pantech group holdings berhad · the bank of nova scotia berhad united overseas bank limited united...

PANTECH CORPORATION SDN BHD(176321-P)

Johor Bahru Head OfficePLO 234, Jalan Tembaga Satu

Pasir Gudang Industrial Estate

81700 Pasir Gudang

Johor Darul Takzim, Malaysia

Tel: +607 259 7979 / 252 1767

Fax: + 607 251 2877 / 252 0835

Email: [email protected]

Shah Alam OfficeNo. 3, Jalan Trompet 33/8

Seksyen 33, 40400 Shah Alam

Selangor Darul Ehsan, Malaysia

Tel : +603 5192 7995

Fax : +603 5192 7992

Email : [email protected]

Pulau Indah (Warehouse Office)Persiaran Port Klang FZ 7, Jalan FZ 6-P1

Port Klang Free Zone / KS 12

42920 Pulau Indah


Tel : +603 3101 3767

Fax : +603 3101 4767

PANTECH (KUANTAN) SDN BHD(191606 U)

Lot 5, Jalan Industri Semambu 2

Kawasan Perindustrian Semambu

25350 Kuantan

Pahang Darul Makmur, Malaysia

Tel: +609 568 7550

Fax: +609 568 7553


PANAFLO CONTROLS PTE LTD(200413822 D)

Singapore OfficeNo. 5

Tuas View Close

Tradelink Place

Singapore 637490

Tel: +65 6562 3048

Fax: +65 6562 3148


PANTECH INTERNATIONAL (KSA)

SDN BHD(890670-K)

PLO 234, Jalan Tembaga Satu

Pasir Gudang Industrial Estate

81700 Pasir Gudang



PANTECH STEEL INDUSTRIES SDN BHD(509731-A)

ManufacturerLot 13258 & 13259

Jalan Haji Abdul Manan

Off Jalan Meru

42200 Kapar


Tel: +603 3393 1633

Fax: +603 3392 8966


PANTECH STAINLESS & ALLOY

INDUSTRIES SDN BHD(733428-W)

ManufacturerPLO 809, Jalan Kampung Pasir Gudang Baru,

Pasir Gudang Industrial Estate, Zone 12B,

81700 Pasir Gudang,


Tel: +607 251 8888

Fax:+607 251 9999


Cert. No. KLR0404021

MS ISO/IEC Guide 62:1999

OSH 18072007 CB 02

Cert. No. MY08/00161.1


EMS 12072004 CB 03

SG08/02 123.1 MY08/00171.1

Cert. No. SNG6003354


OSH 18072007 CB 02

Cert. No. MY08/00161.3


EMS 12072004 CB 03

SG08/02/123.3 MY08/00171.3

Cert. No. KLR0403926

annua

l rep

ort 2011

Pante

ch G

roup

Ho

lding

s Berha

d (733607-W

)

Financial Highlights

Corporate Information

Corporate Structure

Notice of Fifth Annual General Meeting

Directors’ Profile

Executive Chairman’s Statement

Corporate Social Responsibility Activities

Corporate Events

Audit Committee Report

Statement on Internal Control

Corporate Governance Statement

Additional Compliance Statement

Financial Statements

List of Properties

Analysis of Shareholdings

Analysis of ICULS Holdings

Analysis of Warrant Holdings

Proxy Form

01

02

03

04

07

09

13

15

17

20

22

27

31

111

112

115

117

con

ten

ts

ANNUAL REPORT 2011

PANTECH GROUP HOLDINGS BERHAD (733607-W)

13 1

FINANCIAL HIGHLIGHTS

Revenue

RM’000

401,578

511,595

313,323

243,000*

‘07 ‘08 ‘09 ‘10

*Proforma

335,779

‘11

Profit After Taxation

RM’000

50,871

61,459

34,142

26,758

‘07 ‘08 ‘09 ‘10

28,980

‘11

Earnings Per Share

Sen

11.33

13.69

7.59

5.95

‘07 ‘08 ‘09 ‘10 ‘11

6.45

Shareholders’ Fund

RM’000

232,891

199,885

146,474

117,839

‘07 ‘08 ‘09 ‘10

317,268

‘11

2

ANNUAL REPORT 2011


13

CORPORATE INFORMATION

AUDIT COMMITTEE

ChairmanMr. Tan Sui Hin

MembersMr. Loh Wei TakHaji Yusoff Bin Mohamed

REMUNERATION COMMITTEE

ChairmanHaji Yusoff Bin Mohamed

MembersDato’ Chew Ting LengMr. Tan Sui Hin

NOMINATION COMMITTEE

ChairmanMr. Tan Sui Hin

MembersMr. Loh Wei TakHaji Yusoff Bin Mohamed

COMPANY SECRETARIES

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

REGISTERED OFFICE

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

SHARE REGISTRAR

Mega Corporate Services Sdn. Bhd.(Company No.: 187984-H)

Level 15-2, Bangunan Faber Imperial CourtJalan Sultan Ismail50250 Kuala LumpurTel No. : 03-2692 4271Fax No. : 03-2732 5388

PRINCIPAL BANKERS

AmBank (M) BerhadCIMB Bank BerhadCitibank BerhadEON Bank BerhadHong Leong Bank BerhadHSBC Bank Malaysia BerhadOCBC Bank (Malaysia) BerhadThe Bank of Nova Scotia BerhadUnited Overseas Bank LimitedUnited Overseas Bank (Malaysia) Berhad

SOLICITORS

Adi Radlan & CoNg Kee Chong & Co

AUDITORS

Messrs SJ Grant ThorntonChartered AccountantsUnit 29-08Level 29Mailbox 227Menara Landmark12 Jalan Ngee Heng80000 Johor Bahru

STOCK EXCHANGE LISTING

Main MarketBursa Malaysia Securities Berhad

STOCK CODE: 5125

BOARD OF DIRECTORS

Dato’ Chew Ting LengExecutive Chairman/Group Managing Director

Dato’ Goh Teoh KeanGroup Deputy Managing Director

Mr. Tan Ang AngExecutive Director

Mr. To Tai WaiExecutive Director

Haji Abdul Karim Bin AhmadNon-Independent Non-Executive Director

Mr. Tan Sui HinIndependent Non-Executive Director

Mr. Loh Wei TakIndependent Non-Executive Director

Haji Yusoff Bin MohamedIndependent Non-Executive Director

ANNUAL REPORT 2011


13

CORPORATE STRUCTURE

13

100%Pantech

Stainless & AlloyIndustriesSdn. Bhd.

100%Pantech

Steel IndustriesSdn. Bhd.

100%Pantech

CorporationSdn. Bhd.

90%Pantech

International(KSA) Sdn. Bhd.

100%PanafloControlsPte. Ltd.

100%Pantech (Kuantan) Sdn. Bhd.

100%Jayee Holdings Sdn. Bhd.

30%Tuah Nusa Sdn. Bhd.

70%JC FlowControlsPte. Ltd.

3

ANNUAL REPORT 2011


134

NOTICE OF FIFTH ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Fifth Annual General Meeting of Pantech Group Holdings Berhad (“Pantech” or the “Company”)

will be held at Millennium Ballroom, Level 2, Hotel Grand Millennium Kuala Lumpur, 160, Jalan Bukit Bintang, 55100 Kuala Lumpur

on Friday, 19th August 2011 at 11.00 a.m. for the following purposes:-

AGENDA

AS ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the financial year ended 28 February 2011

together with the Directors’ and Auditors’ Reports thereon.

2. To approve the payment of a Final Single Tier Dividend of 1.2 sen per ordinary share of RM0.20

each for the financial year ended 28 February 2011.

3. To approve the increase in Directors’ fees from RM126,000 to RM138,000 for the financial year

ending 29 February 2012.

4. To re-elect the following directors retiring pursuant to Article 122 of the Company’s Articles of

Association and being eligible, offered themselves for re-election:

4.1 Dato’ Goh Teoh Kean

4.2 Mr Tan Sui Hin

4.3 Haji Yusoff Bin Mohamed

5. To re-appoint Messrs SJ Grant Thornton as Auditors of the Company and to authorise the Directors

to fix their remuneration.

AS SPECIAL BUSINESS

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

6. AUTHORITY TO ISSUE SHARES BY THE COMPANY PURSUANT TO SECTION 132D OF THE

COMPANIES ACT, 1965

THAT pursuant to Section 132D of the Companies Act, 1965 and subject to the approvals from the

relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered

to issue shares in the Company from time to time and upon such terms and conditions and

for such purposes as the Directors may in their absolute discretion deem fit, provided that the

aggregate number of shares issued pursuant to this resolution does not exceed ten (10) per cent

of the issued share capital of the Company for the time being AND THAT the Directors be and are

also hereby empowered to obtain the approval from the Bursa Malaysia Securities Berhad for the

listing and quotation of the additional shares so issued AND THAT such authority shall continue

in force until the conclusion of the next Annual General Meeting of the Company.”

7. PROPOSED RENEWAL OF SHARE BUY-BACK

THAT subject to compliance with all applicable rules, regulations and orders made pursuant to

the Companies Act, 1965 (“ACT”), provisions in the Company’s Memorandum and Articles of

Association, the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”)

and any other relevant authorities, the Company be and is hereby authorised to purchase such

number of ordinary shares of the Company (“Proposed Renewal of Share Buy-Back”) as may be

determined by the Directors of the Company from time to time through Bursa Securities upon

such terms and conditions as the Directors may deem fit and expedient in the interest of the

Company PROVIDED THAT:-

(1) the aggregate number of shares purchased does not exceed ten per centum (10%) of the

issued and paid-up share capital of the Company as quoted on Bursa Securities as at the

point of purchase;

Please refer to Note A

Ordinary Resolution 1








ANNUAL REPORT 2011


13 5

NOTICE OF FIFTH ANNUAL GENERAL MEETINGcont’d

(2) the maximum fund to be allocated by the Company for the purpose of purchasing such number of ordinary shares shall not exceed the retained profit and share premium account of the Company. As at the latest financial year ended 28 February 2011, the audited retained profit and share premium account of the Company stood at RM8,556,420 and RM1,947,507 respectively;

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

(a) at the conclusion of the next AGM of the Company following the general meeting in which the authorisation is obtained, at which time it shall lapse unless by ordinary resolution passed at that meeting, the authority is renewed either unconditionally or subject to conditions; or

(b) the expiration of the period within which the next AGM of the Company is required by law to be held; or

(c) revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting.

whichever occurs first;

AND THAT upon completion of the purchase(s) of the ordinary shares of the Company, the Directors of the Company be and are hereby authorised to deal with the ordinary shares so purchased in the following manners:-

(a) to cancel the ordinary shares so purchased; or(b) to retain the ordinary shares so purchased as treasury shares for distribution as dividend to

shareholders and/or resell on Bursa Securities or subsequently cancelled; or(c) to retain part of the ordinary shares so purchased as treasury shares and cancel the

remainder; or(d) in any other manner prescribed by the Act, rules, regulations and orders made to the Act,

the Listing Requirements of Bursa Securities and any other relevant authorities for the time being in force.

AND THAT the Board of the Company be and are hereby authorised to take all such steps as are necessary or expedient to implement, finalise or to effect the aforesaid share buy-back with full powers to assent to any conditions, modifications, variations, and/or amendments as may be required or imposed by the relevant authorities and to do all such acts and things (including executing all documents) as the Board may deem fit and expedient in the best interest of the Company.

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT Subject to the approval of the shareholders, a Final Single Tier Dividend of 1.2 sen per ordinary share for the financial year ended 28 February 2011 will be paid on 15 September 2011 to Depositors registered in the Record of Depositors at the closed of business at 5.00 p.m. on 24 August 2011. A Depositor shall qualify for entitlement only in respect of:

(a) Shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 24 August 2011, in respect of ordinary shares; and

(b) Shares bought on Bursa Securities on a cum entitlement basis according to the Rules of the Bursa Securities. By order of the Board

LIM SECK WAH (MAICSA 0799845)LIANG SIEW CHING (MAICSA 7000168)Company Secretaries Kuala Lumpur

Dated this: 28 July 2011

ANNUAL REPORT 2011


136

NOTICE OF FIFTH ANNUAL GENERAL MEETINGcont’d

Notes

A. The item 1 of the Agenda is meant for discussion only as it does not require a formal approval of the shareholders and hence, is not put forward for

voting.

1. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote in his/her stead. A member may appoint up to

two (2) proxies to attend the same meeting provided that he/she specifies the proportion of his/her shareholding to be represented by each proxy.

A proxy may but need not be a member of the Company and a member may appoint any person to be his/her proxy without limitation and the

provisions of Section 149(1)(b) & (c) of the Companies Act, 1965 shall not apply.

2. Where a member is an authorised nominee as defined under the Security Industry (Central Depositories) Act, 1991, it may appoint at least one (1)

proxy in respect of each Securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

3. The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorized in writing or, if the

appointer is a corporation, either under the Corporation’s Common Seal or under the hand of an officer or attorney so authorized.

4. The Proxy Form must be deposited at the Registered Office of the Company at Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail,

50250 Kuala Lumpur not less than 48 hours before the time set for holding the meeting or any adjournment thereof.

5. Explanatory Notes on Special Businesses:


The proposed Resolution 7 is a renewal of mandate given by the shareholders at the previous Annual General Meeting held on 26 August 2010,

primarily to give flexibility to the Board of Directors to issue and allot shares at any time in their absolute discretion and for such purposes as they

consider would be in the interest of the Company without convening a general meeting. This authority, unless revoked or varied at a general

meeting, will expire at the next annual general meeting of the Company.

The Company continues to consider opportunities to broaden its earnings potential. If any of the expansion/diversification proposals involves the

issue of new shares, the Directors, under certain circumstance when the opportunity arises, would have to convene a general meeting to approve

the issue of new shares even though the number involved may be less than 10% of the issue capital.

In order to avoid any delay and costs involved in convening a general meeting to approve such issue of shares, it is thus considered appropriate

that the Directors be empowered to issue shares in the Company, up to any amount not exceeding in total 10% of the issued share capital of the

Company as at the date of the Annual General Meeting. The renewed authority will provide flexibility to the Company for the allotment of shares

for the purpose of funding future investment, working capital and/or acquisitions. This authority, unless revoked or varied at a general meeting will

expire at the conclusion of the next Annual General Meeting of the Company.

No shares have been issued and allotted by the Company since obtaining the said authority from its shareholders at the last Annual General

Meeting held on 26 August 2010 except for new shares arising from the ICULS and warrants conversion.


This resolution will empower the Directors of the Company to purchase the Company’s shares up to ten per centum (10%) of the issued and paid-up

share capital of the Company by utilising the funds allocated which shall not exceed the total retained profits and share premium of the Company.

This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company.

Further information on the Proposed Renewal of Share Buy-Back are set out in the Share Buy-Back Statement dated 28 July 2011 which is dispatched

together with the Company’s Annual Report 2011.

ANNUAL REPORT 2011


13 7

DIRECTORS’ PROFILE

DATO’ CHEW TING LENG

Executive Chairman/Group Managing Director

Dato’ Jimmy Chew, a Malaysian, aged 56, is one of the

co-founders of the Group. He has more than 30 years of

experience in the PFF solutions industries. He was appointed

as Group Managing Director and Executive Chairman of

Pantech Group Holdings Berhad (PGHB) on 11 November

2006 and 13 November 2006 respectively.

He is a member in the Remuneration Committee.

He does not hold any directorships in any other public

companies.

DATO’ GOH TEOH KEAN

Group Deputy Managing Director

Dato’ Goh, a Malaysian, aged 55, graduated with Diploma in

Commerce (Financial Accounting) from Tunku Abdul Rahman

College.

He has more than 20 years of experience in the PFF solutions

industry. He is one of the co-founders of the Group and

was appointed as the Group Deputy Managing Director on

11 November 2006. He is responsible for the financial and

administrative functions of the Group.


companies.

TAN ANG ANG

Executive Director

Mr Adrian Tan, a Malaysian, aged 55, was appointed as the

Executive Director on 11 November 2006. He is also the

Managing Director of Pantech Steel Industries Sdn Bhd.

He obtained his professional Diploma from the Chartered

Institute of Marketing in 1989. He is responsible for the overall

operation and performance of the Group’s manufacturing

business.


companies.

TO TAI WAI

Executive Director

Mr David To, a Malaysian, aged 40, was appointed as the

Executive Director on 11 November 2006. He is primarily

responsible for the domestic and international sales activities

of the Group’s trading division. He started his career in Pantech

Corporation Sdn Bhd since 1989.


companies.

HAJI ABDUL KARIM BIN AHMAD

Non-Independent Non-Executive Director

Tn. Haji Abdul Karim Bin Ahmad, a Malaysian, aged 57, was

appointed as a Non-Independent Non-Executive Director

on 30 November 2006 representing the interest of Koperasi

Permodalan Felda Malaysia Berhad (KPFB). He graduated with

a Bachelor Degree in Economics (Honours) from University

Kebangsaan Malaysia in 1978. He is presently the Director of

Human Resources in FELDA.


companies.

8

ANNUAL REPORT 2011


13

DIRECTORS’ PROFILEcont’d

TAN SUI HIN

Independent Non-Executive Director

Mr Tan Sui Hin, a Malaysian, aged 61, was appointed as an

Independent Non-Executive Director on 30 November 2006.

He graduated with a Diploma in Mechanical Engineering from

Ungku Omar Polytechnic in 1971. He has more than 35 years

of experience in the building engineering field.

He is the Chairman of both the Audit and the Nomination

Committees.

He is also a member of the Remuneration Committee.


companies.

LOH WEI TAK


Mr Loh Wei Tak, a Malaysian, aged 38, was appointed as an

Independent Non-Executive Director on 30 November 2006.

He is a qualified accountant and a member of the Malaysian

Institute of Accountants. He completed his Bachelor of

Business Degree (Majoring in Accounting) from Monash

University, Melbourne, Australia in 1994 and obtained his

status as a Certified Practicing Accountant from Australia in

1998. In 2000, he was admitted as a Chartered Accountant to

the Malaysian Institute of Accountants.

He is a member in both Audit and Nomination Committees.


companies.

HAJI YUSOFF BIN MOHAMED


Tn Haji Yusoff Bin Mohamed, a Malaysian, aged 60, was

appointed as an Independent Non-Executive Director on

10 August 2007. He graduated from University Kebangsaan

Malaysia with a Bachelor Degree in Economics (Hons). Upon

his graduation, he joined Land and District Office and Royal

Custom Department. After 5 years in public sector, he moved

to Petronas and served in various positions within Petronas’s

subsidiaries and associate company. He was involved in a

number of local and international major oil and gas projects

and stayed with the oil and gas industry for more than 24

years.

He is the chairman of the Remuneration Committee

and a member of the Audit Committee and Nomination

Committee.


companies.

OTHER INFORMATION:-

Directors Shareholdings

Details of Directors’ Shareholdings in the Company are as

disclosed on page 36 of the Annual Report

Conviction of Offences

All Directors have no convictions of offences within the past

10 years saves for traffic offences, if any.

Conflict of Interest

All directors have no family relationship with each other

or major shareholders of Pantech Group Holdings Berhad

(“PGHB”). They have no conflict of interest with PGHB.

Attendance at Board Meetings

The attendance of the Directors is disclosed in the Corporate

Governance Statement on page 22 of the Annual Report.

Dear Shareholders,

It is my honour to bring you the report for the year ended

28 February 2011 for Pantech Group.

EXECUTIVE CHAIRMAN’S STATEMENT

9

ANNUAL REPORT 2011


EXECUTIVE CHAIRMAN’S STATEMENTcont’d

The year 2010/2011 was a challenging year whereby oil and

gas exploration and new projects moved at a slower than

expected pace, the Eurozone debt crisis started, prices of

materials rose and the US dollar declined.

In this challenging time, Pantech Group managed to secure

continuous orders from new and returning clients.

Revenue for Pantech Group for the financial year ended 28

February 2011 stood at RM335.78 million, marking a decrease

of 16.4% over the revenue recorded for our 2010 financial

year. The performance of this financial year is a reflection of

the delay in the capex investment for oil and gas projects

especially within Malaysia.

In the financial year under review, we also saw operating

expenses increased by more than 5%, from 82.71% to 88.29%.

This ate into our profit. Nevertheless Pantech Group still

managed to record a healthy Profit Before Tax (PBT) of RM37.37

million, with Profit After Tax (PAT) of RM28.98 million.

