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Correspondence adress:ATLAN HOLDINGS BHD. (173250-W)

17TH FLOOR, MENARA ATLAN,161B, JALAN AMPANG,50450 KUALA LUMPUR, MALAYSIA.

T +603 2179 2000F +603 2179 2390www.atlan.com.my

Annual Report Laporan Tahunan

2018

Annual Report 2018

laporan tahunan

CHARTING A NEWDIRECTION

At ATLAN, progress is more than just profits. It is the embodiment of us believing in creating possibilities by looking far and beyond the conventional. Together, we are progressing by seeking new technologies, partnerships and ideas to advance confidently into the future.

Menara Atlan

CONTENTS

p. 01

p.02 - p.42

p.02

CORPORATE STRUCTURE

p.04

CORPORATE INFORMATION

p.06

PROFILE OF DIRECTORS

p.12

PROFILE OF KEY SENIOR MANAGEMENT

p.13

FINANCIAL HIGHLIGHTS

p.15

CHAIRMAN’S STATEMENT

p.17

PENYATA PENGERUSI

p.19

董事主席献词

p.21

MANAGEMENT DISCUSSION & ANALYSIS

p.25

SUSTAINABILITY REPORT

p.43 - p.210

p.43

CORPORATE GOVERNANCE OVERVIEW STATEMENT

p.65

ADDITIONAL COMPLIANCE INFORMATION

p.66

AUDIT AND RISK MANAGEMENT COMMITTEE REPORT

p.69

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

p.72

STATEMENT OF DIRECTORS’ RESPONSIBILITY

p.73

FINANCIAL STATEMENTS

p.199

ANALYSIS OF SHAREHOLDINGS

p.202

LIST OF PROPERTIES

p.205

NOTICE OF ANNUAL GENERAL MEETING

FORM OF PROXY

Arah Induk Sdn. Bhd.100%

100%

100%

100%

100%

100%

100%

Atlan Capital Sdn. Bhd.

Atlan Development Sdn. Bhd.

Atlan Technology Sdn. Bhd.Atlan Technology Sdn. Bhd.

Atlan Assets Sdn. Bhd.

Belia Karisma Sdn. Bhd.

Blossom Time Sdn. Bhd.

Gardenia Success Sdn. Bhd. Darul Metro Sdn. Bhd.

Duty Free International Limited DFZ Capital Sdn. Bhd. (Formerly known as DFZ Capital Berhad)

Naluri International Limited

Atlan Properties Sdn. Bhd.

Atlan Orient Sdn. Bhd.

Atlan Management Sdn. Bhd.

Orchard BoulevardSdn. Bhd.

50%

50%

100%100%

100%

100%

100%

74.30%

100%

100%

85%*

United Industries Sdn. Bhd.

United Filter Sdn. Bhd.

Danco Marketing Sdn. Bhd.

Naluri Properties Sdn. Bhd.

Ocean Pride Sdn. Bhd.

Radiant Ranch Sdn. Bhd.

RZ Equities Sdn. Bhd.#

Tegapasti Sdn. Bhd.

Trifiniti Networks Sdn. Bhd.

Timeless Image Sdn. Bhd.

United Industries HoldingsSdn. Bhd.

Tropika Ferringhi ManagementSdn. Bhd.

Zon Hospitality ServicesSdn. Bhd.

Scandinavian Avionics(Malaysia) Sdn. Bhd.

United Sanoh IndustriesSdn. Bhd.

Freighter Industries (M)Sdn. Bhd.

United Vehicles IndustriesSdn. Bhd.

UEW Plastic IndustriesSdn. Bhd.

69%

28%

81%

19%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

25%

100%

70%

100%

100%

100%

p. 02

ATLAN HOLDINGS BHD (173250-W)

CORPORATE STRUCTURE(As at 31 May 2018)

Cergasjaya Sdn. Bhd.

DFZ Utara Sdn. Bhd.

DFZ Emporium Sdn. Bhd.

DFZ (M) Sdn. Bhd.

Jasa Duty Free Sdn. Bhd.

Melaka Duty Free Sdn. Bhd.

Wealthouse Sdn. Bhd.

Zon Emporium Sdn. Bhd.

Binamold Sdn. Bhd.

Cergasjaya Properties Sdn. Bhd.

DFZ Asia Sdn. Bhd.

Gold Vale Development Sdn. Bhd.

Kelana Megah Sdn. Bhd.

PT DFZ Indon

Tenggara Senandung Sdn. Bhd.

1%

Winner Prompt Sdn. Bhd.

Selasih Ekslusif Sdn. Bhd.

Seruntun Maju Sdn. Bhd.

Emas Kerajang Sdn. Bhd.

DFZ Trading Sdn. Bhd.

DFZ Duty Free (Langkawi)Sdn. Bhd.

DFZ Duty Free SuppliesSdn. Bhd.

Jelita Duty Free SuppliesSdn. Bhd.

Black Forest Golf AndCountry Club Sdn. Bhd.

Kadar Prisma Sdn. Bhd.

UVI Advance TechnologySdn. Bhd.100%

100%

100%

100%

100%

69.90%

69.80%

100%

100%

100%

29.30%

69.89%

51%

28.60%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

99%

* Represent 85% equity interest in DFZ Capital Sdn. Bhd. (”DFZ”) (Formerly known as DFZ Capital Berhad) less one DFZ share.

# Intheprocessofstriking-off.

p. 03

ANNUAL REPORT 2018

BOARD OF DIRECTORS

Dato’ Sri Adam Sani Bin Abdullah

Chairman

Non-Independent Non-Executive Director

Lee Sze Siang

Executive Director

Tengku Abdul Rahman Ibni Sultan Haji Ahmad Shah Al-Mustain Billah, DK II., SSAP

Independent Non-Executive Director

Dato’ Sri Robin Tan Yeong Ching


Jeneral Tan Sri Dato’ Sri Abdullah Bin Ahmad @ Dollah Bin Amad (B)


Mohd Sharif Bin Hj Yusof

Senior Independent Non-Executive Director

Tan Thiam Chai


Dato’ Woo Hon Kong


Ong Bok Siong


Tuan Haji Mohd Jaffar Bin Awang (Ismail)

Independent Non-Executive Director (Appointed on 16 May 2017)

Raja Dato’ Shaharudin Shah Bin Raja Jalil Shah

Independent Non-Executive Director (Appointed on 13 June 2018)

AUDIT AND RISK MANAGEMENT COMMITTEE

Mohd Sharif Bin Hj Yusof (Chairman)


Tan Thiam Chai


REMUNERATION COMMITTEE

Dato’ Sri Adam Sani Bin Abdullah (Chairman)



NOMINATION COMMITTEE

Mohd Sharif Bin Hj Yusof (Chairman)

(Appointed on 26 April 2018)

Dato’ Sri Adam Sani Bin Abdullah

(Re-designated on 26 April 2018)


COMPANY SECRETARIES

Chua Siew Chuan (MAICSA 0777689)

Thum Sook Fun (MIA 24701)

REGISTERED OFFICE

17th Floor, Menara Atlan,

161B Jalan Ampang

50450 Kuala Lumpur, Malaysia

Tel: 603 – 2179 2000

Fax: 603 – 2179 2390

CORPORATE INFORMATION

p. 04


PRINCIPAL BANKERS

Affin Bank Berhad

CIMB Bank Berhad

RHB Bank Berhad

Alliance Bank Malaysia Berhad

AUDITORS

Ernst & Young

21st Floor, MWE Plaza

8 Lebuh Farquhar

10200 Penang

Malaysia

Tel: 604 – 263 0033

Fax: 604 – 263 0099

STOCK EXCHANGE LISTING

Main Market of Bursa Malaysia

Securities Berhad

Stock Name: Atlan

Stock Code: 7048

Stock Sector: Trading / Services

Date Listing: 15 January 1996

INVESTOR RELATIONS

Lee Sze Siang

17th Floor, Menara Atlan,

161B Jalan Ampang


Tel: 603 – 2179 2000

Fax: 603 – 2179 2390

Email: [email protected]

CORRESPONDENCE ADDRESS

17th Floor, Menara Atlan

161B Jalan Ampang


Tel: 603 – 2179 2000

Fax: 603 – 2179 2390

Web: http://www.atlan.com.my

SHARE REGISTRAR

Securities Services (Holdings)

Sdn. Bhd. (36869-T)

Level 7, Menara Milenium

Jalan Damanlela

Pusat Bandar Damansara

Damansara Heights


Tel: 603 – 2084 9000

Fax: 603 – 2094 9940 / 2095 0292

CORPORATE INFORMATION (CONT’D)

p. 05

ANNUAL REPORT 2018

PROFILE OF DIRECTORS

DATO’ SRI ADAM SANI BIN ABDULLAHChairmanNon-Independent Non-Executive Director

DATO’ SRI ADAM SANI BIN ABDULLAH, male, a Malaysian, age 62, was appointed as Chairman of the Company on 16 June 2000.

Dato’ Sri Adam is a self-made entrepreneur for more than 38 years. He received his primary education in Malaysia and secondary education in the United Kingdom.

Dato’ Sri Adam also serves as Chairman of the Remuneration Committee and was re-designated as a Member of the Nomination Committee of the Company on 26 April 2018. He is also the Non-Executive Chairman of Duty Free International Limited, a company listed on the Main Board of the Singapore Exchange Securities Trading Limited.

Dato’ Sri Adam does not have any family relationship with any director. Mr. Sebastian Lim, a substantial shareholder of the Company, is the son of Dato’ Sri Adam.

Dato’ Sri Adam has no conflict of interests with the Company and has not been convicted of any offences within the past 5 years other than traffic offences and has not been imposed any public sanction or penalty by the relevant regulatory bodies during the financial year 2018.

p. 06


PROFILE OF DIRECTORS (CONT’D)

LEE SZE SIANGExecutive Director

LEE SZE SIANG, male, a Malaysian, age 47, was appointed as Executive Director of the Company on 16 June 2000. He was re-designated to Non-Executive Director on 27 December 2004 and subsequently re-designated as Executive Director of the Company on 8 October 2008.

He holds a professional qualification from the Australia Society of Certified Practicing Accountants. He is also a member of the Malaysian Institute of Accountants. Previously, he was with KPMG, a firm of public accountants.

He is the Executive Director (Finance and Corporate Services) of Duty Free International Limited, a company listed on the Main Board of the Singapore Exchange Securities Trading Limited.

He does not have any family relationship with any director and/or major shareholder of the Company and has no conflict of interests with the Company.

He has not been convicted of any offences within the past 5 years other than traffic offences and has not been imposed any public sanction or penalty by the relevant regulatory bodies during the financial year 2018.

TENGKU ABDUL RAHMAN IBNI SULTAN HAJI AHMAD SHAH AL-MUSTAIN BILLAH, DK II., SSAPIndependent Non-Executive Director

TENGKU ABDUL RAHMAN IBNI SULTAN HAJI AHMAD SHAH AL-MUSTAIN BILLAH, DK II., SSAP, male, a Malaysian, age 58, was appointed as an Independent Non-Executive Director of the Company on 9 October 2000.

Tengku Abdul Rahman was educated at Harrow College, United Kingdom in Business Administration. He was a Director on the Board of Public Bank Berhad from 1983 to March 2011. He also served as a Director for Public Islamic Bank Berhad and Public Investment Bank Berhad till March 2011.

Tengku Abdul Rahman does not have any family relationship with any director and/or major shareholder of the Company and has no conflict of interests with the Company.

Tengku Abdul Rahman has not been convicted of any offences within the past 5 years other than traffic offences and has not been imposed any public sanction or penalty by the relevant regulatory bodies during the financial year 2018.

p. 07

ANNUAL REPORT 2018


JENERAL TAN SRI DATO’ SRI ABDULLAH BIN AHMAD @ DOLLAH BIN AMAD (B)Independent Non-Executive Director

JENERAL TAN SRI DATO’ SRI ABDULLAH BIN AHMAD @ DOLLAH BIN AMAD (B), male, a Malaysian, age 70, was appointed as an Independent Non-Executive Director of the Company on 26 January 2011.

He is graduated from Royal Air Force Staff College in Bracknell, United Kingdom in 1982. He holds Master Degree in International Relations and Strategic Studies from University of Lancaster, United Kingdom in 1986. He joined the Royal Malaysian Air Force (“RMAF”) in 1968 as a cadet officer and had served the RMAF for 36 years before retiring as the Chief of RMAF in 2004 with last rank as General.

He serves as a member of the Audit and Risk Management and Remuneration Committee of the Company.



DATO’ SRI ROBIN TAN YEONG CHINGNon-Independent Non-Executive Director

DATO’ SRI ROBIN TAN YEONG CHING, male, a Malaysian, age 44, was appointed as a Non-Independent Non-Executive Director of the Company on 18 December 2012.

He graduated with a Bachelor of Social Science degree in Accounting/Law from the University of Southampton, United Kingdom, in 1995. He joined Berjaya Group Berhad in 1995 as an Executive and subsequently became the General Manager, Corporate Affairs in 1997.

Currently, he is the Chief Executive Officer of Berjaya Corporation Berhad and the Executive Director of Sports Toto Malaysia Sdn. Bhd. He is also the Chairman of Berjaya Media Berhad, Sun Media Corporation Sdn Bhd and Informatics Education Ltd, Singapore and a Director of KDE Recreation Berhad and Berjaya Golf Resort Berhad. He also holds directorships in several other private limited companies in the Berjaya Corporation Group of companies.

He does not have any family relationship with any director. His father, Tan Sri Dato’ Seri Vincent Tan Chee Yioun is a deemed major shareholder of the Company.


p. 08



MOHD SHARIF BIN HJ YUSOFSenior Independent Non-Executive Director

MOHD SHARIF BIN HJ YUSOF, male, a Malaysian, age 79, was appointed as an Independent Non-Executive Director of the Company on 23 January 2009.

He is a Fellow Member of the Institute of Chartered Accountants, England and Wales and an Associate Member of the Malaysian Institute of Accountants. He has had more than 20 years experience in the government and financial sectors, serving the Selangor State Government, Bumiputra Merchant Bankers Berhad (now known as CIMB Bank Berhad) and thereafter British American Life & General Insurance Co Bhd (now known as Manulife Insurance (Malaysia) Berhad) where he held the position of Senior Vice President, Finance/Company Secretary at the time he retired.

He serves as Chairman of the Audit and Risk Management Committee and was appointed as the Chairman of Nomination Committee of the Company on 26 April 2018.

He currently sits on the board of Ireka Corporation Berhad, Axis Reit Managers Berhad and AYS Ventures Berhad.



TAN THIAM CHAINon-Independent Non-Executive Director

TAN THIAM CHAI, male, a Malaysian, age 59, was appointed as a Non-Independent Non-Executive Director of the Company on 18 December 2012.

He graduated with a Diploma in Commerce (Financial Accounting) from Kolej Tunku Abdul Rahman (now known as Tunku Abdul Rahman University College) and also completed The Association of Chartered Certified Accountants (UK) professional course in 1981. He is a Fellow member of the Association of Chartered Certified Accountants (UK) since 1990 and also a member of the Malaysian Institute of Accountants.

He started work with an accounting firm in Kuala Lumpur for about 2 years and thereafter served in various Finance and Accounting positions with the Hong Leong Group of Companies in Malaysia as well as in Hong Kong for about 8 years. He joined Berjaya Group of Companies in early 1991 as a Finance Manager of an operating subsidiary and was promoted to Operation Manager later that year. In 1992, he was transferred to the Corporate Head Office of Berjaya Group Berhad to head the Group Internal Audit function and subsequently in 1993, he was promoted to oversee the Group Accounting function of Berjaya Group Berhad.

Currently, he is the Chief Financial Officer of Berjaya Corporation Berhad. He is also an Executive Director of Berjaya Land Berhad, a Director of Berjaya Food Berhad, Berjaya Vacation Club Berhad, Indah Corporation Berhad, Cosway Corporation Berhad, Tioman Island Resort Berhad, Cosway Corporation Limited (Hong Kong) and Berjaya Starbucks Coffee Company Sdn Bhd. He also holds directorships in several other private limited companies in the Berjaya Corporation group of companies.

He serves as a member of the Audit and Risk Management Committee of the Company.



p. 09

ANNUAL REPORT 2018


ONG BOK SIONGNon-Independent Non-Executive Director

ONG BOK SIONG, male, a Malaysian, age 59, was appointed as Executive Director of the Company on 26 August 2010. He was re-designated to Group Managing Director on 30 April 2012 and subsequently re-designation as Non-Independent Non-Executive Director on 26 June 2013.

He holds a Bachelor of Laws degree from the University of London, United Kingdom, Bachelor of Science degree in Building Economics and Quantity Surveying (first class honours) from the Heriot-Watt University, Scotland, United Kingdom and Diploma in Building Technology from Tunku Abdul Rahman College. He also holds professional membership with various professional bodies.

He started his career in the construction and property industry in 1983 and had involved in mega construction and property development projects. He was the Chief Executive Officer and Executive Director of Meda Inc. Berhad and Group Chief Executive Officer of Andaman Consolidated Sdn Bhd Group before joining Atlan Group. Currently, he is also the Managing Director of Duty Free International Ltd, a company listed on the Main Board of the Singapore Exchange Securities Trading Limited.



DATO’ WOO HON KONGIndependent Non-Executive Director

DATO’ WOO HON KONG, male, a Malaysian, age 53, was appointed as Non-Independent Non-Executive Director of the Company on 24 April 2002. He was re-designated to the Executive Director position on 5 July 2002 and subsequently re-designated as Non-Independent Non-Executive Director of the Company on 30 October 2008. He was further re-designated to Independent Non-Executive Director of the Company on 16 May 2014.

He holds a Bachelor of Laws degree from the University of Canterbury, New Zealand. He started his career in 1988 as a legal assistant and joined a mid size legal firm as a partner in 1989 until 1994. He subsequently oversees the management and financial matters of companies involved in real estate and equities market locally and overseas prior to joining Atlan Group.



p. 10


TUAN HAJI MOHD JAFFAR BIN AWANG (ISMAIL)Independent Non-Executive Director

TUAN HAJI MOHD JAFFAR BIN AWANG (ISMAIL), male, a Malaysian, age 64, was appointed as a Independent Non-Executive Director of the Company on 16 May 2017.

He holds a Master of Arts (South East Asean Studies) from University of Hull, United Kingdom and Bachelor of Social Science (Political Science) from University Sains Malaysia (USM).

He has had more than 30 years experience in the government, serving the Johor Civil Service where he held the position of Mayor at Johor Bahru City Council at the time he retired. Currently, he hold directorships in several other private limited Companies and also a member of Johor Public Service Commission.

He serves as a member of the Audit and Risk Management, Remuneration and Nomination Committees of the Company.




RAJA DATO’ SHAHARUDIN SHAH BIN RAJA JALIL SHAHIndependent Non-Executive Director

RAJA DATO’ SHAHARUDIN SHAH BIN RAJA JALIL SHAH, male, a Malaysian, age 60, was appointed as an Independent Non-Executive Director of the Company on 13 June 2018.

He holds a B.A.(Hons) Degree in Accounting and Finance from Middlesex University, United Kingdom. He began his working career in Malaysia in 1985 by joining Permodalan Nasional Berhad (PNB) as a Senior Executive in the Investments Division. In 1990 he left PNB and became Manager of Corporate and Business Development in a public listed company, Malaysian General Investment Corporation Berhad (MGIC). Subsequently, he was appointed as Executive Director of its stockbroking arm, MGIC Securities Sdn. Bhd.(MGICS) in 1992. In 1997, he left MGICS to become Director (Institutional Sales) in Alliance Investment Bank Berhad (AIBB). After leaving AIBB in 2013, he is currently serving as a member of the Board of Directors of Deru Semangat Sdn. Bhd., a related company of TH Plantations Berhad, which is involved in the cultivation of oil palm in Pahang.



p. 11

ANNUAL REPORT 2018

HO YUET LENGGroup General Manager –Finance & Corporate Services

HO YUET LENG, female, a Malaysian, age 55, joined the Group as Head of Finance and Corporate Services in October 2002, and was subsequently promoted to Group General Manager – Finance and Corporate Services in January 2006. Prior to joining the Group, she was the Finance Director of a listed company on Bursa Malaysia Securities Berhad from years 1995 to 2002. From years 1983 to 1992, she was with Ernst & Young.

She holds a professional qualification from The Malaysian Institute of Certified Public Accountant. She is also a member of the Malaysian Institute of Accountants.

She does not have any family relationship with any director and/or major shareholder of the Company and has no conflict of interests with the Company.

She has not been convicted of any offences within the past 5 years and has not been imposed any public sanction or penalty by the relevant regulatory bodies during the financial year 2018.

ANDREAS CURT WINNENChief Executive Officer of DFZ Capital Sdn Bhd (Formerly known as DFZ Capital Berhad)

ANDREAS CURT WINNEN, male, a German Citizen, age 49, was appointed as Chief Executive Officer of DFZ Capital Sdn Bhd (Formerly known as DFZ Capital Berhad) on 1 September 2016. Andreas holds a qualification as graduate engineer for machine construction from Technical University Braunschweig (Germany).

He was a Managing Director and Chief Executive Officer of Tchibo Manufacturing (Austria) GmbH in Vienna, Austria from January 2006 to December 2007, subsequently from January 2008 to August 2008, he was attached to Tchiba Romania SRL

in Bucharest, Romania. From September 2008 to August 2016, he was a Managing Director of Heinrig Impex SRL for the Romanian branches of Gebr. Heinemann and also concurrently attached to Regal GH, Ljubljana, Solvenia, the Slovene branch of Gebr. Heinemann.



KHOO CHUN KEONGChief Executive Officer of United Industries Holdings Sdn Bhd

KHOO CHUN KEONG, male, a Malaysian, age 46, was appointed as Chief Executive Officer of United Industries Holdings Sdn Bhd on 1 September 2017.

He started with KPMG in 1992 under its articleship program and graduated in 1994. He subsequently joined a public listed company assisting the Managing Director to oversee its operations and expansion before moving on to his consultancy company.

He holds a professional qualification from the Malaysian Institute of Certified Public Accountant and also a member of the Malaysian Institute of Accountants.



PROFILE OF KEY SENIOR MANAGEMENT

p. 12


REvENUE (RM’million)

EARNINGS BEFORE INTEREST, TAx,DEPRECIATION AND AMORTISATION(Before Exceptional Items) (RM’million)

REvENUE BY BUSINESS SEGMENTS (RM’million)

PROFIT AFTER TAx AND NON-CONTROLLING INTERESTS (RM’million)

900.0

800.0

700.0

600.0

500.0

400.0

300.0

200.0

100.0

0

700.0

600.0

500.0

400.0

300.0

200.0

100.0

0

140.0

120.0

100.0

80.0

60.0

40.0

20.0

0

250.0

200.0

150.0

100.0

50.0

0

FY 2

009

FY 2

010

FY 2

011

FY 2

012

FY 2

013

FY 2

014

FY 2

015

FY 2

016

FY 2

017

FY 2

018

■ Duty Free ■ Automotive ■ Property & Hospitality

FINANCIAL HIGHLIGHTS

FY 2

009

FY 2

010

FY 2

011

FY 2

012

FY 2

013

FY 2

014

FY 2

015

FY 2

016

FY 2

017

FY 2

018

FY 2

009

FY 2

010

FY 2

011

FY 2

012

FY 2

013

FY 2

014

FY 2

015

FY 2

016

FY 2

017

FY 2

018

FY 2

009

FY 2

010

FY 2

011

FY 2

012

FY 2

013

FY 2

014

FY 2

015

FY 2

016

FY 2

017

FY 2

018

p. 13

ANNUAL REPORT 2018

BASIC EARNINGS PER SHARE (sen)

DIvIDEND PAYOUT (RM’million)

NET TANGIBLE ASSETS PER SHARE (RM)

CASH AND CASH EqUIvALENTS (RM’million)

90.0

80.0

70.0

60.0

50.0

40.0

30.0

20.0

10.0

0

180.0

160.0

140.0

120.0

100.0

80.0

60.0

40.0

20.0

0

2.50

2.00

1.50

1.00

0.50

0

450.0

400.0

350.0

300.0

250.0

200.0

150.0

100.0

50.0

0

FINANCIAL HIGHLIGHTS (CONT’D)

FY 2

009

FY 2

010

FY 2

011

FY 2

012

FY 2

013

FY 2

014

FY 2

015

FY 2

016

FY 2

017

FY 2

018

FY 2

009

FY 2

010

FY 2

011

FY 2

012

FY 2

013

FY 2

014

FY 2

015

FY 2

016

FY 2

017

FY 2

018

FY 2

009

FY 2

010

FY 2

011

FY 2

012

FY 2

013

FY 2

014

FY 2

015

FY 2

016

FY 2

017

FY 2

018

FY 2

009

FY 2

010

FY 2

011

FY 2

012

FY 2

013

FY 2

014

FY 2

015

FY 2

016

FY 2

017

FY 2

018

p. 14


CHAIRMAN’S STATEMENT

Bismillahir Rahmanir Rahim Assalamu Alaikum wa Rahmatullahi wa Barakatuh

On behalf of the Board of Directors of Atlan Holdings Bhd (“Atlan”, “we” or “the Group”), I am pleased to present to you the annual report and audited financial statements of the Group for the financial year ended 28 February 2018 (“FYE2018”).

ECONOMIC AND BUSINESS OVERVIEW

The World Bank Global estimated 2017 global Gross Domestic Product (“GDP”) growth at 3.0%, an increase from 2.4% in 2016 which was due to the broad-based growth. Locally, Bank Negara Malaysia (“BNM”) reported that Malaysia’s GDP growth for 2017 came in at 5.9% (2016:4.2%) which was mainly driven by domestic demand, reflecting faster expansion in both private and public sector spending.

While broad global and local economic indicators may be positive, the Group had been adversely affected by the foreign currency fluctuations against the Malaysian Ringgit. The strengthening of the Ringgit Malaysia against the United States Dollars (“USD”) from RM4.44 in the beginning of FYE2018 to RM3.92 at the end of FYE2018 led to a sizable one-off Group net unrealised forex loss of RM20.0 million.

Despite the challenging foreign currency exchange conditions, the Group’s business remained buoyant throughout FYE2018 as we took on imperative measures to further enhance our operations with effective strategies. Moving forward, the Group expects the challenging factors to be temporary and that the Group will continue on its growth trajectory delivering greater value for all of our shareholders.

FINANCIAL PERFORMANCE

For the financial year under review, the Group’s performance continued to be stable and profitable. The Group reported a revenue of RM826.3 million compared to RM809.4 million in the preceding year which translates to an increase of 2.1%. The Group’s Profit After Tax (“PAT”) for FYE2018 was RM66.3 million as compared to RM75.6 million in

financial year ended 28 February 2017 (“FYE2017”), registering a decrease of 12.3%. Nevertheless, the Group’s cash flow continued to be strong with a net increase in cash and cash equivalent of RM108.9 million during the year, and a net cash and cash equivalent position of RM398.3 million by the end of FYE2018.

The Group’s duty free business segment remained our core business which contributed a total of 74.9% to the Group’s total revenue. This was followed by the automotive segment, property and hospitality segment and investment holding segment which delivered 21.3%, 3.4% and 0.4% to the Group’s total revenue respectively.

DIVIDEND

The Group continued to reward its shareholders for their loyalty and support with robust dividend pay-outs. For FYE 2018, the Group has paid a total dividend of RM0.21 per ordinary share, amounting to a total pay-out of RM53.3 million. This translates to a dividend yield of approximately 4.52% based on the closing share price of RM4.65 as at 28 February 2018.

CORPORATE DEVELOPMENTS

On 18th May 2017 Duty Free International Limited (“DFIL”) completed the bonus warrant issue exercise with the listing and quotation of 491,400,042 Bonus Warrants on the Official List of the Singapore Exchange Securities Trading Limited (“SGX-ST”). The allotment of the bonus warrant was on the basis of two bonus warrants for every five existing ordinary shares by the shareholders of DFIL. As at 28 February 2018, the Company has 362,011,245 bonus warrants of DFIL.

Pursuant to the sale and purchase agreement between Heinemann Asia Pacific Pte. Ltd. (“HAP”) and DFIL dated 17 March 2016, HAP had exercised the second tranche call option on 30 November 2017 in which 5% of the issued and paid-up share capital of DFZ Capital Sdn Bhd (formerly known as DFZ Capital Berhad) (“DFZ”), a subsidiary of DFIL, was sold to HAP for a total amount of Euro9.85 million. Following the exercise of the second tranche call option as mentioned above, HAP’s total equity interest in DFZ as at to-date is now 15% plus one share.

p. 15

ANNUAL REPORT 2018

CHAIRMAN’S STATEMENT (CONT’D)

The above-mentioned strategic business partnership initiative is part of the Group’s long-term plans to grow our duty-free business. We are certain that this partnership will further develop and enhance the overall retail experience in our stores and will place us on par with the highest quality duty-free operators in the world.

OUTLOOK & PROSPECTS

BNM has forecasted the Malaysian GDP to grow at a firm pace between 5.5% and 6.0% in calendar year 2018, backed by strengthening global economic conditions, sustained private sector expenditure, continual growth in wages and employment, positive business outlook and stronger demand.

However, for the short term, with the rising inflationary cost and consumers’ cautious purchasing sentiment, the Group expects the business environment in which the Group operates, to remain challenging. The Group will reinforce measures to mitigate the business risks surrounding the operating environment by focusing on strengthening customer bases and distribution channels whilst improving operational efficiency and cost management in order to remain competitive.

APPRECIATION

On behalf of the Board of Directors, I wish to extend my sincerest appreciation to the management team and staff of the Group for their continuous commitment and hard work that has contributed significantly to the Group’s success.

I would also like to take this opportunity to express my deepest gratitude to our valued shareholders, stakeholders, clients, partners and customers for your endless support and confidence in the Group. In expressing our sincerest thanks, we will continue to strive to further develop sustainable growth, value and success for the Group.

On my part, I remain your humble and obedient servant and pledge to continue my dedication and diligence to Atlan Group.

Thank you.

Wasallamu Alaikum wa Rahmatullahi wa Barakatuh

Adam Sani Abdullah,Chairman of Atlan Holdings Bhd13 June 2018

The Zon All Suites Residences on the Park

p. 16


PENYATA PENGERUSI

Bismillahir Rahmanir Rahim Assalamu Alaikum wa Rahmatullahi wa Barakatuh

Bagi pihak Lembaga Pengarah Kumpulan Atlan Holdings Bhd (“Atlan”, “kami” atau “Kumpulan Atlan”), saya dengan sukacitanya membentangkan Laporan Tahunan dan Penyata Kewangan Beraudit Kumpulan bagi tahun kewangan berakhir 28 Februari 2018 (“ tahun kewangan 2018”).

TINJAUAN EKONOMI DAN PERNIAGAAN

Bank Dunia Global te lah menjangkakan pertumbuhan Keluaran Dalam Negara Kasar (“KDNK”) global untuk tahun 2017 berada pada 3.0%, iaitu peningkatan 2.4% dari tahun 2016 yang disebabkan oleh pertumbuhan yang meluas. Di Malaysia pula, Bank Negara Malaysia (“BNM”) telah melaporkan pertumbuhan KDNK negara untuk tahun 2017 telah mencapai pertumbuhan 5.9% (2016: 4.2%) yang mana telah didorong oleh permintaaan domestik yang menunjukkan perkembangan yang pesat dalam perbelanjaaan di kedua-dua sektor swasta dan awam.

Meskipun penunjuk ekonomi global dan tempatan adalah positif, namun Kumpulan Atlan telah terjejas teruk disebabkan oleh turun naik matawang asing berbanding Ringgit Malaysia. Pengukuhan Ringgit Malaysia berbanding Dolar Amerika pada RM4.44 di awal tahun kewangan 2018 kepada RM3.92 di akhir tahun kewangan 2018 telah membawa kepada suatu jumlah kerugian matawang asing Kumpulan Atlan yang belum direalisasikan sebanyak RM20.0 juta.

Walaupun dalam keadaan pertukaran matawang asing yang mencabar, perniagaan Kumpulan Atlan kekal memberangsangkan sepanjang tahun kewangan 2018 memandangkan kami mengambil langkah-langkah penting untuk meningkatkan lagi operasi dengan strategi yang dilaksanakan dengan baik. Melangkah hadapan, Kumpulan Atlan menjangkakan faktor-faktor yang mencabar ini adalah bersifat sementara, dan Kumpulan Atlan akan meneruskan trajektori pertumbuhannya yang memberikan nilai yang lebih besar untuk semua pemegang saham.

PRESTASI KEWANGAN

Di dalam tahun kewangan yang dikaji, prestasi Kumpulan Atlan terus stabil dan menguntungkan. Kumpulan Atlan telah mencatatkan perolehan sebanyak RM826.3 juta berbanding RM809.4 juta di tahun sebelumnya yang mana telah mencatatkan peningkatan sebanyak 2.1%. Kumpulan Atlan mencatatkan keuntungan selepas cukai sebanyak RM66.3 juta untuk tahun kewangan 2018, berbanding RM75.6 juta pada tahun kewangan berakhir 28 February 2017 iaitu menunjukkan penurunan sebanyak 12.3%. Walaupun begitu, aliran tunai Kumpulan Atlan terus kukuh dengan penambahan tunai dan kesetaraan tunai sebanyak RM108.9 juta sepanjang tahun, dan kedudukan bersih tunai dan kesetaraan tunai di akhir tahun kewangan 2018 sebanyak RM398.3 juta.

Segmen perniagaan bebas cukai Kumpulan Atlan kekal sebagai perniagaan teras kami yang mana telah menyumbangkan 74.9% kepada jumlah pendapatan Kumpulan Atlan. Ini diikuti oleh segmen otomotif, segmen hartanah dan hospitaliti dan segmen pegangan pelaburan yang masing-masing menyumbangkan 21.3%, 3.4% dan 0.4% kepada pendapatan Kumpulan Atlan.

DIVIDEN

Kumpulan Atlan akan terus memberi ganjaran kepada pemegang sahamnya di atas kesetiaan dan sokongan dengan pembayaran dividen yang mantap. Untuk tahun kewangan 2018, Kumpulan Atlan telah membayar RM0.21 sesaham biasa berjumlah RM53.3 juta. Ini diterjemahkan kepada hasil dividen kira-kira 4.52% berdasarkan harga saham penutupan sebanyak RM4.65 pada 28 Februari 2018.

PERKEMBANGAN KORPORAT

Pada 18 Mei 2017, Duty Free International Lmited (“DFIL”) telah menyempurnakan pelaksanaan waran bonus dengan penyenaraian dan sebut harga 491,400,042 Waran Bonus di Senarai Rasmi Singapore Exchange Securities Trading Limited (“SGX-ST”). Peruntukan waran bonus ini adalah berdasarkan dua waran bonus bagi setiap lima saham biasa sedia ada oleh para pemegang saham DFIL. Pada 28 Februari 2018, Atlan mempunyai 362,011,245 waran bonus DFIL.

p. 17

ANNUAL REPORT 2018

PENYATA PENGERUSI (SAMB.)

Berdasarkan perjanjian jual beli di antara Heinemann Asia Pacific Pte. Ltd. (“HAP”) dan DFIL bertarikh 17 Mac 2016, HAP telah melaksanakan hak membeli saham peringkat kedua pada 30 November 2017 melibatkan 5% daripada modal terbitan dan berbayar DFZ Capital Sdn Bhd (sebelum ini dikenali sebagai DFZ Capital Berhad) (“DFZ”), iaitu anak syarikat DFIL sebanyak 9.85 juta Euro. Berikutan dengan perlaksanaan hak pembelian saham peringkat kedua ini, jumlah kepentingan ekuiti HAP ke atas DFZ adalah 15% ditambah dengan satu (1) saham.

Inisiatif perkongsian perniagaan strategik yang disebut di atas adalah sebahagian daripada rancangan jangka panjang Kumpulan Atlan untuk mengembangkan perniagaan bebas cukai kami. Kami yakin bahawa perkongsian ini akan terus berkembang dan meningkatkan pengalaman runcit secara keseluruhan di kedai-kedai kami dan akan meletakkan kami setanding dengan pengendali bebas cukai yang berkualiti tinggi di dunia.

TINJAUAN DAN HARAPAN

BNM telah menjangkakan KDNK negara akan berkembang pada kadar yang kukuh antara 5.5% hingga 6.0% pada tahun kalendar 2018, disokong oleh pengukuhan keadaan ekonomi global, mengekalkan perbelanjaan sektor swasta, pertumbuhan gaji dan pekerjaan yang berterusan, prospek perniagaan yang positif dan permintaan yang lebih kukuh.

Walaubagaimanapun untuk jangkamasa pendek, dengan peningkatan kos inflasi dan sentimen belian berhati-hati pengguna, Kumpulan Atlan menjangkakan persekitaran perniagaan yang mana Kumpulan beroperasi, akan terus mencabar.

Kumpulan Atlan akan melaksanakan langkah-langkah untuk mengurangkan risiko perniagaan di persekitaran operasi dengan memberi tumpuan kepada pengukuhan asas pelanggan dan saluran pengedaran di samping meningkatkan kecekapan operasi dan pengurusan kos agar kekal kompetitif.

PENGHARGAAN

Bagi pihak Lembaga Pengarah, saya ingin mengucapkan setinggi-tinggi penghargaan kepada pasukan pengurusan dan kakitangan Kumpulan Atlan di atas komitmen yang berterusan dan kerja keras yang telah memberi sumbangan besar ke arah kejayaan Kumpulan Atlan.

Saya juga ingin mengambil kesempatan ini untuk mengucapkan penghargaan dan terima kasih kepada para pemegang saham, pihak berkepentingan, rakan kongsi dan pelanggan-pelanggan kami di atas sokongan yang berterusan dan kenyakinan kepada Kumpulan Atlan. Dalam menyampaikan ucapan terima kasih kami yang tulus ikhlas, kami akan berusaha untuk terus membangunkan pertumbuhan, nilai dan kejayaan yang mampan bagi Kumpulan Atlan.

Saya dengan rendah diri berjanji untuk sedia berkhidmat meneruskan komitmen, dedikasi dan usaha saya untuk Kumpulan Atlan.

Terima kasih,

Wasallamu Alaikum wa Rahmatullahi wa Barakatuh

Adam Sani Abdullah,Pengerusi Atlan Holdings Bhd13 Jun 2018

UI Factory

p. 18


董事主席献词

我很荣幸代表董事会，提呈益联控股有限公司（“益联”或“我们”或 “集团”）截至2018年2月28日（“2018财政年”）的年度报告和已审核财务表。

经济与商业展望

世界银行预测全球国内生产总值从2016年的2.4% 成长至2017年的3.0%，这源于广泛增长。在国内，马来西亚国家银行报告指出2017年国内生产总值为5.9%（2016年：4.2%），主要是由内需驱动，反映了私人界和公共部门支出的快速扩张。

虽然全球和国内经济指数皆呈现正面，益联还是遭受马币兑外币波动的严重影响。马币兑美元从2018财政年一开始的RM4.44反弹至2018财政年结束的RM3.92，使到集团蒙受2千万令吉的一次性未实现净外汇损失。

虽然面对汇率波动的挑战，集团在2018财政年的业务仍然令人鼓舞，因我们采取了必要的措施来加强营运和执行策略。未来，我们相信目前面对的挑战是暂时性的，集团将继续它的增长轨迹而把更大的价值带给股东。

财务绩效

益联在2018财政年依然表现稳固和获利。营业额为8亿2千630万令吉，相较于去年的8亿940万令吉，取得2.1%的成长。税后利润为6千630万令吉，相较于去年的7千560万令吉，下跌12.3%。无论如何，集团的现金流量还是强劲，现金和现金等值净增长了1亿890万令吉，达致2018财政年的3亿9千830万令吉。

集团的免税业务继续成为首要业务，贡献了整体营业额的74.9%。接着是汽车零件制造业务、办公楼和酒店业务以及投资控股，各别贡献了整体营业额的21.3%, 3.4%和0.4%。

股息

益联继续派发可观的股息给予股东们，以回馈他们一直以来的忠心支持。2018财政年，集团派发了每普通股21仙的股息，总额5千330万令吉。股息收益相等于截至2018年2月28日闭市价每股4.65令吉的4.52%。

企业发展

于2017年5月18日，集团的子公司 Duty Free International Limited (“DFIL”)完成了派发红利认股权证事项，共491,400,042股红利认股权证在新加坡证件交易所（Singapore Exchange Securities Trading Limited，简称 “SGX-ST ”）上市和报价。配股方式是现持DFIL股每5普通股获派送2红利认股权证。截至2018年2月28日，公司总共有362,011,245股红利认股权证。

按照DFIL与Heinemann Asia Pacific Pte. Ltd. (“HAP”)于2016年3月17日签署的买卖合约，HAP 已经于2017年11月30日行使了第二次购买权，即以985万欧元购买了DFIL的子公司DFZ Capital Sdn. Bhd. (原名为DFZ Capital Berhad）(“DFZ”) 的5%股权。随着第二次的购买股权事项，HAP目前已拥有DFZ的15% 加一股的股份。

上述的策略性商业伙伴合作是集团为要强化免税业务的其中一个长远计划。我们有信心这会提升我们的整体旅游零售经验并逐步让集团跟其他世界最好的免税业务经营者处于同等水平。

p. 19

ANNUAL REPORT 2018

董事主席献词(继续)

展望与前景

马来西亚国家银行预测2018年国内生产总值将介于5.5% 至6.0% 之间，这是以全球经济改善、持续的私人界开支、就业与薪资成长、正面的商业前景以及更大的需求作为基础。

但短期而言，由于通货膨胀以及消费者谨慎开销的氛围，我们预料集团身处的商业环境持续充满挑战。集团将采取必要的措施来减低商业风险，加强客户群和分销渠道；同时，改善营运效率和成本控制以继续保持竞争力。

致谢

我谨代表董事会衷心感谢公司管理层和员工的奉献精神和辛勤工作，以致集团能够达致成功。

我也借此向公司股东、相关部门和机构、客户、生意伙伴和顾客对于我们的无尽支持和信任致于万二分的谢意。为此，我们会继续保持成长、创造价值和带来辉煌的成功。

而我，作为您谦恭的仆人，承诺持续全力以赴为益联集团效力。

谢谢。

Adam Sani Abdullah,董事主席2018年6月13日

p. 20


MANAGEMENT DISCUSSION & ANALYSIS

BUSINESS OVERVIEW

Atlan was incorporated in 1988 and started off as a precision metal stamping company. Today the Group operates three principal business divisions namely trading and retailing of duty free and non-dutiable merchandise, manufacturing of auto-components, and property investment and hospitality.

