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A N N U A L R E P O R T 2 0 1 6

annua

l rep

ort 2016

One-Stop Centerfor Pipes, Valves, Fittings

PANTECH GROUPPANTECH GROUPPANTECH GROUP

PANAFLO CONTROLS PTE. LTD.(200413822 D)

Singapore OfficeNo. 22Pioneer Crescent #02-06 West Park Biz Central Singapore 628556 Tel: +65 6562 3048Fax: +65 6562 3148Email: [email protected]

PANTECH INTERNATIONAL (KSA)

SDN. BHD.(890670-K)PTD 204334Jalan Platinum UtamaKawasan Perindustrian Pasir GudangZon 12B81700 Pasir GudangJohor Darul Takzim, MalaysiaEmail: [email protected]

PANTECH STEEL INDUSTRIES SDN. BHD.(509731-A)

ManufacturerLot 13258 & 13259Jalan Haji Abdul MananOff Jalan Meru42200 KaparSelangor Darul Ehsan, MalaysiaTel: +603 3393 1633Fax: +603 3392 8966Email: [email protected]

PANTECH CORPORATION SDN. BHD.(176321-P)

Johor Bahru Head OfficePTD 204334Jalan Platinum UtamaKawasan Perindustrian Pasir GudangZon 12B81700 Pasir GudangJohor Darul Takzim, MalaysiaTel: +607 259 7979 Fax: + 607 256 7588/5789Email: [email protected]

Shah Alam OfficeNo. 3, Jalan Trompet 33/8Seksyen 33, 40400 Shah AlamSelangor Darul Ehsan, MalaysiaTel: +603 5192 7995Fax: +603 5192 7992Email: [email protected]

Pulau Indah (Warehouse Office)Persiaran Port Klang FZ 7, Jalan FZ 6-P1Port Klang Free Zone / KS 1242920 Pulau IndahSelangor Darul Ehsan, MalaysiaTel: +603 3101 3767Fax: +603 3101 4767

Pengerang (Warehouse office)Lot LO129, Kampung Bukit Gelugur81600 PengerangJohor Darul Takzim, MalaysiaTel: +607 826 6235/6239Fax: +607 826 6237Email : [email protected]

PANTECH (KUANTAN) SDN. BHD.(191606-U)Lot 5, Jalan Industri Semambu 2Kawasan Perindustrian Semambu25350 KuantanPahang Darul Makmur, MalaysiaTel: +609 568 7550Fax: +609 568 7553Email: [email protected]

Cert. No. KLR0404021

MS ISO/IEC 17021:2011OSH 18072007 CB 02

Cert. No. MY12/00913.01

MS ISO/IEC 17021:2011EMS 12072004 CB 03

SG12/03893.01MY12/00912.01

PANTECH STAINLESS & ALLOY

INDUSTRIES SDN. BHD.(733428-W)

ManufacturerPTD 204334Jalan Platinum UtamaKawasan Perindustrian Pasir GudangZon 12B81700 Pasir GudangJohor Darul Takzim, MalaysiaTel: +607 251 8888Fax:+607 251 9999Email: [email protected]

NAUTIC STEELS LIMITED,

UNITED KINGDOM(02302004)

ManufacturerNautic House, Claymore,Tame Valley Industrial Estate,Tamworth, Staffordshire,England, B77 5DQTel: +44 (0)1827 281111Fax:+44 (0)1827 281444Email: [email protected]

PANTECH GALVANISING SDN. BHD.(1162100-W)PLO 7, Jalan Rumbia 4Kawasan Perindustrian Tanjung Langsat81700 Pasir GudangJohor Darul Takzim, MalaysiaTel: +6019 757 5128Email: [email protected]


Cert. No. LRQ 0921634

Cert. No.: E02742Cert. No.: SNG 6003354 • SNG 6019422 SNG 6019422


FYE

29 Feb 2012

434,604

62,905

47,198

34,223

34,232

90,530

337,230

596,573

337,230

192,770

7.60

5.91

15,728

3.50

0.74

FYE

28 Feb 2013

635,663

102,115

80,255

56,063

56,066

102,201

377,019

699,222

377,019

256,455

11.73

9.19

23,795

4.60

0.74

FYE

28 Feb 2014

575,610

96,272

75,227

54,637

54,638

113,909

426,229

690,465

426,229

195,915

10.02

8.53

24,916

4.40

0.75

FYE

28 Feb 2015

525,772

81,352

58,702

43,152

43,152

120,597

467,405

747,369

467,405

215,000

7.38

6.85

22,546

3.76

0.78

FYE

29 Feb 2016

513,293

75,240

53,076

37,945

37,973

123,294

509,297

720,307

509,270

159,665

6.23

6.23

16,548

2.70

0.83

Ringgit Malaysia (RM'000)

Revenue

EBITDA

Profit Before Tax

Profit After Tax

Profit Attributable to Shareholders

Paid-Up Capital

Shareholders' Equity

Total Assets

Total Net Tangible Assets

Total Borrowings

Basic Earnings Per RM0.20 Share (sen)

Diluted Earnings Per RM0.20 Share (sen)

Total Net Dividend Declared

Net Dividend Per RM0.20 Share (sen)

Net Tangible Assets Per Share (RM)

GROUP FIVE-YEAR SUMMARY

12 13 14 15 16

REVENUERM’000

EARNING PER SHARESEN

434,

604 63

5,66

3

575,

610

525,

772

513,

293

12 13 14 15 16

7.60

11.7

3

10.0

2

7.38

6.23

PROFIT AFTER TAXATIONRM’000

SHAREHOLDERS’ EQUITYRM’000

12 13 14 15 16

34,2

23

56,0

63

54,6

37

43,15

2

37,9

45

12 13 14 15 16

337,2

30

377,0

19

426,

229

467,4

05

509,

297

CONTENTSFinancial Highlights

Corporate Information

Group Structure

Directors’ Profile

ExecutiveChairman’s Statement

ManagementDiscussion and Analysis

Corporate Social Responsibility

Corporate Events

Audit Committee Report

Statement on Risk Management and Internal Control

01

02

03

04

06

08

10

12

14

16

CorporateGovernance Statement

AdditionalCompliance Statement

Financial Statements

List of Properties

Notice of Tenth Annual General Meeting

Analysisof Shareholdings

Analysisof Warrant Holdings

Proxy Form

Total Net Dividend declared for FYE2016 is

RM16.55 million,representing

44% of our PAT

18

28

32

132

133

138

141

NTA stands at

RM509.27 milliontranslating to a

NTA/share of RM0.83

FYE

29 Feb 2012

434,604

62,905

47,198

34,223

34,232

90,530

337,230

596,573

337,230

192,770

7.60

5.91

15,728

3.50

0.74

FYE

28 Feb 2013

635,663

102,115

80,255

56,063

56,066

102,201

377,019

699,222

377,019

256,455

11.73

9.19

23,795

4.60

0.74

FYE

28 Feb 2014

575,610

96,272

75,227

54,637

54,638

113,909

426,229

690,465

426,229

195,915

10.02

8.53

24,916

4.40

0.75

FYE

28 Feb 2015

525,772

81,352

58,702

43,152

43,152

120,597

467,405

747,369

467,405

215,000

7.38

6.85

22,546

3.76

0.78

FYE

29 Feb 2016

513,293

75,240

53,076

37,945

37,973

123,294

509,297

720,307

509,270

159,665

6.23

6.23

16,548

2.70

0.83

Ringgit Malaysia (RM'000)

Revenue

EBITDA

Profit Before Tax

Profit After Tax

Profit Attributable to Shareholders

Paid-Up Capital

Shareholders' Equity

Total Assets

Total Net Tangible Assets

Total Borrowings

Basic Earnings Per RM0.20 Share (sen)

Diluted Earnings Per RM0.20 Share (sen)

Total Net Dividend Declared

Net Dividend Per RM0.20 Share (sen)

Net Tangible Assets Per Share (RM)

GROUP FIVE-YEAR SUMMARY

12 13 14 15 16

REVENUERM’000

EARNING PER SHARESEN

434,

604 63

5,66

3

575,

610

525,

772

513,

293

12 13 14 15 16

7.60

11.7

3

10.0

2

7.38

6.23

PROFIT AFTER TAXATIONRM’000

SHAREHOLDERS’ EQUITYRM’000

12 13 14 15 16

34,2

23

56,0

63

54,6

37

43,15

2

37,9

45

12 13 14 15 16

337,2

30

377,0

19

426,

229

467,4

05

509,

297

CONTENTSFinancial Highlights

Corporate Information

Group Structure

Directors’ Profile

ExecutiveChairman’s Statement

ManagementDiscussion and Analysis

Corporate Social Responsibility

Corporate Events

Audit Committee Report

Statement on Risk Management and Internal Control

01

02

03

04

06

08

10

12

14

16

CorporateGovernance Statement

AdditionalCompliance Statement

Financial Statements

List of Properties

Notice of Tenth Annual General Meeting

Analysisof Shareholdings

Analysisof Warrant Holdings

Proxy Form

Total Net Dividend declared for FYE2016 is

RM16.55 million,representing

44% of our PAT

18

28

32

132

133

138

141

NTA stands at

RM509.27 milliontranslating to a

NTA/share of RM0.83

1Pantech Group Holdings Berhad (733607-W) Annual Report 2016

FINANCIAL HIGHLIGHTS

2

AUDIT COMMITTEE

ChairmanMr. Tan Sui Hin

MembersMr. Loh Wei TakTuan Haji Yusoff Bin Mohamed

REMUNERATION COMMITTEE

ChairmanTuan Haji Yusoff Bin Mohamed

MembersDato’ Chew Ting LengMr. Tan Sui Hin

NOMINATION COMMITTEE

ChairmanMr. Loh Wei Tak

Members Mr. Tan Sui HinTuan Haji Yusoff Bin Mohamed

COMPANY SECRETARIES

Ms. Lim Seck Wah(MAICSA No.: 0799845)Ms. Liang Siew Ching(MAICSA No.: 7000168)

REGISTERED OFFICE

Level 15-2,Bangunan Faber Imperial CourtJalan Sultan Ismail 50250 Kuala LumpurTel : 03-2692 4271Fax : 03-2732 5388

SHARE REGISTRAR

Mega Corporate Services Sdn. Bhd. (Company No.: 187984-H)Level 15-2,Bangunan Faber Imperial CourtJalan Sultan Ismail 50250 Kuala LumpurTel No. : 03-2692 4271Fax No. : 03-2732 5388

BOARD OF DIRECTORS

Dato’ Chew Ting LengExecutive Chairman / Group Managing Director

Dato’ Goh Teoh KeanGroup Deputy Managing Director

Mr. Tan Ang AngExecutive Director

Mr. To Tai WaiExecutive Director

Ms. Ng Lee LeeExecutive Director

Mr. Tan Sui HinSenior Independent Non-Executive Director

Mr. Loh Wei TakIndependent Non-Executive Director

Tuan Haji Yusoff Bin MohamedIndependent Non-Executive Director

Datuk Hanapi Bin SuhadaNon-Independent Non-Executive Director(Ceased w.e.f. 29/02/2016)

PRINCIPAL BANKERS

AmBank (M) BerhadAmIslamic Bank BerhadCIMB Bank BerhadCIMB Islamic Bank BerhadCitibank BerhadHong Leong Bank BerhadHong Leong Islamic Bank BerhadHSBC Amanah Malaysia BerhadHSBC Bank Malaysia BerhadHSBC Bank PlcOCBC Bank (Malaysia) BerhadThe Bank of Nova Scotia BerhadUnited Overseas Bank LimitedUnited Overseas Bank (Malaysia) Berhad

SOLICITORS

Ng Kee Chong & Co.

AUDITORS

Messrs SJ Grant Thornton(Member of Grant Thornton International Ltd)Chartered Accountants Unit 29-08, Level 29, Mailbox 227Menara Landmark12, Jalan Ngee Heng80000 Johor Bahru

STOCK EXCHANGE LISTING

Main Market Bursa Malaysia Securities Berhad

STOCK CODE: 5125

PANTECH STEEL INDUSTRIES SDN. BHD.

PANTECH STAINLESS & ALLOY INDUSTRIES SDN. BHD.

PANAFLO CONTROLS PTE. LTD.

NAUTIC STEELS SDN. BHD.

PANTECH INTERNATIONAL (KSA) SDN. BHD.

NAUTIC STEELS (HOLDINGS) LIMITED

Nautic Steels Limited

PANTECH CORPORATION SDN. BHD.100%

Pantech (Kuantan) Sdn. Bhd.

Tuah Nusa Sdn. Bhd.

100%

100%

100%

100%

100%

100%

PANTECH GALVANISING SDN. BHD.51%

100%

40%

Pantech Realty Sdn. Bhd.

70% JC Flow Controls Pte. Ltd.

100%

100%

Pantech Group Holdings Berhad (733607-W) Annual Report 2016

CORPORATE INFORMATION

AUDIT COMMITTEE

ChairmanMr. Tan Sui Hin

MembersMr. Loh Wei TakTuan Haji Yusoff Bin Mohamed

REMUNERATION COMMITTEE

ChairmanTuan Haji Yusoff Bin Mohamed

MembersDato’ Chew Ting LengMr. Tan Sui Hin

NOMINATION COMMITTEE

ChairmanMr. Loh Wei Tak

Members Mr. Tan Sui HinTuan Haji Yusoff Bin Mohamed

COMPANY SECRETARIES

Ms. Lim Seck Wah(MAICSA No.: 0799845)Ms. Liang Siew Ching(MAICSA No.: 7000168)

REGISTERED OFFICE

Level 15-2,Bangunan Faber Imperial CourtJalan Sultan Ismail 50250 Kuala LumpurTel : 03-2692 4271Fax : 03-2732 5388

SHARE REGISTRAR

Mega Corporate Services Sdn. Bhd. (Company No.: 187984-H)Level 15-2,Bangunan Faber Imperial CourtJalan Sultan Ismail 50250 Kuala LumpurTel No. : 03-2692 4271Fax No. : 03-2732 5388

BOARD OF DIRECTORS

Dato’ Chew Ting LengExecutive Chairman / Group Managing Director

Dato’ Goh Teoh KeanGroup Deputy Managing Director

Mr. Tan Ang AngExecutive Director

Mr. To Tai WaiExecutive Director

Ms. Ng Lee LeeExecutive Director

Mr. Tan Sui HinSenior Independent Non-Executive Director

Mr. Loh Wei TakIndependent Non-Executive Director

Tuan Haji Yusoff Bin MohamedIndependent Non-Executive Director

Datuk Hanapi Bin SuhadaNon-Independent Non-Executive Director(Ceased w.e.f. 29/02/2016)

PRINCIPAL BANKERS

AmBank (M) BerhadAmIslamic Bank BerhadCIMB Bank BerhadCIMB Islamic Bank BerhadCitibank BerhadHong Leong Bank BerhadHong Leong Islamic Bank BerhadHSBC Amanah Malaysia BerhadHSBC Bank Malaysia BerhadHSBC Bank PlcOCBC Bank (Malaysia) BerhadThe Bank of Nova Scotia BerhadUnited Overseas Bank LimitedUnited Overseas Bank (Malaysia) Berhad

SOLICITORS

Ng Kee Chong & Co.

AUDITORS

Messrs SJ Grant Thornton(Member of Grant Thornton International Ltd)Chartered Accountants Unit 29-08, Level 29, Mailbox 227Menara Landmark12, Jalan Ngee Heng80000 Johor Bahru

STOCK EXCHANGE LISTING

Main Market Bursa Malaysia Securities Berhad

STOCK CODE: 5125

PANTECH STEEL INDUSTRIES SDN. BHD.

PANTECH STAINLESS & ALLOY INDUSTRIES SDN. BHD.

PANAFLO CONTROLS PTE. LTD.

NAUTIC STEELS SDN. BHD.

PANTECH INTERNATIONAL (KSA) SDN. BHD.

NAUTIC STEELS (HOLDINGS) LIMITED

Nautic Steels Limited

PANTECH CORPORATION SDN. BHD.100%

Pantech (Kuantan) Sdn. Bhd.

Tuah Nusa Sdn. Bhd.

100%

100%

100%

100%

100%

100%

PANTECH GALVANISING SDN. BHD.51%

100%

40%

Pantech Realty Sdn. Bhd.

70% JC Flow Controls Pte. Ltd.

100%

100%

Pantech Group Holdings Berhad (733607-W) Annual Report 2016 3

GROUP STRUCTURE


DATO’ CHEW TING LENGExecutive Chairman/Group Managing Director

Dato’ Chew Ting Leng, Malaysian, aged 61, is one of the co-founders of the Group. He has more than 30 years of experience in the Pipes, Valves and Fittings (“PVF”) solutions industries. He was appointed as Group Managing Director and Executive Chairman of Pantech Group Holdings Berhad on 11 November 2006 and 13 November 2006 respectively.

He is a member in the Remuneration Committee.

He does not hold any directorships in any other public companies.

DATO’ GOH TEOH KEANGroup Deputy Managing Director

Dato’ Goh Teoh Kean, Malaysian, aged 60, graduated with Diploma in Commerce (Financial Accounting) from Tunku Abdul Rahman College.

He has more than 20 years of experience in the PVF solutions industry. He is one of the co-founders of the Group and was appointed as the Group Deputy Managing Director on 11 November 2006. He is responsible for the financial functions of the Group.


TAN ANG ANGExecutive Director

Mr. Adrian Tan, Malaysian, aged 60, was appointed as the Executive Director on 11 November 2006. He is responsible for the overall operation and performance of the Group’s manufacturing business and is also the Managing Director of Pantech Steel Industries Sdn. Bhd., Pantech Stainless & Alloy Industries Sdn. Bhd. and Nautic Steels Limited. He obtained his professional Diploma from the Chartered Institute of Marketing in 1989.


TO TAI WAIExecutive Director

Mr. David To, Malaysian, aged 45, was appointed as the Executive Director on 11 November 2006. He started his career in Pantech Corporation Sdn. Bhd. since 1989 and has more than 20 years of experience in the PVF solution industries. He is primarily responsible for the domestic, international and project sales activities of the Group’s trading division and trading operation in Malaysia.


NG LEE LEEExecutive Director

Ms. Ng Lee Lee, Malaysian, aged 49, was appointed as the Executive Director on 8 May 2013. She started her career in Pantech Corporation Sdn. Bhd. since 1990. She is primarily responsible for the human resources, administration and project sales division.

She does not hold any directorships in any other public companies.

TAN SUI HINSenior Independent Non-Executive Director

Mr. Tan Sui Hin, Malaysian, aged 66, was appointed as an Independent Non-Executive Director on 30 November 2006. He graduated with a Diploma in Mechanical Engineering from Ungku Omar Polytechnic in 1971. He has more than 35 years of experience in the manufacturing and building engineering field.

He was appointed as the Senior Independent Director with effective from 19 June 2014.

He is the Chairman of the Audit Committee and a member of both the Nomination and Remuneration Committees.


DIRECTORS’ PROFILE


LOH WEI TAKIndependent Non-Executive Director

Mr. Loh Wei Tak, Malaysian, aged 43, was appointed as an Independent Non-Executive Director on 30 November 2006. He is a qualified accountant and a member of the Malaysian Institute of Accountants. He completed his Bachelor of Business Degree (Majoring in Accounting) from Monash University, Melbourne, Australia in 1994 and was admitted to Certified Practicing Accountant from Australia in 1998. In 2000, he was admitted as a Chartered Accountant to the Malaysian Institute of Accountants.

He is the Chairman of the Nomination Committee and a member of the Audit Committee.


TUAN HAJI YUSOFF BIN MOHAMEDIndependent Non-Executive Director

Tuan Haji Yusoff Bin Mohamed, Malaysian, aged 65, was appointed as an Independent Non-Executive Director on 10 August 2007. He graduated from University Kebangsaan Malaysia with a Bachelor Degree in Economics (Hons).

He is the Chairman of the Remuneration Committee and a member of both the Audit and Nomination Committees.


OTHER INFORMATION:-Directors’ Shareholdings

Details of Directors’ Shareholdings in the Company are as disclosed on page 34 of the Annual Report 2016.

Family relationship with Directors and/or Major Shareholders

Dato’ Chew Ting Leng and his spouse, Datin Shum Kah Lin are major shareholders of Pantech Group Holdings Berhad (“PGHB”) by virtue of their substantial shareholdings in CTL Capital Holding Sdn. Bhd. pursuant to Section 6A of the Companies Act 1965.

Dato’ Goh Teoh Kean and his spouse, Datin Lee Sock Kee are major shareholders of PGHB by virtue of their substantial shareholdings in GL Management Agency Sdn. Bhd. pursuant to Section 6A of the Companies Act 1965.

Conflict of Interest

All Directors have no family relationship with each other or major shareholders of PGHB. They have no conflict of interest in PGHB.

Conviction of Offences

All Directors have no convictions of offences within the past 10 years.

Attendance at Board Meetings

The attendance of the Directors is disclosed in the Corporate Governance Statement on page 24 of the Annual Report 2016.

DIRECTORS’ PROFILEcont’d

Dear Shareholders,

This year, Pantech Group marks a decade as a public listed company. It has been a journey of growth, challenges and achievements shared with our loyal shareholders.

EXECUTIVE CHAIRMAN’S STATEMENT

6 Pantech Group Holdings Berhad (733607-W)6 Pantech Group Holdings Berhad (733607-W) Annual Report 2016

Dear Shareholders,

This year, Pantech Group marks a decade as a public listed company. It has been a journey of growth, challenges and achievements shared with our loyal shareholders.

EXECUTIVE CHAIRMAN’S STATEMENT

7

EXECUTIVE CHAIRMAN’S STATEMENTcont’d


I am honoured to be able to report another profitable performance for Pantech Group Holdings Berhad, for the financial year ended 29 February 2016, despite the numerous events that rocked the equity market, especially oil and gas related companies.

2015 witnessed collapse in oil prices and the aftershocks were felt throughout world. The tremors reverberated throughout the financial market when energy related stocks tumbled. With reduced risk appetite, capex were slashed and cost cutting measures became the norm for the period under review.

Such dark clouds of uncertain economic outlook proved to be a test for every level of management and companies. Pantech Group turned in a revenue of RM513.29 million and profit before tax (PBT) of RM53.08 million for the financial year ended 29 February 2016 (FYE 2016) and it was a commendable performance in the face of such headwinds.

This result was attained through the grit of the team who had the steely determination to probe for sales in the RAPID projects from the preceding years.

While FYE 2016 group performance was comparatively lower by 2.37% and 9.58% in revenue and PBT respectively against the financial year ended 28 February 2015, it stands out among its peers in the industry. Business was more competitive and pricing was pressured, while expectations rose, causing margins to narrow.

Business in both the Trading and Manufacturing divisions were sustained with Trading registering an increase of 6.63% whilst sales at Manufacturing division declined 14.15%.

Despite the lacklustre international market, Pantech Group continues to have product presence in 67 countries with Malaysia continuing to be our main market for the period under review. Our reputation as a reliable supplier of pipes, valves and fittings (PVF) as well as strong foothold and understanding of the Malaysian market, which was built over the years, have helped Pantech Group to establish a constant presence in tenders.

Coupled with stringent financial management, the efforts have given rise to a strong balance sheet and good cash flow.

Even in such challenging times, our prudence has enabled Pantech Group to be in a position to establish a new hot-dip galvanising facility. This process that will create a new product line that has a cost saving advantage in corrosion protection. The Group holds 51 percent in this subsidiary company, Pantech Galvanising Sdn. Bhd., and the balance 49 percent is held by minority shareholders with established commercial presence in Johor. Operations for Pantech Galvanising is expected to commence by December this year.

Our approach to any venture is on the side of caution and will remain so in the face of market uncertainty and fluctuating currency.

Inventory value was reduced to RM253.37 million but the inventory items have remained the same at about 30,000 items, in line with our One Stop Centre value proposition.

We continue to have a firm grip on the financials of the group and seek to extract best returns from all our asset class. Even while we brace ourselves for the daunting year ahead, our financial prudence has put us in the position to reward loyal shareholders once again this year. Upon the approval by shareholders at the 10th Annual General Meeting, the total dividend payout will amount to approximately RM16.55 million or 43.6% of our profit after tax, including share dividend reward from our 6.10 million treasury shares.

CORpORATE GOvERNANCE

As doing business becomes tougher and compounded by unfavourable market conditions and weak sentiments in the oil and gas industry, it is easy to fall prey to unethical practices in the desire to return a positive year. Pantech Group vigilantly upholds integrity, doing business the ethical way while balancing the interest of stakeholders. The trustworthiness earned over the years is an asset that we guard watchfully.

Our corporate governance statement and reports are on page 18 to 27.

ACKNOWLEDGEMENT

Throughout the last 29 years of operations, of which ten were as a public listed company, we are regularly reminded that it is the belief of shareholders, foresight of the directors and management, the hard work of the team and most of all, the confidence of customers in us that have brought us through.

I would like to express my deepest appreciation to all stakeholders who have put their faith in us.

The last financial year was a period of working doubly harder and belt tightening, a path which our team will continue as we brace for another tough year ahead as oil prices are projected to remain low in the coming year.

Dato’ Chew Ting Leng (Jimmy)Executive Chairman


The financial period of 1 March 2015 to 29 February 2016 under review was an extremely challenging season for Pantech Group Holdings Berhad.

The full impact of the unsettling oil price which tumbled at the end of 2014 was felt during this period. It was a time when oil and gas players cut back on capital expenditure, taking on a subdued stance as economists and researchers reported that the price of crude is expected to remain low in the near future. Faced with such dim outlook, Pantech Group challenged ourselves to continue returning a profitable year.

FINANCIAL

Pantech Group was able to harvest from the groundwork laid for inroads into tenders and contracts at Refinery and Petrochemical Integrated Development (RAPID) over the last two years. The focus on RAPID was also an insightful move towards servicing downstream industries whereas previously sales had come very largely from upstream oil and gas activities.

This helped the Group to return a group performance of RM513.29 million in revenue and RM53.08 million in Profit Before Tax (PBT) for FYE2016. Profit After tax (PAT) stood at RM37.95 million.

Overall, for the financial year ended 29 February 2016, group revenue declined by RM12.48 million or 2.4% and group PBT decreased by RM5.63 million or 9.6% compared to FYE2015’s revenue of RM525.77 million and PBT of RM58.70 million respectively. Correspondingly, PAT margin had decreased from approximately 8.2% to 7.4% year-on-year.

Profitability came under severe pressure arising from competitive pricing from international players faced by the group both domestically and overseas, and the result was reflected in the profit margins.

The weakened sales was due to lower contribution from Manufacturing, which felt the impact of weaker demand from oil and gas sector, international competition and lower product prices. However, the improved performance from the Trading division which benefited from RAPID projects lessened the reduced demand in the manufacturing division.

For FYE2016, Trading recorded RM19.75 million or 6.6% higher revenue of RM317.79 million as compared to FYE2015 revenue of RM298.04 million. In line with the increased revenue, segment profit before finance cost and interest income for Trading also rose by RM1.56 million or 5.0% from FYE2015 for this financial year.

Sales at the Manufacturing division came in at RM195.50 million, which was RM32.23 million or 14.2% lower than the sales recorded for FYE2015. The decline in revenue contribution from the Manufacturing division was attributable to lessened production brought about by weak global demand. Sales at Nautic also declined as international demand slowed and compounded by strong pound sterling.

MANAGEMENT DISCUSSION AND ANALYSIS

The drop in revenue also translated to a correspondingly pressured segment profit before finance cost and interest income for Manufacturing which stood at RM30.44 million, a decrease in margin from approximately 17.6% to 15.6% year-on-year.

The challenging market scenario was exacerbated by the squeeze on pricing by customers and rising cost of business in particular higher material costs. All these factors ate into our gross profit by one percentage, bring it from FYE2015’s gross profit margin of 24.1% to 22.9% this year.

The management reevaluated the financing arrangements, applying stricter cost control and cost cutting measures including insurance rationalisation. The belt tightening extended to working capital and loan management, which resulted in RM55.33 million or 25.7% reduction in borrowings, down to RM159.67 million as at FYE2016 from FYE2015’s RM215.0 million.

Under a more circumspect approach to financial management, we also strengthened the receivables management and managed to reduce our receivables from FYE2015’s RM130.8 million to RM109.1 million this financial year.

In terms of inventory management, the group reduced inventory holdings to RM253.37 million, down RM36.01 million from FYE2015’s RM289.38 million. This was an exercise in prudence in consideration of uncertain business environment.

The stringent measures undertaken enabled our NTA per share to rise RM0.05 to RM0.83 from FYE2015 RM0.78 on the back of stronger non-current assets. Dividend

Our ability to be resilient in a growingly challenging market and turn in profitable performance year after year is also without doubt attributable to loyal shareholders who have put trust in the management to drive the strategy and business.

Even as we proceed with caution, we believe in rewarding our loyal shareholders. In view of the current market situation, the Board of Directors has taken a measured approach of balancing rewarding loyal shareholders with conserving cash in order to enable Pantech Group to develop accordingly in anticipation of market direction. Thus, Pantech Group has to-date paid out three tiers of cash dividends for FY2016:

l First interim dividend of 0.5 sen per ordinary share was paid on 22 October 2015, the payout amounted to RM3.08 million

l Second interim dividend of 0.6 sen per ordinary share was paid on 14 January 2016, with the total payout of RM3.68 million

l Third interim dividend of 0.5 sen per ordinary share was paid on 15 April 2016 and the total cash payout came up to RM3.06 million


MANAGEMENT DISCUSSION AND ANALYSIScont’d

We have also proposed for shareholders’ approval at the 10th Annual General Meeting, a final single tier cash dividend of 0.5 sen per ordinary share of RM0.20 each and a share dividend distribution of approximately 6.10 million treasury shares on the basis of 1 treasury share for every 100 existing ordinary shares of RM0.20 each. Upon approval by shareholders, this dividend payout will bring the total dividend for FY2016 to approximately 2.7 sen or RM16.55 million, translating to a payout ratio of 43.6%.

OpERATIONS

New subsidiary for hot-dip galvanising

On 29 Sept 2015, Pantech Group entered into a 51:49 joint venture agreement with Euromech Machinery Sdn. Bhd., which resulted in the incorporation of Pantech Galvanising Sdn. Bhd. on 13 October 2015, and currently has a paid up capital of RM20 million. Pantech Group holds 51% equity with 10.2 million shares of RM1.00 each.

This move is in line with our strategy to supply value-added products. Works are underway to enable us to hot-dip galvanise our pipes and fittings specific to our customers’ requirements - providing a value-add service with cost saving solution in corrosion protection while enhancing our One Stop Centre advantage. Commencement of operations at Pantech Galvanising Sdn. Bhd. is anticipated to be in December 2016, with revenue contribution coming on stream for our FY2017.

Warehouse

Changes took place at the warehouse in Pengerang, where it was trimmed down by 1.3264 hectares, the portion was requisitioned by the Johor State Government. Our land parcel near Sungai Rengit is now 0.6362 hectares in size and houses an off-site office to provide customers in Pengerang with faster response.

The new warehouse on a six-acre site which is part of the 26-acre plot that houses our consolidated operations and head office in Zon 12B in Pasir Gudang Industrial Area, has been completed and is now fully utilised by Pantech Stainless and Alloy Industries Sdn. Bhd.

Manufacturing & Capacities

Capacity at Pantech Steel Industries Sdn. Bhd., Pantech Stainless & Alloy Industries Sdn. Bhd. and Nautic Steels remained, unchanged at 21,000, 14,400 and 800 metric tonnes respectively.

Due to shrunken global demand, output was moderated to 70%, 80% and 60% accordingly for each of the manufacturing plants. We will continue the ongoing focus of increasing operation efficiency at the manufacturing side.

MARKET

The market for Pantech Group pipes, valves and fittings (PVF) remain a global one despite the depressed market worldwide.

Our reputation as a One Stop Centre that has the expertise and experience to support the fluid transmission requirements of customers at their demand level, was built over 29 years. It is a position that holds us in good stead when competing for contracts, as exemplified by the contracts won for supply to RAPID projects.

Under the current tough business environment, it is hence all the more important that we continue to maintain market presence.

In 2015, Pantech Group was highly selective of the exhibitions that we chose to invest in to meet and exchange ideas with industry players and be kept abreast of developments in the oil and gas industry. Balancing expenses with the need to continue marketing effort, Pantech Group was present at the Tube Southeast Asia 2015 exhibition in Bangkok, Thailand, where we communicated our value proposition while strengthening ties with customers and prospects.

OUTLOOK AND pROSpECTS

The international oil price remains low currently and we are cautious with challenges faced by this industry in Malaysia and the region.

On the international front, we do not see significant changes in the fortunes of the oil and gas industry, causing demand to remain dull. On the domestic front, the announcement by Petronas of slashing RM50 billion in capital expenditure and operating expenditure over the next four years had put many players on tenterhooks.

The Group will prudently continue to focus and expand on existing revenue generating business and seek opportunities to grow, both locally and overseas. As we charily expand our capacity as the major PVF solutions provider to the oil and gas sector for both upstream and downstream, we are also hunkered down to take on the onslaughts of poor market sentiments.

We are positive on the long term outlook in particular with the continuous development of the RAPID projects and associated facilities in Johor. As we brace ourselves for the coming uncertainties, we hope to return another profitable year on the back of sustained maintenance orders and harvesting on supply contracts that Pantech Group has tendered.

10

No act of kindness, no matter how small, is ever wasted.