In the face of such difficult operating environment, Pantech

Group took measures to strengthen our working capital

management.

We tapped into shareholders via ICULS to fund the expansion

of our manufacturing division, instead of increasing our loans.

This would enable shareholders to enjoy the returns on their

investment further as the interest are paid to ICULS subscribers

instead of banks.

The expansion in subject included the purchase of a 5.844

acres of land in Zone 12B of Pasir Gudang Industrial Estate to

augment the existing land of 20.656 acres which was bought

the last financial year. With adjoining land parcels, Pantech

Group is in the position to better consolidate and streamline

the manufacturing, warehousing and trading operations

whilst reducing logistics cost in future.

Out of the RM250 million earmarked for this development over

the next 5 years, we have committed an investment of more

than RM100 million for land acquisition, building construction

and purchase of machineries.

We officially opened the factory of our wholly-owned

subsidiary, Pantech Stainless & Alloy Industries Sdn Bhd in

May. This new factory which has a current floor space of about

19,800 square metre is dedicated to the production of stainless

steel pipes. It currently produces 1/8 inch to 8 inches of ASTM

pipes. Production of stainless steel fittings will begin soon. By

the end of this calendar year, we expect to increase the range

of products we manufacture at this new factory and double

the production output. Currently, the Pantech Stainless &

Alloy factory has a capacity of 7,000 tonnes per year; this will

increase as we put in more production lines.

We are currently pursuing ISO9001 and PED certifications for

Pantech Stainless & Alloy Industries Sdn Bhd.

Our other manufacturing facility, the Pantech Steel Industries

Sdn Bhd’s 16,500-tonne capacity manufacturing plant in Klang,

which is producing carbon steel fittings, is already running at

full output. We are planning to expand this factory in Klang

in line with the demands for our manufactured products. The

expansion will utilise the ready land bank of 3.8 acres that we

purchased back in FY2009.

As it stands, we expect the revenue contribution from the

manufacturing division of our business to increase to 40% of

total revenue by 2013. Trading will continue to be a mainstay

for Pantech Group.

Most of our manufactured products are destined for the

overseas market. The export market is an attractive one. Our

products meet with and comply with the various international

standards, enabling us to supply into any oil and gas projects

that require comprehensive gas and fluid transmission

solution.

We are constantly looking for ways to tap into new markets

locally as well as overseas. To help us open doors to more

markets and projects, Pantech Group participates in specialised

field exhibitions. The recent Asian Oil, Gas & Petrochemical

Engineering Exhibition which was held in Kuala Lumpur was a

good platform for the Group to connect, renew and strengthen

ties with players in the oil and gas industries.

10

ANNUAL REPORT 2011



The Australasian Oil & Gas Expo 2011 which was held in Perth,

Australia in February 2011 also provided us an opportunity

to reach the oil and gas professionals, service providers,

engineers and, technical professionals and suppliers in the

Australasia region. The exhibition which was well-attended

by over 10,000 visitors saw Pantech Group exhibiting our new

products of hot induction steel bends of special materials,

stainless steel welded pipes and fittings.

Another exhibition that we participated in was the Asean Oil &

Gas Expo 2010 which was held in Sabah mid 2010 whereby we

had the opportunity to network with fellow industry players

from Singapore, United Kingdom, the USA, China, Korea, Italy,

Germany, Taiwan and Japan.

We will continue to push ahead in our marketing efforts and

seek opportunities to make our presence felt in both the

upstream and downstream players in the oil and gas and

petrochemical industries.

At the time of this report, our joint-venture foray into the

world’s largest oil producer of Saudi Arabia with the Abdul

Rahman Al-Otaishan Group, has progressed to the stage

whereby we are waiting for approval of the JV from the

Saudi Arabian General Investment Authority (SAGIA). In the

meantime, we have identified the site where the joint-venture

manufacturing facility will be constructed later. With the

unrest and uncertainty of the Middle East and African region,

we are pacing our entry into the country prudently.

Pantech Group will be celebrating our 25th Anniversary in

2012. We have since, grown from being an industrial hardware

trader to be a One Stop Centre for pipes, fittings, flanges and

valves preferred by the oil and gas industry. With the oil and

gas industry being our main revenue contributor, we are

cognizant of the need to constantly be ahead of the game, in

being poised to supply items required in a timely manner.

As such, our inventory stood at 24,000 items and at a value of

RM168.8 million as at 28 February 2011.

Aligning our strategy with the development of the oil and gas

industry, we go where the oil and gas explorations go. Pantech

Group is able to supply exotic pipes, fittings, flanges and valves

that meet the demanding conditions of the harsher oilfields.

In our inventory are items that can withstand tremendous

pressure and highly corrosive conditions, especially such as

that of deepwater fields.

We are also looking at manufacturing custom-order exotic

products at our own manufacturing plants in future.

GROUP RESULTS

The last financial year coincided with a stormy year for

the world, including our domestic front where we saw

changes in captains of industries. The results for our FY2011

was significantly affected. The Group recorded a revenue

of RM335.78 million, reflecting the challenging business

landscape and rising cost of business. This lower revenue was

also due to lower sales volume from trading division.

Revenues from the trading division and the manufacturing

division were RM243.92 million and RM91.86 million and the

respective PBTs were RM39.82 million and RM6.13 million.

Group PAT stood at RM28.98 million. This depressed PAT

margin of 8.63% was due to higher manufacturing material

cost and expenses incurred on Rights Issues exercise and

ESOS expenses.

PROSPECTS

We are steadfast in our focus of generating income from the

oil and gas industry. As we seek to expand our revenue from

existing customers and increase our customer base, both the

local and overseas market will be our equal priority.

11

ANNUAL REPORT 2011


1312


The long term outlook of the oil and gas industries continues to be a positive one. Under the Economic Transformation Programme (ETP), the government has announced multi-billion oil and gas investment. The more notable one is the investment of RM60 billion to build a Refinery and Petrochemical Integrated Development complex in Pengerang, a location easily accessible from Pantech Group’s base in Johor.

We are excited at the prospects that await. Our technical knowledge and expertise together with our ability to supply products that are of international-base, set us in good position to tap the opportunities as the oil and gas sector picks up pace again in its development.

DIVIDENDS

Pantech Group upholds a philosophy of creating value and providing returns on investment to shareholders. Our dividend culture which started since becoming a public listed entity continues in this financial year.

For FY2011, Pantech Group has distributed a total RM8.32 million as dividend to-date.

The dividends were paid out in 2 interim single tier dividends. The first interim dividend of 1.50 sen per ordinary share of RM0.20 sen each was paid out on 3 December 2010 and the second interim dividend of 0.60 sen per ordinary share of RM0.20 sen each was paid out on 30 March 2011. The dividend payouts amounted to RM5.61 million and RM2.71 million respectively.

We announced a final single tier dividend of 1.20 sen per ordinary share of RM0.20 sen on 28 April 2011, which is subject to shareholders’ approval at this forthcoming Fifth Annual General Meeting which will be held on 19 August 2011.

This dividend amounts to RM5.43 million and upon approval, it will bring the total dividend payout for FY2011 to RM13.75 million. This represents about 47.4% of Pantech Group’s PAT of RM28.98 million.

Pantech Group will continue to reward our loyal shareholders in line with our philosophy and the performance of the Group.

CORPORATE GOVERNANCE

Pantech Group believes in ethical business. Integrity and accountability are the cornerstone of our everyday business operations. Our commitment to quality and customer satisfaction is an integral part of Pantech Group. These are values that we have built Pantech Group on, and we continue to uphold them. We believe that business prospers when we make ethical business our business.

Our strategy and growth plan are founded on these values. Our statement of corporate governance and related reports are on pages 17 to 30.

ACKNOWLEDGEMENTS

It is indeed my privilege to once-again thank the Directors, management, staff, partners and shareholders for your support. We hold ourselves accountable to you and we are committed to increasing value to our stakeholders.

The fundamentals of the Group are strong. The venture into stainless steel pipes and fittings production enhances our position as a One Stop Centre for pipes, fittings, flanges and valves for the oil and gas industry. We are confident that our strategy forward will poise us to tap the opportunities as they arise.

The road is still ahead of us and we remain positive on the outlook. We look forward to your continuous support as we strive to deliver value to you.

DATO’ CHEW TING LENGExecutive Chairman

ANNUAL REPORT 2011


13 13

CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES

Progress comes when we are involved with other people. For Pantech Group, this involvement comes in the form of caring and

extending a helping hand to society and community. We prosper because we care.

This care starts with creating a conducive workplace for our staff. Just as we are committed to delivering values to shareholders, we

are committed as an employer that cares.

Like the effect of a water ripple, our Corporate Social Responsibility activities are concentrated, first in the workplace, before

moving out to the community.

WORKPLACE

Of primary focus is the welfare and wellbeing of our staff and their families. Staff who are happy with their workplace are far more

motivated and productive. As with the years before, we organised a get-together with Pantech’s staff who have school-going

children. In the event which was held on 18 December 2010 at a fast food outlet this time around, Pantech contributed schoolbags

with basic stationery sets to our staff who have children in primary and secondary school. In addition to this, they also each

received a hypermarket cash voucher for them to purchase school shoes and uniform. Continuing to take care and help ease the

burden of our staff is a key Corporate Social Responsibility agenda for Pantech Group.

A company which has a management that is cohesive and single-minded in its mission, will prosper. We also closed ranks during

our annual dinner which was held in Johor Bahru. During this event held earlier this year on 22 January 2011, all level of management

staff had the opportunity to meet under a more relaxed atmosphere and build closer bond.

ANNUAL REPORT 2011


1314

CORPORATE SOCIAL RESPONSIBILITY ACTIVITIEScont’d

COMMUNITY

Extending Corporate Social Responsibility beyond our staff, we reached out to the community around us. On 17 and 22 December

2010, our subsidiary in Klang, Pantech Steel Industries Sdn Bhd moved staff and strength to help a family in Banting and visit a

children’s association in Klang respectively. The family in Teluk Bunut, Banting was living in abject poverty and our effort was in

answering the call for help of ntv7’s Talian Hayat programme. Pantech Steel contributed basic furniture and household items such

as mattress, cabinet, racks and groceries. Our staff was at hand to paint the house and clean the areas around it.

Children are precious and regardless of the situation and condition, they deserve unconditional love. The visit to the Handicapped

& Disabled Children’s Association in Klang was held just three days before Christmas. In the spirit of remembering and giving, our

staff brought a bit of love and interacted with the children residing in the home and contributed groceries to them.

We are aware of the community and society in which we operate in. We earn our rights to exist by caring and doing our part, however

big or small. Living up to this awareness, Pantech Group immediately responded to the double natural disaster of earthquake and

tsunami that hit the northeastern part of Japan on 11 March 2011. We contributed RM10,000 via Yayasan Sin Chew as our gesture

of support for the victims of this devastation.

Pantech Group believes that to thrive in business, we must be committed towards people, community and profit. Corporate

Responsibility is one of the cornerstones of our efforts to grow the group. We envision the day where our Corporate Reponsibility

programme engages all stakeholders, from shareholders, suppliers to customers in a holistic manner towards the development of

society.

The Corporate Responsibility thrust of Pantech Group will consistently be founded on the care for our staff, environment,

community around us and society at large. It is one of the values that drive us.

14

ANNUAL REPORT 2011


13 15

CORPORATE EVENTS

ASEAN OIL & GAS EXPO 2010, SABAH TRADE CENTRE, KOTA KINABALU, SABAH

AUSTRALASIAN OIL & GAS EXHIBITION & CONFERENCE, PERTH, AUSTRALIA

OIL & GAS ASIA 2011 (OGA2011), KUALA LUMPUR CONVENTION CENTRE, MALAYSIA

16

ANNUAL REPORT 2011


13

CORPORATE EVENTScont’d

ADU DHABI

INTERNATIONAL PETROLEUM

EXHIBITION AND

CONFERENCE

SME RECOGNITION AWARD 2010

OFFICIAL LAUNCH OF THE NEW FACTORY OF PANTECH STAINLESS & ALLOY INDUSTRIES SDN. BHD.

INDUSTRIAL ROAD SHOW,

KUANTAN, MALAYSIA

SABIC STM-9 EXIBITION,

JUBAIL,

SAUDI ARABIA

17

ANNUAL REPORT 2011


13

AUDIT COMMITTEE REPORT

1. COMPOSITION

The Audit Committee was established by the Board on 1 December 2006. The Committee presently comprises of three (3) members of the Board which consists of Non-Executive Directors.

Chairman Mr Tan Sui Hin Independent Non-Executive Director Members Mr Loh Wei Tak Independent Non-Executive Director Haji Yusoff Bin Mohamed Independent Non-Executive Director

2. TERMS OF REFERENCE OF THE AUDIT COMMITTEE

2.1 Constitution

The Audit Committee was formed pursuant to a resolution passed by the Board of Directors on 1 December 2006.

2.2 Membership

The Audit Committee shall be appointed by the Board of Directors from among their members and shall comprise of not less than three (3) members, all members must be non-executive directors, with a majority of them being independent directors.

The members of the Audit Committee shall elect a chairman from among their members who is not an executive director or employees of the Company or any related corporation. The chairman elected shall be subjected to endorsement by the Board.

If a member of the Audit Committee resigns, dies or for any other reason ceases to be a member with the results that the number is reduced below 3, the Board of Directors shall, within 3 months of that event, appoint such number of new members as may be required to make up the minimum number of 3 members.

No alternate Director shall be appointed as a member of the Audit Committee.

At least one member of the Committee:-(a) shall be a member of the Malaysian Institute of Accountants; or(b) if he is not a member of the Malaysian Institute of Accountants, he shall have at least three (3) years’ working

experience and:-i) he must have passed the examination specified in Part 1 of the 1st Schedule of the Accountants Act, 1967;

orii) he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of

the Accountants Act, 1967.

The term of office and performance of the Committee and each of its members must be reviewed by the Board at least once every three (3) years.

2.3 Notice of Meeting and Attendance

The agenda for Audit Committee meetings shall be circulated before each meeting to members of the Committee. The Committee may require the external auditors and any official of the Company to attend any of its meetings as it determined. The external auditors shall have the right to appear and be heard at any meeting of the Audit Committee and shall appear before the Committee when required to do so by the Committee.

Meetings shall be held at least four (4) times a year with a minimum quorum of two (2) members and the majority of members present shall be independent non-executive Directors. Additional meetings may be called at any time at the discretion of the Committee.

At least twice a year, the Committee shall meet with the external and/or internal auditors without any executive Board member present and upon the request of the external auditors, the Chairman of the Committee shall convene a meeting to consider any matter which the external auditors believe should be brought to the attention to the Board or shareholders.

The Company Secretary of the Company shall be the Secretary of the Committee.

ANNUAL REPORT 2011


1318

AUDIT COMMITTEE REPORTcont’d

2. TERMS OF REFERENCE OF THE AUDIT COMMITTEE cont’d

2.4 Authority

The Audit Committee is authorised to investigate any activity of the Company within its terms of reference and

all employees shall be directed to co-operate with any request made by the Committee. The Committee shall be

empowered to retain persons having special competence as necessary to assist the Committee in fulfilling its

responsibilities.

The Committee shall have direct communication channels with the external and internal auditors.

The Committee is authorised by the Board to obtain independent professional or other advice at the Company’s

expense and to invite outsiders with relevant experience and expertise to attend meetings if necessary.

The Committee would be able to convene meetings with the external auditors, internal auditors or both, excluding the

attendance of the other Directors and employees of the Company, whenever deemed necessary.

2.5 Duties And Responsibilities

The duties and responsibilities of the Audit Committee shall be:-

2.5.1 To review the quarterly results and year end financial statements prior to the approval by the Board of Directors

focusing particularly on:-

- the going concern assumption;

- compliance with accounting standards and other legal requirements;

- any changes in accounting policies and practices;

- significant issues from the audit and significant and unusual events.

2.5.2 To review with External Auditors on the following:-

- the audit plan;

- evaluation of system of internal controls;

- problems and observation arising from interim and final audits.

2.5.3 To review:-

- any letter of resignation from External Auditors of the Company or Group;

- whether there is reason to believe that the Company or Group’s External Auditors is not suitable for re-

appointment;

- any recommendations on the nomination of a person or persons as External Auditors and to consider

audit fees;

- the appointment or re-appointment of Internal Auditors or recommend the nominations of a person or

persons as Internal Auditors.

- any related party transaction and conflict of interest situation that may arise within the Company or

Group including any transaction, procedure or course of conduct that raises questions of management

integrity.

- internal audit program, processes, the results of the internal audit program, processes or investigation

undertaken and whether or not appropriate action is taken on the recommendations of the internal audit

function .

2.5.4 To assess the adequacy and effectiveness of the system of internal control and accounting control procedures of

the Company and Group by reviewing the reports from the Internal Auditors and External Auditors’ management

letter and Management’s response.

2.5.5 To undertake such other responsibilities as may be agreed by the Committee and the Board.

ANNUAL REPORT 2011


13 19

AUDIT COMMITTEE REPORTcont’d

3. SUMMARY OF ACTIVITIES DURING THE FINANCIAL YEAR

A total of five (5) meetings were held during the financial year under review. The details of the attendance of each member

of the Audit Committee are as per table below:-

Audit Committee Members Number of Meetings Attended

Mr Tan Sui Hin 4/5

Mr Loh Wei Tak 5/5

Haji Yusoff Bin Mohamed 4/5

The summary of the activities of the Audit Committee in discharging of its duties and responsibilities for the financial year

ended 28 February 2011 included the following:-

i) Reviewed the External Auditors’ scope of work and audit plans for the financial year under review.

ii) Reviewed the results of audit, the audit report and management letter with management’s response.

iii) Reviewed the Group’s compliance with the Listing Requirements of Bursa Malaysia Securities Berhad, Financial

Reporting Standards (FRS) in Malaysia and other relevant legal and regulatory requirements with regards to the

quarterly and year-end financial statements.

iv) Reviewed and approved the Internal Audit Plan and the Internal Audit Report.

v) Reviewed the financial statements of the Group prior to submission to the Directors for their perusal and approval. This

was to ensure compliance of the financial statements with the provisions of the Companies Act, 1965 and Financial

Reporting Standards (FRS).

vi) Reviewed the unaudited quarterly financial results announcements before recommending them for the Board

approval.

vii) Considered and recommended to the Board the re-appointment of External Auditors and their fees.

4. INTERNAL AUDIT FUNCTIONS

The Audit Committee is aware of the fact that an independent and adequately resourced internal audit function is essential

to assist in obtaining the assurance it requires regarding the effectiveness of the system of internal control.

The Board has outsourced its internal audit function to an independent professional service firm. The Outsourced Internal

Auditors (“Internal Auditors”) report to the Audit Committee at least half yearly. Findings arising from the internal audit

review together with the level of concern, the Management’s response, recommendations and personnel responsible for

implementing corrective actions are presented to the Audit Committee for its review. The costs incurred for the internal audit

function for the financial year 2011 is RM58,000.

During the period under review, the Internal Auditors carried out the following activities:-

i) Presented and obtained approval from the Audit Committee the annual internal audit plan, its audit strategy and

scope of audit work.

ii) Performed audits according to the annual internal audit plan, to review the adequacy and effectiveness of the internal

control system, compliance with policies and procedures and reported ineffective and inadequate controls and made

recommendations to improve their effectiveness.

iii) Monitored and followed-up to ensure Management implemented the action plans as agreed.

5. EMPLOYEES’ SHARES OPTIONS SCHEME (“ESOS”)

The allocations of options were reviewed by the Audit Committee to ensure compliance with the allocation criteria

determined by the Option Committee and in accordance with the By-Laws of the ESOS.

ANNUAL REPORT 2011


1320

STATEMENT ON INTERNAL CONTROL

The Malaysian Code on Corporate Governance stipulates that the Board of Directors of a listed company should maintain a sound

system of internal control to safeguard shareholders’ investment and the Company’s assets. The system of internal control covers

not only financial controls but operational and compliance controls as well. This Statement on Internal Control is made pursuant to

paragraph 15.26 (b) of the Listing Requirements of Bursa Malaysia Securities Berhad.

In addition, the Group has requested that the external auditors to review this Statement in accordance to paragraph 15.23 of the

Listing Requirements and Recommended Practice Guide 5 (“RPG 5”) issued by the Malaysian Institute of Accountants. The Board

is pleased to note that external auditors find this Statement to be consistent with their understanding of the internal control

processes implemented by the Group during their review.