Duty Free

The Group’s trading and retailing of duty free and non-dutiable segment is undertaken by Duty Free International Ltd and its group of subsidiaries (“DFIL Group”). DFIL Group is also a listed entity on the Mainboard of Singapore Exchange Securities Trading Limited (“SGX-ST”) and currently operates more than 40 outlets under the brand name “ZON” with an operating history of 40 years.

To date, the ZON is Malaysia’s largest multi-channel duty free and duty paid retailing brand that serves both Malaysian and international customers across all major entry and exit points in Peninsular Malaysia. The Group’s retail outlets are extensively located at all leading entry and exit points at international airports, seaports, international ferry terminals, border towns and popular tourist destinations.

Automotive

The Group’s automotive segment is undertaken by the United Industries Holdings Sdn Bhd and its group of subsidiaries (“UI Group”) which was incorporated in 1973 in Malaysia as a manufacturer of motor vehicles’ exhaust system. Today UI Group has expanded its expertise into manufacturing and supplying of various automotive component parts such as metal fuel tanks, screw jack, tubing and related automotive production and assembly parts.

Property and Hospitality

The Group’s property investment and hospitality comprise two properties on Jalan Ampang in the Kuala Lumpur City Centre i.e. an office building named Menara Atlan and a hotel and serviced apartment named “The Zon All Suites Residences on the Park”. These two properties are located on a prime land that is strategically located within walking vicinity to Suria Kuala Lumpur City Centre (“KLCC”), the heart of Kuala Lumpur.

FINANCIAL PERFORMANCE

Despite the challenging business environment and unfavourable foreign currency, Atlan’s business continues to be stable and healthy. For the financial year under review, the Group achieved a strong revenue of RM826.3 million. The Group also reported a profit before tax (“PBT”) and profit after tax (“PAT”) of RM91.3 million and RM66.3 million respectively.

The largest revenue contributor for the Group is the duty free segment contributing 74.9% of total revenue of RM619.0 million, a marginal decrease of 3.1% compared to financial year ended 28 February 2017 (“FYE2017”). The decrease in revenue was mainly due to lower demand from customers in particular in the first quarter financial year ended 28 February 2018 (“FYE2018”) following the imposition of Goods and Services Tax at the border outlets and duty free zones with effect from 1 January 2017.

The automotive segment remains the Group’s second largest contributor, reporting a total revenue of RM175.9 million, an increase of 3.1% compared to FYE2017. The increase was mainly due to higher orders received from certain customers.

As for the property and hospitality segment, the Group recorded revenue of RM28.1 million, marginally lower compared FYE2017 due to lower occupancy for both the properties in FYE2018.

As at 28 February 2018, the Group’s balance sheet remained solid and robust with net cash and cash equivalents of RM398.3 million and a net cash position of RM340.5 million which is equivalent to RM1.34 per share. The Group’s total capital commitments, approved, contracted for and not contracted for, as at 28 February 2018, amounted to RM6.9million (28.2.2017 : RM6.9million).

The Group with its strong balance sheet and low gearing will allow the Group to explore and capitalise on any valuable business opportunities in future.

p. 21

ANNUAL REPORT 2018

MANAGEMENT DISCUSSION & ANALYSIS (CONT’D)

DIVIDEND

For FYE2018, the Group paid a total of three interim single tier dividends of RM0.06, RM0.05 and RM0.10 per ordinary share respectively, all totalling RM0.21 per ordinary share, amounting to a total pay-out of RM53.3 million. This translates to a dividend yield of approximately 4.52% based on the closing share price of RM4.65 as at 28 February 2018.

BUSINESS RISKS

Duty Free

The Group’s retailing of duty free and non-dutiable segment is mainly affected by regulatory risk and foreign exchange fluctuation risk apart from the usual business risk. The operation of duty-free business requires a number of licences which include amongst others, duty-free shop licence, wholesale dealer’s licence, bonded warehouse licence and import licence to be renewed on a regular basis. The Group is also subject to changes in regulatory framework by the various authorities from time to time. To mitigate these risks, the Group continues to diligently work closely with the government authorities and will continuously ensure that its business and operations are in compliance with the relevant laws and regulations as well as adapt to new laws and regulations that are being implemented.

The Group has transactional currency exposures arising from purchases that are denominated in a currency other than the functional currency of the operations to which they relate, primarily United States Dollars and Singapore Dollars. Approximately 64% (FYE2017: 52%) of the Group’s purchases are denominated in foreign currencies. Foreign currency exposures in transactional currencies other than functional currencies of the operating entities are kept to an acceptable level via constant monitoring of foreign currency fluctuations and hedging policies implemented within the Group.

Automotive

The Group’s automotive segment is subjected to various risks such as change in technology, entrance of new manufacturers as well as amount of car models being introduced yearly. The Group seeks to mitigate these risks through improving manufacturing technologies, increasing know-how and ensuring quality in each product being manufactured to garner more market share in the automotive industry.


The Group’s property and hospitality business is segregated into office tower and hotel, both of which are affected by similar business risks which include the increase of supply of commercial spaces, cost of labour and changes in customers’ preference. Office spaces around the Kuala Lumpur city centre are increasing at a high rate which will lead to lower and increasingly competitive pricing to attract tenants. As for the hotel business, it is also affected by the increase in number of hotels in the city, however, this risk is largely mitigated by Malaysia’s tourism initiatives to attract more tourists to Malaysia.

BUSINESS STRATEGY

Duty Free

Over the years, DFIL Group has grown to be a major player in Malaysia’s travel retail industry. This was a result of the geographical and multi-channel diversification of the duty free and duty paid retailing outlets at all major entry and exit points of Malaysia.

p. 22



The Group’s reputation as a duty free and non-dutiable retailer had fortified when its strategic business and equity partner, Heinemann Asia Pacific Pte Ltd (“HAP”) exercised the Second Tranche Call Option to take up more equity stake in the DFIL Group. This shows their commitment and confidence in the Group. As mentioned in last year’s Management Discussion & Analysis (“MD&A”), together with HAP, the Group is making progress in unlocking the 5 targeted key areas which are:-

i. Increase operational efficiencies;

ii. Cost effectiveness in supply chain;

iii. Efficiency in logistics management of products;

iv. Enhancement of retail outlets;

v. Increase in product assortments.

Apart from improving key targeted areas mentioned above, on the frontline, the Group continues to focus on creating a better experience for customers visiting the outlets. This initiative has been set as a benchmark across all the outlets and is executed through constant improvement in the outlets’ aesthetic appearance, effective marketing and promotions together with excellent customer service.

Moving forward, the Group is expected to grow both organically and inorganically. In Malaysia, growth is anticipated in the average footfall to the Group’s outlets especially at the border outlets. Furthermore, despite the saturation in Malaysia’s duty-free industry, the Group’s emphasis remains on seeking opportunities to grow through additional retail spaces. With the Group’s strong financial standing and brand name, the Group will continue to explore expansion through acquisition opportunities with synergistic businesses within the region.

Automotive

To date the Group is working closely with global automotive players that have manufacturing operations in Malaysia. The Group will continue to scale up the operations concurrently with the quantity of orders received. As of last year, the Group had commissioned a new factory to cater for the increase in demand whilst at the same time continued to produce quality components parts. Henceforth, the Group will further enhance its manufacturing capabilities in order to meet the demand of newer technologies and models in the market.


Being strategically located in Kuala Lumpur city centre puts a premium on the Group’s properties and allows the Group to continuously attract tenants and tourists. The Group will progressively upgrade and maintain both the properties to ensure that the assets will continue to yield steady streams of recurring income.

For Menara Atlan office building, the Group is attentive to market rates and will continue to ensure competitive rental rates are given on the back of long term leases. Pricing is key against the influx of new office supply, as well as up-keeping and implementing asset enhancement initiatives of the property to compete against newer office towers within the vicinity.

As for The Zon All Suites Residences on the Park, the Group remains focus on marketing promotional activities to attract foreign tourists and participating in Malaysia’s tourism initiatives. In terms of price point over value, the Group is within the affordable range as compared to the newer hotels being established here in the KLCC vicinity.

OUTLOOK & PROSPECTS

According to Bank Negara Malaysia (“BNM”)1 and International Monetary Fund (“IMF”)2, the global economy recorded its highest growth rate since 2011 with trade growth exceeding global GDP growth for the first time since 2014. In this aspect, global economic activity for 2018 and 2019 is forecasted to be revised upward by 0.2% point to 3.9% (2017:3.7%).

In line with global economy growth, Malaysia’s economy remains robust recording a growth of 5.9% (2016:4.2%), supported by greater expansion in both private and public-sector spending. Moving forward, the Malaysian economy is projected to grow by 5.5% - 6.0% in 2018.

Duty Free Division

As of 2017, the travel industry3 reported the largest surplus which is expected to increase from higher tourist arrivals and rising per capita spending. A total of 25.9 million tourist arrivals into Malaysia were registered in 2017, and this is expected to increase to 33.1 million in 20184.

p. 23

ANNUAL REPORT 2018

In addition, during the 2018 Malaysia budget, it was declared that 2020 will be the Visit Malaysia Year5. In line with this initiative, funds have been allocated to increase the tourism infrastructure in Malaysia. Overall, the Group expects a positive growth in line with the government’s expectations of tourist arrivals with our retail outlets being strategically positioned at prominent entry and exit points in Peninsular Malaysia.

Automotive

The outlook for the for the automotive industry in Malaysia remains positive as Malaysian Automotive Association (“MAA”)6 has projected a 2.3% growth in new vehicle sales to 590,000 units in 2018 compared to 576,635 in 2017. Thus far, the Group has experience an increase in production orders which is aligned with the projected increase of sales. The Group will continue to leverage on the business initiatives that had already been put in place to maximise opportunities in light of the changing dynamics in the automotive industry in Malaysia.


The outlook for commercial properties as a whole remains sluggish due to the oversupply of offices and shopping complexes. To overcome this issue, Dewan Bandaraya Kuala Lumpur7 has frozen approvals for the development of high-end residential and commercial properties above RM1 million per unit in Kuala Lumpur. This is positive news for the Group as it relieves further oversupply pressure. Moving forward, more competitive pricing is expected from the commercial properties that are currently being completed within the vicinity of Kuala Lumpur City Centre.

The Group is optimistic about The Zon All Suites Residences on the Park as the Group believes that this business will grow in tandem with the expected increase of influx in foreign tourist for the calendar year 2018. The Group continues to strive to improve operations in order to mitigate the risks which are not within control.

The Group has been resilient throughout the many years in operations. Although challenges will continue to be encountered by all of the three business divisions, nevertheless, the Group is confident that the challenges will be overcome and the Group is committed to implement strategies and plans to ensure that the core businesses remain resilient and sustainable. At the same time, the Group will fortify its efforts to improve and grow its businesses so as to provide maximum value to shareholders.


1. http://www.bnm.gov.my/files/publication/ar/en/2017/ar2017_book.pdf2. https://www.imf.org/en/Publications/WEO/Issues/2018/01/11/world-economic-outlook-update-january-20183. http://www.bnm.gov.my/files/publication/ar/en/2017/ar2017_book.pdf4. https://www.tourism.gov.my/media/view/malaysia-banking-on-new-tourism-developments-to-boost-2018-arrivals5. https://www.thestar.com.my/news/nation/2017/10/27/budget-2018-full-speech/6. https://www.thestar.com.my/business/business-news/2018/01/23/automotive-industry-tiv-to-grow-2-3pc-in-2018/7. https://www.thestar.com.my/business/business-news/2017/11/21/minimal-impact/

p. 24


SUSTAINABILITY REPORT

p.26 - p.42

p.26ABOUT THIS REPORT

p.26KEY SUSTAINABILITY HIGHLIGHTS

p.27 SUSTAINABILITY AT ATLAN HOLDINGS BHD

p.29 STAKEHOLDER ENGAGEMENT

p.30 MATERIALITY ASSESSMENT

p.31 OUR SUSTAINABILITY PILLARS

p.32 MATERIAL SUSTAINABILITY TOPICS

p. 25

ABOUT THIS REPORT

This is our inaugural sustainability report that details our journey and progress towards our sustainability efforts at Atlan Holdings Bhd (“Atlan”).

Reporting period __________________________________________________________

This report covers our sustainability performance and efforts from 1 March 2017 to 28 February 2018. We have included comparative historical data in this report that are presently available. Going forward, we will report on our sustainability performance and efforts on an annual basis. This will serve as a platform to communicate our economic, social and environmental progress and commitments to the various stakeholder groups.

Reporting scope and boundaries ___________________________________________

The indicators and performance data in this report covers Atlan as a Group which corresponds to our Corporate Structure in the Annual Report. The Group, here, refers to the Company, Atlan and the entities which Atlan has direct managerial control.

Reporting methodology ____________________________________________________

We have developed this report in accordance to the Bursa Malaysia Securities Berhad’s (“Bursa Malaysia”) Sustainability Reporting Guidelines and Main Market Listing Requirements. We have not sought for external assurance for this report.

We appreciate and value your feedback on this report. We look forward to enhancing our sustainability reporting journey through constructive feedbacks from our stakeholders. Please contact us at [email protected]

KEY SUSTAINABILITY HIGHLIGHTS

39% of our total employees

are female

5,370 training hours

provided to our employees in

FY2018

0.001% of lost-time injuries

(“LTI”)

16,117 MWh

of total energy consumption

p. 26


SUSTAINABILITY AT ATLAN HOLDINGS BHD

Our SuStainability GOvernance

Our Board of Directors provides formal oversight of our sustainability progress in ensuring sustainability agenda is integrated into our business and strategic decisions.

Our sustainability efforts are driven by our senior management comprising the Executive Director and the Sustainability Working Group. The Sustainability Working Group implements and monitors our sustainability efforts with close support from our key business functions. Our sustainability governance structure is depicted in Diagram 1.

Board of Directors Ultimately responsible for the sustainability direction of the Group

Ensure the integration of sustainability consideration in strategic business decisions

Approves the overall sustainability-related business strategies

Executive Director Steers and oversees the implementation of sustainability-related business strategies

Approves sustainability targets, key indicators and disclosures

Evaluates and assess sustainability risks and opportunities

Sustainability Working Group

Monitors and manages the sustainability-related business strategies of the Group

Facilitates and assists in the sustainability processes among the key business functions

Report on performance and targets of sustainability processes and controls

Key Business Functions

Support the sustainability-related business strategies

Develop plans and timeline for sustainability reporting disclosures

Diagram 1: Sustainability Governance Structure at Atlan Holdings Bhd

p. 27

ANNUAL REPORT 2018

SUSTAINABILITY AT ATLAN HOLDINGS BHD (CONT’D)

cOde Of ethicS

At Atlan, we believe that strong business ethics is paramount to maintain and enhance stakeholders’ confidence in us. This shapes a culture of honesty and integrity which are integral in sustaining our business.

Our employees are required to act responsibly and in compliance with the Group’s Code of Ethics (the “Code”). Likewise, we emphasise the need for our business partners to comply with the Code. Each of us have an obligation to ensure that the conduct of those who work around us complies to these standards. The Code provides clear guidelines for workplace ethics and professionalism in compliance with applicable laws. The Code of Ethics covers aspects relating to confidentiality, press releases and public statements, conflict of interests and gifts and favours.

All employees shall comply with directions given by the Group and faithfully observe all the rules, regulations, procedures, practices and policy of the Group, whether expressed or implied.

anti-cOrruptiOn and WhiStle-blOWinG pOlicy

Anti-corruption policies and procedures are befittingly laid out in the Code which are assessable via the Group’s intranet or through physical briefing by their respective Heads of Department or Outlet Managers.

To augment our anti-corruption policies and procedures, our Whistle-blowing Policy provides an avenue for employees to raise genuine concerns. Under this policy, employees may address their concerns in writing to the Audit and Risk Management Committee Chairman of the Group. In such circumstances, employees are given assurance that they shall be protected from reprisals and victimisation. All information provided will be fairly investigated with due consideration given to the severity, reliability and credibility of the information.

As at the financial year ended 28 February 2018, there were no complaints received by the Audit and Risk Management Committee Chairman of the Group on this matter.

p. 28


STAKEHOLDER ENGAGEMENT

Stakeholders are integral to the sustainability of our business. It is fundamental for us to proactively engage and responsibly address the concerns of our stakeholders. This increases accountability and strengthens stakeholders’ confidence towards us. The feedbacks and concerns from our stakeholders help us understand their expectations, allowing us to prioritise our sustainability efforts effectively.

As part of our materiality assessment process, we have identified our key stakeholders who have direct influence on our business and operations. Our key stakeholders include, but are not limited to, customers, employees, Board of Directors, government, investors, suppliers and financiers.

Table 1 below summarises our stakeholder engagements over the past financial year:

Stakeholder Group

Engagement Platforms Frequency Areas of Concern

Customers • Corporate website• Feedback forms• Social media• Direct visits

• Continuously• Continuously• Continuously• Continuously

Quality of products and services, product prices and promotions

Employees • Annual performance review

• Email communications• Internal meetings• Intranet portal

• Annually

• Continuously• Continuously• Continuously

Job related trainings and development, employment benefits, performance appraisal and reward system

Board of Directors

• Board meetings

• Email communications

• Quarterly and Annually

• As needed

Regulatory compliance, economic performance, corporate governance and risk review

Government • Formal meetings• Dialogues

• As needed• As needed

Regulatory compliance, economic performance, societal welfare

Investors • Media release• Investors relations

roadshow• Announcements

• Investor meetings• Annual Reports

• Quarterly• As needed

• Quarterly / as needed

• Annually• Annually

Regulatory compliance, financial performance, new development of the Group and return on investment

Suppliers • Meetings and briefings• Email communications

• As needed• Continuously

Product knowledge, events, partnerships and compliance with contract terms

Financiers • Regular meetings• Financial reports

• As needed• Annually

Compliance with financiers’ terms and conditions and financial performance

Table 1: Stakeholder engagement table

p. 29

ANNUAL REPORT 2018

Materiality aSSeSSMent prOceSS

Material topics that are relevant to us are dependent on its degree of influence on stakeholders’ decisions and the significance of economic, environmental and social impacts to our business.

In identifying the material sustainability topics and its scope and boundaries for reporting, we have commissioned an external consultant to guide us through the materiality assessment process. Internal stakeholders comprising the Group’s heads of key business functions and key management personnel (including Directors), were involved in providing their views and perspectives from the aforementioned two dimensions: significance of the impact to Atlan and the importance to our stakeholders. The outcome of the materiality assessment, as shown in Diagram 3 was presented and approved by the Board of Directors.

We recognise that the materiality assessment process is essential in identifying stakeholders’ concerns and systematically formulating plans for our long-term sustainable business growth.

The materiality assessment process is summarised in Diagram 2 as follows:

MATERIALITY ASSESSMENT

A list of potential material topics (economic, social and environmental) were identified based on Bursa Malaysia Sustainability Reporting Guidelines, media reviews and other internal and external sources. Leveraging upon this list, a customised questionnaire was circulated to internal stakeholders to shortlist topics that significantly impact Atlan.

During the materiality assessment workshop, key internal stakeholders were asked to rank each of the shortlisted material topics according to the aforementioned two dimensions.

A summarised ranking of the material topics were presented to the Board of Directors for discussion and validation.

Six (6) material topics were selected for this reporting period.

IDENTIFY PRIORITISE VALIDATE

Diagram 3: Materiality matrix

• Product service responsibility• Procurement practices

• Workforce health

• Social compliance

• Employment policies

• Human rights

• Workforce engagement

• Local hiring practices

• Diversity

• Community engagement

• Water management

• Product services responsibility

Atlan Materiality Matrix

Low Impact to Atlan High

Low

S

take

hold

ers

Inte

rest

H

igh • Economic performance

• Occupational health and safety

• Employee management

• Training and education

• Anti-corruption

• Environmental compliance

• Energy

Legend:

• Economic

• Environmental

• Social

Diagram 2: Materiality assessment process

p. 30


OUR SUSTAINABILITY PILLARS

Sustainability is crucial in unlocking shared values for the organisation and our stakeholders through our initiatives. The Group’s sustainability agenda has three areas of focus: Our Economic, Our People and Our Environment, and will serve as a guide for the Group’s future sustainability direction.

For this reporting period, we have identified six material topics to fulfil our sustainability agenda as mapped in Diagram 4. We will work towards enhancing the disclosures and scope of our sustainability initiatives as we believe in the long-term benefits it has on our business and the communities around us.

Diagram 4: Our sustainability pillars

MATERIAL TOPICS AND ITS BOUNDARIES

Our Material Topics Organisational Boundary

Economic Performance All

Anti-corruption All

Employee Management All

Training and Education All

Occupational Safety and Health United Industries (“UI”) Group only

Energy All

Table 2: Organisational boundary

Our Economic• Creation and distribution

of economic value to our stakeholders, and ultimately reflecting our commitment to profitable growth through performance excellence.

Our Environment• Showcases our commitment

of being a responsible corporate citizen by conducting our business in an energy-efficient manner.

Our People• Focuses on learning, well-

being and development of our people through our people management and safety and health initiatives.

• Economic Performance

• Anti-corruption

• Energy• Employee Management

• Training and Education

• Occupational Safety and Health

p. 31

ANNUAL REPORT 2018

MATERIAL SUSTAINABILITY TOPICS

Our ecOnOMic

The principal activities of Atlan are investment holding and the provision of management, financial, technical and other ancillary services, while its subsidiaries are involved in property investment, hospitality, auto-components manufacturing and trading of duty free and non-dutiable merchandise. To ensure that Atlan delivers quality products and services, the Group continuously review and develop its core propositions to meet and manage the ever-changing market trends and consumer demands.

As we continue to financially excel and grow, we generate economic value and benefits to our diverse groups of stakeholder. Diagram 5 below showcases our direct economic value generated and the distribution of economic value to these groups of stakeholder as mentioned in Table 1. Further details of our economic performance for the financial year ended 28 February 2018 can be found on Page 84 to Page 198 of this Annual Report.

Diagram 5: Direct economic value generated and distributed

Direct economic value generated

Direct economic value distributed

Customers:

Revenue

RM 826,335,000

Suppliers:

Cost of goods sold

RM 563,811,000

Employees:

Employees’ wages and benefits

RM 70,817,000

Suppliers:

Operating cost

RM 99,947,000

Payments to financiers:

Net finance cost

RM 4,159,000

Government:

Taxes

RM 24,961,000

Community:

Donations

RM 2,000,000

Owners:

Dividends

RM 53,267,000

ecOnOMic perfOrMance

Properties on Jalan Ampang

p. 32


Our peOple

Our employees are the most valuable assets of the Group as they contribute to the growth of our business by fulfilling our customers’ needs and meeting operational targets. As such, we are mindful of our people’s well-being and strive to create a conducive and accessible working environment that encourages our people to excel. Our employees are guided by the Code of Conducts and Ethics and the Employee Handbook.

Our Workforce

In FY2018, we have a total of 1,554 employees as compared to 1,613 employees in FY2017 as shown in Diagram 6. We have embarked on an exercise to realign job scopes following the increased number of resignations to improve efficiency alongside the advancement of technology.

As a conglomerate, we believe that a diverse workforce enables us to better engage and understand the unique needs of our stakeholders. We are in support of gender diversity in efforts to create an inclusive environment. We pledge to continue providing equal opportunities in hiring, career progression and remuneration packages strictly based on merits irrespective of gender, ethnicity or background. We are proud to showcase that we have a total of 42% and 39% women workforce in FY2017 and FY2018, respectively.

eMplOyee ManaGeMent

Wo

man

in A

tlan

Wo

rkfo

rce

Diagram 6: Number of employees

Num

ber

of e

mp

loye

es

2000

1500

1000

500

0

■ Permanent ■ Contract ■ Part-time

2018 2017

1319

2341

1430

1821

39%FY2018

42%FY2017

MATERIAL SUSTAINABILITY TOPICS (CONT’D)

Chinese New Year celebration 2018

p. 33

ANNUAL REPORT 2018


eMplOyee ManaGeMent

Over the years, we have established a strong business presence in our travel retail business, which represents a significant segment of our Group. The understanding of local stakeholders’ needs is the key to achieving our service delivery goals, beyond ‘just selling’. As such, we are committed to the recruitment of local citizens with similar cultural background and the common ‘lingua franca’ to serve the local and international market. We have achieved 87% local hiring (Malaysian citizens) in FY2018.

In efforts to attract and retain our employees, we strive to compensate our employees fairly and competitively and in line with the relevant labour laws. Our full-time employees are entitled to benefits such as:

• Group personal accident insurance

• Group hospitalisation and surgical scheme

• Healthcare

• Hospitalisation and sick leave

• Annual leave

• Statutory contributions to Employees Provident Fund (“EPF”), Social Security Organization (“SOCSO”) and Employment Insurance System (“EIS”)

• Parental leave

• Retirement benefit for unionised employees

Parental leave is an equitable gender benefit comprising both maternity and paternity leave. We ensure employees are aware of the aforementioned benefits through the employment contracts, Employee Handbook and the intranet. We eminently encourage entitled male employees to utilise their paternity leaves whenever possible to help reduce the burden of their spouse as well as to have increased bonding time with their family. This also positively impacts women to take such leave without prejudicing their career path.

Diagram 7: Number of employees that took parental leaves

Num

ber

of e

mp

loye

es

100

80

60

40

20

02018 2017

84

46

Our peOple

Team activity in Penang

p. 34



eMplOyee ManaGeMent

Employee Breakdown

The disaggregated data shown below provides information on our workforce composition and changes during the financial year. This demonstrates our efforts in promoting equality, diversity and locality as we progressively build our workforce.

Workforce composition

Diagram 8: Percentage of local employees Diagram 9: Gender diversity

■ Local ■ Expatriates

■ Female

■ Male

Num

ber

of e

mp

loye

es

1650160015501500145014001350130012501200

2018 2017

1347 87%

1460 91%

207 13%

153 9%

2017

2018

39%42%

61%58%

Diagram 10: Age diversity Diagram 11: Female in management

Number of employees

0 20 40 60

■ 2018 ■ 2017

Num

ber

of e

mp

loye

es

213

310

87

341

474

129

245

340

92

315

478

143Middle management

Senior management

■ Below 30 ■ 30-50 ■ Over 50

1000

800

600

400

200

02018 2017 2018 2017

Female Male

57

55

8

8

Diagram 12: Ethnic diversity

Number of employees

0 200 400 600 800 1000 1200 1400 1600 1800

■ Malay ■ Others ■ Chinese ■ Indian ■ Sarawakian ■ Sabahan

804

851

300

250

200

222

27

27

1

222

263

2018

2017

Our peOple

p. 35

ANNUAL REPORT 2018


eMplOyee ManaGeMent

Employee Breakdown

Changes in workforce

Diagram 13: Percentage of new hires (by age group)

Diagram 15: Employee turnover rate (by age group)

Diagram 14: Percentage of new hires (by gender)

Diagram 16: Employee turnover rate (by gender)

0% 10% 20% 30% 40%

0% 10% 20% 30% 40%

0% 10% 20% 30% 40%

0% 10% 20% 30% 40%

■ under 30 ■ 30-50 ■ over 50

■ under 30 ■ 30-50 ■ over 50

■ Female ■ Male

■ Female ■ Male

22%

19%

8%

11%

14%

16%

9%

11%

10%

11%

26%

23%

5%

8%

11%

16%

2%

4%

1%

2%

2018

2018

2018

2018

2017

2017

2017

2017

Employee statistics

2018 2017

Number of employees as at28 February 1,554 1,613

Number of new hires

• Female

• Male

124

407

150

180

Number of resignations

• Female

• Male

173

349

172

256

Percentage of new hires (%) 34 20

Total turnover rate (%) 34 27

Table 3: Employee statistics

Our peOple

p. 36



Regularly upskilling and developing our people is key to enhancing competencies that strengthen employee performance. We tailor our training programmes accordingly to equip our employees with the relevant skill sets that are specific to job requirements whilst responding to external environmental changes. For instance, the ‘Cyber Risks and the Impacts on the Organisation’ training covers the importance of data protection and its impact towards the business.

The core areas of training and education provided during the reporting period include:

Core training areas Description of training

Manufacturing processes and techniques Automotive production system and safety briefings

Product knowledge Refresher course on product information

Information technology Enterprise Resource Planning system and basic computer skills

Regulatory compliance Code on Corporate Governance, listing rules & regulations and direct & indirect tax rules & regulations

Safety and Health Safety, health and emergency response on fire safety

Leadership and management Organisational management and team coordination

Table 4: Core trainings

Referring to Diagram 18, in FY2018, we invested a total of 5,370 training hours and RM 70,174 as compared to 4,712 hours and RM 145,390 in FY2017.

traininG and educatiOn

Diagram 18: Training hours by division

0 2,000 4,000 6,000

■ Duty Free ■ Automotive ■ Property and Hospitality

2,893

2,415

2,271

2,085

206

212

2018

2017

Diagram 17: Average training hours per employee

Num

ber

of e

mp

loye

es 3.80

3.40

3.20

3.00

2.80

2.602018 2017

3.46

2.92

In house Training

Our peOple

p. 37

ANNUAL REPORT 2018


traininG and educatiOn

FY2018 FY2017

Number of participants 846 733

Total number of hours 5,370 4,712

Total number of employees 1,554 1,613

Percentage of employees trained (%) 54 45

Table 5: Statistics on training and education

At Atlan, we aspire to gradually extend our training programmes to benefit all employees.

Performance appraisal

All employees at a minimum will receive one performance and career development review annually. This process aids personal development of employees and enhances employee satisfaction.

Our performance and career development review process is established based on the Balanced Scorecard, which focuses on strategic alignment of targets and goals. Our performance and career development review process is summarised in Diagram 19.

Target setting

Individual departments will set their annual targets and key performance indicators for their employees, which ultimately aligns to the Group’s vision.

Consultations

Employees may enquire and obtain advice on their performance expectations from their immediate superiors. They will then assess their competencies and recommend any

necessary trainings.

Appraisal

At year end, a one-to-one appraisal session will be conducted between the immediate superior and the employee to evaluate their work performance against the targets

and expectations set.

Compensation

Any high achievers will be rewarded with lucrative monetary benefits, whereas for any under achievers, further trainings will be provided to help bridge their capability to the

expected level of skill.

Diagram 19: Performance and career development review process

➧➧

➧

Our peOple

p. 38



We prioritise the well-being and health of the Group’s employees, contractors as well as members of the local communities where we have operational presence. Henceforth, the UI Group is committed to maintain a safe working environment and ensure that appropriate trainings are provided to employees to enable the safe performance of their work.

Safety and Health Policy

We value the lives of the people we work with. The adoption of sound safety and health practices for the protection of our employees is essential to the overall success of our business. As such, we have established a robust Safety and Health Policy across UI Group. Our safety and health practices cover all UI employees, visitors and contractors within our premises.

Our Safety and Health Policy aims to achieve the following objectives:

Our Occupational Safety and Health Objectives

1. Ensure all employees work in a safe and healthy environment

2. Comply with all safety and health laws and practices

3. Prevent and eliminate all work-related injuries and illness

OccupatiOnal Safety and health (“OSh”)

Worker in the Factory

Our peOple

p. 39

ANNUAL REPORT 2018

OccupatiOnal Safety and health (“OSh”)

Occupational Safety and Health Committee

With these objectives in mind, we have established a Safety and Health Committee to uphold the UI Group’s safety, health and environment commitments and to ensure no compromises have been made. The OSH Committee is spearheaded by the OSH Chairman, leading both employers’ and employees’ representatives. The committee meets regularly and is entasked to evaluate the effectiveness of the OSH programmes, review of incident or near miss occurrences, inspection of the workplace, management reviews, regular monitoring, audits, consultations and communications.

Safety and Health Programmes

We provide various OSH trainings to ensure all employees are committed and contribute to a safe and healthy environment. Out of the 5,370 training hours in FY2018, 1,050 hours were related to safety and health initiatives as shown in Diagram 20. Amongst the trainings conducted in 2018 include rules and regulation of safety and health and emergency response on fire safety.

For the period under review, we have recorded a lost-time injury (“LTI”) of 0.001% as compared to 0.0006% in FY2017. This indicator reflects the number of incidents occurring for every man-hour. To date, we have only noted minor injuries in UI Group, and are proud to record zero fatalities throughout the years. We remain tactful of our objectives and strive to improve our safety and health performance in the upcoming years.

Diagram 20: OSH training hours

Num

ber

of e

mp

loye

es

1200

1000

800

600

400

200

02018 2017

1,050

108


Our peOple

p. 40


Atlan

enerGy

Climate change is driving a shift towards sustainable and eco-friendly power generation, which includes renewable energy technology. We are consciously aware of our significant footprint towards the environment. Consequently, we are progressively minimising our reliance on non-renewable sources of energy which in turn increases cost-efficiency.

In FY2018, the Group’s energy consumption stood at 16,117 MWh. The breakdown of the energy consumption is illustrated in Diagram 21. Our energy consumption mainly consists of direct electricity consumption. Energy intensity for the Group is recorded at 10.37 MWh/employee in FY2018 as compared to 10.30 MWh/employee in FY2017.

Skylight in one of UI Group’s Factory

Diagram 21: Energy consumption by division (MWh)

■ Duty Free ■ Automotive ■ Property and Hospitality

5,4375,8875,291

4,929

5,433

5,751

2018

2017


Our envirOnMent

p. 41

ANNUAL REPORT 2018

enerGy

Several initiatives were carried out across the Group to reduce our energy consumption. For instance, we have installed 45 units of LED lights to replace highbay lights in UI’s factory which has reduced 100W consumption per unit. We have also leveraged on skylight to replace the usage of highbay lights during the day. Regular monitoring and maintenance of power system were carried out to inspect the power factor reading and identify the need for capacitor replacements within the factory. From the readings, we have noted an average of 90% power efficiency throughout the period under review.

In FY2018, our subsidiary, DFI Group have set in motion the installation of solar panels at its Bukit Kayu Hitam outlet. Table 5 below shows the projection of our renewable energy generation capacity.

Description Bukit Kayu Hitam

Solar installed capacity (kWp) 353

Total electricity generated (kWh) 509,776

Monthly expected electricity savings (kWh) 42,481

Monthly expected cost savings (RM) 21,623

Table 6: Projection of renewable energy capacity

Going forward, we will extend this initiative to other outlets as a part of our progress towards reducing the reliance on non-renewable sources of energy.

Solar Panels at Bukit Kayu Hitam outlet


Our envirOnMent

p. 42


ANNUAL REPORT 2018

p. 43

Corporate GovernanCe Overview Statement

The Board of Directors (“Board”) of Atlan Holdings Bhd. (“Atlan” or “the Company”) recognises the importance of adopting good corporate governance throughout the Group as a fundamental part of discharging its responsibilities to protect and enhance shareholders’ value and the financial performance of the Group. The Group will continue to endeavour to apply the recommendations of the new Malaysian Code on Corporate Governance released by Securities Commission Malaysia on 26 April 2017 (“new MCCG”), in its effort to observe high standards of transparency, accountability and integrity, and strive to strengthen corporate culture anchored on accountability and transparency.

This corporate governance overview outlines the corporate governance practices which have been adopted by the Board of the Company during the financial year ended 28 February 2018, where possible, and applicable laws to be a dynamic framework within which the Company would conduct its business.

PRINCIPLE A – BOARD LEADERSHIP AND EFFECTIVENESS

PART 1 - BOARD RESPONSIBILITIES

Intended Outcome 1.0

• EverycompanyisheadedbyaBoard,whichassumesresponsibilityforthecompany’sleadership and is collectively responsible formeeting theobjectivesandgoalsof thecompany.

1.1 Strategicaims,valuesandstandards

The Board is responsible for the leadership, oversight and overall management of the Company. An effective Board is the one that made up of a combination of Executive Director with intimate knowledge of the business and Non-Executive Directors from diversified industry/business background to bring broad business and commercial experience to the Group. The Board has the overall responsibility for corporate governance, establishing goals, strategies and direction, reviewing the Group’s performance and critical business issues and ultimately the enhancement of long term shareholders’ value. It monitors and delegates the implementation of the strategic direction to the management.

The Directors collectively, with their different background and specialisation, bring with them a diverse wealth of experience and expertise in areas such as business, finance, legal, regulatory and operations which is relevant to the Group. A brief profile of each individual Directors is set out in this Annual Report.

The Board reviews the strategic plan of the Company tabled by Management at its meeting. The review would cover the performance targets and long-term plans of the Company to be met by Management. On an annual basis, the Executive Director and Management review with the Board the outlook of the relevant industries for the following financial year.

The Board is satisfied with the strategic plan of the Company as presented by the Management. The Board would continue to review the plan to ensure its implementation.

The Board’s role is to oversee the performance of the Management to determine whether the business is properly managed. The Board gets updates from Management at the quarterly Board meetings when reviewing the unaudited quarterly results. During such meetings, the Board participated actively in the discussion on the performance of the Company and assessed the performance of the Management.


p. 44

Corporate GovernanCe Overview Statement (COnt’d)

The Board has a formal schedule of matters reserved for its decision which include, amongst others, the following: -

i) Reviewing and adopting strategic plans for the Company which will enhance the future growth of the Company;

ii) Reviewing and evaluating key policies adopted by the Company; iii) Overseeing the conduct of the Company’s businesses to evaluate whether the businesses

are being properly managed;iv) Identifying principal risks of the business and ensuring the implementation of appropriate

systems to manage these risks; v) Reviewing the adequacy and integrity of the Company’s internal control systems and

management information systems;vi) Establish Board committees and be responsible for all decisions made by the committees; vii) Reviewing and approving unaudited quarterly results and audited financial statements;viii) To ensure all candidates appointed to senior management positions are of sufficient caliber

and satisfied that there are programmes in place to provide for the orderly succession of senior management; and

ix) Overseeing the development and implementation of a shareholder communications policy for the Company.

As part of its efforts to ensure the effective discharge of its duties, the Board has delegated certain functions and responsibilities to the following respective Board Committees:-

• NominationCommittee;• RemunerationCommittee;and• AuditandRiskManagementCommittee.

The Chairman of each Board Committee will report to the Board on the outcome of the Committee’s meetings which also include the key issues deliberated at the Committee’s meetings. The Board Committees discharge their duties in accordance to the Terms of Reference approved by the Board.

1.2 TheChairmanoftheBoard

The Board has elected a Chairman from amongst the members of the Board who is a Non-Executive Director. Dato’ Sri Adam Sani Bin Abdullah as the Company’s Non-Independent Non-Executive Chairman provides leadership and guidance to the Board and is responsible for ensuring effectiveness of the Board’s performance. Dato’ Sri Adam Sani Bin Abdullah works closely with the rest of the Board members in forming policies and strategies to align the business activities driven by the management team.

The responsibilities of the Chairman are clearly defined in the Board Charter. They include, but not limited to, the following:-

• ToprovideleadershiptotheBoard,andoverseetheBoardintheeffectivedischargeofitsfiduciary duties;

• TosettheagendaforBoardMeetingsandensureefficientandeffectiveconductoftheBoardMeetings;

• Toensurethatcompleteandaccurateinformationtofacilitatedecision-makingareprovidedto the Board members in a timely manner;

• ToleadBoardMeetingsandencourageactiveparticipationandallowdissentingviewstobefreely expressed;

• TopromoteconstructiveandrespectfulrelationsbetweenBoardmembersandmanagetheinterface between the Board and Management;

• To ensure that appropriate steps are taken to provide effective communicationwithstakeholders and that their views are communicated to the Board as a whole; and

• ToleadtheBoardinestablishingandmonitoringgoodcorporategovernanceintheCompany.