- Aesop

“ “


CORPORATE SOCIAL RESPONSIBILITY

The Pantech Group understands that the long-term success of any business cannot be determined by its profitability bottom-line concerns alone and that corporations can no longer operate detached from society and its concerns. With this in mind, the Group is fully committed to its Corporate Social Responsibility (CSR) programs, highlighting accountability to its stakeholders and their well-being, in particular to its employees and the community at large.

WORKpLACE SAFETY

As with previous years, the focus of Pantech Group’s CSR activities in FY2016 was on its workforce; the Group cared for its most valuable assets, its employees, by providing them with workplace safety training activities to increase their situational awareness and equip them with new skills.

Emergency Response Training (ERT) training sessions were conducted throughout the year at various subsidiaries by Jabatan Bomba dan Penyelamat Malaysia (BOMBA) to teach employees how to use fire-fighting equipment such as fire hydrant hose and extinguisher, as well as what to do during an emergency. Some of the sessions were led by external trainer, educating employees on emergency response and rescue in situations involving electricity, chemical spillage and fire.

Programs to raise health and safety awareness were also organised with the aim of improving the protection and wellbeing of machine operators in the workplace. Personal Protective Equipment (PPE) and Hazard at Workplace Trainings were conducted to improve PPE awareness as well as highlighting the potential hazards. There was also a Safety in Handling Forklift Truck Training to improve safety awareness among forklift operators.

In addition, an Audiometric Test was conducted for factory workers to determine their hearing levels as well as to recommend action to prevent hearing problems among the employees.

No act of kindness, no matter how small, is ever wasted.

- Aesop

“ “


CORPORATE SOCIAL RESPONSIBILITYcont’d

WORKpLACE RECOGNITION

Back to School 2016 - In November and December 2015, Pantech Corporation Sdn. Bhd., Pantech Stainless & Alloy Industries Sdn. Bhd., Pantech (Kuantan) Sdn. Bhd. and Pantech Steel Industries Sdn. Bhd. (PSI) once again provided a helping hand to their employees with vouchers to buy uniforms and bags for their school-going children. Pantech Group extended this simple but meaningful assistance to employees for the eighth consecutive year; a timely support when family budgets have been stretched tight by rising costs of living.

Appreciation - Pantech Group recognises that the success of the company depends on its employees and in appreciation of their valuable contribution, the Group celebrated its employees over Appreciation Dinners in Johor and Klang. The dinners were the perfect occasion for employees from various departments to get to know one another better. Also not forgotten were the Group’s migrant workers in production; they were treated to a warm and welcoming dinner to show appreciation for their hard work here in Malaysia.

CARING FOR THE COMMUNITY

Pantech Group understands that the true measure of success is not merely by how much wealth is accumulated but also by how that wealth is used with compassion to care for those less fortunate in the community. With this in mind, the Group continues to care for those who have fallen on hard times whether it is due to economic or medical reasons. The Group via PSI has maintained contributions to support a grandmother in Klang who is caring for her five orphaned grandchildren, as well as provided meals to another poor family, a mother with three children, who was unable to work due to an accident.

As the Pantech Group grows from strength to strength, it will do so by ensuring that their employees and the community at large will also benefit from this growth by its continued appreciation and support. This underscores its unfailing commitment to being known not only for its top quality products and people, but also for the Group’s integrity, character and compassionate concern for its stakeholders and society at large.


Offshore Technology Conference Asia (OTC) Exhibition 2016

22 - 25 March 2016

Kuala Lumpur Convention Centre, Malaysia

Tube Southeast Asia 2015

16 - 18 September 2015

Bangkok, Thailand

CORPORATE EVENTS

13Pantech Group Holdings Berhad (733607-W) Annual Report 2016

Green Energy Asia & Tenaga 2016

23rd - 25 April 2016

Kuala Lumpur Convention Centre, Malaysia

CORPORATE EVENTScont’d

International Tube & pipe Trade Fair

4 - 8 April 2016

Fairground Dusseldorf, Germany


AUDIT COMMITTEE REPORT

The primary objective of the Audit Committee is to assist the Board in the effective discharge of its fiduciary responsibilities for corporate governance, financial reporting process and internal control system.

The Audit Committee have adopted practices aimed at maintaining appropriate standards of responsibility, integrity and accountability to all the Company’s shareholders.

MEMBERSHIp

The Audit Committee is appointed by the Board and comprises exclusively of Independent Non-Executive Directors:-

Chairman

Mr. Tan Sui Hin : Senior Independent Non-Executive Director

Members

Tuan Haji Yusoff Bin Mohamed : Independent Non-Executive DirectorMr. Loh Wei Tak : Independent Non-Executive Director

MEETINGS

There were five (5) Audit Committee meetings held during the financial year 2016. The details of attendance of Committee members are as follows:-

Name of Committee Members Designation Attendance

Mr. Tan Sui Hin Chairman 5/5

Tuan Haji Yusoff Bin Mohamed Member 5/5

Mr. Loh Wei Tak Member 5/5

SUMMARY OF ACTIvITIES OF THE AUDIT COMMITTEE

In line with the Terms of Reference of the Audit Committee, the following activities were carried out by the Audit Committee during the financial year ended 29 February 2016 in discharging its functions and duties:-

a) Reviewed the External Auditors’ scope of work and audit plans for the financial year under review;b) Reviewed the results of audit and the audit report; c) Reviewed and approved the Internal Audit Plan and the Internal Audit Report;d) Reviewed the quarterly and annual financial statements of the Group prior to submission to the Directors for their

perusal and approval. This was to ensure compliance of the financial statements with the provisions of the Companies Act, 1965, Malaysian Financial Reporting Standards, International Financial Reporting Standards and applicable Listing Requirements of Bursa Malaysia Securities Berhad;

e) Reviewed the audit memorandum plan; f) Reviewed the independence and competence of the external auditors;g) Considered and recommended to the Board the re-appointment of External Auditors and their fees; andh) Reviewed the related party transactions and conflict of interest situation that may arise within the Company and its

subsidiary companies including any transaction, procedure or course of conduct that raises questions of management integrity.


AUDIT COMMITTEE REPORTcont’d

INTERNAL AUDIT FUNCTION

The Group has an in-house internal audit function and supported by an independent professional consulting firm to assist the Audit Committee in discharging their responsibilities and duties. The role of the internal audit function is to undertake independent, regular and systematic reviews of the system of internal controls so as to provide reasonable assurance that such systems continue to operate satisfactory and effectively.

The professional fee and other cost incurred in respect of the internal audit function for the financial year ended 29 February 2016 was RM206,332.

The detail of internal audit functions during the period under review is stated in the Statement on Risk Management and Internal Control of this Annual Report. During the period under review, the Internal Auditors carried out the following activities:-

a) Presented and obtained approval from the Audit Committee the annual internal audit plan, its audit strategy and scope of audit work;

b) Performed audits according to the annual internal audit plan, to review the adequacy and effectiveness of the internal control system, compliance with policies and procedures and reported ineffective and inadequate controls and made recommendations to improve their effectiveness; and

c) Performed follow-up reviews in assessing the progress of the agreed management’s action plans and report to the management and Audit Committee.


The Malaysian Code on Corporate Governance stipulates that the Board of Directors of a listed company should establish a sound risk management framework and internal control system to safeguard shareholders’ investment and the Company’s assets. The system of risk management and internal control covers not only financial controls but operational and compliance controls as well. This Statement on Risk Management and Internal Control is made pursuant to paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

Pursuant to Paragraph 15.23 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Group has requested that the external auditors to review this Statement on Risk Management and Internal Control in accordance with Recommended Practice Guide (“RPG”) 5 issued by the Malaysian Institute of Accountants. The Board is pleased to note that external auditors find this Statement to be consistent with their understanding of the risk management and internal control processes implemented by the Group during their review.

BOARD RESpONSIBILITY

The Board acknowledges its overall responsibility for the Group’s risk management and internal control system and has in place an on-going process for identifying, evaluating and managing the significant risks faced by the Group in its achievement of business objectives and strategies during the financial year and up to the date of approval of this statement for inclusion in the annual report. The risk management and internal control system are designed to manage, rather than eliminate the risk that may impede the achievement of the Group’s business objectives and strategies. Due to the inherent limitations of internal controls, the system can only provide reasonable but not absolute assurance against material misstatement, loss or fraud.

The Board also takes into consideration the need to balance the business risks and the potential returns to stakeholders in its daily operations, with the dynamic business climate it operates in. The Board recognises the need for a concerted effort from the management, head of department and senior staff members in ensuring that the integrity, effectiveness and adequacy of the control mechanism are monitored and maintained throughout the financial period.

ENTERpRISE RISK MANAGEMENT FRAMEWORK

During the financial year, the Group monitored significant risks and implement risk mitigation strategies on an ongoing basis through its Executive Directors, management and Risk Management Committee (“RMC”) within its risk appetite.

The Board has set up a Risk Management Committee (“RMC”) which comprises of Executive Directors and Senior Management of the Group. Executive Directors, senior management personnel and Departmental Heads are responsible for assessing and managing the risks of their respective business units, operational units and departments. Significant issues and risks are discussed during Executive Group Directors Meeting and management meetings which are attended by Executive Directors and senior management personnel. This process has been in place during the year under review and up to the date of approval of this statement for inclusion in the annual report.

INTERNAL AUDIT FUNCTION

The Group has an in-house internal audit function and supported by an independent professional firm, both report directly to the Audit Committee on its findings and recommendations for improvements. An internal audit charter and internal audit plan has been submitted and approved by the Audit Committee.

For the financial year under review, the internal auditors have carried out their review according to the approved internal audit plan. The review covered the assessment on the adequacy and effectiveness of the Group’s risk management and internal control system. Upon completion, the internal audit observations, recommendations and management comments were reported to the Audit Committee. The Audit Committee reviews internal control matters and updates the Board on significant issues for the Board’s attention and action.

Total cost incurred for the internal audit function in respect of the financial year ended 29 February 2016 was RM206,332.

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL


KEY ELEMENTS OF THE GROUp’S INTERNAL CONTROL SYSTEM

The key elements of the Group’s internal control system comprise the following:-

l Responsibilities of the Board and management are defined to ensure effective discharge of roles and responsibilities;

l The Board and the Audit Committee meet every quarter to discuss matter(s) raised by Management and/or Internal Audit on business and operational matters including potential risks and control issues;

l The Board has established and documented a Schedule of Matters Reserved for the Board to facilitate the effective reporting and operation of the Board at regular Board meeting. Major capital investment, acquisition, disposals or any other transaction that are not in the ordinary course of business exceeding a certain threshold must be referred to the Board for approval;

l Management reports to the Board on material findings and/or variances, if any, and the Board will review their implications to the Group and advise accordingly;

l Annual budgeting process is in place and performance is monitored on an ongoing basis;

l Senior Management attends management meetings on a regular basis to address budgets, operational and financial performance, business planning, control environment and other key issues;

l Key personnel from respective subsidiaries provide monthly reports to the corporate office on the subsidiaries’ performance;

l Communication channels have been established between subsidiaries, business units, divisions and employees through internal memorandums, staff briefings and operational meetings to achieve the Group’s overall business objectives;

l Close and active involvement of the Executive Directors on the day-to-day business operations of the Group;

l Health, Safety and Environmental Committee has been established in order to review and ensure compliance with occupational safety and health policies and procedures on a continuous basis; and

l System access controls are established to ensure the information systems are duly safeguarded and secured from unauthorised access. Regular review on user access rights for the Enterprise Resource Planning Systems is also in place.

CONCLUSION

In reviewing the risk management and internal control system of the Group, the Board has, through the Audit Committee, received reports from External Auditors and Internal Auditors in relation to the findings on risk and internal audit control system. The Board has also received reasonable assurance from the Group Managing Director and Chief Financial Officer that the Group’s risk management and internal control system is operating adequately and effectively, in all material respects.

No major weaknesses in the internal control system were noted that may have resulted in any material losses, contingencies or uncertainties that would require disclosure in the Group’s annual report.

The Board is of the opinion that the risk management and internal control system in place is adequate and effective at its current level of operations and will continuously strive to enhance the Group’s risk management and internal control system in safeguarding stakeholders’ interest, shareholders’ investment and Group’s assets.

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROLcont’d


The Board of Directors (“the Board”) of Pantech Group Holdings Berhad (“Pantech” or “the Company”) recognises and subscribes to the importance of the principles and recommendations set out in the Malaysian Code on Corporate Governance 2012 (“the Code”) as a key factor towards achieving an optimal governance framework and process in managing the business and operational activities of the Company and its subsidiaries (“the Group”).

The Board believes that good corporate governance practices are pivotal towards enhancing business prosperity and corporate accountability with the ultimate objective of realizing long-term shareholder value, whilst taking into account the interests of other stakeholders. Hence, the Board is fully dedicated to continuously appraise the Group’s corporate governance practices and procedures to ensure that the principles and recommendations in corporate governance are applied and adhered to in the best interests of the stakeholders.

The Statement below sets out the manner in which the Group has applied the principles of the Code and the extent of compliance with recommendations advocated therein.

pRINCIpLE 1 - ESTABLISH CLEAR ROLES AND RESpONSIBILITIES OF THE BOARD AND MANAGEMENT

The Board recognises the key role it plays in charting the strategic direction of the Company and has assumed the following principal responsibilities in discharging its fiduciary and leadership functions:

n reviewing and adopting a strategic plan for the Company, addressing the sustainability of the Group’s business; n overseeing the conduct of the Group’s business and evaluating if its businesses are being properly managed; n identify principal business risks faced by the Group and ensuring the implementation of appropriate internal controls

and mitigating measures to address such risks; n ensuring that all candidates appointed to senior management positions are of sufficient calibre, including the orderly

succession of senior management personnel;n overseeing the development and implementation of a shareholder communications policy, including an investor

relations programme for the Company; and n reviewing the adequacy and integrity of the Group’s internal control and management information systems.

To assist in the discharge of its stewardship role, the Board has established Board Committees, namely the Audit Committee, Nomination Committee, Remuneration Committee and Risk Management Committee, to examine specific issues within their respective terms of reference as approved by the Board and report to the Board with their recommendations. The ultimate responsibility for decision making, however, lies with the Board.

SCHEDULE OF MATTERS RESERvED FOR THE BOARD

The following matters (including changes to any such matters) require approval from the Board of Directors, except where they are expressly delegated to a Committee of the Board:-

(A) Strategy and Management

1. Responsibility for the overall strategic direction and strategic plans for, and the overall management of, Pantech and its subsidiaries (the “Group”).

2. Approval of the Group’s long-term objectives and sustainability strategy.

3. Approval of the annual operating and capital expenditure budgets and any material changes thereto.

4. Review of performance in the light of the Group’s strategy, objectives, business plans, borrowings from financial institution, budgets and ensuring that any necessary corrective action is taken.

CORPORATE GOVERNANCE STATEMENT


pRINCIpLE 1 - ESTABLISH CLEAR ROLES AND RESpONSIBILITIES OF THE BOARD AND MANAGEMENT cont’d

SCHEDULE OF MATTERS RESERvED FOR THE BOARD cont’d

(A) Strategy and Management cont’d

5. Oversight of the Group’s operations ensuring:

(a) competent and prudent management (b) sound planning (c) adequate system of internal control (d) adequate accounting and other records (e) compliance with statutory and regulatory obligations

6. Expansion of the Group’s activities into new business or geographical areas.

7. Decision to cease to operate all or any material part of the Group’s business or to cease to operate in any country that would result in the Group no longer having a presence in that country.

8. Any matters materially affecting the Group’s overall reputation, including its brand and values.

(B) Structure and Capital

1. Changes relating to Group’s capital structure including:

(a) share split, capital reduction, issuance of unsecured securities (b) new share issues (except pursuant to approved option scheme) (c) share buy-back (including the disposal/use of treasury shares) (d) establishment of employees’ share and/or performance option scheme(s)

2. Changes to the Group’s corporate structure or creation or liquidation of subsidiary/joint venture.

3. Any changes to Pantech’s listing status or matters affecting Pantech’s listing status.

(C) Financial Reporting and Controls

1. Approval of the announcements of the interim and final results.

2. Approval of Pantech’s audited financial statements and annual report.

3. Approval of any significant changes in accounting policies or practices.

4. Approval of significant treasury policies, including policies on foreign currency exposure and use of financial derivatives.

5. Approval of dividend policy, declaration of interim dividend and recommendation of final dividend.

(D) Investment

1. Approval of major investment proposal, such as expansion of the Group’s activities into new business, acquisitions, disposals and other contractual commitments entered into by Group (not in the ordinary course of business).

(E) Financial

1. Approval of Group capital expenditure and commitment that is anticipated to exceed or has exceeded the threshold of RM5 million.

2. Approval of bank borrowings and pledging of any asset in excess of the thresholds, and corporate guarantees of any amount granted by Pantech in favour of financial institutions or third parties.

CORPORATE GOVERNANCE STATEMENTcont’d



SCHEDULE OF MATTERS RESERvED FOR THE BOARD cont’d

(F) Communication

1. Approval of resolutions and corresponding documentation to be put forward to shareholders at a general meeting.

2. Approval of all circulars, prospectuses and listing particulars.

(G) Board Membership and Other Appointments

1. Consider recommendations from the Nomination Committee on changes to the structure, size and composition of the Board (including appointment, re-designation, resignation and removal).

2. Establishment of Board committees, membership and terms of reference.

3. Review the continuation in office of directors at the end of their term of office, when they are due for retirement by rotation and consider recommendation of Nomination Committee on the continuation of office of directors.

4. Appointment or removal of Company Secretary.

5. Appointment, reappointment or removal of external auditors and determination of their remuneration, upon recommendation from the Audit Committee.

(H) Remuneration

1. Review and approve the remuneration package for the Chairman/Group Managing Director and Executive Directors upon recommendation from Remuneration Committee.

2. Recommend Directors’ fees for the Non-Executive Directors, subject to the Articles of Association and shareholders’ approval as appropriate.

(I) Internal Controls and Governance

1. Review of the Group’s internal controls and risk management, including the effectiveness of the system of internal controls, and consider significant risk issues referred to it.

2. Review of the Group’s compliance with the Code on Corporate Governance.

3. Approve prosecution, defence and settlement of major litigation involving more than 10% of the Group’s latest audited net profit or otherwise material to the interests of the Group.

4. Review of the performance of the Board, its Committees and individual Directors.

5. Development of sustainability terms and succession plan.

Board Charter

The Board had formalized and approved the Board Charter. The Board Charter will be reviewed as and when to ensure that it remains consistent with the Board’s objectives and best practices. The Board Charter can be accessed at the Company’s website at www.pantech-group.com.

Code of Ethics and Whistleblowing Policy

The Board has finalized and approved the Code of Ethics and Whistleblowing policy. They can be accessed at the Company’s website at www.pantech-group.com.




Sustainability of Business

The Board is mindful of the importance of business sustainability in conducting the Group’s business and the impact on the environmental, social, health and safety, staff welfare and governance aspects are taken into consideration. The Board takes heed of go green and energy saving by implement several measures on sustainability. The Board actively reviews the Group business plan for diversification.

Supply of, and Access to, Information

The Board is supplied with relevant information and reports on financial, operational, corporate, regulatory, business development and audit matters, by way of Board reports or upon specific requests, for decisions to be made on an informed basis and effective discharge of Board’s responsibilities.

Good practices have been observed for timely dissemination of meeting agenda, including the relevant Board and Board Committee papers to all Directors prior to the Board and Board Committee meetings, to give effect to Board decisions and to deal with matters arising from such meetings. The Executive Directors and/or other relevant Board members furnish comprehensive explanation on pertinent issues and recommendations by Management. The issues are then deliberated and discussed thoroughly by the Board prior to decision making.

In addition, the Board members are updated on the Company’s activities and its operations on a regular basis. All Directors have access to all information of the Company on a timely basis in an appropriate manner and quality necessary to enable them to discharge their duties and responsibilities.

Senior Management of the Group and external advisers are invited to attend Board meetings to provide additional insights and professional views, advice and explanations on specific items on the meeting agenda. Besides direct access to Management, Directors may obtain independent professional advice at the Company’s expense, if considered necessary, in furtherance of their duties.

Directors have unrestricted access to the advice and services of the Company Secretary to enable them to discharge their duties effectively. The Board is regularly updated and advised by the Company Secretary who is qualified, experienced and competent on statutory and regulatory requirements, and the resultant implications of any changes therein to the Company and Directors in relation to their duties and responsibilities. The Company Secretary, who oversees adherence with board policies and procedures, briefs the Board on the proposed contents and timing of material announcements to be made to regulators. The Company Secretary attends all Board and Board Committees meetings and ensures that meetings are properly convened, and that accurate and proper records of the proceedings and resolutions passed are taken and maintained accordingly. The removal of Company Secretary, if any, is a matter for the Board, as a whole, to decide.

pRINCIpLE 2 - STRENGTHEN COMpOSITION OF THE BOARD

As at the date of this report, the Board consists of eight (8) members, comprising of an Executive Chairman who is also the Group Managing Director, one (1) Group Deputy Managing Director, three (3) Executive Directors and three (3) Independent Non-Executive Directors. This composition fulfills the requirements as set out under the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa”), which stipulate that at least two (2) Directors or one-third of the Board, whichever is higher, must be Independent. The profile of each Director is set out in this Annual Report. The Directors, with their differing backgrounds and specializations, collectively bring with them a wide range of experience and expertise in areas such as finance; accounting and audit; corporate affairs; and marketing and operations.

Nomination Committee – Selection and Assessment of Directors

A Nomination Committee has been established, with specific terms of reference, by the Board, comprising exclusively Independent Non-Executive Directors as follows:

Chairman Mr. Loh Wei Tak Independent Non-Executive Director

Members Mr. Tan Sui Hin

Tuan Haji Yusoff Bin Mohamed

Senior Independent Non-Executive Director

Independent Non-Executive Director



pRINCIpLE 2 - STRENGTHEN COMpOSITION OF THE BOARD cont’d

Assessment of Performance

The process of assessing Directors is an ongoing responsibility of the entire Board. During the financial year, the Nomination Committee had assessed the performance of all the Board members based on established criteria, which include:-

(a) the compliance with attendance and qualification requirements of the position; (b) the ability to provide input relating to business, market outlook and management strategies; (c) the ability to keep the Board abreast with operational, business, regulatory, economic and environmental issues

confronting the Company; and(d) whether sufficient level of importance has been accorded to governance issues to safeguard the integrity of the

Company’s activities, operations and improvement in the financial position of the Group.

The Nomination Committee will recommend to the Board on the balance mix skills and composition of Board members and the need for any relevant training to the respective Director.

The Company has also developed assessment criteria for the following:

i. Board

(a) appropriateness of Board composition (b) mix of skills and experience (c) effectiveness of Board as a team (d) balance mix between Independent and Non-Independent Directors (e) adequacy of information supplied to the Board (f) effectiveness of Board in setting strategic plan (g) adequacy of Board in identifying and managing significant risks to the Group (h) effectiveness of Board in monitoring operational and financial performance

ii. Board Committees

(a) terms of reference (b) skills and competencies (c) meeting administration (d) conduct of meeting (e) communication to the Board (f) areas of focus specific to each Board Committee

iii. Individual Directors

(a) contribution of the Director in meetings (b) quality of input provided by the Director (c) the Director’s understanding of his or her roles and responsibilities

Assessment forms have been developed to facilitate the assessment process. Assessment of the Board and Board Committees are performed on a Board review basis whilst assessment of individual Directors is performed on a peer review basis. Each director is provided with the same set of assessment forms for their completion. Upon completion of assessment, the Company Secretary would compile the results for the Nomination Committee’s evaluation prior to reporting to the Board for deliberation and approval.

The final decision on the appointment of a candidate recommended by Nomination Committee rests with the whole Board. The Board is entitled to the services of the Company Secretary who would ensure that all appointments are properly made upon obtaining all necessary information from the Directors.

During the financial year, the Nomination Committee met once, attended by all members, to assess the balance composition of Board members based on merits, Directors’ contribution and Board effectiveness. The Company has no policy on gender diversity or target set but believes in merits and commitment of its Board members. The Nomination Committee assesses the Board members on an objective basis for both genders.



pRINCIpLE 2 - STRENGTHEN COMpOSITION OF THE BOARD cont’d

Directors’ Remuneration

A Remuneration Committee has been established by the Board, comprising a majority of Non-Executive Directors as follows:

Chairman Tuan Haji Yusoff Bin Mohamed Independent Non-Executive Director

Members Dato’ Chew Ting Leng

Mr. Tan Sui Hin

Executive Chairman/Group Managing Director

Senior Independent Non-Executive Director

The Remuneration Committee has been entrusted by the Board to determine that the levels of remuneration are sufficient to attract and retain Directors of quality required to manage the business of the Group. The Remuneration Committee is entrusted under its terms of reference to assist the Board, amongst others, to recommend to the Board the remuneration of the Executive Directors. In the case of Non-Executive Directors, the level of remuneration shall reflect the experience and level of responsibilities undertaken by the Non-Executive Directors concerned. In all instances, the deliberations are conducted, with the Directors concerned abstaining from discussions on their individual remuneration. During the financial year under review, the Committee met once attended by all members.

Details of Directors’ remuneration for the financial year ended 29 February 2016 are as follows:

Remuneration (RM)

Executive Directors 6,847,857

Non-Executive Directors 160,128

Total 7,007,985

The remuneration paid to the Directors, analysed in the following bands, is as below:-

Range of Remuneration (RM) Executive Non-Executive

50,000 and below - 3

50,000 – 100,000 - 1

650,000 – 700,000 1 -

950,000 – 1,000,000 1 -

1,500,000 – 1,550,000 1 -

1,550,000 – 1,600,000 1 -

1,850,000 – 1,900,000 1 -

There is no service contract made between any Director and the Company or its subsidiary companies.

pRINCIpLE 3 – REINFORCE INDEpENDENCE OF THE BOARD

The roles of the Chairman and Group Managing Director are held by the same Director. This departs from the Recommendation 3.4 of the Code which stipulates that the positions of Chairman and Chief Executive Officer should be held by different individuals and that the Chairman must be a Non-Executive member of the Board. However, the Board believes that for its current size, it is more expedient for the two roles to be held by the same person as long as there are pertinent checks and balance to ensure no one person in the Board has unfettered powers to make major decisions for the Company unilaterally. As such, the Board is of the view that the significant composition of Non-Executive Directors, which is close to the current Board’s size, provides for the relevant check and balance.



pRINCIpLE 3 – REINFORCE INDEpENDENCE OF THE BOARD cont’d

The Executive Chairman is responsible for ensuring the adequacy and effectiveness of the Board’s governance process and acts as a facilitator at Board meetings to ensure all Directors participate and deliberated at all Board meetings and that no Board member dominates discussion. As the Group Managing Director, supported by fellow Executive Directors, he implements the Group’s strategies, policies and decision adopted by the Board and oversees the operations and business development of the Group.

The Independent Non-Executive Directors bring objective and independent views, advice and judgment on interests, not only of the Group, but also of shareholders and stakeholders. Independent Non-Executive Directors are essential for protecting the interests of shareholders and can make significant contributions to the Company’s decision by giving rationale and fair view and to decide impartially.

The Board recognizes the importance of establishing criteria on independence to be used in the annual assessment of its Independent Non-Executive Directors. Although the definition on independence according to the Listing Requirements of Bursa is used, the Board review and assess the independence of its Independent Directors annually based on their conduct, argue on the matters objectively and make decision rationally and other independence criteria.

pRINCIpLE 4 – FOSTER COMMITMENT OF DIRECTORS

The Board ordinarily meets at least five (5) times a year, scheduled well in advance before the end of the preceding financial year to facilitate the Directors in planning their meeting schedule for the year. Additional meetings are convened when urgent and important decisions need to be made between scheduled meetings. Board and Board Committee papers which are prepared by Management, provide the relevant facts and analysis for the convenience of Directors. The meeting agenda, the relevant reports and Board papers are furnished to Directors and Board Committee members well before the meeting to allow the Directors sufficient time to peruse for effective discussion and decision making during meetings. At the quarterly Board meetings, the Board reviews the business performance of the Group and discusses major operational and financial issues. The Chairman of the Audit Committee informs the Directors at each Board meetings of any salient matters noted by the Audit Committee which require the Board’s attention or direction. All pertinent issues discussed at Board meetings in arriving at the decisions and conclusions are properly recorded by the Company Secretary by way of minutes of meetings.

Board Meetings

There were Five (5) Board meetings held during the financial year ended 29 February 2016, with details of Directors’ attendance set out below:

Meetings Attended(out of 5 held)

Dato’ Chew Ting Leng Executive Chairman/Group Managing Director 5/5

Dato’ Goh Teoh Kean Group Deputy Managing Director 4/5

Mr. Tan Ang Ang Executive Director 5/5

Mr. To Tai Wai Executive Director 5/5

Ms. Ng Lee Lee Executive Director 5/5

Mr. Tan Sui Hin Senior Independent Non-Executive Director 5/5

Mr. Loh Wei Tak Independent Non-Executive Director 5/5

Tuan Haji Yusoff Bin Mohamed Independent Non-Executive Director 5/5

Datuk Hanapi Bin Suhada(Ceased w.e.f. 29/02/2016)

Non-Independent Non-Executive Director 0/2

It is the practice of the Company for Directors to devote sufficient time and efforts to carry out their responsibilities. All Board members are required to notify the Chairman before accepting any new directorships notwithstanding that the Listing Requirements of Bursa allow a Director to sit on the boards of 5 listed issuers. Such notification is expected to include an indication of time that will be spent on the new appointment.



pRINCIpLE 4 – FOSTER COMMITMENT OF DIRECTORS cont’d

Directors’ Training – Continuing Education Programmes

The Board is mindful of the importance for its members to undergo continuous training to keep abreast with changes to regulatory requirements and the impact such regulatory requirements have on the Group.

All the Directors of the Company have attended the Mandatory Accreditation Programme conducted by Bursatra Sdn. Bhd. within the stipulated timeframe required in the Listing Requirements.

During the year, all Board Members have attended pertinent training as below:-

Name of Director Date Training attended

(a) Dato’ Chew Ting Leng 17 August 2015 Decision Making Skills

(b) Dato’ Goh Teoh Kean 17 August 2015 Decision Making Skills

(c) Mr. Tan Ang Ang 17 August 2015 Decision Making Skills

(d) Mr. To Tai Wai 17 August 2015 Decision Making Skills

(e) Ms. Ng Lee Lee 17 August 2015 Decision Making Skills

(f) Mr. Tan Sui Hin 17 August 2015 Decision Making Skills

(g) Mr. Loh Wei Tak 2 October 2015 Understanding On Applying GST

(h) Tuan Haji Yusoff Bin Mohamed 17 August 2015 Decision Making Skills

Throughout the year, the Directors also received updates and briefings, particularly on regulatory, industry and legal developments, including information on significant changes in business and procedures instituted to mitigate such risks.

The External Auditors also briefed the Board members on any changes to the Malaysian Financial Reporting Standards that would affect the Group’s financial statements during the financial year under review. The Directors continue to undergo relevant training programmes to further enhance their skills and knowledge in the discharge of their stewardship role.

The Company Secretaries also update the Board Members on the relevant guidelines on statutory and regulatory requirements from time to time.

pRINCIpLE 5 – UpHOLD INTEGRITY IN FINANCIAL REpORTING BY COMpANY

It is the Board’s commitment to present a balanced and meaningful assessment of the Group’s financial performance and prospects at the end of each reporting period and financial year, primarily through the quarterly announcement of Group’s results to Bursa, the annual financial statements of the Group and Company as well as the Chairman’s statement and review of the Group’s operations in the Annual Report, where relevant. A statement by the Directors of their responsibilities in the preparation of financial statements is set out in the ensuing paragraph.

Statement of Directors’ Responsibility for Preparing Financial Statements

The Board is responsible to ensure that the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965, Malaysian Financial Reporting Standards and International Financial Reporting Standards so as to give a true and fair view of the financial position of the Group as at the end of the financial year and of the financial performance and cash flows of the Group for the financial year then ended.

The Directors are satisfied that in preparing the financial statements of the Group for the year ended 29 February 2016, the Group has adopted suitable accounting policies and applied them consistently, prudently and reasonably. The Directors also consider that all applicable approved accounting standards have been followed in the preparation of the financial statements, subject to any material departures being disclosed and explained in the notes to the financial statements. The financial statements have been prepared on the going concern basis.

The Directors are responsible for ensuring that the Group keeps sufficient accounting records to disclose with reasonable accuracy, the financial position of the Group and which enable them to ensure that the financial statements comply with the Companies Act, 1965.



pRINCIpLE 5 – UpHOLD INTEGRITY IN FINANCIAL REpORTING BY COMpANY cont’d

Audit Committee

In assisting the Board to discharge its duties on financial reporting, the Board has established an Audit Committee, comprising wholly Independent Non-Executive Directors, with Mr. Tan Sui Hin as the Committee Chairman. The composition of the Audit Committee, including its roles and responsibilities, are set out in the Audit Committee Report of this Annual Report. One of the key responsibilities of the Audit Committee in its specific terms of reference is to ensure that the financial statements of the Group and Company comply with applicable financial reporting standards in Malaysia. Such financial statements comprise the quarterly financial report announced to Bursa and the annual statutory financial statements.