BOARD RESPONSIBILITY

The Board acknowledges its responsibility for the Group’s system of internal control and for reviewing adequacy and integrity of

the system on an on-going basis. The system is designed to manage rather than eliminate the risk of failure to achieve business

objectives, and can only provide reasonable but not absolute assurance against material misstatement, loss and fraud.

The Board also takes into consideration the need to balance the business risks and the potential returns to stakeholders in its daily

operations, with the dynamic business climate it operates in. The Board also recognises the need for a concerted effort from the

management, head of department and senior staff members in ensuring that the integrity, effectiveness and adequacy of the

control mechanism are monitored and maintained throughout the financial period.

ENTERPRISE RISK MANAGEMENT FRAMEWORK

The Board recognizes risk management as an important element of the business operations in order to identify and evaluate

principal risks and implement appropriate controls to manage significant risks faced by the Group. As such, the Board has adopted

an Enterprise Risk Management (“ERM”) framework, which is developed within its risk appetite.

An ERM report together with the Group’s detailed key risk profile, were presented to the Board. The Board has set up a Risk

Management Committee (“RMC”) which comprises of Executive Directors and Senior Management of the Group to identify,

evaluate, and manage significant risks faced by the Group as well as report to the Board on a regular basis.

INTERNAL AUDIT FUNCTION

The internal audit function has been outsourced by the Group to a professional firm, who reports directly to the Audit Committee.

An internal audit charter and internal audit plan has been submitted and approved by the Audit Committee.

For the financial year under review, the internal auditors have carried out their review according to the approved internal audit plan.

The review covered the assessment on the adequacy and effectiveness of the Group’s internal controls system. Upon completion

of the internal audit, the internal audit observations, recommendations and management comments were reported to the Audit

Committee.

Total cost incurred for the internal audit function in respect of the financial year ended 28 February 2011 was RM 58,000.

KEY ELEMENTS OF THE GROUP’S INTERNAL CONTROLS

The key elements of the Group’s system of internal controls include:

business and operational matters including potential risks and control issues.

and operation of the Board at regular Board meeting. Major capital investment, acquisition, disposals or any other transaction

not in the ordinary course of business exceeding a certain threshold must be referred to the Board for approval.

ANNUAL REPORT 2011


13 21

STATEMENT ON INTERNAL CONTROLcont’d

KEY ELEMENTS OF THE GROUP’S INTERNAL CONTROLS cont’d

to the Group and advise accordingly;

performance, business planning, control environment and other key issues;

performance;

memorandums, staff briefings and operational meetings to achieve the Group’s overall business objectives;

compliance with occupational safety and health policies and procedures on a continuous basis.

INTERNAL CONTROL SUMMARY

There is no material internal control failures occurred during the financial period that could have resulted in material losses or

contingencies. The Board is of the opinion that the internal control system in place is adequate at its current level of operations and

will continuously strive to enhance the Group’s system of internal control in safeguarding shareholders’ investment and Company’s

assets.

ANNUAL REPORT 2011


1322

CORPORATE GOVERNANCE STATEMENT

The Board of Directors (“the Board”) of Pantech Group Holdings Berhad supports the objectives of the Malaysian Code on Corporate Governance (“the Code”) and also acknowledges their roles in ensuring that shareholders’ interest are properly looked after. For this reason, the Board of Directors is committed in maintaining highest standard of corporate governance pursuant to the Code.

The Group will continue to endeavor to comply with all the key Principles and Best Practices of the Malaysian Code on Corporate Governance in its effort to maintain shareholders value, whilst taking into account the interest of other stakeholders.

This Corporate Governance Statement contained the principles and practices of the Code that the Group has adhered to.

A. BOARD OF DIRECTORS

i. Composition and Attendance

The composition of the Board and the individual Directors’ attendance of meetings during the financial year ended 28 February 2011 were as follows:-

Meetings Attended

(out of 5 held)

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

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

Mr Tan Ang Ang Executive Director 5/5

Mr To Tai Wai Executive Director 5/5

Mr Tan Sui Hin Independent Non-Executive Director 4/5

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

Haji Yusoff Bin Mohamed Independent Non-Executive Director 4/5

Haji Abdul Karim Bin Ahmad Non-Independent Non-Executive Director 5/5

The Group is lead by an effective Board which oversees the activities of the Group. The Board has overall responsibility for corporate governance, strategic planning, formulation of policies and overseeing the investments and business of the Company.

The Board currently consists of eight (8) members, comprising of an Executive Chairman who is also the Group

Managing Director, one (1) Group Deputy Managing Director, two (2) Executive Directors and four (4) non-executive directors.

The Board of Directors has complied with the Best Practices in Corporate Governance except that the Chairman also holds an Executive position as Group Managing Director. Although of combined roles, the Board is of the opinion that there is a balanced view at all deliberations due to the presence of at least 1/3 Independent Directors who are unbiased and provide independent views, advice and judgment in compliance with Paragraph 15.02 of the Bursa Securities Listing Requirements.

Although all the Directors have an equal responsibility for the Company’s operations, the presence of Independent Non-Executive Directors brings additional element of balance to the Board. Besides providing valuable expertise and business inputs, the Independent Directors have the caliber to exercise independent judgment in the Board’s decision.

ii. Appointment and Re-election of Directors

According to the Articles of Association of the Company, one-third (or the number nearest to one-third) of the Directors are required to retire from office at each annual general meeting. Further, all the Directors are required to retire from office at least once in every three (3) years. However, a retiring Director is eligible for re-election at the meeting at which he or she retires. An election of the retiring Directors shall take place every year.

Any person appointed as a Director, either to fill a casual vacancy or as an addition to the existing Directors shall hold office only until the conclusion of the next annual general meeting, and shall be eligible for re-election but shall not

be taken into account in determining the Directors who are to retire by rotation at that meeting.

ANNUAL REPORT 2011


13 23

CORPORATE GOVERNANCE STATEMENTcont’d

A. BOARD OF DIRECTORS cont’d

iii. Directors’ Training

All the Board members have completed its Mandatory Accreditation Programme. There has been greater awareness

on the importance and benefits of attending and participating in the training and continuing education programme.

The Board is committed to equip themselves in discharging their duties and responsibilities and shall continue to

attend relevant seminars, conferences and other training programme deemed appropriate for the Directors.

Pursuant to paragraph 15.08(2) and Appendix 9C (Part A, paragraph 28) of the Listing Requirements, all the Directors

collectively have attended and participated in programmes and forums relating to leadership and governance as

well as current changes to laws and regulations. Descriptions on types of training attended by the Directors are as

follows:-

Dato’ Chew Ting Leng

Dato’ Goh Teoh Kean

benefit from it?

Mr Tan Ang Ang

Mr To Tai Wai

Mr Tan Sui Hin

Mr Loh Wei Tak

Haji Abdul Karim Bin Ahmad

Haji Yusoff Bin Mohamed

Throughout the financial year, all the Directors have also been briefed in meetings by the respective professionals that

covered the following topics:-

The Company Secretaries also circulate the relevant guidelines on statutory and regulatory requirements from time to

time for the Directors’ reference and brief the Board members on the update.

iv. Supply of Information

The Board members are updated on the Company’s activities and its operations on a regular basis. All Directors have

access to all information of the Company on a timely basis in an appropriate form and quality necessary to enable

them to discharge their duties and responsibilities. All Directors have access to the advice and services of the Company

Secretaries and to obtain independent professional advice, whenever necessary, at the expense of the Company.

ANNUAL REPORT 2011


1324


A. BOARD OF DIRECTORS cont’d

v. Board Committees The Board delegates specific responsibilities to three committees; namely, Audit Committee, Nomination Committee

and Remuneration Committee. All the Committee has written terms of reference and the Board receives reports of their proceedings and deliberations.

a. Audit Committee

The Audit Committee was formed on 1st December 2006. The Committee plays an active role in assisting the Board in discharging its governance responsibilities which include maintaining a sound system of internal control. The Audit Committee Report is set out separately on pages 17 to 19 of this Annual Report.

b. Nomination Committee

The Nomination Committee presently comprises the following members:-

Chairman Mr Tan Sui Hin Independent Non-Executive Director

Members Mr Loh Wei Tak Independent Non-Executive Director Haji Yusoff Bin Mohamed Independent Non-Executive Director

The Board has established the Nomination Committee on 1st December 2006. The Committee is empowered to make recommendations of nominees to the Board. All decisions on appointments are made by the Board after considering the recommendations of the Nomination Committee in accordance with the Company’s Articles of Association.

The Committee comprising of three (3) Non-Executive Directors, involved in assessing the existing Directors and identifying, nominating, recruiting, appointing and orientating new Directors. The Committee also ensures the selection of Board members has an appropriate balance of expertise and abilities by reviewing the skills, experiences and other qualities of the Directors thus strengthen the composition of the Board and contributes extensively to the effectiveness of the Board.

c. Remuneration Committee

The Remuneration Committee presently comprises the following members:-

Chairman Haji Yusoff Bin Mohamed Independent Non-Executive Director

Members Dato’ Chew Ting Leng Executive Chairman/Group Managing Director Mr Tan Sui Hin Independent Non-Executive Director

The Remuneration Committee was formed on 1st December 2006. The Committee is responsible for, among others, recommending to the Board the remuneration of all Executive Directors in all its forms, by referring to the KPI and the performance evaluation assessment. In the event an Executive Director is a member of the Remuneration Committee, then he or she would not be part of the decision making process to arrive at his or her own remuneration. The determination of remuneration packages of non-executive directors would be a matter for the Board as a whole. Nonetheless, the non-executive directors concerned would abstain from discussion of their own respective remuneration. The Committee is entrusted under its terms of reference to assist the Board.

d. Risk Management Committee

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

Continuous efforts will be made to monitor and re-assess the existing ERM framework in regards to maintaining

a proper system of managing risks as well as the related control activities.

ANNUAL REPORT 2011


13 25


B. DIRECTOR’S REMUNERATION

i. The Level and Make-Up of Remuneration

The aggregate Directors’ remuneration for the financial year ended 28 February 2011 are set out below:

Remuneration

(RM)

Executive Directors 3,635,459

Non-Executive Directors 126,000

Total 3,761,459

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

Range of Remuneration (RM) Executive Non-Executive

50,000 and below - 4

1 -

1 -

1 -

1 -

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

ii Procedure

The remuneration Committee shall ensure that the levels of remuneration are sufficient to attract and retain Directors

of the quality required to manage the business of the Group.

The Directors’ Fees will be recommended by the Remuneration Committee and submitted to the Board for

endorsements. These Directors’ Fees are submitted for shareholders approval at the Annual General Meeting.

C. SHAREHOLDERS

i. Dialogue with Investors

The Board recognizes the values of the dialogue with investors and shareholders and the importance of accountability

to them. As such, the Board is disseminating proper, timely and adequate information to the investors and shareholders

through annual reports, announcements, circulars to shareholders and press releases. The Company updates all the

corporate information and development in its website on regular basis. Through such channels, the Company is able

to provide an overview of the Group’s performance and operation and to disclose material information.

Shareholders and Investors who would like to obtain further understanding on the Group’s activities can log into the

Company’s website at www.pantech-group.com or request a copy of some publicly available documents are welcome

to send their letters or emails to the Company Secretary at the registered office.

ii. General Meetings

The Company’s annual general meetings and extraordinary general meetings are the platform for communication

between the Company and its shareholders.

ANNUAL REPORT 2011


1326


D. ACCOUNTABILITY AND AUDIT

i. Financial Reporting

The Directors are responsible to present a true and fair assessment of the Group’s position and prospects in the annual

reports and quarterly reports. The quarterly financial results were reviewed by the Audit Committee and approved by

the Board of Directors prior to submission to Bursa Malaysia Securities Berhad.

A statement by the Directors of their responsibilities in the preparation of financial statements is set out in the ensuing

section.

ii. Statement of Directors’ Responsibility for Preparing Financial Statements

The Board is responsible to ensure that the financial statements are properly drawn up in accordance with the

provisions of the Companies Act, 1965 and approved accounting standards in Malaysia so as to give a true and fair

view of the state of affairs of the Group as at the end of the financial year and of the results and cash flows of the Group

for the financial year then ended. The matter will be further enhanced in the forthcoming year.

The Directors are satisfied that in preparing the financial statements of the Group for the year ended 28 February 2011,

the Group has adopted suitable accounting policies and applied them consistently, prudently and reasonably. The

Directors also consider that all applicable approved accounting standards have been followed in the preparation of

the financial statements, subject to any material departures being disclosed and explained in the notes to the financial

statements. The financial statements have been prepared on the going concern basis.

The Directors are responsible for ensuring that the Group keeps sufficient accounting records to disclose with

reasonable accuracy, the financial position of the Group and which enable them to ensure that the financial statements

comply with the Companies Act, 1965.

iii. Internal Control

The Board of Directors acknowledges their responsibility for the Group’s system of internal control, which is designed

to identify and manage the risks of the businesses of the Group in pursuit of its objectives. In addition, the system

of internal control practiced by the Group spans over financial, operational and compliance aspects, particularly to

safeguard the Group assets and hence shareholders’ investment. In executing this responsibility, the Board via the

Audit Committee and the internal auditors, has adopted procedures to monitor the ongoing adequacy and integrity

of the system of internal control.

Further details of the state of the system of internal control of the Group are presented on pages 20 and 21 of this

Annual Report.

iv. Relationship with the Auditors

The Board has established a formal and transparent arrangement for maintaining appropriate relationships with

the external auditors in seeking professional advice and ensuring the compliance with the appropriate accounting

standards. The Audit Committee met with the external auditors to discuss their audit plan, audit findings and the

financial statements.

v. Directors’ Responsibility Statement on Annual Audited Accounts

The Directors are required by the Companies Act, 1965 to prepare financial statements for each financial year which

are made in accordance with the applicable approved accounting standards in Malaysia and to give a true and fair

view of the state of affairs of the Company and of the Group as at the end of each financial year and of the result and

cash flows of the Company and of the Group for the financial year end.

E. COMPLIANCE STATEMENT

The Company is committed in achieving high standards of corporate governance throughout the Group and to the highest

level of integrity and ethical standards in all its business dealings. The Board considers that the Company has complied with

the principles and best practices as set out in parts 1 and 2 respectively of the Code.

ANNUAL REPORT 2011


13 27

ADDITIONAL COMPLIANCE STATEMENT

1. UTILISATION OF PROCEEDS FROM CORPORATE EXERCISE

The Renounceable Rights Issue of 7-year 7% Irredeemable Convertible Unsecured Loan Stock (“ICULS”) 2010/2017 together with free detachable warrants were completed on 27 December 2010. The status of utilisation of proceeds raised from Rights Issue is as below:-

No. Purpose

Proposed

utilisation

Actual

Utilisation

as at 28

February

2011

Intended

Timeframe

for

Utilisation Deviation Explanations

RM’000 RM’000 RM’000 %

1. Construction of factory

buildings and warehouses,

acquisition of plant and

equipment

39,000 - By January

2013

N/A - -

2. Investments in related and/

or complementary businesses

locally and/or overseas

9,750 - By January

2013

N/A - -

3. Working capital 24,591 24,584 - 7 0.03 The shortfall

was funded

from the

working

capital of

Pantech

Group

4. Corporate exercise expenses 1,500 1,507 - (7) 0.46

74,841 26,091

2. BONUS ISSUE

On 29 November 2010 the Company issued 74,841,027 new ordinary share of RM0.20 each on the basis of one (1) bonus share for every five (5) existing ordinary shares of RM0.20 each held in the Company.

3. SHARE BUY-BACKS

There was no share buy-back during the financial year ended 28 February 2011.

At the end of the financial year, a total of 820,800 ordinary shares at RM0.20 each were retained as treasury shares.

There was no sale or cancellation of treasury shares during the financial year.

4. OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES ISSUED AND EXERCISED

Employees’ Shares Options Scheme (“ESOS”) During the financial year, the Company granted 48,435,000 options to the eligible employees of the Company under ESOS

of which 26,000 ordinary shares of RM0.20 each were exercised at an exercise price of RM0.86 per unit.

The exercise price subsequently adjusted to RM0.67 in accordance with Bye-Laws following the completion of Bonus Issue and Rights Issue during the financial year.

ANNUAL REPORT 2011


1328

ADDITIONAL COMPLIANCE STATEMENTcont’d

4. OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES ISSUED AND EXERCISED cont’d

Irredeemable Convertible Unsecured Loan Stocks 2010/2017 (“ICULS”)

On 22 December 2010, the Company issued 748,410,400 7-year 7% ICULS at a nominal value of RM0.10 each.

During the financial year, a total of 12,408,600 units of ICULS were converted to 2,068,100 ordinary shares in the Company at

the conversion price of RM0.60.

Warrants 2010/2020 (“Warrants”)

On 22 December 2010, the Company issued 74,841,040 Warrants at an exercise price of RM0.60 per Warrant.

There was no Warrants exercised during the financial year.

5. DEPOSITORY RECEIPT PROGRAMME

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

6. IMPOSITION OF SANCTIONS/PENALTIES

There were no public impositions of sanctions or penalties imposed on the Company and its subsidiaries, directors or

management by the regulatory bodies during the financial year.

7. NON-AUDIT FEES

The amount of non-audit fees incurred for services rendered to the Company and its subsidiaries during the financial year

ended 28 February 2011 by Messrs SJ Grant Thornton was RM22,100.

8. PROFIT ESTIMATE, FORECAST AND PROJECTION

The Company did not release any profit estimate, forecast or projections during the financial period.

9. VARIANCE IN RESULTS

There is no significant variance between the profit after tax for the financial statement ended 28 February 2011 and the

unaudited results previously announced.

10. PROFIT GUARANTEE

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

11. MATERIAL CONTRACTS AND CONTRACTS RELATING TO LOANS

There were no contracts relating to loan and material contracts of the Company and its subsidiaries involving the Directors

and substantial shareholders since the end of the previous financial year.

12. RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE AND TRADING NATURE (“RRPT”)

There is no RRPT entered during the financial year.

ANNUAL REPORT 2011


13 29

13. REVALUATION POLICY ON LANDED PROPERTIES

The Group’s revaluation policies on landed properties held by the Group are disclosed in note 3.2 to the financial statements.

14. EXEMPTION TO CTL CAPITAL HOLDING SDN BHD (“CTL CAPITAL”) AND THE PARTIES ACTING IN CONCERT WITH IT (“PACS”) FROM THE OBLIGATION TO UNDERTAKE A MANDATORY TAKE-OVER OFFER FOR ALL THE REMAINING VOTING SHARES, ICULS AND WARRANTS IN THE COMPANY NOT ALREADY OWNED BY THEM

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

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

i. The Time Period for Which the Exemption has Been Granted

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

ii. Number and Percentage of Voting Shares in the Company, and the Number of ESOS Options, ICULS and

Warrants Held by CTL Capital And Its PACS As At 30 June 2011:-

Ordinary Shares No of ICULS No of Warrants

Direct Indirect Direct Indirect Direct Indirect

Parties

No. of

Voting

Shares %*

No. of

Voting

Shares

(i)

%*

No of

ESOS

Options (vii)

CTL Capital 101,196,480 22.40 - - 173,463,982 - 17,346,398 - -

GL Management

Agency Sdn

Bhd (“GL

Management”) 74,895,960 16.58 - - 128,381,300 - 12,838,130 - -

Dato’ Chew Ting

Leng (“CTL”) - - 101,196,480 (i) 22.40 - 173,463,982 (i) - 17,346,398 (i) 4,500,000

Dato’ Goh Teoh

Kean (“GTK”) - - 74,895,960 (ii) 16.58 - 128,381,300 (ii) - 12,838,130 (ii) 4,500,000

Tan Ang Ang

(“TAA”) 7,944,600 1.76 1,278,000 (iii) 0.28 13,472,400 2,130,000 (iii) 1,347,240 213,000 (iii) 4,500,000

To Tai Wai

(“TTW”) 12,320,580 2.73 - - 21,118,800 - 2,111,880 - 3,150,000

Datin Shum Kah

Lin (“SKL”) - - 101,196,480 (iv) 22.40 - 173,463,982 (iv) - 17,346,398 (iv) -

Datin Lee Sock

Kee (“LSK”) - - 74,895,960 (v) 16.58 - 128,381,300 (v) - 12,838,130 (v) -

Mdm Yong Yui

Kiew (“YYK”) 1,278,000 0.28 7,944,600 (vi) 1.76 2,130,000 13,472,400 (vi) 213,000 1,347,240 (vi) -

TOTAL 197,635,620 43.75 - - 338,566,482 - 33,856,648 - 16,650,000

Notes:-

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

(“the Act”).(ii) Deemed interested by virtue of his and his spouse LSK’s interests in GL Management pursuant to Section 6A of the Act.(iii) Deemed interested by virtue of his spouse YYK’s direct shareholding in the Company pursuant to Section 134(12) of the Act.(iv) Deemed interested by virtue of her and her spouse CTL’s interests in CTL Capital pursuant to Section 6A of the Act.(v) Deemed interested by virtue of her and her spouse GTK’s interests in GL Management pursuant to Section 6A of the Act.(vi) Deemed interested by virtue of her spouse TAA’s direct shareholding in the Company pursuant to Section 134(12) of the Act.(vii) Only 40% of the ESOS Option is exercisable as at 30 June 2011.