The Chairman of the Board also acts as Chairman at all Board Meetings and meetings of members.

ANNUAL REPORT 2018

p. 45


1.3 SeparationofthepositionsofChairmanandChiefExecutiveOfficer(“CEO”)

The Chairman, Dato’ Sri Adam Sani Bin Abdullah, and the Executive Director, Mr. Lee Sze Siang, both holds separate position. There is a clear division of responsibilities between the Chairman (non-executive) and the Executive Director to ensure a balance of power and authority, such that no one individual has unfettered powers of decision-making.

The Chairman is responsible in leading the Board in its collective oversight of Management and ensure effectiveness of the Board matters whilst the Executive Director is responsible to implement the policies and strategies approved by the Board for the purposes of running the business and the day-to-day management of the Company.

1.4 TheCompanySecretaries

In compliance with Practice 1.4 of the new MCCG, the Board is supported by suitably qualified and competent Company Secretaries. The Company Secretaries play an advisory role to the Board in relation to the Company’s Constitution, Board’s policies and procedures and compliance with the relevant regulatory requirements, codes or guidance and legislations.

The briefed profile of the existing Company Secretaries are as follows:-

Ms.ChuaSiewChuan(FCIS)

Ms. Chua is a Chartered Secretary by profession and she has been elected as a Fellow of the Malaysian Association of the Institute of Chartered Secretaries & Administrators (“MAICSA”) since 1997.

She has now more than 35 years of experience in corporate secretarial practice with working knowledge across a diverse range of industries. Ms. Chua is also the named Chartered Secretary for a number of public listed companies and private limited companies. Ms. Chua has been appointed as Chartered Secretary of the Company with effect from 1 November 2010.

Ms.ThumSookFun,FCIS,C.A.(M),FCCA

Ms. Thum is a Chartered Secretary by profession. Ms. Thum has been elected as a Fellow member of the MAICSA and also a Fellow member of the Association of Chartered Certified Accountants (“ACCA”). She is also a member of the Malaysian Institute of Accountants (“MIA”).

She has more than 20 years of professional experience in the field of corporate secretarial practice with working knowledge of many industries. Ms. Thum is also the named Company Secretary for a number of public listed companies and private limited companies. Ms. Thum has been appointed as Company Secretary of the Company with effect from 1 November 2010.

The Board has ready and unrestricted access to the advice and services of the Company Secretaries, who are considered capable of carrying out the duties to which the post entails. The Directors may seek advice from the management on issues under their respective purview. The Directors may also interact directly with the management, or request further explanation, information or updates on any aspect of the Company’s operations or business concerns from them.


p. 46


In performing their duties, the Company Secretaries carry out, amongst others, the following tasks:-

• StatutorydutiesasrequiredundertheCompaniesAct2016,MainMarketListingRequirementsof Bursa Malaysia Securities Berhad (“Listing Requirements”), Capital Market and Services Act, 2007;

• FacilitatingandattendingBoardMeetingsandBoardCommitteeMeetings,respectively;• FacilitatingandattendingtheGeneralMeeting(s);• Ensuring thatBoardMeetingsandBoardCommitteeMeetings, respectivelyareproperly

convened and the proceedings are properly recorded;• EnsuringtimelycommunicationoftheBoardleveldecisionstotheManagementforfurther

action;• EnsuringthatallappointmentstotheBoardand/orBoardCommitteesareproperlymadein

accordance with the relevant regulations and/or legislations;• Maintainingrecordsforthepurposeofmeetingstatutoryobligationsofapplicablejurisdictions;• FacilitatingtheprovisionofinformationasmayberequestedbytheDirectorsfromtimeto

time in a timely manner and ensuring adherence to Board policies and procedures;• FacilitatingtheconductoftheassessmentstobeundertakenbytheBoardand/orBoard

Committees as well as to compile the results of the assessments for the Board and/or Board Committee’s notation;

• AssistingtheCompanyonthelodgementsofdocumentswithrelevantstatutoryandregulatorybodies;

• AssistingtheBoardwiththepreparationofannouncementsforreleasetoBursaMalaysiaSecurities Berhad (“Bursa Securities”) and Securities Commission Malaysia; and

• RenderingadviceandsupporttotheBoardandManagement.

The Company Secretaries keep the Board abreast with the latest regulatory updates and also ensure that deliberations at Board and Board Committee meetings are well documented.

The Board is satisfied with the performance and support rendered by the two (2) qualified and experienced Company Secretaries to the Board in discharge of its functions.

1.5 Meetingmaterials

The Board meets at least, quarterly, to consider all matters relating to the overall control, business performance and strategy of the Company. Additional meeting will be called when and if necessary.

A full year meeting schedule which sets out the meeting dates is prepared and circulated to the Directors before the start of each calendar year to allow Directors to plan ahead to attend such meetings.

Prior to the scheduled meeting, Directors will be provided a structured agenda together with management reports and proposal papers in a timely manner prior to the meeting. All Directors have full and timely access to information through the Board papers distributed in a timely manner prior to the Board meetings. The Board papers provide, among others, periodic financial information, annual budget, operational and corporate issues, investment proposals and management proposals that require Board’s approval.

Senior management staff may be invited to attend Board meetings to provide the Board detailed explanations and clarifications on certain matters that are tabled to the Board. All Directors have unrestricted access to information with the Group. The Directors may interact directly with the Management, or request further explanation, information or updates on any aspect of the Company’s operations or business concerns from them. In this way the Board has full access to all information on the Company’s affairs to enable the proper discharge of duties.

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All deliberations and decisions made at the Board meetings are recorded by the Company Secretaries including whether any Directors abstained from voting or deliberating on a particular matter. Minutes of the meeting are circulated to the Board and the Management for review and comments in a timely manner before the minutes of the last Board meeting are confirmed at the next Board meeting.

The Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of the Company.

For the financial year ended 28 February 2018, the Board held five (5) meetings. The attendance record of the Directors for the financial year ended 28 February 2018 was satisfactory. This is evidenced by the attendance record of the Directors at the Board meetings as set out in the below table:-

Attendance duringtenureDirectors inoffice

1. Dato’ Sri Adam Sani bin Abdullah 5/52. TengkuAbdulRahmanIbniSultanHajiAhmadShah 5/5 Al-Mustain Billah, DK II., SSAP 3. Jeneral Tan Sri Dato’ Sri Abdullah bin Ahmad @ Dollah bin Amad (B) 5/54. Dato’ Woo Hon Kong 5/55. MohdSharifbinHjYusof 4/56. Ong Bok Siong 5/57. Lee Sze Siang 5/58. Dato’SriRobinTanYeongChing 5/59. Tan Thiam Chai 5/510. TuanHajiMohdJaffarbinAwang(Ismail) 4/4 (Appointed on 16 May 2017) 11. Dato’ Shagul Hamid bin K.R. Williams @ Abdullah 3/3 (Retired on 26 July 2017)

All the Directors have complied with the minimum 50% attendance requirement in respect of Board Meeting as stipulated in the Listing Requirements. In the intervals between Board Meetings, for any matters requiring Board’s decisions, the Board’s approvals are obtained through circular resolutions. The resolutions passed by way of such circular resolutions are then noted at the next Board Meeting.



p. 48



• There is demarcation of responsibilities between the board, board committees andmanagement.

• Thereisclarityintheauthorityoftheboard,itscommitteesandindividualdirectors.

2.1 BoardCharter

The Board understands the importance of the roles and responsibilities between the Board and Management. As part of the good corporate governance process, the Board has documented these roles and responsibilities in the Board Charter to ensure accountability of both parties and also to provide reference for directors in relation to the Board’s role, powers, duties and functions.

The Board reviews the Board Charter periodically, when necessary, to ensure it remains relevant and effective at the prevailing time and business environment. The revised Board Charter was recently reviewed approved by the Board on 26 April 2018 to re-align the existing governance policies in the Company with the good standard of corporate governance practices prescribed by new MCCG and Listing Requirements, where possible or relevant.

The Board Charter clearly sets out the functions, responsibilities, and processes of the Board and ensures that all Board members are aware of their roles and duties. In order to ensure that the direction and control of the Group are in the hands of the Board, it had adopted a formal schedule of matters reserved for the Board’s deliberation and decision which is set out in the Board Charter.

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


• TheBoardiscommittedtopromotinggoodbusinessconductandmaintainingahealthycorporateculturethatengendersintegrity,transparencyandfairness.

• TheBoard,management,employeesandotherstakeholdersareclearonwhatisconsideredacceptablebehaviourandpracticeinthecompany.

3.1 CodeofConductandEthics

Employees are introduced to the ethical corporate culture of the Group during employee induction and thereafter, employees are constantly monitored to ensure the culture is upheld in their dealings within the Group and also in their association with our customers, distribution, suppliers, governmental and regulatory authorities and other business associates. Any employee may report directly to the Chairman of any ethical misconduct discover within the Group.

The Board of Directors conducts themselves in an ethical manner while executing their duties and functions and comply with the Company’s Code of Conduct and Ethics.

In addition to the Company’s Code of Conduct and Ethics, the Group also gives emphasis on the behavioral ethics and conduct that sets out the sound principles and standards of good practice within the Group’s business landscape, which are expected to be observed by the Directors and employees. Both Directors and employees are required to uphold the highest integrity in discharging their duties and in dealings with various stakeholders such as shareholders, customers, fellow employees and regulators.

The Company’s Code of Conduct and Ethics is available on the Company’s website at www.atlan.com.my.

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3.2 WhistleblowingPolicy

The Company has implemented a whistleblowing policy whereby accessible channels are provided for employees to raise concerns about possible improprieties in matters of financial reporting or other matters which they become aware and to ensure that:-

(i) independent investigations are carried out in an appropriate and timely manner;

(ii) appropriate action is taken to correct the weakness in internal controls and policies which allowed the perpetration of fraud and/or misconduct and to prevent a recurrence; and

(iii) administrative, disciplinary, civil and/or criminal actions that are initiated following the completion of investigations are appropriate, balance and fair, while providing reassurance that employees will be protected from reprisals or victimisation for whistle-blowing in good faith and without malice.

The whistleblowing policy is published on the Company’s website at www.atlan.com.my.

PRINCIPLE A: PART 2 - BOARD COMPOSITION


• Boarddecisionsaremadeobjectively in thebest interestsof thecompany taking intoaccountdiverseperspectivesandinsights.

4.1 Boardcomposition

The Board currently comprises of six (6) Independent Non-Executive Directors including a Senior Independent Director out of total eleven (11) Directors in the Board. Therefore, the following prescribed requirements have been fully complied by the Board:-

• Paragraph3.04(1)oftheListingRequirementswhichstipulatesthatatleast2directorsor1/3 of the board of directors, whichever is the higher, are independent directors; and

• Practice4.1of thenewMCCG,whereat leasthalfof theboardcomprises IndependentDirector

The Independent Non-Executive Directors of the Company are independent of management and free fromanybusinessrelationshipwhichcouldmateriallyinterferewiththeexerciseoftheirjudgment.Theyprovideguidance,unbiased,fullybalancedandindependentviews,adviceandjudgmentto many aspects of the Group’s strategy so as to safeguard the interests of minority shareholders and to ensure that the highest standards of conduct and integrity were maintained by the Group.

The Board places great importance on its Independent Directors where they serve as an essential source of impartial and professional guidance to protect the interest of the shareholders. The Independent Non-Executive directors are professionals of high caliber and credibility who play a pivotal role in corporate accountability by contributing their knowledge, advice and experience towardsmaking independent judgment on issues of strategies, performance, resources andstandards of conducts.



p. 50

Any material and important proposals that will significantly affect the policies, strategies, directions andassetsoftheGroupwillbesubjecttoapprovalbytheBoard.NoneofthemembersoftheBoardhas unfettered powers of decision. All Independent Non-Executive Directors do not participate in the day-to-day management of the Group and do not engage in any business dealing or other relationship with the Group.

The Board is satisfied that the Independent Directors represent the interest of public shareholders in theCompanyandtheBoardhasappointedEn.MohdSharifbinHjYusofastheSeniorIndependentNon-Executive Director and any concerns from the shareholders can be conveyed to the said Senior Independent Non-Executive Director.

4.2 Tenureofindependentdirector

The Board is mindful that the recommendation in new MCCG, the tenure of an independent director does not exceed a cumulative term limit of nine years. Upon completion of the nine years, an independent director may continue to serve on the board as a non-independent director. If theBoardintendstoretainanindependentdirectorbeyondnineyears,itshouldjustifyandseekannual shareholders’ approval.

The Board is also mindful of Practice 4.2 of the new MCCG which require the Board to seek annual shareholders’ approval through a two-tier voting process. If the Board continues to retain the independent director after the twelfth year, the Board should seek annual shareholders’ approval through a two-tier voting process.

The Board through the Nomination Committee assesses the Independent Directors on an annual basis,withaviewtoensuretheIndependentDirectorsbringindependentandobjectivejudgmentto the Board and this mitigates arising from conflict of interest or undue influence from interested parties. Where there is a likely conflict of interest position, the Board would take appropriate action to rectify the situation. Should any Director have an interest in any matter under deliberation, he is required to disclose his interest and abstain from participating discussions on the matter.

In ascertaining the independence status of the Directors, the Board continues to believe that tenure should not form part of the assessment criteria. It is of the view that the fiduciary duties of Directors are the primary concern of all Directors, regardless of their status. The Board firmly believes that the ability of a Director to serve effectively is dependent on his/her calibre, qualification, experience and personalqualities,particularlyhis/herintegrityandobjectivity.Italsobelievestherearesignificantadvantages to be gained from long-serving Directors who possess insight and knowledge of the Company’s business and affairs in view of the continuous challenges faced by the Company.

Currently,thelongestservingIndependentDirectorsareTengkuAbdulRahmanIbniSultanHajiAhmadShahAl-MustainBillah,DKII.,SSAPandEn.MohdSharifbinHjYusofwhohaveservedthe Board for more than 12 and 9 years respectively.

However,YangAmatMuliaTengkuAbdulRahmanIbniSultanHajiAhmadShahAl-MustainBillah,DKII, SSAP had expressed his intention not to seek for re-election as Director of the Company at the forthcoming 29th Annual General Meeting (“AGM”) and will retire in accordance with Article 78 of the Company’s Constitution. Henceforth, he will retain in office until the conclusion of the forthcoming 29th AGM of the Company.


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Both the Nomination Committee and the Board have on 26 April 2018 assessed the independence ofEn.MohdSharifbinHjYusofandaresatisfiedwithhisskills,contributionand independentjudgments. Besides, En.MohdSharif binHj Yusof remained objective and independent inexpressing his views and in participating in deliberation and decision making of the Board and Board Committees. His length of services on the Board does not in any way interfere with his exerciseof independent judgementandability toact in thebest interestsof theCompany. Inaddition,En.MohdSharifbinHjYusofhasindividuallyconfirmedanddeclaredinwritingthatheis Independent Director and he has satisfied all the criteria of an Independent Director as set out in Paragraph 1.01 of the Listing Requirements.

In line with the Practice 4.2 of the new MCCG, the Company will be seeking its shareholders’ approval at this forthcoming 29thAGMto retainEn.MohdSharifbinHjYusofas independentdirector of the Company.

4.3 DiversityofBoardandSeniorManagement

The Company does not practice any form of gender, ethnicity and age group biasness as all candidates for either Board or Senior Management team shall be given fair and equal treatment.

The Board believes that there is no detriment to the Company in not adopting a formal gender, ethnicity and age group diversity policy as the Company is committed to provide fair and equal opportunities and nurturing diversity within the Group.

Notwithstanding with the above, the Board affirms its commitment to boardroom diversity as a truly diversified board can enhance the board’s effectiveness, perspective, creativity and capacity to thrive in good times and to weather the tough times.

In identifying suitable candidates for appointment to the Board, the Nomination Committee will considercandidatesonmeritagainstobjectivecriteriaandwithdueregardfor thebenefitsofdiversity on the Board.

4.4 Genderdiversity

As mentioned above, the Board did not set specific targets on gender diversity for the Company but endeavour to improve the number of women directors on the Board, based on pre-determined skill sets and competencies.

4.5 Boardappointment

The Board is responsible for the appointment of new Directors, the Nomination Committee is delegated with the role of screening and conducting an initial selection, which includes an external search, before making a recommendation to the Board. Nomination Committee has the authority to obtain the services of professional recruitment firms to source for candidates for directorship or seek independent professional advice whenever necessary.

The Nomination Committee is also empowered to bring to the Board, recommendations as to the appointment of any new director or to fill board vacancies as and when they arise. In making its recommendation, the Nomination Committee will consider the required mix of skills, knowledge, expertise, experience and other qualities, including core competencies which Directors of the Company should bring to the Board.


p. 52

The duties and functions of the Nomination Committee are as follow: -

• Torecommendtotheboard,candidatesforalldirectorshipstobefilledbytheshareholdersorthe Board. In making its recommendation, the Committee should consider the candidate's: -i) Skills, knowledge, expertise and experience;ii) Competencies, commitment, contribution and performance;iii) Professionalism;iv) Integrity; andv) In the case of the candidates for the position of independent non-executive directors,

the Nomination Committee should also evaluate the candidate’s ability to discharge such responsibilities/ functions as expected from independent non-executive directors

• Toconsider,inmakingrecommendations,candidatesfordirectorshipsproposedwithinthebounds of practicability, by any senior executive or any director or shareholder

• ToensuretheboardcompositionmeetstheneedsoftheCompany• Todevelop,maintainandreviewthecriteriatobeusedintherecruitmentprocessandannual

assessment of directors• Torecommendtotheboard,directorstofilltheseatsonboardcommittees• To review its requiredmix of skills and experience and other qualities, including core

competencies which Directors of the Company should bring to the board• Toannuallyassesstheeffectivenessoftheboardasawholeandassessthecontributionof

each individual director, including independent non-executive directors, as well as the chief executive officer

• Toreviewthere-appointmentandre-electionofDirectorsoftheCompany• Tofacilitateboardinductionandtrainingprogrammes• ToreviewthetermofofficeandperformanceofAuditandRiskManagementCommitteeand

each of its members annually

TuanHajiMohdJaffarbinAwang(Ismail)andRajaDato’ShaharudinShahbinRajaJalilShahwere recommended by the existing Board members to the Nomination Committee for review. The Nomination Committee reviewed their profile, curriculum vitae, academic qualifications and the disclosure of their other directorships and also considered their background, academic qualifications, skills, experiences and competencies for appointment as an Independent Non-Executive Directors of the Company.

The Board after taking into consideration of the Nomination Committee’s recommendation, approved theappointmentsofTuanHajiMohdJaffarbinAwang(Ismail)andRajaDato’ShaharudinShahbinRajaJalilShahtotheBoard.

Based on the above approach, the Nomination Committee concluded that other sources such as Directors’ registry or open advertisement were not use to identify the candidate as the Management bearing in mind that the industry in which the Company operates in, the Board is in the best position to look for suitable and qualified candidates through their social networking.


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4.6 NominatingCommittee

The Nomination Committee of the Company comprises exclusively of Non-Executive Directors, a majorityofwhomareIndependentDirectors.TheNominationCommitteeischairedbytheSeniorIndependent Director. Its composition is as follows: -

Position Name Directorship Chairman En.MohdSharifbinHjYusof SeniorIndependentand Non-Executive Director Member Dato’ Sri Adam Sani bin Abdullah Non-Independent and Non-Executive Director Member TuanHajiMohdJaffarbinAwang(Ismail) Independentand Non-Executive Director

En.MohdSharifbinHjYusofasaSeniorIndependentandNon-ExecutiveDirectoroftheCompanywas appointed as the Chairman of Nomination Committee on 26 April 2018.

En.MohdSharifbinHjYusofwasappointedbytheBoardastheSeniorIndependentDirectorbased on his experience with the Board and strong comprehension of the Company’s governance issues. His collective tenure in the Company accords familiarity on the workings of the Board and its individual members. He is respected by the other Board members as he has consistently conscientious in preserving the interest of the Company first and foremost throughout his tenure as director.

In line with the amendment of Listing Requirements, the Terms of Reference of the Nomination Committee has been revised and updated on 26 April 2018.

In addition to the above, the Nomination Committee is required to assess the Board’s effectiveness in terms of its composition, roles and responsibilities, and whether the Board Committees have discharged their functions and duties in accordance with the Terms of Reference. The Board is assessed based on the character, competence, experience, integrity and time availability of each Director as well as their abilities to contribute positively at meetings and in decision making. The Nomination Committee assesses on annual basis the composition of the Board to ensure that the Board has the appropriate mix of expertise and experience, and collectively possesses the necessary core competencies for effective functioning and informed decision making. All assessments and evaluations carried out by the Nomination Committee in discharging its functions have been well documented.

The Nomination Committee had undertaken the following activities for the financial year 2018:-

(i) NominatedandrecommendedtotheBoard,theappointmentofTuanHajiMohdJaffarbinAwang (Ismail) as additional member of the Board based on the designated evaluation criteria;

(ii) Facilitated the self and peers’ assessment on Audit and Risk Committee Members;(iii) Reviewed the effectiveness of the Audit and Risk Management Committee as a whole;(iv) Reviewed the effectiveness of the individual directors, the Board as a whole;(v) Annual review of the composition of the Board and all Board Committees having regard to the

mix of skills, character, experience, integrity, competence and time commitment rendered;(vi) Reviewed the independence of Independent Directors;(vii) Reviewed the required mix of skills, experience and other qualities of the Board; and(viii) Reviewed and recommended to the Board, the re-election of the Directors who will be retiring

at the forthcoming Annual General Meeting (“AGM”) of the Company.


p. 54

The Directors are mindful that they should receive appropriate continuous training to further enhance their skills and knowledge. Accordingly, the Company organises trainings at least once every two (2) years for the Board to ensure they are kept up-to-date on relevant developments.

Some of the seminars and briefings attended by the directors during the financial year to broaden their perspectives and to keep abreast with the changes on the guidelines issued by the relevant authorities as well as the latest developments in the market place were as follows:-

• MICPALuncheonTalk• ANewEraofAuditorReporting(MIA&MSWG)• FTSE4GoodBursaMalaysiaIndexBriefing• Ernst&YoungBreakfastTalk–Embracingtheaccountingdisruptions• TheNewMalaysianCodeandCorporateGovernance• LHAGTax,GST&CustomsSeminar2017• AdvocacySessiontoEnhanceQualityofManagementDiscussion&AnalysisforMD&A• CorporateGovernanceBreakfastSerieswithDirectors–IntegratinganInnovationMindset

with Effective Governance• ForbesAsiaForum:ThenextTycoons–AGenerationEmerges• AdvocacySessiononCorporateDisclosure forDirectorsandPrincipalOfficersofListed

Issuers–CorporateDisclosureFramework• Rethinking–IndependentDirectors:ANewFrontier• MalaysianCodeonCorporateGovernance2017• ProposedAmendmentstoSCGuidelinesonREITsandAmendmentstoListingRequirements

The Company Secretaries circulate relevant guidelines on statutory and regulatory requirements from time to time to the Board for reference. The external auditors also brief the Board members on any changes to the Malaysian Financial Reporting Standards that affect the Company’s financial statements during the year.

During the financial year 2018, the Directors were updated on the amendments to the Listing Requirements and Companies Act, 2016.

Upon review, the Board concluded that the Directors’ Trainings for the financial year 2018 were adequate.


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• Stakeholdersareabletoformanopinionontheoveralleffectivenessoftheboardandindividualdirectors.

5.1 AnnualassessmentoftheDirectors,BoardasawholeandBoardCommittees

The Nomination Committee is required to assess the Board’s effectiveness in terms of its composition, roles and responsibilities, and whether the Board Committees have discharged their functions and duties in accordance with the terms of reference. The Nomination Committee assesses on annual basis the composition of the Board to ensure that the Board has the appropriate mix of expertise and experience, and collectively possesses the necessary core competencies for effective functioning and informed decision making. All assessments and evaluations carried out by the Nomination Committee in discharging its functions have been well documented.

During the financial year 2018, the Nomination Committee conducted an annual assessment of its Directors and the effectiveness of the Board of Directors as a whole in terms of Board mix and composition, quality of information and decision making, boardroom activities and Board’s relationshipwithmanagement.ItalsoconductedanassessmentoftheDirectorswhoaresubjectto retirement at the forthcoming 29th AGM in accordance with the provisions of the Constitution of the Company and the relevant provisions of the Companies Act, 2016. Upon recommendation by the Nomination Committee of the proposed re-election of the relevant directors, the Board had recommended and supported the re-election of the relevant Directors to be tabled at the 29th AGM for shareholders’ approval.


• Thelevelandcompositionofremunerationofdirectorsandseniormanagementtakeintoaccountthecompany’sdesiretoattractandretaintherighttalentintheboardandseniormanagementtodrivethecompany’slong-termobjectives.

• Remunerationpoliciesanddecisionsaremadethroughatransparentandindependentprocess.

6.1 RemunerationPolicy

In general, the remuneration is structured so as to link rewards to corporate and individual performance, as in the case of the Executive Director and Senior Management. As for the Non-Executive Directors, the level of remuneration reflects the experience and level of responsibilities undertaken individually by the Director concerned.

The Board does not have any formal remuneration policy. Notwithstanding that, in determining the remuneration packages of Executive Director and Senior Management, the Remuneration Committee has considered the compensation and benefits which commensurate with the level of the Executive Director and Senior Management’s responsibilities and performance, as well as taking into consideration the Group’s performance relative to the industry. The Executive Director is not entitled to annual fee or allowance nor he is entitled to receive any meeting allowances for the Board and Board Committees Meetings he attends.

The Board collectively determines the remuneration for the Non-Executive Directors to ensure the same is appropriately reflective of experience and the level of responsibilities and contributions including the number of the scheduled meetings for the Board, board of subsidiaries and Board committees; and competitive compared with the prevalent market practices. Each of the Non-Executive Directors abstains from deliberating and voting on his own remuneration.


p. 56

For the financial year 2018, the Remuneration Committee had performed its duty to assess annually the remuneration package of its Executive Directors and Senior Management.

6.2 RemunerationCommittee

The Remuneration Committee of the Company comprises of all Non-Executive Directors and majorityofwhomareIndependentDirectors.Itscompositionisasfollows:-

Position Name Directorship Chairman Dato’ Sri Adam Sani bin Abdullah Non Independent and Non-Executive Director Member Jeneral Tan Sri Dato’ Sri Abdullah bin Independent and Ahmad @ Dollah bin Amad (B) Non-Executive Director Member TuanHajiMohdJaffarbinAwang(Ismail) Independentand Non-Executive Director

The Remuneration Committee is primarily responsible for recommending the policy and framework of the remuneration of the directors and senior management, including the terms and remuneration of the executive director(s), to the Board in order to align with the business strategy and long-term objectivesoftheCompany.Theremunerationofdirectorsandseniormanagementisdeterminedat levels which enable the Company to attract and retain Directors and senior management with the relevant experience and expertise to govern the Group effectively.

In line with the amendment of Listing Requirements and new MCCG, the Terms of Reference of Remuneration Committee has been revised and updated by the Board on 26 April 2018.


• Stakeholders are able to assesswhether the remuneration of directors and seniormanagementiscommensuratewiththeirindividualperformance,takingintoconsiderationthecompany’sperformance.

7.1 DetailsoftheremunerationofDirectors

Pursuant to Section 230 of the Companies Act 2016, the fees of the Directors and any benefits payable to the directors of a listed company and its subsidiaries shall be approved by a general meeting.

Forthefinancialyearended28February2018(“FY2018”),theBoardofDirectorsdecidedthattheDirectors’feesforFY2018bemaintainedasthepreviousfinancialyearforeachDirectorandrecommended to the shareholders’ approval at the forthcoming 29th AGM.

In addition, the Directors are covered under the Directors’ & Officers’ Liability Insurance in respect of liabilities arising from acts committed in their capacity as directors and officers of the Atlan Group as their benefit, provided that such director or officer has not acted negligently, fraudulently or dishonestly, or is in breach of his or her duty of trust.

The relevant resolutions in relation to the Directors’ fees and benefits payable to the Directors are to be presented to the shareholders for approval at the forthcoming 29th AGM.


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A summary in named basis of each individual directors of the remuneration of the Directors (including benefit-in-kind)intheCompanyforservicesrenderedtotheGroupfortheFY2018isanalysedasfollows: -

COMPANY GROUP Salaries& Benefits Other Fees Fees Allowance Bonus inKind Emolument Total Non-ExecutiveDirectors RM RM RM RM RM RM RM

1. Dato’SriAdamSanibinAbdullah* 38,000 111,259 – – – – 149,2592. TengkuAbdulRahmanIbniSultan 30,000 – – – – – 30,000 HajiAhmadShahAl-MustainBillah, DK II., SSAP 3. JeneralTanSriDato’SriAbdullahbin 30,000 – – – – – 30,000 Ahmad @ Dollah bin Amad (B) 4. Dato’SriRobinTanYeongChing 30,000 – – – – – 30,0005. Dato’WooHonKong 30,000 – – – – – 30,0006. Dato’ShagulHamidbinK.R.Williams 12,500 – – – – – 12,500 @ Abdullah (retired on 26 July 2017) 7. En.MohdSharifbinHjYusof 35,000 – – – – – 35,0008. TanThiamChai 30,000 – – – – – 30,0009. TuanHajiMohdJaffarbinAwang(Ismail) 25,000 – – – – – 25,000 (Appointed on 16 May 2017) 10. OngBokSiong** – – 540,000 150,000 8,731 84,481 783,212

260,500 111,259 540,000 150,000 8,731 84,481 1,154,971

ExecutiveDirector 1. LeeSzeSiang – – 511,800 150,000 – 81,104 742,904

260,500 111,259 1,051,800 300,000 8,731 165,585 1,897,874

* Also Non-Executive Chairman of Duty Free International Limited** Also Managing Director of Duty Free International Limited

7.2 RemunerationofSeniorManagement

In determining the remuneration packages of the Senior Management personnel, factors that were taken into consideration included their individual responsibilities, skills, expertise and contributions to the Group’s performance and whether the remuneration packages are competitive and sufficient to ensure that the Group is able to attract and retain executive talents.

The Company believes it may not be in its best interest to disclose the information on the remuneration on the named basis of each member of the Senior Management Personnel, having considered the highly competitive human resource environment for personnel with the requisite knowledge, expertise and experience in the Group’s business activities.

The remuneration of the Senior Management personnel is combination of annual salary, bonus and benefits-in-kind are determined in a similar manner as other management employee of the Company. The basis of determination has been consistently applied and is based on individual performance, the overall performance of the Company and benchmarked against other companies operating in similar industry.


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PRINCIPLEB–EFFECTIVEAUDITANDRISKMANAGEMENT

PART 1 - AUDIT COMMITTEE


• ThereisaneffectiveandindependentAuditCommittee.• TheboardisabletoobjectivelyreviewtheAuditCommittee’sfindingsandrecommendations.

Thecompany’sfinancialstatementisareliablesourceofinformation.

8.1 TheChairmanoftheAuditCommitteeisnottheChairmanoftheBoard

The Company complied with the Practice 8.1 of the new MCCG which stipulates that the Chairman of the Audit Committee is not the Chairman of the Board.

The Audit and Risk Management Committee is chaired by a Senior Independent and Non-ExecutiveDirector,En.MohdSharifbinHjYusof,who isnot theChairmanof theBoard.TheChairman of the Audit and Risk Management Committee is a Fellow Member of the Institute of Chartered Accountants, England and Wales and an Associate Member of the Malaysian Institute of Accountants.

8.2 Formerauditkeypartner

Practice 8.2 of the new MCCG requires the Audit Committee to have a policy that requires a former key audit partner to observe a cooling-off period of at least two years before being appointed as a member of the Audit Committee.

The Terms of Reference of the Audit and Risk Management Committee has been updated accordingly in order for the Audit and Risk Management Committee to formalise such policy.

8.3 Suitability,objectivityandindependenceoftheexternalauditor

In accordance with the Terms of Reference of the Audit and Risk Management Committee, the Audit and Risk Management Committee, on an annual basis would review and monitor the suitability and independence of the external auditors.

During the year under review, the Audit and Risk Management Committee members met with the externalauditorsnamelyErnst&YoungtwiceintheabsenceoftheManagement.

The Audit and Risk Management Committee had obtained a written assurance from the external auditors confirming that they were, and had been, independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements.

The Audit and Risk Management Committee has assessed and is satisfied with the competence and independence of the external auditors and had recommended the re-appointment of the external auditors for shareholders’ consideration at the forthcoming 29th AGM.

For the audit of the financial year ended 28 February 2018, the Audit and Risk Management Committeereviewedandendorsedcertainnon-auditengagementsprovidedbyErnst&Youngandmonitoredthefeeoftotalnon-auditworkcarriedoutbythemwiththemainobjectiveofensuringtherewasnoimpairmentofindependencyorobjectivity.Thetotalamountoffeespaidfornon-auditservices rendered by the Group to external auditors for the financial year 2018 were RM86,000 only.


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8.4 QualificationoftheAuditCommittee

All Audit and Risk Management Committee members are financially literate and its composition and performance are reviewed by the Nomination Committee annually and recommended to the Board for its approval.

Two (2) of the Audit and Risk Management Committee members are the members of the Malaysian Institute of Accountants (“MIA”) thus fulfilling the requirement under Paragraph 15.09(1)(c)(i) of the Listing Requirements which requires at least one (1) of the Audit Committee members to be a member of the MIA.

Audit and Risk Management Committee members acknowledge the need for continuous education trainings, however, for the year under review, some members of the Audit and Risk Management Committee attended training on the developments in accounting and auditing standards, practices and rules.

All Audit and Risk Management Committee members will attend at least one training in financial year 2019 which is relevant to accounting and auditing standards, practices and rules in enhancing their professional development.

8.5 CompositionoftheAuditCommittee

The Audit and Risk Management Committee comprises four (4) Non-Executive Directors, of whom three (3) are Independent Directors.

This is in compliance with Paragraph 15.09(1)(c) of the Listing Requirements, which stipulates that “alltheauditcommitteemembersmustbenon-executivedirectors,withamajorityofthembeingindependent directors”

In term of the Step-Up Practice 8.4 of the new MCCG which recommends that the Audit Committee should comprise solely of Independent Directors, the Company do not intend to adopt such step-up practice for the time being.

PRINCIPLEB:PART2-RISKMANAGEMENTANDINTERNALCONTROLFRAMEWORK


• Companiesmakeinformeddecisionsaboutthelevelofrisktheywanttotakeandimplementnecessarycontrolstopursuetheirobjectives.

• Theboard isprovidedwith reasonableassurance that adverse impact arising fromaforeseeablefutureeventorsituationonthecompany’sobjectivesismitigatedandmanaged.

9.1 Establishmentofriskmanagementandinternalcontrolframework

The Board acknowledges that risk management is an integral part of the Group business operations. It is an ongoing process which involves different levels of managements to identify, evaluate, monitor and manage and mitigate the risks that may affect the achievement of its business and corporate objectives.


p. 60

The Management is responsible for creating risk awareness culture and to build the necessary environment for effective risk management. Significant issues related to internal controls and risk management are highlighted to the Board. If deemed necessary, assistance from external parties shall be consulted on issues in which the Board needs to seek an opinion.

The Company has established the Risk Management Team which is under the purview of the Audit and Risk Management Committee to oversee the risk management of the Group. The Risk Management Framework was adopted by the Directors. The Board through the Audit and Risk Management Committee would obtain report from the internal auditors on the periodic check on the internal control system.

9.2 Featuresofitsriskmanagementandinternalcontrolframework

The details of the Company’s internal control system and framework are set out in the Statement on Risk Management and Internal Control on pages 69 to 71 of this Annual Report.

9.3 RiskManagementCommittee

This practice is not adopted by the Company. The function of Risk Management Committee is currently assumed by the Audit and Risk Management Committee.


• Companieshaveaneffectivegovernance,riskmanagementandinternalcontrolframeworkandstakeholdersareabletoassesstheeffectivenessofsuchaframework.

10.1 Internalauditfunction

It is responsibility of the Board to maintain sound systems of internal controls to safeguard shareholders’ investment.

As the systems of internal controls are designed to mitigate rather than eliminate the likelihood of errors or fraud, these systems can only provide a reasonable assurance against material misstatement or loss.

In order to maintain sound systems of internal controls, the Board has established an Audit & Risk Assessment (“ARA”) department, which is completely independent from all operations to monitor and review the effectiveness of the internal controls within the organisation. The scope of work covered by the internal audit function during the financial year set out on pages 66 to 68 of this Annual Report.

The internal auditors adopt a risk-based approach towards the planning and conduct of audits, which are consistent with the Group’s framework in designing, implementing and monitoring its internal control system.

The internal audit function is guided by Internal Audit Charter which was approved by the Audit and Risk Management Committee. Audit engagement is focused on areas of priority according to their risk assessment and in accordance with the annual audit plans approved by the Audit Committee.


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The Head of the ARA department attended the meetings and reported directly to the Audit and Risk Management Committee on the annual internal audit plan and internal audit reports on the audit conducted in accordance with the annual audit plan.

During the financial year, the ARA department has presented its internal audit reports to Audit andRiskManagementCommitteeandmanagementinregardstoanymajorauditfindingontheweaknesses in the system and controls of the operation. Areas for improvement were highlighted and the implementation of recommendations was monitored. None of the internal control weaknesses have resulted in any material losses, contingencies or uncertainties that would require disclosure in the Annual Report.

The total costs of the internal audit function in respect of the financial year ended 28 February 2018 was approximately RM969,000.

As of 28 February 2018, the ARA department consists of seven (7) audit personnel and are led by

two (2) Co-Head of ARA, namely Mr. Chong Wee Siong, John, and Ms. Koo Lee Theng.

Mr. Chong Wee Siong, John, who holds a Bachelor of Science in Applied Accounting and is a chartered member of the Association of Chartered Certified Accountants (“ACCA”). He is also a Certified Internal Auditor (“CIA”).

Ms. Koo Lee Theng is a Chartered Accountant of the Malaysian Institute of Accountant (MIA), a member of Certified Practise Accountant of Australia (CPA), Certified Practise Accountant of Australia, Malaysia Institute of Certified Public Accountants (MICPA) and Institute of Internal Auditor Malaysia (IIA).

None of the internal audit personnel had any relationship or conflict of interest that could impair theirobjectivityandindependenceinconductingtheirinternalauditfunctions.TheARADepartmentprovides the Audit and Risk Management Committee with reasonable assurance on the adequacy and integrity of the Group’s internal control systems.

PRINCIPLE C – INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITHSTAKEHOLDERS

PART1-COMMUNICATIONWITHSTAKEHOLDER


• Thereiscontinuouscommunicationbetweenthecompanyandstakeholderstofacilitatemutualunderstandingofeachother’sobjectivesandexpectations.

• Stakeholdersareable tomake informeddecisionswithrespect to thebusinessof thecompany,itspoliciesongovernance,theenvironmentandsocialresponsibility.

11.1 Effective,transparentandregularcommunicationwithitsstakeholders

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 to the regulators, shareholders and stakeholders. The Company has identified persons authorised and responsible to approve and disclose material information to shareholders and stakeholders to ensure compliance with the Listing Requirements. The Board has delegated the authority to the Executive Director to approve all announcements for release to Bursa Securities. The Executive Director works closely with the Board, the senior management and the company secretaries who are privy to the information to maintain strict confidentiality of the information.



p. 62

The Company continues to recognise the importance of transparency and accountability to its shareholders and investors. The Board always ensures that the shareholders are informed of thefinancialperformanceandmajorcorporateactivitiesoftheCompany. Such information iscommunicated to shareholders and investors through various disclosures and announcements to Bursa Securities, including the quarterly financial results, annual reports and where appropriate, circulars and press releases.

Apart from the mandatory announcements through Bursa Securities, the Company also maintains a website www.atlan.com.my to which shareholders and investors can have access to information on the operations and business activities of the Group.

Investor relations activities such as meetings with fund managers and analysts and interviews bythepressareheldatappropriatetimetoexplaintheGroup’sstrategy,performanceandmajordevelopments.

In maintaining the commitment to effective communication with shareholders, the Group adopts the practice of comprehensive, timely and continuing disclosures of information to its shareholders as wellastothegeneralinvestingpublic.Thepracticeofdisclosureofinformationisnotjustestablishedto comply with the requirements of the Listing Requirements. It also adopts the recommendations of the new MCCG with regard to strengthening engagement and communication with shareholders. Where possible and applicable, the Group also provides additional disclosure of information on a voluntary basis. The Group believes that consistently maintaining a high level of disclosure and extensive communication with its shareholders is vital to shareholders and investors to make informed investment decisions.

The Annual Report is the main channel of communication between the Company and its stakeholders. The Annual Report communicates comprehensive information of the financial results and activities undertaken by the Group. As a listed issuer, the contents and disclosure requirements of the annual report are also governed by the Listing Requirements.