As the Board understands its role in upholding the integrity of financial reporting by the Company, it will take steps to revise the Audit Committee’s terms of reference by formalizing a policy on the types of non-audit services permitted to be provided by the external auditors of the Company so as not to compromise their independence and objectivity, including the need for the Audit Committee’s approval in writing before such services can be provided by the external auditors.

In assessing the independence of external auditors, the Audit Committee will require written assurance by the external auditors, confirming that they are, and have been, independent throughout the conduct of the audit engagement with the Company in accordance with the independence criteria set out by the International Federation of Accountants and the Malaysian Institute of Accountants.

pRINCIpLE 6 – RECOGNISE AND MANAGE RISKS OF THE GROUp

The Company has established a Risk Management Committee (“RMC”) and is headed by the Executive Directors and members of key management team of the respective division. The Board delegates to the RMC the responsibility for evaluating, reviewing and monitoring the vital enterprise risks that affecting the business and operations as an on-going basis. The Board is committed to the development and implementation of an effective Enterprise Risk Management framework (“ERM”) to assist the Group to manage all key businesses risk with the intent to strengthening the risk management and internal control system as a whole.

The RMC will report to the Board on the risk management at least once yearly.

Continuous efforts will be made to monitor and re-assess the existing ERM framework in regards to maintaining a proper system of managing risks as well as the related control activities.

The Group has an in-house internal audit function and supported by an independent professional firm, whose work is performed with impartiality, proficiency and due professional care, and in accordance with the International Professional Practices Framework of the Institute of Internal Auditors, which sets out professional standards on internal audit. It undertakes regular reviews of the adequacy and effectiveness of the Group’s system of internal controls and risk management process, as well as appropriateness and effectiveness of the corporate governance practices. The Internal Audit reports directly to the Audit Committee. Further details on the internal audit function can be seen in the Audit Committee Report and the Statement on Risk Management and Internal Control in this Annual Report.

pRINCIpLE 7 – ENSURE TIMELY AND HIGH qUALITY DISCLOSURE

The Board is aware of the need to establish corporate disclosure policies and procedures to enable comprehensive, accurate and timely disclosures relating to the Company and its subsidiaries to be made to the regulators, shareholders and stakeholders. On this basis, the Board has formalized pertinent policies and procedures not only to comply with the disclosure requirements as stipulated in the Listing Requirements of Bursa, but also setting out the persons authorised and responsible to approve and disclose material information to regulators, shareholders and stakeholders.

To augment the process of disclosure, the Board has earmarked a dedicated section for corporate governance on the Company’s website where information on the Company’s announcements to the regulators, the Board Charter, rights of shareholders and the Company’s Annual Report may be accessed.



pRINCIpLE 8 – STRENGTHEN RELATIONSHIp BETWEEN THE COMpANY AND ITS SHAREHOLDERS

Shareholder participation at general meeting

The Annual General Meeting (“AGM”), which is the principal forum for shareholder dialogue, allows shareholders to review the Group’s performance via the Company’s Annual Report and pose questions to the Board for clarification. At the AGM, shareholders participate in deliberating resolutions being proposed or on the Group’s operations in general. At the last AGM, a question & answer session was held where the Chairman invited shareholders to raise questions with responses from the Board.

The Notice of AGM is circulated at least twenty one (21) days before the date of the meeting to enable shareholders to go through the Annual Report and papers supporting the resolutions proposed. Shareholders are invited to ask questions both about the resolutions being proposed before putting a resolution to vote as well as matters relating to the Group’s operations in general. All the resolutions set out in the Notice of the last AGM were put to vote by show of hands and duly passed. The outcome of the AGM was announced to Bursa on the same meeting day.

Communication and engagement with shareholders

The Board recognises the importance of being transparent and accountable to the Company’s investors and, as such, has various channels to maintain communication with them. The various channels of communications are through the quarterly announcements on financial results to Bursa, relevant announcements and circulars, when necessary, the Annual and Extraordinary General Meetings and through the Group’s website at where shareholders can access pertinent information concerning the Group.

This Statement is issued in accordance with a resolution of the Board dated 16 June 2016.



ADDITIONAL COMPLIANCE STATEMENT

1. SHARES BUY-BACK

Details of the share buy-back by the Company during the financial year are set out below:-

MonthNo. of Shares

purchased

price per share (RM) Total Consideration

(RM)Lowest Highest Average

May – 2015 376,000 0.705 0.705 0.705 266,273.25

July – 2015 50,000 0.685 0.685 0.685 34,513.73

August - 2015 477,000 0.480 0.620 0.550 246,043.70

September - 2015 401,700 0.580 0.600 0.590 239,986.77

October – 2015 201,900 0.575 0.630 0.603 123,639.74

November - 2015 493,500 0.635 0.645 0.640 317,303.50

December – 2015 2,014,300 0.570 0.640 0.605 1,233,326.68

January - 2016 580,700 0.550 0.575 0.562 332,834.51

At the end of the financial year, a total of 4,766,460 ordinary shares at RM0.20 each were retained as treasury shares. There has been no sale or cancellation of treasury shares during the financial year.

During the financial year, a final share dividend of 6,096,440 treasury shares on the basis of 1 treasury shares for every

100 existing shares of RM0.20 each were distributed in respect of financial year ended 28 February 2015.

The Board is proposing for the shareholders’ approval at the 10th Annual General Meeting to be held on 21 July 2016, a final single tier cash dividend of 0.50 sen per ordinary share of RM0.20 each and a share dividend via a distribution of treasury shares on the basis of 1 treasury share for every 100 existing ordinary shares of RM0.20 each. Any fractions arising from the distribution of the share dividend will be disregarded.

2. OpTIONS, WARRANTS OR CONvERTIBLE SECURITIES ISSUED AND EXERCISED

Warrants 2010/2020 (“Warrants”)

There were no warrants securities being exercised in respect of the financial year.

As at 29 February 2016, a total of 24,670 units of Warrants were exercised. 74,816,370 units of Warrants still remain outstanding.

Employees’ Shares Options Scheme (“ESOS”)

The ESOS expired on 2 March 2015. Irredeemable Convertible Unsecured Loan Stocks 2010/2017 (“ICULS”)

The ICULS were fully converted on 6 May 2015.

3. DEpOSITORY RECEIpT pROGRAMME

The Company did not sponsor any depository receipt programme during the financial year.


ADDITIONAL COMPLIANCE STATEMENTcont’d

4. IMpOSITION OF SANCTIONS / pENALTIES

There were no public impositions of sanctions or penalties imposed on the Company and its subsidiaries, directors or management by the regulatory bodies during the financial year.

5. NON-AUDIT FEES

The amount of non-audit fees incurred for services rendered to the Company and its subsidiaries during the financial year ended 29 February 2016 by Messrs SJ Grant Thornton was RM67,600.00.

6. pROFIT ESTIMATE, FORECAST AND pROJECTION The Company did not release any profit estimate, forecast or projections during the financial year.

7. vARIANCE IN RESULTS

There is no significant variance between the profit after tax for the financial statement ended 29 February 2016 and the unaudited results previously announced.

8. pROFIT GUARANTEE

The Company did not receive any form of profit guarantee from any parties during the financial year under review.

9. MATERIAL CONTRACTS AND CONTRACTS RELATING TO LOANS

There were no contracts relating to loan and material contracts of the Company and its subsidiaries involving the Directors and major shareholders interests during the financial year or since the end of the previous financial year.

10. RECURRENT RELATED pARTY TRANSACTIONS OF A REvENUE AND TRADING NATURE (“RRpT”)

There was no RRPT entered during the financial year.

11. EXEMpTION TO CTL CApITAL HOLDING SDN BHD (“CTL CApITAL”) AND THE pARTIES ACTING IN CONCERT WITH IT (“pACS”) FROM THE OBLIGATION TO UNDERTAKE A MANDATORY TAKE-OvER OFFER FOR ALL THE REMAINING vOTING SHARES, ICULS AND WARRANTS IN THE COMpANY NOT ALREADY OWNED BY THEM

The Company had received the approval from the Securities Commission vide its letter dated 3 November 2010 for the exemption sought by CTL Capital and its PACs pursuant to Practice Note 2.9.1 of the Malaysian Code on Take-Overs and Mergers, 1998 (replaced by Practice Note 9 of the Malaysian Code on Take-Overs and Mergers 2010 with effect from 15 December 2010).

Amongst others, the approval requires the Company to disclose in its annual and interim accounts and any public document, including annual reports, prospectuses and circulars for so long as the ESOS Options, ICULS and Warrants remain outstanding, the following:-

i. The time period for which the exemption has been granted

The exemption has been granted from 3 November 2010 up to the issuance and listing of the new Pantech Shares pursuant to the mandatory conversion of ICULS at its maturity date or upon full conversion of ICULS, whichever date is earlier. ICULS has been fully converted on 6 May 2015.


11. EXEMpTION TO CTL CApITAL HOLDING SDN BHD (“CTL CApITAL”) AND THE pARTIES ACTING IN CONCERT WITH IT (“pACS”) FROM THE OBLIGATION TO UNDERTAKE A MANDATORY TAKE-OvER OFFER FOR ALL THE REMAINING vOTING SHARES, ICULS AND WARRANTS IN THE COMpANY NOT ALREADY OWNED BY THEM cont’d

ii. Number and percentage of voting shares in the Company, and the number of Warrants held by CTL Capital and its pACs as at 31 May 2016:-

Ordinary Shares No. of Warrants

Direct Indirect Direct Indirect

partiesNo. of voting

Shares %(i)No. of voting

Shares %(i)

CTL Capital 109,693,214 17.97 - - 17,346,398 -

GL Management Agency Sdn. Bhd. (“GL Management”) 79,075,770 12.95 - - 12,838,130 -

Dato’ Chew Ting Leng (“CTL”) 4,545,000 0.74 109,693,214 (ii) 17.97 - 17,346,398 (ii)

Dato’ Goh Teoh Kean (“GTK”) 4,545,000 0.74 79,075,770 (iii) 12.95 - 12,838,130 (iii)

Tan Ang Ang (“TAA”) 10,897,900 1.78 1,649,330 (iv) 0.27 1,347,240 213,000 (iv)

To Tai Wai (“TTW”) 13,625,283 2.23 - - 2,111,880 -

Datin Shum Kah Lin (“SKL”) - - 114,238,214 (v) 18.71 - 17,346,398 (viii)

Datin Lee Sock Kee (“LSK”) - - 83,620,770 (vi) 13.69 - 12,838,130 (ix)

Madam Yong Yui Kiew (“YYK”) 1,649,330 0.27 10,897,900 (vii) 1.78 213,000 1,347,240 (vii)

TOTAL 224,031,497 36.68 - - 33,856,648 -

Notes:-

(i) Excluding a total of 5,906,160 treasury shares. (ii) Deemed interested by virtue of his and his spouse SKL’s interests in CTL Capital pursuant to Section 6A of the Companies

Act, 1965 (“the Act”). (iii) Deemed interested by virtue of his and his spouse LSK’s interests in GL Management pursuant to Section 6A of the Act. (iv) Deemed interested by virtue of his spouse YYK’s direct shareholding in the Company pursuant to Section 134(12) of the

Act. (v) Deemed interested by virtue of her and her spouse CTL’s interests in CTL Capital pursuant to Section 6A of the Act, and by

virtue of her spouse CTL’s direct shareholding in the Company pursuant to Section 134(12) of the Act. (vi) Deemed interested by virtue of her and her spouse GTK’s interests in GL Management pursuant to Section 6A of the Act

and by virtue of her spouse GTK’s direct shareholding in the Company pursuant to Section 134(12) of the Act. (vii) Deemed interested by virtue of her spouse TAA’s direct shareholding in the Company pursuant to Section 134(12) of the

Act. (viii) Deemed interested by virtue of her and her spouse CTL’s interests in CTL Capital pursuant to Section 6A of the Act. (ix) Deemed interested by virtue of her and her spouse GTK’s interests in GL Management pursuant to Section 6A of the Act.



11. EXEMpTION TO CTL CApITAL HOLDING SDN BHD (“CTL CApITAL”) AND THE pARTIES ACTING IN CONCERT WITH IT (“pACS”) FROM THE OBLIGATION TO UNDERTAKE A MANDATORY TAKE-OvER OFFER FOR ALL THE REMAINING vOTING SHARES, ICULS AND WARRANTS IN THE COMpANY NOT ALREADY OWNED BY THEM cont’d

iii. The maximum potential voting shares or voting rights of CTL Capital and its pACs in the Company, assuming only CTL Capital and its pACs (but not other shareholders) exercise the Warrants in full:-

Direct Indirect

parties

No. of voting Shares %

No. of voting Shares %

CTL Capital 127,039,612 19.71 - -

GL Management 91,913,900 14.26 - -

CTL 4,545,000 0.71 127,039,612 (i) 19.71

GTK 4,545,000 0.71 91,913,900 (ii) 14.26

TAA 12,245,140 1.90 1,862,330 (iii) 0.29

TTW 15,737,163 2.44 - -

SKL - - 131,584,612 (iv) 20.42

LSK - - 96,458,900 (v) 14.97

YYK 1,862,330 0.29 12,245,140 (vi) 1.90

TOTAL 257,888,145 40.02 - -

Notes:-

(i) Deemed interested by virtue of his and his spouse SKL’s interests in CTL Capital pursuant to Section 6A of the Companies Act, 1965 (“the Act”).

(ii) Deemed interested by virtue of his and his spouse LSK’s interests in GL Management pursuant to Section 6A of the Act. (iii) Deemed interested by virtue of his spouse YYK’s direct shareholding in the Company pursuant to Section 134(12) of the

Act. (iv) Deemed interested by virtue of her and her spouse CTL’s interests in CTL Capital pursuant to Section 6A of the Act, and by

virtue of her spouse CTL’s direct shareholding in the Company pursuant to Section 134(12) of the Act. (v) Deemed interested by virtue of her and her spouse GTK’s interests in GL Management pursuant to Section 6A of the Act,

and by virtue of her spouse GTK’s direct shareholding in the Company pursuant to Section 134(12) of the Act. (vi) Deemed interested by virtue of her spouse TAA’s direct shareholding in the Company pursuant to Section 134(12) of the

Act.

iv. No take-over offer would arise on full exercise of the Warrants by CTL Capital and the pACs


STATEMENTSFINANCIAL

Directors’ Report

Statement by Directors

Statutory Declaration

Independent Auditors‘ Report

Statements of Financial Position

Statements of Profit or Loss and Other Comprehensive Income

Statements of Changes in Equity

Statements of Cash Flows

Notes to the Financial Statements

33

40

40

41

43

45

47

51

54


The Directors of Pantech Group Holdings Berhad have pleasure in submitting their report together with the audited financial statements of the Group and of the Company for the financial year ended 29 February 2016.

PRINCIPAL ACTIVITIES

The Company is principally engaged in investment holding and provision of management services.

The principal activities of the subsidiary companies, associate company and joint venture are disclosed in Notes 8, 9 and 10 to the Financial Statements respectively.

There have been no significant changes in the nature of these activities of the Company, its subsidiary companies, associate company and joint venture during the financial year.

RESULTS

Group Company

RM RM

Net profit for the financial year 37,945,155 11,857,781

Attributable to:-

Owners of the Company 37,972,555 11,857,781

Non-controlling interest (27,400) -

37,945,155 11,857,781

RESERVES AND PROVISIONS

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

DIVIDENDS

The amount of dividends paid and declared since the end of the last financial year were as follows:-

RM

Final single tier dividend of 0.50 sen per ordinary share in respect of the financial year ended 28 February 2015 and paid on 18 September 2015 3,057,367

Final share dividend via distribution of treasury shares on the basis of 1 treasury share for every 100 existing ordinary shares in respect of the financial year ended 28 February 2015 and paid on 18 September 2015 3,984,024

First interim single tier dividend of 0.50 sen per ordinary share in respect of the financial year ended 29 February 2016 and paid on 22 October 2015 3,074,546

Second interim single tier dividend of 0.60 sen per ordinary share in respect of the financial year ended 29 February 2016 and paid on 14 January 2016 3,679,329

Third interim single tier dividend of 0.50 sen per ordinary share in respect of the financial year ended 29 February 2016 and paid on 15 April 2016 3,058,525

DIRECTORS’ REPORT


DIVIDENDS cont’d

At the forthcoming Annual General Meeting, a final single tier dividend, in respect of the financial year ended 29 February 2016, of 0.50 sen per ordinary share and a share dividend distribution of approximately 6.10 million treasury shares on the basis of 1 treasury share for every 100 existing ordinary shares will be proposed for shareholders’ approval. The financial statements for current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 28 February 2017.

DIRECTORS

The Directors in office since the date of the last report are:-

Dato’ Chew Ting Leng (Executive Chairman/Group Managing Director)Dato’ Goh Teoh Kean (Group Deputy Managing Director)Tan Ang Ang (Executive Director)To Tai Wai (Executive Director)Ng Lee Lee (Executive Director)Tan Sui Hin (Senior Independent Non-Executive Director)Loh Wei Tak (Independent Non-Executive Director)Yusoff Bin Mohamed (Independent Non-Executive Director)Datuk Hanapi Bin Suhada (Non-Independent Non-Executive Director) (appointed on 20.8.2015 and ceased office effective on

29.2.2016)

According to the Register of Directors’ Shareholdings, the beneficial interests of those who were Directors at the end of the financial year in the shares of the Company are as follows:-

Number of ordinary shares of RM0.20 each

As at1.3.2015 Exercised

SharesDividend (Sold)

As at29.2.2016

Dato’ Chew Ting Leng

- direct interest 4,500,000 - 45,000 - 4,545,000

- deemed interest through CTL Capital Holding Sdn. Bhd. 108,607,143 - 1,086,071 - 109,693,214

Dato’ Goh Teoh Kean

- direct interest 4,500,000 - 45,000 - 4,545,000

- deemed interest through GL Management AgencySdn. Bhd. 78,292,843 - 782,927 - 79,075,770

Tan Ang Ang

- direct interest 9,790,000 1,000,000 107,900 - 10,897,900

- deemed interest through his spouse, Yong Yui Kiew 1,633,000 - 16,330 - 1,649,330

To Tai Wai

- direct interest 13,490,380 - 134,903 - 13,625,283

Ng Lee Lee

- direct interest 7,134,623 - 71,345 - 7,205,968

- deemed interest through her spouse, Wong Chong Peng 157,473 - 1,574 - 159,047

DIRECTORS’ REPORTcont’d


DIRECTORS cont’d

According to the Register of Directors’ Shareholdings, the beneficial interests of those who were Directors at the end of the financial year in the shares of the Company are as follows:- cont’d

Number of ordinary shares of RM0.20 each

As at1.3.2015 Exercised

SharesDividend (Sold)

As at29.2.2016

Tan Sui Hin

- direct interest 545,000 - 5,450 - 550,450

Yusoff Bin Mohamed

- direct interest 1,000 - 10 - 1,010

Loh Wei Tak

- direct interest 250,000 - 2,500 - 252,500

Interest in Pantech Group Holdings Berhad Employees Share Option Scheme of those who were Directors at the end of the financial year are as follows:-

Number of ordinary shares of RM0.20 each under option

Unexercised as at

1.3.2015 Exercised Expired Lapsed

Unexercised as at

29.2.2016

Tan Ang Ang 1,000,000 (1,000,000) - - -

Yusoff Bin Mohamed 115,000 - (115,000) - -



DIRECTORS cont’d

The beneficial interests of those who were Directors at the end of the financial year in the Warrants of the Company are as follows:-

Number of Warrants

As at1.3.2015 Acquired (Exercised)

As at29.2.2016

Dato’ Chew Ting Leng

- deemed interest through CTL Capital Holding Sdn. Bhd. 17,346,398 - - 17,346,398

Dato’ Goh Teoh Kean

- deemed interest through GL Management Agency Sdn. Bhd. 12,838,130 - - 12,838,130

Tan Ang Ang

- direct interest 1,347,240 - - 1,347,240

- deemed interest through his spouse, Yong Yui Kiew 213,000 - - 213,000

To Tai Wai

- direct interest 2,111,880 - - 2,111,880

Ng Lee Lee

- direct interest 1,111,190 - - 1,111,190

- deemed interest through her spouse, Wong Chong Peng 20,540 - - 20,540

Tan Sui Hin

- direct interest 15,000 - - 15,000

By virtue of Dato’ Chew Ting Leng and Dato’ Goh Teoh Kean’s indirect interest in the Company, they are also deemed to have interest in the shares of all the subsidiary companies to the extent that the Company has an interest under Section 6A of the Companies Act 1965.

DIRECTORS’ BENEFITS

During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the object or objects of enabling the Directors of the Company to acquire any benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate, other than those arising from the share options granted under the Employees Share Option Scheme.

Since the end of the previous financial year, no Director has received or become entitled to receive any benefit (other than as disclosed in Notes 34, 37 and 39 to the Financial Statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest.



ISSUE OF SHARES AND DEBENTURES

During the current financial year, the Company had increased its issued and fully paid-up ordinary share capital from RM120,596,651 to RM123,294,296 by:-

(a) the issuance of 12,032,027 new ordinary shares of RM0.20 each resulting from the conversion of 72,193,818 units of 7-Year 7% Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) at the rate of six RM0.10 nominal value of ICULS into one fully paid-up ordinary shares of RM0.20 each in the Company.

(b) the issuance of 1,456,200 new ordinary shares of RM0.20 each for cash arising from the exercise of employees’ share options at an exercise price of RM0.67 per ordinary share.

All the new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of the Company.

There were no debentures issued during the financial year.

TREASURY SHARES

The shareholders of the Company, through the Annual General Meeting held on 21 August 2008, approved the Company’s plan to repurchase up to 10% of the issued and paid-up share capital of the Company (“Share Buy Back”). The authority granted by the shareholders was subsequently renewed in every Annual General Meeting held and it was last renewed in the Annual General Meeting held on 18 August 2015. The Directors of the Company are committed to enhancing the value of the Company to its shareholders and believe that the purchase plan can be applied in the best interest of the Company and its shareholders.

The Company has distributed a share dividend via distribution of treasury shares on the basis of 1 treasury share for every 100 existing ordinary shares in respect of the financial year ended 28 February 2015 and paid on 18 September 2015.

During the financial year ended 29 February 2016, the Company repurchased 4,595,100 ordinary shares of RM0.20 each of its issued share capital from the open market. The average price paid for the shares repurchased was RM0.61 per share. The repurchased transactions were financed by internally generated funds. These shares repurchased were held as treasury shares and treated in accordance with the requirements of Section 67A of the Companies Act 1965.

The Company has the right to cancel, resell these shares and/or distributes as dividends at a later date. As treasury shares, the rights attached to voting, dividends and participation in other distribution is suspended. None of the treasury shares repurchased had been sold as at the reporting date.

As at financial year end, the number of ordinary shares issued and fully paid-up after deducting treasury shares against equity is 611,705,020 ordinary shares of RM0.20 each.

PANTECH GROUP HOLDINGS BERHAD EMPLOYEES SHARE OPTION SCHEME

At an Extraordinary General Meeting held on 10 February 2010, the shareholders approved the Employees Share Option Scheme (“ESOS”) for the granting of non-transferable options that are settled by physical delivery of the ordinary shares of the Company, to eligible Directors (including Non-Executive Directors) of the Company and authorised the Board of Directors to allocate the share options to eligible employees of the Group. The tenure of the ESOS is for 5 years from 3 March 2010 and expired on 2 March 2015.

On 2 March 2015, the ESOS had expired.

The salient features, other terms of the ESOS and details of the share options granted are disclosed in Note 38 to the Financial Statements.

No new options were granted to any person during the financial year ended 29 February 2016.

Details of options granted to Directors are disclosed in the section on Directors’ interest in this report.



7-YEAR 7% IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“ICULS”)

The terms of the conversion of the ICULS are disclosed in Note 24 to the Financial Statements.

All outstanding ICULS have been fully converted into ordinary shares of the Company through compulsory conversion exercise which was completed on 7 May 2015.

OTHER STATUTORY INFORMATION

Before the statements of financial position and 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 action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and adequate provision had been made for doubtful debts; and

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

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

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

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

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

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

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

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

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

In the opinion of the Directors:-

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

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

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



SIGNIFICANT EVENT AFTER THE REPORTING DATE

The significant event after the reporting date is disclosed in Note 44 to the Financial Statements.

AUDITORS

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

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

)DATO’ CHEW TING LENG ) ) ) ) ) ) ) DIRECTORS ) ) ) ) )

)DATO’ GOH TEOH KEAN )

Johor Bahru16 June 2016



In the opinion of the Directors, the financial statements set out on pages 43 to 130 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 29 February 2016 and of their financial performance and cash flows for the financial year then ended.

In the opinion of the Directors, the information set out on page 131 has been compiled in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

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

DATO’ CHEW TING LENG DATO’ GOH TEOH KEAN


I, Wang Woon Chin, being the Officer primarily responsible for the financial management of Pantech Group Holdings Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 43 to 130 and the supplementary information set out on page 131 are 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 at Johor Bahru in the )State of Johor this day of ) 16 June 2016 ) WANG WOON CHIN

Before me:

MOHDZAR BIN KHALIDNo. J204Commissioner for Oaths

STATEMENT BY DIRECTORS

STATUTORY DECLARATION


REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of Pantech Group Holdings Berhad, which comprise statements of financial position as at 29 February 2016 of the Group and of the Company, and statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 43 to 130.

Directors’ Responsibility for the Financial Statements

The Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as of 29 February 2016 and of their financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia.

REPORT ON OTHER LEGAL AND REGULATORY REqUIREMENTS

In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following:-

a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiary companies of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

b) We have considered the accounts and the auditors’ reports of all the subsidiary companies of which we have not acted as auditors, which are indicated in Note 8 to the Financial Statements.

c) We are satisfied that the accounts of the subsidiary companies that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.

d) The auditors reports on the accounts of the subsidiary companies did not contain any qualification or any adverse comment made under Section 174 (3) of the Act.

INDEPENDENT AUDITORS’ REPORTTo the Members of Pantech Group Holdings Berhad

(Incorporated in Malaysia) Company No: 733607 W


OTHER REPORTING RESPONSIBILITIES

The supplementary information set out on page 131 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

OTHER MATTERS

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

SJ GRANT THORNTON TAN CHEE BENG(NO. AF: 0737) (NO: 2664/02/17( J))CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANT


INDEPENDENT AUDITORS’ REPORTTo the Members of Pantech Group Holdings Berhad(Incorporated in Malaysia) Company No: 733607 Wcont’d


STATEMENTS OF FINANCIAL POSITION As at 29 February 2016

Group CompanyNote 2016 2015 2016 2015

RM RM RM RM

ASSETSNon-current assets

Property, plant and equipment 4 199,755,305 198,000,565 - - Prepaid land lease payments 5 26,843,738 27,166,994 - - Capital work-in-progress 6 10,260,534 3,073,452 - - Investment properties 7 6,500,000 4,830,000 - - Investment in subsidiary companies 8 - - 225,094,509 225,094,458 Investment in an associate company 9 2,233,712 2,544,651 - - Investment in a joint venture company 10 796,904 608,590 - - Goodwill on acquisition 11 1,282,166 1,364,066 - - Deferred tax assets 12 1,413,087 1,701,711 - 190,615

Total non-current assets 249,085,446 239,290,029 225,094,509 225,285,073

Current assetsInventories 13 253,367,474 289,377,352 - - Trade receivables 14 109,148,304 130,819,803 - - Other receivables 15 10,313,298 21,243,578 44,304 578,800 Amount due from subsidiary companies 8 - - 5,323,288 8,782,111 Amount due from an associate company 9 17,323,281 6,212,059 - - Derivative financial instruments 16 3,997,730 2,394,387 - - Tax recoverable 120,031 355,150 - 82,877 Fixed deposits with licensed banks 17 2,352,101 2,283,357 - - Cash and bank balances 18 74,599,063 55,392,956 3,314,200 9,360,271

Total current assets 471,221,282 508,078,642 8,681,792 18,804,059

Total assets 720,306,728 747,368,671 233,776,301 244,089,132

EqUITY AND LIABILITIESEqUITYShare capital 19 123,294,296 120,596,651 123,294,296 120,596,651 Share application money - 7,504 - 7,504 Share premium 20 80,634,291 74,743,799 80,634,291 74,743,799 Treasury shares 21 (2,948,525) (4,139,385) (2,948,525) (4,139,385)Revaluation reserve 22 12,754,630 3,904,448 - - Employees share option reserve 23 - 93,983 - 93,983 Irredeemable Convertible Unsecured Loan Stocks

- Equity component 24 - 4,821,211 - 4,821,211 Cash flow hedge reserve 25 3,262,018 1,304,275 (727,452) (1,085,642)Warrants reserve 26 7,481,637 7,481,637 7,481,637 7,481,637 Exchange translation reserve 14,178,208 7,236,699 - - Unappropriated profit 27 270,640,658 251,354,613 10,530,179 17,482,319

Equity attributable to owners of the Company 509,297,213 467,405,435 218,264,426 220,002,077 Non-controlling interest (27,351) - - -

Total equity 509,269,862 467,405,435 218,264,426 220,002,077


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

STATEMENTS OF FINANCIAL POSITION As at 29 February 2016cont’d

Group Company

Note 2016 2015 2016 2015

RM RM RM RM

LIABILITIES

Non-current liabilities

Irredeemable Convertible Unsecured Loan Stocks

- Liability component 24 - 764,204 - 764,204

Finance lease creditors 28 3,607,094 6,307,311 - -

Borrowings 29 36,710,294 54,891,264 1,250,000 6,250,000

Other payables 30 262,569 232,876 - -

Deferred tax liabilities 31 5,891,999 4,651,260 - -

Total non-current liabilities 46,471,956 66,846,915 1,250,000 7,014,204

Current liabilities

Trade payables 32 21,126,097 34,790,970 - -

Other payables 30 16,974,741 16,656,396 333,783 374,116

Derivatives financial instruments 16 727,452 1,085,642 727,452 1,085,642

Amount due to a joint venture company 10 802,034 656,279 - -

Amount due to an associate company 9 253,256 223,000 - -

Finance lease creditors 28 3,505,898 3,959,224 - -

Borrowings 29 115,841,787 149,842,188 10,022,600 12,032,801

Dividend payable 3,058,525 3,580,292 3,058,525 3,580,292

Tax payable 2,275,120 2,322,330 119,515 -

Total current liabilities 164,564,910 213,116,321 14,261,875 17,072,851

Total liabilities 211,036,866 279,963,236 15,511,875 24,087,055

Total equity and liabilities 720,306,728 747,368,671 233,776,301 244,089,132


STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the Financial Year ended 29 February 2016

Group Company

Note 2016 2015 2016 2015

RM RM RM RM

Revenue 33 513,293,392 525,771,598 16,584,201 28,644,408

Cost of sales (395,506,552) (398,821,955) - -

Gross profit 117,786,840 126,949,643 16,584,201 28,644,408

Other income 9,386,876 10,162,664 368,144 3,062,792

Selling and distribution expenses (17,176,453) (21,046,227) - -

Administration expenses (44,456,523) (42,953,280) (3,243,141) (4,220,595)

Other expenses (3,899,361) (4,687,836) (260,747) (398,073)

Finance costs (8,361,594) (9,696,844) (682,247) (1,655,625)

Profit from operations 53,279,785 58,728,120 12,766,210 25,432,907

Share of loss in associate company (310,939) (74,479) - -

Share of profit in joint venture company 107,281 48,415 - -

Profit before tax 34 53,076,127 58,702,056 12,766,210 25,432,907

Tax expense 35 (15,130,972) (15,550,360) (908,429) (816,725)

Net profit for the financial year 37,945,155 43,151,696 11,857,781 24,616,182

Other comprehensive income, net of tax

Items that will not be reclassified subsequently to profit or loss

Revaluation of property, plant and equipment 10,284,149 - - -

Realisation of revaluation reserve upon depreciation of revalued assets 123,411 123,412 - -

Transfer of revaluation reserve to unappropriated profit (123,411) (123,412) - -

Tax effect on items that will not be reclassified to profit or loss (1,310,556) - - -

8,973,593 - - -


STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the Financial Year ended 29 February 2016cont’d


Group Company

Note 2016 2015 2016 2015

RM RM RM RM

Items that may be reclassified subsequently to profit or loss

Fair value gain on cash flow hedge 1,957,743 2,745,793 358,190 355,876

Foreign currency translation differences forforeign operations, net of tax 6,941,509 2,677,646 - -

8,899,252 5,423,439 358,190 355,876

Other comprehensive income for the financial year, net of tax 17,872,845 5,423,439 358,190 355,876

Total comprehensive income for the financial year 55,818,000 48,575,135 12,215,971 24,972,058

Profit/(Loss) attributable to:-

Owners of the Company 37,972,555 43,151,696 11,857,781 24,616,182

Non-controlling interest (27,400) - - -

Net profit for the financial year 37,945,155 43,151,696 11,857,781 24,616,182

Total comprehensive income attributable to:-

Owners of the Company 55,845,400 48,575,135 12,215,971 24,972,058

Non-controlling interest (27,400) - - -

Total comprehensive income for the financial year 55,818,000 48,575,135 12,215,971 24,972,058

Earnings per share attributable to owners of the Company

Earnings per 20 sen share

- Basic (sen) 36 6.23 7.38 - -

- Diluted (sen) 36 6.23 6.85 - -

Pantech Group Holdings Berhad (733607-W) Annual Report 2016 47 A

ttribu

table

to ow

ners

of th

e Com

pany

N

on-d

istrib

utab

le Di

stribu

table

Sh

are

capit

al

Shar

eap

plica

tion

mon

eySh

are

prem

iumTre

asur

ysh

ares

Reva

luatio

nre

serv

e

Emplo

yees

shar

e opt

ionre

serv

e

Irred

eem

able

Conv

ertib

le Un

secu

red

Loan

Stoc

ks

Cash

flow

hedg

ere

serv

eWa

rrant

sre

serv

e

Exch

ange

trans

lation

rese

rve

Unap

prop

riate

dpr

ofit

Tota

l

Non-

cont

rollin

gint

eres

tTo

tal

equit

yRM

RMRM

RMRM

RMRM

RMRM

RMRM

RMRM

RM

Grou

p

Balan

ce at

1 Ma

rch 20

14 11

3,908

,546

- 54

,159,8

78

(1,80

6,598

) 4,

027,8

60

5,23

5,826

9,

142,8

41

(1,44

1,518

) 7,

481,9

03

4,55

9,053

23

0,888

,671

426,1

56,46

2 72

,643

426,2

29,10

5

Trans

actio

ns w

ith ow

ners:

Share

optio

n gran

ted un

der

ESOS

- -

- -

- 47

9,942

-

- -

- -

479,9

42

- 47

9,942

Ac

quisi

tion o

f rem

aining

no

n-co

ntroll

ing in

teres

t of

a sub

sidiar

y com

pany

- -

- -

- -

- -

- -

(1,90

3) (1

,903)

(72,6

43)

(74,5

46)

Issua

nce o

f sha

res pu

rsuan

t to

conv

ersion

of IC

ULS

2,15

7,113

-

4,31

4,225

-

- -

(4,32

1,630

) -

- -

(1,33

9,807

) 80

9,901

-

809,9

01

Issua

nce o

f sha

res pu

rsuan

t to

exerc

ise of

Warr

ants

532

- 1,

330

- -

- -

- (2

66)

- -

1,59

6 -

1,59

6 Ex

ercise

of ES

OS 4,

530,4

60

7,50

4 16

,268,3

66

- -

(5,62

1,785

) -

- -

- -

15,18

4,545

-

15,18

4,545

Ac

quisi

tion o

f trea

sury

share

s -

- -

(2,33

2,787

) -

- -

- -

- -

(2,33

2,787

) -

(2,33

2,787

)Fin

al sin

gle ti

er div

idend

of

1.00 s

en pe

r sha

re -

- -

- -

- -

- -

- (5

,962,7

10)

(5,96

2,710

) -

(5,96

2,710

)Fir

st int

erim

single

tier

divide

nd of

1.00

sen p

er sh

are -

- -

- -

- -

- -

- (5

,973,0

10)

(5,97

3,010

) -

(5,97

3,010

)Se

cond

inter

im si

ngle

tier

divide

nd of

1.00

sen p

er sh

are -

- -

- -

- -

- -

- (5

,951,4

44)

(5,95

1,444

) -

(5,95

1,444

)Th

ird in

terim

sing

le tie

r div

idend

of 0.