* Excluding a total of 820,800 treasury shares.


ANNUAL REPORT 2011


1330

14. EXEMPTION TO CTL CAPITAL HOLDING SDN BHD (“CTL CAPITAL”) AND THE PARTIES ACTING IN CONCERT WITH IT

(“PACS”) FROM THE OBLIGATION TO UNDERTAKE A MANDATORY TAKE-OVER OFFER FOR ALL THE REMAINING VOTING

SHARES, ICULS AND WARRANTS IN THE COMPANY NOT ALREADY OWNED BY THEM cont’d

iii. The Maximum Potential Voting Shares or Voting Rights of CTL Capital and Its PACS in the Company, Assuming

only CTL Capital and Its PACS (but not other shareholders) Exercise the ESOS Options, ICULS and Warrants In

Full:-

Direct Indirect

Parties

No. of

Voting

Shares %

No. of

Voting

Shares %

CTL Capital 147,453,542 26.39 - -

GL Management 109,130,973 19.53 - -

CTL 4,500,000 0.81 147,453,542 (i) 26.39

GTK 4,500,000 0.81 109,130,973 (ii) 19.53

TAA 16,037,240 2.87 1,846,000 (iii) 0.33

TTW 21,102,260 3.78 - -

SKL - - 151,953,542 (iv) 27.20

LSK - - 113,630,973 (v) 20.34

YYK 1,846,000 0.33 16,037,240 (vi) 2.87

TOTAL 304,570,015 54.52 - -

Notes:-

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

(“the Act”).(ii) Deemed interested by virtue of his and his spouse LSK’s interests in GL Management pursuant to Section 6A of the Act.(iii) Deemed interested by virtue of his spouse YYK’s direct shareholding in the Company pursuant to Section 134(12) of the Act.(iv) Deemed interested by virtue of her and her spouse CTL’s interests in CTL Capital pursuant to Section 6A of the Act.(v) Deemed interested by virtue of her and her spouse GTK’s interests in GL Management pursuant to Section 6A of the Act.(vi) Deemed interested by virtue of her spouse TAA’s direct shareholding in the Company pursuant to Section 134(12) of the Act.

iv. No Take-over Offer Would Arise on Full Exercise of the ESOS Options And Warrants And conversion of ICULS by

CTL Capital and The PACS


Directors’ Report 32

Statement by Directors 39

Statutory Declaration 39

Independent Auditors’ Report 40

Statements of Financial Position 42

Income Statements 44

Statements of Comprehensive Income 45

Statements of Changes in Equity 46

Statements of Cash Flows 50

Notes to the Financial Statements 53Fin

an

cia

l S

tate

me

nts

ANNUAL REPORT 2011


1332

DIRECTORS’ REPORT

The Directors of Pantech Group Holdings Berhad have pleasure in submitting their report together with the audited financial

statements of the Group and of the Company for the financial year ended 28 February 2011.

PRINCIPAL ACTIVITIES

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

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

Financial Statements respectively.

There have been no significant changes in the nature of these activities of the Company, its subsidiary companies, associate

company and joint venture during the financial year.

FINANCIAL RESULTS

Group Company

RM RM

Net profit for the financial year 28,980,431 13,557,736

Attributable to:-

Owners of the parent 28,994,270 13,557,736

Minority interest (13,839) -

28,980,431 13,557,736

DIVIDENDS

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

RM

Special second interim single tier dividend of 1.50 sen per ordinary share in respect of the financial year

ended 28 February 2010 and paid on 20 April 2010 5,612,688

Final single tier dividend of 1.20 sen per ordinary share in respect of the financial year ended 28 February

2010 and paid on 22 September 2010 4,490,462

First interim single tier dividend of 1.50 sen per ordinary share in respect of the financial year ended 28

February 2011 and paid on 3 December 2010 5,613,078

Special second interim single tier dividend of 0.60 sen per ordinary share in respect of the financial year

ended 28 February 2011 and paid on 30 March 2011 2,710,819

At the forthcoming Annual General Meeting, a final single tier dividend, in respect of the financial year ended 28 February 2011,

of 1.20 sen per ordinary share amounting to a dividend payable of RM5,430,000 will be proposed for shareholders’ approval. The

financial statements for current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders,

will be accounted for in equity as an appropriation of retained earnings in the financial year ending 28 February 2012.

ANNUAL REPORT 2011


13 33

DIRECTORS’ REPORTcont’d

RESERVES AND PROVISIONS

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

financial statements.

ISSUE OF SHARES AND DEBENTURES

During the current financial year, the Company had increased its issued and fully paid-up ordinary share capital from RM75,000,000

to RM90,387,025 by:-

(a) the issuance of 74,841,027 new ordinary shares of RM0.20 each through bonus share issue on the basis of one bonus share

for every five existing ordinary shares of RM0.20 each held on 26 November 2010.

(b) the issuance of 26,000 new ordinary shares of RM0.20 each at RM0.86 per ordinary share, for cash pursuant to the exercise of

options under Pantech Group Holdings Berhad Employees Share Option Scheme.

(c) the issuance of 2,068,100 new ordinary shares of RM0.20 each resulting from the conversion of 12,408,600 units of 7-Year 7%

Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) at the rate of six RM0.10 nominal value of ICULS into one fully

paid-up ordinary shares of RM0.20 each in the Company.

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

Company.

There were no debentures issued during the financial year.

TREASURY SHARES

The shareholders of the Company, through the Annual General Meeting held on 21 August 2008, approved the Company’s plan

to repurchase up to 10% of the issued and paid-up share capital of the Company (“Share Buy Back”). The authority granted by the

shareholders was subsequently renewed in every Annual General Meeting held and it was last renewed in the Annual General

Meeting held on 26 August 2010. The Directors of the Company are committed to enhancing the value of the Company to its

shareholders and believe that the purchase plan can be applied in the best interest of the Company and its shareholders.

During the financial year ended 28 February 2009, the Company repurchased 820,800 ordinary shares of RM0.20 each of its issued

share capital from the open market. The average price paid for the shares repurchased was RM0.46 per share. The repurchased

transactions were financed by internally generated funds. These shares repurchased were held as treasury shares and treated in

accordance with the requirements of Section 67A of the Companies Act, 1965.

No repurchase of ordinary shares were made during the previous and current financial year.

The Company has the right to cancel, resell these shares and/or distributes as dividends at a later date. As treasury shares, the rights

attached to voting, dividends and participation in other distribution is suspended. None of the treasury shares repurchased had

been sold as at the reporting date.

As at financial year end, the number of ordinary shares issued and fully paid-up after deducting treasury shares against equity is

451,114,327 ordinary shares of RM0.20 each.

PANTECH GROUP HOLDINGS BERHAD EMPLOYEES SHARE OPTION SCHEME

At an Extraordinary General Meeting held on 10 February 2010, the shareholders approved the Employees Share Option Scheme

(“ESOS”) for the granting of non-transferable options that are settled by physical delivery of the ordinary shares of the Company, to

eligible Directors (including Non-Executive Directors) of the Company and authorised the Board of Directors to allocate the share

options to eligible employees of the Group. The ESOS was implemented on 3 March 2010 and is to be in force for a period of 5 years

from the date of its implementation.

ANNUAL REPORT 2011


1334


PANTECH GROUP HOLDINGS BERHAD EMPLOYEES SHARE OPTION SCHEME cont’d

The salient features, other terms of the ESOS and details of the share options granted during the financial year are disclosed in Note

36 to the Financial Statements.

The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose in this report the

names of the persons to whom options have been granted during the financial year and details of their shareholdings pursuant to

Section 169 (11) of the Companies Act, 1965 except for information on employees who were granted options representing 400,000

and above ordinary shares of RM0.20 each.

The following are names of employees who have been granted options to subscribe for 400,000 or more ordinary shares of RM0.20

each.

Number of ordinary shares of RM0.20 each under option

Granted on

3.3.2010 Exercised Expired Lapsed

Unexercised

as at

28.2.2011

Chew Hean Khoon 400,000 - - - 400,000

Chew Soon Jiat 650,000 - - - 650,000

Kong Chiong Lee 1,500,000 - - - 1,500,000

Lee Liang Mong 1,350,000 - - - 1,350,000

Lim Shen Lee 960,000 - - - 960,000

Lim Soon Beng 2,000,000 - - - 2,000,000

Lim Yoke Lian 400,000 - - - 400,000

Ng Lee Lee 2,000,000 - - - 2,000,000

Shum Bi Shian 2,000,000 - - - 2,000,000

Tea Lee Ling 800,000 - - - 800,000

Ten Weng Liang 400,000 - - - 400,000

Wang Woon Chin 1,350,000 - - - 1,350,000

Wong Chun Nam 1,350,000 - - - 1,350,000

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

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

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

As at the end of the financial year, the number of ICULS in issue is 736,001,800.

INFORMATION ON THE FINANCIAL STATEMENTS

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

(a) to ascertain that action had been taken in relation to the writing off of bad debts and the making of provision for doubtful

debts and satisfied themselves that all known bad debts had been written off and adequate provision had been made for

doubtful debts; and

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

as shown in the accounting records of the Group and of the Company have been written down to an amount which they

might be expected so to realise.

ANNUAL REPORT 2011


13 35


INFORMATION ON THE FINANCIAL STATEMENTS cont’d

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

(a) which would render the amounts written off for bad debts or the amount of provision for doubtful debts in the financial

statements of the Group and of the Company inadequate to any substantial extent; or

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

misleading; or

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

Company misleading or inappropriate.

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, in the opinion of the Directors, will or may affect the ability of the Group and of the Company

to meet its obligations as and when they fall due.

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

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

the liability of any other person; or

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

OTHER STATUTORY INFORMATION

The Directors state that:-

At the date of this report, they are not aware of any circumstances not otherwise dealt with in this report or the financial statements

which would render any amount stated in the financial statements misleading.

In the opinion of the Directors:-

(a) the results of operations of the Group and of the Company during the financial year were not substantially affected by any

item, transaction or event of a material and unusual nature; and

(b) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction

or event of a material and unusual nature likely to affect substantially the results of operations of the Group and of the

Company for the current financial year in which this report is made.

DIRECTORS

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

Dato’ Chew Ting Leng (Executive Chairman/Group Managing Director)

Dato’ Goh Teoh Kean (Group Deputy Managing Director)

Tan Ang Ang (Executive Director)

To Tai Wai (Executive Director)

Abdul Karim Bin Ahmad (Non-Independent Non-Executive Director)

Tan Sui Hin (Independent Non-Executive Director)

Loh Wei Tak (Independent Non-Executive Director)

Yusoff Bin Mohamed (Independent Non-Executive Director)

ANNUAL REPORT 2011


1336


DIRECTORS cont’d

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

Number of ordinary shares of RM0.20 each

As at

1.3.2010 Bonus Issue Bought (Sold)

As at

28.2.2011


- deemed interest through

CTL Capital Holding Sdn. Bhd. 84,330,400 16,866,080 - - 101,196,480


- deemed interest through

GL Management Agency Sdn. Bhd. 62,413,300 12,482,660 - - 74,895,960

Tan Ang Ang

- direct interest 6,620,500 1,324,100 - - 7,944,600

- deemed interest through his spouse,

Yong Yui Kiew 1,065,000 213,000 - - 1,278,000

To Tai Wai

- direct interest 10,267,150 2,053,430 - - 12,320,580

Abdul Karim Bin Ahmad

- direct interest 25,000 5,000 - - 30,000

Tan Sui Hin

- direct interest 75,000 15,000 180,000 - 270,000

Yusoff Bin Mohamed

- direct interest 2,500 500 - - 3,000

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

Number of ordinary shares of RM0.20 each under option

Granted on

3.3.2010 Exercised Expired Lapsed

Unexercised

as at

28.2.2011

Dato’ Chew Ting Leng 4,500,000 - - - 4,500,000

Dato’ Goh Teoh Kean 4,500,000 - - - 4,500,000

Tan Ang Ang 4,500,000 - - - 4,500,000

To Tai Wai 3,150,000 - - - 3,150,000

Abdul Karim Bin Ahmad 250,000 - - - 250,000

Tan Sui Hin 250,000 - - - 250,000

Yusoff Bin Mohamed 250,000 - - - 250,000

Loh Wei Tak 250,000 - - - 250,000

ANNUAL REPORT 2011


13 37

DIRECTORS cont’d

The beneficial interests of those who were Directors at the end of the financial year in the 7-Year 7% Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) of the Company are as follows:-

Number of ICULS of RM0.10 each

As at

1.3.2010 Acquired (Sold)

As at

28.2.2011


- deemed interest through CTL Capital Holding Sdn. Bhd. - 173,463,982 - 173,463,982


- deemed interest through GL Management Agency Sdn.

Bhd. - 128,381,300 - 128,381,300

Tan Ang Ang

- direct interest - 13,472,400 - 13,472,400

- deemed interest through his spouse, Yong Yui Kiew - 2,130,000 - 2,130,000

To Tai Wai

- direct interest - 21,118,800 - 21,118,800


- direct interest - 50,000 - 50,000

Tan Sui Hin

- direct interest - 150,000 - 150,000 The beneficial interests of those who were Directors at the end of the financial year in the Warrants of the Company are as follows:-

Number of Warrants

As at

1.3.2010 Acquired (Sold)

As at

28.2.2011


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


- deemed interest through GL Management Agency

Sdn. Bhd. - 12,838,130 - 12,838,130

Tan Ang Ang

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

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

To Tai Wai

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



Tan Sui Hin



ANNUAL REPORT 2011


1338

DIRECTORS cont’d

By virtue of Dato’ Chew Ting Leng and Dato’ Goh Teoh Kean’s indirect interest in the Company, they are also deemed to have

interest in the shares of all the subsidiary companies to the extent that the Company has an interest under Section 6A of the

Companies Act, 1965.

DIRECTORS’ BENEFITS

During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the object or objects

of enabling the Directors of the Company to acquire any benefits by means of the acquisition of shares in or debentures of the

Company or any other body corporate, other than those arising from the share options granted under the Employees Share Option

Scheme.

Since the end of the previous financial year, no Director has received or become entitled to receive any benefit (other than as

disclosed in Notes 32 and 37 to the Financial Statements) by reason of a contract made by the Company or a related corporation

with the Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest.

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

The significant events during the financial year are disclosed in Note 42 to the Financial Statements.

SIGNIFICANT EVENTS AFTER THE REPORTING DATE

The significant events after the reporting date are disclosed in Note 43 to the Financial Statements.

AUDITORS

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

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors dated 24 June 2011.

.................................................... )

DATO’ CHEW TING LENG )

)

)

)

)

) DIRECTORS

)

)

)

)

................................................... )

DATO’ GOH TEOH KEAN )

Johor Bahru


ANNUAL REPORT 2011


13 39

STATEMENT BY DIRECTORS

STATUTORY DECLARATION

In the opinion of the Directors, the financial statements set out on pages 42 to 109 are drawn up in accordance with the provisions

of Companies Act, 1965 and Financial Reporting Standards 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 2011 and of their financial performance and cash flows of the Group and of the

Company for the financial year then ended.

The supplementary information as set out in Note 48, page 110 is prepared in accordance with Guidance on Special Matter No.1,

Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure pursuant to Bursa Malaysia Securities

Berhad Listing Requirement, as issued by the Malaysian Institute of Accountants and the directive of Bursa Malaysia Securities

Berhad.

On behalf of the Board

.................................................... .....................................................

DATO’ CHEW TING LENG DATO’ GOH TEOH KEAN

Johor Bahru

24 June 2011

I, Wang Woon Chin, being the Officer primarily responsible for the financial management of Pantech Group Holdings Berhad, do

solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 42 to 109

are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the

Statutory Declarations Act, 1960.

Subscribed and solemnly declared by )

the abovenamed at Johor Bahru in the ) .................................................

State of Johor this day of 24 June 2011 ) WANG WOON CHIN

Before me:

MOHDZAR BIN KHALID

P. L. P., P. I. S.

J204

Commissioner for Oaths

ANNUAL REPORT 2011


1340

INDEPENDENT AUDITORS’ REPORT to the Members of Pantech Group Holdings Berhad

(Incorporated in Malaysia)

Company No: 733607 W

REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of Pantech Group Holdings Berhad, which comprise the statements of financial position

as at 28 February 2011 of the Group and of the Company, and the 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 financial year then ended,

and a summary of significant accounting policies and other explanatory notes as enumerated in Notes 1 to 47 and set out on pages

42 to 109.

Directors’ Responsibility for the Financial Statements

The Directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance

with Financial Reporting Standards and the Companies Act, 1965 in Malaysia, and for such internal control as the Directors

determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due

to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance

with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and

perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.

The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial

statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s

preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also

includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the

Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the

Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at

28 February 2011 and of their financial performance and cash flows for the financial year then ended.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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

a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its

subsidiary companies of which we have acted as auditors have been properly kept in accordance with the provisions of the

Act.

b) We have considered the financial statements and the auditors’ reports of the subsidiary company of which we have not acted

as auditors, as disclosed in Note 8 to the Financial Statements.

c) We are satisfied that the financial statements of the subsidiary companies that have been consolidated with the Company’s

financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial

statements of the Group and we have received satisfactory information and explanations required by us for those

purposes.

d) The auditors’ reports on the financial statements of the subsidiary companies did not contain any qualification or any adverse

comment made under Section 174 (3) of the Act.