Another key avenue of communication with its shareholders is the Company’s AGM, which provides a useful forum for shareholders to engage directly with the Company’s Directors. At each AGM, the Directors of the Company would be present at the meetings to answer any questions that the shareholders may ask. The Chairman of the meeting will provide time for the shareholders to ask questions for each agenda in the notice of the AGM. The external auditors will also be present at the AGM to answer any questions that the shareholders may ask. The shareholders were also able to meet with the Directors after the meeting while they mingle with the shareholders, proxies and corporate representatives.


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PRINCIPLE C : PART 2 - CONDUCT OF GENERAL MEETINGS


• Shareholdersareabletoparticipates,engagetheboardandseniormanagementeffectivelyandmakeinformedvotingdecisionsatGeneralMeetings.

12.1 NoticeforanAnnualGeneralMeeting

General meeting serves as a principal platform for the Board and Senior Management to engage with shareholders and encourage effective shareholders’ communication on the Company’s performance, corporate and business developments and any other matters affecting shareholder interests. The Company Secretaries, by order of the Board, served a notice of AGM to all shareholders of the Company at least 28 days prior to its forthcoming 29th AGM to provide the shareholders sufficient time to consider the proposed resolutions that will be discussed and decided at the 29th AGM. Notice of the 29th AGM clearly sets out details of the resolutions proposed accompanying with explanatory notes on the rationale of each resolution to enable the shareholders to make informed decision in exercising their voting rights.

The Notice of an AGM also provides information to the shareholders with regard to, amongst others their entitlement to attend the AGM, the right to appoint a proxy and also the qualifications of a proxy.

To further promote participation of members through proxy(ies), which is in line with the insertion of Paragraph 7.21 of the Listing Requirements, the Company’s Constitution included explicitly the right of proxies to speak at general meetings, to allow a member who is an exempt authorised nominee to appoint multiple proxies for each omnibus account it holds and expressly disallow any restriction on proxy’s qualification.

12.2 AttendanceinGeneralMeetings

The general meeting also serves as an avenue for the Chairman and the Board members to engage in a two-way communication with shareholders where the shareholders are encouraged to participate in the question-and-answer session with the Board personally and exercise their right to vote on the proposed resolutions. The Board will ensure that all Board members, particularly the chairperson of each Board committee will make their endeavours to attend general meeting to facilitate engagement with shareholders and to address any relevant questions and concerns raised by the shareholders. The external auditors will be present at the AGM to respond to any queries from shareholders on the audit conducted, the preparation and content of the auditors’ report, the accounting policies adopted by the Company, and the independent audit review of the Company’s financial position.

12.3 Voting

The Company’s General Meeting is not held in a remote location. The Company has adopted manual polling for 2017 AGM. As for voting in absentia and remote shareholders’ participation, the existing proxy form authorizing proxies or Chairman of meeting is an alternative measure adopted by the Company.


p. 64

Shareholders are allowed to appoint any person(s) as their proxies to attend, participate, speak and vote in his/her stead at a general meeting.

Practice 12.3 of new MCCG encouraged listed companies with a large number of shareholders of which have meetings in remote locations should leverage technology to facilitate: -• Votinginabsentia;and• Remoteshareholders’participationatGeneralMeetings.

AsalistedentityonBursaSecuritiesinMalaysia,theBoardnotedthatmajorityoftheshareholdersof the Company reside in Malaysia and predominantly in either Penang or Kuala Lumpur. Therefore, the general meetings of the Company have always been held in the Penang or Kuala Lumpur.

COMPLIANCE STATEMENT

The Board is satisfied that to the best of its knowledge, the Company is substantially in compliance with the principles and practices set out in the new MCCG as well as the relevant Listing requirements for the financial year 2018. Any practices in the new MCCG which have not been implemented during the financial year will be reviewed by the Board and implemented where possible and relevant to the Group’s business.

This Statement is made in accordance with the resolution of the Board dated 13 June 2018.


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additional ComplianCe infOrmatiOn

The information set out below is disclosed in compliance with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad:-

1. UtilisationofProceeds

During the financial year ended 28 February 2018, the Company did not raise any funds through any corporate proposal/shareholders’ mandate under Sections 75 and 76 of the Companies Act 2016.

2. AuditandNon-AuditFees

Audit fees paid/payable to external auditors by the Company and by the Group for the financial year ended 28 February 2018 amounted to RM70,000 and RM1,178,000 respectively.

Non-audit fees paid/payable to external auditors by the Company and by the Group for the financial year ended 28 February 2018 amounted to RM11,000 and RM86,000 respectively.

3. MaterialContracts InvolvingDirectors’,ChiefExecutivewho isnotaDirectorandMajorShareholders’Interests

Other than those related party transactions disclosed in Note 37 to the financial statements, there were no material contracts entered into by the Company and its subsidiaries involving directors’, chiefexecutivewhoisnotadirectorandmajorshareholders’interests,eitherstillsubsistingattheend of the financial year or entered into since the previous financial year end.


p. 66

aUdit and riSK manaGement COmmittee rePOrt

The Audit and Risk Management Committee comprises the following members: -

Position Name Directorship

Chairman MohdSharifBinHjYusof SeniorIndependent Non-Executive Director

Member Jeneral Tan Sri Dato’ Sri Abdullah Bin Independent Non-Executive Director Ahmad @ Dollah Bin Amad (B) Member TuanHajiMohdJaffarBinAwang(Ismail) IndependentNon-ExecutiveDirector (Appointed w.e.f. 16 May 2017)

Member Tan Thiam Chai Non-Independent Non-Executive Director

Member Dato’ Shagul Hamid Bin K.R Williams Independent Non-Executive Director @ Abdullah (Retired w.e.f. 26 July 2017)

ATTENDANCE

The Audit and Risk Management Committee met five (5) times during the financial year ended 28 February2018(“FY2018”).DetailsoftheattendanceoftheCommitteemembersholdingofficeduringthe financial year are as follows: -

AttendanceduringMembers tenureinoffice

MohdSharifBinHjYusof 4/5Dato’ Shagul Hamid Bin K.R. Williams @ Abdullah 3/3Jeneral Tan Sri Dato’ Sri Abdullah Bin Ahmad @ Dollah Bin Amad (B) 5/5Tan Thiam Chai 5/5TuanHajiMohdJaffarBinAwang(Ismail) 4/4

AUTHORITYANDDUTIESOFTHEAUDITANDRISKMANAGEMENTCOMMITTEE

The Audit and Risk Management Committee is governed by its terms of reference, which is available on the Company’s website at www.atlan.com.my.

SUMMARYOFACTIVITIESOFTHEAUDITANDRISKMANAGEMENTCOMMITTEE

TheactivitiesoftheAuditandRiskManagementCommitteefortheFY2018areasfollows:-

(i) FinancialPerformanceandReporting• ReviewedquarterlyfinancialresultsoftheGroupforFY2018presentedbythemanagement

before recommending to the Board for their consideration and approval;• ReviewedwiththeexternalauditorstheannualauditedfinancialstatementsoftheCompany

and of the Group to ensure the said audited financial statements were drawn up in accordance with the relevant legislation and the applicable approved accounting standards before recommending to the Board for their consideration and approval; and

• Reviewedanddeliberatedonauditissuesraisedbytheexternalauditorsandtheactionplansrequired to address those issues.

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(ii) InternalAudit(“IA”)• ReviewedandapprovedtheannualIAplanpresentedbytheinternalauditorsafterbeing

satisfied with the contents’ suitability, adequacy and scope of coverage;• Reviewed the IA reports, which highlighted the audit issues, recommendations and

management’s responses;• ReviewedthefollowupreportsbytheInternalAuditorsonthestatusofactionstakenbythe

management on recommendations suggested in the IA reports; • Discussedwiththemanagementonactionstakentoimprovethesystemsofinternalcontrol

based on the recommendations and findings identified in the IA reports and made necessary recommendations to the Board for approval;

• Assess and facilitate the introduction of new IA teammembers in theAudit andRiskManagement Assessment (“ARA”) Department; and

• Evaluated the effectiveness and independence of the IA function in carrying out itsresponsibilities in respect of risk management, internal control, and governance.

(iii) Externalauditors• ReviewedanddiscussedwiththeexternalauditorstheirAuditPlanandscopeofworksfor

the financial year;• Mettwicewiththeexternalauditorswithoutthepresenceofthemanagementteamtodiscuss

issues of concern to the external auditors arising from the annual statutory audit;• Reviewed the results of the audit,management letter togetherwith themanagement’s

responses and comments to the findings; and• Evaluatedtheperformanceoftheexternalauditorsforthefinancialyearunderreviewcovering

areas such as calibre, quality processes, audit team experience, audit scope, audit governance and independence as well as audit fees of the external auditors. The Group’s external auditors also confirmed their independence and the Audit and Risk Management Committee having beensatisfiedwiththeindependence,stabilityandperformanceofMessrs.Ernst&Young,made recommendations to the Board for approval on the re-appointment of the external auditors.

(iv) CorporateGovernance• Reviewed the impactof the relevant regulatorychangesandensuredcomplianceby the

Company and the Group; • Reviewed and recommended theAudit andRiskManagementCommitteeReport and

Statement of Risk Management and Internal Control for inclusion in the Annual Report to ensure the contents therein are accurate and in compliance with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad to the Board for approval; and

• ReviewedtheTermsofReferenceofAuditandRiskManagementCommitteetoensureitisinline with the Malaysian Code of Corporate Governance and Main Market Listing Requirements of Bursa Malaysia Securities Berhad to the Board for approval.

(v) RiskManagement• Reviewed and endorsed the riskmanagement frameworks, guidelines and other key

components of risk management for implementation within the Company and throughout the Group; and

• Reviewedtheprogressofongoingriskmanagementactivitiestoidentify,evaluate,monitorand manage critical risks.

aUdit and riSK manaGement COmmittee rePOrt (COnt’d)


p. 68

aUdit and riSK manaGement COmmittee rePOrt (COnt’d)

SUMMARY OF ACTIVITIES OF THE INTERNAL AUDIT FUNCTION

The IA function is independent of the auditable areas in the organisation and reports to the Audit and Risk Management Committee. The responsibilities include reviewing the adequacy of the system of internal controls and evaluating the various financial and operational risks faced by the organisation.

The IA activities are specified in the annual audit plan, which is submitted to the Audit and Risk Management Committee for approval. IA reports with findings and recommendations are forwarded to the Audit and Risk Management Committee for their review.

For the financial year under review, the total costs incurred by the Group for maintaining the IA functions are RM969,000.

This Statement is made in accordance with the resolution of the Board dated 16 May 2018.

ANNUAL REPORT 2018

p. 69

Statement on riSK manaGement and internal COntrOl

PREAMBLE

Pursuant to paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Board is required to include in its Annual Report a statement on risk management and internal control of the Group. In making this statement on risk management and internal control, it is essential to address the Principles, Recommendations and Commentary in the Malaysian Code on Corporate Governance 2017.

RESPONSIBILITY

The Board acknowledges its stewardship responsibility for the Group’s internal control and risk management system to safeguard shareholders’ investment and the Group’s assets as well as for reviewing its adequacy and integrity of the system.

However, it should be noted that such system is designed to manage rather than eliminate the risk of failuretoachievebusinessobjectivesandcanonlyprovidereasonableandnotabsoluteassuranceagainst material misstatement loss and fraud. For the purpose of this statement, the associated company is not dealt with as part of the Group.

INTERNAL CONTROL SYSTEMS

TheembeddedcontrolsystemisdesignedtofacilitateachievementoftheGroup’sbusinessobjectives.It comprises the following: -

• OrganisationalStructure

The organisational structure has well-defined lines of responsibility, delegation of authority, segregationofdutiesandinformationflowtosupporttheGroupinachievingitsbusinessobjectives.

In addition, the committees made up predominantly of non-executive directors such as Audit and Risk Management Committee, Nomination Committee and Remuneration Committee with defined terms of reference and functions, provide the essential support to the Board.

• AuditandRiskManagementCommittee

The Audit and Risk Management Committee convenes regularly to meet their strategic business agenda, thus ensuring that the Board properly apprises and maintains effective supervision over the entire operations.

• ControlActivities

The Group continuously reviews and updates its policies, procedures and standards in accordance with changes in the operating environment.

• BudgetingandMonitoringProcesses

The Group has in place budgeting process for all operating units with periodical monitoring of performancesothatmajorvariancesarefollowed-upandmanagementactiontaken.


p. 70

Statement on riSK manaGement and internal COntrOl (COnt’d)

• ManagingandMonitoringofCapitalandRevenueExpenditure

The functional limits of authority for revenue and capital expenditure for all operating units serve to facilitate the approval process whilst keeping potential exposure in check.

Detailed justificationandapprovalprocess formajorprojectsandacquisitionsare imposedtoensurecongruencewithCompany’sstrategicobjectives.

• InformationandCommunicationControls

The Group’s computerized information systems are streamlined to ensure compliance with hardware and software regulations and guidelines for system integrity, effectiveness and efficiency.

• IndependentAuditing

Independent appraisals by internal and external auditors ensure ongoing compliance with policies, procedures, standards and legislations whilst assessing the effectiveness of the Group’s systems of financial, compliance and operational controls.

RISKMANAGEMENT

The Board acknowledges that risk management is an integral part of the Group business operations. It is an ongoing process which involves different levels of managements to identify, assess, evaluate, monitor and manage and mitigate the risks that may affect the achievement of its business and corporate objectives.Regularmanagementandoperationalmeetingsareheldtodeliberatesolutionstomitigatekeyrisks.ThisongoingriskmanagementactivitiesareundertakenatallmajorsubsidiariesoftheGroup,as well as collectively at the Group level. The ongoing risk management process is coordinated by the Audit and Risk Assurance Department (ARA) of the Group.

Key elements of the Group’s risk management framework are described below:

• RiskIdentification

Risk identification is performed on an ongoing basis by different levels of management. The respective business units of the Group are the risk owners and are responsible to develop the appropriate risk response strategies.

• RiskAssessment

The Group maintains a risk database together with their corresponding controls, which are categorized below:

Strategic risk, risk which affect the overall direction of the business.

Operational risk, derived from the inability of internal processes and procedures to address operational failings due to people or systems.

Financial, risk associated with financial reporting and recording of transactions.

Compliance, risk associated in relation to legal, statutory, and corporate governance.

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• RiskMitigationProcess

Potential risk were identified by the respective business functions based on relevant knowledge, expertise,andadvicefromsubjectmatterexperts. Thepoliciesandproceduresof theGroupembed internal controls to address and mitigate known risks.

• Reporting&Communication

ARA reports to the Board, on a quarterly basis, on any significant changes in the business and external environment, and any updates to key risks in the risk register.

The management is responsible for creating risk awareness culture and to build the necessary environment for effective risk management. Significant issues related to internal controls and risk management are highlighted to the Board. If deemed necessary, assistance from external parties shall be consulted on issues in which the Board needs to seek an opinion.

INTERNAL AUDIT FUNCTION

An Internal Audit function supports the Audit and Risk Management Committee, and by extension, the Board, by providing reasonable independent assurance on the effectiveness of the Group’s internal control.

In particular, Internal Audit appraises and contributes towards improving the Group’s internal control systems and reports to the Audit and Risk Management Committee on a quarterly basis.

The Internal Audit function adopts the risk-based approach when carrying out its internal audit work plan, whichreflectstheriskprofileoftheGroup’smajorbusinesssectorsisroutinelyreviewedandapprovedby the Audit and Risk Management Committee. The scope of the Internal Audit function covers the audit of all business units and operations.

REVIEWOFADEQUACYOFRISKMANAGEMENTANDINTERNALCONTROL

The Audit and Risk Management Committee is responsible to review the audit reports from the internal and external auditors and assess the effectiveness of the actions taken by the management on recommendations made by the internal and external auditors for resolving lapses or weaknesses in the controls.

For the financial year ended 28 February 2018, the Board has received assurances from the Executive Director that the Group’s internal controls are adequate and effective in all material aspects.

Based on the internal controls established and maintained by the Group, reviews performed by the management and work performed by internal and external auditors, the Board, with concurrence of the Audit and Risk Management Committee, is of the opinion that the Group’s internal controls are adequate and effective.

REVIEw BY ExTERNAL AUDITORS

The external auditors have reviewed the statement on risk management and internal control as required by paragraph 15.23 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. Their review was performed in accordance with Audit and Assurance Practice Guides 3 issued by the Malaysian Institute of Accountants.

Statement on riSK manaGement and internal COntrOl (COnt’d)


p. 72

Statement of direCtOrS’ reSPOnSibilityin reSPeCt Of the audited finanCial StatementS

The Directors are required by the Companies Act 2016 to prepare financial statements which give a true and fair view of the state of affairs of the Group and of the Company at the end of each financial year and of their results and cash flows for the financial year then ended.

In preparing the financial statements, the Directors have:-

• Adoptedappropriateaccountingpoliciesandappliedthemconsistently;• Madejudgementsandestimatesthatarereasonable;• Ensuredthatapplicableaccountingstandardshavebeencompliedwith;and• Appliedthegoingconcernbasis.

The Directors are responsible for ensuring that the Group and the Company keep proper accounting records, which disclose with reasonable accuracy on the financial position of the Group and of the Company, and which enable them to ensure that the financial statements comply with the provisions of the Companies Act 2016.

The Directors are also responsible for taking reasonable steps to safeguard the assets of the Company and to prevent and detect other irregularities.

FINANCIALSTATEMENTS

p.74 - p.198

p.74DIRECTORS’ REPORT

p.79STATEMENT BY DIRECTORS

p.79 STATUTORY DECLARATION

p.80INDEPENDENT AUDITORS’ REPORT

p.84INCOME STATEMENTS

p.85 STATEMENTS OF COMPREHENSIVE INCOME

p.86 STATEMENTS OF FINANCIAL POSITION

p.89 STATEMENTS OF CHANGES IN EQUITY

p.93STATEMENTS OF CASH FLOWS

p.97 NOTES TO THE FINANCIAL STATEMENTS


p. 74

direCtorS’ rePOrt

The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 28 February 2018.

Principalactivities The principal activities of the Company are investment holding and the provision of management, financial, technical and other ancillary services.

The principal activities of the subsidiaries are set out in Note 17 to the financial statements.

Results

Group Company RM'000 RM'000 Profit net of tax 66,325 46,251

Profit attributable to: Owners of the parent 49,033 46,251Non-controllinginterests 17,292 –

66,325 46,251

There were no material transfers to or from reserves or provisions during the financial year.

In the opinion of the directors, the results of the 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.

Dividends

The amounts of dividends paid by the Company since 28 February 2017 were as follows:

RM'000In respect of the financial year ended 28 February 2018: First interim dividend (single-tier) of 6% on 253,650,000 ordinary shares, declared on 13 July 2017 and paid on 23 August 2017 15,219 Second interim dividend (single-tier) of 5% on 253,650,000 ordinary shares, declared on 12 October 2017 and paid on 15 November 2017 12,683 Third interim dividend (single-tier) of 10% on 253,650,000 ordinary shares, declared on 11 January 2018 and paid on 15 March 2018 25,365

53,267

The directors do not recommend the payment of any final dividend in respect of the financial year ended 28 February 2018.

ANNUAL REPORT 2018

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direCtorS’ rePOrt (COnt’d)

Directors

The names of the directors of the Company in office since the beginning of the financial year to the date of this report are: Dato' Sri Adam Sani Bin Abdullah**TengkuAbdulRahmanIbniSultanHajiAhmadShahAl-MustainBillah,DKII.,SSAPDato’SriRobinTanYeongChingJeneral Tan Sri Dato' Sri Abdullah Bin Ahmad @ Dollah Bin Amad (B)**Dato' Woo Hon KongTan Thiam Chai MohdSharifBinHajiYusofLee Sze Siang**Ong Bok Siong**TuanHajiMohdJaffarBinAwang(Ismail) (appointed on 16 May 2017)Dato' Shagul Hamid Bin K.R. Williams @ Abdullah (retired on 26 July 2017)

**These directors are also directors of certain subsidiaries of the Company.

The names of the directors of the Company’s subsidiaries in office since the beginning of the financial year to the date of this report (not including those directors listed above) are:

General Tan Sri Dato’ Seri Mohd Azumi Bin Mohamed (Retired)Dato’ Megat Hisham Bin Megat MahmudChew Soo LinY.A.M.Dato'SeriSharifahFaziraBtDYMMSyedSirajuddin(F)HoYuetLeng(F)Max Borries Claus HeinemannMarvinChristianVonPlatoDato' Mohamed Suhaimi Bin SulaimanDatukHajiMohdRadzuanBinAbdullahMasahito AdachiTadayoshi MizukamiDato' Wong Thien SangMamat Bin SamatRosly Bin AhmadAhmad Shaker Bin AhmadAhmad Zubir Bin KhalidRajaMuzafarBinRajaHassanChuah Teck Tiong (deceased on 27 March 2017)


p. 76


Directors'benefits

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salary of a full-time employee of the Company as shown in Note 7 to the financial statements) by reason of a contract made by the Company or a related corporation with any director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest, except as disclosed in Note 37 to the financial statements.

The Company maintains a liability insurance for the directors and officers of the Group. The total amount of sum insured for the financial year amounted RM20,000,000.

Directors'interests

According to the register of directors' shareholdings, the interests of directors in office at the end of the financial year in shares in the Company and its related corporations during the financial year were as follows:

Numberofordinaryshares 1March 28February 2017 Acquired Sold 2018

HoldingCompanyDistinctContinentSdn.Bhd.

DirectinterestDato' Sri Adam Sani Bin Abdullah 1 - - 1 Deemedinterest Dato' Sri Adam Sani Bin Abdullah* 999 - - 999 TheCompany Directinterest Dato' Sri Adam Sani Bin Abdullah 64,061 - - 64,061 Deemedinterest Dato' Sri Adam Sani Bin Abdullah** 130,255,153 - - 130,255,153

* Disclosure pursuant to Section 59(11)(c) of the Companies Act 2016.

** Deemed interest through shares held in Distinct Continent Sdn. Bhd. and Alpretz Capital Sdn. Bhd., by virtue of Section 8(4) of the Companies Act 2016.

Dato' Sri Adam Sani Bin Abdullah by virtue of his interest in shares in Distinct Continent Sdn. Bhd. is deemed interested in the shares in the Company and its related corporations to the extent Distinct Continent Sdn. Bhd. has an interest.

None of the other directors in office at the end of the financial year had any interest in shares in the Company or its related corporations during the financial year.

ANNUAL REPORT 2018

p. 77

Holdingcompany

The immediate and ultimate holding company is Distinct Continent Sdn. Bhd., which is incorporated in Malaysia.

Otherstatutoryinformation

(a) Before the income statements, statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the directors took reasonable steps:

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

(ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

(b) At the date of this report, the directors are not aware of any circumstances which would render:

(i) the amount written off for bad debts or the amount of the allowance for impairment in the financial statements of the Group and of the Company inadequate to any substantial extent; and

(ii) the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

(c) At the date of this report, the directors are not aware of any circumstances 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.

(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.

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

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

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

(f) In the opinion of the directors:

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

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



p. 78

Significantandsubsequentevents

Details of significant and subsequent events are disclosed in Note 43 to the financial statements.

Auditors

Theauditors,Ernst&Young,haveexpressedtheirwillingnesstocontinueinoffice.

Auditors' remuneration are disclosed in Note 8 to the financial statements.

Totheextentpermittedbylaw,theCompanyhasagreedtoindemnifyitsauditors,Ernst&Young,aspartoftheterms of its audit engagement against claims by third parties arising from the audit (for an unspecified amount). No paymenthasbeenmadetoindemnifyErnst&Youngduringorsincetheendofthefinancialyear.

Signed on behalf of the Board in accordance with a resolution of the directors dated 17 May 2018.

LeeSzeSiang OngBokSiong


ANNUAL REPORT 2018

p. 79

Statement by direCtOrSPurSuant tO SeCtiOn 251(2) Of the COmPanieS aCt 2016

StatUtory deClaratiOnPurSuant tO SeCtiOn 251(1)(b) Of the COmPanieS aCt 2016

We, Lee Sze Siang and Ong Bok Siong, being two of the directors of Atlan Holdings Bhd., do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 84 to 198 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 28 February 2018 and of their financial performance and cash flows for the year then ended.

Signed on behalf of the Board in accordance with a resolution of the directors dated 17 May 2018.

LeeSzeSiang OngBokSiong

I, Lee Sze Siang, being the director primarily responsible for the financial management of Atlan Holdings Bhd., do solemnly and sincerely declare that the accompanying financial statements set out on pages 84 to 198 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed Lee Sze Siangat Kuala Lumpur in the Federal Territoryon 17 May 2018. LeeSzeSiang (MIA 16287)

Before me,

HAJJAH JAMILAH ISMAILNo. W626Commissioner for Oaths


p. 80

independent auditOrS’ rePOrttO the SharehOlderS Of atlan hOldingS bhd.

Reportontheauditofthefinancialstatements

Opinion

We have audited the financial statements of Atlan Holdings Bhd. which comprise the statements of financial position as at 28 February 2018 of the Group and of the Company, and income statements, statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 84 to 198.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 28 February 2018, and of their financial performance and their cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

Basisforopinion

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

Independenceandotherethicalresponsibilities

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

Keyauditmatters

Keyauditmattersarethosemattersthat, inourprofessionaljudgement,wereofmostsignificanceinourauditof the financial statements of the Group and of the Company for the current year. We have determined that there are no key audit matters to communicate in our report on the financial statements of the Company. The key audit matters for the audit of the financial statements of the Group are described below. These matters were addressed in the context of our audit of the financial statements of the Group as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditors’ responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis of our audit opinion on the accompanying financial statements.

ANNUAL REPORT 2018

p. 81

Keyauditmatters(cont’d)

Impairment assessment of goodwill

As at 28 February 2018, the Group recorded goodwill of RM27.4 million, which represents 10.1% of the non-current assets and 3.8% of net assets. We considered the audit of management’s annual impairment assessment ofgoodwilltobeakeyauditmatterbecausetheassessmentprocessinvolvedsignificantmanagementjudgement,and is based on assumptions that are affected by future market and economic conditions. Based on the annual impairment testing, management assessed that the goodwill is not impaired.

As disclosed in Note 16 to the financial statements, the goodwill is allocated to three cash-generating units (“CGUs”). TherecoverableamountsoftheCGUshavebeendeterminedbasedonValue-In-Use(“VIU”)calculationsusingcashflowprojectionsapprovedbymanagement.WeassessedthevaluationmethodusedbytheGroupandevaluatedthe key assumptions used in the impairment analysis, in particular the revenue growth rates, budgeted gross margin, discount rateand long-termgrowthrate.Wecheckedthat thecashflowprojectionswerebasedonapprovedmanagement budgets. We reviewed the robustness of management’s budgeting process by comparing previous forecasts to actual results. We evaluated the assumptions used by comparing them to historical data as well as local economic development and industry outlook. For the assumption on renewal of the Group’s duty free license agreement, we inquired with senior management on their historical renewal experience and their assessment of the Group’s ability to renew the agreement. We involved our internal valuation specialist to assess the reasonableness of the discount rate and long-term growth rate used by the Group. We also reviewed management’s analysis of the sensitivityoftheVIUcalculationstochangesintherespectivekeyassumptions.Finally,wereviewedtheadequacyof the disclosures made on the goodwill impairment test in Note 16 to the financial statements.

Informationotherthanthefinancialstatementsandauditors’reportthereon

The directors of the Company are responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon. We have obtained the Directors’ Report prior to the date of this auditors’ report. The remaining other information expected to be included in the annual report are expected to be made available to us after the date of this auditors’ report.

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

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

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

When we read the remaining other information expected to be included in the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors of the Company and take appropriate action.

independent auditOrS’ rePOrt (COnt’d)


p. 82


Responsibilitiesofthedirectorsforthefinancialstatements

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

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

Auditors’responsibilitiesfortheauditofthefinancialstatements

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

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing,weexerciseprofessionaljudgementandmaintainprofessionalscepticismthroughouttheaudit.Wealso:

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

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

• Evaluatetheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesand related disclosures made by the directors.

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

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

ANNUAL REPORT 2018

p. 83

Auditors’responsibilitiesfortheauditofthefinancialstatements(cont’d)

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

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

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

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

Reportonotherlegalandregulatoryrequirements

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

Othermatters

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

Ernst&Young LeeAiChungAF: 0039 No. 03265/04/2019 J Chartered Accountants Chartered Accountant

Penang, Malaysia17 May 2018



p. 84

inCome StatementSfOr the year ended 28 february 2018

Group Company Note 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 Revenue 4 826,335 809,435 53,663 72,760Other income 5 39,977 29,270 277 242Raw materials and consumablesused (498,575) (432,844) – –Changesinfinishedgoods (65,236) (95,898) – –Employee benefits expense 6 (70,817) (77,383) (263) (266)Depreciationandamortisation (16,336) (16,957) – –Other operating expenses 8 (120,061) (113,707) (3,371) (4,656)

Operating profit 95,287 101,916 50,306 68,080Share of results of an associate 158 19 – –Finance costs 9 (4,159) (5,382) (3,423) (3,748)

Profit before tax 91,286 96,553 46,883 64,332Income tax expense 10 (24,961) (20,954) (632) (480)

Profit net of tax 66,325 75,599 46,251 63,852

Profitattributableto:Owners of the parent 49,033 54,536 46,251 63,852Non-controllinginterests 17,292 21,063 – –

66,325 75,599 46,251 63,852

Earningspershare attributabletoownersof theparent(senpershare) Basic 11 19.33 21.50

Diluted 11 19.33 21.50

The accompanying accounting policies and explanatory information form an integral part of the financial statements.

ANNUAL REPORT 2018

p. 85

StatementS of COmPrehenSive inCOmefOr the year ended 28 february 2018

Group Company Note 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 Profit for the year 66,325 75,599 46,251 63,852

Othercomprehensiveincome:

Items that not to be reclassified to profit or loss in subsequent period - Remeasurement gain on definedbenefitplans 30 – 1,626 – – -Incometaxeffect 21 – (390) – –

Total comprehensive income for the year 66,325 76,835 46,251 63,852

Totalcomprehensiveincome attributableto:Owners of the parent 49,033 55,664 46,251 63,852Non-controllinginterests 17,292 21,171 – –

66,325 76,835 46,251 63,852



p. 86

StatementS of finanCial POSitiOnaS at 28 february 2018

Group Note 2018 2017 RM’000 RM’000

Assets

Non-currentassetsProperty, plant and equipment 13 141,679 145,817Investment properties 14 36,494 38,739Land use rights 15 21,871 22,321Goodwill 16 27,408 27,408Investment in associate 18 721 563Other investments 19 129 130Prepayments 20 39,489 49,270Deferred tax assets 21 2,267 1,734

270,058 285,982

CurrentassetsInventories 22 172,539 243,703Biological assets 23 152 187Trade and other receivables 24 92,944 92,850Prepayments 20 12,956 12,329Tax recoverable 7,663 7,830Marketable securities 25 5 11Derivative assets 26 8 3Cash and bank balances 27 410,231 303,151

696,498 660,064

Total assets 966,556 946,046

ANNUAL REPORT 2018

p. 87

Group Note 2018 2017 RM’000 RM’000

Equityandliabilities Currentliabilities Trade and other payables 28 135,682 143,209Derivative liabilities 26 1,043 9,006Provisions 29 – 14,557Employee benefits 30 594 22Dividends payable 34,731 40,485Tax payable 2,744 4,351Borrowings 31 27,881 19,557

202,675 231,187

Netcurrentassets 493,823 428,877

Non-currentliabilities Employee benefits 30 2,930 6,225Deferred tax liabilities 21 7,121 7,223Borrowings 31 41,803 52,631

51,854 66,079

Totalliabilities 254,529 297,266

Netassets 712,027 648,780

Equityattributabletoownersoftheparent Share capital 33 356,528 356,528Sharepremium 33 – –Currency translation reserve (214) (214)Other reserve 34 (39,455) (32,059)Retained earnings 216,236 156,061

533,095 480,316Non-controlling interests 178,932 168,464

Totalequity 712,027 648,780

Totalequityandliabilities 966,556 946,046

StatementS of finanCial POSitiOn (COnt’d)


p. 88

StatementS of finanCial POSitiOn (COnt’d)

Company Note 2018 2017 RM’000 RM’000

Assets Non-currentassets Property, plant and equipment 13 1 1Investment in subsidiaries 17 1,020,732 1,020,732Investment in associate 18 437 437

1,021,170 1,021,170

Currentassets Other receivables 24 46,909 42,247Prepayments 20 9 10Tax recoverable 2,413 2,538Dividend receivable 26,852 35,862Marketable securities 25 5 11Cash and bank balances 27 3,238 11,448

79,426 92,116

Totalassets 1,100,596 1,113,286

Equityandliabilities Currentliabilities Other payables 28 175,466 176,140Borrowing 31 10,000 5,000Dividend payable 25,365 25,365

210,831 206,505

Netcurrentliabilities (131,405) (114,389)

Non-currentliability Borrowing 31 40,000 50,000

Totalliabilities 250,831 256,505

Netassets 849,765 856,781

Equityattributabletoownersoftheparent Share capital 33 356,528 356,528Sharepremium 33 – –Retained earnings 35 493,237 500,253

Totalequity 849,765 856,781

Totalequityandliabilities 1,100,596 1,113,286


ANNUAL REPORT 2018

p. 89

StatementS of ChangeS in equityfOr the year ended 28 february 2018

Attrib

utab

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paren

t

Non

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To

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re

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earning

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RM’000

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M’000

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M’000

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RM’000

RM’000

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At1

March

201

7

648,78

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0,31

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6,52

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(214

)(32,05

9)

156,06

116

8,46

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inco

me

66

,325

49

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–

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–

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3,09

535

6,52

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216,23

617

8,93

2


p. 90

StatementS of ChangeS in equity (COnt’d)

Attrib

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RM’000

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––

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At1

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201

6,re

stated

485,

689

394,

884

253,

650

102,

878

(214

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2,56

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71,1

30

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Profit,n

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75,599

54

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–

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76

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55

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–

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6

33

––

102,87

8(102

,878

)–

––

–

ANNUAL REPORT 2018

p. 91


Attrib

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Non

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Total

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Retaine

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Note

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RM’000

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92

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86

,256

29

,768

–

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56

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6,52

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156,06

116

8,46

4


p. 92


Non-distributable Distributable Total Share Share Retained Note equity capital premium earnings RM’000 RM’000 RM’000 RM’000

Company At1March2017 856,781 356,528 – 500,253Totalcomprehensiveincome 46,251 – – 46,251Transactionswithowners Dividendsonordinaryshares 12 (53,267) – – (53,267)

At28February2018 849,765 356,528 – 493,237

At1March2016 850,000 253,650 102,878 493,472Totalcomprehensiveincome 63,852 – – 63,852Adjustmentforeffectsof CompaniesAct2016 33 – 102,878 (102,878) –Transactionswithowners Dividendsonordinaryshares 12 (57,071) – – (57,071)

At28February2017 856,781 356,528 – 500,253


ANNUAL REPORT 2018

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StatementS of CaSh flOwSfOr the year ended 28 february 2018

Group Company Note 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000

Operatingactivities Profit before tax 91,286 96,553 46,883 64,332

Adjustmentsfor:Amortisationoflanduserights 450 449 – –Amortisation of other investments 1 – – –Changes in fair value of marketable securities (229) 191 (229) 191Depreciation 15,886 16,508 – –Dividendincome – – (50,910) (70,049)Employeebenefits (2,089) 695 – –Changes in fair value of biologicalassets 35 (5) – –Gain arising from changes in fairvalueofoptions (7,976) (4,044) – –Gain on disposal of property, plantandequipment (1,032) (3,037) – –Impairment loss on:-subsidiaries – – 1,849 2,425-receivables 22 24 – -Interest expense 4,159 5,382 3,423 3,748Interest income (8,456) (6,506) (2,753) (2,711)Inventorieswrittenback (668) (578) – –Inventorieswrittendown 1,134 2,223 – –Inventorieswrittenoff 157 88 – –Loss/(gain) on forward foreign exchangecontracts 8 (1,622) – –Property, plant and equipment writtenoff 31 40 – –Reversal of impairment loss onreceivables (235) – – –Reversal of provision for guarantees (14,875) – – –Shareofresultsofanassociate (158) (19) – –Unrealised loss/(gain) on foreignexchange–net 19,977 (7,198) 235 (193)

Operating cash flows before changes in working capital 97,428 99,144 (1,502) (2,257)


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StatementS of CaSh flOwS (COnt’d)


Operatingactivities(cont’d.) Balance brought forward 97,428 99,144 (1,502) (2,257)Changes in working capital: Decreaseininventories 70,541 86,472 – – (Increase)/decrease in receivables (10,151) 8,458 1 1 (Decrease)/increase in payables (7,491) (29,335) (662) 182

Cash generated from/(used in) operations 150,327 164,739 (2,163) (2,074)Tax paid (27,036) (28,277) (507) (498)Employeebenefitspaid (634) (106) – –

Net cash flows generated from/(used in) operating activities 122,657 136,356 (2,670) (2,572)

Investingactivities Acquisition of: -investmentproperties (27) (93) – – - property, plant and equipment (10,588) (16,156) – –Dividendreceived – – 59,920 34,187Interest received 8,456 6,506 2,753 2,711Proceeds from disposal of property,plantandequipment 3,241 3,995 – –Repurchase of shares by a subsidiary (9,985) – – –Proceeds from placements of treasurysharesofsubsidiary – 4,967 – –Proceeds from issuance of new ordinary shares by subsidiary 39,811 87,824 – –

Net cash flows generated from investing activities 30,908 87,043 62,673 36,898

ANNUAL REPORT 2018

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Financingactivities

Decrease/(increase) in pledged fixeddeposits 1,777 (217) – –Dividends paid to: - non-controlling interests of subsidiaries (31,763) (9,039) – – - ordinary shareholders of the Company (53,267) (31,706) (53,267) (31,706)Interest paid (4,159) (5,382) (3,423) (3,748)Proceedsfromborrowings – 1,500 – –Proceeds from non-controlling interestspartialdivestment 46,336 87,712 – –(Advances to)/repayment from subsidiaries – – (6,523) 5,479Repayment of borrowings (1,680) (46,890) (5,000) (5,000)Repayment of obligations underfinanceleases (1,952) (628) – –

Net cash flows used in financing activities (44,708) (4,650) (68,213) (34,975)

Netincrease/(decrease)in cashandcashequivalents 108,857 218,749 (8,210) (649)Cashandcashequivalentsat beginningoffinancialyear 289,473 70,724 11,448 12,097

Cashandcashequivalentsat endoffinancialyear 27 398,330 289,473 3,238 11,448



p. 96

Reconciliation of liabilities arising from financing activities:

Carrying Carrying amountas Non-cash amountasat at1March Cash changes 28February 2017 flows Others 2018 RM'000 RM'000 RM'000 RM'000

Group Termloans 56,500 (5,248) – 51,252Bankers’acceptances 13,489 3,568 – 17,057Obligations under finance leases 2,199 (1,952) 1,128 1,375Dividend payable 40,485 (85,030) 79,276 34,731

Total liabilities from financing activities 112,673 (88,662) 80,404 104,415

CompanyTermloans 55,000 (5,000) – 50,000Dividend payable 25,365 (53,267) 53,267 25,365Amounts due from related companies (42,244) (6,511) 1,849 (46,906)Amounts due to related companies 174,874 (12) – 174,862

Total liabilities from financing activities 297,483 (64,790) 64,440 297,133



ANNUAL REPORT 2018

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noteS to the finanCial StatementS– 28 february 2018

1. Corporateinformation

The Company is a public limited liability company incorporated and domiciled in Malaysia, and is listed on the Bursa Malaysia Securities Berhad (“Bursa Securities”). The registered office of the Company is located at 17th Floor, Menara Atlan, 161B, Jalan Ampang, 50450 Kuala Lumpur.

The holding company is Distinct Continent Sdn. Bhd., a private limited liability company incorporated in Malaysia.

The principal activities of the Company are investment holding and the provision of management, financial, technical and other ancillary services.

The principal activities of the subsidiaries are set out in Note 17.

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

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 17 May 2018.

2. Summaryofsignificantaccountingpolicies

2.1 Basisofpreparation

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

The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below.

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

2.2 Changesinaccountingpolicies

The accounting policies adopted are consistent with those of the previous financial year except as follows:

On 1 March 2017, the Group and the Company adopted the following mandatory new and amended MFRSs.