60 se

n per

share

- -

- -

- -

- -

- -

(3,58

0,292

) (3

,580,2

92)

- (3

,580,2

92)

Total

tran

sacti

ons w

ith

owne

rs 6,

688,1

05

7,50

4 20

,583,9

21

(2,33

2,787

) -

(5,14

1,843

) (4

,321,6

30)

- (2

66)

- (2

2,809

,166)

(7,32

6,162

) (7

2,643

) (7

,398,8

05)

Pro

fit fo

r the

finan

cial y

ear

- -

- -

- -

- -

- -

43,15

1,696

43

,151,6

96

43,15

1,696

Ot

her c

ompre

hens

ive in

come

for

the f

inanc

ial ye

ar -

- -

- (1

23,41

2) -

- 2,

745,7

93

- 2,

677,6

46

123,4

12

5,42

3,439

-

5,42

3,439

Total

comp

rehen

sive i

ncom

e for

the f

inanc

ial ye

ar -

- -

- (1

23,41

2) -

- 2,

745,7

93

- 2,

677,6

46

43,27

5,108

48

,575,1

35

- 48

,575,1

35

Balan

ce at

28 Fe

bruary

2015

120,5

96,65

1 7,

504

74,74

3,799

(4

,139,3

85)

3,90

4,448

93

,983

4,82

1,211

1,

304,2

75

7,48

1,637

7,

236,6

99

251,3

54,61

3 46

7,405

,435

- 46

7,405

,435

STATEMENTS OF CHANGES IN EQUITY For the Financial Year ended 29 February 2016

Pantech Group Holdings Berhad (733607-W) Annual Report 201648 A

ttribu

table

to ow

ners

of th

e Com

pany

N

on-d

istrib

utab

le Di

stribu

table

Sh

are

capit

al

Shar

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prem

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prop

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dpr

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l

Non-

cont

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gint

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tTo

tal

equit

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RMRM

RMRM

RMRM

RMRM

RMRM

RMRM

RM

Grou

p co

nt’d

Balan

ce at

1 Ma

rch 20

15 12

0,596

,651

7,50

4 74

,743,7

99

(4,13

9,385

) 3,

904,4

48

93,98

3 4,

821,2

11

1,30

4,275

7,

481,6

37

7,23

6,699

25

1,354

,613

467,4

05,43

5 -

467,4

05,43

5

Trans

actio

ns w

ith ow

ners:

Acqu

isitio

n of a

subs

idiary

co

mpan

y -

- -

- -

- -

- -

- -

- 49

49

Iss

uanc

e of s

hares

pursu

ant

to co

nvers

ion of

ICUL

S 2,

406,4

05

- 4,

812,8

11

- -

- (4

,821,2

11)

- -

- (1

,656,8

46)

741,1

59

- 74

1,159

Ex

ercise

of ES

OS 29

1,240

(7

,504)

1,07

7,681

-

- (9

3,983

) -

- -

- (2

99,28

4) 96

8,150

-

968,1

50

Acqu

isitio

n of t

reasu

ry sh

ares

- -

- (2

,793,1

64)

- -

- -

- -

- (2

,793,1

64)

- (2

,793,1

64)

Final

single

tier

divide

nd of

0.5

0 sen

per s

hare

- -

- -

- -

- -

- -

(3,05

7,367

) (3

,057,3

67)

- (3

,057,3

67)

Final

share

divid

end v

ia dis

tribu

tion o

f trea

sury

share

s on t

he ba

sis of

1 tre

asury

share

for e

very

100 e

xistin

g ordi

nary

share

s -

- -

3,98

4,024

-

- -

- -

- (3

,984,0

24)

- -

- Fir

st int

erim

single

tier

divide

nd of

0.50

sen p

er sh

are -

- -

- -

- -

- -

- (3

,074,5

46)

(3,07

4,546

) -

(3,07

4,546

)Se

cond

inter

im si

ngle

tier

divide

nd of

0.60

sen p

er sh

are -

- -

- -

- -

- -

- (3

,679,3

29)

(3,67

9,329

) -

(3,67

9,329

)Th

ird in

terim

sing

le tie

r div

idend

of 0.

50 se

n per

share

- -

- -

- -

- -

- -

(3,05

8,525

) (3

,058,5

25)

- (3

,058,5

25)

Total

tran

sacti

ons w

ith

owne

rs 2,

697,6

45

(7,50

4) 5,

890,4

92

1,19

0,860

-

(93,9

83)

(4,82

1,211

) -

- -

(18,8

09,92

1) (1

3,953

,622)

49

(13,9

53,57

3)

Profit

for t

he fin

ancia

l yea

r -

- -

- -

- -

- -

- 37

,972,5

55

37,97

2,555

(2

7,400

) 37

,945,1

55

Othe

r com

prehe

nsive

inco

me

for th

e fina

ncial

year

- -

- -

8,85

0,182

-

- 1,

957,7

43

- 6,

941,5

09

123,4

11

17,87

2,845

-

17,87

2,845

Total

comp

rehen

sive i

ncom

e for

the f

inanc

ial ye

ar -

- -

- 8,

850,1

82

- -

1,95

7,743

-

6,94

1,509

38

,095,9

66

55,84

5,400

(2

7,400

) 55

,818,0

00

Balan

ce at

29 Fe

bruary

2016

123,2

94,29

6 -

80,63

4,291

(2

,948,5

25)

12,75

4,630

-

- 3,

262,0

18

7,48

1,637

14

,178,2

08

270,6

40,65

8 50

9,297

,213

(27,3

51)

509,2

69,86

2

STATEMENTS OF CHANGES IN EQUITY For the Financial Year ended 29 February 2016cont’d

Pantech Group Holdings Berhad (733607-W) Annual Report 2016 49 N

on-d

istrib

utab

le

Distr

ibut

able

Sh

are

capi

tal

Shar

eap

plica

tion

mon

eySh

are

prem

ium

Treas

ury

shar

es

Empl

oyee

ssh

are

optio

nre

serv

e

Irred

eem

able

Co

nver

tible

Un

secu

red

Loan

Stoc

ks

Cash

flow

hedg

ere

serv

eWa

rrant

sre

serv

eUn

appr

opria

ted

prof

itTo

tal

equi

ty

RMRM

RMRM

RMRM

RMRM

RMRM

Com

pany

Balan

ce at

1 M

arch

201

4 1

13,90

8,546

-

54,1

59,87

8 (1

,806,5

98)

5,23

5,826

9

,142,8

41

(1,44

1,518

) 7

,481,9

03

15,6

73,40

0 2

02,35

4,278

Trans

actio

ns w

ith o

wner

s:

Shar

e op

tion

gran

ted

unde

r ESO

S -

- -

- 4

79,94

2 -

- -

- 4

79,94

2

Issua

nce

of sh

ares

pur

suan

t to

conv

ersio

n of

ICUL

S 2

,157,1

13

- 4

,314,2

25

- -

(4,32

1,630

) -

- (1

,339,8

07)

809

,901

Issua

nce

of sh

ares

pur

suan

t to

exer

cise

of W

arra

nts

532

-

1,33

0 -

- -

- (2

66)

- 1

,596

Exer

cise

of ES

OS 4

,530,4

60

7,50

4 1

6,268

,366

- (5

,621,7

85)

- -

- -

15,1

84,54

5

Acqu

isitio

n of

trea

sury

shar

es -

- -

(2,33

2,787

) -

- -

- -

(2,33

2,787

)

Final

single

tier

divi

dend

of 1

.00 se

n pe

r ord

inary

shar

e -

- -

- -

- -

- (5

,962,7

10)

(5,96

2,710

)

First

inter

im si

ngle

tier d

ivide

nd o

f 1.00

sen

per

ordin

ary s

hare

- -

- -

- -

- -

(5,97

3,010

) (5

,973,0

10)

Seco

nd in

terim

sing

le tie

r divi

dend

of 1

.00 se

n pe

r or

dinar

y sha

re -

- -

- -

- -

- (5

,951,4

44)

(5,95

1,444

)

Third

inte

rim si

ngle

tier d

ivide

nd o

f 0.60

sen

per

ordin

ary s

hare

- -

- -

- -

- -

(3,58

0,292

) (3

,580,2

92)

Tota

l tra

nsac

tions

with

own

ers

6,68

8,105

7

,504

20,5

83,92

1 (2

,332,7

87)

(5,14

1,843

) (4

,321,6

30)

- (2

66)

(22,8

07,26

3) (7

,324,2

59)

Prof

it fo

r the

fina

ncial

year

- -

- -

- -

- -

24,6

16,18

2 2

4,616

,182

Othe

r com

preh

ensiv

e inc

ome

for t

he fi

nanc

ial ye

ar -

- -

- -

- 3

55,87

6 -

- 3

55,87

6

Tota

l com

preh

ensiv

e inc

ome

for t

he fi

nanc

ial ye

ar -

- -

- -

- 3

55,87

6 -

24,6

16,18

2 2

4,972

,058

Balan

ce at

28

Febr

uary

2015

120

,596,6

51

7,50

4 7

4,743

,799

(4,13

9,385

) 9

3,983

4

,821,2

11

(1,08

5,642

) 7

,481,6

37

17,4

82,31

9 2

20,00

2,077

STATEMENTS OF CHANGES IN EQUITY For the Financial Year ended 29 February 2016

cont’d

Pantech Group Holdings Berhad (733607-W) Annual Report 201650 N

on-d

istrib

utab

le

Distr

ibut

able

Sh

are

capi

tal

Shar

eap

plica

tion

mon

eySh

are

prem

ium

Treas

ury

shar

es

Empl

oyee

ssh

are

optio

nre

serv

e

Irred

eem

able

Co

nver

tible

Un

secu

red

Loan

Stoc

ks

Cash

flow

hedg

ere

serv

eWa

rrant

sre

serv

eUn

appr

opria

ted

prof

itTo

tal

equi

ty

RMRM

RMRM

RMRM

RMRM

RMRM

Com

pany

con

t’d

Balan

ce at

1 M

arch

201

5 1

20,59

6,651

7

,504

74,7

43,79

9 (4

,139,3

85)

93,9

83

4,82

1,211

(1

,085,6

42)

7,48

1,637

1

7,482

,319

220

,002,0

77

Trans

actio

ns w

ith o

wner

s:

Issua

nce

of sh

ares

pur

suan

t to

conv

ersio

n of

ICUL

S 2

,406,4

05

- 4

,812,8

11

- -

(4,82

1,211

) -

- (1

,656,8

46)

741

,159

Exer

cise

of ES

OS 2

91,24

0 (7

,504)

1,07

7,681

-

(93,9

83)

- -

- (2

99,28

4) 9

68,15

0

Acqu

isitio

n of

trea

sury

shar

es -

- -

(2,79

3,164

) -

- -

- -

(2,79

3,164

)

Final

single

tier

divi

dend

of 0

.50 se

n pe

r ord

inary

shar

e -

- -

- -

- -

- (3

,057,3

67)

(3,05

7,367

)

Final

shar

e div

idend

via d

istrib

ution

of t

reas

ury

shar

es o

n th

e ba

sis o

f 1 tr

easu

ry sh

are

for e

very

100

exist

ing o

rdina

ry sh

ares

- -

- 3

,984,0

24

- -

- -

(3,98

4,024

) -

First

inter

im si

ngle

tier d

ivide

nd o

f 0.50

sen

per

shar

e -

- -

- -

- -

- (3

,074,5

46)

(3,07

4,546

)

Seco

nd in

terim

sing

le tie

r divi

dend

of 0

.60 se

n pe

r sha

re -

- -

- -

- -

- (3

,679,3

29)

(3,67

9,329

)

Third

inte

rim si

ngle

tier d

ivide

nd o

f 0.50

sen

per

shar

e -

- -

- -

- -

- (3

,058,5

25)

(3,05

8,525

)

Tota

l tra

nsac

tions

with

own

ers

2,69

7,645

(7

,504)

5,89

0,492

1

,190,8

60

(93,9

83)

(4,82

1,211

) -

- (1

8,809

,921)

(13,9

53,62

2)

Prof

it fo

r the

fina

ncial

year

- -

- -

- -

- -

11,8

57,78

1 1

1,857

,781

Othe

r com

preh

ensiv

e inc

ome

for t

he fi

nanc

ial ye

ar -

- -

- -

- 3

58,19

0 -

- 3

58,19

0

Tota

l com

preh

ensiv

e inc

ome

for t

he fi

nanc

ial ye

ar -

- -

- -

- 3

58,19

0 -

11,8

57,78

1 1

2,215

,971

Balan

ce at

29

Febr

uary

2016

123

,294,2

96

- 8

0,634

,291

(2,94

8,525

) -

- (7

27,45

2) 7

,481,6

37

10,5

30,17

9 2

18,26

4,426

The

acco

mpa

nyin

g no

tes

form

an

inte

gral

par

t of t

he fi

nanc

ial s

tate

men

ts.

STATEMENTS OF CHANGES IN EQUITY For the Financial Year ended 29 February 2016cont’d



RM RM RM RM

OPERATING ACTIVITIESProfit before tax 53,076,127 58,702,056 12,766,210 25,432,907

Adjustments for:-

Allowance for impairment of receivables 3,150,044 3,181,433 - - Inventories written down 1,036,671 1,737,747 - - Amortisation of prepaid land lease payments 323,256 323,256 - - Depreciation of property, plant and

equipment 14,524,732 13,629,004 - - Interest expense 7,316,358 8,698,169 614,287 1,596,481 Property, plant and equipment written off 22,328 10,341 - - Reversal of inventories written down (2,356,972) (65,639) - - Bad debts written off 13,305 109,073 - - Bad debts recovered - (9,809) - - Employees Share Option Scheme expenses - 479,942 - 479,942 Revaluation loss on property, plant and

equipment 100,722 - - - Interest income (229,010) (446,306) (368,144) (1,585,694)Share of profit from joint venture company (107,281) (48,415) - - Share of loss from associate company 310,939 74,479 - - Dividend income - - (14,018,613) (26,118,320)Loss/(Gain) on disposal of property, plant and

equipment 434,603 (220,805) - - Loss from cross currency swap 40,998 22,497 40,998 22,497 Fair value gain on derivatives financial

instruments (3,790) (12,890) - - Fair value gain adjustment on investment

properties (1,670,000) - - - Allowance for impairment of receivables no

longer required (3,122,960) (4,613,327) - - Under provision of leave entitlement - 32,950 - - Unrealised (gain)/loss on foreign exchange (798,782) 1,976,561 17,207 398,073

Operating profit/(loss) before working capital changes 72,061,288 83,560,317 (948,055) 225,886

Changes in working capital:-Inventories 37,330,179 (39,839,733) - - Receivables 30,997,439 (19,563,025) 534,496 (44,800)Payables (13,235,392) 5,159,747 (439,521) (475,517)Associate company (11,056,089) 4,557,535 - - Joint venture company 145,755 62,510 - -

Cash flows from/(used in) operations 116,243,180 33,937,351 (853,080) (294,431)

Tax refund 98,309 3,613 14,493 - Tax paid (14,950,843) (17,476,149) (529,915) (1,066,617)

Net cash flows from/(used in) operating activities 101,390,646 16,464,815 (1,368,502) (1,361,048)

STATEMENTS OF CASH FLOWS For the Financial Year ended 29 February 2016



RM RM RM RM

INVESTING ACTIVITIES

Dividend received - - 14,018,613 26,118,320

Repayment from subsidiary companies - - 3,177,164 8,909,265

Interest received 229,010 446,306 368,144 1,585,694

Purchase of property, plant and equipment A (7,540,786) (11,025,438) - -

Investment in subsidiary companies - - (51) (74,546)

Proceeds from disposal of property, plant and equipment 8,137,604 356,152 - -

Capital work-in-progress incurred (12,135,941) (3,186,166) - -

Payment to non-controlling interest - (74,546) - -

Purchase of prepaid land lease payments - (2,390,608) - -

Net cash flows (used in)/from investing activities (11,310,113) (15,874,300) 17,563,870 36,538,733

FINANCING ACTIVITIES

Advance from/(Repayment to) subsidiary companies - - 280,010 (20,306,071)

Dividend paid (13,391,534) (23,557,838) (13,391,534) (23,557,838)

Proceeds from non-controlling interest 49 - - -

Proceeds from issuance of share capital 968,151 15,178,637 968,151 15,178,637

Purchase of treasury shares (2,793,164) (2,332,787) (2,793,164) (2,332,787)

Share application money received - 7,504 - 7,504

Interest paid (7,354,712) (9,966,807) (647,534) (2,018,719)

Repayment of finance lease creditors (4,130,868) (3,718,465) - -

(Repayment of)/Proceeds from short-term borrowings (28,856,364) 21,259,115 - -

Repayment of term loans (19,880,856) (18,477,843) (7,000,000) (9,000,000)

Drawndown of term loans - 16,590,000 - -

Net cash flows used in financing activities (75,439,298) (5,018,484) (22,584,071) (42,029,274)

CASH AND CASH EqUIVALENTS

Net change 14,641,235 (4,427,969) (6,388,703) (6,851,589)

Effect of exchange rate changes 4,633,616 11,139 342,632 416,880

At beginning of financial year 57,676,313 62,093,143 9,360,271 15,794,980

At end of financial year B 76,951,164 57,676,313 3,314,200 9,360,271

STATEMENTS OF CASH FLOWS For the Financial Year ended 29 February 2016cont’d


NOTES TO THE STATEMENTS OF CASH FLOWS

A. PURCHASE OF PROPERTY, PLANT AND EqUIPMENT

Group Company

2016 2015 2016 2015

RM RM RM RM

Acquired by means of finance lease 831,710 3,341,732 - -

Provision for reinstatement costs (Note 30) - 232,876 - -

Cash payments 7,540,786 11,025,438 - -

8,372,496 14,600,046 - -

B. CASH AND CASH EqUIVALENTS

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

Group Company

2016 2015 2016 2015

RM RM RM RM

Cash and bank balances 74,599,063 55,392,956 3,314,200 9,360,271

Fixed deposits with licensed banks 2,352,101 2,283,357 - -

76,951,164 57,676,313 3,314,200 9,360,271

STATEMENTS OF CASH FLOWS For the Financial Year ended 29 February 2016

cont’d


Pantech Group Holdings Berhad (733607-W) Annual Report 2016Pantech Group Holdings Berhad (733607-W) Annual Report 201654

1. GENERAL INFORMATION

The Company is principally engaged in investment holding and provision of management services.

The principal activities of the subsidiary companies, associate company and joint venture are disclosed in Notes 8, 9 and 10 to the Financial Statements respectively.

There have been no significant changes in the nature of these activities of the Company, its subsidiary companies, associate company and joint venture during the financial year.

The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of the Bursa Malaysia Securities Berhad. The registered office of the Company is located at Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur. The principal place of business of the Company is located at PTD 204334, Jalan Platinum Utama, Kawasan Perindustrian Pasir Gudang, Zon 12B, 81700 Pasir Gudang, Johor Darul Takzim.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 16 June 2016.

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

2.1 Statement of compliance

The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards (“IFRSs”) and the requirements of the Companies Act 1965 in Malaysia.

2.2 Basis of measurement

The financial statements of the Group and of the Company are prepared under historical cost convention, except for certain buildings and freehold land and financial instruments that are measured at revalued amount or fair value at the end of each reporting period as indicated in the summary of significant accounting policies.

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

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

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

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

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

NOTES TO THE FINANCIAL STATEMENTS 29 February 2016



cont’d


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

2.2 Basis of measurement cont’d

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

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities. Level 2 – Valuation techniques for which the lowest level input that is significant to their fair value measurement

is directly or indirectly observable. Level 3 – Valuation techniques for which the lowest level input that is significant to their fair value measurement

is unobservable.

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

The Group and the Company have established control framework in respect of measurement of fair values of financial instruments. The Board of Directors has overall responsibility for overseeing all significant fair value measurements. The Board of Directors regularly reviews significant unobservable inputs and valuation adjustments.

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

2.3 Functional and presentation currency

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

2.4 Adoption of Amendments to MFRSs and IC Interpretations (“IC Int”)

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

At the beginning of the current financial year, the Group and the Company adopted amendments to MFRSs and IC Int which are mandatory for the financial periods beginning on or after 1 January 2015.

Initial application of the amendments to MFRSs and IC Int did not have material impact to the financial statements of the Group and of the Company.


NOTES TO THE FINANCIAL STATEMENTS 29 February 2016cont’d


2.5 Standards issued but not yet effective

The Group and the Company have not applied the following new standards and amendments to standards that have been issued by the Malaysian Accounting Standards Board but are not yet effective for the Group and the Company:

MFRS and Amendments to MFRSs effective 1 January 2016:

MFRS 14 Regulatory Deferral AccountsAmendments to MFRS 10 Consolidated Financial Statements, MFRS 12 Disclosure of Interests in Other Entities

and MFRS 128 Investments in Associates and Joint Ventures: Investment Entities – Applying the Consolidation Exception

Amendments to MFRS 11 Joint Arrangements: Accounting for acquisitions of interests in joint operationsAmendments to MFRS 101 Presentation of Financial Statements: Disclosure InitiativeAmendments to MFRS 116 Property, Plant and Equipment and MFRS 138 Intangible Assets: Clarification of

acceptable methods of depreciation and amortisation Amendments to MFRS 116 Property, Plant and Equipment and MFRS 141 Agriculture: Agriculture - Bearer PlantsAmendments to MFRS 127 Consolidated and Separate Financial Statements: Equity Method in Separate Financial

StatementsAnnual Improvements to MFRSs 2012 – 2015 Cycle, including the amendments to:

– MFRS 5 Non-current Assets Held for Sale and Discontinued Operations: Changes in methods of disposal– MFRS 7 Financial Instruments - Disclosures: Servicing contracts – MFRS 7 Financial Instruments - Disclosures: Applicability of the amendments to MFRS 7 to condensed interim financial statements– MFRS 119 Employee Benefits: Discount rate – regional market issue– MFRS 134 Interim Financial Reporting: Disclosure of information “elsewhere in the interim financial report”

MFRS and Amendments to MFRS effective 1 January 2018:

MFRS 9 Financial Instruments (IFRS 9 issued by IASB in July 2015)MFRS 15 Revenue from Contracts with CustomersAmendments to MFRS 7 Financial Instruments – Disclosures: Mandatory effective date of MFRS 9 and transitional

disclosures

Amendments to MFRS (deferred effective date to be announced by the MASB):

Amendments to MFRS 10 Consolidated Financial Statements and MFRS 128 Investments in Associates and Joint Ventures: Sale or contribution of assets between an investor and its associate or joint venture

MFRS 5, 14 and 141 are not applicable to the Group’s operations.

MFRS 5, 10, 11, 12, 14, 116, 119, 127, 128, 134, 138 and 141 are not applicable to the Company’s operations.

The initial application of the above standards, amendments and interpretations are not expected to have any material impact to the financial statements of the Group and the Company except as mentioned below:-



cont’d


2.5 Standards issued but not yet effective cont’d

MFRS 9 Financial Instruments

MFRS 9 replaces MFRS 139 Financial Instruments: Recognition and Measurement and all previous version of MFRS 9. The new standard introduces extensive requirements and guidance for classification and measurement of financial assets and financial liabilities which fall under the scope of MFRS 9, new “expected credit loss model” under the impairment of financial assets and greater flexibility has been allowed in hedge accounting transactions. Upon adoption of MFRS 9, financial assets will be measured at either fair value or amortised cost. It is also expected that the Group’s and Company’s investment in unquoted shares will be measured at fair value through other comprehensive income.

The adoption of MFRS 9 will result in a change in accounting policy. The Group and the Company are currently examining the financial impact of adopting MFRS 9.

MFRS 15 Revenue from Contracts with Customers

MFRS 15 presents new requirements for the recognition of revenue, replacing the guidance of MFRS 111 Construction Contracts, MFRS 118 Revenue, IC Int 13 Customer Loyalty Programmes, IC Int 15 Agreements for Construction of Real Estate, IC Int 18 Transfers of Assets from Customers and IC Int 131 Revenue – Barter Transaction Involving Advertising Services. The principles in MFRS 15 provide a more structured approach to measuring and recognising revenue. It establishes a new five-step model that will apply to revenue arising from contracts with customers. Under MFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

The adoption of MFRS 15 will result in a change in accounting policy. The Group and the Company are currently assessing the impact of MFRS 15 and plan to adopt the new standards on the required effective date of 1 January 2018.

2.6 Significant Accounting Estimates and Judgements

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

2.6.1 Estimation uncertainty

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

Impairment of inventories

The management reviews inventories to identify damaged, obsolete and slow-moving inventories which require judgement and changes in such estimates could result in revision to valuation of inventories.

The carrying amount of the Group’s inventories at the end of the reporting period is disclosed in Note 13 to the Financial Statements.

A 2% (2015: 2%) difference in the management’s estimation of net realisable values of the inventories would result in approximately 0.05% (2015: 0.07%) variance in the Group’s profit for the financial year.




2.6 Significant Accounting Estimates and Judgements cont’d

2.6.1 Estimation uncertainty cont’d

Useful lives of depreciable assets

The management estimates the useful lives of the property, plant and equipment to be within 3 to 50 years and reviews the useful lives of depreciable assets at each reporting date. At 29 February 2016, the management assesses that the useful lives represent the expected utility of the assets to the Group. The carrying amounts are analysed in Note 4 to the Financial Statements. Actual results, however, may vary due to change in the expected level of usage and technological developments, which result in adjustment to the Group’s assets.

A 3% (2015: 3%) difference in the expected useful lives of the property, plant and equipment from the management’s estimate would result in approximately 1.15% (2015: 0.95%) variance in the Group’s profit for the financial year.

Impairment of loans and receivables

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

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

Impairment of property, plant and equipment and prepaid land lease payments

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

Impairment of goodwill

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

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

Further details of the carrying values, key assumptions applied in the impairment assessment of goodwill and sensitivity analysis to changes in the assumptions are disclosed in Note 11 to the financial statements.



cont’d




Income taxes/Deferred tax liabilities

Significant judgement is involved in determining the Group-wide 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 recognise tax liabilities based on estimates of whether additional taxes will be due. Where the final tax outcome is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the period in which such determination is made.

Deferred tax assets

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

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

Employees share option The Group measures the cost of equity-settled transactions with employees by reference to the fair value

of the equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also require determining the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them.

The assumptions and model used for estimating fair value for share-based payment transactions, sensitivity analysis and the carrying amounts are disclosed in Note 38 to the Financial Statements.

Fair value measurement and valuation processes

Some of the Group’s assets and liabilities are measured at fair value for financial reporting. Significant judgement is involved in determining the appropriate valuation techniques and inputs for fair value measurements where active market quotes are not available.

In estimating the fair value of an asset or a liability, the Group uses market-observable data to the extent it is available. Management makes maximum use of market inputs, and uses estimates and assumptions that are, as far as possible, consistent with observable data that market participants would use in measuring the assets and liabilities. Where Level 1 inputs are not available, management uses its best estimate about the assumptions that market participants would make. These estimates may vary from the actual prices that would be achieved in an arm’s length transaction at the end of the reporting date. For the valuation of land and buildings, the Group engages third party qualified valuers to perform the valuation.






Fair value measurement and valuation processes cont’d

Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are disclosed in the Notes 4 and 7 to the financial statements.

Fair value measurement of contingent consideration

Contingent consideration, resulting from business combination, is valued at fair value at the acquisition date as part of the business combination. Where the contingent consideration meets the definition of a derivative and, thus, a financial liability, it is subsequently remeasured to fair value at each reporting date. The determination of the fair value is based on discounted cash flows. The key assumptions taken into consideration include the probability of meeting each performance target and the discounted factor.

2.6.2 Significant management judgement

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

Classification between investment properties and owner-occupied properties

The Group determines whether a property qualifies as an investment property, and has developed criteria in making that judgement. Investment property is a property held to earn rentals or for capital appreciation or both. Therefore, the Group considers whether a property generates cash flows largely independently of the other assets held by the Group.

Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods or services or for administrative purposes. The Group accounts for the portions separately if the portions could be sold separately (or leased out separately under a finance lease). If the portions could not be sold separately, the property is an investment property only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes.

Judgement is made on an individual property basis to determine whether ancillary services are so significant that a property does not qualify as an investment property.

Deferred tax assets

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



cont’d

3. SIGNIFICANT ACCOUNTING POLICIES

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

3.1 Consolidation

3.1.1 Subsidiary companies

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

Investment in subsidiary companies is stated at cost in the Company’s statement of financial position. Where an indication of impairment exists, the carrying amount of the subsidiary companies is assessed and written down immediately to their recoverable amount.

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

3.1.2 Basis of consolidation

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

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.

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

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



3. SIGNIFICANT ACCOUNTING POLICIES cont’d

3.1 Consolidation cont’d

3.1.3 Business combinations and goodwill

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

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

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

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

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

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

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

3.1.4 Loss of control

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



cont’d



3.1.5 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 profit or loss and other comprehensive income as an allocation of the profit or loss and the comprehensive income for the financial year between non-controlling interests and the owners of the Company.

Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling

interests even if that results in a deficit balance.

3.1.6 Associate company

An associate company is an entity in which the Group has significant influence, but no control, over its financial and operating policies.

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

The share of the result of an associate company is reflected in profit or loss. This is the profit attributable to equity holders of the associate company and therefore is the profit after tax and non-controlling interests in the associate company. When the Group’s share of losses exceeds its interest in an associate company, 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 company.

Where there has been a change recognised directly in the equity of an associate company, the Group recognises its share of any changes and discloses this, when applicable, in the consolidated statement of changes in equity.

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

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

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

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





3.1.7 Joint venture

A joint venture is a type of joint arrangement whereby the parties who have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

The Group’s interests in jointly-controlled entities are accounted for in the Group’s financial statements using the equity method from the date the Group obtains joint control until the date the Group ceases to have joint control over the joint venture.

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

In the Company’s statement of financial position, investment in jointly-controlled entity is stated at cost less impairment losses. On disposal of such investment, the difference between net disposal proceeds and their carrying amount is included in the profit or loss.

3.2 Property, plant and equipment

Property, plant and equipment are initially stated at cost. Land and buildings are subsequently shown at market value, based on valuations by external valuers, less subsequent depreciation and any impairment losses. All other property, plant and equipment are stated at historical cost less accumulated depreciation and any impairment losses.