ANNUAL REPORT 2011


13 41

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

OTHER REPORTING RESPONSIBILITIES

The supplementary information set out in Note 48 on page 110 is disclosed to meet the requirement of Bursa Malaysia Securities

Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information

in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of

Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants

(“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared,

in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

OTHER MATTERS

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965

in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

SJ GRANT THORNTON TAN CHEE BENG

(NO. AF: 0737) CHARTERED ACCOUNTANT

CHARTERED ACCOUNTANTS (NO: 2664/02/13(J))

Johor Bahru

24 June 2011

ANNUAL REPORT 2011


1342

STATEMENTS OF FINANCIAL POSITION as at 28 February 2011

Group Company

Note 2011 2010 2011 2010

RM RM RM RM

ASSETS

Non-current assets

Property, plant and equipment 4 104,139,888 58,321,926 - -

Prepaid land lease payments 5 18,678,044 18,894,227 - -

Capital work-in-progress 6 6,748,340 166,932 - -

Investment properties 7 3,160,000 3,040,000 - -

Investment in subsidiary companies 8 - - 90,171,435 82,271,444

Investment in an associate company 9 1,789,618 1,771,224 - -

Investment in a joint venture company 10 379,118 323,626 - -

Available for sale investments 11 6,900 6,900 - -

Deferred tax assets 12 6,054,600 2,719,000 5,480,862 -

Total non-current assets 140,956,508 85,243,835 95,652,297 82,271,444

Current assets

Inventories 13 168,771,532 153,667,520 - -

Trade receivables 14 58,208,300 39,644,851 - -

Other receivables 15 7,309,306 6,114,487 540,628 741

Derivatives financial instruments 16 33,020 - - -

Amount due from subsidiary companies 8 - - 35,043,745 17,610,226

Amount due from an associate company 9 7,749,426 41,339,687 - -

Tax recoverable 642,995 2,148,500 - -

Fixed deposits with licensed banks 17 63,244,173 10,330,304 55,250,000 3,550,000

Cash and bank balances 18 75,138,489 52,285,615 20,094,096 943,448

Total current assets 381,097,241 305,530,964 110,928,469 22,104,415

Total assets 522,053,749 390,774,799 206,580,766 104,375,859

EQUITY AND LIABILITIES

EQUITY

Share capital 19 90,387,025 75,000,000 90,387,025 75,000,000

Share application money 12,960 - 12,960 -

Share premium 20 1,947,507 16,067,022 1,947,507 16,067,022

Treasury shares 21 (380,002) (380,002) (380,002) (380,002)

Revaluation reserve 22 4,720,415 - - -

Employees share option reserve 23 5,595,312 - 5,595,312 -

Irredeemable Convertible Unsecured Loan Stocks

- Equity component 24 49,151,154 - 49,151,154 -

Warrants reserve 25 7,484,104 - 7,484,104 -

Exchange translation reserve 149,771 242,819 - -

Unappropriated profit 158,113,413 141,961,553 8,556,420 7,841,094

Equity attributable to owners of the parent 317,181,659 232,891,392 162,754,480 98,528,114

Minority interest 86,161 1 - -

Total equity 317,267,820 232,891,393 162,754,480 98,528,114

ANNUAL REPORT 2011


13 43

STATEMENTS OF FINANCIAL POSITION as at 28 February 2011cont’d

Group Company

Note 2011 2010 2011 2010

RM RM RM RM

LIABILITIES

Non-current liabilities

Irredeemable Convertible Unsecured Loan Stocks

- Liability component 24 21,923,448 - 21,923,448 -

Finance lease creditors 26 2,172,112 1,446,962 - -

Borrowings 27 53,442,137 20,933,449 14,000,000 -

Deferred tax liabilities 28 3,462,508 3,538,844 - -

Total non-current liabilities 81,000,205 25,919,255 35,923,448 -

Current liabilities

Trade payables 29 23,353,865 18,216,329 - -

Other payables 30 8,765,183 5,147,956 1,117,062 158,958

Amount due to a joint venture company 10 357,353 79,045 - -

Finance lease creditors 26 1,073,837 1,057,260 - -

Borrowings 27 84,969,119 96,122,172 4,002,663 -

Dividend payable 2,710,819 5,612,688 2,710,819 5,612,688

Tax payable 2,555,548 5,728,701 72,294 76,099

Total current liabilities 123,785,724 131,964,151 7,902,838 5,847,745

Total liabilities 204,785,929 157,883,406 43,826,286 5,847,745

Total equity and liabilities 522,053,749 390,774,799 206,580,766 104,375,859

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

ANNUAL REPORT 2011


1344

INCOME STATEMENTSfor the Financial Year Ended 28 February 2011


Group Company

Note 2011 2010 2011 2010

RM RM RM RM

Revenue 31 335,778,998 401,578,364 27,903,892 21,202,328

Cost of sales (249,804,407) (295,833,291) - -

Gross profit 85,974,591 105,745,073 27,903,892 21,202,328

Other income 5,396,874 3,856,619 1,381,423 11,619

Selling and distribution expenses (14,546,193) (8,263,201) - -

Administration expenses (32,112,503) (28,068,012) (9,309,623) (2,070,072)

Other expenses (1,270,457) (262,763) - -

Finance costs (6,164,798) (6,645,049) (819,372) -

Profit from operations 37,277,514 66,362,667 19,156,320 19,143,875

Share of profit in associate company 34,144 348,780 - -

Share of profit in joint venture company 57,544 46,859 - -

Profit before tax 32 37,369,202 66,758,306 19,156,320 19,143,875

Tax expense 33 (8,388,771) (15,887,326) (5,598,584) (3,538,042)

Net profit for the financial year 28,980,431 50,870,980 13,557,736 15,605,833

Profit/(Loss) attributable to:-

Owners of the parent 28,994,270 50,870,980 13,557,736 15,605,833

Minority interest (13,839) - - -


Earnings per share attributable to owners of

the Company

Earnings per 20 sen share

- Basic (sen) 34 6.45 11.33 - -

- Diluted (sen) 34 6.15 - - -

ANNUAL REPORT 2011


13 45

STATEMENTS OF COMPREHENSIVE INCOMEfor the Financial Year Ended 28 February 2011

Group Company

2011 2010 2011 2010

RM RM RM RM


Other comprehensive income, net of tax

Surplus on revaluation of properties 5,645,924 - - -

Income tax relating to components of other

comprehensive income (925,509) - - -

Foreign currency translation differences for foreign

operations (93,048) 95,603 - -

Other comprehensive income for the financial year,

net of tax 4,627,367 95,603 - -

Total comprehensive income for the financial year 33,607,798 50,966,583 13,557,736 15,605,833

Total comprehensive income attributable to:-

Owners of the parent 33,621,637 50,966,583 13,557,736 15,605,833

Minority interest (13,839) - - -

Total comprehensive income for the financial year 33,607,798 50,966,583 13,557,736 15,605,833


ANNUAL REPORT 2011


1346

STATEMENTS OF CHANGES IN EQUITYfor the Financial Year Ended 28 February 2011

Attributable to owners of the parent

Non-distributable Distributable

Share

capital

Share

application

money

Share

premium

Treasury

shares

Revaluation

reserve

Employees

share

option

reserve

Irredeemable

Convertible

Unsecured

Loan Stocks

Warrants

reserve

Exchange

translation

reserve

Unappropriated

profit Total

Minority

interest

Total

equity

RM RM RM RM RM RM RM RM RM RM RM RM RM

Group

Balance at 1

March 2009 75,000,000 - 16,067,022 (380,002) - - - - 147,216 109,051,175 199,885,411 - 199,885,411

Transactions

with owners:

Special second

interim single

tier dividend

of 0.80 sen per

share - - - - - - - - - (2,993,434) (2,993,434) - (2,993,434)

Final single tier

dividend of

1.00 sen per

share - - - - - - - - - (3,741,792) (3,741,792) - (3,741,792)

First interim

single tier

dividend of

1.00 sen per

share and

special interim

single tier

dividend of

0.50 sen per

share - - - - - - - - - (5,612,688) (5,612,688) - (5,612,688)

Special second

interim single

tier dividend

of 1.50 sen per

share - - - - - - - - - (5,612,688) (5,612,688) - (5,612,688)

Incorporation

of subsidiary

company - - - - - - - - - - - 1 1

Total transactions

with owners - - - - - - - - - (17,960,602) (17,960,602) 1 (17,960,601)

Total

comprehensive

income for the

financial year - - - - - - - - 95,603 50,870,980 50,966,583 - 50,966,583

Balance at 28

February 2010 75,000,000 - 16,067,022 (380,002) - - - - 242,819 141,961,553 232,891,392 1 232,891,393

ANNUAL REPORT 2011


13 47

STATEMENTS OF CHANGES IN EQUITY for the Financial Year Ended 28 February 2011cont’d

Attributable to owners of the parent


Share

capital

Share

application

money

Share

premium

Treasury

shares

Revaluation

reserve

Employees

share

option

reserve

Irredeemable

Convertible

Unsecured

Loan Stocks

Warrants

reserve

Exchange

translation

reserve

Unappropriated

profit Total

Minority

interest

Total

equity

RM RM RM RM RM RM RM RM RM RM RM RM RM

Group cont’d

Balance at 1

March 2010 75,000,000 - 16,067,022 (380,002) - - - - 242,819 141,961,553 232,891,392 1 232,891,393

Transactions

with owners:

Bonus issue of

share capital 14,968,205 - (14,968,205) - - - - - - - - - -

Share option

granted under

ESOS - - - - - 5,599,602 - - - - 5,599,602 - 5,599,602

Issuance of shares

pursuant to

exercise of

ESOS 5,200 - 17,160 - - - - - - - 22,360 - 22,360

Transfer to share

premium for

ESOS exercised - - 4,290 - - (4,290) - - - - - - -

Issuance of ICULS - - - - - - 49,979,816 - - - 49,979,816 - 49,979,816

Issuance of

Warrants - - - - - - - 7,484,104 - - 7,484,104 - 7,484,104

Issuance of shares

pursuant to

conversion of

ICULS 413,620 - 827,240 - - - (828,662) - - (28,051) 384,147 - 384,147

Issuance of shares

pursuant to

exercise of

Warrants - 12,960 - - - - - - - - 12,960 - 12,960

Final single tier

dividend of

1.20 sen per

share - - - - - - - - - (4,490,462) (4,490,462) - (4,490,462)

First interim

single tier

dividend of

1.50 sen per

share - - - - - - - - - (5,613,078) (5,613,078) - (5,613,078)

Special second

interim single

tier dividend

of 0.60 sen per

share - - - - - - - - - (2,710,819) (2,710,819) - (2,710,819)

Allotment of

share capital - - - - - - - - - - - 99,999 99,999

Total transactions

with owners 15,387,025 12,960 (14,119,515) - - 5,595,312 49,151,154 7,484,104 - (12,842,410) 50,668,630 99,999 50,768,629

Total

comprehensive

income for the

financial year - - - - 4,720,415 - - - (93,048) 28,994,270 33,621,637 (13,839) 33,607,798

Balance at 28

February 2011 90,387,025 12,960 1,947,507 (380,002) 4,720,415 5,595,312 49,151,154 7,484,104 149,771 158,113,413 317,181,659 86,161 317,267,820

ANNUAL REPORT 2011


1348

STATEMENTS OF CHANGES IN EQUITY for the Financial Year Ended 28 February 2011

cont’d


Share

capital

Share

application

money

Share

premium

Treasury

shares

Employees

share

option

reserve

Irredeemable

Convertible

Unsecured

Loan Stocks

Warrants

reserve

Unappropriated

profit

Total

equity

RM RM RM RM RM RM RM RM RM

Company

Balance at 1 March

2009 75,000,000 - 16,067,022 (380,002) - - - 10,195,863 100,882,883

Transactions with

owners:

Special second

interim single tier

dividend of 0.80

sen per share - - - - - - - (2,993,434) (2,993,434)

Final single tier

dividend of 1.00

sen per share - - - - - - - (3,741,792) (3,741,792)

First interim single

tier dividend of

1.00 sen per share

and special interim

single tier dividend

of 0.50 sen per

share - - - - - - - (5,612,688) (5,612,688)

Special second interim


of 1.50 sen per

share - - - - - - - (5,612,688) (5,612,688)

Total transactions with

owners - - - - - - - (17,960,602) (17,960,602)

Total comprehensive

income for the

financial year - - - - - - - 15,605,833 15,605,833

Balance at 28

February 2010 75,000,000 - 16,067,022 (380,002) - - - 7,841,094 98,528,114

ANNUAL REPORT 2011


13 49

STATEMENTS OF CHANGES IN EQUITY for the Financial Year Ended 28 February 2011cont’d


Share

capital

Share

application

money

Share

premium

Treasury

shares

Employees

share

option

reserve

Irredeemable

Convertible

Unsecured

Loan Stocks

Warrants

reserve

Unappropriated

profit

Total

equity

RM RM RM RM RM RM RM RM RM

Company cont’d

Balance at 1 March

2010 75,000,000 - 16,067,022 (380,002) - - - 7,841,094 98,528,114

Transactions with

owners:

Bonus issue of share

capital 14,968,205 - (14,968,205) - - - - - -

Share option granted

under ESOS - - - - 5,599,602 - - - 5,599,602

Issuance of shares

pursuant to

exercise of ESOS 5,200 - 17,160 - - - - - 22,360

Transfer to share

premium for ESOS

exercised - - 4,290 - (4,290) - - - -

Issuance of ICULS - - - - - 49,979,816 - - 49,979,816

Issuance of Warrants - - - - - - 7,484,104 - 7,484,104

Issuance of shares

pursuant to

conversion of

ICULS 413,620 - 827,240 - - (828,662) - (28,051) 384,147

Issuance of shares

pursuant to

exercise of

Warrants - 12,960 - - - - - - 12,960

Final single tier

dividend of 1.20

sen per share - - - - - - - (4,490,462) (4,490,462)

First interim single tier

dividend of 1.50

sen per share - - - - - - - (5,613,078) (5,613,078)

Special second interim


of 0.60 sen per

share - - - - - - - (2,710,819) (2,710,819)

Total transactions with

owners 15,387,025 12,960 (14,119,515) - 5,595,312 49,151,154 7,484,104 (12,842,410) 50,668,630

Total comprehensive

income for the

financial year - - - - - - - 13,557,736 13,557,736

Balance at 28

February 2011 90,387,025 12,960 1,947,507 (380,002) 5,595,312 49,151,154 7,484,104 8,556,420 162,754,480


ANNUAL REPORT 2011


1350

STATEMENTS OF CASH FLOWSfor the Financial Year Ended 28 February 2011

Group Company

Note 2011 2010 2011 2010

RM RM RM RM

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax 37,369,202 66,758,306 19,156,320 19,143,875 Adjustments for:-

Allowance for impairment of receivables 900,832 22,444 - -

Inventories written down 184,092 4,970,534 - -

Amortisation of prepaid land lease payments 216,183 101,437 - -

Depreciation of property, plant and equipment 5,266,453 5,172,808 - -

Interest expense 5,338,687 5,990,072 819,372 -

Property, plant and equipment written off 2,098 19,557 - -

Reversal of inventories written down (12,099,580) (4,168,271) - -

Bad debts written off 1,275,005 50,113 - -

Employees Share Option Scheme expenses 5,599,602 - 5,599,602 -

Interest income (1,418,553) (348,446) (1,381,423) (11,619)

Share of profit in joint venture company (57,544) (46,859) - -

Share of profit in associate company (34,144) (348,780) - -

Dividend income (296) (296) (25,718,070) (18,922,328)

Gain on disposal of property, plant and

equipment (216,508) (6,728) - -

Gain on disposal of investment property (175,000) - - -

Fair value gain adjustment on investment

properties (470,000) - - -

Fair value gain on derivatives financial

instruments (33,020) - - -

Allowance for impairment of receivables no

longer required (1,120,363) (425,959) - -

Unrealised (gain)/loss on foreign exchange (435,227) 47,751 - -

Operating profit/(loss) before working capital

changes 40,091,919 77,787,683 (1,524,199) 209,928

Changes in working capital:-

Inventories (3,234,304) 48,313,677 - -

Receivables (20,828,485) 11,301,214 (539,887) -

Payables 7,050,605 (12,743,760) (15,841) (92,227)

Subsidiary companies - - (17,433,519) 10,698,239

Associate company 33,750,726 5,531,369 - -

Joint venture 278,808 63,165 - -

Bills payables 3,509,855 (49,098,719) - -

Cash generated from/(used in) operations 60,619,124 81,154,629 (19,513,446) 10,815,940

Dividend paid (15,716,228) (12,347,914) (15,716,228) (12,347,914)

Tax refund 2,150,863 - 5,291 -

Tax paid (9,565,730) (20,876,851) (133,141) (262,440)

Net cash from/(used in) operating activities 37,488,029 47,929,864 (35,357,524) (1,794,414)

ANNUAL REPORT 2011


13 51

STATEMENTS OF CASH FLOWSfor the Financial Year Ended 28 February 2011cont’d

Group Company

Note 2011 2010 2011 2010

RM RM RM RM

CASH FLOWS FROM INVESTING ACTIVITIES

Dividend received 16,046 120,296 20,555,043 15,700,641

Interest received 1,418,553 347,705 1,381,423 10,878

Purchase of property, plant and equipment A (43,375,090) (7,336,751) - -

Investment in subsidiary companies - - (7,899,991) (10,000,008)

Acquisition of subsidiary companies, net of cash

acquired B - 1 - (1)

Proceeds from disposal of property, plant and

equipment 315,563 67,200 - -

Proceeds from disposal of investment property 525,000 - - -

Purchase of prepaid land lease payments - (12,854,505) - -

Proceeds from non-controlling interest 99,999 - - -

Capital work-in-progress incurred (6,748,340) (166,932) - -

Net cash (used in)/from investing activities (47,748,269) (19,822,986) 14,036,475 5,711,510

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of share capital 22,360 - 22,360 -

Proceeds from issuance of Irredeemable

Convertible Unsecured Loan Stocks 74,841,040 - 74,841,040 -

Share application money received 12,960 - 12,960 -

Interest paid (5,226,641) (5,990,072) (704,663) -

Repayment of finance lease creditors (1,257,984) (1,497,232) - -

Repayment of borrowings (30,010,885) (10,485,179) (2,000,000) -

Drawndown of term loans 47,739,181 18,529,098 20,000,000 -

Net cash from financing activities 86,120,031 556,615 92,171,697 -

CASH AND CASH EQUIVALENTS

Net increase 75,859,791 28,663,493 70,850,648 3,917,096

Effect of exchange rate changes (93,048) 95,603 - -

At beginning of financial year 62,615,919 33,856,823 4,493,448 576,352

At end of financial year C 138,382,662 62,615,919 75,344,096 4,493,448

ANNUAL REPORT 2011


1352

STATEMENTS OF CASH FLOWSfor the Financial Year Ended 28 February 2011

cont’d

NOTES TO THE STATEMENTS OF CASH FLOWS

A. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

The Group acquired property, plant and equipment with an aggregate cost of RM45,375,910 (2010: RM8,764,439) of which RM2,000,820

(2010: RM1,427,688) was acquired by means of finance lease. Cash payment of RM43,375,090 (2010: RM7,336,751) was made to purchase

the property, plant and equipment.

B. ACQUISITION OF SUBSIDIARY COMPANIES

The fair value of assets acquired and liabilities assumed of the subsidiary companies acquired during the previous financial year were as

follows:-

Group

RM

Cash and bank balances 1

Other payables (1,950)

Amount due to a Director (5,920)

Net liabilities acquired (7,869)

Less: Deficit of net fair value over acquisition costs 7,870

Cost of investments 1

Cost of investments 1

Less: Non-cash purchase consideration -

Company’s cash outflows on acquisition paid to subsidiary companies 1

Cash and cash equivalents acquired

- Cash and bank balances 1

Group’s cash inflows on acqusition, net of cash and cash equivalents acquired 1

C. CASH AND CASH EQUIVALENTS

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

Group Company

2011 2010 2011 2010

RM RM RM RM

Cash and bank balances 75,138,489 52,285,615 20,094,096 943,448

Fixed deposits with licensed banks 63,244,173 10,330,304 55,250,000 3,550,000

138,382,662 62,615,919 75,344,096 4,493,448


ANNUAL REPORT 2011


13 53

NOTES TO THE FINANCIAL STATEMENTS 28 February 2011

1. GENERAL INFORMATION

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

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

to the Financial Statements respectively.

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

The Company is a limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of

Bursa Malaysia Securities Berhad. The registered office of the Company is located at Level 15-2, Bangunan Faber Imperial

Court, Jalan Sultan Ismail, 50250 Kuala Lumpur. The principal place of business of the Company is located at PLO 234, Jalan

Tembaga Satu, Pasir Gudang Industrial Estate, 81700 Pasir Gudang, Johor Darul Takzim.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors

on 24 June 2011.

2. BASIS OF PREPARATION

2.1 Statement of Compliance

The financial statements of the Group and of the Company have been prepared in accordance with the Companies Act,

1965 in Malaysia and Financial Reporting Standards issued by the Malaysian Accounting Standards Board (“MASB”). At

the beginning of the current financial year, the Group and the Company adopted new and revised Financial Reporting

Standards (“FRSs”) which are mandatory for financial periods beginning on or after 1 January 2010 as described fully

in Note 2.4 to the Financial Statements.

2.2 Basis of Measurement

The financial statements of the Group and of the Company are prepared under the historical cost convention, unless

otherwise indicated in summary of significant accounting policies.