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noteS to the finanCial StatementS (COnt’d)

2. Summaryofsignificantaccountingpolicies(cont’d)

2.2 Changesinaccountingpolicies(cont’d)

Effectivefor annualperiods beginningonDescription orafter Amendments to MFRS 12: Annual Improvements to MFRS Standards2014–2016Cycle 1January2017Amendments to MFRS 107: Disclosure Initiatives 1 January 2017Amendments to MFRS 112: Recognition of Deferred Tax Assets for Unrealised Losses 1 January 2017

The adoption of the above standards and interpretations did not have any effect on the financial performance or position of the Group and the Company except as discussed below:

AmendmentstoMFRS107:DisclosureInitiatives

The amendments to MFRS 107 Statement of Cash Flows require an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. On initial application of these amendments, entities are not required to provide comparative information for preceding periods. Apart from the additional disclosures in statement of cash flows, the application of these amendments has had no impact on the Group and on the Company.

AmendmentstoMFRS112:RecognitionofDeferredTaxAssetsforUnrealisedLosses

The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount.

The application of these amendments has had no impact on the Group and on the Company as the Group and the Company already assess the sufficiency of future taxable profits in a way that is consistent with these amendments.

ANNUAL REPORT 2018

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2.3 Standardsissuedbutnotyeteffective

The standards and interpretations that are issued but not yet effective up to the date of issuance of the Company’s financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective.

Effectivefor annualperiods beginningonDescription orafter

MFRS 2 Classification and Measurement of Share-based Payment Transactions (Amendments to MFRS 2) 1 January 2018MFRS 9 Financial Instruments 1 January 2018MFRS 15 Revenue from Contracts with Customers 1 January 2018MFRS 140 Transfers of Investment Property (Amendments to MFRS 140) 1 January 2018AnnualImprovementstoMFRSStandards2014–2016Cycle 1January2018IC Interpretation 22 Foreign Currency Transactions and Advance Consideration 1 January 2018Amendments to MFRS 4: Applying MFRS 9 Financial Instruments with MFRS 4 Insurance Contracts 1 January 2018MFRS 9 Prepayment Features with Negative Compensation (Amendments to MFRS 9) 1 January 2019MFRS 16 Leases 1 January 2019MFRS128Long-termInterestsinAssociatesandJointVentures (Amendments to MFRS 128) 1 January 2019AnnualImprovementstoMFRSStandards2015–2017Cycle 1January2019MFRS 119 Plan Amendment, Curtailment or Settlement (Amendments to MFRS 119) 1 January 2019IC Interpretation 23 Uncertainty over Income Tax Treatments 1 January 2019Amendments to MFRS 2: Share-based payment 1 January 2020Amendments to MFRS 3: Business combinations 1 January 2020Amendments to MFRS 6: Exploration for and evaluation of mineral resources 1 January 2020Amendments to MFRS 14: Regulatory Deferral Accounts 1 January 2020Amendments to MFRS 101: Presentation of financial statements 1 January 2020Amendments to MFRS 108: Accounting policies, changes in accounting estimates and errors 1 January 2020Amendments to MFRS 134: Interim Financial Reporting 1 January 2020Amendments to MFRS 137: Provisions, contingent liabilities and contingent assets 1 January 2020Amendments to MFRS 138: Intangible assets 1 January 2020MFRS 17 Insurance Contracts 1 January 2021Amendments to MFRS 10 and MFRS 128: Sale or Contribution of AssetsbetweenanInvestoranditsAssociateorJointVenture Deferred


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2.3 Standardsissuedbutnotyeteffective(cont’d)

The Directors expect that the adoption of the standards and interpretations above will have no material impact on the financial statements in the period of initial application, except as disclosed below:

MFRS15RevenuefromContractswithCustomers MFRS 15 establishes a new five-step model that will apply to revenue arising from contracts with

customers. MFRS 15 will supersede the current revenue recognition guidance including MFRS 118 Revenue, MFRS 111 Construction Contracts and the related interpretations when it becomes effective.

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

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

The Group and the Company plan to adopt the new standard on the required effective date using the modified retrospective method and apply all the practical expedients available for modified retrospective approach. The directors have assessed the effects of applying the new standard on the Group’s financial statements and have identified the following areas that will be affected.

Presentation and disclosure requirements

The presentation and disclosure requirements in MFRS 15 are more detailed than the current standard. Many of the disclosure requirements in MFRS 15 are new and the Group has assessed that the impact of some of these disclosures will be significant. In particular, the Group expects that the notes to the financialstatementswillbeexpandedbecauseofthedisclosureofsignificantjudgmentsmade:whendetermining the transaction price of those contracts that include variable consideration, how the transaction price has been allocated to each performance obligation, and the assumptions made to estimate the stand-alone selling prices of each performance obligation.

The Group continued testing the appropriate systems, internal controls, policies and procedures necessary to collect and disclose the required information.

ANNUAL REPORT 2018

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MFRS9FinancialInstruments

MFRS 9 introduces new requirements for classification and measurement, impairment and hedge accounting. MFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory. During 2018, the Group has performed a detailed impact assessment of all three aspects ofMFRS9.Theassessmentisbasedoncurrentlyavailableinformationandmaybesubjecttochangesarising from further reasonable and supportable information being made available to the Group in 2019 when the Group adopt MFRS 9.

Based on the analysis of the Group’s financial assets and liabilities as at 28 February 2018 on the basis of facts and circumstances that exist at that date, the directors of the Company have assessed the impact of MFRS 9 to the Group’s financial statements as follows:

(i) Classificationandmeasurement

The Group does not expect a significant impact on its statements of financial position or equiry on applying the classification and measurement requirements of MFRS 9.

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

(ii) Impairment

The Group will apply the simplified approach and record lifetime expected losses on all trade receivables. The directors of the Company have assessed the impact of MFRS 9 in accordance with the simplified approach and determined that there is no significant impact to the Group’s and the Company’s financial statements.

MFRS16Leases

MFRS 16 will replace MFRS 117 Leases, IC Interpretation 4 Determining whether an Arrangement contains a Lease, IC Interpretation 115 Operating Lease-Incentives and IC Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. MFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under MFRS 117.


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MFRS16Leases(cont’d)

At the commencement date of a lease, a lessee will recognise a liability to make lease payments and an asset representing the right to use the underlying asset during the lease term. The right-of-use asset isinitiallymeasuredatcostandsubsequentlymeasuredatcost(subjecttocertainexceptions),lessaccumulateddepreciationandimpairmentlosses,adjustedforanyremeasurementoftheleaseliability.The lease liability is initially measured at present value of the lease payments that are not paid at that date.Subsequently,theleaseliabilityisadjustedforinterestandleasepayments,aswellastheimpactof lease modifications.

Classification of cash flows will also be affected as operating lease payments under MFRS 117 are presented as operating cash flows, whereas under MFRS 16, the lease payments will be split into a principal (which will be presented as financing cash flows) and an interest portion (which will be presented as operating cash flows).

Lessor accounting under MFRS 16 is substantially the same as the accounting under MFRS 117. Lessors will continue to classify all leases using the same classification principle as in MFRS 117 and distinguish between two types of leases: operating and finance leases. MFRS 16 also requires lessees and lessors to make more extensive disclosures than under MFRS 117.

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

The Group and the Company are currently assessing the impact of MFRS 16 and plan to adopt the new standard on the required effective date.

MFRS140TransfersofInvestmentProperty(AmendmentstoMFRS140)

The amendments clarify that when an entity should transfer property, including property under construction or development into, or out of investment property. The amendments state that a change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. A mere change in management’s intentions for the use of a property does not provide evidence of change in use.

Entities can apply these amendments either retrospectively (if this is possible without the use of hindsight) or prospectively. Earlier application of the amendments is permitted and must be disclosed. The Group will apply these amendments when they become effective. However, since the Group’s current practice is in line with the clarifications issued, the Group does not expect any effect on its consolidated financial statements.

ANNUAL REPORT 2018

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AnnualImprovementstoMFRSStandards2014–2016Cycle

The Annual Improvements to MFRS Standards 2014-2016 Cycle include a number of amendments to various MFRSs, which are summarised below. These amendments do not have a significant impact on the Group’s and the Company’s financial statements.

Standards Descriptions

MFRS1First-timeAdoptionofMalaysianFinancialReportingStandards–Deletionofshort-termexemptions forfirst-timeadopters

This amendment is not applicable to the Group as the Group is not a first-time adopter of MFRS.

MFRS 128 Investments inAssociatesandJointVentures–Clarification thatmeasuringinvesteesatfairvaluethroughprofitorlossisaninvestment-by-investmentchoice

The amendments clarify that:- an entity that is a venture capital organisation, or other

qualifying entity, may elect, at initial recognition, on an investment-by-investment basis, to measure its investments inassociatesandjointventuresatfairvaluethroughprofitor loss.

- if an entity, that is not itself an investment entity, has an interestinassociateorjointventurethatisaninvestmententity, the entity may, when applying the equity method, elect to retain the fair value measurement applied by that investmententityassociateorjointventuretotheinvestmententityassociate’sorjointventure’sinterestsinsubsidiaries.This election is made separately for each investment entity associateorjointventure,atalaterdateonwhich:

(a) the investment entity associate or joint venture isinitially recognised;

(b) theassociateorjointventurebecomesaninvestmententity; and

(c) theinvestmententityassociateorjointventurefirstbecomes a parent.

Earlier application of these amendments are permitted and must be disclosed. These amendments are not applicable to the Group as the Group is not a venture capital organisation and the Group doesnothaveanyassociateorjointventurethatisaninvestmententity.


p. 104




ICInterpretation22ForeignCurrencyTransactionsandAdvanceConsideration

The interpretation clarifies that, in determining the exchange rate to use on initial recognition of an asset, expense or income, when consideration for that item has been paid or received in advance in a foreign currency which resulted in the recognition of a non-monetary asset or non-monetary liability, the date of transaction is the date on which an entity initially recognises the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, then the entity must determine the transaction date for each payment or receipt of advance consideration.

Entities may apply the amendments either retrospectively or prospectively. Specific transition provisions apply to prospective application. Early application is permitted and must be disclosed. The application of these amendments will not have an impact on the Group and on the Company as the Group and the Company are already accounting for transactions involving the payment or receipt of advance consideration in foreign currency in a way that is consistent with the amendments.

MFRS9PrepaymentFeatureswithNegativeCompensation(AmendmentstoMFRS9)

Under MFRS 9, a debt instrument can be measured at amortised cost or at fair value through other comprehensive income, provided that the contractual cash flows are solely payments of principal and interest on the principal amount outstanding (the SPPI criterion) and the instrument is held within the appropriate business model for that classification. The amendments to MFRS 9 clarify that a financial asset passes the SPPI criterion regardless of the event or circumstance that causes the early termination of the contract and irrespective of which party pays or receives reasonable compensation for the early termination of the contract.

The amendments must be applied retrospectively. Earlier application is permitted. These amendments are not expected to have a significant impact on the Group’s and the Company’s financial statements.

MFRS128Long-termInterestsinAssociatesandJointVentures(AmendmentstoMFRS128)

The amendments clarify that an entity applies MFRS 9 Financial Instruments to long-term interests in anassociateorjointventuretowhichtheequitymethodisnotappliedbutthat,insubstance,formpartofthenetinvestmentintheassociateorjointventure(long-terminterests).InapplyingMFRS9,anentitydoesnotaccountforanylossesoftheassociate,orjointventure,oranyimpairmentlossesonthenetinvestment,recognisedasadjustmentstothenetinvestmentintheassociateorjointventurethatarisefromapplyingMFRS128InvestmentsinAssociatesandJointVentures.

Entities must apply the amendments retrospectively, with certain exceptions. Early application of the amendments is permitted and must be disclosed. As the amendments eliminate ambiguity in the wording of the standard, the directors of the Company do not expect the amendments to have any impact on the Group’s and the Company’s financial statements.

ANNUAL REPORT 2018

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AnnualImprovementstoMFRSStandards2015–2017Cycle

The Annual Improvements to MFRS Standards 2015-2017 Cycle include a number of amendments to various MFRSs, which are summarised below. These amendments do not have a significant impact on the Group’s and the Company’s financial statements.

Standards Descriptions

MFRS112IncomeTaxes–Incometaxconsequencesofpaymentsonfinancial instrumentsclassifiedasequity

The amendments clarify that the income tax consequences of dividends are linked more directly to past transactions or events that generated distributable profits than to distributions to owners. Therefore, an entity recognises the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognised those past transactions or events.

An entity applies these amendments for annual reporting periods beginning on or after 1 January 2019. Earlier application is permitted. When an entity first applies these amendments, it applies them to the income tax consequences of dividends recognised on or after the beginning of the earliest comparative period.

MFRS 123 Borrowing Costs–Borrowingcosts eligible forcapitalisation

The amendments clarify that an entity treats as part of general borrowings any borrowing originally made to develop a qualifying asset when substantially all of the activities necessary to prepare that asset for its intended use or sale are complete.

An entity applies these amendments to borrowing costs incurred on or after the beginning of the annual reporting periods beginning on or after 1 January 2019. Earlier application is permitted.

MFRS119PlanAmendment,CurtailmentorSettlement(AmendmentstoMFRS119)

The amendments require entities to use the updated actuarial assumptions to determine current service cost and net interest for the remainder of the annual reporting period after a plan amendment, curtailment or settlement, which occurs during the reporting period. The amendments also clarify how the requirements for accounting for a plan amendment, curtailment or settlement affect the asset ceiling requirements.

The amendments should be applied prospectively to plan amendments, curtailments or settlements that occur on or after 1 January 2019, with earlier application permitted. These amendments will not have a significant impact on the Group’s and the Company’s financial statements.


p. 106




ICInterpretation23UncertaintyoverIncomeTaxTreatments

The interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of MFRS 112 and does not apply to taxes or levies outside the scope of MFRS 112, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments.

The interpretation specifically addresses the following:- whether an entity considers uncertain tax treatments separately;- the assumptions an entity makes about the estimation of tax treatments by taxation authorities; - how an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits

and tax rates; and - how an entity considers changes in facts and circumstances.

An entity must determine whether to consider each uncertain tax treatment separately or together with one or more uncertain tax treatments. The approach that better predicts the resolution of the uncertainty should be followed. The Group and the Company will apply the interpretation from its effective date.

MFRS17InsuranceContracts

MFRS 17 will replace MFRS 4 Insurance Contracts. MFRS 17 applies to all types of insurance contracts (i.e life, non-life, direct insurance and re-insurance), regardless of the type of entities that issue them, as well as to certain guarantees and financial instruments with discretionary participation features. The overallobjectiveofMFRS17istoprovideanaccountingmodelforinsurancecontractsthatismoreuseful and consistent for insurers. In contrast to the requirements in MFRS 4, which are largely based on grandfathering previous local accounting policies, MFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects. The core of MFRS 17 is the general model, supplemented by:

- A specific adaptation for contracts with direct participation features (the variable fee approach); and

- A simplified approach (the premium allocation approach) mainly for short-duration contracts.

MFRS 17 is effective for reporting periods beginning on or after 1 January 2021, with comparative figures required. Early application is permitted, provided the entity also applies MFRS 9 and MFRS 15 on or before the date it first applies MFRS 17. This standard is not applicable to the Group.

ANNUAL REPORT 2018

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2.4 Basisofconsolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied for like transactions and events in similar circumstances.

The Company controls an investee, if and only if, the Company has all the following:

(i) Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);

(ii) Exposure, or rights, to variable returns from its investment with the investee; and

(iii) The ability to use its power over the investee to affect its returns.

Generally, there is apresumption that amajority of voting rights result in control. To support thispresumptionandwhentheGrouphaslessthanamajorityofthevotingorsimilarrightsofaninvestee,the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

(i) The contractual arrangement with the other vote holders of the investee;

(ii) Rights arising from other contractual arrangements; and

(iii) The Group’s voting rights and potential voting rights.

Subsidiaries are consolidated when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full except for unrealised losses, which are not eliminated when there are indications of impairment.

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

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interestsandthenon-controllinginterestsareadjustedtoreflectthechangesintheirrelativeinterestsin the subsidiaries. The resulting difference is recognised directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, a gain or loss calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets and liabilities of the subsidiary and any non-controlling interest, is recognised in profit or loss. The subsidiary’s cumulative gain or loss which has been recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss or where applicable, transferred directly to retained earnings. The fair value of any investment retained in the former subsidiary at the date control is lost is regarded as the cost on initial recognition of the investment.


p. 108



2.4 Basisofconsolidation(cont’d)

Businesscombinations

Acquisitions of subsidiaries 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 interests in the acquiree. The Group elects on a transaction-by-transaction basis whether to measure the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Transaction costs incurred are expensed and included in 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.

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, any previously held equity interest is re-measured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss. It is then considered in the determination of goodwill.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss. The accounting policy for goodwill is set out in Note 2.9.

2.5 Transactionswithnon-controllinginterests

Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and is presented separately in the consolidated statements of comprehensive income and within equity in the consolidated statements of financial position, separately from equity attributable to owners of the Company.

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 controllingandnon-controllinginterestsareadjustedtoreflectthechangesintheirrelativeinterestsinthesubsidiary.Anydifferencebetweentheamountbywhichthenon-controllinginterestisadjustedand the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the parent.

Total comprehensive income within a subsidiary is attributed to the non-controlling interest even if it results in a deficit balance.

ANNUAL REPORT 2018

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2.5 Transactionswithnon-controllinginterests(cont’d)

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

- derecognises the assets (including goodwill) and liabilities of the subsidiary; - derecognises the carrying amount of any non-controlling interest; - derecognises the cumulative translation differences recorded in equity; - recognises the fair value of the consideration received; - recognises the fair value of any investment retained; - recognises any surplus or deficit in profit or loss; and- reclassifies the parent’s share of components previously recognised in other comprehensive

income to profit or loss or retained earnings, as appropriate.

2.6 Foreigncurrency

The Group’s consolidated financial statements are presented in Ringgit Malaysia, which is also the Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

(a) Transactionsandbalances Transactions in foreign currencies are measured in the respective functional currencies of the

Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the end of the reporting period. 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 was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the end of the reporting period are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation.

(b) Consolidatedfinancialstatements

For consolidation purpose, the assets and liabilities of foreign operations are translated into RM at the rate of exchange ruling at the end of the reporting period and their profit or loss are translated at the exchange rates prevailing at the date of the transactions. The exchange differences arising on the translation are recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profit or loss.

In the case of a partial disposal without loss of control of a subsidiary that includes a foreign operation, the proportionate share of the cumulative amount of the exchange differences are re-attributed to non-controlling interests and are not recognised in profit or loss. For partial disposals of associates that are foreign operations, the proportionate share of the accumulated exchange differences is reclassified to profit or loss.


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2.7 Property,plantandequipment

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

Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses, if any. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assetswithspecificusefullivesanddepreciation,respectively.Likewise,whenamajorinspectionisperformed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.

Freehold land is stated at cost less accumulated impairment losses, if any. Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:

Buildings over 26 to 50 yearsLeasehold land over 99 yearsGolf course over 60 yearsMotor vehicles 14.3% - 20%Office equipment, furniture and fittings 5% - 33.3%Plant and machinery 10% - 33.3%Other assets 5% - 20%

Buildings situated on leased land are amortised over the unexpired term of leases.

Capital work-in-progress is not depreciated as these assets are not yet available for use.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjustedprospectively,ifappropriate.

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

2.8 Investmentproperties

Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are carried at cost less accumulated depreciation and impairment losses, if any.

Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:

Buildings over 36.5 to 50 yearsLeasehold land over 99 years

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

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2.9 Goodwill

Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less 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 synergies of the combination.

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

Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating

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

2.10 Landuserights

Land use rights are initially measured at cost. Following initial recognition, land use rights are measured at cost less accumulated amortisation and accumulated impairment losses, if any. The land use rights are amortised on a straight-line basis over the respective lease terms of 37 to 99 years.

2.11 Impairmentofnon-financialassets

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

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

In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.

Impairment losses are recognised in profit or loss.

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


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2.12 Subsidiaries

A subsidiary is an entity over which the Group has all the following:

(i) Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);

(ii) Exposure, or rights, to variable returns from its investment with the investee; and

(iii) The ability to use its power over the investee to affect its returns.

In the Company’s separate financial statements, investments in subsidiaries are accounted for 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.

2.13 Investmentsinassociates

An associate is an entity in which the Group has significant influence. Significant influence is the power toparticipateinthefinancialandoperatingpolicydecisionsoftheinvesteebutisnotcontrolorjointcontrol over those policies.

On acquisition of an investment in associate, any excess of the cost of investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill and included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities of the investee over the cost of investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associate’s profit or loss for the period in which the investment is acquired.

An associate is equity accounted for from the date on which the investee becomes an associate.

Under the equity method, on initial recognition the investment in an associate is recognised at cost, and the carrying amount is increased or decreased to recognise the Group's share of the profit or loss and other comprehensive income of the associate after the date of acquisition. When the Group’s share of losses in an associate equal or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

Profits and losses resulting from upstream and downstream transactions between the Group and its associate are recognised in the Group’s financial statements only to the extent of unrelated investors’ interests in the associate. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.

The most recent available audited financial statements of the associate is used by the Group in applying the equity method. Where the dates of the audited financial statements used are not coterminous with those of the Group, the share of results is arrived at from the last audited financial statements available and management financial statements to the end of the accounting period. Where necessary, adjustmentsaremadetobringtheaccountingpoliciesinlinewiththoseoftheGroup.

After application of the equity method, the Group applies MFRS 139 Financial Instruments: Recognition and Measurement to determine whether it is necessary to recognise any additional impairment loss with respect to its net investment in the associate. When necessary, the entire carrying amount of the investment is tested for impairment in accordance with MFRS 136 Impairment of Assets as a single asset, by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss is recognised in profit or loss. Reversal of an impairment loss is recognised to the extent that the recoverable amount of the investment subsequently increases.

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2.13 Investmentsinassociates(cont’d)

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

2.14 Financialassets

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

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

The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets.

(a) Financialassetsatfairvaluethroughprofitorloss

Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other losses or other income.

Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that are held primarily for trading purposes are presented as current whereas financial assets that are not held primarily for trading purposes are presented as current or non-current based on the settlement date.

(b) Loansandreceivables

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

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

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


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2.14 Financialassets(cont’d)

(c) Held-to-maturityinvestments

Financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold the investment to maturity.

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

Held-to-maturity investments are classified as non-current assets, except for those having maturity

within 12 months after the reporting date which are classified as current.

(d) Available-for-salefinancialassets

Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories.

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

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss, if any.

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

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

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

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2.15 Impairmentoffinancialassets

TheGroupandtheCompanyassessateachreportingdatewhetherthereisanyobjectiveevidencethat a financial asset is impaired.

(a) Tradeandotherreceivablesandotherfinancialassetscarriedatamortisedcost

Todeterminewhetherthereisobjectiveevidencethatanimpairmentlossonfinancialassetshasbeen incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. 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 similarriskcharacteristics.Objectiveevidenceofimpairmentforaportfolioofreceivablescouldinclude the Group’s and the Company's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.

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

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade and other receivables, where the carrying amount is reduced through the use of an allowance account. When a trade or 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 can berelatedobjectivelytoaneventoccurringaftertheimpairmentwasrecognised,thepreviouslyrecognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

(b) Available-for-salefinancialassets

Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there isobjectiveevidence that investmentsecuritiesclassifiedasavailable-for-salefinancial assets are impaired.

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

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


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2.16 Cashandcashequivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term, highlyliquidinvestmentsthatarereadilyconvertibletoknownamountsofcashandwhicharesubjectto an insignificant risk of changes in value. These also include bank overdrafts that form an integral part of the Group’s cash management.

For the purpose of the statements of cash flows, cash and cash equivalents consist of cash and bank balances as defined above, net of outstanding bank overdrafts and deposits pledged with licensed banks.

2.17 Inventories

(a) Tradinginventories

Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the inventories to their present location and condition are accounted for on a weighted average basis.

(b) Manufacturinginventories

Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the inventories to their present location and condition are accounted for as follows:

(i) Raw materials: purchase costs on a first-in first-out basis.(ii) Finished goods and work-in-progress: costs of direct materials and labour and a proportion

of manufacturing overheads based on normal operating capacity.

(c) Inventoryproperty

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

Wherenecessary,allowanceisprovidedfordamaged,obsoleteandslowmovingitemstoadjustthecarrying value of inventories to the lower of cost and net realisable value.

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

2.18 Provisions

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

Provisionsarereviewedateachreportingdateandadjustedtoreflectthecurrentbestestimate.Ifitis no longer probable that an outflow of economic resources be required to settle the obligation, the provision is reversed. If 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 provision due to the passage of time is recognised as a finance cost.

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2.19 Financialliabilities

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

Financial liabilities, within the scope of MFRS 139, are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.

(a) Financialliabilitiesatfairvaluethroughprofitorloss

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

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

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

(b) Otherfinancialliabilities

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

Trade and other payables are recognised initially at fair value plus directly attributable transaction

costs and subsequently measured at amortised cost using the effective interest method.

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

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

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


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2.20 Financialguaranteecontracts

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 debtors 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.

2.21 Borrowingcosts

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing

costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.

2.22 Employeebenefits

(a) Shorttermbenefits

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

(b) Definedcontributionplans

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 obligations to pay further contributions 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 expense in the period in which the related services is performed. 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.

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2.22 Employeebenefits(cont’d)

(c) Terminationbenefits

Termination benefits are payable when employment is terminated before the normal retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group and the Company recognise termination benefits when they are demonstrably committed to either terminate the employment of current employees according to a detailed plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. In the case of an offer made to encourage voluntary redundancy, the measurement of termination benefits is based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after reporting date are discounted to present value.

(d) Definedbenefitplans

The Group operates an unfunded, defined benefit plan for its eligible employees. The Group’s net obligation in respect of defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return for their services in the current and prior periods and that benefit is discounted to determine the present value. The discount rate is the market yield at the reporting date on high quality corporate bonds or government bonds. The defined benefitobligationiscalculatedusingtheprojectedunitcreditmethod.

Re-measurements, comprising actuarial gains and losses, are recognised immediately in the statements of financial position with a corresponding debit or credit to retained earnings through other comprehensive income in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.

Past service costs are recognised in profit or loss on the earlier of:

- the date of the plan amendment or curtailment; and

- the date that the Group recognises restructuring-related costs.

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset.

The Group recognises the following changes in the net defined benefit obligation under ‘employee benefits expense’ in the income statements:

- service costs comprising current service costs, past-service costs, gains and losses on curtailments, and non-routine settlements; and

- net interest expense or income.


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2.23 Leases

(a) Aslessee

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.

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

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

(b) Aslessor

Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. The accounting policy for rental income is set out in Note 2.24(f).

2.24 Revenue

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

(a) Saleofgoods

Revenue from sale of goods is recognised upon the transfer of significant risks and rewards of ownership of the goods to the customer, usually on delivery of goods. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

(b) Dividendincome

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

(c) Rentalofhotelroomsandotherservices

Revenue from rental of hotel rooms and other related services are recognised as and when the services are rendered.

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2.24 Revenue(cont’d)

(d) Managementincome

Management income is received from a third party operator who manages golf course of a subsidiary. The income is recognised on an accrual basis.

(e) Interestincome

Interest income is recognised using the effective interest method.

(f) Rental,parkingandrelatedservices

Rental income is recognised on a straight-line basis over the rental tenancy agreements or over the term of the lease. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease term on a straight-line basis.

Parking and related services are recognised net of discounts, if any, as and when the services are rendered.

(g) Saleofinventoryproperty

A property is regarded as sold when the significant risks and rewards have been transferred to the buyer, which is normally on unconditional exchange of contracts. For conditional exchanges, sales are recognised only when all the significant conditions are satisfied.

(h) Saleofoilpalmfreshfruitbunches

Revenue from sale of oil palm fresh fruit bunches is recognised when significant risks and rewards of ownership of goods are transferred to the customer.

2.25 Incometaxes

(a) Currenttax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.

(b) Deferredtax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.


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2.25 Incometaxes(cont’d)

(b) Deferredtax(cont’d)

Deferred tax liabilities are recognised for all temporary differences, except:

- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit; and

- in respect of taxable temporary differences associated with investments in subsidiaries and associates, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

- where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of deductible temporary differences associated with investments in subsidiaries and associates, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.

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

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

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2.25 Incometaxes(cont’d)

(c) GoodsandServicesTax(“GST”)

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

- where the GST incurred in a purchase of assets or services is not recoverable from the taxation authority, in which case the GST 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 GST included.

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

2.26 Bearertreesandbiologicalassets

Bearer trees are living plants used in the production or supply of agricultural produce; are expected to bear produce for more than one period; and have a remote likelihood of being sold as agricultural produce, except for incidental scrap sales. Bearer trees mainly include mature oil palm plantations. Mature plantations are depreciated on a straight-line basis over its estimated useful life of 25 years.

In general, oil palms are considered mature 30 to 36 months after field planting.

The carrying values of bearer trees are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

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.

A bearer tree 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 bearer trees is included in the income statement in the year the bearer plant is derecognised.

Produce that grows on mature plantations are measured at fair value less estimated point-of-sale costs. Point-of-sale costs include all costs that would be necessary to sell the produce.

2.27 Segmentreporting

For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 41, including the factors used to identify the reportable segments and the measurement basis of segment information.


p. 124



2.28 Sharecapitalandshareissuanceexpenses

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

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

2.29 Treasuryshares

When shares of the Company, that have not been cancelled, recognised as equity are reacquired, the amount of consideration paid is recognised directly in equity. Reacquired shares are classified as treasury shares and presented as a deduction from total equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of treasury shares. When treasury shares are reissued by resale, the difference between the sales consideration and the carrying amount is recognised in equity.

2.30 Contingencies

A contingent liability is:

(a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group; or

(b) a present obligation that arises from past events but is not recognised because:

(i) It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(ii) The amount of the obligation cannot be measured with sufficient reliability.

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group and of the Company.

Contingent liabilities and assets are not recognised in the statements of financial position of the Group and of the Company.

2.31Fairvaluemeasurement

The Group and the Company measure financial instruments, such as, derivatives, and non-financial assets such as properties, at fair value at each reporting date. Also, fair values of financial instruments measured at amortised cost are disclosed in Note 38.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

- in the principal market for the asset or liability; or - in the absence of a principal market, in the most advantageous market for the asset or liability.

ANNUAL REPORT 2018

p. 125



2.31Fairvaluemeasurement(cont’d)

The principal or the most advantageous market must be accessible to by the Group and by 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.

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 the fair value measurement as a whole:

- Level1:Quoted(unadjusted)marketpricesinactivemarketsforidenticalassetsorliabilities;- Level2:Valuationtechniquesforwhichthelowestlevelinputthatissignificanttothefairvalue

measurement is directly or indirectly observable; or - Level3:Valuationtechniquesforwhichthelowestlevelinputthatissignificanttothefairvalue

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 the fair value measurement as a whole) at the end of each reporting period.

The Group and the Company determine the policies and procedures for recurring fair value measurement, such as properties and unquoted available-for-sale (“AFS”) financial assets.

External valuers may be involved for valuation of significant assets, such as properties and AFS financial assets. Involvement of external valuers is decided upon annually by the Group and by the Company. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained.

At each reporting date, the Group and the Company analyse the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Group’s and the Company’s accountingpolicies.Forthisanalysis,theGroupandtheCompanyverifythemajorinputsappliedinthe latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.

TheGroupandtheCompany,inconjunctionwiththeGroup’sandtheCompany’sexternalvaluers,alsocompare the changes in the fair value of each asset and liability with relevant external sources, where practical, to determine whether the change is reasonable.

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 the fair value hierarchy as explained above.


p. 126



2.32 Currentandnon-currentclassification

The Group and the Company present assets and liabilities in statements of financial position based on current and non-current classification.

An asset is classified as current when it is:

- expected to be realised or intended to sold or consumed in normal operating cycle;- held primarily for the purpose of trading;- expected to be realised within 12 months after the reporting period; or- cash and cash equivalents unless restricted from being exchanged or used to settle a liability for

at least 12 months after the reporting period.

All other assets are classified as non-current.

A liability is classified as current when:

- it is expected to be settled in normal operating cycle;- it is held primarily for the purpose of trading;- it is due to be settled within 12 months after the reporting period; or- there is no unconditional right to defer the settlement of the liability for at least 12 months after

the reporting period.

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities, respectively.

2.33 Relatedparties

A related party is defined as follows:

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

(a) hascontrolorjointcontrolovertheCompany;(b) has significant influence over the Company; or(c) is a member of the key management personnel of the Company or of a parent of the

Company.

(ii) an entity is related to the Company if any of the following conditions applies:

(a) if the entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others);

(b) oneentityisanassociateorjointventureoftheotherentity(oranassociateorjointventureof a member of a group of which the other entity is a member);

(c) bothentitiesarejointventuresofthesamethirdparty;(d) oneentityisajointventureofathirdentityandtheotherentityisanassociateofthethird

entity;(e) the entity is a post-employment benefit plan for the benefit of employees of either the

Company or an entity related to the Company. If the Company is itself such a plan, the sponsoring employers are also related to the Company;

(f) theentityiscontrolledorjointlycontrolledbyapersonidentifiedin(i);or(g) a person identified in (i) (a) has significant influence over the entity or is a member of the

key management personnel of the entity (or of a parent of the entity).

ANNUAL REPORT 2018

p. 127


3. Significantaccountingjudgementsandestimates

The preparation of the Group’s and of the Company’s financial statements requires management to make judgements,estimatesandassumptionsthataffectthereportedamountsofrevenues,expenses,assetsandliabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptionsandestimatescouldresultinoutcomesthatcouldrequireamaterialadjustmenttothecarryingamount of the asset or liability affected in the future periods.

3.1 Judgementsmadeinapplyingaccountingpolicies

In the process of applying the Group’s and the Company’s accounting policies, management has made thefollowingjudgements,apartfromthoseinvolvingestimations,whichhavethemostsignificanteffecton the amounts recognised in the financial statements:

(a) Classificationbetweeninvestmentpropertiesandproperty,plantandequipment

TheGrouphasdevelopedcertaincriteriabasedonMFRS140inmakingjudgementwhetheraproperty qualified as an investment property. Investment property is a property held to earn rentals or for capital appreciation or both.

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. If these portions could be sold separately (or leased out separately under a finance lease), the Group would account for the portions separately. 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 investment property.

One of the buildings of the Group is being substantially let out to earn rental income. Accordingly, this property is classified as investment property.

One of the land and building of the Group is currently held with undetermined future use. Accordingly, this property is classified as investment property.

(b) Impairmentoffinancialassets

The Group and the Company follow the guidance of MFRS 139 in determining when a financial assetisconsideredimpaired.Thisdeterminationrequiressignificantjudgement.TheGroupandthe Company evaluate, among other factors, the duration and extent to which the fair value of a financial asset is less than its cost; and the financial health of and the near-term business outlook of the issuer of the instrument, including factors such as industry performance, changes in technology and operational and financing cash flows.

(c) Controlovercertainsubsidiaries

As at 28 February 2018, the proportion of equity interest of the Group is disclosed in Note 17(a).

Pursuant to the shareholders agreements, the Group is responsible for the management, business directionandstrategiesofeachofthe5companies,EmasKerajangSdn.Bhd.,SeruntunMajuSdn. Bhd., DFZ Emporium Sdn. Bhd., DFZ (M) Sdn. Bhd. and Wealthouse Sdn. Bhd.. The Group assessed that it has retained control over the said 5 companies during the financial year through stipulations in the shareholders agreements.


p. 128


3. Significantaccountingjudgementsandestimates(cont’d) 3.2 Keysourcesofestimationuncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the reportingdatethathaveasignificantriskofcausingamaterialadjustmenttothecarryingamountsofassets and liabilities within the next financial year are discussed below.

(a) Impairmentofgoodwill

Goodwill is tested for impairment annually and at other times when such indicators exist. This requires an estimation of the value in use of the cash-generating units to which goodwill is allocated.

When value in use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows. Further details of the carrying value, the key assumptions applied in the impairment assessment of goodwill and sensitivity analysis to changes in the assumptions are given in Note 16. The carrying amount of the Group's goodwill is disclosed in Note 16.

(b) Impairmentofreceivables

TheGroupandtheCompanyassessateachreportingdatewhetherthereisanyobjectiveevidencethatafinancialassetisimpaired.Todeterminewhetherthereisobjectiveevidenceofimpairment,the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

Wherethereisobjectiveevidenceofimpairment,theamountandtimingoffuturecashflowsareestimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s and the Company’s receivables at the reporting date is disclosed in Note 24.

(c) Provisions

The provisions are determined based on the management’s best estimates after considering the probable outflow of resources embodying economic benefits that will be required to settle the obligation.

(d) Usefullivesofplantandequipment

The cost of plant and equipment is depreciated on a straight-line basis over the plant and equipment’s estimated useful lives. Management estimates the useful lives of these plant and equipment (excludes freehold land, leasehold land, golf course, and buildings) to be within 3 to 25 years. The carrying amount of the Group’s plant and equipment at 28 February 2018 was RM36,224,000 (2017: RM35,659,000). Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

ANNUAL REPORT 2018

p. 129


3.Significantaccountingjudgementsandestimates(cont’d)

3.2 Keysourcesofestimationuncertainty(cont’d)

(e) Deferredtaxassets

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

The carrying amount of recognised and unrecognised tax losses and capital allowances of the Group and of the Company is disclosed in Note 21.

(f) Impairmentlossoninvestmentsinsubsidiaries

The Company has subsidiaries which are principally involved in trading of duty free goods and non-dutiable merchandise. The Company carried out the impairment test based on the estimation of the higher of the value-in-use or the fair value less cost to sell of the cash-generating unit (“CGU”) to which the investment in subsidiaries belong to. Estimating the recoverable amount requires the Company to make an estimate of the expected future cash flows from the CGU and also to determine a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of the Company’s investment in subsidiaries is disclosed in Note 17.

(g) Valuationofcalloptions

The fair values of call options are determined using Binomial Tree valuation technique with unobservableinputsthatrequirejudgementandestimationinestablishingthefairvalues.Thekeyassumptions applied in determining of the valuation of these call options and sensitivity analysis are described in Note 38. The valuation of call options are sensitive to changes in underlying DFZ Capital Sdn. Bhd. (“DFZ”) share value. Changes in this assumption may result in changes in carrying value. The carrying amount of the unquoted call options as at 28 February 2018 is RM1,017,000 (2017: RM8,993,000).

4. Revenue

Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000

Saleofgoods 791,606 775,946 – –Gross dividends: -subsidiaries – – 50,910 70,049Rental of hotel rooms and otherservices 11,146 13,007 – –Managementincome 215 335 – –Interest income: -subsidiaries – – 2,455 2,250 - others 4,856 2,916 298 461Rental,parkingandrelatedservices 16,739 15,995 – –Saleofoilpalmfreshfruitbunches 1,773 1,236 – –

826,335 809,435 53,663 72,760


p. 130


5. Otherincome

Included in other income are as follows:


Gain arising from changes in fairvalueofbiologicalassets – 5 – –Gain arising from changes in fairvalueofoptions 7,976 4,044 – –Gain on disposal of property, plant andequipment 1,032 3,037 – –Gain on foreign exchange: -realised 2,530 2,744 – – -unrealised 102 7,458 – 193Gain on forward foreign exchange contracts – 1,622 – –Changes in fair value of marketable securities 229 – 229 –Inventorieswrittenback* 668 578 – –Interestincomefromathirdparty 3,600 3,590 – –Rental income: -advertisementspace 3,446 3,210 – – -property,plantandequipment 574 578 – –Reversalofprovisionforguarantees 14,875 – – –Reversal of impairment loss on receivables 235 – – –

* The write back of inventories was made when the related inventories were sold above their carrying amounts.

6. Employeebenefitsexpense


Wages and salaries 60,801 60,868 260 253Socialsecuritycontribution 637 765 – –Contribution to defined contribution plan 6,295 6,109 – –(Decrease)/increase in liability for definedbenefitplan(Note30(c)) (2,089) 695 – –Retirementgratuity – 3,000 – –Other benefits 5,173 5,946 3 13

70,817 77,383 263 266

Included in employee benefits expense of the Group are executive director’s remuneration amounting to RM743,000 (2017: RM745,000).