Revaluation is made at least once in every five years based on valuation by an independent valuer on an open market value basis. Any revaluation increase is credited to equity as a revaluation surplus, except to the extent that it reverses a revaluation decrease for the same asset previously recognised as an expense, in which case, the increase is recognised in profit or loss to the extent of the decrease previously recognised. A revaluation decrease is first offset against an increase on unutilised valuation surplus in respect of the same asset and is thereafter recognised as an expense. Upon the disposal of revalued assets, the attributable revaluation surplus remaining in the revaluation reserve is transferred to unappropriated profit.

Depreciation is provided on the straight-line method in order to write off the cost of each asset over its estimated useful life. No depreciation is provided on freehold land.

The principal annual depreciation rates used are as follows:-

Factory buildings 2.00% - 5.50%Renovation, warehouse extension and electrical installation 10.00% - 33.33%Computers and software 20.00% - 33.33%Crane, plant and machinery 7.00% - 20.00%Factory equipment 10.00% - 25.00%Office equipments, furniture and fittings 10.00% - 20.00%Telecommunication system, forklift, mobile crane and motor vehicles 15.00% - 25.00%

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



cont’d


3.2 Property, plant and equipment cont’d

Property, plant and equipment are written down to recoverable amount if, in the opinion of the Directors, it is less than their carrying value. Recoverable amount is the net selling price of the property, plant and equipment i.e. the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal.

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 property, plant and equipment.

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

3.3 Investment properties

Investment properties consist of land and buildings held for capital appreciation or rental purpose and not occupied by the Group or only an insignificant portion is occupied for use in the operations of the Group. Investment properties are treated as long-term investments and are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met and excludes the costs of day-to-day servicing of an investment property.

Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the financial year in which they arise.

Investment properties are derecognised when either they are disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from the disposal. Any gain or loss on the retirement or disposal of an investment property is recognised in profit or loss in the financial year of retirement or disposal.

3.4 Inventories

Inventories comprising of raw materials, work-in-progress and finished goods are stated at the lower of cost and net realisable value.

The costs of inventories are determined on weighted average method.

Cost of trading finished goods and raw materials refers to invoiced cost of goods purchased plus incidental handling and freight charges.

Cost of work-in-progress and finished goods include raw materials, direct labour, other direct costs and an appropriate proportion of manufacturing overheads.

Net realisable value represents the estimated selling price in the ordinary course of business less selling and distribution costs and all other estimated costs to completion.




3.5 Assets acquired under lease agreements

Accounting by lessees

Finance leases

Lease of property, plant and equipment acquired under hire purchase and finance lease arrangements which transfer substantially all the risks and rewards of ownership to the Group are capitalised. The depreciation policy on these assets is similar to that of the Group’s property, plant and equipment depreciation policy.

Outstanding obligation due under hire purchase and finance lease arrangements after deducting finance expenses are included as liabilities in the financial statements. Finance charges on hire purchase and finance lease arrangements are allocated to profit or loss over the period of the respective agreements.

Operating leases

Leased payments for operating leases, where substantially all the risk and benefits remain with the lessor, are charged as expenses in the period in which they are incurred.

Leased assets

Leasehold land that normally has an indefinite economic life and title is not expected to pass to the Group by the end of the lease term is treated as operating lease. The payment made on entering into or acquiring a leasehold land is accounted for as prepaid land lease payment and is amortised over the respective lease term ranging from 60 to 88 years (2015: 60 to 88 years).

3.6 Foreign currency translation

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

3.6.1 Foreign currency transactions and balances

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

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

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

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



cont’d


3.6 Foreign currency translation cont’d

3.6.2 Foreign operations

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

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

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

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

3.7 Income tax

Income tax on profit or loss for the year comprises current and deferred tax. Current tax expense is the expected amount of income taxes payable in respect of the taxable profit for the financial year and is measured using the tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax liabilities and assets are provided for under the liability method at the current tax rate in respect of all temporary differences at the reporting date between the carrying amount of an asset or liability in the statements of financial position and its tax base including unused tax losses and capital allowances.

Deferred tax asset are recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised. The carrying amount of a deferred tax asset is reviewed at each reporting date. If it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or that entire deferred tax asset to be utilised, the carrying amount of the deferred tax asset will be reduced accordingly. When it becomes probable that sufficient taxable profit will be available, such reductions will be reversed to the extent of the taxable profit.

Current and deferred tax are recognised in profit or loss, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited 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.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted by the reporting date.




3.7 Income tax cont’d

Value-added tax and goods services tax Value-added tax (“VAT”) or Goods and Services Tax (“GST”) are consumption tax based on value-added concept.

VAT and GST are imposed on goods and services at every production and distribution stage in the supply chain including importation of goods and services, at the rates applicable in the jurisdictions where the Group operates. Input tax on purchases can be deducted from output VAT/GST.

Revenues, expenses and assets are recognised net of the amount of VAT/GST except:-

- Where the taxes incurred on the purchase of assets or services is not recoverable from the taxation authority, in which case the tax incurred is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

- Receivables and payables that are stated with the amount of taxes included.

The net amount of VAT/GST recoverable from, or payable to the authority is included as part of “other receivables” or “other payables” in the statements of financial position.

3.8 Impairment of financial assets

The Group assesses at each reporting date whether there is any objective evidence indicating that a financial asset is impaired.

Trade and other receivables and other financial assets carried at amortised cost

The Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments to determine whether there is objective evidence that an impairment loss has occurred. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience with industry group, increase in cases of delayed payments and observable changes in economic conditions.

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

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

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



cont’d


3.9 Impairment of non-financial assets

At each reporting date, the Group reviews the carrying amounts of non-financial assets to determine whether there is any indication of impairment.

If any such indication exists, or when annual impairment testing for an asset is required, the recoverable amount is estimated and an impairment loss is recognised whenever the recoverable amount of the asset or a cash-generating unit is less than its carrying amount. Recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use.

In assessing value in use, estimated future cash flows are discounted to 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. Impairment losses of continuing operations are recognised in profit or loss in those expense categories consistent with the function of the impaired asset.

An impairment loss is recognised as an expense in profit or loss immediately, unless the asset is carried at a revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of previously recognised revaluation surplus for the same asset.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses for an asset other than goodwill may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.

All reversals of impairment losses are recognised as income immediately in profit or loss unless the asset is carried at revalued amount, in which case, the reversal in excess of impairment loss previously recognised through profit or loss is treated as revaluation increase. After such a reversal, depreciation charge is adjusted in future periods to allocate the revised carrying amount of the asset, less any residual value, on a systematic basis over its remaining useful life.

3.10 Financial assets Financial assets are recognised in the statements of financial position when, and only when, the Group becomes

a party to the contractual provisions of the financial instrument and they are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred.

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

For the purpose of subsequent measurement, financial assets other than those designated and effective as

hedging instruments are classified into the following categories upon initial recognition:-

a) Loans and receivables b) Financial assets at fair value through profit or loss c) Held to maturity investments d) Available-for-sale financial assets

The category mentioned above determines subsequent measurement of a financial asset and whether any resulting income and expense is recognised in profit or loss or in statement of comprehensive income. All financial assets except for those at fair value through profit or loss are subject to review for impairment at least once at each reporting date. Financial assets are impaired when there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria are applied to determine impairment for each category of financial assets, as described in Note 3.8.




3.10 Financial assets cont’d

All income and expenses relating to financial assets are recognised in profit or loss.

Other than loans and receivables, the Group does not have financial assets at fair value through profit or loss, held to maturity investments and available-for-sale financial assets.

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted

in an active market and they are measured at amortised cost using effective interest method, less provision for impairment subsequently. Discounting is omitted where the effect of discounting is immaterial in subsequent measurement. Cash and cash equivalents, amount due from an associate company, trade and most other receivables of the Group and of the Company are fall into this category of financial instruments.

Loans and receivables are classified as current assets and those that mature 12 months after the reporting date are classified as non-current.

3.11 Financial liabilities Financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial

instrument. Financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

Financial liabilities are measured initially at fair value plus transactions costs, except for financial liabilities carried at fair value through profit or loss, which are measured initially at fair value. Subsequently, they are measured at amortised cost using the effective interest method except for financial liabilities held for trading or designated at fair value through profit or loss, that are carried subsequently at fair value with gains or losses recognised in profit or loss.

All derivative financial instruments which are not designated and effective as hedging instruments are accounted for at fair value through profit or loss.

The Group’s financial liabilities include borrowings, finance lease creditors, amount due to an associate company and a joint venture company, trade and other payables.

3.12 Revenue recognition

Revenue from sale of goods is recognised when the goods are delivered, net of discount and return. Rental income is recognised when the rent is due.

Interest income is accounted for on accrual basis.

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

Insurance commission received is recognised on receivable basis.

Sales and inter-company transactions between companies of the Group are excluded from revenue of the Group.

3.13 Interest-bearing borrowings

Interest-bearing borrowings are recorded at the amount of proceeds received, net of transaction costs incurred. Borrowing costs are recognised as an expense in profit or loss in the period in which they are incurred. However, borrowing costs incurred to finance the construction of property, plant and equipment are capitalised as part of the cost of those assets during the period of time that is required to complete and prepare the assets for its intended use.



cont’d


3.14 Employee benefits

(a) Short term benefits

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

(b) 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 contribution if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years.

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

3.15 Share-based payment transactions

Share-based payment transactions of the Company

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in Note 38 to the Financial Statements.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-

line basis over the vesting period, based on the Group’s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.

The policy described above is applied to all equity-settled share-based payment transactions that were granted after 31 December 2004 and vested after 1 January 2006. No amounts have been recognised in the consolidated financial statements in respect of other equity-settled shared-based payments.

Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.

For cash-settled share-based payments, a liability is recognised for the goods or services acquired, measured initially at the fair value of the liability. At the end of each reporting period until the liability is settled, and at the date of settlement, the fair value of the liability is remeasured, with any changes in fair value recognised in profit or loss for the year.




3.15 Share-based payment transactions cont’d

Share-based payment transactions of the acquiree in a business combination

When the share-based payment awards held by the employees of an acquiree (acquiree awards) are replaced by the Group’s share-based payment awards (replacement awards), both the acquiree awards and the replacement awards are measured in accordance with MFRS 2 Share-based Payment (“market-based measure”) at the acquisition date. The portion of the replacement awards that is included in measuring the consideration transferred in a business combination equals the market-based measure of the acquiree awards multiplied by the ratio of the portion of the vesting period completed to the greater of the total vesting period or the original vesting period of the acquiree award. The excess of the market-based measure of the replacement awards over the market-based measure of the acquiree awards included in measuring the consideration transferred is recognised as remuneration cost for post-combination service.

However, when the acquiree awards expire as a consequence of a business combination and the Group replaces those awards when it does not have an obligation to do so, the replacement awards are measured at their market-based measure in accordance with MFRS 2. All of the market-based measure of the replacement awards is recognised as remuneration cost for post-combination service.

At the acquisition date, when the outstanding equity-settled share-based payment transactions held by the employees of an acquiree are not exchanged by the Group for its share-based payment transactions, the acquiree share-based payment transactions are measured at their market-based measure at the acquisition date. If the share-based payment transactions have vested by the acquisition date, they are included as part of the non-controlling interest in the acquiree. However, if the share-based payment transactions have not vested by the acquisition date, the market-based measure of the unvested share-based payment transactions is allocated to the non-controlling interest in the acquiree based on the ratio of the portion of the vesting period completed to the greater of the total vesting period or the original vesting period of the share-based payment transaction. The balance is recognised as remuneration cost for post-combination service.

3.16 Dividends

Final dividends proposed by the Directors are not accounted for in shareholders’ equity as an appropriation of unappropriated profit, until they have been approved by the shareholders in a general meeting. When these dividends have been approved by the shareholders and declared, they are recognised as a liability.

Interim dividends are simultaneously proposed and declared, because the articles of association of the Company grant the Directors the authority to declare interim dividends. Consequently, interim dividends are recognised directly as a liability when they are proposed and declared.

3.17 Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due.

Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.

3.18 Provisions

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



cont’d


3.18 Provisions cont’d

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

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

3.19 Cash and cash equivalents

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

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

3.20 Equity and reserves

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

Share capital represents the nominal value of shares that have been issued.

Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

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

Retained earnings include all current and prior period retained profits.

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

3.21 Treasury shares When issued share of the Company are repurchased, the consideration paid, including directly attributable costs

is presented as a change in equity. Repurchased shares that have not been cancelled are classify as treasury shares and presented as a deduction from equity. No gain or loss is recognised in the profit or loss on the sale, reissuance or cancellation of treasury shares.

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

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




3.22 Capital work-in-progress Capital work-in-progress consists of factory, building, machinery, equipment, furniture and fittings under

construction/installation for intended use as production facilities. The amount is stated at cost and includes capitalisation of interest incurred on borrowings related to property, plant and equipment under construction/installation until the property, plant and equipment are ready for their intended use.

3.23 Goodwill/Negative goodwill Goodwill/(Negative goodwill) represents the excess/(deficit) of the cost of acquisition of subsidiary company

acquired over the Group’s share of the fair values of their separable net assets at the date of acquisition.

The goodwill is retained in the consolidated statement of financial position and subject to annual impairment review. The negative goodwill is credited immediately to profit or loss as it arises.

3.24 Contingent liabilities

A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that an outflow of economic resources will be required or the amount of obligation cannot be measured reliably.

3.25 Irredeemable Convertible Unsecured Loan Stocks (“ICULS”)

The ICULS are regarded as compound financial instruments, consisting of a liability component and an equity component. At the date of issue, the fair value of the liability component is estimated by discounting the future contractual cash flows at the prevailing market interest rate available to the Company. The difference between the proceeds of issue of the ICULS and the fair value assigned to the liability component, representing the conversion option is accounted in the shareholders’ equity.

The liability component is subsequently stated at amortised cost using the effective interest rate method until extinguished on conversion whilst the value of the equity component is not adjusted in subsequent periods except on exercise and conversion to ordinary shares.

Under the effective interest rate method, the interest expense on the liability component is calculated by applying the prevailing market interest rate. The difference between this amount and the interest paid is added to the carrying value of the ICULS.

3.26 Warrants

The free detachable warrants were issued pursuant to the ICULS of the Company. The issuance of ordinary shares upon exercise of the warrants is treated as new subscription of ordinary shares for the consideration equivalent to the exercise price of the warrants.

Upon exercise of warrants, the proceeds are credited to share capital and share premium. The warrants reserve in relation to the unexercised warrants at the expiry of the warrants will be transferred to share premium.

3.27 Earnings per Share

The Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise convertible notes and share options granted to employees.



cont’d


3.28 Related parties

A related party is a person or entity that is related to the Group. A related party transaction is a transfer of resources, services or obligations between the Group and its related party, regardless of whether a price is charged.

(a) A person or a close member of that person’s family is related to the Group if that person:

(i) Has control or joint control over the Group; (ii) Has significant influence over the Group; or (iii) Is a member of the key management personnel of the Group.

(b) An entity is related to the Group if any of the following conditions applies:

(i) The entity and the Group are members of the same group. (ii) One entity is an associate or joint venture of the other entity. (iii) Both entities are joint ventures of the same third party. (iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity. (v) The entity is a post-employment benefit plan for the benefits of employees of either the Group or an

entity related to the Group. (vi) The entity is controlled or jointly-controlled by a person identified in (a) above. (vii) A person identified in (a)(i) above has significant influence over the entity or is a member of the key

management personnel of the entity. (viii) The entity, or any member of a group of which it is a part, provides key management personnel

services to the Group.

3.29 Derivative financial instruments and hedging activities

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and subsequently remeasured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivatives designated as hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as follows:-

Derivative financial instruments

The Group holds derivative financial instruments to hedge its foreign currency exposures.

Forward foreign exchange contracts used are accounted for on an equivalent basis as the underlying assets, liabilities or net positions. Any profit or loss arising is recognised on the same basis as those arising from the related assets, liabilities or net position.

Exchange gains or losses on contracts are recognised when settled at which time they are included in the measurement of the transaction hedged.

The fair value of foreign currency forward contract is determined using the forward exchange market rates at the reporting date.

Cash flow hedge

A cash flow hedge is a hedge of exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction and could affect the profit or loss. In a cash flow hedge, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income and the ineffective portion is recognised in profit or loss.




3.29 Derivative financial instruments and hedging activities cont’d

Cash flow hedge cont’d

Subsequently, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity into profit or loss in the same period or periods during which the hedge forecast cash flows affect profit or loss. If the hedge item is a non-financial asset or liability, the associated gain or loss recognised in other comprehensive income is removed from equity and included in the initial amount of the asset or liability. However, loss recognised in other comprehensive income that will not be recovered in one or more future periods is reclassified from equity into profit or loss.

Cash flow hedge accounting is discontinued prospectively when the hedging instrument expires or is sold, terminated or exercised, the hedge is no longer highly effective, the forecast transaction is no longer expected to occur or the hedge designation is revoked. If the hedge is for a forecast transaction, the cumulative gain or loss on the hedging instrument remains in other comprehensive income until the forecast transaction occurs. When the forecast transaction is no longer expected to occur, any related cumulative gain or loss recognised in other comprehensive income on the hedging instrument is reclassified from equity to profit or loss.

3.30 Operating segments

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



cont’d

4. PROPERTY, PLANT AND EqUIPMENT

Group

Freehold land Buildings

Total land and buildings

Renovation and electrical

installation

Crane, machinery,

equipments, furniture and

fittings

Forklift, mobile

crane and motor

vehicles Total

RM RM RM RM RM RM RM

Cost/Valuation

At 1 March 2014 17,526,467 108,244,730 125,771,197 3,571,486 105,127,323 12,563,402 247,033,408

Additions - - - 880,825 12,541,460 1,177,761 14,600,046

Disposals - - - - (350) (1,014,367) (1,014,717)

Written off - - - - (255,183) - (255,183)

Transferred from capital work-in-progress - 41,340 41,340 - 751,402 - 792,742

Currency translation difference 4,010 214,874 218,884 14,169 126,457 21,023 380,533

At 28 February 2015 17,530,477 108,500,944 126,031,421 4,466,480 118,291,109 12,747,819 261,536,829

Representing:-

At cost 360,477 90,570,944 90,931,421 4,466,480 118,291,109 12,747,819 226,436,829

At valuation: 2011 17,170,000 17,930,000 35,100,000 - - - 35,100,000

At 1 March 2015 17,530,477 108,500,944 126,031,421 4,466,480 118,291,109 12,747,819 261,536,829

Additions 3,340,623 - 3,340,623 25,512 3,913,766 1,092,595 8,372,496

Disposals (2,257,721) (6,517,549) (8,775,270) - (48,259) (623,894) (9,447,423)

Revaluation 5,547,098 (10,086,354) (4,539,256) - - - (4,539,256)

Written off - - - - (77,143) - (77,143)

Transferred from capital work-in-progress - 4,948,859 4,948,859 - - - 4,948,859

Currency translation difference 18,571 1,054,795 1,073,366 70,637 805,116 103,409 2,052,528

At 29 February 2016 24,179,048 97,900,695 122,079,743 4,562,629 122,884,589 13,319,929 262,846,890

Representing:-

At cost - 47,000 47,000 4,562,629 122,884,589 13,319,929 140,814,147

At valuation: 2016 24,179,048 97,853,695 122,032,743 - - - 122,032,743

At 29 February 2016 24,179,048 97,900,695 122,079,743 4,562,629 122,884,589 13,319,929 262,846,890



4. PROPERTY, PLANT AND EqUIPMENT cont’d

Group cont’d

Freehold land Buildings

Total land and buildings

Renovation and electrical

installation

Crane, machinery,

equipments, furniture and

fittings

Forklift, mobile

crane and motor

vehicles Total

RM RM RM RM RM RM RM

Accumulated depreciation

At 1 March 2014 - 8,957,637 8,957,637 2,294,108 31,878,037 7,730,386 50,860,168

Charge for the financial year - 2,880,508 2,880,508 484,734 8,447,139 1,816,623 13,629,004

Disposals - - - - (119) (879,251) (879,370)

Written off - - - - (244,842) - (244,842)

Currency translation difference - 48,109 48,109 5,376 101,070 16,749 171,304

At 28 February 2015 - 11,886,254 11,886,254 2,784,218 40,181,285 8,684,507 63,536,264

Charge for the financial year - 2,921,687 2,921,687 520,727 9,237,872 1,844,446 14,524,732

Disposals - (271,592) (271,592) - (47,107) (556,517) (875,216)

Revaluation - (14,722,683) (14,722,683) - - - (14,722,683)

Written off - - - - (54,815) - (54,815)

Currency translation difference - 188,684 188,684 33,862 380,320 80,437 683,303

At 29 February 2016 - 2,350 2,350 3,338,807 49,697,555 10,052,873 63,091,585

Net carrying amount

2015 17,530,477 96,614,690 114,145,167 1,682,262 78,109,824 4,063,312 198,000,565

2016 24,179,048 97,898,345 122,077,393 1,223,822 73,187,034 3,267,056 199,755,305

On 31 December 2015 and on 29 February 2016, the Directors revalued all the above freehold land and buildings based on professional revaluations made by Sr. Lo Kin Weng, BSc. (Hons) Estate Mgt. MRICS, MRISM and Registered Valuer (V917) of CH Williams Talhar & Wong Sdn. Bhd. and Steve Smith B.Sc. (Hons) MRICS MNAVA and RICS Registered Valuer of Ernest Hawk Chartered Surveyors respectively. Both are independent professional valuers having recent experience in the location and category of properties being valued. All the above freehold land and buildings were revalued based on the market value basis. The valuations were incorporated in the financial statements for the financial year ended 29 February 2016.

The market value is defined as the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. The market value of the freehold land and buildings were determined based on the comparison approach and depreciated replacement cost approach respectively.



cont’d

4. PROPERTY, PLANT AND EqUIPMENT cont’d

At the reporting date, had the revalued freehold land and buildings of the Group been carried under the cost model, the net carrying amount would have been as follows:-

Freeholdland Buildings Total

RM RM RM

2016

Cost 16,201,467 108,602,631 124,804,098

Accumulated depreciation - (17,043,903) (17,043,903)

Net carrying amount 16,201,467 91,558,728 107,760,195

2015

Cost 14,739,517 18,263,238 33,002,755

Accumulated depreciation - (7,078,134) (7,078,134)

Accumulated impairment (569,517) - (569,517)

Net carrying amount 14,170,000 11,185,104 25,355,104

The net carrying amount of property, plant and equipment of the Group which are acquired under finance lease arrangements amounted to RM11,077,018 (2015: RM12,529,510).

Included in the property, plant and equipment of the Group are fully depreciated property, plant and equipment with a total cost of RM14,170,377 (2015: RM10,458,248) but still in use.



5. PREPAID LAND LEASE PAYMENTS

Group

2016 2015

RM RM

Leasehold land:-

Cost

At beginning and at end of financial year 28,630,137 28,630,137

Accumulated amortisation

At beginning of financial year 1,463,143 1,139,887

Charge for the financial year 323,256 323,256

At end of financial year 1,786,399 1,463,143

Net carrying amount 26,843,738 27,166,994

Amount to be amortised

- Not later than one year 323,256 323,256

- Later than one year but not later than five years 1,293,024 1,293,024

- Later than five years 25,227,458 25,550,714

26,843,738 27,166,994

The prepaid land lease payments are amortised over the leasehold period of 60 to 88 (2015: 60 to 88) years.

On 26 June 2013, a subsidiary company acquired a leasehold land from Johor Corporation. The leasehold period of this leasehold land is 60 years. No amortisation is charged during the financial year as the leasehold land is still in the acquisition stage and pending the transfer of land title from Johor Corporation as at the reporting date. Subsequently, the transfer of land title was completed on 27 March 2016.



cont’d

6. CAPITAL WORK-IN-PROGRESS

Group

Buildings

Crane, machinery,

equipment, furniture and

fittings Total

RM RM RM

Balance as at 1 March 2014 - 680,028 680,028

Addition 3,114,792 71,374 3,186,166

Transferred to property, plant and equipment (41,340) (751,402) (792,742)

Balance as at 28 February 2015 3,073,452 - 3,073,452

Addition 11,986,391 149,550 12,135,941

Transferred to property, plant and equipment (4,948,859) - (4,948,859)

Balance as at 29 February 2016 10,110,984 149,550 10,260,534

7. INVESTMENT PROPERTIES

Leasehold land Buildings

Total land and

buildings

Freehold land and

shophouse building Total

RM RM RM RM RM

Group

At fair value:-

At 1 March 2014 and 28 February 2015 1,700,000 2,900,000 4,600,000 230,000 4,830,000

Fair value gain adjustment on investment properties 900,000 500,000 1,400,000 270,000 1,670,000

At 29 February 2016 2,600,000 3,400,000 6,000,000 500,000 6,500,000

The investment properties consist of land and buildings and are valued annually at fair value, comprising market value, by an external independent professionally qualified valuer having appropriate recognised professional qualifications and recent experience in the location and category of properties being valued.

The market value is defined as the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. The market value of the land and buildings were determined based on the comparison approach and depreciated replacement cost approach respectively.



8. SUBSIDIARY COMPANIES

(a) Investment in subsidiary companies

Company

2016 2015

RM RM

Unquoted shares - At cost:-


Additional investments made 51 75,074,546


The particulars of the subsidiary companies are as follows:-

Name of companyPlace of

incorporationEffective

equity interest Principal activities2016 2015

% %

1. Pantech Corporation Sdn. Bhd. Malaysia 100 100 Trading, supply and stocking of high pressure seamless and specialised steel pipes, fittings, flanges, valves and other related products for use in the oil and gas, gas reticulation, marine, onshore and offshore heavy engineering, power generation, petrochemicals, palm oil refining and other related industries.

Subsidiary company of Pantech Corporation Sdn. Bhd.

1.1 Pantech Realty Sdn. Bhd. Malaysia 100 100 Investment holding, property investment and insurance agency.

1.2 Pantech (Kuantan) Sdn. Bhd.

Malaysia 100 100 Trading and supply of high pressure seamless and specialised steel pipes, fittings, flanges, valves and other related products for use in the oil and gas, gas reticulation, marine, onshore and offshore heavy engineering, power generation, petrochemicals, palm oil refining and other related industries.

2. Pantech Steel Industries Sdn. Bhd.

Malaysia 100 100 Manufacturing and supply of butt-welded carbon steel fittings such as elbows, tees, reducers, end-caps and high frequency induction long bends for use in the oil and gas and other related industries.

3. Panaflo Controls Pte. Ltd.# Singapore 100 100 Supplier of flow control solutions such as valves, actuators and controls for the oil and gas, petrochemicals, water treatment and other related industries and trading of specialised steel pipes and related products.



cont’d

8. SUBSIDIARY COMPANIES cont’d

(a) Investment in subsidiary companies cont’d

The particulars of the subsidiary companies are as follows:- cont’d


incorporationEffective

equity interest Principal activities2016 2015

% %

4. Pantech Stainless & Alloy Industries Sdn. Bhd.

Malaysia 100 100 Manufacturing and supply of stainless steel and alloy pipes, fittings and related products for use in the oil and gas, marine, onshore and offshore, heavy engineering, petrochemical and chemical, palm oil refinery and oleochemical, power generation, pharmaceutical, water and other related industries.

5. Pantech International (KSA) Sdn. Bhd.

Malaysia 100 100 Dormant.

6. Nautic Steels (Holdings) Limited#

United Kingdom

100 100 Investment holdings.

Subsidiary company of Nautic Steels (Holdings) Limited:-

6.1 Nautic Steels Limited# United Kingdom

100 100 Milling, machining and welding of tube and pipe fittings in special metals for the oil industry.

7. Nautic Steels Sdn. Bhd. Malaysia 100 100 Dormant.

8. Pantech Galvanising Sdn. Bhd.

Malaysia 51 - Hot dip galvanising, treatment and coating of metals and its related activities, engineering fabrication works and its related activities and manufacturing of industrial consumable products.

# Not audited by SJ Grant Thornton.

(b) Amount due from subsidiary companies

The amount due from subsidiary companies is non-trade in-nature, bears no interest and repayable upon demand except for loans to certain subsidiary companies amounted to RM5,000,000 (2015: RM8,178,812) which bear interest at rates ranging from 2.75% to 5.60% (2015: 2.75% to 5.60%) per annum.

The currency exposure profile of the amount due from subsidiary companies is as follows (foreign currency balances are unhedged):-

Company2016 2015

RM RM

Ringgit Malaysia 5,338,876 7,635,340

Great Britain Pound Sterling (15,588) 1,119,717

Singapore Dollar - 27,054

5,323,288 8,782,111



9. ASSOCIATE COMPANY

(a) Investment in an associate company

Group

2016 2015

RM RM

Unquoted shares - at cost 288,717 288,717

Share of post acquisition profit

- At beginning of financial year 2,701,434 2,775,913

- Share of post acquisition loss during the financial year (310,939) (74,479)

- At end of financial year 2,390,495 2,701,434

Less: Dividend received (445,500) (445,500)

2,233,712 2,544,651

Represented by:-

Share of net assets 2,233,712 2,544,651

Summarised financial information of associate company is as follows:-

Group

2016 2015

RM RM

Assets and liabilities

Current assets 21,264,124 19,918,927

Non-current assets 3,286,983 3,462,673

Total assets 24,551,107 23,381,600

Current liabilities 18,535,499 15,906,395

Non-current liabilities 431,326 1,113,575

Total liabilities 18,966,825 17,019,970

Results

Revenue 39,574,351 25,346,336

Loss for the financial year 777,348 186,197

There is no share of commitments and contingent liabilities from the associate company to the Group.



cont’d

9. ASSOCIATE COMPANY cont’d

(a) Investment in an associate company cont’d

The particulars of the associate company are as follows:-


incorporationEffective equity

interest Principal activities

2016 2015

% %

Tuah Nusa Sdn. Bhd. Malaysia 40 40 Manufacturing of butt-welded fittings and high frequency induction long bends as well as trading and supply of specialised industrial products, alloys and ferrous materials for the oil and gas and related industries.

(b) Amount due from/(to) an associate company

The amount due from an associate company is trade in-nature, bears no interest and repayable upon demand.

The amount due to an associate company is trade in-nature, unsecured, bears no interest and repayable upon demand.

The currency exposure profile of the amount due from an associate company is as follows (foreign currency balances are unhedged):-

Group

2016 2015

RM RM


US Dollar 6,480,682 -

Singapore Dollar - 7,186

17,323,281 6,212,059

The amount due to an associate company is denominated in Ringgit Malaysia.



10. JOINT VENTURE COMPANY

(a) Investment in a joint venture company

Group

2016 2015

RM RM

Unquoted shares - at cost 160,440 160,440

Share of post acquisition profit

- At beginning of financial year 448,150 384,317

- Share of post acquisition profit during the financial year 107,281 48,415

- Currency translation difference 81,033 15,418

- At end of financial year 636,464 448,150

796,904 608,590

Represented by:-

Share of net assets 796,904 608,590

Summarised financial information of joint venture company is as follows:-

Group

2016 2015

RM RM

Assets and liabilities

Current assets 1,324,386 1,271,500

Non-current assets - -

Total assets 1,324,386 1,271,500

Current liabilities 185,953 402,089

Non-current liabilities - -

Total liabilities 185,953 402,089

Results

Revenue 1,639,547 681,713

Profit for the financial year 153,260 69,162

The joint venture company had no capital commitment and contingent liabilities as at 29 February 2016 and 28 February 2015.



cont’d

10. JOINT VENTURE COMPANY cont’d

(a) Investment in a joint venture company cont’d

The particulars of the joint venture company are as follows:-


incorporationEffective equity

interest Principal activities

2016 2015

% %

JC Flow Controls Pte. Ltd. *# Singapore 70 70 Sales and distribution of JC products such as Ball, Gate, Globe and Check valves for South East Asian markets.

* Held through Panaflo Controls Pte. Ltd. # Not audited by SJ Grant Thornton

(b) Amount due to a joint venture company

The amount due to a joint venture company is trade in-nature, unsecured, bears no interest and repayable upon demand.

The entire amount due to a joint venture company of the Group is denominated in Singapore Dollar.

11. GOODWILL ON ACqUISITION

Group

2016 2015

RM RM

At cost and at net carrying amount:


Currency translation difference (81,900) 158,282


The goodwill arose from the acquisition of a new subsidiary company on 7 March 2012.

Impairment tests for goodwill

(a) Allocation of goodwill

For the purpose of impairment testing, goodwill is allocated to the Group’s cash generating units (“CGU”) identified as follows:

Group

2016 2015

RM RM

Subsidiary company

Nautic Steels (Holdings) Limited 1,282,166 1,364,066

1,282,166 1,364,066



11. GOODWILL ON ACqUISITION cont’d

Impairment tests for goodwill cont’d

(a) Allocation of goodwill cont’d

The recoverable amount of the above is based on its value in use and the recoverable amount is higher than the carrying amount of the above goodwill allocated. Thus, there is no impairment loss recognised for the financial years ended 28 February 2015 and 29 February 2016.

(b) Key assumptions used in value-in-use calculations

The recoverable amount of a CGU is determined based on value-in-use calculations using cash flow projections based on financial budgets approved by management covering a period of one year. Key assumptions and management’s approach to determine the values assigned to each key assumption are as follows:-

(i) Budgeted gross profit margin

The basis used to determine the value assigned to the budgeted gross profit margin of 30% (2015: 21%) is the average gross margins achieved in the year immediately before the budgeted year and revised for expected demand of their products.

(ii) Revenue growth rate

The revenue growth rate of approximately 10% (2015: 7%) per annum is based on management’s estimate of revenue growth rate based on the past and current trends of the industry.