2.3 Functional and Presentation Currency

The financial statements are presented in Ringgit Malayisa (RM) which is the Group’s and the Company’s functional

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

2.4 Adoption of New/Revised Financial Reporting Standards (“FRSs”)

On 1 March 2010, the Group and the Company adopted the following new and amended FRSs and IC Interpretations

which are mandatory for annual financial period beginning on or after 1 January 2010:-

1) Amendments to FRS 2 - Share-based Payment

- Vesting Conditions and Cancellations

2) FRS 7 - Financial Instruments: Disclosures

3) Amendments to FRS 7 - Financial Instruments: Disclosures

4) FRS 8 - Operating Segments

5) Amendment to FRS 8 - Operating Segments

6) FRS 101 - Presentation of Financial Statements (Revised)

7) Amendment to FRS 107 - Statement of Cash Flows

8) Amendment to FRS 108 - Accounting Policies, Changes in Accounting Estimates and Errors

9) Amendment to FRS 110 - Events After the Reporting Period

10) Amendment to FRS 116 - Property, Plant and Equipment

11) Amendment to FRS 117 - Leases

12) Amendment to FRS 118 - Revenue

13) Amendment to FRS 119 - Employee Benefits

14) FRS 123 - Borrowing Costs

15) Amendment to FRS 123 - Borrowing Costs

ANNUAL REPORT 2011


1354


cont’d

2. BASIS OF PREPARATION cont’d

2.4 Adoption of New/Revised Financial Reporting Standards (“FRSs”) cont’d

On 1 March 2010, the Group and the Company adopted the following new and amended FRSs and IC Interpretations

which are mandatory for annual financial period beginning on or after 1 January 2010:- cont’d

16) Amendment to FRS 127 - Consolidated and Separate Financial Statement: Cost of an Investment in a

Subsidiary, Jointly Controlled Entity or Associate

17) Amendment to FRS 128 - Investments in Associates

18) Amendment to FRS 131 - Interests in Joint Ventures

19) Amendments to FRS 132 - Financial Instruments: Presentation

20) Amendments to FRS 134 - Interim Financial Reporting

21) Amendment to FRS 136 - Impairment of Assets

22) FRS 139 - Financial Instruments: Recognition and Measurement

23) Amendments to FRS 139 - Financial Instruments: Recognition and Measurement

24) Amendment to FRS 140 - Investment Property

25) IC Interpretation 10 - Interim Financial Reporting and Impairment

26) IC Interpretation 11 - FRS 2 – Group and Treasury Share Transactions

The following new and revised FRSs and IC Interpretations, which are effective for financial period beginning on or

after 1 January 2010, are not applicable to the Group’s and the Company’s operations:-

1) Amendments to FRS 1 - First-time Adoption of Financial Reporting Standards

2) FRS 4 - Insurance Contracts

3) Amendment to FRS 5 - Non-current Assets Held for Sale and Discontinued Operations

4) Amendment to FRS 120 - Accounting for Government Grants and Disclosure of Government Assistance

5) Amendment to FRS 129 - Financial Reporting in Hyperinflationary Economies

6) Amendment to FRS 138 - Intangible Assets

7) IC Interpretation 9 - Reassessment of Embedded Derivatives

8) IC Interpretation 13 - Customer Loyalty Programmes

9) IC Interpretation 14 - FRS 119 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements

and Their Interaction

The adoption of the relevant FRSs and Interpretations effective from 1 January 2010 has no significant impact on the

financial performance or position of the Group and of the Company except for those discussed below:-

FRS 7 Financial Instruments: Disclosures

FRS 7 and the consequential Amendment to FRS 101 – Presentation of Financial Statements require disclosure of

information about the significance of financial instruments on the Group’s and the Company’s financial position and

performance, nature and extent of risks arising from financial instruments and the objectives, policies and processes

for managing capital.

The Group and the Company applied FRS 7 prospectively in accordance with the transitional provisions. Disclosures

required were included throughout the Group’s and the Company’s financial statements for the financial year ended

28 February 2011. However, such disclosures were not applied to the comparatives.

FRS 8 Operating Segments

FRS 8, which replaces FRS 1142004 – Segment Reporting, requires identification of operating segments based on internal

reports that are regularly reviewed by the Group’s chief operating decision maker in order to allocate resources to

the segments and to assess their performance. Currently, the Group identifies two sets of segments (business and

geographical) using a risks and rewards approach, with the Group’s system of internal financial reporting to key

management personnel serving only as the starting point for the identification of such segments. The Group has

adopted FRS 8 retrospectively.

ANNUAL REPORT 2011


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2.4 Adoption of New/Revised Financial Reporting Standards (“FRSs”) cont’d

The adoption of the relevant FRSs and Interpretations effective from 1 January 2010 has no significant impact on the

financial performance or position of the Group and of the Company except for those discussed below cont’d

FRS 101 Presentations of Financial Statements (Revised)

The revised FRS 101 introduces changes in the presentation and disclosures of financial statements. The revised

Standard separates owner and non-owner changes in equity. The statement of changes in equity includes only

details of transactions with owners, with all non-owner changes in equity presented as a single line. The Standard also

introduces the statement of comprehensive income, with all items of income and expense recognised in profit or loss,

together with all other items of income and expense recognised directly in equity, either in one single statement, or in

two linked statements. The Group and the Company has elected to present this statement as two statements.

A statement of financial position is required at the beginning of the earliest comparative period following a change in

accounting policy, the correction of an error or the classification of items in the financial statements. The revised FRS

101 also requires the Group and the Company to make new disclosures to enable users of the financial statements to

evaluate the Group’s and the Company’s objective, policies and processes for managing capital as disclosed in Note 46

to the financial statements.

FRS 123 Borrowing Costs

FRS 123 eliminates the option available under the previous version of FRS 123 to recognise all borrowing costs

immediately as an expense. The Group shall capitalise borrowing costs that are directly attributable to the acquisition,

construction or production of a qualifying asset as part of the cost of that asset.

The revised FRS 123 was adopted prospectively by the Group.

FRS 139 Financial Instruments: Recognition and Measurement

FRS 139 establishes principles for recognising and measuring financial assets, financial liabilities and some contracts to

buy and sell non-financial items.

In accordance with FRS 139, the recognition, derecognition, measurement and hedge accounting requirements are

applied prospectively from 1 March 2010 and the effects of remeasurement of financial assets and financial liabilities

brought forward from previous financial year are adjusted to opening unappropriated profit and other opening

reserves as disclosed in the statement of changes in equity.

2.5 Standards Issued but not yet Effective

The following standards and IC Interpretations are not yet effective and have not been early adopted by the Group and

the Company:-

Effective date

1) FRS 1 - First-time Adoption of Financial Reporting Standards 1 July 2010

2) Amendments to FRS 1 - First-time Adoption of Financial Reporting Standards 1 January 2011

3) Amendments to FRS 2 - Share-Based Payment 1 July 2010

4) Amendments to FRS 2 - Share-Based Payment. Group Cash-settled Share-based

Payment Transactions

1 January 2011

5) FRS 3 - Business Combinations (Revised) 1 July 2010

6) Amendments to FRS 3 - Business Combinations 1 January 2011

7) Amendments to FRS 5 - Non-Current Assets Held for Sale and Discontinued

Operations

1 July 2010

8) Amendments to FRS 7 - Financial Instruments: Disclosures. Improving

Disclosures about Financial Instruments

1 January 2011

NOTES TO THE FINANCIAL STATEMENTS 28 February 2011cont’d

ANNUAL REPORT 2011


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2.5 Standards Issued but not yet Effective cont’d

The following standards and IC Interpretations are not yet effective and have not been early adopted by the Group and

the Company:- cont’d

Effective date

9) Amendments to FRS 101 - Presentation of Financial Statements 1 January 2011

10) Amendments to FRS 121 - The Effects of Changes in Foreign Exchange Rates 1 January 2011

11) FRS 124 - Related Party Disclosures 1 January 2012

12) FRS 127 - Consolidated and Separate Financial Statements 1 July 2010

13) Amendments to FRS 128 - Investment in Associates 1 January 2011

14) Amendments to FRS 131 - Interests in Joint Ventures 1 January 2011

15) Amendments to FRS 132 - Financial Instruments: Presentation 1 January 2011

16) Amendments to FRS 134 - Interim Financial Reporting 1 January 2011

17) Amendments to FRS 138 - Intangible Assets 1 July 2010

18) Amendments to FRS 139 - Financial Instruments: Recognition and Measurement 1 January 2011

19) IC Interpretation 4 - Determining Whether an Arrangement contains a

Lease

1 January 2011

20) Amendments to IC

Interpretation 9

- Reassessment of Embedded Derivatives 1 July 2010

21) IC Interpretation 12 - Service Concession Arrangements 1 July 2010

22) Amendments to IC

Interpretation 13

- Customer Loyalty Programmes 1 January 2011

23) Amendment to IC

Interpretation 14

- Prepayments of a Minimum Funding Requirement 1 July 2011

24) Amendment to IC

Interpretation 15

- Agreements for the Construction of Real Estate 1 January 2012

25) IC Interpretation 16 - Hedges of Net Investment in a Foreign Operation 1 July 2010

26) IC Interpretation 17 - Distributions of Non-Cash Assets to Owners 1 July 2010

27) IC Interpretation 18 - Transfers of Assets from Customers *

28) IC Interpretation 19 - Extinguishing Financial Liabilities with Equity

Instruments

1 July 2011

* During the financial year, MASB approved and issued IC Interpretation 18 – Transfers of Assets from Customers and requires the

interpretation to be applied prospectively to all transfers of assets from customers received on or after 1 January 2011.

The existing FRS 1, FRS 3, FRS 124 and FRS 127 will be withdrawn upon the adoption of the new requirements. IC

Interpretation 15 will replace FRS 2012004 . IC Interpretation 8 and IC Interpretation 11 will be withdrawn upon the

application of Amendments to FRS 2 – Group Cash-settled Share-based Payment Transactions.

The above FRS 1, FRS 5, FRS 138, IC Interpretation 4, 9, 12, 13, 14, 15, 16, 18 and 19 are not applicable to the Group’s

operations.

The above FRS 1, FRS 5, FRS 121, FRS 128, FRS 131, FRS 134, FRS 138, IC Interpretation 4, 9, 12, 13, 14, 15, 16, 18 and 19

are not applicable to the Company’s operations.


cont’d

ANNUAL REPORT 2011


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2.5 Standards Issued but not yet Effective cont’d

The Directors anticipate that the adoption of these new/revised FRS, amendments to FRS and IC Interpretations will

have no material impact on the financial statements of the Group in the period for initial application except for the

following:-

FRS 3 Business Combination

The revised standard continues to apply the acquisition method to business combinations, with some significant

changes. All payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent

payments classified as debt subsequently re-measured through profit or loss. There is a choice to measure the non-

controlling interest in the acquiree at fair value or at the non-controlling interest’s proportionate share of the acquiree’s

net assets. All acquisition-related costs should be expensed.

FRS 127 Consolidated and Separate Financial Statements

The revised standard requires the effects of all transactions with non-controlling interests to be recorded in equity if

there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard

also specifies the accounting treatment when control is lost. Any remaining interest in the entity is remeasured to fair

value, and a gain or loss is recognised in profit or loss. Losses are required to be allocated to non-controlling interests,

even if it results in the non-controlling interest to be in a deficit position.

IC Interpretation 17 Distributions of Non-Cash Assets to Owners

This interpretation provides guidance on accounting for arrangements whereby an entity distributes non-cash assets

to shareholders either as a distribution of reserves or as dividends. The Company should measure the dividend payable

at the fair value of the assets to be distributed when the dividend is appropriately authorised and is no longer at the

discretion of the Group. On settlement of the dividend, the difference between the dividend paid and the carrying

amount of the assets distributed is recognised in profit or loss. If the dividend remains unpaid at the end of the financial

year, the dividend payable’s carrying amount is reviewed with any changes recognised in equity.

FRS 124 Related Party Disclosures (Revised)

The revised standard modifies the definition of a related party and simplifies disclosures for government-related entities.

The disclosure exemptions introduced in the standard do not affect the Group because the Group is not a government-

related entity. However, disclosures regarding related party transactions and balance in this financial statement may

be affected when the revised standard is applied in future accounting periods because some counterparties that did

not previously meet the definition of a related party may come within the scope of the Standard.

2.6 Significant Accounting Estimates and Judgements

Estimates, assumptions concerning the future and judgements are made in the preparation of the financial statements.

They affect the application of the Group’s accounting policies and reported amounts of assets, liabilities, income and

expenses, and disclosures made. They are assessed on an on-going basis and are based on experience and relevant

factors, including expectations of future events that are believed to be reasonable under the circumstances.

2.6.1 Key Sources of Estimation Uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting

date that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities

within the next financial year are discussed below:-

Useful lives of depreciable assets

The management estimates the useful lives of the property, plant and equipment to be within 4 to 25 years

and reviews the useful lives of depreciable assets at each reporting date. At 28 February 2011, the management

assesses that the useful lives represent the expected utility of the assets to the Group. The carrying amounts are

analysed in Note 4 to the Financial Statements. Actual results, however, may vary due to change in the expected

level of usage and technological developments, which resulting the adjustment to the Group’s assets.


ANNUAL REPORT 2011


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2.6 Significant Accounting Estimates and Judgements cont’d

2.6.1 Key Sources of Estimation Uncertainty cont’d

Impairment of loans and receivables

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

impaired. Factors such as probability of insolvency or significant financial difficulties of the receivables and

default or significant delay in payments are considered in determining whether there is objective evidence of

impairment.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated

based on historical loss experience for assets with similar credit risk characteristics.

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

The Group carries out impairment tests based on a variety of estimation including value-in-use of cash-generating

unit to which the property, plant and equipment and prepaid land lease payments are allocated. Estimating the

value-in-use requires the Group to make an estimate of the expected future cash flows from cash-generating

unit and also to choose a suitable discount rate in order to calculate present value of those cash flows.

Impairment of inventories

The management reviews inventories to identify damaged, obsolete and slow-moving inventories which require

judgement and changes in such estimates could result in revision to valuation of inventories.

Deferred tax assets

Deferred tax assets are recognised for all deductible temporary differences, unutilised tax losses, unabsorbed

capital allowances and unused tax credits to the extent that it is probable that taxable profit will be available

against which all the deductible temporary differences, unutilised tax losses and unabsorbed capital allowances

can be utilised. Significant management judgement is required to determine the amount of deferred tax assets

that can be recognised, based upon the likely timing and level of future taxable profits together with future tax

planning strategies.

Assumptions about generation of future taxable profits depend on management’s estimates of future cash

flows. These depend on estimates of future production and sales volume, operating costs, capital expenditure,

dividends and other capital management transactions. Judgement is also required about application of

income tax legislation. These judgements and assumptions are subject to risks and uncertainty, hence there is

a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred

tax assets recognised in the statements of financial position and the amount of unrecognised tax losses and

unrecognised temporary differences.

Employees share option

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

the equity instruments at the date at which they are granted. Estimating fair value for share-based payment

transactions requires determining the most appropriate valuation model, which is dependent on the terms and

conditions of the grant. This estimate also require determining the most appropriate inputs to the valuation

model including the expected life of the share option, volatility and dividend yield and making assumptions

about them. The assumptions and model used for estimating fair value for share-based payment transactions,

sensitivity analysis and the carrying amounts are disclosed in Note 36 to the Financial Statements.


cont’d

ANNUAL REPORT 2011


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2.6 Significant Accounting Estimates and Judgements cont’d

2.6.2 Significant Management Judgement

The significant management judgements in applying the accounting policies of the Group that has the most

significant effect on the financial statements are as follows:-

Deferred tax assets

The assessment of the probability of future taxable income in which deferred tax assets can be utilised is based on

the Group’s latest approved budget forecast, which is adjusted for significant non-taxable income and expenses

and specific limits to the use of any unused tax loss or credit. The tax rules in the numerous jurisdictions in

which the Group operates are also carefully taken into consideration. If a positive forecast of taxable income

indicates the probable use of a deferred tax asset, especially when it can be utilised without a time limit, that

deferred tax asset is usually recognised in full. The recognition of deferred tax assets that are subject to certain

legal or economic limits or uncertainties is assessed individually by management based on the specific facts and

circumstances.

3. SIGNIFICANT ACCOUNTING POLICIES

3.1 Basis of Consolidation

The Group’s financial statements consolidate the audited financial statements of the Company and all of its subsidiary

companies, which have been prepared in accordance with the Group’s accounting policies.

All intercompany transactions, balances and unrealised gains on transactions between group companies are

eliminated; unrealised losses are also eliminated on consolidation unless cost cannot be recovered.

The financial statements of the Company and its subsidiary companies are all drawn up to the same reporting date.

The cost of an acquisition is measured as the fair value of the assets acquired, equity instruments issued and liabilities

incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets

acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at fair

values at the acquisition date, irrespective of the extent of any non-controlling interest.

Any excess of the cost of business combination over the Group’s interest in the net fair value of the identifiable assets,

liabilities and contingent liabilities represents goodwill. Goodwill is accounted for in accordance with the accounting

policy for goodwill stated in Note 3.27.

Any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over

the cost of business combination is recognised as income on the date of acquisition.

Non-controlling interests represent the portion of profit or loss and net assets in subsidiary companies not wholly-

owned by the Group. They are presented in the consolidated statement of financial position within equity, separately

from the parent shareholders’ equity, and are separately disclosed in the consolidated statement of comprehensive

income.

Subsidiary companies are consolidated using the acquisition method of accounting from the date on which control is

transferred to the Group and are no longer consolidated from the date that control ceases.

The gain or loss on disposal of a subsidiary company is the difference between net disposal proceeds and the Group’s

share of its net assets together with any unamortised or unimpaired balance of goodwill on acquisition and exchange

differences.


ANNUAL REPORT 2011


1360

3. SIGNIFICANT ACCOUNTING POLICIES cont’d

3.2 Property, Plant and Equipment

Property, plant and equipment are initially stated at cost. Land and buildings are subsequently shown at market value,

based on valuations by external valuers, less subsequent depreciation and any impairment losses. All other property,

plant and equipment are stated at historical cost less accumulated depreciation and any impairment losses.

Revaluation is made at least once in every five years based on valuation by an independent valuer on an open market

value basis. Any revaluation increase is credited to equity as a revaluation surplus, except to the extent that it reverses a

revaluation decrease for the same asset previously recognised as an expense, in which case, the increase is recognised

in profit or loss to the extent of the decrease previously recognised. A revaluation decrease is first offset against an

increase on unutilised valuation surplus in respect of the same asset and is thereafter recognised as an expense. Upon

the disposal of revalued assets, the attributable revaluation surplus remaining in the revaluation reserve is transferred

to unappropriated profit.

Depreciation is provided on the straight-line method in order to write off the cost of each asset over its estimated

useful life. No depreciation is provided on freehold land.

The principal annual depreciation rates used are as follows:-

Factory buildings 2% – 5.5%

Renovation, warehouse extension and electrical installation 10% – 20%

Computers and software 20%

Crane, plant and machinery 7% – 10%

Factory equipment 10% – 25%

Office equipments, furniture and fittings 10% – 20%

Telecommunication system, forklift and motor vehicles 20%

Restoration cost relating to an item of property, plant and equipment is capitalised only if such expenditure is expected

to increase the future benefits from the existing property, plant and equipment beyond its previously assessed

standard of performance.

Property, plant and equipment are written down to recoverable amount if, in the opinion of the Directors, it is less than

their carrying value. Recoverable amount is the net selling price of the property, plant and equipment i.e. the amount

obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, less the

costs of disposal.

The residual values, useful life and depreciation method are reviewed at each financial year end to ensure that the

amount, method and period of depreciation are consistent with previous estimates and the expected pattern of

consumption of the future economic benefits embodied in the items of property, plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are

expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in profit or loss in

the financial year in which the asset is derecognised.

3.3 Subsidiary Companies

A subsidiary company is a company in which the Company or the Group, either directly or indirectly, owns a power to

govern its financial and operating policies so as to obtain benefits from its activities.

Investment in subsidiary companies is stated at cost in the Company’s statement of financial position. Where an

indication of impairment exists, the carrying amount of the subsidiary companies is assessed and written down

immediately to their recoverable amount.


cont’d

ANNUAL REPORT 2011


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3.4 Associate Company

An associate company is a company in which the Company or the Group is in the position to exercise significant

influence over its financial and operating policies through management participation but not to exert control over

those policies.

Investment in an associate company is accounted for in the consolidated financial statements using equity accounting

which involves recognising in profit or loss the Group’s share of the results of associate company based on audited

financial statements of the associate company. The Group’s investment in an associate company is carried in the

consolidated statement of financial position at an amount that reflects its share of the net assets of the associate

company. Equity accounting is discontinued when the carrying amount of the investment in an associate company

reaches zero, unless the Group has incurred obligations or guaranteed obligations in respect of the associate

company.

Investment in an associate company is stated at cost. Where an indication of impairment exists, the carrying amount

of the associate company is assessed and written down immediately to their recoverable amount.