ANNUAL REPORT 2018

p. 131


7. Directors’remuneration

The details of remuneration receivable by directors of the Company during the year are as follows:


Executive:Salariesandotheremoluments 512 512 – –Bonus 150 152 – –Definedcontributionplan 81 81 – –

Totalexecutivedirector’sremuneration 743 745 – –

Non-executive:Salariesandotheremoluments 540 615 – –Bonus 150 270 – –Definedcontributionplan 84 104 – –Fees 372 371 260 253Benefitinkind 9 7 – –

Total non-executive directors’ remuneration 1,155 1,367 260 253

Total directors’ remuneration 1,898 2,112 260 253

Total directors’ remuneration (excludingfees) 1,526 1,741 – –

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

Numberofdirectors 2018 2017

Executivedirector: RM700,001–RM750,000 1 1 Non-executivedirectors: Below RM50,000 8 7 RM100,001–RM150,000 1 – RM150,001–RM200,000 – 1 RM750,001–RM800,000 1 – RM950,001–RM1,000,000 – 1

11 10

The total number of directors as at 28 February 2018 is 10 (2017: 10).


p. 132


8. Otheroperatingexpenses

Included in other operating expenses are as follows:


Amortisationofotherinvestments 1 –* – –Auditors’ remuneration:Ernst&Young - statutory audit 1,154 1,130 70 69 -specialaudit – 305 – – - under/(over) provision in previousyear 6 (3) 5 –Other auditors -statutoryaudit 24 23 – –Changes in fair value of marketable securities – 191 – 191Loss arising from changes in fair value ofbiologicalassets 35 – – –Impairment loss on receivables: -thirdparties 22 24 – – -subsidiaries – – 1,849 2,425Inventorieswrittendown 1,134 2,223 – –Inventorieswrittenoff 157 88 – –Leaseofland 216 216 – –Legal and professional fees 799 2,888 (255) 652Loss on foreign exchange: -realised 319 931 – – -unrealised 20,079 260 235 –Loss on forward foreign exchange contracts 8 – – –Management fee charged by a subsidiary – – 915 630Property, plant and equipment writtenoff 31 40 – –Contingentrent 5,241 7,698 – –Rentalexpense 40,655 39,381 – –

* The amount is less than a thousand.

ANNUAL REPORT 2018

p. 133


9. Financecosts


Interest expense on: -bankers'acceptance 403 774 – – -bankoverdrafts 103 175 – – -obligationsunderfinanceleases 158 138 – – -USDtradeloans – 5 – – - term loans 3,491 4,232 3,423 3,748 -letterofcredit 4 58 – –

4,159 5,382 3,423 3,748

10.Incometaxexpense

Majorcomponentsofincometaxexpense

Themajorcomponentsofincometaxexpenseforthefinancialyearsended28February2018and28February2017 are as follows:


Current income tax - Malaysian income tax 25,409 25,370 574 504 - Under/(over) provision in respect of previous years 187 (3,965) 58 (24)

25,596 21,405 632 480

Deferred income tax - Origination and reversal of temporarydifferences (310) (84) – –- Over provision in respect of previousyears (325) (367) – –

(635) (451) – –

Income tax expense recognised in profit or loss 24,961 20,954 632 480

Reconciliation between tax expense and accounting profit

Domestic current income tax is calculated at the Malaysian statutory tax rate range of 20% to 24% (2017: 20% to 24%). The reduction in the income tax rate is based on the percentage of increase in chargeable income as compared to the immediate preceding year of assessment.


p. 134


10. Incometaxexpense(cont’d)

Reconciliationbetweentaxexpenseandaccountingprofit(cont’d)

The reconciliation between tax expense and the product of accounting profit multiplied by the applicable corporate tax rate for the financial years ended 28 February 2018 and 28 February 2017 are as follows:


Profit before tax 91,286 96,553 46,883 64,332

Taxation at Malaysian statutory tax rate of 24% 21,908 23,173 11,252 15,440Effect of different tax rates in othercountry (256) (928) – –Effect of expenses not deductible for tax purposes 9,690 6,312 1,540 1,876Effectofincomenotsubjectto taxation (4,921) (3,309) (12,218) (16,812)Effect of reduction in Malaysian statutorytaxrate (918) – – –Utilisation of previously unrecognised deferredtaxassets (668) – – –Reinvestment allowances claimed duringtheyear (134) (577) – –Deferred tax assets not recognised duringtheyear 398 615 – –Over provision of deferred tax in previousyears (325) (367) – –Under/(over) provision of income tax in previous years 187 (3,965) 58 (24)

Income tax expense recognised in profit or loss 24,961 20,954 632 480

The Group has tax savings from the following:

Group 2018 2017 RM’000 RM’000

Utilisation of previously unabsorbed capital allowances and unrecognisedtemporarydifferences 668 –

ANNUAL REPORT 2018

p. 135


11. Earningspershare

Basic earnings per share amounts are calculated by dividing profit net of tax attributable to owners of the parent by the number of ordinary shares outstanding during the financial year.

Diluted earnings per share are calculated by dividing profit, net of tax, attributable to owners of the Company by the number of ordinary shares outstanding during the financial year plus the number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. The Company does not have any diluted earnings per share.

The following reflect the profit and share data used in the computation of basic and diluted earnings per share for the years ended 28 February 2018 and 28 February 2017:

Group 2018 2017 RM’000 RM’000

Profit net of tax attributable to owners of the parent 49,033 54,536

Group 2018 2017 Number Number ofshares ofshares '000 '000 Number of ordinary shares for basic earnings per share computation 253,650 253,650

Number of ordinary shares for diluted earnings per share computation 253,650 253,650

There have been no transactions involving ordinary shares or potential ordinary shares since the reporting date and before the completion of these financial statements.

12. Dividends

Company 2018 2017 RM’000 RM’000

Recognisedduringthefinancialyear:

Dividends on ordinary shares: In respect of the financial year ended 28 February 2018 -Firstinterimsingle-tierdividendof6% 15,219 – -Secondinterimsingle-tierdividendof5% 12,683 – -Thirdinterimsingle-tierdividendof10% 25,365 – In respect of the financial year ended 28 February 2017: -Firstinterimsingle-tierdividendof12.5% – 31,706 -Secondinterimsingle-tierdividendof10% – 25,365

53,267 57,071


p. 136


13.

Property,p

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RM’000

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M’000

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M’000

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M’000

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RM’000

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RM’000

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83

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2,82

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602

370,

790

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–

7,46

631

11,83

02,01

3–

111

,716

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sals

––

(306

)(698

)–

(2,189

)–

–(3,193

)Write-offs

(3,087

)–

––

(8,964

)(1,156

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(283

)(13,49

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lass

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317

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)–

28

5,87

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11,2

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2,32

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5,82

3

ANNUAL REPORT 2018

p. 137


13.

Property,p

lantand

equipmen

t(cont’d)

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equ

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La

ndand

G

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Other

buildings

*

cou

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ass

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Total

RM’000

R

M’000

R

M’000

R

M’000

R

M’000

RM’000

R

M’000

RM’000

R

M’000

Acc

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dep

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dim

pairm

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At1

March

201

795

,554

12

,755

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8,23

237

,190

69

,518

63

01,09

422

4,97

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376

6–

748

1,86

55,72

411

454

13

,614

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––

–(698

)–

(286

)–

–(984

)Write-offs

(3,081

)–

––

(8,945

)(1,150

)–

(283

)(13,45

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––

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74

486

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4,14

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dep

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,521

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8,28

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73

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74

486

518

5,99

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impa

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38,152

–

––

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38,152

96,816

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,521

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8,28

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486

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141,

679


p. 138


13.

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Total

RM’000

R

M’000

R

M’000

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M’000

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M’000

RM’000

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M’000

RM’000

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17

2,53

544

,648

8,89

09,57

742

,784

78

,412

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2,59

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sals

––

(766

)–

(33)

(2,609

)–

–(3,408

)Write-offs

––

––

(219

)(334

)–

–(553

)Rec

lass

ifica

tion

3,30

4–

(6,619

)–

(118

)3,43

3–

––

At 2

8 Fe

brua

ry 2

017

173,

819

44,6

48

10,3

60

10,2

46

43,7

83

82,5

07

2,82

5 2,

602

370,

790

ANNUAL REPORT 2018

p. 139


13.

Property,p

lantand

equipmen

t(cont’d)

Office

Cap

ital

equ

ipmen

t,

La

ndand

G

olf

wor

k-in-

Motor

furn

iture

Plantand

Bea

rer

Other

buildings

*

cou

rse

progres

sveh

iclesand

fittings

m

achine

ry

tree

s

ass

ets

Total

RM’000

R

M’000

R

M’000

R

M’000

R

M’000

RM’000

R

M’000

RM’000

R

M’000

Acc

umulated

dep

reciationan

dim

pairm

entlos

ses

At1

March

201

6,previou

slystated

92

,548

11

,948

–

7,29

835

,520

67

,239

–

1,04

621

5,59

9Ef

fect

s of

ado

ptio

n of

am

endm

ents

to

MFR

S116

and

MFR

S141

–

––

––

–51

7–

517

At1

March

201

6,re

stated

92

,548

11

,948

–

7,29

835

,520

67

,239

51

71,04

621

6,11

6Dep

reciationch

arge

forthe

yea

r4,53

180

7–

934

1,90

15,01

811

348

13

,352

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sfer

red

to in

vest

men

t pro

pert

ies

(Note14

)(1,532

)–

––

––

––

(1,532

)Dispo

sals

––

––

(33)

(2,417

)–

–(2,450

)Write-offs

––

––

(191

)(322

)–

–(513

)Rec

lass

ifica

tion

7–

––

(7)

––

––

At 2

8Fe

brua

ry201

795

,554

12

,755

–

8,23

23

7,19

069

,518

63

01,09

422

4,97

3

Ana

lyse

d as

:

Acc

umulated

dep

reciation

57,402

12,75

5–

8,23

237

,190

69

,518

63

01,09

418

6,82

1Acc

umulated

impa

irmen

tlos

ses

38,152

–

––

––

––

38,152

95,554

12

,755

–

8,23

237

,190

69

,518

63

01,09

422

4,97

3

Netcarryingam

ount

78

,265

31

,893

10

,360

2,

014

6,59

3 12

,989

2,

195

1,50

8 14

5,81

7


p. 140


13. Property,plantandequipment(cont’d)

* Landandbuildings

Longterm leasehold Freehold Buildings land land Total RM’000 RM’000 RM’000 RM’000

Group At28February2018 Cost At 1 March 2017 163,032 1,393 9,394 173,819Additions 95 – – 95Write-offs (3,087) – – (3,087)Reclassification 317 – – 317

At 28 February 2018 160,357 1,393 9,394 171,144

Accumulateddepreciation andimpairmentlosses At1March2017 95,549 5 – 95,554Depreciationchargefortheyear 4,313 30 – 4,343Write-offs (3,081) – – (3,081)

At28February2018 96,781 35 – 96,816

Analysed as: Accumulateddepreciation 58,629 35 – 58,664Accumulatedimpairmentlosses 38,152 – – 38,152

96,781 35 – 96,816

Netcarryingamount 63,576 1,358 9,394 74,328

ANNUAL REPORT 2018

p. 141



* Landandbuildings(cont’d)

Longterm leasehold Freehold Buildings land land Total RM’000 RM’000 RM’000 RM’000

Group At28February2017 Cost

At 1 March 2016 161,338 1,803 9,394 172,535Additions 2,110 138 – 2,248Transferred to investment properties(Note14) (2,465) (1,803) – (4,268)Reclassification 2,049 1,255 – 3,304

At 28 February 2017 163,032 1,393 9,394 173,819

Accumulateddepreciation andimpairmentlosses At1March2016 92,118 430 – 92,548Depreciationchargefortheyear 4,495 36 – 4,531Transferred to investment properties(Note14) (1,071) (461) – (1,532)Reclassification 7 – – 7

At28February2017 95,549 5 – 95,554

Analysed as: Accumulateddepreciation 57,397 5 – 57,402Accumulatedimpairmentlosses 38,152 – – 38,152

95,549 5 – 95,554

Net carrying amount 67,483 1,388 9,394 78,265


p. 142



Office equipment, furniture Motor andfittings vehicles TotalCompany RM'000 RM'000 RM'000 At28February2018 Cost At 1 March 2017 73 183 256Disposal – (183) (183)

At28February2018 73 – 73

Accumulateddepreciation At 1 March 2017 72 183 255Disposal – (183) (183)

At28February2018 72 – 72

Netcarryingamount 1 – 1

At28February2017 Cost At 1 March 2016/28 February 2017 73 183 256

Accumulateddepreciation At 1 March 2016/28 February 2017 72 183 255

Netcarryingamount 1 – 1

ANNUAL REPORT 2018

p. 143



(a) During the financial year, the Group acquired property, plant and equipment with an aggregate cost of RM11,716,000 (2017: RM16,751,000).

Group 2018 2017 RM’000 RM’000

Hire purchase 1,128 595Cash payment 10,588 16,156

11,716 16,751

The net carrying amount of plant and equipment held under finance leases as at reporting date are as follows:

Group 2018 2017 RM’000 RM’000

Motor vehicles 1,288 1,799Plant and machinery 276 980

1,564 2,779

(b) The net carrying amount of property, plant and equipment pledged as securities for borrowings (Note 31) are as follows:

Group 2018 2017 RM’000 RM’000

Freehold land 2,861 2,861Leasehold land 1,358 1,388Buildings 31,398 33,279Others 9,773 7,869

45,390 45,397

(c) Included in the plant and machinery of the Group are staff costs capitalised amounting to RM234,000 (2017: RM254,000).


p. 144


14. Investmentproperties

Group 2018 2017 RM’000 RM’000

Cost At beginning of the year 113,612 109,251Additions 27 93Transferredfromproperty,plantandequipment(Note13) – 4,268

At end of the year 113,639 113,612

Accumulateddepreciationandimpairmentlosses At beginning of the year 74,873 70,185Depreciation charge for the year 2,272 3,156Transferredfromproperty,plantandequipment(Note13) – 1,532


Analysed as: Accumulated depreciation 53,174 50,902Accumulated impairment losses 23,971 23,971

77,145 74,873

Netcarryingamount 36,494 38,739

Fairvalue 95,920 93,020

Direct operating expenses arising from income generating investment properties included in income statements 4,340 4,235

The fair value of the investment properties was based on a valuation report provided by an independent qualifiedvaluer.Valuationwasbasedoncurrentpricesinanactivemarketforcertainpropertiesandwhereappropriate, the investment method reflecting receipt of contractual rentals, expected future market rentals, current market yields, void periods, maintenance requirements and approximate capitalisation rates is used.

Investment properties with net carrying amount of RM33,811,000 (2017: RM36,003,000) are situated on a land owned by a third party with whom the Group has an operating lease arrangement as disclosed in Note 36(b).

Investment properties with a net carrying amount of RM36,494,000 (2017: RM38,739,000) are pledged as securities for borrowings (Note 31).

ANNUAL REPORT 2018

p. 145


14. Investmentproperties(cont’d)

A quantitative sensitivity analysis of the change in the yield rate as at 28 February 2018 and 28 February 2017 is shown below:

Fairvalue Valuation Unobservable SensitivityoftheDescription RM’000 techniques inputs Range inputtofairvalue Land 2,810 Comparable Yieldadjustments -15%to33% 1%increaseor (2017: method based on (2017: -15% to decrease in the 2,810) management’s 33%) yield rate would assumptions* result in decrease or increase in fair value by approximately RM21,000 (2017: RM21,000). Building 1,410 Comparable Yieldadjustments -25%to-15% 1%increaseor (2017: method based on (2017: -25% to decrease in the 1,410) management’s -15%) yield rate would assumptions* result in decrease or increase in fair value by approximately RM14,000 (2017: RM14,000). Buildings 91,700 Investment Yieldadjustments 7.25%to7.75% 0.5%increaseor (2017: method based on (2017: 6.25% decrease in the 88,800) management’s to 7.25%) yield rate would assumptions* result in decrease or increase in fair value by approximately RM3.8 million. (2017: RM3.8 million).

* Theyieldadjustmentsaremadeforanydifferenceinthenature,locationorconditionofthespecificproperty.


p. 146


15. Landuserights

Group 2018 2017 RM’000 RM’000

Cost

At beginning of the year/end of the year 34,171 34,171

Accumulatedamortisation

At beginning of the year 11,850 11,401Amortisation for the year 450 449


Netcarryingamount 21,871 22,321

Amount to be amortised: - Not later than 1 year 449 449- Later than 1 year but not later than 5 years 1,798 1,798- Later than 5 years 19,624 20,074

21,871 22,321

16. Goodwill

Group 2018 2017 RM’000 RM’000

Cost At beginning of year and at end of year 27,408 27,408

Impairmenttestsforgoodwill

(a) Allocationofgoodwill

Goodwill has been allocated to the Group's cash-generating unit ("CGU") identified according to business segment as follows:

Group 2018 2017 RM’000 RM’000

Trading of duty free goods and non-dutiable merchandise 27,408 27,408

ANNUAL REPORT 2018

p. 147


16. Goodwill(cont’d)

Impairmenttestsforgoodwill(cont’d)

(b) Keyassumptionsusedinvalue-in-usecalculations

The recoverable amount of the CGU is determined based on value-in-use calculations using cash flow projectionsfromfinancialforecastswithkeyassumptionsapprovedbymanagementcoveringa5-yearperiod with a growth rate of approximately 5% to 12% (2017: 5%). The forecasted growth rate used to extrapolate cash flow beyond the 5-year period is 2.5% (2017: 1%).

Key assumptions and management's approach to determine the values assigned to each key assumption are as follows:

(i) Budgeted gross margin

The basis used to determine the value assigned to the budgeted gross margin is the average gross margin achieved in the year immediately before the budgeted year, increased for expected efficiency improvements. The budgeted gross margins for trading of duty free goods and non-dutiable merchandise segment are in the range of 7% to 32% (2017: 7% to 33%).

(ii) Revenue growth rates

The growth rates are based on the management’s estimated products prices and sales forecast. The selling prices used to calculate the cash inflows from operations were determined after taking intoconsiderationpricetrendsoftheindustry,whichtheCGUsareexposedto.Valuesassignedare consistent with the external sources of information.

(iii) Long-term growth rates

The forecasted growth rates are based on published industry research and do not exceed the long-term average growth rate for the industries relevant to the CGUs.

(iv) Duty-free licences

The duty-free business requires a number of licences, which include duty-free shop licence, wholesale dealer’s licence, bonded warehouse licence and/or liquor import licence. It is assumed that the licences will be renewed upon their expiry on terms and conditions which are not less favourable.

(v) Discount rate

Thediscountrateappliedtothecashflowprojectionsof7.5%(2017:5.8%) isbasedontheweighted average cost of capital of a subsidiary, Duty Free International Limited Group.

(c) Sensitivitytochangesinassumptions

With regard to the assessment of value-in-use of all CGUs, the management believes that any reasonable change in any of the above key assumptions would not cause the carrying value of the CGUs to materially exceed their recoverable amounts.


p. 148


17. Investmentinsubsidiaries

Company 2018 2017 RM’000 RM’000

Quotedequityinstruments,atcostOutsideMalaysia 784,367 784,367Unquoted shares, at cost 274,045 274,045

1,058,412 1,058,412Less: Accumulated impairment losses (37,680) (37,680)

1,020,732 1,020,732

(a) Details of the subsidiaries, which were incorporated in Malaysia (unless otherwise indicated), as at 28 February 2018, are as follows:

Proportionof ownershipinterest NameofCompany inordinaryshares Principalactivities 2018 2017 % %

Arah Induk Sdn. Bhd. 100 100 Dormant Atlan Properties Sdn. Bhd. 100 100 Investment holding Atlan Technology Sdn. Bhd. 100 100 Dormant Atlan Orient Sdn. Bhd. 100 100 Dormant Naluri Properties Sdn. Bhd. 100 100 Property investment, general construction and apartment hotel business

Duty Free International Limited 74 76 Investment holding (“DFIL”) (Incorporated in Singapore)+^

United Industries Holdings 100 100 Investment holding Sdn. Bhd. (“UIH”) Zon Hospitality Services 100 100 Dormant Sdn. Bhd.

Blossom Time Sdn. Bhd. 100 100 Property development

Timeless Image Sdn. Bhd. 100 100 Investment holding

InternationalAviation – 100 Dormant Consultants Sdn. Bhd.**

ANNUAL REPORT 2018

p. 149


17. Investmentinsubsidiaries(cont’d)

(a) Details of the subsidiaries, which were incorporated in Malaysia (unless otherwise indicated), as at 28 February 2018, are as follows: (cont’d)


RZ Equities Sdn. Bhd.** 100 100 Dormant

Trifiniti Networks Sdn. Bhd. 100 100 Dormant

Atlan Assets Sdn. Bhd. 100 100 Dormant

Atlan Management Sdn. Bhd. 100 100 Providing various administration, advisory, management, planning, functions and assistance to its holding company and related companies

Atlan Development Sdn. Bhd. 100 100 Dormant

Atlan Capital Sdn. Bhd. 100 100 Dormant

Ocean Pride Sdn. Bhd. 100 100 Dormant

Tegapasti Sdn. Bhd. 100 100 Dormant

Belia Karisma Sdn. Bhd. 100 100 Dormant

Radiant Ranch Sdn. Bhd. 100 100 Dormant

Gardenia Success Sdn. Bhd. 100 100 Dormant

Tropika Ferringhi Management 100 100 Property management Sdn. Bhd.

HeldthroughAtlanProperties Sdn.Bhd.

NaluriCorporationSdn.Bhd.** – 100 Dormant

HeldthroughBeliaKarisma Sdn.Bhd.andAtlanAssets Sdn.Bhd.

Naluri International Limited 100 100 Investment holding (Incorporated in Hong Kong)#


p. 150





HeldthroughDFIL

DFZ Capital Sdn. Bhd. (Formerly known as DFZ Capital Berhad) (“DFZ”)*** 63 68 Investment holding

Darul Metro Sdn. Bhd. 74 76 Dormant

Orchard Boulevard Sdn. Bhd. 74 76 Investment holding and resort development

HeldthroughDFZ

DFZ Trading Sdn. Bhd. 63 68 Investment holding and management services

Selasih Ekslusif Sdn. Bhd. 63 68 Retailer of duty free and non-dutiable merchandise

Winner Prompt Sdn. Bhd. 63 68 Licensed distributor and wholesaler of duty free merchandise

EmasKerajangSdn.Bhd.@ 44 48 Retailerofdutyfreeand non-dutiable merchandise

SeruntunMajuSdn.Bhd.@ 44 48 Retailerofdutyfreeand non-dutiable merchandise

HeldthroughOrchard BoulevardSdn.Bhd.

GoldValeDevelopment 74 76 Dormant Sdn. Bhd.

Kelana Megah Sdn. Bhd. 74 76 Dormant

CergasjayaProperties 74 76 Resortdevelopment,properties Sdn. Bhd. management and cultivation of oil palm

Black Forest Golf And Country 74 76 Dormant Club Sdn. Bhd.

ANNUAL REPORT 2018

p. 151





HeldthroughOrchard BoulevardSdn.Bhd.(cont’d)

Binamold Sdn. Bhd. 74 76 Property investment

Tenggara Senandung Sdn. Bhd. 74 76 Dormant

DFZ Asia Sdn. Bhd. 74 76 Investment holding

PT DFZ Indon 74 75 Dormant (Incorporated in Republic of Indonesia)#

HeldthroughDFZTrading Sdn.Bhd.

CergasjayaSdn.Bhd. 63 68 Wholesalerandretailerofduty free and non-dutiable merchandise

Melaka Duty Free Sdn. Bhd. 32 35 Retailer of duty free and non- dutiable merchandise

DFZ Duty Free Supplies 63 68 Wholesaler and distributor of Sdn. Bhd. duty free and non-dutiable merchandise

Jasa Duty Free Sdn. Bhd. 63 68 Retailer of duty free and non-dutiable merchandise

DFZ Emporium Sdn. Bhd.@ 19 20 Retailer of duty free and non-dutiable merchandise

DFZ (M) Sdn. Bhd.@ 44 48 Retailer of duty free and non-dutiable merchandise

Wealthouse Sdn. Bhd.@ 18 20 Retailer of duty free and non-dutiable merchandise

Jelita Duty Free Supplies 63 68 Wholesaler and distributor of Sdn. Bhd. duty free and non-dutiable Merchandise


p. 152





HeldthroughDFZTrading Sdn.Bhd.(cont’d)

DFZ Duty Free (Langkawi) 63 68 Retailer of duty free and Sdn. Bhd. non-dutiable merchandise

Zon Emporium Sdn. Bhd. 63 68 Retailer of duty free and non-dutiable merchandise

DFZ Utara Sdn. Bhd. 63 68 Dormant

HeldthroughDFZAsia Sdn.Bhd.

PT DFZ Indon 1 1 Dormant (Incorporated in Republic of Indonesia)#

HeldthroughUIH

United Industries Sdn. Bhd. 100 100 Manufacturing and marketing of exhaust systems and other automotive component parts

United Sanoh Industries 70 70 Manufacturing and distribution Sdn. Bhd. of brake, fuel, other automotive component parts and clutch tubings

HeldthroughUnitedIndustries Sdn.Bhd.

UEW Plastic Industries 100 100 Dormant Sdn. Bhd.

Freighter Industries (M) 100 100 Dormant Sdn. Bhd.

Danco Marketing Sdn. Bhd. 100 100 Dormant

ANNUAL REPORT 2018

p. 153





HeldthroughUIHand UnitedIndustriesSdn.Bhd.

UnitedVehiclesIndustries 100 100 Manufacturingandmarketing Sdn. Bhd. of fuel tanks, other automotive component parts and wheelbarrows

United Filter Sdn. Bhd. 97 97 Dormant

HeldthroughUnitedVehicles IndustriesSdn.Bhd.

Kadar Prisma Sdn. Bhd. 100 100 Dormant

UVIAdvanceTechnology 100 100 Dormant Sdn. Bhd.

+ A corporation listed on Singapore Stock Exchange ("SGX-ST")^ AuditedbymemberfirmofErnst&YoungGlobalinSingapore# AuditedbyafirmotherthanErnst&Young@ The terms of non-voting Convertible Redeemable Preference Shares has led to the total effective

ownership interest held as shown below:

Totaleffective ownershipinterestheld 2018 2017 % %

Nameofcompany EmasKerajangSdn.Bhd. 63 68SeruntunMajuSdn.Bhd. 63 68DFZ Emporium Sdn. Bhd. 63 68DFZ (M) Sdn. Bhd. 63 68Wealthouse Sdn. Bhd. 63 68

The Group assessed that these investees are subsidiaries as control was retained by the Group through stipulations in the shareholder agreement, signed by the Group and the non-controlling interests.


p. 154




* Company was striked off during the financial year ended 28 February 2018** Company was placed under Strike Off since financial year ended 28 February 2017*** On 30 November 2017, Heinemann Asia Pacific Pte. Ltd. (“HAP”) exercised the Second Tranche

Call Option, requiring the Company’s subsidiary, Duty Free International Limited (“DFIL”) to sell to HAP 5% of the issued and paid-up share capital of DFZ Capital Sdn. Bhd. (“DFZ”), being 10,498,181 shares in DFZ, for an aggregate cash consideration of Euro9,850,000. The disposal was successfully completed on 29 December 2017, as set out in Note 43(f)

(b) Subsidiaries with material non-controlling interests

The Group regards DFIL and its subsidiaries (“DFIL Group”) and United Sanoh Industries Sdn. Bhd. (“USISB”) as subsidiaries which have non-controlling interests that are material to the Group. The equity interest held by non-controlling interests are as follows:

DFILGroup USISB 2018 2017 2018 2017 % % % %

Equity interest held by non-controlling interests 26 24 30 30

The summarised financial information of DFIL Group and USISB is set out below. The information presented below is based on the amounts before inter-company elimination.

(i) Summarised statements of financial position

DFILGroup USISB 2018 2017 2018 2017 RM'000 RM'000 RM'000 RM'000

Non-current assets 164,755 177,132 6,739 7,458Current assets 584,305 544,412 46,916 49,268

Total assets 749,060 721,544 53,655 56,726

Current liabilities 144,236 163,782 14,615 22,068Non-current liabilities 5,139 5,465 814 1,782

Total liabilities 149,375 169,247 15,429 23,850

Net assets 599,685 552,297 38,226 32,876

Equity attributable to owners of the company 432,445 406,241 26,758 23,013Non-controlling interests 167,240 146,056 11,468 9,863

599,685 552,297 38,226 32,876

ANNUAL REPORT 2018

p. 155



(b) Subsidiaries with material non-controlling interests (cont’d)

(ii) Summarised statements of comprehensive income

DFILGroup USISB 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000

Revenue 620,124 632,588 66,383 64,391

Profit for the year 48,220 76,966 5,350 3,897

Profit attributable to: Owners of the company 30,959 55,118 3,745 2,728 Non-controlling interests 17,261 21,848 1,605 1,169

48,220 76,966 5,350 3,897

Other comphensive income not to be reclassified to profit or loss in subsequent period - Remeasurement gain ondefinedbenefitplans – – – 471-Incometaxeffect – – – (113)

Total comprehensive income 48,220 76,966 5,350 4,255

Total comprehensive income attributable to: Owners of the company 30,959 55,118 3,745 2,979 Non-controlling interests 17,261 21,848 1,605 1,276

48,220 76,966 5,350 4,255

Dividends paid to non-controllinginterests 25,973 24,137 – –


p. 156



(b) Subsidiaries with material non-controlling interests (cont’d)

(iii) Summarised statements of cash flows

DFILGroup USISB 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000

Net cash generated from/ (used in): - Operating activities 123,603 123,377 5,517 1,582 - Investing activities 5,290 1,348 (1,312) (1,978) - Financing activities (4,553) 91,730 259 (1,854)

Net increase/(decrease) in cash and cash equivalents 124,340 216,455 4,464 (2,250)Effects of foreign exchange rate changes (21,716) 6,243 – –Cash and cash equivalents at beginning of the year 261,516 38,818 7,945 10,195

Cash and cash equivalents at end of the year 364,140 261,516 12,409 7,945

18. Investmentinassociate


Unquoted shares in Malaysia, at cost 437 437 437 437Sharesofpostacquisitionresults 284 126 – –

721 563 437 437

Represented by:Share of net assets of associate 721 563 437 437

ANNUAL REPORT 2018

p. 157


18. Investmentinassociate(cont’d)

The particulars of the associate, which is incorporated in Malaysia, are as follows:

ProportionofNameofCompany ownershipinterest 2018 2017 Principalactivities % % Scandinavian Avionics (Malaysia) 25 25 Sale of aviation related Sdn. Bhd.# electrical instruments and the provision of avionics support services

# AuditedbyafirmotherthanErnst&Young

The financial year end of the associate is 31 December. The results of the associate are accounted for in the Group’s financial statements under the equity method, based on the most recently available audited financial statements and the unaudited management financial statements of the associate made up to period ended 28 February 2018.

The associate requires the parent’s consent to distribute its profits. The parent does not foresee giving such consent at the reporting date.

The associate had no contingent liabilities or capital commitments as at 28 February 2018 or 28 February 2017.

The summarised financial information of the associate is set out below and represents the amounts in the financial statements of the associate and not the Group’s share of those amounts.

(a) Summarised statements of financial position

Group 2018 2017 RM’000 RM’000

Non-current assets 481 348Current assets 6,350 3,669

Total assets 6,831 4,017

Current liabilities, representing total liabilities 3,948 1,765

Net assets 2,883 2,252


p. 158


18. Investmentinassociate(cont’d)

The summarised financial information of the associate is set out below and represents the amounts in the financial statements of the associate and not the Group’s share of those amounts (cont’d).

(b) Summarised statements of comprehensive income

Group 2018 2017 RM’000 RM’000

Revenue 9,730 9,210Profit before tax 631 76Profit net of tax, representing total comprehensive income 631 76

(c) Reconciliation of the summarised financial information presented above to the carrying amount of the Group’s interest in the associate

Group 2018 2017 RM’000 RM’000

Net assets at beginning of the year 2,252 2,176Profit net of tax 631 76

Net assets at end of the year 2,883 2,252

Interest in the associate 25% 25% Carrying value of Group’s interest in the associate 721 563

19. Otherinvestments

Group 2018 2017 RM’000 RM’000

Unquoted shares at cost - in Malaysia 21 21 - outside Malaysia 3,688 3,688

3,709 3,709Less: Accumulated impairment losses (3,688) (3,688)

21 21Corporate golf club and vacation club memberships at cost 125 125Less: Accumulated amortisation (17) (16)

129 130

ANNUAL REPORT 2018

p. 159


20. Prepayments


CurrentPrepaidrental 9,785 9,780 – –Prepaid other operating expenses 3,171 2,549 9 10

12,956 12,329 9 10

Non-currentPrepaidrental 39,489 49,270 – –

Totalprepayments 52,445 61,599 9 10

Amount to be charged out to profit or loss: - Not later than 1 year 12,956 12,329 9 10 - Later than 1 year but not later than5years 39,122 39,122 – – -Laterthan5years 367 10,148 – –

52,445 61,599 9 10

IncludedintheprepaidrentalisthebalancerentalpaidinadvancebytheGrouptoBerjayaWaterfrontSdn.Bhd. amounting to RM44,367,000 (2017: RM53,167,000).

21. Deferredtax

Group 2018 2017 RM’000 RM’000

At beginning of the year 5,489 5,550Recognised in profit or loss (635) (451)Recognisedinequity – 390


Presentedafterappropriateoffsettingasfollows: Deferred tax assets (2,267) (1,734)Deferred tax liabilities 7,121 7,223

4,854 5,489


p. 160


21. Deferredtax(cont’d)

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

DeferredtaxliabilitiesoftheGroup:

Property, plantand equipment RM'000 At 1 March 2016 7,476Recognised in profit or loss 1,779

At 28 February 2017 9,255

At 1 March 2017 9,255Recognised in profit or loss (667)

At 28 February 2018 8,588

DeferredtaxassetsoftheGroup:

Unutilisedtax lossesand unabsorbed capital allowances Others Total RM'000 RM'000 RM'000 At 1 March 2016 (363) (1,563) (1,926)Recognised in profit or loss (436) (1,794) (2,230)Recognisedinequity – 390 390

At 29 February 2017 (799) (2,967) (3,766)

At 1 March 2017 (799) (2,967) (3,766)Recognised in profit or loss (143) 175 32

At 28 February 2018 (942) (2,792) (3,734)

ANNUAL REPORT 2018

p. 161


21. Deferredtax(cont’d)

Deferred tax assets have not been recognised in respect of the following items:


Unabsorbed capital allowances 56,334 56,211 818 818Unabsorbed reinvestment allowances 119,989 119,989 – –Unutilisedtaxlosses 233,759 233,004 – –Other deductible temporary differences 7,837 9,837 – –

417,919 419,041 818 818

Deferred tax assets have not been recognised in respect of these items as they may not be used to offset taxable profits of other subsidiaries in the Group and they have been risen in subsidiaries that have insufficient profits to fully utilise these unabsorbed capital allowances, unabsorbed reinvestment allowances, unutilised tax losses and other deductible temporary differences in the foreseeable future.

The deferred tax assets attributable to unabsorbed capital allowances, unabsorbed reinvestment allowances andunutilisedtaxlossesareavailableforoffsettingagainstfuturetaxableprofitssubjecttonosubstantialchange in shareholdings under the Income Tax Act, 1967 and guidelines issued by the tax authority.

22. Inventories

Group 2018 2017 RM’000 RM’000

Cost Food and beverages 39 30Raw materials 18,568 24,049Work in progress 3,098 3,302Trading goods 135,304 199,827Finished goods 1,726 2,672Inventory property 13,665 13,665Consumables 139 158

172,539 243,703

During the year, the amount of inventories recognised as an expense in the income statement was RM555,200,000 (2017: RM527,931,000).


p. 162


23. Biologicalassets

Group 2018 2017 RM’000 RM’000

Atfairvalue

At beginning of the year 187 182(Loss)/gain arising from changes in fair value (Note 8 and Note 5) (35) 5

At end of the year 152 187

Mature oil palm trees produce fresh fruit bunches (“FFB”), which are used to produce Crude Palm Oil (“CPO”) and Palm Kernel (“PK”). The group adopted the Amendments to MFRS 116 and MFRS 141 on 1 March 2016, which changed the accounting requirements for biological assets. Bearer plant will now fall within the scope of MFRS 116 Property, Plant and Equipment whereas agricultural produce growing on bearer trees (e.g. fruit growing on a tree) will remain within the scope of MFRS 141 Agriculture. The fair values of bearer fruits are determined by using the total sales figure in the following month with the assumptions of all the fruits harvested are sold subsequently to the customer.

During the year, the Group’s bearer fruits produced approximately 3,400 tonnes (2017: 2,200 tonnes) of FFB. The selling prices per tonne for those FFB based on CPO and PK selling price ranged between RM2,000 to RM2,900 (2017: RM2,300 to RM3,500). The selling prices per tonne for those FFB are based on a calculation using the periodic market prices of CPO and PK and contracted pre-determined extraction rates of CPO and PK as agreed with the buyer of FFB crop.

24. Tradeandotherreceivables


CurrentTradereceivablesThirdparties 36,575 40,762 – –Less:Allowanceforimpairment (595) (573) – –

Tradereceivables,net 35,980 40,189 – –

OtherreceivablesDuefromsubsidiaries – – 102,547 96,036Less:Allowanceforimpairment – – (55,641) (53,792)

– – 46,906 42,244

ANNUAL REPORT 2018

p. 163


24. Tradeandotherreceivables(cont’d)


Current(cont’d)Otherreceivables(cont’d)Deposits 3,987 4,497 3 3DuefromBerjayaWaterfront Sdn.Bhd. 40,434 40,434 – –Sundryreceivables 9,828 4,461 – –Goods and Services Tax (“GST”) receivable 3,084 3,873 – –

57,333 53,265 3 3Less:Allowanceforimpairment (369) (604) – –

Other receivables, net 56,964 52,661 3 3

Total current trade and other receivables, net 92,944 92,850 3 42,247

Total trade and other receivables 92,944 92,850 46,909 42,247Less:GSTreceivable (3,084) (3,873) – –Total trade and other receivables excluding GST receivable 89,860 88,977 46,909 42,247Add: Cash and bank balances (Note 27) 410,231 303,151 3,238 11,448

Total loans and receivables 500,091 392,128 50,147 53,695

Trade receivables

Trade receivables are non-interest bearing and are generally on 14 to 120 days (2017: 14 to 120 days) terms. Other credit terms are assessed and approved on a case-by-case basis. Trade receivables are recognised at their original invoice amounts which represent their fair values on initial recognition.

Due from subsidiaries

The amounts owing from subsidiaries are unsecured and are recoverable on demand. The interest bearing and non-interest bearing amounts are as follows:

Company 2018 2017 RM’000 RM’000

Interest bearing 46,390 41,786Non-interest bearing 516 458

Total 46,906 42,244

The effective interest is 5.0% (2017: 5.0%) per annum.


p. 164



DuefromBerjayaWaterfrontSdn.Bhd.(“BerjayaWaterfront”)

TheamountduefromBerjayaWaterfrontisrelatedtotheuncollectedportionofthesaleconsiderationfortheGroup’s interests over leasehold properties in The Zon Johor Bahru, which was completed in March 2013. Thisbalancehadbeensubjecttointerestthroughoutthetermthatthebalancewasoutstanding.Theinterestrate was initially at 6% per annum, but this has been revised to 9% per annum from 16 July 2015 onwards. In April 2018, Darul Metro Sdn. Bhd. (“DMSB”) received RM0.9 million, being accrued interest up to 15 April 2018.

The balance of RM40.0 million was scheduled to be due on 15 April 2018. Subsequent to year end, both partieshadmutuallyagreedthatBerjayaWaterfrontshallpaytheremainingdeferredconsiderationofRM40.0milliononorbefore15April2019andBerjayaWaterfrontwillcontinuetopayinterestattherateof9%perannum on unpaid consideration on quarterly basis.

TheamountisguaranteedbyBerjayaWaterfront’sholdingcompany.

Goods and Services Tax (“GST”) receivable

(i) Duringthefinancialyear,asubsidiaryoftheCompany,SeruntunMajuSdn.Bhd.(“SMSB”)hadreceivedBills of Demand dated 2 November 2017 from the Royal Malaysian Customs of Perak Darul Ridzuan (“Customs”) which demanded payments of GST amounting to RM1,225,000 for the period from 1 April 2015 to 31 December 2016.

The said Bills of Demand were raised by the Customs who alleged that SMSB did not comply with certain conditions of a duty-free shop located at the border.

On 27 November 2017, SMSB had appealed to the Director-General in respect of GST pursuant to Section 124 of the GST Act. To-date, the matter is still pending a decision from the Director-General.

The Company, after consultation with its solicitors, strongly believes that there is no legal and/or factual basis for the Customs to arrive at their decision to raise the said Bills of Demand. The solicitors of SMSB are taking the necessary defence actions on its behalf.

As at 28 February 2018, SMSB had paid RM476,000 out of the RM1,225,000 demand by the Customs and this is included in GST receivable.

(ii) Also, included in GST receivable is RM895,000, relating to the GST paid for the Bills of Demand which were raised by the Customs Department as disclosed in Note 42.

ANNUAL REPORT 2018

p. 165



Ageing analysis of trade receivables

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

Group 2018 2017 RM’000 RM’000

Neither past due nor impaired 29,721 26,616

1 to 30 days past due not impaired 2,953 7,93631 to 60 days past due not impaired 1,665 2,93361 to 90 days past due not impaired 71 1,48891 to 120 days past due not impaired 634 1,032More than 120 days past due not impaired 936 184

Past due but not impaired 6,259 13,573Impaired 595 573

36,575 40,762

Receivables that are neither past due nor impaired

Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group.