(iii) Discount rate

A pre-tax discount rate of 3% (2015: 3%) is applied. The discount rate reflects specific risks relating to the relevant business operations.

The Directors believe that any reasonably possible changes in the above key assumptions applied are not likely to materially cause the recoverable amount to be lower than its carrying amount except for the changes in prevailing operating environment which is not ascertainable.

12. DEFERRED TAX ASSETS

Group Company

2016 2015 2016 2015

RM RM RM RM

At beginning of financial year 1,701,711 2,421,090 190,615 493,985

Transferred to profit or loss (301,987) (719,379) (190,615) (303,370)

Transferred from other comprehensive income 13,363 - - -

At end of financial year 1,413,087 1,701,711 - 190,615



cont’d

12. DEFERRED TAX ASSETS cont’d

The balance in the deferred tax assets is made up of temporary differences arising from:-

Group Company

2016 2015 2016 2015

RM RM RM RM

Carrying amount of qualifying property, plant and equipment in excess of their tax base (855,744) (666,374) - -

Issuance of ICULS - 190,615 - 190,615

Inventories written down 977,393 880,234 - -

Allowance for impairment of receivables 1,278,075 1,284,420 - -

Revaluation of buildings 13,363 - - -

Provision of expenses - 12,816 - -

1,413,087 1,701,711 - 190,615

The following temporary differences have not been recognised in the financial statements:-

Group

2016 2015

RM RM

Carrying amount of qualifying property, plant and equipment in excess of their tax base (39,584,000) (38,564,726)

Inventories written down 725,822 496,466

Unabsorbed business losses 8,561,000 8,561,000

Unabsorbed value of increased in exports exemption 9,577,000 9,577,000

Unutilised capital allowances 50,290,000 47,677,000

Provision for leave entitlement 63,743 56,534

29,633,565 27,803,274

The unabsorbed business losses, unabsorbed value of increased in exports exemption and unutilised capital allowances are available indefinitely for offset against future taxable profits of the subsidiary companies in which those items arose. Deferred tax assets have not been recognised in respect of these items as they may not be used to offset taxable profits of other subsidiary companies in the Group and they have arisen in subsidiary companies that have a recent history of losses.



13. INVENTORIES

Group

2016 2015

RM RM

At carrying amount:-

Raw materials 30,570,162 56,072,963

Goods in transit - 1,242,905

Work-in-progress 16,204,764 24,603,147

Finished goods 206,592,548 207,458,337

Total inventories 253,367,474 289,377,352

Recognised in profit or loss:-

Inventories recognised in cost of sales 349,913,833 348,844,040

Inventories written down 1,036,671 1,737,747

Reversal of inventories written down (2,356,972) (65,639)

The reversal of written down of inventories was made when the related inventories were sold above their carrying amounts and increased in net realisable value because of changed economic circumstances.

14. TRADE RECEIVABLES

Group

2016 2015

RM RM

Trade receivables 115,764,167 137,625,475

Less: Allowance for impairment of trade receivables (6,615,863) (6,805,672)

109,148,304 130,819,803

Movement in allowance for impairment of trade receivables:-

Group

2016 2015

RM RM

At beginning of financial year (6,805,672) (8,208,698)

Charge for the financial year (3,150,044) (3,181,433)

Reversal of impairment

- payment received 3,122,960 4,432,164

- write off against allowance for impairment 307,730 181,163

Currency translation difference (90,837) (28,868)

At end of financial year (6,615,863) (6,805,672)



cont’d

14. TRADE RECEIVABLES cont’d

The currency exposure profile of the trade receivables is as follows (foreign currency balances are unhedged):-

Group

2016 2015

RM RM


US Dollar 41,018,414 31,546,536

Singapore Dollar 4,346,473 4,834,656

Great Britain Pound Sterling 9,807,737 14,333,231

EURO - 141,838

115,764,167 137,625,475

Trade receivables comprise amounts receivable from sales of goods. The credit terms granted on sales of goods ranged from 7 days to 90 days (2015: 7 days to 90 days). Allowance has been made for estimated irrecoverable of trade receivables based on the default experience of the Group.

15. OTHER RECEIVABLES

Group Company

2016 2015 2016 2015

RM RM RM RM

Non-trade receivables 181,232 2,207,342 - -

Advance payment to suppliers 5,614,977 15,774,639 - -

Deposit for purchase of property, plant and equipment 1,757,676 535,000 - -

Deposits 647,386 1,122,702 44,304 578,800

Prepayment of expenses 1,539,065 1,603,895 - -

GST receivable 572,962 - - -

10,313,298 21,243,578 44,304 578,800

The currency exposure profile of the other receivables is as follows (foreign currency balances are unhedged):-

Group Company

2016 2015 2016 2015

RM RM RM RM

Ringgit Malaysia 3,685,123 7,613,459 44,304 578,800

US Dollar 5,192,769 11,017,405 - -

Great Britain Pound Sterling 527,389 2,320,922 - -

EURO 332,259 107,205 - -

Singapore Dollar 575,758 184,587 - -

10,313,298 21,243,578 44,304 578,800



16. DERIVATIVES FINANCIAL INSTRUMENTS

Contract/Notional amount Assets Liabilities Net

RM RM RM RM

Group

Current assets

2016

Hedging derivatives:-

Cash flow hedges

- Cross currency swap 17,064,662 17,064,662 13,075,192 3,989,470

Non-hedging derivatives:-

Forward currency contracts 2,110,690 2,110,690 2,102,430 8,260

19,175,352 19,175,352 15,177,622 3,997,730

2015


Cash flow hedges

- Cross currency swap 18,662,167 18,662,167 16,272,250 2,389,917

Non-hedging derivatives:-

Forward currency contracts 2,170,110 2,170,110 2,165,640 4,470

20,832,277 20,832,277 18,437,890 2,394,387

Current liabilities

2016


Cash flow hedges

- Cross currency swap 3,807,944 3,080,492 3,807,944 (727,452)

2015


Cash flow hedges

- Cross currency swap 6,679,352 5,593,710 6,679,352 (1,085,642)



cont’d

16. DERIVATIVES FINANCIAL INSTRUMENTS cont’d

Contract/Notional amount Assets Liabilities Net

RM RM RM RM

Company

Current liabilities

2016


Cash flow hedges

- Cross currency swap 3,807,944 3,080,492 3,807,944 (727,452)

2015


Cash flow hedges

- Cross currency swap 6,679,352 5,593,710 6,679,352 (1,085,642)

Hedging activities – Cash flow hedges

Cross currency swap

The Group and the Company held cross currency swap contracts designated as hedges of cash flow currency risk for certain borrowings.

The terms of the cross currency swap contracts have been negotiated to match the terms of the borrowings.

The following table indicates the periods in which the cash flows associated with the cross currency swap are expected to occur and affect profit or loss:

Carrying amount

Expected cash flows

Less than 1 year

2 to 5 years

More than 5 years

RM RM RM RM RM

Group

2016

Cross currency swap 19,522,000 20,766,054 8,899,398 11,866,656 -

2015


Company

2016


2015




16. DERIVATIVES FINANCIAL INSTRUMENTS cont’d

Hedging activities – Cash flow hedges cont’d

Cross currency swap cont’d

The cash flow hedges of the borrowings were assessed to be highly effective and a net unrealised gain of RM1,957,743 and net unrealised gain of RM358,190 (2015: gain of RM2,745,793 and gain of RM355,876) of the Group and of the Company respectively relating to the hedging instruments are included in other comprehensive income. None was reclassified from equity to profit or loss during the current and previous financial year.

Non-hedging activities

The Group uses forward currency contracts to manage some of the transaction exposure. Trading derivatives are classified as a current asset or liability. The full fair value of a derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months and, as a current asset or liability, if the maturity of the hedged item is less than 12 months.

These contacts are not designated as cash flow or fair value hedges and are entered into for periods consistent with currency transaction exposure and fair value changes exposure. Such derivatives do not qualify for hedge accounting.

17. FIXED DEPOSITS WITH LICENSED BANKS

Group Company

2016 2015 2016 2015

RM RM RM RM

Current 2,352,101 2,283,357 - -

The fixed deposits with licensed banks of the Group are on fixed rate basis and will mature within 1 month to 6 months (2015: 1 month to 6 months) period.

The effective interest rates on fixed deposits with licensed banks ranged from 2.20% to 3.20% (2015: 2.20% to 3.29%) per annum.

All fixed deposits with licensed banks are denominated in Ringgit Malaysia.

18. CASH AND BANK BALANCES

The currency exposure profile of the cash and bank balances is as follows (foreign currency balances are unhedged):-

Group Company

2016 2015 2016 2015

RM RM RM RM

Ringgit Malaysia 27,292,182 32,162,842 1,877,726 6,396,418

US Dollar 38,552,148 14,115,033 - -

EURO 24,553 624,224 - -

Singapore Dollar 1,405,383 3,957,165 - -

Great Britain Pound Sterling 7,324,797 4,533,692 1,436,474 2,963,853

74,599,063 55,392,956 3,314,200 9,360,271



cont’d

19. SHARE CAPITAL

2016 2016 2015 2015

Unit RM Unit RM

Group and Company

Authorised:-

Ordinary shares of RM0.20 each 2,500,000,000 500,000,000 2,500,000,000 500,000,000

Issued and fully paid-up:-

Ordinary shares of RM0.20 each

At beginning of financial year 602,983,253 120,596,651 569,542,731 113,908,546

Issued during the financial year

- Pursuant to conversion of ICULS 12,032,027 2,406,405 10,785,562 2,157,113

- Pursuant to exercise of ESOS 1,456,200 291,240 22,652,300 4,530,460

- Pursuant to exercise of Warrants - - 2,660 532

At end of financial year 616,471,480 123,294,296 602,983,253 120,596,651

New ordinary shares issued during the financial year ranked pari passu in all respect with the existing ordinary shares of the Company.

20. SHARE PREMIUM

Group and Company

2016 2015

RM RM


Pursuant to conversion of ICULS 4,812,811 4,314,225

Pursuant to exercise of ESOS 1,077,681 16,268,366

Pursuant to exercise of Warrants - 1,330


21. TREASURY SHARES

Group and Company

The shareholders of the Company, through the Annual General Meeting held on 21 August 2008, approved the Company’s plan to repurchase up to 10% of the issued and paid-up share capital of the Company (“Share Buy Back”). The authority granted by the shareholders was subsequently renewed in every Annual General Meeting held and it was last renewed in the Annual General Meeting held on 18 August 2015. The Directors of the Company are committed to enhancing the value of the Company to its shareholders and believe that the purchase plan can be applied in the best interest of the Company and its shareholders.

The Company has distributed a share dividend via distribution of treasury shares on the basis of 1 treasury share for

every 100 existing ordinary shares in respect of the financial year ended 28 February 2015 and paid on 18 September 2015.



21. TREASURY SHARES cont’d

Group and Company cont’d

The Company repurchased 4,595,100 (2015: 2,815,500) ordinary shares of RM0.20 each of its issued share capital from the open market during the financial year. The average price paid for the shares repurchased was RM0.61 (2015: RM0.83) per share. The repurchased transactions were financed by internally generated funds. These shares repurchased were held as treasury shares and treated in accordance with the requirements of Section 67A of the Companies Act 1965.

The shares purchased were retained as treasury shares. The Company has the right to re-issue these shares at a later date. As treasury shares, the rights attached as to voting, dividends and participation in other distribution are suspended.

As at the financial year end, the Company held 4,766,460 (2015: 6,267,800) of the Company’s shares and the number of outstanding shares in issue after setting treasury shares off against equity are 611,705,020 (2015: 596,715,453).

No treasury shares were sold during the current and previous financial year.

22. REVALUATION RESERVE

Group

The revaluation reserve arose from the revaluation of lands and buildings and is not available for distribution as dividends.

23. EMPLOYEES SHARE OPTION RESERVE

Group and Company

Employees share option reserve represents the equity-settled share option granted to employees. The reserve is made up of the cumulative value of services received from employees recorded over the vesting period commencing from the grant date of equity-settled share option, and is reduced by the expiry or exercise of the share option.

The employees share option reserve is not available for distribution as dividends.



cont’d

24. IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“ICULS”)

Group and Company

2016 2015

RM RM

Equity component


Converted to ordinary shares during the financial year (4,821,211) (4,321,630)

At end of financial year - 4,821,211

Liability component

At beginning of financial year 764,204 1,975,947

Converted to ordinary shares during the financial year (741,158) (809,900)

Coupon interest paid/accrued (23,046) (666,185)

Interest expense - 264,342

At end of financial year - 764,204

Total - 5,585,415

On 22 December 2010, the Company issued and allotted the renounceable rights issue of RM74,841,040 nominal value of 7-Year 7% ICULS at 100% of its nominal value on the basis of two RM0.10 nominal value of ICULS for every one existing ordinary share of RM0.20 each held in the Company together with 74,841,040 free detachable warrants on the basis of one warrant for every ten ICULS subscribed for.

The ICULS were listed on the Bursa Malaysia Securities Berhad on 27 December 2010.

The ICULS represent the unconverted portion of the original RM74,841,040 nominal value of 7-Year 7% ICULS issued and allotted at 100% of the nominal value, net of deferred tax and the amount allocated to warrants reserve.

The salient features of the ICULS are as follows:-

(a) The ICULS are convertible into fully paid-up ordinary shares of RM0.20 each at any time during the tenure of the ICULS from the date of issue of the ICULS up to and including the maturity date on 21 December 2017, at the rate of six RM0.10 nominal value of ICULS for one fully paid-up ordinary shares of RM0.20 each in the Company.

(b) The ICULS have a tenure period of seven years from the date of issue and will not be redeemable in cash. All outstanding ICULS will be mandatorily converted by the Company into new ordinary shares at the conversion price of RM0.60 each on the maturity date.

(c) The interest on the ICULS is at the rate of 7% per annum on the nominal value of the ICULS and is payable twice per annum.

(d) Upon conversion of the ICULS into new ordinary shares, such shares would rank pari passu in all respects with the existing ordinary shares of the Company in issue at the date of allotment of the new ordinary shares except that the newly converted ordinary shares shall not be entitled to any rights, allotments of dividends and/or other distribution if the entitlement date is before the new shares allotment.

On issuance of the ICULS which contain both liability and equity component, the fair value of the liability portion is determined using a market interest rate for an equivalent financial instrument and the Company is using 13% per annum as the discounting factor. These amounts are carried as liability until extinguished on conversion or maturity of the ICULS. The remaining proceeds are allocated to the ICULS which is recognised and included in shareholders’ equity.

All outstanding ICULS have been fully converted into ordinary shares of the Company through compulsory conversion exercise which was completed on 7 May 2015.



25. CASH FLOW HEDGE RESERVE

The cash flow hedge reserve contains the effective portion of the gain or loss on hedging instruments in cash flow hedges and is not available for distribution as dividends.

26. WARRANTS RESERVE

Group and Company

2016 2015

RM RM


Pursuant to exercise of Warrants - (266)


On 22 December 2010, the Company issued 748,410,400 ICULS at the nominal value of RM0.10, together with 74,841,040 free detachable warrants to the holders of the ICULS on the basis of one free detachable warrants for every ten ICULS subscribed.

The fair value of the warrants is estimated using the Vanilla American model, taking into account the terms and conditions upon which the warrants are acquired. The fair value of the warrants measured at issuance date and the assumptions are as follows:-

Valuation model Vanilla

Exercise type American

Tenure 10 years

5-day volume weighted average price of Pantech share at 23 December 2010 RM0.58

Conversion price RM0.60

Volatility rate 20 %

Each warrant entitles the registered holder of warrant to subscribe for one new ordinary share in the Company at any time on or after 22 December 2010 up to the date of expiry on 21 December 2020, at an exercise price of RM0.60 per share or such adjusted price in accordance with the provisions in the Deed Poll. The warrants were listed on the Bursa Malaysia Securities Berhad on 27 December 2010.

During the financial year, no warrants were exercised and converted to ordinary shares.

As at the reporting date, 74,816,370 (2015: 74,816,370) warrants remained unexercised.

27. UNAPPROPRIATED PROFIT

Effective from 1 January 2014, the Company is required by the Income Tax Act 1967 to pay dividend under single tier income tax system. As such, the Company may frank the payment of dividends out of its entire unappropriated profit.



cont’d

28. FINANCE LEASE CREDITORS

Group

2016 2015

RM RM

Minimum lease payment

- within 1 year 3,821,923 4,430,959

- after 1 year but not later than 5 years 3,767,512 6,690,976

7,589,435 11,121,935

Less: Interest in suspense (476,443) (855,400)

7,112,992 10,266,535

Total principal sum payable

- within 1 year 3,505,898 3,959,224

- after 1 year but not later than 5 years 3,607,094 6,307,311

7,112,992 10,266,535

The interest rates on the finance lease range from 2.26% to 4.78% (2015: 2.26% to 4.78%) per annum.

Included in the above total principal sum payable is an amount of RM132,635 (2015: RM142,441) denominated in Singapore Dollar and RM2,019,122 (2015: RM2,473,921) denominated in Great Britain Pound Sterling.

29. BORROWINGS

Group Company2016 2015 2016 2015

RM RM RM RM

CurrentUnsecured:-

Term loans 18,180,757 19,895,951 5,022,600 7,032,801Trade loans:-- Accepted bills-i 24,343,129 25,215,449 - -- Bankers’ acceptance 33,977,000 48,060,000 - -- Trust receipts 132,590 - - -- Foreign currency loan-i 5,010,538 10,866,406 - -- Onshore foreign currency loans 27,470,716 30,523,406 - -- Commodity Murabahah Revolving Credit-i 5,000,000 5,000,000 5,000,000 5,000,000- Clean import loans 1,727,057 10,280,976 - -

Total current 115,841,787 149,842,188 10,022,600 12,032,801

Non-currentUnsecured:-

Term loans 36,710,294 54,891,264 1,250,000 6,250,000

Total non-current 36,710,294 54,891,264 1,250,000 6,250,000

Total borrowings 152,552,081 204,733,452 11,272,600 18,282,801



29. BORROWINGS cont’d

(i) The term loans, accepted bills-i, bankers’ acceptance, trust receipts, foreign currency loan-i, bank overdrafts and clean import loans of the Group are obtained by way of corporate guarantee from the Company and negative pledge on subsidiary companies’ assets. There is no security held to obtain Commodity Murabahah Revolving Credit-i facility.

A term loan of a subsidiary company is obtained by way of facility agreement and corporate guarantee from the Company.

The term loans of the Group and of the Company bear interest at rates ranging from 4.73% to 6.10% (2015: 4.53% to 6.80%) per annum respectively.

All term loans of the Group and of the Company are repayable by monthly, quarterly or yearly installments.

The accepted bills-i bears interest at rates ranging from 3.63% to 4.61% (2015: 3.62% to 4.82%) per annum.

The bankers’ acceptance bears interest at rates ranging from 3.27% to 4.66% (2015: 3.53% to 4.66%) per annum.

The trust receipts bear interest at interest rate of 2.72% (2015: Nil) per annum.

The foreign currency loan-i bears interest at rates ranging from 1.16% to 2.14% (2015: 1.16% to 1.87%) per annum.

The bank overdraft bears interest at rates ranging from 7.85% to 8.10% (2015: 6.85% to 8.51%) per annum.

The revolving credits of the Group bear interest at rates ranging from 4.80% to 5.04% (2015: 4.78% to 5.03%) per annum.

The Commodity Murabahah Revolving Credit-i of the Group and of the Company bears interest at rates ranging from 4.63% to 4.81% (2015: 4.55% to 4.79%) per annum.

The clean import loans of the Group bear interest at the rate of 1.05% (2015: 1.05%) per annum.

(ii) The onshore foreign currency loans of the Group are obtained by way of corporate guarantee from the Company. Certain onshore foreign currency loans are obtained by way of negative pledge on subsidiary companies’ assets.

It bears interest at rates ranging from 1.00% to 1.77% (2015: 1.25% to 2.00%) per annum.

The currency exposure profile of the borrowings is as follows (foreign currency balances are unhedged):-

Group Company

2016 2015 2016 2015RM RM RM RM

Ringgit Malaysia 115,074,880 148,017,413 8,136,300 13,237,550

US Dollar 32,613,844 41,389,812 - -

Great Britain Pound Sterling 4,863,357 15,326,227 3,136,300 5,045,251

152,552,081 204,733,452 11,272,600 18,282,801



cont’d

30. OTHER PAYABLES

Group Company2016 2015 2016 2015

RM RM RM RM

Current

Non-trade payables 4,343,719 10,957,370 73,977 24,368

Deposits received 119,750 149,750 - -

Accrual of expenses 5,012,944 4,527,922 238,588 349,748

Advance payment from customers 7,236,636 1,021,354 - -

GST payable 261,692 - 21,218 -

Total current 16,974,741 16,656,396 333,783 374,116

Non-current

Provision for reinstatement cost 262,569 232,876 - -

Total non-current 262,569 232,876 - -

Total other payables 17,237,310 16,889,272 333,783 374,116

Provision for reinstatement cost refers to estimated costs made by a subsidiary company required to reinstate its office premise and retail outlets to its original state according to the terms and conditions of the respective tenancy agreements.

Movement in the provision for reinstatement cost:-

Group2016 2015

RM RM

At beginning of financial year 232,876 226,919

Currency translation difference 29,693 5,957

At end of financial year 262,569 232,876

Included in the non-trade payables of the Group is an amount of RM753,260 (2015: RMNil) due to a company in which a director of a subsidiary company has equity interest in it of which the amount due is unsecured and bears no interest.

The currency exposure profile of the other payables is as follows (foreign currency balances are unhedged):-

Group Company2016 2015 2016 2015

RM RM RM RM

Ringgit Malaysia 10,245,517 14,516,877 333,783 374,116

US Dollar 2,278,984 1,264,121 - -

Singapore Dollar 3,744,599 517,447 - -

Great Britain Pound Sterling 968,210 590,827 - -

17,237,310 16,889,272 333,783 374,116



31. DEFERRED TAX LIABILITIES

Group2016 2015

RM RM


Transferred (to)/from profit or loss (Note 35) (103,873) 581,670

Transferred from other comprehensive income 1,323,919 -

Realisation of deferred tax liabilities upon depreciation of revalued assets (41,147) (41,147)

Currency translation difference 61,840 16,448


The balance in the deferred tax liabilities is made up of temporary differences arising from:-

Group2016 2015

RM RM

Carrying amount of qualifying property, plant and equipment in excess of their tax base 3,955,750 3,997,782

Revaluation of land and building 1,936,249 653,478

5,891,999 4,651,260

32. TRADE PAYABLES Group Trade payables comprise amounts outstanding for trade purchases. The credit terms granted to the Group ranged from

30 days to 90 days (2015: 30 days to 90 days).

The currency exposure profile of the trade payables is as follows (foreign currency balances are unhedged):-

Group2016 2015

RM RM


US Dollar 4,941,718 9,298,736

Singapore Dollar 2,649,170 6,447,207

Great Britain Pound Sterling 1,846,066 2,697,974

EURO 449,627 162,332

21,126,097 34,790,970



cont’d

33. REVENUE

Group Company2016 2015 2016 2015

RM RM RM RM

Sales of goods 513,293,392 525,771,598 - -

Dividend income - - 14,018,613 26,118,320

Management fee - - 2,565,588 2,526,088

513,293,392 525,771,598 16,584,201 28,644,408

34. PROFIT BEFORE TAX

Profit before tax has been determined after charging/(crediting), amongst others, the following items:-

Group Company2016 2015 2016 2015

RM RM RM RM

Allowance for impairment of receivables 3,150,044 3,181,433 - -

Amortisation of prepaid land lease payments 323,256 323,256 - -

Auditors’ remuneration

- statutory 150,500 143,000 19,000 18,000

- non-statutory 67,600 62,600 27,200 24,800

- other auditors 156,617 126,805 - -

Bad debts written off 13,305 109,073 - -

Depreciation 14,524,732 13,629,004 - -

Directors’ remuneration

- fees 850,171 618,000 160,128 168,000

- other emoluments 7,648,619 7,436,139 1,691,844 1,719,387

Direct operating expenses: -

- revenue generating investment properties during the financial year 41,699 90,791 - -

Employees Share Option Scheme expenses - 479,942 - 479,942

Fair value gain on derivatives financial instruments (3,790) (12,890) - -

Hire of machinery 470 2,350 - -

Interest expense

- hire purchase/finance lease 397,192 543,640 - -

- term loans 2,710,493 3,778,590 479,927 933,466

- bank overdrafts 92,505 25,058 - -

- ICULS liability component interest (118,578) 264,342 (118,578) 264,342

- onshore foreign currency loans, trust receipts and bankers’ acceptance 3,485,363 3,752,061 - -

- subsidiary companies - - 16,110 285,208

- revolving credit 430,908 236,580 236,828 113,465

- clean import loans 318,475 97,898 - -



34. PROFIT BEFORE TAX cont’d

Profit before tax has been determined after charging/(crediting), amongst others, the following items:- cont’d

Group Company

2016 2015 2016 2015

RM RM RM RM

Inventories written down 1,036,671 1,737,747 - -

Property, plant and equipment written off 22,328 10,341 - -

Rental expense

- premises 1,485,118 1,336,314 - -

- factory and warehouse 227,753 231,904 - -

- forklift 196,860 95,530 - -

- office equipment 102,254 100,174 - -

Revaluation loss on property, plant and equipment 100,722 - - -

Under provision of leave entitlement - 32,950 - -

(Gain)/Loss on foreign exchange

- realised (3,182,793) (1,762,439) 202,542 (141,495)

- unrealised (798,782) 1,976,561 17,207 398,073

Allowance for impairment of receivables no longer required (3,122,960) (4,613,327) - -

Bad debts recovered - (9,809) - -

Dividend income

- subsidiary companies - - (14,018,613) (26,118,320)

Fair value gain adjustment on investment properties (1,670,000) - - -

Loss/(Gain) on disposal of property, plant and equipment 434,603 (220,805) - -

Government grant received (155,247) (88,861) - -

Loss from cross currency swap 40,998 22,497 40,998 22,497

Interest income from fixed deposits (124,808) (218,343) - -

Interest income from current bank accounts (104,202) (227,963) (32,551) (115,727)

Interest income from intercompany loans - - (335,593) (1,469,967)

Warranty claim - (1,358,100) - (1,358,100)

Rental income (414,000) (166,750) - -

Reversal of inventories written down (2,356,972) (65,639) - -

Share of loss from associate company 310,939 74,479 - -

Share of profit from joint venture (107,281) (48,415) - -



cont’d

34. PROFIT BEFORE TAX cont’d

The estimated monetary value of benefits provided to the Directors of the Group during the financial year by way of usage of the Group’s assets and other benefits amounted to RM292,484 (2015: RM115,886).

The remuneration paid to the Directors of the Company is categorised as follows:-

FeesOther

emolumentsBenefits-

in-kind Total

RM RM RM RM

2016

Executive Directors 640,040 5,915,333 292,484 6,847,857

Non-Executive Directors 160,128 - - 160,128

Total 800,168 5,915,333 292,484 7,007,985

2015

Executive Directors 350,000 5,581,209 115,886 6,047,095

Non-Executive Directors 168,000 - - 168,000

Total 518,000 5,581,209 115,886 6,215,095

The remuneration paid to the Directors of the Company analysed into bands are as follows:-

Number of Directors <RM100,000

RM100,000to

RM1,000,000

RM1,000,001to

RM2,000,000

2016

Executive Directors - 2 3

Non-Executive Directors 4 - -

2015

Executive Directors - 2 3

Non-Executive Directors 4 - -



35. TAX EXPENSE

Tax recognised in profit or loss

Group Company2016 2015 2016 2015

RM RM RM RM

In Malaysia

Current year’s tax expense 15,345,623 13,988,647 594,175 638,753

(Over)/Under provision of tax expense in prior financial year (280,913) (566,090) 123,639 (125,398)

Realisation of deferred tax liabilities upon depreciation of revalued assets (41,147) (41,147) - -

Transferred to deferred tax liabilities (Note 31) 326,508 177,000 - -

Transferred from deferred tax assets (Note 12) 301,987 719,379 190,615 303,370

15,652,058 14,277,789 908,429 816,725

Outside Malaysia

Current year’s tax expense - 907,802 - -

Over provision of tax expense in prior financial year (90,705) (39,901) - -

Transferred (from)/to deferred tax liabilities (Note 31) (430,381) 404,670 - -

(521,086) 1,272,571 - -

Total 15,130,972 15,550,360 908,429 816,725

Malaysian income tax is calculated at the statutory tax rate of 24% (2015: 25%) of the estimated taxable profits for the financial year.

The reconciliations of income tax expense applicable to profit before tax at the statutory tax rate to the income tax expense at the effective tax rate of the Group and of the Company are as follows:-

Group Company2016 2015 2016 2015

RM RM RM RM

Profit before tax 53,076,127 58,702,056 12,766,210 25,432,907

Tax expense at Malaysian statutory tax rate of 24% (2015: 25%) 12,738,270 14,675,514 3,063,890 6,358,227

Tax effects in respect of:-

Expenses not deductible for tax purposes 4,240,403 4,006,093 1,158,749 1,268,345

Income not subject to tax (2,118,921) (1,658,970) (3,437,849) (6,684,449)

Deferred tax assets not recognised in current financial year 203,629 (460,985) - -

Under/(Over) provision of deferred tax liabilities in prior financial year 562,000 (167,000) - -

(Over)/Under provision of tax expense in prior financial year (371,618) (605,991) 123,639 (125,398)



cont’d

35. TAX EXPENSE cont’d

Tax recognised in profit or loss cont’d

The reconciliations of income tax expense applicable to profit before tax at the statutory tax rate to the income tax expense at the effective tax rate of the Group and of the Company are as follows:- cont’d

Group Company2016 2015 2016 2015

RM RM RM RM

Realisation of deferred tax liabilities upon depreciation of revalued assets (41,147) (41,147) - -

Effect of change in tax rate on opening of deferred tax (57,541) (129,886) - -

Utilisation of unabsorbed capital allowance brought forward (24,103) (67,268) - -

Total tax expense 15,130,972 15,550,360 908,429 816,725

Tax recognised in other comprehensive income

Group2016 2015

RM RM

Revaluation of land and buildings 1,310,556 -

The Group has unutilised capital allowances, unabsorbed value of increased in exports exemption and unabsorbed business losses which can be carried forward to offset against future taxable profit amounted to approximately RM50,290,000, RM9,577,000 and RM8,561,000 (2015: RM47,677,000, RM9,577,000 and RM8,561,000) respectively.

36. EARNINGS PER SHARE

(a) Basic earnings per share

The earnings per share have been calculated based on Group’s profit after tax for the financial year attributable to owners of the Company of RM37,972,555 (2015: RM43,151,696) and the weighted average number of ordinary shares in issue during the financial year of 609,062,606 (2015: 585,064,015).

(b) Diluted earnings per share

For the purpose of calculating diluted earnings per share, profit after tax for the financial year attributable to owners of the Company and weighted average number of ordinary shares in issue during the financial year have been adjusted for dilutive effects of all potential ordinary shares (share options granted to employees, ICULS and exercise of warrants).

Group2016 2015

Profit after tax for the financial year attributable to owners of the Company (RM) 37,972,555 43,151,696

Impact on income statement upon conversion of ICULS (RM) - (39,028)

Adjusted profit after tax (RM) 37,972,555 43,112,668



36. EARNINGS PER SHARE cont’d

(b) Diluted earnings per share cont’d

Group

2016 2015

Weighted average number of ordinary shares in issue (basic) 609,062,606 585,064,015

Adjustment for dilutive effect on conversion of ICULS - 16,898,401

Adjustment for dilutive effect on exercise of warrant - 16,754,333

Adjustment for dilutive effect on exercise of ESOS - 10,518,340

Weighted average number of ordinary shares in issue (diluted) 609,062,606 629,235,089

Diluted earnings per share (sen) 6.23 6.85

37. EMPLOYEE BENEFITS EXPENSE

Group Company

2016 2015 2016 2015

RM RM RM RM

Staff costs 41,953,093 42,114,318 2,036,617 2,079,333

Employee benefits expense of the Group and of the Company consists of, amongst others, the following items:-

Group Company

2016 2015 2016 2015

RM RM RM RM

Directors’ remuneration

- Salary 5,828,382 5,727,319 1,532,400 1,532,400

- EPF 631,056 714,899 156,168 183,888

- Bonus 1,179,150 983,815 - -

- SOCSO 10,031 10,106 3,276 3,099

Defined contribution plan – staff EPF 2,168,217 2,057,833 36,865 37,380



cont’d

38. EMPLOYEES SHARE OPTION SCHEME

(a) The Pantech Group Holdings Berhad Employees Share Option Scheme (“ESOS”) is governed by the by-laws and approved by the shareholders at an Extraordinary General Meeting held on 10 February 2010. The tenure of the ESOS is for 5 years from 3 March 2010 and expired on 2 March 2015.

The salient features of the ESOS are as follows:-

(i) The Option Committee appointed by the Board of Directors to administer the ESOS, may from time to time grant options to eligible employees of the Group to subscribe for new ordinary shares of RM0.20 each in the Company.

(ii) Subject to the discretion of the Option Committee, any employee whose employment has been confirmed shall be eligible to participate in the ESOS.

(iii) The total number of ordinary shares to be issued under the ESOS shall not exceed in aggregate 15% of the issued and paid-up share capital (excluding treasury shares) of the Company at any point of time during the tenure of the ESOS.