3.5 Joint Venture

The Group’s joint venture is an entity over which the Group has contractual arrangements to jointly share the control

over the economic activity of the entity with one or more parties.

Investment in joint venture is stated at cost. Interest in joint venture is accounted for using the equity method in the

consolidated statement of financial position of the Group.

Allowance is made for any impairment losses on an individual joint venture basis.

3.6 Investment Properties

Investment properties consist of land and buildings held for capital appreciation or rental purpose and not occupied

by the Group or only an insignificant portion is occupied for use or in the operations of the Group. Investment

properties are treated as long-term investments and are measured initially at cost, including transaction costs. The

carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred

if the recognition criteria are met and excludes the costs of day-to-day servicing of an investment property.

Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at

the reporting date. Gain or losses arising from changes in the fair values of investment properties are included in profit

or loss in the financial year in which they arise.

Investment properties are derecognised when either they are disposed of or when they are permanently withdrawn

from use and no future economic benefit is expected from the disposal. Any gain or loss on the retirement or disposal

of an investment property is recognised in profit or loss in the financial year of retirement or disposal.

3.7 Inventories

Inventories are stated at the lower of cost and net realisable value after adequate allowance has been made for

deteriorated, obsolete and slow moving inventories.

Inventories are determined on a first-in-first-out basis.

Cost of trading goods is determined on weighted average method.

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

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

proportion of manufacturing overheads.

Net realisable value represents the estimated selling price in the ordinary course of business less selling and distribution

costs and all other estimated costs to completion.


ANNUAL REPORT 2011


1362


cont’d


3.8 Assets Acquired Under Lease Agreements

Accounting by Lessees

Finance leases

Lease of property, plant and equipment acquired under hire purchase and finance lease arrangements which transfer

substantially all the risks and rewards of ownership to the Group are capitalised. The depreciation policy on these

assets is similar to that of the Group’s property, plant and equipment depreciation policy.

Outstanding obligation due under hire purchase and finance lease arrangements after deducting finance expenses are

included as liabilities in the financial statements. Finance charges on hire purchase and finance lease arrangements

are allocated to profit or loss over the period of the respective agreements.

Operating leases

Leased payments for operating leases, where substantially all the risk and benefits remain with the lessor, are charged

as expenses in the period in which they are incurred.

Leased assets

Leasehold land that normally has an indefinite economic life and title is not expected to pass to the Group by the end

of the lease term is treated as operating lease. The payment made on entering into or acquiring a leasehold land is

accounted for as prepaid land lease payment and is amortised over the respective lease term ranging from 42 to 88

years.

Leasehold land at cost

The Group had previously classified a lease of land as finance lease and had recognised the amount of prepaid land

lease payment as property within its property, plant and equipment. On adoption of FRS 117 Leases, the Company

treats such a lease as an operating lease, with the unamortised carrying amount reclassified as prepaid lease payments

retrospectively in accordance with the transitional provisions in FRS 117.67A.

3.9 Foreign Currency Transactions and Balances

Transactions in foreign currencies are recorded in Ringgit Malaysia at rates of exchange ruling at the date of the

transactions. Foreign currency monetary assets and liabilities are translated at exchange rates ruling at reporting

date.

Gains and losses resulting from settlement of such transactions and conversion of monetary assets and liabilities,

whether realised or unrealised, are included in profit or loss as they arise.

Financial statements of foreign subsidiary companies are translated at year-end exchange rates with respect to the

assets and liabilities. The assets and liabilities of the foreign entities, including goodwill and fair value adjustments

arising on the acquisitions, are translated to Ringgit Malaysia at the closing rates at the reporting date. The operating

results are translated to Ringgit Malaysia at the exchange rates at the average rates during the financial year. All

resulting translation differences are included in the foreign exchange reserve in shareholders’ equity.

Prior to 1 January 2006, goodwill and fair value adjustments arising on the acquisition of a foreign entity are deemed

to be assets and liabilities of the Group and translated at the exchange rate ruling at the date of the acquisition.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity on and after 1 January 2006 are

treated as assets and liabilities of the foreign entity and translated at the closing rate at the reporting date.

On disposal of a foreign entity, the cumulative amount of exchange differences deferred in equity relating to that

foreign entity is recognised in profit or loss as a component of the gain or loss on disposal.

All other foreign exchange differences are taken to profit or loss in the financial year in which they arise.

ANNUAL REPORT 2011


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3.10 Income Tax

Income tax on profit or loss for the year comprises current and deferred tax. Current tax expense is the expected

amount of income taxes payable in respect of the taxable profit for the financial year and is measured using the tax

rates that have been enacted or substantively enacted by the reporting date.

Deferred tax liabilities and assets are provided for under the liability method at the current tax rate in respect of all

temporary differences at the reporting date between the carrying amount of an asset or liability in the statements of

financial position and its tax base including unused tax losses and capital allowances.

Deferred tax asset are recognised only to the extent that it is probable that taxable profit will be available against

which the deductible temporary differences can be utilised. The carrying amount of a deferred tax asset is reviewed at

each reporting date. If it is no longer probable that sufficient taxable profit will be available to allow the benefit of part

or all of that deferred tax asset to be utilised, the carrying amount of the deferred tax asset will be reduced accordingly.

When it becomes probable that sufficient taxable profit will be available, such reductions will be reversed to the extent

of the taxable profit.

Current and deferred tax are recognised in profit or loss, except when it arises from a transaction which is recognised

directly in equity, in which case the deferred tax is also charged or credited directly in equity, or when it arises from a

business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the

liability is settled, based on tax rates that have been enacted or substantively enacted by the reporting date.

Value-added Tax and Goods Services Tax

The Group’s sale of goods may subject to value-added tax (“VAT”) or goods services tax (“GST”) in accordance with

rules applicable in the jurisdication where the Group operates.

The net amount of such taxes recoverable from, or payable to the authority is included as part of “other receivables” or

“other payables” in the statements of financial position.

Revenues, expenses and assets are recognised net of the amount of taxes except:-

(i) where the taxes incurred on the purchase of assets or services is not recoverable from the taxation authority, in

which case the tax incurred is recognised as part of the cost of acquisition of the asset or as part of the expense

item as applicable; and

(ii) receivables and payables stated is inclusive of the tax elements.

3.11 Impairment of Financial Assets

The Group assesses at each reporting date whether there is any objective evidence indirecting that a financial assets

is impaired.

Trade and Other Receivables and Other Financial Assets Carried at Amortised Cost

The Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and

default or significant delay in payments to determine whether there is objective evidence that an impairment loss has

occurred. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired

individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics.

Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience with industry

group, increase in cases of delayed payments and observable changes in economic conditions.

If such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying

amount and the present value of estimated future cash flows discounted at the financial asset’s original effective

interest rate and the loss is recognised in profit or loss.


ANNUAL REPORT 2011


1364


3.11 Impairment of Financial Assets cont’d

Trade and Other Receivables and Other Financial Assets Carried at Amortised Cost cont’d

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

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

Available-for-sale Financial Assets

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

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

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

3.12 Impairment of Non-financial Assets

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

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

In assessing value in use, estimated future cash flows are discounted to present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses of continuing operations are recognised in profit or loss in those expense categories consistent with the function of the impaired asset.

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

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

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


cont’d

ANNUAL REPORT 2011


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3.13 Financial Assets

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

Company becomes a party to the contractual provisions of the financial instrument and they are derecognised when

the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial

risks and rewards are transferred.

Financial assets are measured initially at fair value, plus transactions costs, except for financial assets carried at fair

value through profit or loss, which are measured initially at fair value. Financial assets are subsequently measured as

described below.

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

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

a) Loans and receivables

b) Financial assets at fair value through profit or loss

c) Held to maturity investments

d) Available-for-sale financial assets

The category mentioned above determines subsequent measurement of a financial asset and whether any resulting

income and expense is recognised in profit or loss or in statement of comprehensive income. All financial assets except

for those at fair value through profit or loss are subject to review for impairment at least once at each reporting date.

Financial assets are impaired when there is any objective evidence that a financial asset or a group of financial assets

is impaired. Different criteria are applied to determine impairment for each category of financial assets, as described in

note 3.11.

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

Other than loan and receivables and available-for-sale financial assets, the Group does not have financial assets at fair

value through profit or loss and held-to-maturity investments.

Loans and Receivables

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

active market and they are measured at amortised cost using effective interest method, less provision for impairment

subsequently. Discounting is omitted where the effect of discounting is immaterial in subsequent measurement. Cash

and cash equivalents, trade and most other receivables of the Group and of the Company fall into this category of

financial instruments.

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

classified as non-current.

Available-for-sale Financial Assets

Available-for-sale financial assets are non-derivative financial assets that are either designated to this category or do

not qualify for inclusion in any of the other categories of financial assets. The Group’s available-for-sale financial assets

include quoted equity instruments.

Available-for-sale financial assets are measured at fair value subsequent to the initial recognition. Gains and losses are

recognised in statement of comprehensive income and reported within the available-for-sale reserve within equity,

except for impairment losses and foreign exchange differences on monetary assets, which are recognised in profit or

loss. When the asset is disposed of or is determined to be impaired, the cumulative gain or loss recognised in statement

of comprehensive income is reclassified from the equity reserve to profit or loss and presented as a reclassification

adjustment within statement of comprehensive income.

Interest calculated using the effective interest method and dividends are recognised in profit or loss. Dividends on an

available-for-sale equity are recognised in profit or loss when the Group’s right to receive payment is established.


ANNUAL REPORT 2011


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3.13 Financial Assets cont’d

Available-for-sale Financial Assets cont’d

Investment in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment

loss.

Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12

months after the reporting date.

3.14 Financial Liabilities

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

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

Financial liabilities are measured initially at fair value plus transactions costs, except for financial liabilities carried at fair

value through profit or loss, which are measured initially at fair value. Subsequently, they are measured at amortised

cost using the effective interest method except for financial liabilities held for trading or designated at fair value

through profit or loss, that are carried subsequently at fair value with gains or losses recognised in profit or loss.

All derivative financial instruments which are not designated and effective as hedging instruments are accounted for

at fair value through profit or loss.

The Group’s financial liabilities include borrowings, finance lease creditors, trade and other payables.

3.15 Revenue Recognition

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

Rental income is recognised when the rent is due.

Interest income is accounted for on accrual basis.

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

Insurance commission received is recognised on receivable basis.

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

3.16 Interest-bearing Borrowings

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

Borrowing costs are recognised as an expense in profit or loss in the period in which they are incurred. However,

borrowing costs incurred to finance the construction of property, plant and equipment are capitalised as part of the

cost of those assets during the period of time that is required to complete and prepare the assets for its intended use.

3.17 Employee Benefits

(a) Short Term Benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the financial year, in

which the associated services are rendered by employees of the Group. Short term accumulating compensated

absences such as paid annual leave are recognised when services are rendered by employees that increase their

entitlement to future compensated absences, and short term non-accumulating compensated absences such as

sick leave are recognised when the absences occur.


cont’d

ANNUAL REPORT 2011


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3.17 Employee Benefits cont’d

(b) Defined Contribution Plans

Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions

into separate entities or funds and will have no legal or constructive obligation to pay further contribution if

any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the

current and preceding financial years.

Such contributions are recognised as an expense in profit or loss as incurred. As required by law, the Group

made such contributions to the Employees Provident Fund (“EPF“).

(c) Employees Share Option Scheme (“ESOS”)

The ESOS allows the Group’s employees to acquire shares of the Company and none of the Group’s plan features

any options for a cash settlement. Employees of the Group receive remuneration in the form of share options as

consideration for services rendered. The cost of these equity-settled transactions with employees is measured by

reference to the fair value of the options at the date on which the options are granted, which takes into account

market conditions and non-vesting conditions. The cost is recognised in profit or loss, with a corresponding

increase in the employees share option reserve, over the vesting period. The cumulative expense recognised at

each reporting date until the vesting date reflects the extent to which the vesting period has expired and the

Group’s best estimate of the number of options that will ultimately vest. The charge or credit to profit or loss

for a period represents the movement in cumulative expense recognised as at the beginning and end of that

period.

No expense is recognised for options that do not ultimately vest, except for options where vesting is conditional

upon a market condition or a non-vesting condition, which are treated as vested irrespective of whether or not

the market condition or non-vesting condition is satisfied, provided that all other performance and/or service

conditions are satisfied. In the case where the option does not vest as the result of a failure to meet a non-vesting

condition that is within the control of the Group or the employee, this is accounted for as a cancellation. In

such case, the amount of the compensation cost that otherwise would be recognised over the remainder of the

vesting period is recognised immediately in profit or loss upon cancellation. The employees share option reserve

is transferred to unappropriated profit upon expiry of the share options. When the options are exercised, the

employees share option reserve is transferred to share capital if new shares are issued, or to treasury shares if the

options are satisfied by the reissuance of treasury shares.

3.18 Dividends

Final dividends proposed by the Directors are not accounted for in shareholders’ equity as an appropriation of retained

profits, until they have been approved by the shareholders in a general meeting. When these dividends have been

approved by the shareholders and declared, they were recognised as a liability.

Interim dividends are simultaneously proposed and declared, because the articles of association of the Company grant

the Directors the authority to declare interim dividends. Consequently, interim dividends are recognised directly as a

liability when they are proposed and declared.

3.19 Financial Guarantee Contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the

holder for a loss it incurs because a specified debtor fails to make payment when due.

Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent

to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the

guarantee. If the debtor fails to make payment relating to financial guarantee contract when it is due and the Group, as

the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best

estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially

recognised less cumulative amortisation.


ANNUAL REPORT 2011


1368


3.20 Provisions

Provisions are recognised when there is a present legal or constructive obligation that can be estimated reliably,

as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be

required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are

not recognised for future operating losses.

Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation

is recognised as a separate asset. However, this asset may not exceed the amount of the related provision.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer

probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed.

Where the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that

reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provisions

due to the passage of time is recognised as a finance cost.

3.21 Cash and Cash Equivalents

Cash and cash equivalents comprise cash on hand, bank balances, short term demand deposits and highly liquid

investments which are readily convertible to known amount of cash and which are subject to an insignificant risk of

changes in value.

For the purpose of the statements of financial position, cash and cash equivalents restricted to be used to settle a

liability of 12 months or more after the reporting date are classified as non-current asset.

3.22 Segment Reporting

In identifying its operating segments, management generally follows the Group’s internal reports regularly reviewed

by the Group’s chief operating decision makers in order to allocate resources to the respective segments and to assess

their performance.

3.23 Inter-segment Transfers

Segment revenues, expenses and result include transfers between segments. The prices charged on inter-segment

transactions are based on negotiation basis. These transfers are eliminated on consolidation.

3.24 Equity

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all

of its liabilities. Ordinary shares are equity instruments.

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

Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the

issuing of shares are deducted from share premium, net of any related income tax benefits.

Unappropriated profit includes all current and prior period profit.

All transactions with shareholder are recorded separately within equity.

3.25 Treasury Shares

When issued share of the Company are repurchased, the consideration paid, including directly attributable costs is

presented as a change in equity. Repurchased shares that have not been cancelled are classify as treasury shares

and presented as a deduction from equity. No gain or loss is recognised in the profit or loss on the sale, reissuance or

cancellation of treasury shares.


cont’d

ANNUAL REPORT 2011


13 69


3.25 Treasury Shares cont’d

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

the share premium account or distributable reserves, or both.

When treasury shares are reissued by resale, the difference between the sale consideration net of directly attributable

costs and the carrying amount of the treasury shares is shown as a movement in equity.

3.26 Capital Work-in-progress

Capital work-in-progress consists of factory building and plant and machinery under construction/installation for

intended use as production facilities. The amount is stated at cost and includes capitalisation of interest incurred on

borrowings related to property, plant and equipment under construction/installation until the property, plant and

equipment are ready for their intended use.

3.27 Goodwill/Negative Goodwill

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

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

The goodwill is retained in the consolidated statement of financial position and subject to annual impairment review.

The negative goodwill is credited immediately to profit or loss as it arises.

3.28 Contingent Liabilities/Assets

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be

confirmed only through the occurrences or non-occurrence of uncertain future events not wholly within the control

of the Group.

Contingent liabilities and assets are not recognised in the statements of financial position of the Group.

3.29 Derivatives Financial Instruments

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

Forward foreign exchange contracts used are accounted for on an equivalent basis as the underlying assets, liabilities

or net positions. Any profit or loss arising is recognised on the same basis as that arising from the related assets,

liabilities or net position.

3.30 Irredeemable Convertible Unsecured Loan Stocks (“ICULS”)

The ICULS are regarded as compound financial instruments, consisting of a liability component and an equity

component. At the date of issue, the fair value of the liability component is estimated by discounting the future

contractual cash flows at the prevailing market interest rate available to the Company. The difference between the

proceeds of issue of the ICULS and the fair value assigned to the liability component, representing the conversion

option is accounted in the shareholders’ equity.

The liability component is subsequently stated at amortised cost using the effective interest rate method until

extinguished on conversion whilst the value of the equity component is not adjusted in subsequent periods except

on exercise and conversion to ordinary shares.

Under the effective interest rate method, the interest expense on the liability component is calculated by applying

the prevailing market interest rate. The difference between this amount and the interest paid is added to the carrying

value of the ICULS.


ANNUAL REPORT 2011


1370


3.31 Warrants

The free detachable warrants were issued pursuant to the ICULS of the Company. The issuance of ordinary shares

upon exercise of the warrants is treated as new subscription of ordinary shares for the consideration equivalent to the

exercise price of the warrants.

Upon exercise of warrants, the proceeds are credited to share capital and share premium. The warrants reserve in

relation to the unexercised warrants at the expiry of the warrants will be transferred to share premium.

3.32 Minority Interest

Minority interest represents the portion of profit or loss and net assets in subsidiaries not held by the Group and

are presented separately in profit or loss of the Group and within equity in the consolidated statement of financial

position, separately from parent shareholders’ equity. Transactions with minority interest are accounted for using the

entity concept method, whereby, transactions with minority interest are accounted for as transactions with owners.

On acquisition of minority interest, the difference between the consideration and book value of the share of the net

assets acquired is recognised directly in equity. Gain or loss on disposal to minority interest is recognised directly in

equity.

3.33 Foreign Currency Forward Contracts

The Group enters into foreign currency forward contracts to protect the Group from movements in exchange rates by

establishing the rate at which a foreign currency asset or liability will be settled.

Exchange gains and losses on contracts are recognised when settled at which time they are included in the measurement

of the transaction hedged.

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

date.