None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

Trade receivables that are past due but not impaired

The Group has trade receivables amounting to RM6,259,000 (2017: RM13,573,000) that are past due at the reporting date but not impaired. Although these balances are unsecured in nature, they are mostly due from creditworthy debtors.

None of the Group’s trade receivables that are past due but not impaired have been renegotiated during the financial year.

Trade receivables that are impaired

The Group’s trade receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows:

Group 2018 2017 RM’000 RM’000

Individually impaired Trade receivables - nominal amounts 595 573Less: Allowance for impairment (595) (573)

– –


p. 166



Trade receivables that are impaired (cont’d)

Movement in allowance accounts:

Group 2018 2017 RM’000 RM’000

At beginning of the year 573 582Charge for the year 22 24Writtenoff – (33)

At end of the year 595 573

Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that are in legal disputes or financial difficulties, and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

Management conducts periodic assessment on its trade receivable balances on an account-by-account basis. Hence, all impairment losses are provided for specific trade receivable balances. Management is of the opinion that there are no further factors that warrants the consideration of additional impairment losses on a collective basis.

Other receivables that are impaired

Other receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows:

Group 2018 2017 RM’000 RM’000

Individuallyimpaired Sundry receivables - nominal amounts 369 604Less: Allowance for impairment (369) (604)

– –

Company 2018 2017 RM’000 RM’000

IndividuallynotimpairedDue from subsidiaries 31,307 33,511Individuallyimpaired Due from subsidiaries - nominal amounts 71,240 62,525

102,547 96,036Less: Allowance for impairment (55,641) (53,792)

46,906 42,244

ANNUAL REPORT 2018

p. 167


24. Tradeandotherreceivables(cont’d) Other receivables that are impaired (cont’d)

Movement in allowance accounts:


At beginning of the year 604 604 53,792 51,367Chargefortheyear – – 1,849 2,425Reversal (235) – – –

At end of the year 369 604 55,641 53,792

Sundry receivables that are individually determined to be impaired at the reporting date relate to debtors that are in legal disputes or financial difficulties, and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

Management conducts periodic assessment on its sundry receivable balances on an account-by-account basis. Hence, all impairment losses are provided for specific sundry receivable balances. Management is of the opinion that there are no further factors that warrants the consideration of additional impairment losses on a collective basis.

25. Marketablesecurities

GroupandCompany 2018 2017 Marketvalue Marketvalue Carrying ofquoted Carrying ofquoted amount investments amount investments RM'000 RM'000 RM'000 RM'000

Held for trading investments Equity instruments -QuotedoutsideMalaysia 5 5 11 11

Changes in fair value

During the financial year, the Group and the Company have recognised an increase in fair value amounting to RM229,000 (2017: decrease of RM191,000) and RM229,000 (2017: decrease of RM191,000), respectively with regards to the equity instruments.


p. 168


26. Derivativeassetsandliabilities

Notional amount Assets Liabilities RM'000 RM'000 RM'000

Group

At28February2018

Forward currency contracts 9,823 8 26Calloptions 1,017 – 1,017

8 1,043

At28February2017

Forward currency contracts 23,377 3 13Calloptions 8,993 – 8,993

3 9,006

The Group uses forward foreign currency contracts to manage some of its transaction exposure. These contracts are not designated as cash flow or fair value hedges and are entered into for periods consistent with currency translation exposure and fair value changes exposure. Such derivatives do not qualify for hedge accounting. The derivatives represent total financial assets and liabilities at fair value through profit or loss, classified held for trading.

During the financial year, the Group recognised loss on forward foreign exchange contracts amounting to RM8,000 (2017: gain of RM1,622,000) arising from fair value changes of financial derivative. The fair value changes are attributable to changes in foreign exchange and forward rate.

The call options was in relation to the fair value of call options issued which gives HAP the option to acquire a maximum of 15% additional equity interest in DFZ, a subsidiary of the Company.

During the year, HAP has exercised the Second Tranche Call Option and purchased 5% of equity interest in DFZ.

During the financial year, the Group recognised a gain on call options of RM7,976,000 (2017: RM4,044,000) arising from fair value changes of financial derivative. The fair value changes are attributable to changes in foreign exchange spot and forward rate.

ANNUAL REPORT 2018

p. 169


27. Cashandbankbalances


Cash on hand and at banks 245,857 105,723 1,151 4,171Deposits with licensed banks 164,374 197,428 2,087 7,277

410,231 303,151 3,238 11,448

Cash at banks earns interest at floating rates based on daily bank deposit rates. Deposits with licensed banks are made for varying periods of between one day and one year (2017: one day and one year) depending on the immediate cash requirements of the Group and of the Company, and earn interest at the respective deposit rates. The effective interest rates for the Group and the Company were 2.70% to 5.28% (2017: 2.50% to 5.32%) per annum and 3.40% (2017: 2.60% to 3.95%) per annum, respectively.

Deposits with licensed banks of the Group amounting to RM11,901,000 (2017: RM13,678,000) are pledged to banks for credit facilities granted to certain subsidiaries as disclosed in Note 31.

For the purpose of the statements of cash flows, cash and cash equivalents comprise the following as at the reporting date:


Cash on hand and at banks 245,857 105,723 1,151 4,171Deposits with licensed banks 164,374 197,428 2,087 7,277

410,231 303,151 3,238 11,448Depositspledgedwithlicensedbanks (11,901) (13,678) – –

Cash and cash equivalents 398,330 289,473 3,238 11,448


p. 170


28. Tradeandotherpayables


TradepayablesThirdparties 97,611 103,706 – –Retentionsums 1 1 – –

97,612 103,707 – –

OtherpayablesDuetosubsidiaries – – 174,862 174,874Sundry payables 9,219 9,156 15 645Goods and Services Tax (“GST”) payable 1,362 1,297 – –Accruals 21,018 21,731 589 621Depositspayable 4,629 4,418 – –Rentalpayable 476 1,589 – –Royaltypayable 597 542 – –Deposits received for proposed disposals 560 560 – –Contributioncostpayable 209 209 – –

38,070 39,502 175,466 176,140

Total trade and other payables 135,682 143,209 175,466 176,140

Total trade and other payables 135,682 143,209 175,466 176,140Less:GSTpayable (1,362) (1,297) – –

Total trade and other payables excluding GST payable 134,320 141,912 175,466 176,140Add: Borrowings (Note 31) 69,684 72,188 50,000 55,000

Total financial liabilities carried at amortised cost 204,004 214,100 225,466 231,140

Trade payables

The amounts are non-interest bearing. The credit terms of trade payables normally range from 30 to 120 days (2017: 30 to 120 days).

Due to subsidiaries

The amounts due to subsidiaries are unsecured, non-interest bearing and are repayable on demand.

Sundry payables

The amounts are non-interest bearing. Sundry payables are normally settled on an average term of 30 to 120 days (2017: 30 to 120 days).

ANNUAL REPORT 2018

p. 171


29. Provisions

Group 2018 2017 RM’000 RM’000

Provisionforguarantees – 14,557

The movements of provisions are as follows:

Group 2018 2017 RM’000 RM’000

At beginning of the year 14,557 14,296Unrealised foreign exchange difference 318 261Reversalofprovisionforguarantees (14,875) –

Atendoftheyear – 14,557

These guarantees are denominated in Deutschemark which are equivalent to Euro3.1 million in respect of credit facilities granted by the Group with a financial institution to ACL Advanced Cargo Logistic GmbH, a former subsidiary company of the Group.

The provision for guarantees was reversed during the financial year as under the laws of the Federal Republic of Germany, the claims had become time-barred at the end of the financial year following the point in time when the claim has come into existence.

30. Employeebenefits

The Group's defined benefit plan is unfunded and it provides retirement benefits for employees upon retirement on the account of medical grounds and for employees who pass away while under employment. The retirement benefits are only applicable to employees who are in the scope of the 2 Collective Agreements signed between the National Union of Transport Equipment and Allied Industries Workers and 3 subsidiaries of the Group.

The Minister of Human Resources had on 13 November 2014 and 14 September 2015, referred the finalisation of the new Collective Agreements to the Industrial Court, pursuant to Section 26(2) of the Industrial Relations Act, 1967.

Therefore, the Collective Agreements for the period from 1 January 2011 to 31 December 2013 subsists until superseded by new Collective Agreements.

Under the subsisting Collective Agreements, eligible employees are entitled to retirement benefit amounting to one, two, three and four weeks' of last drawn salary, based on the period and length of service, upon reaching the age of 60. Eligible employees may opt to retire at the age of 50.

The Industrial Court had on 7 September 2017 and 12 September 2017 issued final consent awards with the agreement from all parties on the Collective Agreements for the period from 1 January 2014 to 31 December 2016 and 1 January 2017 to 29 February 2020.


p. 172


30. Employeebenefits(cont’d)

Under the Collective Agreements for the period from 1 January 2014 to 31 December 2016, the retirement benefits ceased with effect from 31 December 2016 and shall be calculated up to 31 December 2016 and shall be paid directly to the employees upon the employees attaining the optional retirement age of 55 years.

Under the Collective Agreements for the period from 1 January 2017 to 29 February 2020, in place of the retirement benefit, eligible employees shall receive an additional 1% based on the basic salary, in respect of the Group’s contribution to the Employee Provident Fund.

(a) The amounts recognised in the statements of financial position are determined as follows: Group 2018 2017 RM’000 RM’000

Present value of unfunded defined benefit obligations 3,524 6,247

Analysed as: Current 594 22

Non-current: Later than 1 year but not later than 2 years 124 27Later than 2 years but not later than 5 years 797 849Later than 5 years 2,009 5,349

2,930 6,225

Total employee benefits 3,524 6,247

(b) Movement in the net liability recognised in the statements of financial position:

Group 2018 2017 RM’000 RM’000

At beginning of the year 6,247 7,284Expense recognised in the profit or loss (2,089) 695Remeasurementeffectsrecognisedinothercomprehensiveincome – (1,626)Benefits paid (634) (106)


(c) The amounts recognised in the income statements:

Group 2018 2017 RM’000 RM’000

Current service cost 119 370Interest on obligation 187 325Pastservicecosts (2,395) –

Total, included in employee benefits expense (Note 6) (2,089) 695

ANNUAL REPORT 2018

p. 173


30. Employeebenefits(cont’d)

(d) Principal actuarial assumptions used at the reporting date (expressed as weighted averages):

Group 2018 2017

% %

Discount rate 5.3 5.5Futuresalaryincrease –* 5.5Priceinflation –* 3.5

* Future salary increase and price inflation assumption is no longer a principal actuarial assumptions as the Group’s retirement benefits had ceased with effect from 31 December 2016.

(e) A quantitative sensitivity analysis of the change in the rates as at 28 February 2018 and 28 February 2017 is shown below:

Group 2018 2017 Impacton Impacton defined defined Increase/ benefit benefit (decrease) obligations obligations % RM'000 RM'000

Discount rate 1.0 (205) (791)Futuresalaryincrease 1.0 – 944

Discount rate (1.0) 205 936Futuresalaryincrease (1.0) – (797)

(f) The expected benefit payments in future years are as follows:

Group 2018 2017 RM’000 RM’000

Not later than 1 year 594 22Later than 1 year and not later than 5 years 921 876Later than 5 years and not later than 10 years 1,074 3,332

2,589 4,230


p. 174


31. Borrowings

Group Company Maturity 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000

Current Secured: Obligations under financeleases 2019 541 831 – –Bankers'acceptances 2019 17,057 13,489 – –Term loans - term loan 2019 10,000 5,000 10,000 5,000 -Islamictermloan 2019 283 237 – –

27,881 19,557 10,000 5,000

Non-current Secured: Obligationsunder 2020– financeleases 2023 834 1,368 – –Term loans-termloan 2020– 2023 40,000 50,000 40,000 50,000-Islamictermloan 2020– 2022 969 1,263 – –

41,803 52,631 40,000 50,000

Total borrowings 69,684 72,188 50,000 55,000

TotalborrowingsObligations under financeleases(Note32) 1,375 2,199 – –Bankers'acceptances 17,057 13,489 – –Term loans 51,252 56,500 50,000 55,000

Total borrowings 69,684 72,188 50,000 55,000

Maturityofborrowings (excludingobligations underfinanceleases)Not later than 1 year 27,340 18,726 10,000 5,000Later than 1 year and not later than 5 years 40,969 41,263 40,000 40,000Morethan5years – 10,000 – 10,000

68,309 69,989 50,000 55,000

ANNUAL REPORT 2018

p. 175


31. Borrowings(cont’d)

The borrowings are secured by way of:

- fixed charges on certain properties of the Group with a net carrying amount of RM81,884,000 (2017: RM84,136,000);

- deposits with licensed banks of the Group amounting to RM11,901,000 (2017: RM13,678,000);- fixed and floating charges over all present and future assets of certain subsidiaries; and- corporate guarantees by the Company and by certain subsidiaries of the Group.

Obligations under finance leases

These obligations are secured by a charge over the leased assets (Note 13). The discount rates implicit in the leases of the Group range from 2.80% to 3.55% (2017: 2.00% to 3.85%) per annum.

Bankers' acceptances

Bankers’ acceptances bear interest rates which range from 3.34% to 4.00% (2017: 3.60% to 4.25%) per annum.

Term loan

Term loan bears interest rate at BLR - 0.50% per annum. The term loan is secured by certain investment properties of the Group.

Islamic term loan

Islamic term loan bears interest rate at BFR - 1.50% per annum. The term loan is secured by certain properties of the Group and corporate guarantee by the Company.


p. 176


32. Obligationsunderfinanceleases

Group 2018 2017 RM’000 RM’000

Futureminimumleasepayments:

Not later than 1 year 604 935Later than 1 year and not later than 5 years 884 1,465

Total future minimum lease payments 1,488 2,400Less: Future finance charges (113) (201)

Present value of finance lease liabilities (Note 31) 1,375 2,199

Analysisofpresentvalueoffinanceleaseliabilities:

Not later than 1 year 541 831Later than 1 year and not later than 5 years 834 1,368

1,375 2,199Less: Amount due within 12 months (541) (831)

Amount due after 12 months 834 1,368

33. Sharecapitalandsharepremium

Total Share share

capital capitaland (Issuedand Share share fullypaid) premium premium RM'000 RM'000 RM'000

GroupandCompany

At 1 March 2016 253,650 102,878 356,528AdjustmentforeffectsofCompaniesAct2016 102,878 (102,878) –

At28February2017 356,528 – 356,528

At1March2017and28February2018 356,528 – 356,528

ANNUAL REPORT 2018

p. 177


33. Sharecapitalandsharepremium(cont’d)

The holders of ordinary shares (except treasury shares) are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company residual assets.

Share premium

Share premium represents the excess of consideration received from the issue of shares over the nominal (par) value, which is based on the Companies Act, 1965 (Malaysia). On 31 January 2017, the Companies Act 2016 came into force. As a result, the share premium was reclassified under share capital balances.

34. Otherreserve

Other reserve arises from changes in the Group's equity interest in subsidiaries.

Group 2018 2017 RM’000 RM’000

At beginning of the year (32,059) (32,560)Changes of equity interest in a subsidiary: - arising from (accretion)/dilution of equity interest in a subsidiary (7,396) 501

At end of the year (39,455) (32,059)

The dilution of equity interest in a subsidiary was due to the issuance of additional DFIL shares to the non-controlling interests and accretion of equity interest in a subsidiary was due to the repurchase of shares by DFIL.

With the transactions above, the Company’s equity interest in DFIL remains at 74.30% (2017: 75.78%) as at 28 February 2018.

35. Retainedearnings

The Company may distribute dividends out of its entire retained earnings as at 28 February 2018 and 2017 under the single tier system.


p. 178


36. Commitments

(a) Capitalcommitments

Group 2018 2017 RM’000 RM’000

Capital expenditure Approved and contracted for: Property, plant and equipment 2,892 1,500 Approved but not contracted for: Property, plant and equipment 3,959 5,451

6,851 6,951

(b) Non-cancellableoperatingleasecommitments–aslessee

Future minimum rentals payable under non-cancellable operating leases (excluding land use rights) at the reporting date are as follows:

Group 2018 2017 RM’000 RM’000

Not later than 1 year 216 216Later than 1 year but not later than 5 years 864 864Later than 5 years* 164,312 164,528

165,392 165,608

Operating lease commitments represent rentals payable by the Group for use of land and buildings.

Included in operating lease commitments are commitments in respect of a non-cancellable operating lease expiring in 2038 for a piece of property leased by a subsidiary, Naluri Properties Sdn. Bhd. (“NPSB”). NPSB has an option to renew the lease for another 30 years after the expiry of the lease. Should the lease be renewed, the additional lease payments for the renewal period, which is not included in the above would amount to RM7.2 million.

* This includes non-cancellable operating lease commitment of RM161 million (2017: RM161 million) of a subsidiary, Selasih Ekslusif Sdn. Bhd..

ANNUAL REPORT 2018

p. 179


37. Relatedpartydisclosures

(a) Significanttransactions

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


Dividend income fromsubsidiaries – – 50,910 70,049DonationtoYayasan Harmoni* 2,000 3,500 200 300PurchasesfromHAP 244,160 122,008 – –Management fee paid/payabletoHAP 2,199 1,185 – –Ad-space rental received/ receivablefromHAP 2,079 1,173 – –Reimbursement of costs fromHAP 4,244 1,583 – –Interest income from subsidiaries – – 2,455 2,250Management fee charged byasubsidiary – – 915 630

* Dato'SriAdamSaniBinAbdullahisthefounderandexecutivechairmanofYayasanHarmoni,a non-profitable non-government organisation.

(b) Compensationofkeymanagementpersonnel

The remuneration of certain directors and other members of key management during the year were as follows:

Group 2018 2017 RM’000 RM’000

Short-term employee benefits 5,549 7,290Defined contribution plan 418 400

5,967 7,690

In the previous financial year, included in short-term employee benefits was the payment of retirement gratuity of RM3,000,000 to a long service employee who retired from the Group.

Included in the remuneration of total key management personnel are:

Group 2018 2017 RM’000 RM’000

Directors’ remuneration (excluding fees) 1,526 1,741


p. 180


38. Fairvalueofassetsandliabilities

(a) Fairvaluehierarchy

The Group classifies fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

- Level1:Quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities;

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

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

(b) Fairvalueofassetsandliabilitiesthatarecarriedatfairvalue

The following table shows an analysis of each class of assets and liabilities carried at fair value by level of fair value hierarchy:

Level1 Level2 Level3 Total RM'000 RM'000 RM'000 RM'000

Group

At28February2018

AssetsmeasuredatfairvalueFinancialassets:Marketablesecurities 5 – – 5Derivatives assets-Forwardcurrencycontracts – 8 – 8

Non-financialassets:Biologicalassets – – 152 152

Liabilitiesmeasuredatfair valueFinancialliabilities:Derivatives liabilities-Forwardcurrencycontracts – 26 – 26-Calloptions – – 1,017 1,017

Assetsforwhichfairvalues aredisclosedInvestmentproperties – – 95,020 95,020

ANNUAL REPORT 2018

p. 181


38. Fairvalueofassetsandliabilities(cont’d)

(b) Fairvalueofassetsandliabilitiesthatarecarriedatfairvalue(cont’d)

The following table shows an analysis of each class of assets and liabilities carried at fair value by level of fair value hierarchy (cont’d.):

Level1 Level2 Level3 Total RM'000 RM'000 RM'000 RM'000

Group

At28February2017

AssetsmeasuredatfairvalueFinancialassets:Marketablesecurities 11 – – 11Derivatives assets -Forwardcurrencycontracts – 3 – 3

Non-financialassets:Biologicalassets – – 187 187

Liabilitiesmeasuredatfair valueFinancialliabilities:Derivatives-Forwardcurrencycontracts – 13 – 13-Calloptions – – 8,993 8,993

Assetsforwhichfairvalues aredisclosedInvestmentproperties – – 93,020 93,020

Company

At28February2018

AssetsmeasuredatfairvalueFinancialassets:Marketablesecurities 5 – – 5

At28February2017

AssetsmeasuredatfairvalueFinancialassets:Marketablesecurities 11 – – 11


p. 182



(c) Level1fairvaluemeasurements

Marketable securities (Note 25): Fair value is determined directly by reference to their published market bid price at the reporting date (Level 1).

(d) Level2fairvaluemeasurements

Derivatives (Note 26): Forward currency contracts are valued using a valuation technique with market observable inputs (Level 2). The most frequently applied valuation techniques include forward pricing models, using present value calculations. The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates and interest rate curves.

(e) Level3fairvaluemeasurements

The following is a description of the fair value measurements using significant unobservable inputs (Level 3):

Biological assets (Note 23): The fair values of bearer fruits are determined by using the total sales figure in the following month with the assumptions of all the fruits harvested are sold subsequently to the customer.

Call options (Note 26): The fair values of call options are determined by using Binomial tree model, which includes some assumptions that are supported by observable market data. The key inputs used in determining the fair value are as follows:

Fairvalueasat Valuation Unobservable RangeDescription 28February2018 techniques inputs (weighted RM’000 average)

Call options 1,017 Binomial Tree Exercise price Euro1.0321 Underlying DFZ share value Euro0.7125 Volatility 36.97% Risk free rate 3.26% Dividend yield 12.07%

Fairvalueasat Valuation Unobservable RangeDescription 28February2017 techniques inputs (weighted RM’000 average)

Call options 8,993 Binomial Tree Exercise price Euro0.9852 Underlying DFZ share value Euro0.7884 Volatility 34.17% Risk free rate 3.35% Dividend yield 9.47%

Sensitivity analysis for call options

In order to determine the effect of the above reasonably possible alternative assumptions, the Group adjustedthefollowingkeyunobservableinputusedinthefairvaluemeasurement:

ANNUAL REPORT 2018

p. 183



(e) Level3fairvaluemeasurements(cont’d)

Sensitivity analysis for call options (cont’d)

If the underlying share value had been increased by 10% (2017: 10%) with all other variables held constant, the fair value of call options will increase by approximately RM1.0 million (2017: RM4.5 million) as at the end of the reporting period.

(f) Fairvalueoffinancialinstrumentsbyclassesthatarenotcarriedatfairvalueandwhosecarryingamountsareareasonableapproximationoffairvalue

The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are a reasonable approximation of fair value:

Note Trade and other receivables (current) 24 Trade and other payables (current) 28Borrowings (current) 31

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date.

The carrying amounts of the current portion of borrowings are reasonable approximations of fair values due to the insignificant impact of discounting.

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

Amounts due from/(to) holding company, subsidiaries and a related company and finance lease obligations.

The fair values of these financial instruments are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date.

(g) Fairvalueoffinancialinstrumentsbyclassesthatarenotcarriedatfairvalueandwhosecarryingamountsarenotreasonableapproximationoffairvalue

2018 2017 Carrying Fair Carrying Fair amount value amount value RM'000 RM'000 RM'000 RM'000

Group

Obligations under finance leases (Note 32) 1,375 1,406 2,199 2,214


p. 184


39. Financialriskmanagementobjectivesandpolicies

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk, foreign currency risk and market price risk.

The Board of Directors reviews and agrees policies and procedures for the management of these risks, which are executed by the Group and by the Company. The Audit Committee provides independent oversight to the effectiveness of the risk management process.

It is, and has been, throughout the current and previous financial year, the Group’s policy that no derivatives shall be undertaken except for the use as hedging instruments where appropriate and cost-efficient. The Group and the Company do not apply hedge accounting.

The following sections provide details regarding the Group’s and the Company’s exposure to the above-mentionedfinancialrisksandtheobjectives,policiesandprocessesforthemanagementoftheserisks.

(a) Creditrisk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group's credit risk is primarily attributable to trade receivables.

The credit risk of the Group's other financial assets, which comprise cash and cash equivalents, arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these financial assets.

TheGroup’sobjective is toseekcontinual revenuegrowthwhileminimising losses incurredduetoincreased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It istheGroup'spolicythatallcustomerswhowishtotradeoncredittermsaresubjecttocreditverificationprocedures. In addition, receivable balances are monitored on an on-going basis with the result that the Group's exposure to bad debts is not significant. Since the Group trades only with recognised and creditworthy third parties, there is no requirement for collateral.

The Group does not have any significant exposure to any individual customer or counterparty nor does ithaveanymajorconcentrationofcreditriskrelatedtoanyfinancialassets.

Exposure to credit risk

At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by:

- The carrying amount of each class of financial assets recognised in the statements of financial position.

- Nominal amount of RM42,029,000 (2017: RM41,700,000) relating to corporate guarantees provided by the Company as securities for banking facilities to certain subsidiaries.

ANNUAL REPORT 2018

p. 185


39. Financialriskmanagementobjectivesandpolicies(cont’d)

(a) Creditrisk(cont’d)

Credit risk concentration profile

The Group determines concentrations of credit risk by monitoring the industry sector profile of its trade receivables on an on-going basis. The credit risk concentration profile of the Group’s trade receivables at the reporting date are as follows:

Group 2018 2017

RM'000 %oftotal RM'000 %oftotal

Bybusinesssegments:

Property and hospitality 502 1% 302 1%Trading of duty free goods and non-dutiable merchandise 5,471 15% 6,522 16%Automotive 30,007 84% 33,365 83%

35,980 100% 40,189 100%

Financial assets that are neither past due nor impaired

Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment record with the Group. Cash and cash equivalents and derivatives that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.

Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired is disclosed in Note 24.

(b) Liquidityrisk

Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that refinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities at a reasonable level to its overall debt position. As far as possible, the Group raises committed funding from both capital markets and financial institutions and balances its portfolio with some short term funding so as to achieve overall cost effectiveness.


p. 186



(b) Liquidityrisk(cont’d)

Analysisoffinancialinstrumentsbyremainingcontractualmaturities

The table below summarises the maturity profile of the Group’s and of the Company’s financial assets and liabilities at the reporting date based on contractual undiscounted repayment obligations.

2018 On demand orwithin Oneto Morethan oneyear fiveyears fiveyears Total RM’000 RM’000 RM’000 RM’000

Group

Financialassets:Tradeandotherreceivables 89,860 – – 89,860Cashandbankbalances 410,231 – – 410,231Derivativesassets 8 – – 8

Total undiscounted financial assets 500,099 – – 500,099

Financialliabilities:Tradeandotherpayables 134,320 – – 134,320Derivativesliabilities 1,043 – – 1,043Borrowings 31,193 48,143 – 79,336

Total undiscounted financial liabilities 166,556 48,143 – 214,699

Total net undiscounted financialassets/(liabilities) 333,543 (48,143) – 285,400

Company

Financialassets:Otherreceivables 46,909 – – 46,909Cashandbankbalances 3,238 – – 3,238


Financialliabilities: Otherpayables 175,466 – – 175,466Borrowing 13,191 46,209 – 59,400

Total undiscounted financial liabilities 188,657 46,209 – 234,866

Total net undiscounted financialliabilities (138,510) (46,209) – (184,719)

ANNUAL REPORT 2018

p. 187



(b) Liquidityrisk(cont’d)

Analysisoffinancialinstrumentsbyremainingcontractualmaturities(cont’d)

The table below summarises the maturity profile of the Group’s and of the Company’s financial assets and liabilities at the reporting date based on contractual undiscounted repayment obligations (cont’d).

2017 On demand orwithin Oneto Morethan oneyear fiveyears fiveyears Total RM’000 RM’000 RM’000 RM’000

Group

Financialassets:Tradeandotherreceivables 88,977 – – 88,977Cashandbankbalances 303,151 – – 303,151Derivativesassets 3 – – 3


Financialliabilities:Tradeandotherpayables 141,912 – – 141,912Derivativesliabilities 9,006 – – 9,006Borrowings 23,218 51,517 10,498 85,233

Total undiscounted financial liabilities 174,136 51,517 10,498 236,151

Total net undiscounted financial assets/(liabilities) 217,995 (51,517) (10,498) 155,980

Company

Financialassets:Otherreceivables 42,247 – – 42,247Cashandbankbalances 11,448 – – 11,448


Financialliabilities:Otherpayables 176,140 – – 176,140Borrowing 8,404 48,540 10,499 67,443

Total undiscounted financial liabilities 184,544 48,540 10,499 243,583

Total net undiscounted financial liabilities (130,849) (48,540) (10,499) (189,888)


p. 188



(c) Interestraterisk

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

The Group's and the Company’s exposure to interest rate risk arises primarily from interest-bearing borrowings. Borrowings at floating rates expose the Group to cash flow interest rate risk. Borrowings obtained at fixed rates expose the Group to fair value interest rate risk.

The Group manages its interest rate exposure by maintaining a mix of fixed and floating rate borrowings.

Sensitivity analysis for interest rate risk

The table below demonstrates the sensitivity to a reasonably possible change in interest rates with all other variables held constant, of the Group's and of the Company’s profit net of tax (mainly through the impact on interest expense on floating rate loans and borrowings). The assumed movement in the basis points for interest rate sensitivity analysis is based on the currently observable market environment.

Increase/ (decrease) Effecton

inbasis profitnet points oftax RM'000

Group

28February2018Ringgit Malaysia +10 73Ringgit Malaysia -10 (73)

28February2017Ringgit Malaysia +10 89Ringgit Malaysia -10 (89)

Company 28February2018Ringgit Malaysia +10 (36)Ringgit Malaysia -10 36

28February2017Ringgit Malaysia +10 (42)Ringgit Malaysia -10 42

ANNUAL REPORT 2018

p. 189



(d) Foreigncurrencyrisk

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 has transactional currency exposures arising from sales or purchases that are denominated in a currency other than the functional currency of the operations to which they relate, primarily United StatesDollar (“USD”),SingaporeDollar (“SGD”),ThaiBaht ("THB")andJapaneseYen("JPY").TheforeigncurrenciesinwhichthesetransactionsaredenominatedaremainlyUSDandJPY.Approximately64% (2017: 52%) of the Group’s purchases are denominated in foreign currencies. Foreign currency exposures in transactional currencies other than functional currencies of the operating entities are kept to an acceptable level.

The Group also holds cash and cash equivalents denominated in foreign currencies for working capital purposes. At the reporting date, such foreign currency balances (mainly in Euro (“EUR”), SGD and USD) amount to RM191,632,000 (2017: RM181,186,000).

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the Group's profit net of tax to a reasonably possible changeintheUSD,SGD,THB,JPYandEURexchangeratesagainsttherespectivefunctionalcurrenciesof the Group entities, with all other variables held constant.

Group 2018 2017 RM’000 RM’000

USD/RM - strengthened 3% (2017: 3%) 2,712 3,863 - weakened 3% (2017: 3%) (2,712) (3,863) SGD/RM - strengthened 3% (2017: 3%) 236 13 - weakened 3% (2017: 3%) (236) (13) THB/RM - strengthened 3% (2017: 3%) (47) (80) - weakened 3% (2017: 3%) 47 80 JPY/RM -strengthened3%(2017:3%) (140) (201) - weakened 3% (2017: 3%) 140 201 EUR/RM -strengthened3%(2017:3%) 1,412 – -weakened3%(2017:3%) (1,412) –

(e) Marketpricerisk

Market price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates).

The Group does not have exposure to commodity price risk.


p. 190


40. Capitalmanagement

TheprimaryobjectiveoftheGroup’scapitalmanagementistoensurethatitmaintainsastrongcreditratingand healthy capital ratios in order to support its business and maximise shareholder value.

TheGroupmanages its capital structure andmakes adjustments to it, in light of changes in economicconditions. Tomaintain or adjust the capital structure, theGroupmay adjust thedividendpayment toshareholders,returncapitaltoshareholdersorissuenewshares.Nochangesweremadeintheobjectives,policies or processes during the year under review.

The Group monitors capital using a gearing ratio, which is total external debt divided by total capital.

The Group ensures that the gearing ratio shall not be more than 2.0 times to comply with covenants from its borrowings.

The Group includes within total external debt, all financial borrowings of the Group. Total external debt due and payable within 12 months consists of bankers’ acceptances, bank overdrafts, interest payable and current portion of obligations under finance leases. Capital includes equity attributable to owners of the parent and non-controlling interests.


Borrowings (non-current) 41,803 52,631 40,000 50,000Borrowings (current excluding term loans, i.e. due and payablewithin12months) 17,598 14,320 – –Borrowings (current - term loans) 10,283 5,237 10,000 5,000

Total external debt 69,684 72,188 50,000 55,000

Total equity 712,027 648,780 849,765 856,781

Gearing ratio (times) 0.10 0.11 0.06 0.06

ANNUAL REPORT 2018

p. 191


41. Segmentinformation

(a) Reportingformat

The primary segment reporting format is determined to be business segments as the Group's risks and rates of return are affected predominantly by differences in the products and services. The activities of the Group are carried out mainly in Malaysia and as such, segmental reporting by geographical locations is not presented. The operating businesses are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.

(b) Businesssegments

The Group comprises the following main business segments:

(i) Investment holding;

(ii) Property and hospitality;

(iii) Trading of duty free goods and non-dutiable merchandise; and

(iv) Automotive.

Other business segments mainly consist of provision of corporate services, dormant and inactive companies, none of which are of a sufficient size to be reported separately.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. Group financing (including finance costs) and income taxes are managed on a group basis and are not allocated to operating segments.

(c) Allocationbasisandtransferpricing

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

The directors are of the opinion that transfer prices between business segments are based on negotiated prices. Segment revenue, expenses and results include transfers between business segments. These transfers are eliminated on consolidation.


p. 192


41.

Seg

men

tinform

ation(cont’d.)

2018

Trading

ofdutyfree

Per

Prope

rty

good

s an

d

Adjus

tmen

ts

co

nsolidated

Inve

stmen

tan

dno

n-du

tiable

and

fin

ancial

holding

hos

pitalitym

erch

andise

Autom

otive

Others

elim

inations

statemen

ts

RM’000

R

M’000

R

M’000

R

M’000

R

M’000

R

M’000

Note

RM’000

Rev

enue

:

Externalcus

tomers

3,20

828

,115

61

8,96

717

5,88

416

1–

82

6,33

5Inter-se

gmen

t14

8,15

542

3–

–7,36

5(155

,943

)A

–

Tota

l rev

enue

15

1,36

3 28

,538

61

8,96

7 17

5,88

4 7,

526

(155

,943

)

826,

335

Res

ults:

Dep

reciation

–(6,034

)(3,670

)(6,181

)(30)

29

(15,88

6)Amortis

ationofla

nduse

righ

ts

–(465

)–

––

15

(450

)Lo

ss a

risin

g fro

m c

hang

es in

fairva

lueofbiologica

lass

ets

–(35)

––

––

(35)

Gai

n ar

isin

g fro

m c

hang

es in

fair

va

lueofoptions

7,97

6–

––

––

7,97

6Sha

reofres

ultsofa

nas

sociate

158

––

––

–

158

Othernon

-cas

hinco

me/(exp

ense

s)

229

(2)

(487

)(187

)–

–B

(447

)S

egm

ent p

rofit

64

,902

7,

743

99,9

64

12,3

84

5,08

4 (9

8,79

1)

C

91,2

86

Ass

ets:

Inve

stmen

tinas

sociate

721

––

––

–

721

Add

ition

stonon

-currentass

ets

128

1,07

52,32

68,16

549

–

D

11,743

Seg

men

t ass

ets

32

4,40

1 12

9,73

9 36

3,35

3 13

3,18

8 5,

224

10,6

51

E 96

6,55

6

Liab

ilitie

s:

S

egm

ent l

iabi

litie

s 20

,244

40

,506

86

,736

44

,837

1,

089

61,1

17

F 25

4,52

9

ANNUAL REPORT 2018

p. 193


41.

Seg

men

tinform

ation(cont’d)

2017

Trading

ofdutyfree

Per

Prope

rty

good

s an

d

Adjus

tmen

ts

co

nsolidated

Inve

stmen

tan

dno

n-du

tiable

and

fin

ancial

holding

hos

pitalitym

erch

andise

Autom

otive

Others

elim

inations

statemen

ts

RM’000

R

M’000

R

M’000

R

M’000

R

M’000

R

M’000

Note

RM’000

Rev

enue

:

Externalcus

tomers

1,63

628

,825

63

1,72

114

7,22

132

–

80

9,43

5Inter-se

gmen

t16

6,76

848

0–

–7,43

5(174

,683

)A

–

Tota

l rev

enue

16

8,40

4 29

,305

63

1,72

1 14

7,22

1 7,

467

(174

,683

)

809,

435

Res

ults:

Dep

reciation

–(6,033

)(4,184

)(5,504

)(817

)30

(16,50

8)Amortis

ationofla

nduse

righ

ts

–(465

)–

––

16

(449

)G

ain

aris

ing

from

cha

nges

in fa

irva

lueofbiologica

lass

ets

–5

––

––

5

Gai

n ar

isin

g fro

m c

hang

es in

fair

va

lueofoptions

4,04

4–

––

––

4,04

4Sha

reofres

ultsofa

nas

sociate

19

––

––

–

19Othernon

-cas

hex

pens

es

(191

)(1)

(1,738

)(58)

––

B

(1,988

)S

egm

ent p

rofit

/(los

s)

106,

453

7,01

5 87

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6,

011

(10,

715)

(9

9,83

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C

96,5

53

Ass

ets:

Inve

stmen

tinas

sociate

563

––

––

–

563

Add

ition

stonon

-currentass

ets

102

392

4,56

411

,759

27

–

D

16,844

Seg

men

t ass

ets

24

4,72

2 12

7,02

0 42

9,48

6 13

3,88

8 80

3 10

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E

946,

046

Liab

ilitie

s:

S

egm

ent l

iabi

litie

s 49

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10

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96

,481

57

,526

15

,471

68

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F

297,

266


p. 194


41. Segmentinformation(cont’d)

A Inter-segment revenues are eliminated on consolidation.

B Other material non-cash (expenses)/income consist of the following items as presented in the respective notes to the financial statements:

Note 2018 2017 RM'000 RM'000

Changes in fair value of marketable securities 5/8 229 (191)Impairment loss on receivables 8 (22) (24)Inventories written down 8 (1,134) (2,223)Inventories written off 8 (157) (88)Reversal of inventories written off 5 668 578Property, plant and equipment written off 8 (31) (40)

(447) (1,988)

C The following items are deducted from/(added to) segment profit to arrive at “Profit before tax” presented

in the income statements:

2018 2017 RM'000 RM'000

Inter-segment transactions 94,790 94,468Share of results of an associate (158) (19)Finance costs 4,159 5,382

98,791 99,831

D Additions to non-current assets consist of:

2018 2017 RM’000 RM’000

Property, plant and equipment 11,716 16,751Investment properties 27 93

11,743 16,844

ANNUAL REPORT 2018

p. 195


41. Segmentinformation(cont’d)

E The following items are added to segment assets to arrive at total assets reported in the statements of financial position:

2018 2017 RM’000 RM’000

Investment in associate 721 563Deferred tax assets 2,267 1,734Tax recoverable 7,663 7,830

10,651 10,127

F The following items are added to segment liabilities to arrive at total liabilities reported in the statements of financial position:

2018 2017 RM'000 RM'000

Deferred tax liabilities 7,121 7,223Tax payable 2,744 4,351Borrowings 51,252 56,500

61,117 68,074

42. Materiallitigations

Bills of Demand in respect of import duties, excise duties, sales tax and GST

On30November2017,theCompanyannouncedthattheCompany’ssubsidiary,SeruntunMajuSdn.Bhd.(“SMSB”) had received Bills of Demand dated 14 November 2017 from the Royal Malaysian Customs of Perak Darul Ridzuan (“Customs”), which SMSB received on 21 November 2017, demanding payments of customs duties, excise duties, sales tax and Goods and Services Tax (“GST”) all totalling RM41,595,000 for the period from 15 November 2014 to 30 September 2016.

The said Bills of Demand were raised by the Customs who alleged that SMSB did not comply with certain conditions of a duty-free shop located at the border.

The Company, after consultation with its solicitors, strongly believes that there is no legal and/or factual basis for the Customs to arrive at their decision to raise the said Bills of Demand. This is especially so since SMSB’s duty free shop is located after the last customs station en-route out of Malaysia and before the first customs station en-route into Malaysia, where no duties are payable. The solicitors of SMSB are taking the necessary defence actions on its behalf.

On29November2017,theHighCourtgrantedleavetoSMSB’sapplicationforjudicialreview,aswellasaninterim stay of the enforcement of the Bills of Demand until the disposal of the inter partes stay hearing under the Customs Act 1967 and Excise Act, 1976.


p. 196


42. Materiallitigations(cont’d)

The High Court has on 4 January 2018 fixed the case for hearing on 12 April 2018 and subsequently postponed to 17 April 2018. During the hearing on 17 April 2018, SMSB argued that the Bills of Demand are illegal and areraisedbeyondthescopeoftheCustoms’jurisdiction.Thisisonthepremisethattheallegedconditionswere not attached to the duty free shop licences issued to SMSB, as required under Section 65D(2) of the Customs Act 1967.

The High Court subsequently fixed for decision of the matter on 25 May 2018. In addition, the High Court also granted interim stay of enforcement of the Bills of Demand until the date of decision.