(iv) The exercise price for each share shall be the higher of weighted average market price of the shares as quoted in the Daily Official List issued by the Bursa Malaysia Securities Berhad for the five market days immediately preceding the grant date or the par value of the ordinary shares; and provided that the exercise price is not provided at a discount of more than 10% from the five days weighted average market price of the shares immediately preceding the grant date.

(v) All of the new ordinary shares issued upon exercise of the options granted under the ESOS will rank pari passu in all respects with the existing ordinary shares of the Company in issue at the date of allotment of the new ordinary shares except that the newly allotted ordinary shares shall not be entitled to any rights, allotments of dividends and/or other distribution if the entitlement date is before the shares allotment date.

(b) Number of unexercised share option

Company

2016 2015


Exercised during the financial year (1,456,200) (22,652,300)

Expired during the financial year (318,000) -


Analysed as:-

Exercisable in financial year 2015 - 1,774,200

Exercisable in financial year 2016 - -

- 1,774,200

(c) Option price

Company

RM

Option granted

- on grant date 0.86

- after Bonus Issue, ICULS and Warrants 0.67



38. EMPLOYEES SHARE OPTION SCHEME cont’d

(d) Share option exercised during the financial year

Share option exercised during this financial year resulted in the issuance of 1,456,200 new ordinary shares at the exercise price of RM0.67 each.

(e) Fair value of share option granted The fair value of share option granted was estimated by an external valuer using the Binomial Tree Method,

taking into consideration of the terms and conditions upon which the option was granted.

The fair value of the share option measured at grant date and the assumptions are as follow:-

Fair value of share option granted on 3 March 2010 based on vesting date (RM)

- 3 March 2011 0.226

- 3 March 2012 0.253

- 3 March 2013 0.267

- 3 March 2014 0.272

Expected volatility of Company share price (%) 40.00

Option term (years) 5

Risk free rate of interest (%) per annum 3.68

Expected dividend yield (%) per annum 5.00

39. RELATED PARTY DISCLOSURES

(a) The transactions of the Group and of the Company with the related parties were as follows:-

Group Company

2016 2015 2016 2015

RM RM RM RM

Transactions with subsidiary companies:-

- management fee received - - 2,565,588 2,526,088

- dividend received (net) - - 14,018,613 26,118,320

- loan interest received - - 335,593 1,469,967

- loan interest paid - - 16,110 285,208

Transactions with an associate company:-

- sales 35,752,998 22,735,467 - -

- purchases 1,673,494 1,201,736 - -

- machine servicing charged 1,020,000 718,000 - -

- rental received 192,000 192,000 - -

Transaction with joint venture company:-

- purchases 1,081,345 686,505 - -

(b) The outstanding balances arising from related party transactions as at the reporting date are disclosed in Notes 8, 9 and 10 to the Financial Statements.



cont’d

39. RELATED PARTY DISCLOSURES cont’d

(c) The remuneration of key management personnel is same with the Directors’ remunerations as disclosed in Notes 34 and 37 to the Financial Statements. Key management personnel is defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Company either directly or indirectly and entity that provides key management personnel services to the Company. The Company has no other members of key management personnel apart from the Board of Directors.

The following are movements in share option of key management personnel:-

Group

2016 2015


Exercised during the financial year (1,000,000) (15,885,000)

Expired during the financial year (115,000) -


The share option was granted to key management personnel on terms and conditions similar to those offered to employees of the Group as disclosed in Note 38 to the Financial Statements.

40. CAPITAL COMMITMENTS

Group

2016 2015

RM RM

Authorised and contracted for:-

Purchase of - freehold land - 2,465,000

- leasehold land 7,212,055 -

- crane, plant and machinery 3,261,649 626,000

- buildings - 6,182,575

41. RENTAL COMMITMENTS

The future rental expense commitments are as follows:-

Group

2016 2015

RM RM

Year 2016 - 1,889,522

Year 2017 1,088,660 991,337

Year 2018 to 2020 260,873 230,022

1,349,533 3,110,881



42. OPERATING LEASE ARRANGEMENTS

The Group has entered into operating lease agreements on its assets. These leases have remaining lease terms of between 8 to 25 months (2015: 12 to 36 months).

The future minimum lease payments receivable under operating leases contracted for as at the reporting date but not recognised as receivables are as follows:-

Group

2016 2015

RM RM

Within the next twelve months 436,000 414,000

After the next twelve months 390,000 826,000

826,000 1,240,000

43. CONTINGENT LIABILITIES

Company

2016 2015

RM RM

Unsecured:-

Corporate guarantees given to licensed financial institutions for credit facilities granted to subsidiary companies 712,755,292 675,597,355

Corporate guarantees given to finance lease creditors for finance lease facilities granted to subsidiary companies 9,321,622 10,130,099

Corporate guarantees given to third parties for supply of goods and services to subsidiary companies 158,484 4,957

722,235,398 685,732,411

The corporate guarantees do not have determinable effect on the terms of the credit facilities due to the banks requiring guarantee as a pre-condition for approving the credit facilities granted to the subsidiary companies. The actual terms of the credit facilities are likely to be the best indicator of “at market” terms and hence the fair value of the credit facilities are equal to the credit facilities and contract bond amount received by the subsidiary companies. As such, there is no value on the corporate guarantee to be recognised in the financial statements.

44. SIGNIFICANT EVENT AFTER THE REPORTING DATE

At the forthcoming Annual General Meeting, a final single tier dividend, in respect of the financial year ended 29 February 2016, of 0.50 sen per ordinary share and a share dividend distribution of approximately 6.10 million treasury shares on the basis of 1 treasury share for every 100 existing ordinary shares will be proposed for shareholders’ approval. The financial statements for current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 28 February 2017.



cont’d

45. OPERATING SEGMENTS - GROUP (a) Business segments

The Group is organised on three major operating segments. These operating segments are monitored separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit in the consolidated financial statements. The following summary describes the operations in each of the Group’s reportable segments:-

Operating segments Business activities

Trading Trading, supply and stocking of high pressure seamless and specialised steel pipes, fittings, flanges, valves and other related products for use in the oil and gas, gas reticulation, marine, onshore and offshore heavy engineering, power generation, petrochemicals, palm oil refining and other related industries.

Manufacturing Manufacturing and supply of butt-welded carbon steel fittings such as elbows, tees, reducers, end-caps and high frequency induction long bends, manufacturing and supply of stainless steel and alloy pipes, fittings and related products, as well as milling, machining and welding of tube and pipe fitting in special metals for use in the oil and gas, marine, onshore and offshore heavy engineering, petrochemical and chemical, palm oil refinery and oleochemical, power generation, pharmaceutical, water and other related industries.

Investment holding Investment holding, property investment and management service.

Transfer prices between operating segments are on negotiated basis.



45.

OPER

ATIN

G SE

GMEN

TS -

GROU

P c

ont’d

(a

) Bu

sine

ss s

egm

ents

con

t’d Tr

adin

g

M

anuf

actu

ring

In

vest

men

t

hold

ing

Co

nsol

idat

ion

adju

stm

ents

Note

s

Cons

olid

ated

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

RMRM

RMRM

RMRM

RMRM

RMRM

Reve

nue

Exte

rnal

reve

nue

317,

794,

145

298,

039,

578

195,

499,

247

227,

732,

020

--

--

513,

293,

392

525,

771,

598

Inte

r-seg

men

t rev

enue

33,4

75,8

1228

,637

,645

29,1

89,0

9038

,115

,519

16,5

84,2

0128

,644

,408

(79,

249,

103)

(95,

397,

572)

A-

-

Tota

l rev

enue

351,

269,

957

326,

677,

223

224,

688,

337

265,

847,

539

16,5

84,2

0128

,644

,408

(79,

249,

103)

(95,

397,

572)

513,

293,

392

525,

771,

598

Resu

lts

Segm

ent p

rofit

/(lo

ss)

32,5

84,8

3731

,026

,114

30,4

42,7

8340

,083

,557

(1,6

15,2

51)

(3,1

31,0

13)

--

B61

,412

,369

67,9

78,6

58

Inte

rest

inco

me

527,

870

642,

108

356,

819

136,

905

389,

248

1,60

6,46

2(1

,044

,927

)(1

,939

,169

)22

9,01

044

6,30

6

Finan

ce co

sts

(4,3

85,1

92)

(4,2

55,2

54)

(4,0

95,5

33)

(5,5

66,6

93)

(925

,796

)(1

,813

,578

)1,

044,

927

1,93

8,68

1(8

,361

,594

)(9

,696

,844

)

Depr

ecia

tion

and

amor

tisat

ion

(3,8

32,6

73)

(3,5

53,0

90)

(10,

252,

872)

(9,6

36,7

21)

(24)

(30)

(762

,419

)(7

62,4

19)

(14,

847,

988)

(13,

952,

260)

Shar

e of

resu

lts o

f ass

ocia

te

com

pany

(310

,939

)(7

4,47

9)-

--

--

-(3

10,9

39)

(74,

479)

Shar

e of

resu

lts o

f joi

nt

vent

ure

com

pany

107,

281

48,4

15-

--

--

-10

7,28

148

,415

Inco

me

tax

expe

nse

(8,1

59,1

11)

(6,4

02,0

74)

(6,0

04,4

59)

(8,3

04,9

80)

(986

,540

)(8

62,4

44)

19,1

3819

,138

(15,

130,

972)

(15,

550,

360)

Othe

r non

-cas

h in

com

e/(e

xpen

ses)

(6

,486

,742

)1,

653,

087

2,98

9,72

3(3

8,17

9)1,

670,

000

(479

,942

)4,

320,

000

(1,7

43,9

22)

C2,

492,

981

(608

,956

)



cont’d

45. OPERATING SEGMENTS - GROUP cont’d

(a) Business segments cont’d

Trading ManufacturingInvestment

holdingConsolidation adjustments Notes Consolidated

RM RM RM RM RM

2016

Assets

Segment assets 387,281,732 362,960,523 248,862,344 (283,361,605) D 715,742,994

Investment in an associate company 2,233,712 - - - 2,233,712

Investment in joint venture company 796,904 - - - 796,904

Additions to non-current assets other than financial instruments and deferred tax assets 10,532,976 9,975,461 - - E 20,508,437

Liabilities

Segment liabilities 52,266,256 33,401,947 13,105,327 (55,568,856) F 43,204,674

2015

Assets

Segment assets 366,142,633 389,216,182 257,355,871 (270,556,117) D 742,158,569

Investment in an associate company 2,544,651 - - - 2,544,651

Investment in joint venture company 608,590 - - - 608,590

Additions to non-current assets other than financial instruments and deferred tax assets 2,062,108 20,095,318 - (4,371,214) E 17,786,212

Liabilities

Segment liabilities 47,946,913 37,996,540 14,947,980 (42,901,774) F 57,989,659





Notes to the nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements:

A. Inter-segment revenues are eliminated on consolidation.

B. The following items are added to/(deducted from) segment profit to arrive at “profit before tax” presented in the consolidated income statement:-

2016 2015

RM RM

Segment profit 61,412,369 67,978,658

Interest income 229,010 446,306

Finance costs (8,361,594) (9,696,844)

Share of results of associate company (310,939) (74,479)

Share of results of joint venture company 107,281 48,415

Profit before tax 53,076,127 58,702,056

C. Other non-cash (expenses)/income consist of the following items as presented in the respective notes to

the financial statements:-

2016 2015

RM RM

Allowance for impairment of receivables (3,150,044) (3,181,433)

Bad debts written off (13,305) (109,073)

Bad debts recovered - 9,809

Property, plant and equipment written off (22,328) (10,341)

Inventories written down (1,036,671) (1,737,747)

Reversal of inventories written down 2,356,972 65,639

Allowance for impairment of receivables no longer required 3,122,960 4,613,327

Fair value gain adjustment on investment properties 1,670,000 -

(Loss)/Gain on disposal of property, plant and equipment (434,603) 220,805

Employees Share Option Scheme expenses - (479,942)

2,492,981 (608,956)



cont’d



Notes to the nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements:- cont’d

D. The following items are added to segment assets to arrive at total assets reported in the consolidated statement of financial position:-

2016 2015

RM RM

Segment assets 715,742,994 742,158,569

Investment in an associate company 2,233,712 2,544,651

Investment in a joint venture company 796,904 608,590

Deferred tax assets 1,413,087 1,701,711

Tax recoverable 120,031 355,150

Total assets 720,306,728 747,368,671

E. Additions to non-current assets other than financial instruments and deferred tax assets consist of:-

2016 2015

RM RM

Property, plant and equipment 8,372,496 14,600,046

Capital work-in-progress 12,135,941 3,186,166

20,508,437 17,786,212

F. The following items are added to segment liabilities to arrive at total liabilities reported in the consolidated statement of financial position:-

2016 2015

RM RM

Segment liabilities 43,204,674 57,989,659

Finance lease creditors 7,112,992 10,266,535

Borrowings 152,552,081 204,733,452

Tax payable 2,275,120 2,322,330

Deferred tax liabilities 5,891,999 4,651,260

Total liabilities 211,036,866 279,963,236




(b) Geographical information

The Group’s revenue and non-current assets information based on geographical location are as follows:-

Revenue Non-current assets

2016 2015 2016 2015

RM RM RM RM

Malaysia * 461,107,299 445,562,553 227,123,833 215,917,902

Republic of Singapore 21,940,926 35,202,775 2,003,379 2,045,542

United Kingdom 30,245,167 45,006,270 19,958,234 21,326,585

513,293,392 525,771,598 249,085,446 239,290,029

* Company’s home country

Non-current assets information presented above consist of the following items as presented in the consolidated statement of financial position:-

2016 2015

RM RM

Property, plant and equipment 199,755,305 198,000,565

Prepaid land lease payments 26,843,738 27,166,994

Capital work-in-progress 10,260,534 3,073,452

Investment in an associate company 2,233,712 2,544,651

Investment in a joint venture company 796,904 608,590

Deferred tax assets 1,413,087 1,701,711

Goodwill on acquisition 1,282,166 1,364,066

Investment properties 6,500,000 4,830,000

249,085,446 239,290,029

(c) Major customers

The Group does not have any revenue from a single external customer which represents 10% or more of the Group’s revenue.

46. FINANCIAL INSTRUMENTS

Risk management objectives and policies

The Group is exposed to various risks in relation to financial instruments. The Group’s financial assets and liabilities by category are summarised in Note 3.10 and 3.11 respectively. The main types of risks are foreign currency risk, interest rate risk, credit risk and liquidity risk.

Financial risk management policy is established to ensure that adequate resources are available for the development of the Group’s businesses whilst managing its foreign currency risk, interest rate risk, credit risk and liquidity risk. The Group operates within clearly defined policies and procedures that are approved by the Board of Directors to ensure the effectiveness of the risk management process.



cont’d

46. FINANCIAL INSTRUMENTS cont’d

Risk management objectives and policies cont’d

(a) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group is exposed to foreign currency risk mostly on its sales and purchases that are denominated in a currency other than the functional currency of the Group. The currencies giving rise to this risk are primarily US Dollar (“USD”), Singapore Dollar (“SGD”), Great Britain Pound Sterling (“GBP”) and EURO.

The Group uses forward exchange contracts to hedge its foreign currency risk and forward exchange contracts have maturities of less than one year from the reporting date. Where necessary, the forward exchange contracts are rolled over at maturity.

Based on carrying amounts as at the reporting date, foreign currency denominated financial assets and financial liabilities which expose the Group and the Company to currency risk are disclosed below:-

USD SGD GBP EURO

RM RM RM RM

Group

2016

Financial assets 91,244,013 6,327,614 17,659,923 356,812

Financial liabilities (39,834,546) (7,328,438) (9,696,755) (449,627)

Net exposure 51,409,467 (1,000,824) 7,963,168 (92,815)

2015

Financial assets 56,678,974 8,983,594 21,187,845 873,267

Financial liabilities (51,952,669) (7,763,374) (21,088,949) (162,332)

Net exposure 4,726,305 1,220,220 98,896 710,935

Company

2016

Financial assets - - 1,420,886 -

Financial liabilities - - (3,136,300) -

Net exposure - - (1,715,414) -

2015

Financial assets - 27,054 4,083,570 -

Financial liabilities - - (5,045,521) -

Net exposure - 27,054 (961,951) -





(a) Foreign currency risk cont’d

Foreign currency sensitivity analysis

The following table illustrates the sensitivity of profit in regards to the Group’s and the Company’s financial assets and financial liabilities and the RM/USD exchange rate, RM/SGD exchange rate, RM/GBP exchange rate and RM/EURO exchange rate with ‘all other things are being equal’.

It assumes a +/- 6% (2015: 4%) change of the RM/USD, RM/SGD, RM/GBP and RM/EURO exchange rates respectively. The percentage has been determined based on the average market volatility in exchange rates in the previous 12 months. The sensitivity analysis is based on the Group’s and the Company’s foreign currency financial instruments held at each reporting date and also takes into account forward exchange contracts that offset effects from changes in currency exchange rates.

If the RM had strengthened against the USD, SGD, GBP and EURO by 6% (2015: 4%) respectively, this would have the following impact:-

Increase/(Decrease) on profit for the financial year

USD SGD GBP EURO Total

Group RM RM RM RM RM

2016 (3,084,568) 60,049 (477,790) 5,569 (3,496,740)

2015 (189,052) (48,809) (3,956) (28,437) (270,254)

USD SGD GBP EURO Total

Company RM RM RM RM RM

2016 - - 102,925 - 102,925

2015 - (1,082) 38,478 - 37,396

If the RM had weakened against the USD, SGD, GBP and EURO by 6% (2015: 4%) respectively, then the impact to profit for the financial year would be the opposite effect.

Exposures to foreign exchange rates vary during the financial year depending on the volume of overseas transactions. Nonetheless, the analysis above is considered to be representative of the Group’s and the Company’s exposures to foreign currency risk.

(b) Interest rate risk

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

The Group’s and the Company’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s variable rate borrowings are exposed to the risk of change in cash flows due to changes in interest rates. Investment in equity securities and short term receivables and payables are not significantly exposed to interest rate risk.



cont’d



(b) Interest rate risk cont’d

The Group’s interest rate management objective is to manage interest expenses consistent with maintaining an acceptable level of exposure to interest rate fluctuation.

Interest rate sensitivity

The Group and the Company are exposed to changes in market interest rates through bank borrowings at variable interest rates. Other borrowings are at fixed interest rates. The exposure to interest rates for the Group’s short term placement is considered immaterial.

The interest rate profile of the Group’s and of the Company’s significant interest-bearing financial instruments, based on carrying amounts as at the end of the reporting period is as follows:-

Group Company

2016 RM RM

Fixed rate instruments

Financial assets

Fixed deposits with licensed banks 2,352,101 -

Amount due from subsidiary companies - 5,000,000

Financial liabilities

Finance lease creditors (7,112,992) -

Accepted bills-i (24,343,129) -

Bankers’ acceptance (33,977,000) -

Foreign currency loan-i (5,010,538) -

Onshore foreign currency loans (27,470,716) -

Commodity Murabahah Revolving Credit-i (5,000,000) (5,000,000)

Clean import loans (1,727,057) -

Term loans (6,272,600) ( 6,272,600)

(108,561,931) ( 6,272,600)

Floating rate instruments


Term loans (48,618,451) -

Trust receipts (132,590) -

Net financial liabilities (48,751,041) -





(b) Interest rate risk cont’d

Interest rate sensitivity cont’d

The interest rate profile of the Group’s and of the Company’s significant interest-bearing financial instruments, based on carrying amounts as at the end of the reporting period is as follows:- cont’d

Group Company

2015 RM RM

Fixed rate instruments

Financial assets

Fixed deposits with licensed banks 2,283,357 -

Amount due from subsidiary companies - 8,178,812


Finance lease creditors (10,266,535) -

Accepted bills-i (25,215,449) -

Bankers’ acceptance (48,060,000) -

Foreign currency loan-i (10,866,406) -

Onshore foreign currency loans (30,523,406) -

Commodity Murabahah Revolving Credit-i (5,000,000) (5,000,000)

Clean import loans (10,280,976) -

Term loans (13,282,801) (13,282,801)

(151,212,216) (10,103,989)

Floating rate instruments


Term loans (61,504,414) -

Net financial liabilities (61,504,414) -

The following table illustrates the sensitivity of profit to a reasonably possible change in interest rates of +/- 25 (2015: 25) basis points (“bp”). These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on a change in the average market interest rates for each period, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are held constant.

(Decrease)/Increase onprofit for the financial year

+ 25 bp - 25 bpRM RM

Group

29 February 2016 (121,878) 121,878

28 February 2015 (153,761) 153,761



cont’d



(c) Credit risk

Credit risk is the risk that counterparty fails to discharge an obligation to the Group and the Company. The Group’s and the Company’s maximum exposure to credit risk is limited to the carrying amount of financial assets summarised at the reporting date, as summarised below:-

Group Company

2016 2015 2016 2015

RM RM RM RM

Classes of financial assets – carrying amounts:-

Cash and cash equivalents 76,951,164 57,676,313 3,314,200 9,360,271

Trade receivables 109,148,304 130,819,803 - -

Other receivables 8,201,271 19,639,683 44,304 578,800

Amount due from an associate company 17,323,281 6,212,059 - -

Amount due from subsidiary companies - - 5,323,288 8,782,111

211,624,020 214,347,858 8,681,792 18,721,182

The Group continuously monitors defaults of customers and other counterparties, identified either individually or by group, and incorporate this information into its credit risk controls. Where available at reasonable cost, external credit ratings and/or reports on customers and other counterparties are obtained and used. The Group’s policy is to deal only with creditworthy counterparties.

The Group’s management considers that all the above financial assets that are not impaired or past due for each of the reporting dates under review are of good credit quality.

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

Allowance for impairment loss

GrossIndividually

impairedCollectively

impaired Total Net

RM RM RM RM RM

2016

Within terms 41,867,753 - - - 41,867,753

Past due 1 to 30 days 22,380,178 - - - 22,380,178

Past due 31 to 60 days 15,652,319 - - - 15,652,319

Past due 61 to 90 days 7,790,114 - - - 7,790,114

Past due 91 to 120 days 13,523,715 - - - 13,523,715

Past due more than 120 days 14,550,088 6,615,863 - 6,615,863 7,934,225

115,764,167 6,615,863 - 6,615,863 109,148,304





(c) Credit risk cont’d

The ageing analysis of trade receivables of the Group is as follows:- cont’d

Allowance for impairment loss

GrossIndividually

impairedCollectively

impaired Total Net

RM RM RM RM RM

2015

Within terms 56,213,745 - - - 56,213,745

Past due 1 to 30 days 18,765,687 - - - 18,765,687

Past due 31 to 60 days 21,206,971 - - - 21,206,971

Past due 61 to 90 days 9,556,034 - - - 9,556,034

Past due 91 to 120 days 11,284,715 939,343 - 939,343 10,345,372

Past due more than 120 days 20,598,323 5,866,329 - 5,866,329 14,731,994

137,625,475 6,805,672 - 6,805,672 130,819,803 None of the Group’s financial assets are secured by collateral or other credit enhancements and none of the

carrying amount of financial assets whose terms have been renegotiated that would otherwise be past due or impaired.

In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. Trade receivables consist of a large number of customers in various industries and geographical areas. Based on historical information about customer default rates, the management consider the credit quality of trade receivables that are not past due or impaired to be good.

The credit risk for cash and cash equivalents and short term placements is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

(d) Liquidity risk

Liquidity risk is the risk arising from the Group and the Company not being able to meet their obligations due to shortage of funds.

In managing their exposures to liquidity risk, the Group and the Company maintain a level of cash and cash equivalents and bank credit facilities deemed adequate by the management to ensure that they will have sufficient liquidity to meet their liabilities as and when they fall due.



cont’d



(d) Liquidity risk cont’d

The following table shows the areas where the Group and the Company are exposed to liquidity risk:-

Group Company

Current Non-current Current Non-current

Less than 1 year

2 to 5 years

More than 5 years

Less than 1 year

2 to 5 years

More than 5 years

RM RM RM RM RM RM

2016

Non-derivative financial liabilities

Term loans 19,852,899 33,380,482 9,180,539 5,191,370 1,254,897 -

Bankers’ acceptance and accepted bills-i 58,320,129 - - - - -

Clean import loans 1,727,057 - - - - -

Onshore foreign currency loans and foreign currency loan-i 32,481,254 - - - - -

Trust receipts 132,590 - - - - -

Finance lease creditors 3,821,923 3,767,512 - - - -

Trade payables 21,126,097 - - - - -

Other payables 16,974,741 - - 333,783 - -

Commodity Murabahah Revolving Credit-i 5,000,000 - - 5,000,000 - -

Amount due to an associate company 253,256 - - - - -

Amount due to a joint venture company 802,034 - - - - -

160,491,980 37,147,994 9,180,539 10,525,153 1,254,897 -

Derivative financial liabilities

Outflow 3,807,944 - - 3,807,944 - -

Inflow (3,080,492) - - (3,080,492) - -

727,452 - - 727,452 - -

Total undiscounted financial liabilities 161,219,432 37,147,994 9,180,539 11,252,605 1,254,897 -





(d) Liquidity risk cont’d

The following table shows the areas where the Group and the Company are exposed to liquidity risk:- cont’d

Group Company

Current Non-current Current Non-current

Less than 1 year

2 to 5 years

More than 5 years

Less than 1 year

2 to 5 years

More than 5 years

RM RM RM RM RM RM

2015

Non-derivative financial liabilities

Term loans 22,386,456 51,125,332 11,137,893 7,487,109 6,446,267 -

Bankers’ acceptance and accepted bills-i 73,275,449 - - - - -

Clean import loans 10,280,976 - - - - -

Onshore foreign currency loans and foreign currency loan-i 41,389,812 - - - - -

Irredeemable Convertible Unsecured Loan Stocks 97,613 666,591 - 97,613 666,591 -

Finance lease creditors 4,430,959 6,690,976 - - - -

Trade payables 34,790,970 - - - - -

Other payables 16,656,396 - - 374,116 - -

Commodity Murabahah Revolving Credit-i 5,000,000 - - 5,000,000 - -

Amount due to an associate company 223,000 - - - - -

Amount due to a joint venture company 656,279 - - - - -

209,187,910 58,482,899 11,137,893 12,958,838 7,112,858 -

Derivative financial liabilities

Outflow 6,679,352 - - 6,679,352 - -

Inflow (5,593,710) - - (5,593,710) - -

1,085,642 - - 1,085,642 - -

Total undiscounted financial liabilities 210,273,552 58,482,899 11,137,893 14,044,480 7,112,858 -

The above amounts reflect the contractual undiscounted cash flows, which may differ from the carrying values of the financial liabilities at the reporting date.



cont’d

47. CAPITAL MANAGEMENT OBJECTIVE

The primary capital management objective of the Group is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to sustain future development of the business. There is no change to the objectives in financial years ended 2016 and 2015.

The Group manages its capital by regularly monitoring its current and expected liquidity requirement and modify the combination of equity and borrowings from time to time to meet the needs. Shareholders’ equity and gearing ratio of the Group and of the Company are as follows:-

Group Company

2016 2015 2016 2015

RM RM RM RM

Total equity 509,269,862 467,405,435 218,264,426 220,002,077

Borrowings 159,665,073 214,999,987 11,272,600 18,282,801

Debt-to-equity ratio 0.31 0.46 0.05 0.08

The Group has complied with Practice Note No. 17 (Revision on 3 August 2009, 22 September 2011 and 25 March 2015) of Main Market Listing Requirements of Bursa Malaysia Securities Berhad which requires the Group to maintain a consolidated shareholders’ equity not less than 25% of the issued and paid-up capital of the Company and such shareholders’ equity is not less than RM40 million.

48. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of financial assets and liabilities of the Group and of the Company as at the reporting date are approximately at their fair values due to their short term nature or they are floating rate instruments that are re-priced to market interest rates on or near the reporting date.

The following summarises the methods used in determining the fair value of financial instruments:-

(i) Derivatives

The fair value of forward contract is calculated by reference to current forward exchange rates for contracts with similar maturity profile.

Fair value hierarchy

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.



48. FAIR VALUE OF FINANCIAL INSTRUMENTS cont’d

The following summarises the methods used in determining the fair value of financial instruments:- cont’d

(i) Derivatives cont’d

Fair value hierarchy cont’d

quoted in active markets

for identical instruments

Significant other

observable inputs

Significant unobservable

inputs Total

Level 1 Level 2 Level 3

RM RM RM RM

GROUP

2016

Financial assets:

Freehold land - 24,179,048 - 24,179,048

Buildings - 97,853,695 - 97,853,695

Investment properties - 6,500,000 - 6,500,000

Derivatives

- Cross currency swap - 3,989,470 - 3,989,470

- Forward currency contracts - 8,260 - 8,260

- 132,530,473 - 132,530,473

Financial liability:

Derivatives

- Cross currency swap - (727,452) - (727,452)

2015

Financial assets:

Freehold land - 17,170,000 - 17,170,000

Buildings - 17,930,000 - 17,930,000

Investment properties - 4,830,000 - 4,830,000

Derivatives

- Cross currency swap - 2,389,917 - 2,389,917

- Forward currency contracts - 4,470 - 4,470

- 42,324,387 - 42,324,387


Derivatives

- Cross currency swap - (1,085,642) - (1,085,642)



cont’d



(i) Derivatives cont’d

Fair value hierarchy cont’d

quoted in active markets

for identical instruments

Significant other

observable inputs

Significant unobservable

inputs Total

Level 1 Level 2 Level 3

RM RM RM RM

COMPANY

2016


Derivatives

- Cross currency swap - (727,452) - (727,452)

2015


Derivatives

- Cross currency swap - (1,085,642) - (1,085,642)

There were no transfers between Level 1 and 2 in the reporting period. (ii) Non-derivatives financial liabilities

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period. In respect of the liability component of convertible notes, the market rate of interest is determined by reference to similar liabilities that do not have a conversion option. For finance leases, the market rate of interest is determined by reference to similar lease agreements.





(ii) Non-derivatives financial liabilities cont’d The interest rates used to discount estimated cash flows, when applicable, are as follows:-

2016 2015

% %

Bank overdrafts 7.85 – 8.10 6.85 – 8.51

Accepted bills-i 3.63 – 4.61 3.62 – 4.82

Bankers’ acceptance 3.27 – 4.66 3.53 – 4.66

Foreign currency loan-i 1.16 – 2.14 1.16 – 1.87

Onshore foreign currency loans 1.00 – 1.77 1.25 – 2.00

Revolving credits 4.80 – 5.04 4.78 – 5.03

Commodity Murabahah Revolving Credit-i 4.63 – 4.81 4.55 – 4.79

Term loans 4.73 – 6.10 4.53 – 6.80

Trust receipts 2.72 -

Finance lease creditors 2.26 – 4.78 2.26 – 4.78

Clean import loans 1.05 1.05

Irredeemable Convertible Unsecured Loan Stocks 7.00 7.00



cont’d

DISCLOSURE OF REALISED AND UNREALISED PROFITS/(LOSSES)

Bursa Malaysia Securities Berhad has, on 25 March 2010 and 20 December 2010, issued directives requiring all listed corporations to disclose the breakdown of unappropriated profits or accumulated losses into realised and unrealised on group and company basis, as the case may be, in quarterly reports and annual audited financial statements.

The breakdown of unappropriated profit as at the reporting date that has been prepared by the Directors in accordance with the directives from Bursa Malaysia Securities Berhad stated above and Guidance on Special Matter No. 1 issued on 20 December 2010 by the Malaysian Institute of Accountants are as follows:-

Group Company

2016 2015 2016 2015

RM RM RM RM

Total unappropriated profit of the Company and its subsidiary companies:

- Realised 350,963,655 338,520,074 10,547,386 17,880,392

- Unrealised 6,928,704 2,740,293 (17,207) (398,073)

357,892,359 341,260,367 10,530,179 17,482,319

Total unappropriated profit of the Associate Company:

- Realised 1,946,456 2,261,152 - -

- Unrealised (1,461) (5,218) - -

1,944,995 2,255,934 - -

Total unappropriated profit of the Joint Venture Company:

- Realised 661,435 452,827 - -

- Unrealised (24,971) (4,677) - -

636,464 448,150 - -

Total 360,473,818 343,964,451 10,530,179 17,482,319

Consolidation adjustments (89,833,160) (92,609,838) - -

270,640,658 251,354,613 10,530,179 17,482,319

The above disclosures were reviewed and approved by the Board of Directors in accordance with a resolution of the Board of Directors on 16 June 2016.


LIST OF PROPERTIESAs at 29 February 2016

No. Tittle deed Address

( Land area ) Gross build-

up area Sq.ft. Tenure

Description /Existing use

Net Book Value @

29.2.2016 RM’000

Approximate age of building

YearsDate of lastrevaluation

1 HS(D) 484896, PTD 204334, Mukim Plentong, District of Johor Bahru, Johor Darul Takzim

PTD 204334, Jalan Platinum Utama, Pasir Gudang Industrial Estate, Zone 12B, 81700 Pasir Gudang, Johor Darul Takzim

(899,775) 522,610

Leasehold expiring on 18.08.2070

4 Blocks single storey factory buildings with 1 unit 3-storeys office and 1 unit 5-storeys corporate office and ancillary buildings

67,669 3-6 31.12.2015

2 Geran 95058, 95059 and 95060. Lot No. 23190, 23191 and 23192 Mukim Kapar, District of Klang, Selangor Darul Ehsan

Lot 13257, 13258 and 13259, Jalan Haji Abdul Manan, Off Jalan Meru, 41050 Klang, Selangor Darul Ehsan

(544,353) 346,523

Freehold 6 units of single storey detached factories (Identified for reference as Factory A, B, C, D, E and F)

43,000 Factory A,B,C - 26 Factory D - 24 Factory E - 9 Factory F - 4

31.12.2015

3 SF263520, SF207018, SF209083, SF318990, SF211845, SF318991, SF184517, SF196161 Claymore, Tame Valley Industrial Estate, Tamworth

Claymore Tame Valley Industrial Estate, Tamworth, Staffordshire, B77 5DQ, United Kingdom

(59,000) 46,450

Freehold 8 units of building comprising of factories, warehouses and office.