On 12 December 2017, SMSB had also appealed to the Director-General of Customs in respect of the sales tax pursuant to Section 68 of the Sales Tax Act and had submitted an application to the Director-General in respect of GST pursuant to Section 124 of the GST Act. To-date, the matter is still pending a decision from the Director-General of Customs.

The Board, having obtained advice from its solicitor, is of the opinion that the demand payment from the Customs is possible, but not probable, that the Customs will succeed and accordingly no provision for any liability has been made in the financial statements.

43. Significantandsubsequentevents

(a) On 13 February 2017, an announcement was made by a subsidiary of the Company, Duty Free International Limited (“DFIL”) in relation to the issuance of an aggregate of 18,500,000 new ordinary shares in the capital of DFIL (“Subscription Shares 1”) at an issue price of S$0.38 for each Subscription Share (“Subscription 1”), representing approximately 1.55% of the total number of issued ordinary shares of DFIL.

On 24 February 2017, an announcement was made by DFIL in relation to the issuance of an aggregate of 15,650,000 ordinary shares in the capital of DFIL (“Subscription Shares 2”) at an issue price of S$0.38 for each Subscription Share (“Subscription 2”), representing approximately 1.31% of the total number of issued ordinary shares of DFIL.

Further to the DFIL’s announcement on 16 March 2017 in relation to the Approval In-Principle, the total 34,150,000 Subscription Shares 1 and Subscription Shares 2 were issued and allotted to the Subscribers pursuant to the Subscription 1 and Subscription 5 on 23 March 2017. These Subscription Shares were subsequently listed and quoted on the Mainboard on 24 March 2017.

As a consequence of issuance of Subscription Shares 1 and 2, the Company’s holding in DFIL was diluted to 73.67% as at 24 March 2017 from 75.78% as at 26 August 2016.

(b) During the financial year, DFIL had repurchased 10,453,900 of its ordinary shares from the open market for a total consideration of RM9,985,000 (including transaction cost). The shares were bought with internally generated funds and all repurchased shares are being held as treasury shares.

With the repurchase of shares by DFIL, the Company’s holding in DFIL (excluding treasury shares) increased from 73.67% as at 24 March 2017 to 74.30% as at 21 September 2017.

Following the completion of repurchase of shares, DFIL’s issued and paid-up share capital comprises 1,218,046,493 ordinary shares, excluding 11,151,900 treasury shares and also DFIL has 491,400,042 outstanding convertible warrants each with exercise price of S$0.43 expiring 13 May 2022.

ANNUAL REPORT 2018

p. 197


43. Significantandsubsequentevents(cont’d)

(c) On 24 March 2017, an announcement was made by a subsidiary of the Company, DFIL, has proposed a bonus issue of up to 491,400,157 warrants (“Bonus Warrants”), on the basis of two (2) Bonus Warrants for every five (5) existing ordinary shares in the capital of DFIL (“Proposed Bonus Warrant Issue”) held by the shareholders of DFIL (“Shareholders”) as at 5.00 p.m. on 9 May 2017 (the “Book Closure Date”).

On 28 April 2017, the proposed Bonus Warrants was approved with the exercise price of SGD0.43 per each new share.

DFIL had on 2 May 2017 (a) executed a deed poll constituting the Bonus warrants, and (b) entered into a warrant agency agreement with Boardroom Corporate & Advisory Services Pte Ltd (“Boardroom”) in relation to the appointment of Boardroom as the warrant agent and registrar for the Bonus Warrants.

Further to the Announcements in relation to the Proposed Bonus Warrant Issue, DFIL had on 16 May 2017 announced that 491,400,042 Bonus Warrants have been issued and allotted to Shareholders who are entitled to the Bonus Warrants as at 5.00pm on 9 May 2017 pursuant to the Proposed Bonus Warrant Issue. The Bonus Warrants were subsequently listed and quoted on the Official List of the SGX-ST with effect from 9.00 a.m. on 18 May 2017.

Consequently, 362,011,245 Bonus Warrants were allotted to the Company.

The Bonus Warrants are exercisable during the period commencing on and including the date six (6) months from the date of listing of the Bonus Warrants on the SGX-ST and expiring at 5.00 p.m. on the date immediately preceding the fifth (5th) anniversary of the date of issue of the Bonus Warrants unless such date is a date on which the Register of Members of DFIL is closed or is not a Market Day, in which event the exercise period shall expire on the date prior to the closure of the Register of Members of DFIL or the immediately preceding Market Day, but excluding such period(s) during which the register of Warrant holders of DFIL may be closed pursuant to the terms and conditions of the Bonus Warrants set out in the Deed Poll.

(d) On 19 July 2017, the Board of the Company announced that following the application made to the Companies Commission of Malaysia (“CCM”) for striking off its dormant wholly-owned subsidiary, Naluri Corporation Sdn. Bhd. (Company no. 76466-X) (“NCSB”) pursuant to Section 308 of the Companies Act, 2016 (“Act”), NCSB had received a letter dated 17 July 2017 from CCM confirming NCSB had been dissolved on 20 March 2017 pursuant to Section 308 of the Act.

The striking-off of NCSB has no material effect on the earnings or net assets of the Group for the financial year ended 28 February 2018.

(e) On 6 October 2017, the Board of the Company announced that the Company’s subsidiary, DFIL has on 6 October 2017 made an announcement that its subsidiary, DFZ Capital Berhad had received a notice from the Companies Commission of Malaysia confirming that DFZ Capital Berhad had been converted from a public company limited by shares to a private company limited by shares.

Consequently, DFZ Capital Berhad’s name was changed to DFZ Capital Sdn. Bhd. with effect from 6 October 2017.


p. 198


43. Significantandsubsequentevents(cont’d)

(f) In prior year, a subsidiary of the Company, DFIL disposed of 10% equity interest plus one share in DFZ Capital Sdn Bhd (“DFZ”) to Heinemann Asia Pacific Pte Ltd (“HAP”) for an aggregate cash consideration of Euro19,700,000. In addition, DFIL has granted call options to HAP, in which the aggregate number of shares in DFZ which may be acquired by HAP under the call options shall not exceed 15% of the issued and paid-up share capital of DFZ. The details of the two tranches granted to HAP are as follows:

(i) Exercise period from 1 June 2016 to 30 November 2017 with the disposal consideration based on agreed enterprise value of Euro197,000,000 (“Second Tranche Call Option”).

(ii) Exercise period from 1 December 2017 to 30 November 2018 with the disposal consideration based on agreed enterprise value of Euro216,700,000 (“Third Tranche Call Option”).

In addition, DFIL has also granted put option to HAP where HAP can require DFIL to purchase the DFZ shares held by HAP in the event of change of control or substantial violation to the terms of agreements between HAP and DFIL Group. The fair value of put option was assessed to be nil as the exercise price was based on the fair value of DFZ shares at the exercise date.

On 30 November 2017, DFIL announced that HAP has exercised the Second Tranche Call Option, requiring DFIL to sell to HAP 5% of the issued and paid-up share capital of DFZ, being 10,498,191 shares in DFZ, for a consideration of Euro9,850,000 (“Second Tranche Call Option Disposal”).

The sales and purchase of the Second Tranche Sale Shares was completed on 29 December 2017. Consequently, HAP’s equity interest in DFZ increased from 10% plus one share to 15% plus one share.

(g) On 22 January 2018, the Board of the Company announced that following the application made to the Companies Commission of Malaysia (“CCM”) for striking off its dormant wholly-owned subsidiary, International Aviation Consultants Sdn. Bhd. (Company no. 443183-M) (“IACSB”) pursuant to Section 308 of the Companies Act, 2016 (“Act”), IACSB had been struck off from the Register and dissolved following the publication of the notice of striking off pursuant to Section 308(4) of the Act in the Gazette on 29 June 2017.

The notice of striking off pursuant to Section 308(4) of the Act issued by CCM notifying on the aforesaid struck off and dissolution was dated 27 December 2017 and received by IACSB on 22 January 2018.

The striking-off of IACSB has no material effect on the earnings or net assets of the Group for the financial year ended 28 February 2018.

ANNUAL REPORT 2018

p. 199

analySiS of SharehOldingSaS at 31 may 2018

Directors’DirectandDeemedInterestsintheCompanyand/oritssubsidiarycompanies

According to the Register of Directors’ Shareholdings required to be kept under Section 59 of the Companies Act 2016 the Directors’ interests in the Company and its subsidiaries are as follows:-

DirectInterest DeemedInterest No.of No.of Ordinary Ordinary Shares % Shares %

Dato’ Sri Adam Sani Bin Abdullah 64,061 0.03 130,255,153 (1) 51.35

Notes:-

(a) Dato’ Sri Adam Sani Bin Abdullah is deemed to have an interest in the shares of all the subsidiaries by virtue of his interest in the shares in the Company.

(b) Other than disclosed above, none of the other Directors had any interest in shares in the Company or its subsidiaries.

(c) (1) Deemed interested through Distinct Continent Sdn. Bhd. and Alpretz Capital Sdn. Bhd.

ListofSubstantialShareholdersasat31May2018(AsshownintheRegisterofSubstantialShareholders)

DirectInterest DeemedInterest No.of No.of Ordinary OrdinaryNameofSubstantialShareholders Shares % Shares %

Distinct Continent Sdn. Bhd. 83,220,340 32.81 47,034,813 (1) 18.54AlpretzCapitalSdn.Bhd. 47,034,813 18.54 – –Dato’ Sri Adam Sani Bin Abdullah 64,061 0.03 130,255,153 (2) 51.35SebastianPaulLimChinFoo – – 130,255,153(2) 51.35BerjayaCorporationBerhad 60,600,000 23.89 7,100,000(3) 2.80TanSriDato'SeriVincent – – 67,930,000(4) 26.78 TanCheeYioun

Notes:-

(1) Deemed interested by virtue of Alpretz Capital Sdn. Bhd. being a wholly owned subsidiary of Distinct Continent Sdn. Bhd.

(2) Deemed interested through Distinct Continent Sdn. Bhd. and Alpretz Capital Sdn. Bhd. by virtue of Section 8 of the Companies Act 2016

(3) DeemedinterestedbyvirtueofitsinterestinInter-PacificCapitalSdn.Bhd.andBerjayaPhilippinesInc.(4) DeemedinterestedbyvirtueofhisinterestinBerjayaCorporationBerhadanditsrelatedcorporation.


p. 200

analySiS of SharehOldingS (COnt’d)

ANALYSIS OF SHAREHOLDINGS AS AT 31 MAY 2018

Class of Shares : Ordinary shares (“Share(s)”)

VotingRights : One(1)voteperShare

DISTRIBUTION OF SHAREHOLDINGS AS AT 31 MAY 2018 No.of %of No.of %ofIssuedSizeofShareholdings Shareholders Shareholders Shares ShareCapital

Less than 100 181 17.30 4,679 0.00100–1,000 301 28.78 101,249 0.041,001–10,000 395 37.76 1,307,618 0.5210,001–100,000 108 10.33 3,542,388 1.40100,001 to less than 5% of issued shares 57 5.45 131,786,225 51.965% and above of issued shares 4 0.38 116,908,250 46.09

TOTAL 1,046 100.00 253,650,409 100.00

THIRTY(30)LARGESTSHAREHOLDERSASAT31MAY2018

No.ofNameofShareholders SharesHeld %

1. ABB Nominee (Tempatan) Sdn. Bhd. 56,337,750 22.21 - Pledged Securities Account for Distinct Continent Sdn. Bhd. (Adam Sani)

2. AllianceGroup Nominees (Tempatan) Sdn. Bhd. 23,000,000 9.07 -PledgedSecuritiesAccountforBerjayaCorporationBerhad

3. ABB Nominee (Tempatan) Sdn. Bhd. 22,270,500 8.78 - Pledged Securities Account for Alpretz Capital Sdn. Bhd.

4. RHB Nominees (Tempatan) Sdn. Bhd. 15,300,000 6.03 - Bank of China (Malaysia) Berhad Pledged Securities Account for Distinct Continent Sdn. Bhd.

5. Alpretz Capital Sdn. Bhd. 11,764,313 4.64

6. RHB Nominees (Tempatan) Sdn. Bhd. 11,552,367 4.55 - Bank of China (Malaysia) Berhad Pledged Securities Account for Distinct Continent Sdn. Bhd. (OKB)

7. RHB Nominees (Tempatan) Sdn. Bhd. 10,500,000 4.14 - Bank of China (Malaysia) Berhad Pledged Securities Account forBerjayaCorporationBerhad

8. Lembaga Tabung Angkatan Tentera 9,934,900 3.92

9. Maybank Nominees (Tempatan) Sdn. Bhd. 9,000,000 3.55 -PledgedSecuritiesAccountforBerjayaCorporationBerhad

10. Affin Hwang Nominees (Tempatan) Sdn. Bhd. 6,700,000 2.64 -PledgedSecuritiesAccountforBerjayaCorporationBerhad

ANNUAL REPORT 2018

p. 201

analySiS of SharehOldingS (COnt’d)

THIRTY(30)LARGESTSHAREHOLDERSASAT31MAY2018

No.ofNameofShareholders SharesHeld %

11. Kenanga Nominees (Tempatan) Sdn. Bhd. 6,000,000 2.37 - Pledged Securities Account for Alpretz Capital Sdn. Bhd.

12. CIMB Group Nominees (Tempatan) Sdn. Bhd. 5,800,000 2.29 -PledgedSecuritiesAccountforBerjayaCorporationBerhad

13. UOB Kay Hian Nominees (Asing) Sdn. Bhd. 5,621,643 2.22 - Exempt An For UOB Kay Hian Pte Ltd

14. Inter-Pacific Equity Nominees (Asing) Sdn. Bhd. 5,100,000 2.01 -BerjayaPhilippinesInc.

15. Inter-Pacific Equity Nominees (Tempatan) Sdn. Bhd. 5,000,000 1.97 - IPM for Alpretz Capital Sdn. Bhd.

16. Phoon Ching Heong 3,995,554 1.58

17. Kenanga Nominees (Tempatan) Sdn. Bhd. 3,960,000 1.56 -PledgedSecuritiesAccountforChooYeowMing

18. MIDF Amanah Investment Nominees (Tempatan) Sdn. Bhd. 3,380,000 1.33 -PledgedSecuritiesAccountforBerjayaCorporationBerhad

19. CIMB Group Nominees (Asing) Sdn. Bhd. 2,732,100 1.08 - Exempt An For DBS Bank Ltd

20. Cartaban Nominees (Asing) Sdn. Bhd. 2,614,775 1.03 - Exempt An For LGT Bank AG (Foreign)

21. Chew Soo Lin 2,340,834 0.92

22. Kenanga Nominees (Tempatan) Sdn. Bhd. 2,000,000 0.79 - Pledged Securities Account for Alpretz Capital Sdn. Bhd.

23. RHB Nominees (Tempatan) Sdn. Bhd. 2,000,000 0.79 - Bank Of China (Malaysia) Berhad Pledged Securities Account for Inter-Pacific Capital Sdn. Bhd.

24. UOB Kay Hian Nominees (Asing) Sdn. Bhd. 1,502,132 0.59 - Pledged Securities Account for Chew Soo Lin

25. Kenanga Nominees (Asing) Sdn. Bhd. 1,500,000 0.59 - Pledged Securities Account for Seymour Pacific Limited

26. Citigroup Nominees (Tempatan) Sdn. Bhd. 1,428,288 0.56 - UBS AG SG for Phoon Ching Heong

27. HLB Nominees (Asing) Sdn. Bhd. 1,414,475 0.56 - Southern Dynamic Consultants Limited

28. SyedSirajuddinPutraJamalullail 1,350,041 0.53

29. E-Fos Sdn. Bhd. 1,267,875 0.50

30. Maybank Nominees (Tempatan) Sdn. Bhd. 1,188,155 0.47 - Pledged Securities Account for Stuart Saw Teik Siew


p. 202

Location Description ExistingUseTenure/ExpiryDate

AgeofBuildingYears

ApproxAreas

SqMetre

NetBookValue

asat28February

2018RM’mil

DateofAcquisition

1 Lot No. 1, Section 63, Town of Kuala Lumpur, Wilayah Persekutuan

Office building,hotel apartment building andbuilding underconstruction

Registered office, officeblock for rentand hotel apartments for letting

Leasehold (60 years - expiring2038) renewable for a further30 years

Office building

(32),Hotel

apartment (21)

18,701.20 55.48 1974

2 Lot PT 482 HS(M) 19/1981, Mukim Sungai Laka, Daerah Kubang Pasu, Kedah Darul Aman

Double storeyshophouse

Staff quarters Leasehold (99 years - expiring2080)

31 297.00 0.08 1987

3 Lot 2224 HS(M) 1/1987, PT 1443, Bukit Kayu Hitam, Mukim Sungai Laka, Daerah Kubang Pasu, Kedah Darul Aman

A single storeywarehouse annexed to a double storeyshopping complexand 30 units ofsingle storeylock-up shops andancillary building

Duty Free shopping complex and warehouse

Leasehold (60 years - expiring2072)

30 20,234.00 2.25 1987

4 Lot 127-142 & 169-174, PT 1889-1904 & 1931-1936, HS(M) 135/1989- 150/1989 & 177/1989- 82/1989, Bandar Baru Laka Temin, Mukim Sungai Laka, Daerah Kubang Pasu, Kedah Darul Aman

22 units singlestorey terrace house

Staff quarters Leasehold (99 years - expiring2088)

25 3,216.00 0.37 1996

5 Lot 475, Seksyen 1, Bandar Batu Ferringhi, Daerah Timur Laut, Pulau Pinang Darul Mutiara

Vacantland Vacantland Freehold N/A 2,346.00 – 2003

6 Lot 3688, 3689 & PT 2209, Bukit Kayu Hitam, Mukim Sungai Laka, Daerah Kubang Pasu, Kedah Darul Aman

Vacantland,part of which isGolf and CountryClub

Rented out and partly vacant

Leasehold (60 years - expiring2053 and 2057)

20 3,127,220.00 39.57 1993 & 1997

liSt of PrOPertieSfOr finanCial year ended 28 february 2018

ANNUAL REPORT 2018

p. 203

liSt of PrOPertieS (COnt’d)


AgeofBuildingYears

ApproxAreas

SqMetre

NetBookValue

asat28February

2018RM’mil

DateofAcquisition

7 Lot 44 Premises No. 42/1/2&3, Kompleks MunshiAbdullah, Jalan Munshi Abdullah, 75100 MelakaDarul Azim

4 & 1/2 storey shophouse

Business and office premises


33 130.00 0.40 1992

8 Lot 4720,Mukim Titi Tinggi, 2 Jalan Baru Sadao, 02100 Padang Besar, Perlis Darul Sunnah

Store Store Leasehold (60 years - expiring2054)

24 9,474.00

10.51

1994

9 Lot 3548, Mukim Titi Tinggi, 2 Jalan Baru Sadao, 02100 Padang Besar, Perlis Darul Sunnah

Warehouse annexed to a single storey shopping complex

Duty Free Complex andwarehouse


26 14,658.00 1990

10 Lot 2063, Mukim Titi Tinggi, Padang Besar, 30 Bangunan PKENPs, Jalan Besar, 02100 Padang Besar, Perlis Darul Sunnah

Shop Shop Freehold 31 223.00 0.17 1990

11 Shop Lot Nos 47 & 48, Mukim Titi Tinggi, Padang Besar, 3D & 4D Kompleks Arked Niaga PKENPs, 02100 Padang Besar, Perlis Darul Sunnah

Shop Shop Leasehold (99 years - expiring2090)

28 58.00 0.23 1990

12 PN 108045, Lot 4858, Mukim Pengkalan Hulu, District of Hulu Perak, Perak Darul Ridzuan

Duty Free Complex Duty Free Complex


28 10,116.00 8.99 1990

13 Lot No. 5017, Mukim Kapar, District of Klang, Selangor Darul Ehsan

Industrial premises Factories, office and ancillary buildings

Freehold 14 - 33 12,140.55 11.63 1982


p. 204

liSt of PrOPertieS (COnt’d)


AgeofBuildingYears

ApproxAreas

SqMetre

NetBookValue

asat28February

2018RM’mil

DateofAcquisition

14 Lot No PT 54753, Mukim Kapar, District of Klang, Selangor Darul Ehsan

Industrial premises Factory, office and warehouse

Freehold 15 - 40 24,281.00 15.69 1979

15 Lot no PT 6731, Kawasan Perindustrian Berat Gurun, Mukim Gurun, District of Kuala Muda, Kedah Darul Aman

Industrial premises Vacant Leasehold (60 years)

11 43,541.33 2.68 2005

16 8 PersiaranKampung Jawa, No Hakmilik 6711,Lot 9891, Mukim 12, Daerah Barat Daya, Pulau Pinang Darul Mutiara

Factory land and building

Business and office premises

Leasehold (99 years expiring2113)

20 4,355.00

5.20

2002

17 PajakanNegeriNo3839, Lot no 11618, Mukim 12, Daerah Barat Daya, Pulau Pinang Darul Mutiara

Factory land Business and office premises

Leasehold (99 years expiring2111)

N/A 1,106.00 2001

18 PS 1641-A, Kawasan PerindustrianPulau Sebang, 78000 AlorGajah,Melaka.

A single-storey open-sided detached factory

Factory Leasehold (99 years expiring on 23 Oct2100)

2 2,323.04 2.32 2017

ANNUAL REPORT 2018

p. 205

notiCe of annual general meeting

NOTICE IS HEREBY GIVEN THAT the Twenty-Ninth Annual General Meeting (“29th AGM”) of AtlanHoldingsBhd. will be held at the Meeting Room, Wisma Atlan, 8 Persiaran Kampung Jawa, 11900 Bayan Lepas, Penang on Tuesday, 28 August 2018 at 11.00 a.m. for the following purposes:-

AGENDA

AsOrdinaryBusiness:- 1. To receive the Audited Financial Statements for the financial year ended 28 February

2018 together with the Directors’ and Auditors’ Report thereon. 2. To re-elect the following Directors who retire by rotation in accordance with

Article 78 of the Company’s Constitution and being eligible, offer themselves for re-election:-

a) Mr. Lee Sze Siang; andb) Dato’ Woo Hon Kong;

YangAmatMuliaTengkuAbdulRahmanIbniSultanHjAhmadShahAl-MustainBillah, DK II., SSAP who retires by rotation pursuant to Article 78 of the Company’s Constitution, has expressed his intention not to seek for re-election and hence, he will retain office until the conclusion of this 29th AGM.

3. Tore-electRajaDato’ShaharudinShahbinRajaJalilShahwhoretiresinaccordancewith Article 85 of the Company’s Constitution and being eligible, has offered himself for re-election.

4. Tore-appointMessrs.Ernst&YoungasAuditorsoftheCompanyfortheensuingyearand to authorise the Directors to fix their remuneration.

AsSpecialBusiness:-

5. To consider and if thought fit, to pass the following resolutions, with or without any modifications, as Ordinary Resolutions:-

i) OrdinaryResolution PaymentofDirectors’Fees

“THAT the Directors’ fees of RM260,500 for the financial year ended 28 February 2018 be and is hereby approved.”

ii) OrdinaryResolution PaymentofbenefitspayabletotheDirectors

“THAT the payment of benefit payable to the Directors of the Company up to an amount of RM200,000 from the conclusion of this meeting until the next Annual General Meeting of the Company pursuant to Section 230(1)(b) of the Companies Act 2016 be and is hereby approved.”

(Please refer to Note 2)

Resolution 1Resolution 2

Resolution 3

Resolution 4

Resolution 5

Resolution 6


p. 206

notiCe of annual general meeting (COnt’d)

iii) OrdinaryResolution Authoritytoissueandallotshares

“THAT subject always to theCompaniesAct 2016 (“Act”), theCompany’sConstitution, the Listing Requirements of Bursa Malaysia Securities Berhad and approvals of the relevant Governmental and/or regulatory authorities, the Directors be and are hereby empowered pursuant to Section 75 and 76 of the Act, to issue and allot shares in the Company pursuant to the Act, at any time to such persons and upon such terms and conditions and for such purposes as the Directors may deem fit provided that the aggregate number of shares issued pursuant to this Resolution does not exceed 10% of the total issued share capital of the Company for the time being and that the Directors be and are also empowered to obtain the approval from Bursa Malaysia Securities Berhad for the listing of and quotation for the additional shares so issued and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting (“AGM”) of the Company or the expiration of the period within which the next AGM is required to be held, whichever is earlier, unless such authority is revoked or varied by resolution passed by the shareholders in general meeting.”

iv) OrdinaryResolution MandateforEn.MohdSharifbinHjYusofwhohasservedasanIndependent

Non-ExecutiveDirectoroftheCompanyforacumulativetermofmorethannine(9)years,tocontinuetoactasanIndependentNon-ExecutiveDirectoroftheCompany

“THATapprovalbeandisherebygiventoEn.MohdSharifbinHjYusof,whohas served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, to continue to act as an Independent Non-Executive Director of the Company.”

6. To transact any other business of which due notice shall have been given in accordance with the Companies Act 2016 and the Company’s Constitution.

By Order of the Board,

CHUASIEWCHUAN(MAICSA0777689)THUMSOOKFUN(MIA24701)Company Secretaries

Date: 29 June 2018

Resolution 7

Resolution 8

ANNUAL REPORT 2018

p. 207

Notes:-

1) InformationforShareholders/Proxies

1.1 A member entitled to attend and vote at the Meeting is entitled to appoint more than one (1) proxy to attend and vote in his or her stead. Where a member appoints two or more proxies, the appointments shall be invalid unless he or she specifies the proportions of his or her shareholdings to be represented by each proxy.

1.2 A proxy may but need not to be a member of the Company. There shall be no restriction as to the qualification of the proxy. A proxy appointed to attend the Meeting shall have the same rights as the member to speak and vote at the Meeting.

1.3 The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer or attorney duly authorised.

1.4 Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991 (“SICDA”), it may appoint at least one (1) proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.

1.5 Where a member of the Company is an Exempt Authorised Nominee (“EAN”) which holds ordinary shares in the Company for multiple beneficial owners in one (1) Securities Account (“Omnibus Account”), there shall be no limit to the number of proxies which the EAN may appoint in respect of each Omnibus Account it holds. An EAN refers to an additional nominee defined under the SICDA which is exempted from compliance with the provisions of subsection 25A(1) of the SICDA.

1.6 The instrument appointing a proxy must be deposited at the Company’s registered office at 17th Floor, Menara Atlan, 161B, Jalan Ampang, 50450 Kuala Lumpur not less than 48 hours before the time for holdingthemeetingoranyadjournmentthereof.

1.7 For the purpose of determining who shall be entitled to attend, speak and vote at this meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to make available to the Company pursuant to Article 56(b) of the Constitution of the Company and Paragraph 7.16(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Listing Requirements”), a Record of Depositors as at 21 August 2018 (“General Meeting Record of Depositors”) and a Depositor whose name appears on such Record of Depositors shall be entitled to attend, speak and vote at the meeting or appoint proxy to attend, speak and vote in his/her stead.

1.8 Pursuant to Paragraph 8.29A(1) of the Listing Requirements, all resolutions set out in this notice will be put to vote by way of a poll.

2) AuditedFinancialStatementsforthefinancialyearended28February2018

This Agenda item is meant for discussion only, as the provision of Section 340(1)(a) of the Companies Act 2016 (“Act”) does not require a formal approval for the Audited Financial Statements from the shareholders of the Company and hence, Agenda 1 is not put forward for voting.



p. 208


3) Re-electionofDirectorsandretirementofDirector

Article 78 of the Company’s Constitution states that one-third (1/3) of the Directors shall retire from office and shall be eligible for re-election at each AGM. All Directors shall retire from office at least once in each three (3) years but shall be eligible for re-election. A retiring Director shall retain office until the close of the meeting at which he retires.

Article 85 of the Company’s Constitution states that any Director who is appointed either to fill a casual vacancy or as an addition to the existing Directors, shall hold office until the next AGM and shall be eligible for re-election but shall not be taken into account in determining the Directors who are to retire by rotations at that meeting.

In determining the eligibility of the Directors to stand for re-election at the forthcoming AGM, the Nomination Committee (“NC”) has considered the following: -

i. Evaluation on the effectiveness of the Individual Directors, the Board as a whole and all Board Committees; and

ii. For Independent Non-Executive Directors (“INEDs”) only, the level of independence demonstrated by the INEDs and their ability to act in the best interest of the Company.

In line with Practice 5.1 of the Malaysian Code of Corporate Governance 2017, the Board has conducted an assessment of the Directors of the Company based on the relevant performance criteria which include the following: -

i. Board mix and composition; ii. Qualityofinformationanddecisionmaking;iii. Boardroom activities;iv. Board’s relationship with the management.

The Board approved the NC’s recommendation for the re-election of the retiring Directors pursuant to Article 78 of the Company’s Constitution at the forthcoming AGM of the Company. At the relevant Board meeting, alltheretiringDirectorsunderArticle78oftheCompany’sConstitution,exceptforYangAmatMuliaTengkuAbdulRahmanIbniSultanHajiAhmadShahAl-MustainBillah,DKII.,SSAP,haveconsentedtotheirre-electionand abstained from deliberation as well as decision on their own eligibility to stand for re-election.

YangAmatMuliaTengkuAbdulRahmanIbniSultanHajiAhmadShahAl-MustainBillah,DKII.,SSAPwhois retiring in accordance with the Article 78 of the Company’s Constitution has expressed his intention that he will not seek for re-election and hence he will retain in office until the conclusion of the forthcoming 29th AGM.

RajaDato’ShaharudinShahbinRajaJalilShahwhowasappointedsubsequenttothelastAGMissubjectfor retirement pursuant to Article 85 of the Company’s Constitution and has consented to seek for re-election in the forthcoming 29th AGM.

4)Re-appointmentofAuditors

The Board had at its meeting held on 16 May 2018 approved the recommendation by the Audit and Risk ManagementCommittee (“ARMC”) on the re-appointment ofMessrs. Ernst&YoungasAuditorsof theCompany.TheBoardandARMCcollectivelyagreedthatMessrs.Ernst&Younghasmettherelevantcriteriaprescribed by Paragraph 15.21 of Listing Requirements.

ANNUAL REPORT 2018

p. 209

The ARMC have assessed the suitability and independence of the External Auditors and recommended the re-appointmentofMessrs.Ernst&YoungasExternalAuditorsoftheCompanyforthefinancialyearending28 February 2019. The Board has in turn reviewed the recommendation of the ARMC and recommended the same be tabled to the shareholders for approval at the forthcoming AGM of the Company under Resolution 4. The evaluation criteria adopted as well as the process of assessment by the ARMC and Board, respectively, have been duly elaborated in the Corporate Governance Overview Statement of the Annual Report 2018 of the Company.

5) PaymentofDirectors’feesandbenefitsmadepayabletotheDirectors

Section 230(1) of the Act provides amongst others, that the fees of the Directors and any benefits payable to the Directors of a listed company and its subsidiaries shall be approved at a general meeting.

Forthefinancialyearended28February2018(“FY2018”),theBoardofDirectorsdecidedthattheDirectors’feesforFY2018bemaintainedasthepreviousfinancialyearforeachDirector.InconjunctionwiththeappointmentofTuanHajiMohdJaffarbinAwang(Ismail)asIndependentNon-ExecutiveDirectoron16May2017followedby the retirement of Dato’ Shagul Hamid bin K.R. Williams @ Abdullah as Director of the Company at the last AGMheldon26July2017,theproposedDirectors’feesforFY2018isRM260,500(FY2017:RM253,000).

In this respect, the Board wishes to seek for shareholders’ approval at the 29th AGM for the payment of Directors’ fees and benefit payable to the Directors: -

i) Resolution 5 on the proposed Directors’ fees of RM260,500 in respect of the financial year ended 28 February 2018;

ii) Resolution 6 on the benefits payable to the Non-Executive Directors pursuant to Section 230(1)(b) of the Act has been reviewed by the Board of Directors of the Company, which recognizes that the benefits payable are in the best interest of the Company from the conclusion of this meeting until the next AGM. The benefits comprise of benefits in kind and the meeting allowance, which will only be accorded based on actual attendance of meetings by the Directors. In the event the proposed amount is insufficient e.g. due to more meetings or enlarged Board size, approval will be sought at the next AGM for the shortfall.

6)Authoritytoissueandallotshares

The proposed Resolution 7 is primarily to seek for the renewal of a general mandate to give flexibility to the Board of Directors to issue and allot shares up to 10% of the issued share capital (excluding treasury shares) of the Company for the time being, at any time in their absolute discretion pursuant to Sections 75 and 76 of the Act, without convening a general meeting (hereinafter referred to as the “General Mandate”).

The Company has been granted a general mandate by its shareholders at the last AGM held on 26 July 2017 (hereinafter referred to as the “Previous Mandate”) and it will lapse at the conclusion of the 29th AGM.

As at the date of this Notice, the Previous Mandate granted by the shareholders had not been utilised and hence, no proceed was raised therefrom.

The purpose to seek the General Mandate is to enable the Directors to issue and allot shares at any time to such persons in their absolute discretion without convening a general meeting as it would be both time-consuming and costly to organise a general meeting. This General Mandate, unless revoked or varied by the Company in a general meeting, will expire at the conclusion of the next AGM of the Company.

The General Mandate will provide flexibility to the Company for any possible fund-raising activities, including butnotlimitedtofurtherplacingofshares,forpurposeoffundingfutureinvestmentproject(s),acquisitions,working capital and/or settlement of banking facilities.



p. 210


7) MandateforEn.MohdSharifbinHjYusoftocontinuetoactasIndependentNon-ExecutiveDirectors

Pursuant to Practice 4.2 of the Malaysian Code on Corporate Governance 2017, it recommends that shareholders’ approval must be sought in the event that the Company intends to retain the Independent Non-Executive Directors who have served in that capacity for more than 9 years. While the shareholders’ approval through a two-tier voting process must be sought if the Company intends to retain the Independent Non-Executive Directors who have served in that capacity for more than 12 years.

TheNChasattheannualassessmentassessedthe independenceofEn.MohdSharifbinHjYusofwhohad served on the Board as an Independent Non-Executive Director for a cumulative term of more than 9 years.En.MohdSharifbinHjYusofhasremainedobjectiveandindependentinexpressinghisviewsandinparticipating in deliberation and decision making of the Board and Board Committees. His length of services ontheBoarddoesnotinanywayinterferewithhisexerciseofindependentjudgementandabilitytoactinthebestinterestsoftheCompany.Inaddition,En.MohdSharifbinHjYusofhadconfirmedanddeclaredinwriting that he is Independent Director and he has satisfied all the criteria of an Independent Director set out in Paragraph 1.01 of the Listing Requirements. The Board has therefore recommended that the approval of theshareholdersbesoughttoretainEn.MohdSharifbinHjYusofasIndependentNon-ExecutiveDirector.

ThefulldetailsoftheBoard’sjustificationstoretainEn.MohdSharifbinHjYusofasIndependentDirectorisset out in the Corporate Governance Overview Statement in the Company’s Annual Report 2018.

TheResolution8,ifpassed,willenabletheCompanytoretainEn.MohdSharifbinHjYusofasIndependentNon-Executive Director.

Personaldataprivacy:

By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the AGM and/oranyadjournmentthereof,amemberoftheCompany(i)consentstothecollection,useanddisclosureofthe member’s personal data by the Company (or its agents) for the purpose of the processing and administration bytheCompany(oritsagents)ofproxiesandrepresentativesappointedfortheAGM(includinganyadjournmentthereof) and the preparation and compilation of the attendance lists, minutes and other documents relating to the AGM(includinganyadjournmentthereof),andinorderfortheCompany(oritsagents)tocomplywithanyapplicablelaws, listing rules, regulations and/or guidelines (collectively, the “Purposes”), (ii) warrants that where the member discloses the personal data of the member’s proxy(ies) and/or representative(s) to the Company (or its agents), the member has obtained the prior consent of such proxy(ies) and/or representative(s) for the collection, use and disclosure by the Company (or its agents) of the personal data of such proxy(ies) and/or representative(s) for the Purposes, and (iii) agrees that the member will indemnify the Company in respect of any penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING(Pursuant to Paragraph 8.27(2) of the Listing Requirements)

As at date of this notice, there are no individuals who are standing for election as Directors (excluding the above Directors who are standing for re-election) at this forthcoming 29th AGM.

✄CDS Account No.

No. of Shares Held

I/We ____________________________________________________ NRIC No./Company No. _________________________________ (full name in block letters)

of ______________________________________________________________________________________________________________(full address)

being a member ofATLANHOLDINGSBHD(173250-W) hereby appoint _______________________________________________

______________________________________________________ of _______________________________________________________

or failing *him/her, ___________________________________________ of _________________________________________________

or failing *him/her, the Chairman of the meeting as *my/our proxy to vote for *me/us on *my/our behalf at the Twenty-Ninth Annual General Meeting of the Company to be held at the Meeting Room, Wisma Atlan, 8 Persiaran Kampung Jawa, 11900 Bayan Lepas, PenangonTuesday,28August2018at11.00a.m.andatanyadjournmentthereof.

Please indicate your vote by a (X) in the respective box of each resolution. If no specific direction as to voting is given, the proxy will vote or abstain from voting on the resolutions at his/her discretion.

No. Resolutions For AgainstAS ORDINARY BUSINESS:-Resolution 1 To re-elect Mr. Lee Sze Siang as Director of the CompanyResolution 2 To re-elect Dato’ Woo Hon Kong as Director of the CompanyResolution 3 Tore-electRajaDato’ShaharudinShahbinRajaJalilShahasDirectoroftheCompanyResolution 4 Tore-appointMessrs.Ernst&YoungasAuditorsoftheCompanyAS SPECIAL BUSINESS:-Resolution 5 Ordinary Resolution - Payment of Directors' fees Resolution 6 OrdinaryResolution–PaymentofbenefitspayabletotheDirectorsResolution 7 Ordinary Resolution - Authority to Issue and Allot SharesResolution 8 OrdinaryResolution–MandateforEn.MohdSharifbinHjYusoftocontinuetoactas

an Independent Non-Executive Director of the Company* Strike out whichever not applicable

Note: Please note that the short descriptions given above of the Resolutions to be passed do not in any way whatsoever reflect the intent and purpose of the Resolutions. The short descriptions have been inserted for convenience only. Shareholders are encouraged to refer to the Notice of Annual General Meeting for the full purpose and intent of the Resolutions to be passed.

As witness *my/our hand(s) this _____________ day of _____________________, 2018.

__________________________________Signature of Shareholder(s)

Notes:-

1. A member entitled to attend and vote at the Meeting is entitled to appoint more than one (1) proxy to attend and vote in his or her stead. Where a member appoints two or more proxies, the appointments shall be invalid unless he or she specifies the proportions of his or her shareholdings to be represented by each proxy.

2. A proxy may but need not to be a member of the Company. There shall be no restriction as to the qualification of the proxy. A proxy appointed to attend the Meeting shall have the same rights as the member to speak and vote at the Meeting.

3. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer or attorney duly authorised.

4. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991 (“SICDA”), it may appoint at least one (1) proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.

5. Where a member of the Company is an Exempt Authorised Nominee (“EAN’) which holds ordinary shares in the Company for multiple beneficial owners in one (1) Securities Account (“Omnibus Account”), there shall be no limit to the number of proxies which the EAN may appoint in respect of each Omnibus Account it holds. An EAN refers to an additional nominee defined under the SICDA which is exempted from compliance with the provisions of subsection 25A(1) of the SICDA.

6. The instrument appointing a proxy must be deposited at the Company’s registered office at 17th Floor, Menara Atlan, 161B, Jalan Ampang, 50450 Kuala Lumpur not less than 48 hours before the time for holding the meeting or any adjournment thereof.

7. For the purpose of determining who shall be entitled to attend, speak and vote at this meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to make available to the Company pursuant to Article 56(b) of the Constitution of the Company and Paragraph 7.16(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Listing Requirements”), a Record of Depositors as at 21 August 2018 (“General Meeting Record of Depositors”) and a Depositor whose name appears on such Record of Depositors shall be entitled to attend, speak and vote at the meeting or appoint proxy to attend, speak and vote in his/her stead.

8. Pursuant to Paragraph 8.29A(1) of the Listing Requirements, all resolutions set out in the Notice of 29th Annual General Meeting will be put to vote by way of a poll.

9. Any alteration in this form must be initialed

PROxY FORM

COMMONSEAL

Fold this flap for sealing

Then fold here

1st fold here

THE COMPANY SECRETARIES

ATLAN HOLDINGS BHD(Company No.: 173250-W)

17th Floor, Menara Atlan161B, Jalan Ampang50450 Kuala Lumpur

Malaysia

AFFIXPOSTAGE

STAMP

Correspondence adress:ATLAN HOLDINGS BHD. (173250-W)

17TH FLOOR, MENARA ATLAN,161B, JALAN AMPANG,50450 KUALA LUMPUR, MALAYSIA.

T +603 2179 2000F +603 2179 2390www.atlan.com.my

Annual Report Laporan Tahunan

2018

Annual Report 2018

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