8,018 28-34 29.2.2016

4 HS(D) 564272, PTD222449, Mukim Plentong, District of Johor Bahru, Johor Darul Takzim.

PLO 749, Jalan Kampung Pasir Gudang Baru, Pasir Gudang Industrial Estate Zone 12B, 81700 Pasir Gudang, Johor Darul Takzim.

(318,032) Leasehold expiring on 27.03.2076

A parcel of industrial land

7,969 - 31.12.2015

5 SF211341, Brent, Tame Valley Industrial Estate, Wilnecote, Tamworth

Unit 2, Brent, Tame Valley Industrial Estate, Wilnecote, Tamworth, Staffordshire, B77 5DF, United Kingdom

(55,700) 23,500

Freehold A single storey detached factory and warehouse

5,540 26 29.2.2016


PLO 641, Jalan Plantinum 1, Pasir Gudang Industrial Estate, Zone 12B, 81700 Pasir Gudang, Johor Darul Takzim

(254,566) 43,560


A single storey detached warehouse

5,992 4 31.12.2015

7 HS(M) 29537, Lot PT 34277, Mukim and District of Klang, HS(D) 114965, Lot PT 17296, Pekan Baru Hicom, District of Petaling, Selangor Darul Ehsan

No. 3, Jalan Trompet 33/8, Seksyen 33, 40400 Shah Alam, Selangor Darul Ehsan

(123,548) 25,968


& 28.11.2096

A single storey detached warehouse with 2-storey office buildings annexed

5,614 18 31.12.2015


PLO 234, Jalan Tembaga Satu, Pasir Gudang Industrial Estate, 81700 Pasir Gudang, Johor Darul Takzim

(87,123) 42,300


A single storey detached warehouse with 3-storey office buildings annexed

6,000 17 31.12.2015

9 HS(M) 135, Lot LO129 (1433), Mukim Pantai Timor, District of Pengerang, Johor Darul Takzim

Lot LO129, Kampung Bukit Gelugur, 81600 Pengerang, Johor Darul Takzim

(68,480) Freehold A parcel of agriculture land

1,800 1 31.12.2015

10 Part of Plot 157, Plot 158, Plot 159 and part of Plot 160, Precinct 1, Port Klang Free Zone held under Master Title Pajakan Negeri 7324, Lot 67894, Mukim and District of Klang, Selangor Darul Ehsan

Persiaran Port Klang FZ 7, Jalan FZ 6-P1, Precinct 1, Port Klang Free Zone/ KS12, 42920 Pulau Indah, Selangor Darul Ehsan.

(304,920) 48,383


A single storey warehouse and an office block

1,700 8 31.12.2015


NOTICE IS HEREBY GIVEN that the Tenth Annual General Meeting of Pantech Group Holdings Berhad (“Pantech” or the “Company”) will be held at Meeting Room 2, Level 2, Renaissance Johor Bahru Hotel, 2, Jalan Permas 11, Bandar Baru Permas Jaya, 81750 Masai, Johor on Thursday, 21 July 2016 at 10.30 a.m. for the following purposes:-

AGENDA

AS ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the financial year ended 29 February 2016 together with the Directors’ and Auditors’ Reports thereon.

2. To approve the payment of the dividend comprising the following for the financial year ended 29 February 2016:

Ordinary Resolution 1

(i) final single tier cash dividend of 0.5 sen per ordinary share of RM0.20 each; and

(ii) share dividend via a distribution of treasury shares on the basis of 1 treasury share for every 100 existing ordinary shares of RM0.20 each. Any fractions arising from the distribution of share dividend will be disregarded.

3. To approve the payment of Directors’ fees up to RM180,000 for the financial year ending 28 February 2017.


4. To re-elect the following Directors retiring pursuant to Article 122 of the Company’s Articles of Association and being eligible, offered themselves for re-election:-

4.1 Dato’ Chew Ting Leng Ordinary Resolution 34.2 Mr To Tai Wai Ordinary Resolution 4

5. To re-appoint Messrs SJ Grant Thornton as Auditors of the Company and to authorise the Directors to fix their remuneration.


AS SPECIAL BUSINESS

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

6. RETENTION OF INDEPENDENT DIRECTORS

To retain the following Directors who have served for more than nine years as Independent Non-Executive Director of the Company:-

6.1 Mr Tan Sui Hin Ordinary Resolution 66.2 Mr Loh Wei Tak Ordinary Resolution 76.3 Tuan Haji Yusoff Bin Mohamed Ordinary Resolution 8

NOTICE OF TENTH ANNUAL GENERAL MEETING


7. PROPOSED RENEWAL OF SHARE BUY-BACK Ordinary Resolution 9

“THAT subject to compliance with all applicable rules, regulations and orders made pursuant to the Companies Act, 1965 (“ACT”), provisions in the Company’s Memorandum and Articles of Association, the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and any other relevant authorities, the Company be and is hereby authorised to purchase such number of ordinary shares of the Company (“Proposed Renewal of Share Buy-Back”) as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company PROVIDED THAT:-

(1) the aggregate number of shares purchased or held does not exceed ten per centum (10%) of the issued and paid-up share capital of the Company as quoted on Bursa Securities as at the point of purchase;

(2) the maximum fund to be allocated by the Company for the purpose of purchasing such number of ordinary shares shall not exceed the retained profit and share premium account of the Company. As at the latest financial year ended 29 February 2016, the audited retained profit and share premium account of the Company stood at RM10,530,179 and RM80,634,291 respectively;

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

(a) at the conclusion of the next Annual General Meeting (“AGM”) of the Company following the general meeting in which the authorisation is obtained, at which time it shall lapse unless by ordinary resolution passed at that meeting, the authority is renewed either unconditionally or subject to conditions; or

(b) the expiration of the period within which the next AGM of the Company is required by law to be held; or

(c) revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting.

whichever occurs first;

AND THAT upon completion of the purchase(s) of the ordinary shares of the Company, the Directors of the Company be and are hereby authorised to deal with the ordinary shares so purchased in the following manners:-

(a) to cancel the ordinary shares so purchased; or(b) to retain the ordinary shares so purchased as treasury shares for distribution as

dividend to shareholders and/or resell on Bursa Securities or subsequently cancelled; or(c) to retain part of the ordinary shares so purchased as treasury shares and cancel the

remainder; or(d) in any other manner prescribed by the Act, rules, regulations and orders made to the

Act, the Listing Requirements of Bursa Securities and any other relevant authorities for the time being in force.

AND THAT the Board of the Company be and are hereby authorised to take all such steps as are necessary or expedient to implement, finalise or to effect the aforesaid share buy-back with full powers to assent to any conditions, modifications, variations, and/or amendments as may be required or imposed by the relevant authorities and to do all such acts and things (including executing all documents) as the Board may deem fit and expedient in the best interest of the Company.”

NOTICE OF TENTH ANNUAL GENERAL MEETINGcont’d


8. AUTHORITY TO ISSUE SHARES BY THE COMPANY PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965 “THAT pursuant to Section 132D of the Companies Act, 1965 and subject to the approvals from the relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue shares in the Company from time to time and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten per centum (10%) of the issued share capital of the Company at the time of submission, upon such terms and conditions, for such purposes and to such person or persons AND THAT the Directors be and are also hereby empowered to obtain the approval from the Bursa Malaysia Securities Berhad for the listing and quotation of the additional shares so issued AND THAT such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.”


NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT

Subject to the approval of the shareholders, that the payment of the dividend comprising the following for the financial year ended 29 February 2016 will be paid on 18 August 2016 to Depositors registered in the Record of Depositors at the closed of business at 5.00 p.m. on 29 July 2016.

(i) Final single tier cash dividend of 0.5 sen per ordinary share of RM0.20 each; and

(ii) Share dividend via a distribution of treasury shares on the basis of 1 treasury share for every 100 existing ordinary shares of RM0.20 each. Any fractions arising from the distribution of share dividend will be disregarded.

A Depositor shall qualify for entitlement only in respect of:

(a) Shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 29 July 2016, in respect of ordinary shares; and

(b) Shares bought on Bursa Securities on a cum entitlement basis according to the Rules of the Bursa Securities.

Subject to the approval of the Bursa Malaysia Depository Sdn. Bhd. (“Bursa Depository”) for the transfer of treasury shares under the Share Buy-back Account by bulk transfer method of debiting and crediting, the treasury shares to be distributed under the share dividend will be credited into the entitled Depositors’ Securities Account maintained with Bursa Depository on 18 August 2016.

By order of the Board,

LIM SECK WAH (MAICSA 0799845)LIANG SIEW CHING (MAICSA 7000168)Company Secretaries Kuala LumpurDated this: 29 June 2016



Notes:-1. For the purpose of determining a member who shall be entitled to attend, speak and vote at the AGM, the Company shall be

requesting the Record of Depositors as at 15 July 2016. Only a depositor whose name appears on the Record of Depositors as at 15 July 2016 shall be entitled to attend the said meeting or appoint proxies to attend, speak and vote on his/her behalf.

2. A member entitle to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote in his/her stead. A member may appoint up to two (2) proxies to attend the same meeting provided that he/she specifies the proportion of his/her shareholding to be represented by each proxy. A proxy may but need not be a member of the Company and a member may appoint any person to be his/her proxy without limitation and the provisions of Section 149(1)(a) & (b) of the Companies Act, 1965 shall not apply.

3. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, 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 is an exempt authorised nominee, it may appoint multiple proxies for each omnibus account it holds.

5. The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorized in writing or, if the appointer is a corporation, either under the Corporation’s Common Seal or under the hand of an officer or attorney so authorized.

6. The Proxy Form must be deposited at the Registered Office of the Company at Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur not less than 48 hours before the time set for holding the meeting or any adjournment thereof.

7. Explanatory Notes on Special Businesses: Ordinary Resolutions 6, 7 and 8 - Retention of Independent Directors

The Board of Directors has vide the Nomination Committee conducted an assessment of independence of the following directors who have served as Independent Non-Executive Directors for a cumulative term of more than nine years and recommended them to continue to act as Independent Non-Executive Directors based on the following justifications:

(i) Mr Tan Sui Hin (ii) Mr Loh Wei Tak (iii) Tuan Haji Yusoff Bin Mohamed

Justifications:-

(a) They have met the independence guidelines as set out in Chapter 1 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and are therefore able to give independent opinion to the Board;

(b) They understand the group business industry have enabled them to contribute positively during deliberations/discussions at meetings as they are familiar with the operations and possess tremendous insight and knowledge of the group’s activities;

(c) They have contributed sufficient time and exercised due care during their tenure as Independent Non-Executive Directors;

(d) They have discharged their professional duties with reasonable skill and competence, bringing independent judgements into the Board’s decisions;

(e) They have vigilantly safeguarded the interests of the minority shareholders of the Company;

(f) They have the calibre, qualifications, experiences and personal qualities to challenge management in an effective and constructive manner; and

(g) They have never compromised on their independent judgement.

Ordinary Resolution 9 - Proposed Renewal of Share Buy-Back

This resolution will empower the Directors of the Company to purchase the Company’s shares up to ten per centum (10%) of the issued and paid-up share capital of the Company by utilising the funds allocated which shall not exceed the total retained profits and share premium of the Company. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next AGM of the Company.

Further information on the Proposed Renewal of Share Buy-Back are set out in the Share Buy-Back Statement dated 29 June 2016 which has been dispatched together with the Company’s Annual Report 2016.



Ordinary Resolution 10 - Authority to issue shares by the company pursuant to Section 132D of the Companies Act, 1965

The proposed Resolution 10 is a renewal of mandate given by the shareholders at the previous AGM held on 18 August 2015, primarily to give flexibility to the Board of Directors to issue and allot shares at any time in their absolute discretion and for such purposes as they consider would be in the interest of the Company without convening a general meeting. This authority, unless revoked or varied at a general meeting, will expire at the next annual general meeting of the Company.

The Company continues to consider opportunities to broaden its earnings potential. If any of the expansion/diversification proposals involves the issue of new shares, the Directors, under certain circumstance when the opportunity arises, would have to convene a general meeting to approve the issue of new shares even though the number involved may be less than 10% of the issue capital.

In order to avoid any delay and costs involved in convening a general meeting to approve such issue of shares, it is thus considered appropriate that the Directors be empowered to issue shares in the Company, up to any amount not exceeding in total 10% of the issued share capital of the Company. The renewed authority will provide flexibility to the Company for the allotment of shares for the purpose of the possible fund raising activities for the purpose of funding future project/investment, working capital and/or acquisitions. This authority, unless revoked or varied at a general meeting will expire at the conclusion of the next AGM of the Company.

No shares have been issued and allotted by the Company since obtaining the said authority from its shareholders at the last AGM held on 18 August 2015.



ANALYSIS OF SHAREHOLDINGSAs at 31 May 2016

Authorized Share Capital : RM500,000,000.00

Issued and Fully Paid-Up Share Capital : RM123,294,296.00

Class of Shares : Ordinary Shares of RM0.20 Each

Voting Rights : One Vote Per Ordinary Share

No. of Shareholders : 8,070

DISTRIBUTION OF SHAREHOLDINGS AS AT 31 MAY 2016

CategoryNo. of

Shareholders% of

ShareholdersNo. of

Shares*% of

Shares*

Less than 100 371 4.60 11,282 0.00

100 – 1,000 331 4.10 111,172 0.02

1,001 – 10,000 3,271 40.53 14,581,066 2.37

10,001 – 100,000 3,636 45.05 91,796,581 14.89

100,001 – less than 5% of issued shares 458 5.68 356,452,602 57.82

5% and above of issued shares 3 0.04 153,518,777 24.90

Total 8,070 100.00 616,471,480 100.00

Note:* Inclusive of 5,906,160 treasury shares retained by the Company.

LIST OF SUBSTANTIAL SHAREHOLDERS AS AT 31 MAY 2016

Direct Indirect

No. NamesNo. of

Shares %*No. of

Shares %*

1. CTL Capital Holding Sdn. Bhd. 109,693,214 17.97 - -

2. GL Management Agency Sdn. Bhd. 79,075,770 12.95 - -

3. Koperasi Permodalan Felda Malaysia Berhad 60,173,138 9.86 - -

4. Dato’ Chew Ting Leng 4,545,000 0.74 109,693,214 17.97 (a)

5. Datin Shum Kah Lin - - 114,238,214 18.71 (b)

6. Dato’ Goh Teoh Kean 4,545,000 0.74 79,075,770 12.95 (c)

7. Datin Lee Sock Kee - - 83,620,770 13.69 (d)

Note:* Excluding a total of 5,906,160 shares bought-back by the Company and retained as treasury shares


DIRECTORS’ INTERESTS IN SHARES AS AT 31 MAY 2016

Direct Indirect

No. Names No. of Shares %* No. of Shares %*

1. Dato’ Chew Ting Leng 4,545,000 0.74 109,693,214 17.97 (a)

2. Dato’ Goh Teoh Kean 4,545,000 0.74 79,075,770 12.95 (c)

3. Tan Ang Ang 10,897,900 1.78 1,649,330 0.27 (e)

4. To Tai Wai 13,625,283 2.23 - -

5. Ng Lee Lee 7,205,968 1.18 159,047 0.03 (f)

6. Tan Sui Hin 550,450 0.09 - -

7. Tuan Haji Yusoff Bin Mohamed 1,010 0.00 - -

8. Loh Wei Tak 252,500 0.04 - -

Notes:(a) Deemed interested by virtue of his and his spouse Datin Shum Kah Lin’s interest in CTL Capital Holding Sdn. Bhd. pursuant to Section 6A

of the Act. (b) Deemed interested by virtue of her and her spouse Dato’ Chew Ting Leng’s interest in CTL Capital Holding Sdn. Bhd. pursuant to Section

6A of the Act, and by virtue of her spouse Dato’ Chew Ting Leng’s direct shareholding in the Company pursuant to Section 134(12) of the Act.

(c) Deemed interested by virtue of his and his spouse Datin Lee Sock Kee’s interest in GL Management Agency Sdn. Bhd. pursuant to Section 6A of the Act.

(d) Deemed interested by virtue of her and her spouse Dato’ Goh Teoh Kean’s interest in GL Management Agency Sdn. Bhd. pursuant to Section 6A of the Act, and by virtue of her spouse Dato’ Goh Teoh Kean’s direct shareholding in the Company pursuant to Section 134(12) of the Act.

(e) Deemed interested by virtue of his spouse Madam Yong Yui Kiew’s direct shareholding in the Company pursuant to Section 134(12) of the Act.

(f) Deemed interested by virtue of her spouse Mr Wong Chong Peng’s direct shareholding in the Company pursuant to Section 134(12) of the Act.

* Excluding a total of 5,906,160 shares bought-back by the Company and retained as treasury shares

30 LARGEST SHAREHOLDERS AS AT 31 MAY 2016

No. Shareholders Shareholdings %*

1. KOPERASI PERMODALAN FELDA MALAYSIA BERHAD 59,062,138 9.67

2. CTL CAPITAL HOLDING SDN. BHD. 58,705,788 9.62

3. AMSEC NOMINEES (TEMPATAN) SDN. BHD.PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR GL MANAGEMENT AGENCY SDN. BHD.

35,750,851 5.86

4. ALLIANCEGROUP NOMINEES (TEMPATAN) SDN. BHD.PLEDGED SECURITIES ACCOUNT FOR CTL CAPITAL HOLDING SDN. BHD.

29,694,000 4.86

5. GL MANAGEMENT AGENCY SDN. BHD. 23,352,977 3.83

6. GL MANAGEMENT AGENCY SDN. BHD. 19,971,942 3.27

7. ABDUL RASHID HUSSAIN 19,190,000 3.14

8. LEE LIANG MONG 17,597,735 2.88

9. ALLIANCEGROUP NOMINEES (TEMPATAN) SDN. BHD.PLEDGED SECURITIES ACCOUNT FOR CTL CAPITAL HOLDING SDN. BHD.

16,766,000 2.75

10. CITIGROUP NOMINEES (ASING) SDN. BHD.EXEMPT AN FOR CITIBANK NEW YORK

9,951,934 1.63

ANALYSIS OF SHAREHOLDINGSAs at 31 May 2016

cont’d


30 LARGEST SHAREHOLDERS AS AT 31 MAY 2016 cont’d

No. Shareholders Shareholdings %*

11. TO TAI WAI 8,756,498 1.43

12. CITIGROUP NOMINEES (TEMPATAN) SDN. BHD.EMPLOYEES PROVIDENT FUND BOARD

8,244,529 1.35

13. CITIGROUP NOMINEES (TEMPATAN) SDN. BHD.EMPLOYEES PROVIDENT FUND BOARD

7,376,595 1.21

14. KONG CHIONG LEE 4,685,289 0.77

15. CHEW TING LENG 4,545,000 0.74

16. GOH TEOH KEAN 4,545,000 0.74

17. CTL CAPITAL HOLDING SDN. BHD. 4,527,426 0.74

18. TAN ANG ANG 4,158,776 0.68

19. FREDDIE CHEW SUN GHEE 3,803,599 0.62

20. TAN ANG ANG 3,709,124 0.61

21. NG LEE LEE 3,692,803 0.61

22. LIM SOON BENG 3,658,583 0.60

23. CITIGROUP NOMINEES (ASING) SDN. BHD.CBNY FOR DIMENSIONAL EMERGING MARKETS VALUE FUND

3,600,751 0.59

24. NG LEE LEE 3,513,165 0.58

25. LEE LIANG MONG 3,428,041 0.56

26. CITIGROUP NOMINEES (ASING) SDN. BHD.EXEMPT AN FOR CITIBANK NEW YORK

3,263,451 0.53

27. MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN. BHD.PLEDGED SECURITIES ACCOUNT FOR TAN ANG ANG

3,030,000 0.50

28. LIM KHUAN ENG 3,000,000 0.49

29. TO TAI WAI 2,973,615 0.49

30. DB (MALAYSIA) NOMINEE (TEMPATAN) SENDIRIAN BERHADDEUTSCHE TRUSTEES MALAYSIA BERHAD FOR EASTSPRING INVESTMENTSSMALL

2,529,848 0.41

TOTAL : 377,085,458 61.76 * Excluding a total of 5,906,160 shares bought-back by the Company and retained as treasury shares

ANALYSIS OF SHAREHOLDINGSAs at 31 May 2016cont’d


No. Warrants Issued : 74,816,370 Warrants 2010/2020

Exercise Price of Warrants : RM0.60

Expiry Date of Warrants : 21/12/2020

No of Warrant Holders : 1,207

DISTRIBUTION OF WARRANT HOLDINGS

Size of Holdings

No. of Warrant Holders

% of Warrant Holders

No. of Warrant

Holdings

% of Warrant

Holdings

<100 153 12.68 5,141 0.00

100-1,000 237 19.63 153,191 0.20

1,001 – 10,000 475 39.35 2,257,740 3.02

10,001 – 100,000 290 24.03 9,819,710 13.13

100,001 - < 5% issued Warrants 48 3.98 20,856,060 27.88

5% and above of issued Warrants 4 0.33 41,724,528 55.77

1,207 100.00 74,816,370 100.00

DIRECTORS’ INTERESTS IN WARRANTS AS AT 31 MAY 2016

No. Names

Direct Indirect

No. of Warrants %

No. of Warrants %

1. Dato’ Chew Ting Leng - - 17,346,398 23.19 (a)

2. Dato’ Goh Teoh Kean - - 12,838,130 17.16 (b)

3. Tan Ang Ang 1,347,240 1.80 213,000 0.28 (c)

4. To Tai Wai 2,111,880 2.82 - -

5. Ng Lee Lee 1,111,190 1.49 20,540 0.03 (d)

6. Tan Sui Hin 15,000 0.02 - -

7. Tuan Haji Yusoff Bin Mohamed - - - -

8. Loh Wei Tak - - - -

Notes:(a) Deemed interested by virtue of his interest in CTL Capital Holding Sdn. Bhd. pursuant to Section 6A of the Act. (b) Deemed interested by virtue of his interest in GL Management Agency Sdn. Bhd. pursuant to Section 6A of the Act.(c) Deemed interested by virtue of his spouse Madam Yong Yui Kiew’s direct warrant holding in the Company pursuant to Section 134(12)

of the Act.(d) Deemed interested by virtue of her spouse, Wong Chong Peng’s direct warrant holding in the Company pursuant to Section 134(12) of

the Act.

ANALYSIS OF WARRANT HOLDINGSAs at 31 May 2016


30 LARGEST WARRANT HOLDERS AS AT 31 MAY 2016

No. Warrant HoldersWarrant

Holdings %

1. CTL CAPITAL HOLDING SDN. BHD. 17,346,398 23.19 2. AMSEC NOMINEES (TEMPATAN) SDN. BHD.

PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR GL MANAGEMENT AGENCY SDN. BHD.

12,838,130 17.16

3. DB (MALAYSIA) NOMINEE (TEMPATAN) SENDIRIAN BERHAD EXEMPT AN FOR KUMPULAN SENTIASA CEMERLANG SDN. BHD.

7,126,000 9.52

4. DB (MALAYSIA) NOMINEE (TEMPATAN) SENDIRIAN BERHAD DEUTSCHE BANK AG SINGAPORE FOR KSC (S) PTE. LTD.

4,414,000 5.90

5. AMSEC NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT-AMBANK (M) BERHAD FOR LEE LIANG MONG

3,652,750 4.88

6. AMSEC NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT-AMBANK (M) BERHAD FOR TO TAI WAI

2,111,880 2.82

7. ANG HING TAY 1,112,300 1.498. AMSEC NOMINEES (TEMPATAN) SDN. BHD.

PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR NG LEE LEE1,111,190 1.49

9. TAN ANG ANG 836,240 1.1210. ONG SOO THIAH 755,000 1.01 11. EE LI CHEN 723,200 0.9712. CIMB GROUP NOMINEES (ASING) SDN. BHD.

CIMB COMMERCE TRUSTEE BERHAD FOR GLOBAL STRATEGIC GROWTH FUND 670,000 0.90

13. WILLIE LAU CHIENG 649,100 0.8714. DB (MALAYSIA) NOMINEE (TEMPATAN) SENDIRIAN BERHAD

DEUTSCHE BANK AG SINGAPORE FOR KSC (S) PTE. LTD. 640,000 0.86

15. BEH ENG PAR 530,000 0.7116. TAN ANG ANG 511,000 0.6817. GEORGE LEE SANG KIAN 490,160 0.6618. CHAN SIEW KUEN 433,000 0.5819. MAYBANK NOMINEES (TEMPATAN) SDN. BHD.

PLEDGED SECURITIES ACCOUNT FOR CHAN THIAN KIAT 399,900 0.53

20. MAYBANK NOMINEES (TEMPATAN) SDN. BHD. SUKHBIR SINGH A/L TARA SINGH

391,500 0.52

21. MAYBANK NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR LEE KOK HONG

366,000 0.49

22. KENANGA NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR TIMMY GAN VE LI

324,800 0.43

23. RHB CAPITAL NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR FONG JONG HAN

300,000 0.40

24. KONG CHIONG LEE 300,000 0.4025. MERCSEC NOMINEES (TEMPATAN) SDN. BHD.

PLEDGED SECURITIES ACCOUNT FOR TNTT REALTY SDN. BHD. 285,000 0.38

26. LEE CHEE KEONG 264,500 0.3527. GEORGE LEE SANG KIAN 243,840 0.3228. MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN. BHD.

PLEDGED SECURITIES ACCOUNT FOR CHAN PEI LIN 215,000 0.29

29. YONG YUI KIEW 213,000 0.2830. QUAH CHOON HOOI 202,000 0.27

TOTAL : 59,455,888 79.47

ANALYSIS OF WARRANT HOLDINGSAs at 31 May 2016cont’d


PROXY FORM(Before completing this form please refer to the notes below)

I/We I/C No./Co. No./CDS A/C No. (Full name in Capital Letters)

of (Full address)

being a member/members of PANTECH GROUP HOLDINGS BERHAD, hereby appoint the following person(s):-

Name of proxy, NRIC No. & Address No. of shares or % of shares to be represented

1.

2.

or failing him/her, the Chairman of the Meeting as my/our proxy to attend and vote for me/us on my/our behalf at the Tenth Annual General Meeting (“AGM”) of the Company to be held at Meeting Room 2, Level 2, Renaissance Johor Bahru Hotel, 2, Jalan Permas 11, Bandar Baru Permas Jaya, 81750 Masai, Johor on Thursday, 21 July 2016 at 10.30 a.m. My/our proxy/proxies is to vote as indicated below:-

FIRST PROXY SECOND PROXY

FOR AGAINST FOR AGAINST

ORDINARY RESOLUTION

1. To approve dividend for the financial year ended 29 February 2016.

2. To approve the payment of Directors’ fees up to RM180,000 for the financial year ending 28 February 2017.

3. To re-elect Dato’ Chew Ting Leng who retires pursuant to Article 122.

4. To re-elect Mr To Tai Wai who retires pursuant to Article 122.

5. To re-appoint Messrs SJ Grant Thornton as Auditors and to authorise the Directors to fix their remuneration.

SPECIAL BUSINESS

6. To retain Mr Tan Sui Hin as Independent Non-Executive Director.

7. To retain Mr Loh Wei Tak as Independent Non-Executive Director.

8. To retain Tuan Haji Yusoff Bin Mohamed as Independent Non-Executive Director.

9. Proposed Renewal of Share Buy-Back.

10. Authority to issue shares by the Company pursuant to Section 132D of the Companies Act, 1965.

Please indicate with a “√” or “X” in the space provided how you wish your vote to be cast. If no instruction as to voting is given, the proxy will vote or abstain from voting at his/her discretion. The first named proxy shall be entitled to vote on a show of hands on my/our behalf.

Signature of Shareholder(s)/Common Seal Signed this day of 2016

Notes:1. For the purpose of determining a member who shall be entitled to attend, speak and vote at the AGM, the Company shall be requesting the

Record of Depositors as at 15 July 2016. Only a depositor whose name appears on the Record of Depositors as at 15 July 2016 shall be entitled to attend the said meeting or appoint proxies to attend, speak and vote on his/her behalf.

2. A member entitle to attend and vote at the Meeting is entitled to appoint up to two (2) proxies attend and vote in his/her stead provided that he/she specifies the proportion of his/her shareholding to be represented by each proxy. A proxy may but need not be a member of the Company. The provisions of Section 149(1)(a) & (b) of the Companies Act, 1965 shall not apply.

3. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, 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 is an exempt authorised nominee, it may appoint multiple proxies for each omnibus account it holds.5. The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised in writing or, if the

appointer is a corporation, either under the Corporation’s Common Seal or under the hand of an officer or attorney so authorised.6. The Proxy Form must be deposited at the Registered Office of the Company at Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail,

50250 Kuala Lumpur not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof.

No. of ordinary shares held

AFFIXSTAMP

1st Fold Here

Fold This Flap For Sealing

Then Fold Here

THE SECRETARYPANTECH GROUP HOLDINGS BERHAD (733607-W)

Level 15-2, Bangunan Faber Imperial CourtJalan Sultan Ismail50250 Kuala Lumpur

A N N U A L R E P O R T 2 0 1 6

annua

l rep

ort 2016

One-Stop Centerfor Pipes, Valves, Fittings

PANTECH GROUPPANTECH GROUPPANTECH GROUP

PANAFLO CONTROLS PTE. LTD.(200413822 D)

Singapore OfficeNo. 22Pioneer Crescent #02-06 West Park Biz Central Singapore 628556 Tel: +65 6562 3048Fax: +65 6562 3148Email: [email protected]

PANTECH INTERNATIONAL (KSA)

SDN. BHD.(890670-K)PTD 204334Jalan Platinum UtamaKawasan Perindustrian Pasir GudangZon 12B81700 Pasir GudangJohor Darul Takzim, MalaysiaEmail: [email protected]

PANTECH STEEL INDUSTRIES SDN. BHD.(509731-A)

ManufacturerLot 13258 & 13259Jalan Haji Abdul MananOff Jalan Meru42200 KaparSelangor Darul Ehsan, MalaysiaTel: +603 3393 1633Fax: +603 3392 8966Email: [email protected]

PANTECH CORPORATION SDN. BHD.(176321-P)

Johor Bahru Head OfficePTD 204334Jalan Platinum UtamaKawasan Perindustrian Pasir GudangZon 12B81700 Pasir GudangJohor Darul Takzim, MalaysiaTel: +607 259 7979 Fax: + 607 256 7588/5789Email: [email protected]

Shah Alam OfficeNo. 3, Jalan Trompet 33/8Seksyen 33, 40400 Shah AlamSelangor Darul Ehsan, MalaysiaTel: +603 5192 7995Fax: +603 5192 7992Email: [email protected]

Pulau Indah (Warehouse Office)Persiaran Port Klang FZ 7, Jalan FZ 6-P1Port Klang Free Zone / KS 1242920 Pulau IndahSelangor Darul Ehsan, MalaysiaTel: +603 3101 3767Fax: +603 3101 4767

Pengerang (Warehouse office)Lot LO129, Kampung Bukit Gelugur81600 PengerangJohor Darul Takzim, MalaysiaTel: +607 826 6235/6239Fax: +607 826 6237Email : [email protected]

PANTECH (KUANTAN) SDN. BHD.(191606-U)Lot 5, Jalan Industri Semambu 2Kawasan Perindustrian Semambu25350 KuantanPahang Darul Makmur, MalaysiaTel: +609 568 7550Fax: +609 568 7553Email: [email protected]


MS ISO/IEC 17021:2011OSH 18072007 CB 02

Cert. No. MY12/00913.01

MS ISO/IEC 17021:2011EMS 12072004 CB 03

SG12/03893.01MY12/00912.01

PANTECH STAINLESS & ALLOY

INDUSTRIES SDN. BHD.(733428-W)

ManufacturerPTD 204334Jalan Platinum UtamaKawasan Perindustrian Pasir GudangZon 12B81700 Pasir GudangJohor Darul Takzim, MalaysiaTel: +607 251 8888Fax:+607 251 9999Email: [email protected]

NAUTIC STEELS LIMITED,

UNITED KINGDOM(02302004)

ManufacturerNautic House, Claymore,Tame Valley Industrial Estate,Tamworth, Staffordshire,England, B77 5DQTel: +44 (0)1827 281111Fax:+44 (0)1827 281444Email: [email protected]

PANTECH GALVANISING SDN. BHD.(1162100-W)PLO 7, Jalan Rumbia 4Kawasan Perindustrian Tanjung Langsat81700 Pasir GudangJohor Darul Takzim, MalaysiaTel: +6019 757 5128Email: [email protected]


Cert. No. LRQ 0921634

Cert. No.: E02742Cert. No.: SNG 6003354 • SNG 6019422 SNG 6019422


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