3.34 Earnings per Share

The Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by

dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of

ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to

ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive

potential ordinary shares, which comprise convertible notes and share options granted to employees.


cont’d

ANNUAL REPORT 2011


13 71

4. PROPERTY, PLANT AND EQUIPMENT

Group

Freehold

land

Freehold

building

Total

freehold

land and

building

Short

leasehold

building

Renovation

and

electrical

installation

Machinery,

equipments,

furniture and

fittings

Forklift,

crane and

motor

vehicles Total

RM RM RM RM RM RM RM RM

Cost/Valuation

Balance as at 1

March 2009,

at cost 8,700,000 14,029,350 22,729,350 8,632,777 4,331,580 24,812,793 8,572,528 69,079,028

Additions 6,039,517 - 6,039,517 - 5,435 2,505,433 214,054 8,764,439

Disposals - - - - - (630) (222,680) (223,310)

Written off - - - - - (64,819) - (64,819)

Currency

translation

difference - - - - 2,508 2,354 4,274 9,136

Balance as at

28 February

2010, at cost 14,739,517 14,029,350 28,768,867 8,632,777 4,339,523 27,255,131 8,568,176 77,564,474

Additions - - - 29,365,162 - 13,491,947 2,518,801 45,375,910

Disposals - - - - - (4,600) (1,175,866) (1,180,466)

Written off - - - - - (13,730) - (13,730)

Transferred from

capital work-

in-progress - - - 154,907 - 12,025 - 166,932

Revaluation 2,430,483 (1,329,350) 1,101,133 747,223 - - - 1,848,356

Currency

translation

difference - - - - (1,948) (2,098) (3,908) (7,954)

Balance as at 28

February 2011 17,170,000 12,700,000 29,870,000 38,900,069 4,337,575 40,738,675 9,907,203 123,753,522

Representing:-

At cost - - - 29,520,069 4,337,575 40,738,675 9,907,203 84,503,522

At valuation:

2011 17,170,000 12,700,000

29,870,000 9,380,000 - - - 39,250,000

Balance as at 28

February 2011 17,170,000 12,700,000 29,870,000 38,900,069 4,337,575 40,738,675 9,907,203 123,753,522


ANNUAL REPORT 2011


1372

4. PROPERTY, PLANT AND EQUIPMENT cont’d

Group cont’d

Freehold

land

Freehold

building

Total

freehold

land and

building

Short

leasehold

building

Renovation

and

electrical

installation

Machinery,

equipments,

furniture and

fittings

Forklift,

crane and

motor

vehicles Total

RM RM RM RM RM RM RM RM

Accumulated

depreciation

Balance as at

1 March 2009 - 1,176,051 1,176,051 425,268 1,191,840 6,355,009 5,125,387 14,273,555

Charge for the

financial year - 701,468 701,468 396,907 638,196

2,241,701 1,194,536 5,172,808

Disposals - - - - - (158) (162,680) (162,838)

Written off - - - - - (45,262) - (45,262)

Currency

translation

difference - - - - 1,314 845 2,126 4,285

Balance as at 28

February 2010 - 1,877,519 1,877,519 822,175 1,831,350 8,552,135 6,159,369 19,242,548

Charge for the

financial year - 701,468 701,468 493,961 580,848 2,309,893 1,180,283 5,266,453

Disposals - - - - - (537) (1,080,874) (1,081,411)

Written off - - - - - (11,632) - (11,632)

Revaluation - (2,578,987) (2,578,987) (1,218,581) - - - (3,797,568)

Currency

translation

difference - - - - (1,409) (943) (2,404) (4,756)

Balance as at 28

February 2011 - - - 97,555 2,410,789 10,848,916 6,256,374 19,613,634

Net carrying

amount

2011 17,170,000 12,700,000 29,870,000 38,802,514 1,926,786 29,889,759 3,650,829 104,139,888

2010 14,739,517 12,151,831 26,891,348 7,810,602 2,508,173 18,702,996 2,408,807 58,321,926

On 15 January 2011, the Directors revalued the above freehold land, freehold building and short leasehold building based

on professional revaluations made by Sr. Thiruselvam Arumugam, a Registered Valuer in PPC International Sdn. Bhd., on

the market value basis. The freehold land, freehold building and short leasehold building were valued at RM17,170,000,

RM12,700,000 and RM9,380,000 respectively. The valuations were incorporated in the financial statements for the financial

year ended 28 February 2011.


cont’d

ANNUAL REPORT 2011


13 73

4. PROPERTY, PLANT AND EQUIPMENT cont’d

At the reporting date, had the revalued freehold land, freehold building and short leasehold building of the Group been

carried under the cost model, the net carrying amount would have been as follows:-

Freehold land

Freehold

building

Short

leasehold

building Total

2011 RM RM RM RM

Cost 14,739,517 14,029,350 8,632,777 37,401,644

Accumulated depreciation - (2,578,987) (1,218,581) (3,797,568)

Net carrying amount 14,739,517 11,450,363 7,414,196 33,604,076

The net carrying amount of property, plant and equipment of the Group which are acquired under finance lease arrangements

amounted to RM4,908,318 (2010: RM4,159,546).

Included in the property, plant and equipment of the Group are fully depreciated property, plant and equipment with a total

cost of RM3,152,870 (2010: RM3,666,978) but still in use.

Included in the property, plant and equipment of the Group is a motor vehicle registered under the name of a Director of a

subsidiary company with the cost of RM394,224 (2010: RM394,224) and net carrying amount of RM6,881 (2010: RM90,010).

Certain plant and machinery of a subsidiary company with the net carrying amount of RM313,110 (2010: RM331,720) has

been pledged for the subsidiary company’s banking facilities.

5. PREPAID LAND LEASE PAYMENTS

Group

2011 2010

Leasehold land:- RM RM

Cost

At beginning of financial year 19,130,444 6,275,939

Additions - 12,854,505

At end of financial year 19,130,444 19,130,444

Accumulated amortisation

At beginning of financial year 236,217 134,780

Charge for the financial year 216,183 101,437

At end of financial year 452,400 236,217

Net carrying amount 18,678,044 18,894,227

The prepaid land lease payments are amortised over the leasehold period of 42 to 88 (2010: 42 to 88) years.


ANNUAL REPORT 2011


1374

6. CAPITAL WORK-IN-PROGRESS

Group

Short

leasehold

building

Machinery,

equipment,

furniture and

fittings Total

RM RM RM

Addition/Balance as at 28 February 2010 154,907 12,025 166,932

Addition - 6,748,340 6,748,340

Transferred to property, plant and equipment (154,907) (12,025) (166,932)

Balance as at 28 February 2011 - 6,748,340 6,748,340

7. INVESTMENT PROPERTIES

Freehold

land

Freehold

buildings

Total

freehold

land &

buildings

Freehold

land &

shophouse

building Renovation Total

Group RM RM RM RM RM RM

At fair value:-

Balance as at 1 March 2009

and as at 28 February 2010 1,120,000 1,030,000

2,150,000 880,000 10,000

3,040,000

Disposal (175,000) (175,000) (350,000) - - (350,000)

Fair value adjustment 455,000 5,000 460,000 20,000 (10,000) 470,000

Balance as at 28 February

2011 1,400,000 860,000

2,260,000 900,000 - 3,160,000

The investment properties are valued annually at fair value, comprising market value, by an independent professionally

qualified valuer.

The market value is defined as the estimated amount for which an asset or an interest in a property should exchange on the

date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein

the parties had each acted knowledgeably, prudently and without compulsion.


cont’d

ANNUAL REPORT 2011


13 75

8. INVESTMENT IN SUBSIDIARY COMPANIES

Company

2011 2010

RM RM

Unquoted shares – At cost:-


Additional investments made 7,899,991 9,999,999

Acquisition of subsidiary company - 1

Incorporation of subsidiary company - 9


The particulars of the subsidiary companies are as follows:-

Name of company

Place of

incorporation Effective equity interest Principal activities

2011 2010

% %

1. Pantech

Corporation

Sdn. Bhd.

Malaysia 100 100 Trading, supply and stocking of high pressure

seamless and specialised steel pipes, fittings,

flanges, valves and other related products for use

in the oil and gas, gas reticulation, marine, onshore

and offshore heavy engineering, power generation,

petrochemicals, palm oil refining and other related

industries.

Subsidiary companies of Pantech Corporation Sdn. Bhd.: -

1.1 Jayee

Holdings

Sdn. Bhd.

Malaysia 100 100 Investment holding, property investment and

insurance agency.

1.2 Pantech

(Kuantan)

Sdn. Bhd.

Malaysia 100 100 Trading and supply of high pressure seamless and

specialised steel pipes, fittings, flanges, valves and

other related products for use in the oil and gas, gas

reticulation, marine, onshore and offshore heavy

engineering, power generation, petrochemicals,

palm oil refining and other related industries.

2. Pantech Steel

Industries Sdn.

Bhd.

Malaysia 100 100 Manufacturing and supply of butt-welded carbon

steel fittings such as elbows, tees, reducers, end-

caps and high frequency induction long bends for

use in the oil and gas and other related industries.

3. Panaflo Controls

Pte. Ltd.*

Singapore 100 100 Supplier of flow control solutions such as valves,

actuators and controls for the oil and gas,

petrochemicals, water treatment and other related

industries and trading of specialised steel pipes and

related products.


ANNUAL REPORT 2011


1376

8. INVESTMENT IN SUBSIDIARY COMPANIES cont’d

The particulars of the subsidiary companies are as follows:- cont’d

Name of company

Place of


2011 2010

% %

4. Pantech

Stainless

& Alloy

Industries Sdn.

Bhd.

Malaysia 100 100 Manufacturing and supply of stainless steel and

alloy pipes, fittings and related products for use in

the oil and gas, marine, onshore and offshore, heavy

engineering, petrochemical and chemical, palm

oil refinery and oleochemical, power generation,

pharmaceutical, water and other related industries.

5. Pantech

International

(KSA) Sdn.

Bhd.

Malaysia 90 90 Investment holdings and trading of high pressure

seamless and specialised steel pipes, fittings, flanges,

valves and other related products in the Kingdom

of Saudi Arabia and Gulf Cooperation Council

Countries. The company has not commenced

business operation as at the reporting date.

* Subsidiary company not audited by SJ Grant Thornton but by other member firm of Grant Thornton International.

The amount due from subsidiary companies is non-trade in-nature, bears no interest and repayable upon demand except for

loans to certain subsidiary companies amounted to RM6,300,000 and RM24,583,318 which bear interest at the rate of 5.6%

and 7.0% per annum respectively. There were no such loans given during the previous financial year.

9. INVESTMENT IN AN ASSOCIATE COMPANY

Group

2011 2010

RM RM

Unquoted shares – at cost 26,217 26,217

Share of post acquisition profit

- At beginning of financial year 1,865,007 1,516,227

- Share of post acquisition profit during the financial year 34,144 348,780

- At end of financial year 1,899,151 1,865,007

Less: Dividend received (135,750) (120,000)

1,789,618 1,771,224

Group

2011 2010

RM RM

Represented by:-

Share of net assets 1,789,618 1,771,224


cont’d

ANNUAL REPORT 2011


13 77

9. INVESTMENT IN AN ASSOCIATE COMPANY cont’d

Summarised financial information of associate company is as follows:-

2011 2010

RM RM

Assets and liabilities

Current assets 17,632,961 60,543,144

Non-current assets 379,344 500,909

Total assets 18,012,305 61,044,053

Current liabilities 8,819,307 50,865,076

Non-current liabilities 3,380,107 4,427,398

Total liabilities 12,199,414 55,292,474

Results

Revenue 69,455,447 160,087,291

Profit for the financial year 113,812 1,162,600

The particulars of the associate company are as follows:-

Name of company

Place of


2011 2010

% %

Tuah Nusa Sdn.

Bhd.

Malaysia 30 30 Trading and supply of specialised industrial

products, alloys and ferrous materials for the oil and

gas and related industries.

The amount due from an associate company is trade in-nature, bears no interest and repayable upon demand.

The currency exposure profile of the amount due from an associate company is as follows (foreign currency balances are

unhedged):-

2011 2010

RM RM

Ringgit Malaysia 7,138,134 27,891,219

US Dollar 611,292 11,319,077

Singapore Dollar - 2,129,391

7,749,426 41,339,687


ANNUAL REPORT 2011


1378

10. INVESTMENT IN A JOINT VENTURE COMPANY

Group

2011 2010

RM RM

Unquoted shares – at cost 160,440 160,440

Share of post acquisition profit

- At beginning of financial year 163,186 114,069

- Share of post acquisition profit during the financial year 57,544 46,859

- Currency translation difference (2,052) 2,258

- At end of financial year 218,678 163,186

379,118 323,626

Group

2011 2010

RM RM

Represented by:-

Share of net assets 379,118 323,626

Summarised financial information of joint venture company is as follows:-

2011 2010

RM RM

Assets and liabilities

Current assets 771,029 514,575

Non-current assets - -

Total assets 771,029 514,575

Current liabilities 229,387 52,250

Non-current liabilities - -

Total liabilities 229,387 52,250

Results

Revenue 1,033,241 723,614

Profit for the financial year 82,206 66,942


cont’d

ANNUAL REPORT 2011


13 79

10. INVESTMENT IN A JOINT VENTURE COMPANY cont’d

The particulars of the joint venture company are as follows:-

Name of company

Place of


2011 2010

% %

JC Flow Controls

Pte. Ltd. *

Singapore 70 70 Sales and distribution of JC products such as Ball,

Gate, Globe and Check valves for South East Asian

markets.

* Held through Panaflo Controls Pte. Ltd.

The amount due to a joint venture company is trade in-nature, unsecured, bears no interest and repayable upon demand.

The entire amount due to a joint venture company of the Group is denominated in Singapore Dollar currency.

11. AVAILABLE FOR SALE INVESTMENTS

Group

2011 2010

RM RM

At cost:-

Quoted investment in Malaysia 6,900 6,900

Subordinated bond (Note 27) - 2,000,000

6,900 2,006,900

Less: Allowance for impairment in value of investment - (2,000,000)

6,900 6,900

Market value of quoted investment in Malaysia 6,800 6,240

The subordinated bond has been written off during the current financial year.

12. DEFERRED TAX ASSETS

Group Company

2011 2010 2011 2010

RM RM RM RM

At beginning of financial year (2,719,000) (1,540,000) - -

Arising from issuance of ICULS (Note 24) (5,792,373) - (5,792,373) -

Transferred (from)/to profit or loss 2,456,773 (1,179,000) 311,511 -

At end of financial year (6,054,600) (2,719,000) (5,480,862) -


ANNUAL REPORT 2011


1380

12. DEFERRED TAX ASSETS cont’d

The balance in the deferred tax assets is made up of temporary differences arising from:-

Group Company

2011 2010 2011 2010

RM RM RM RM

Carrying amount of qualifying property, plant and

equipment in excess of their tax base 210,347 243,192 - -

Issuance of ICULS (5,480,862) - (5,480,862) -

Inventories written down (510,597) (2,250,491) - -

Allowance for impairment of receivables (273,488) (711,701) - -

(6,054,600) (2,719,000) (5,480,862) -

The following temporary differences have not been recognised in the financial statements:-

Group

2011 2010

RM RM

Carrying amount of qualifying property, plant and equipment in excess of

their tax base 9,039,500 -

Unabsorbed business losses (1,736,500) -

Unutilised capital allowances (9,265,200) -

(1,962,200) -

The deductible temporary difference, unabsorbed business losses and unutilised capital allowances are available for offset

against future taxable profits of the subsidiary companies in which those items arose. Deferred tax assets have not been

recognised in respect of these items as they may not be used to offset taxable profits of other subsidiary companies in the

Group and they have arisen in subsidiary companies that have a recent history of losses.

13. INVENTORIES

Group

2011 2010

RM RM

At cost:-

Raw materials 17,075,773 10,591,545

Goods in transit 232,915 -

Work-in-progress 9,086,792 1,095,779

Finished goods 136,007,387 141,523,131

162,402,867 153,210,455

At net realisable value:-

Raw materials 107,157 -

Finished goods 6,261,508 457,065

6,368,665 457,065

Total inventories 168,771,532 153,667,520


cont’d

ANNUAL REPORT 2011


13 81

13. INVENTORIES cont’d

A total of RM240,292,627 (2010: RM292,001,156) of inventories was included in income statements as expense. This includes

an amount of RM184,092 (2010: RM4,970,534) resulting from write down of inventories during the financial year.

The reversal of written down of inventories was made when the related inventories were sold above their carrying amounts

and increased in net realisable value because of changed economic circumstances.

14. TRADE RECEIVABLES

Group

2011 2010

RM RM

Trade receivables 59,333,588 42,643,809

Less: Allowance for impairment of trade receivables (1,125,288) (2,998,958)

58,208,300 39,644,851

Movement in allowance for impairment of trade receivables: -

Group

2011 2010

RM RM

At beginning of financial year (2,998,958) (3,400,436)

Charge for the financial year (900,832) (22,444)

Reversal of impairment 1,120,363 425,959

Bad debts write off against allowance for impairment 1,654,139 -

Currency translation difference - (2,037)

At end of financial year (1,125,288) (2,998,958)

The currency exposure profile of the trade receivables is as follows (foreign currency balances are unhedged):-

Group

2011 2010

RM RM


US Dollar 7,014,539 6,818,923

Singapore Dollar 4,046,189 1,902,999

59,333,588 42,643,809

Trade receivables comprise amounts receivable from sales of goods. The credit terms granted on sales of goods ranged from

30 days to 90 days (2010: 30 days to 90 days). Allowance has been made for estimated irrecoverable of trade receivables

based on the default experience of the Group.


ANNUAL REPORT 2011


1382

15. OTHER RECEIVABLES

Group Company

2011 2010 2011 2010

RM RM RM RM

Non-trade receivables 635,943 227,210 6,628 741

Advance payment to suppliers 3,929,297 - - -

Deposit for purchase of property, plant and

equipment 824,140 4,688,319 - -

Deposits 1,170,657 564,660 534,000 -

Prepayment of expenses 749,269 634,298 - -

7,309,306 6,114,487 540,628 741

The currency exposure profile of the other receivables is as follows (foreign currency balances are unhedged):-

Group Company

2011 2010 2011 2010

RM RM RM RM

Ringgit Malaysia 3,088,169 1,230,929 540,628 741

US Dollar 3,646,938 4,524,430 - -

GBP Sterling 64,086 - - -

EURO 278,328 - - -

Singapore Dollar 231,785 359,128 - -

7,309,306 6,114,487 540,628 741

16. DERIVATIVES FINANCIAL INSTRUMENTS

2011

Contract/

Notional

amount Assets Liabilities Net

RM RM RM RM

Group

Current

Non-hedging derivatives:-

Forward currency contracts 4,348,900 4,348,900 4,315,880 33,020

The Group uses forward currency contracts to manage some of the transaction exposure. Trading derivatives are classified

as a current assets or liability. The full fair value of a derivative is classified as a non-current asset or liability if the remaining

maturity of the hedged item is more than 12 months and, as a current asset or liability, if the maturity of the hedged item is

less than 12 months.

These contacts are not designated as cash flow or fair value hedges and are entered into for periods consistent with currency

transaction exposure and fair value changes exposure. Such derivatives do not qualify for hedge accounting.


cont’d

ANNUAL REPORT 2011


13 83

17. FIXED DEPOSITS WITH LICENSED BANKS

Group Company

2011 2010 2011 2010

RM RM RM RM

Current 63,244,173 10,330,304 55,250,000 3,550,000

The fixed deposits with licensed banks of the Group and of the Company are on fixed rate basis and will be matured within 1 month to 6 months (2010: 1 month to 6 months) respectively.

The effective interest rates on fixed deposits with licensed banks ranged from 1.65% to 3.00% (2010: 1.30% to 2.00%) per annum.

All of the fixed deposits with licensed banks are denominated in Ringgit Malaysia currency.

18. CASH AND BANK BALANCES

The currency exposure profile of the cash and bank balances is as follows (foreign currency balances are unhedged):-

Group Company

2011 2010 2011 2010

RM RM RM RM

Ringgit Malaysia 61,519,199 44,441,988 20,094,096 943,448

US Dollar 11,527,868 4,452,417 - -

EURO 2,537 56,268 - -

Singapore Dollar 2,088,885 3,334,942 - -

75,138,489 52,285,615 20,094,096 943,448

19. SHARE CAPITAL

2011 2011 2010 2010

Unit RM Unit RM

Group and Company

Authorised:-

Ordinary shares of RM0.20 each 2,500,000,000 500,000,000 2,500,000,000 500,000,000

Issued and fully paid-up:-

Ordinary shares of RM0.20 each

At beginning of financial year 375,000,000 75,000,000 375,000,000 75,000,000

Issued during the financial year

- Bonus issue 74,841,027 14,968,205 - -

- Pursuant to conversion of ICULS 2,068,100 413,620 - -

- Pursuant to exercise of ESOS 26,000 5,200 - -

At end of financial year 451,935,127 90,387,025 375,000,000 75,000,000

New ordinary shares issued during the financial year ranked pari passu in all respect with the existing ordinary shares of the

Company.


ANNUAL REPORT 2011


1384

20. SHARE PREMIUM

Group and Company

2011 2010

RM RM

As at 1 March 2009, as at 28 February 2010 and as at 1 March 2010 16,067,022 16,067,022

Bonus issue during the financial year (14,968,205) -

Pursuant to conversion of ICULS 827,240 -

Pursuant to exercise of ESOS 17,160 -

Transferred from Employees Share Option Reserve 4,290 -

As at 28 February 2011 1,947,507 16,067,022

21. TREASURY SHARES

The shareholders of the Company, through the Annual General Meeting held on 21 August 2008, approved the Company’s

plan to repurchase up to 10% of the issued and paid-up share capital of the Company (“Share Buy Back”). The authority

granted by the shareholders was subsequently renewed in every Annual General Meeting held and it was last renewed in

the Annual General Meeting held on 26 August 2010. The Directors of the Company are committed to enhancing the value

of the Company to its shareholders and believe that the purchase plan can be applied in the best interest of the Company

and its shareholders.

During the financial year ended 28 February 2009, the Company repurchased 820,800 ordinary shares of RM0.20 each of

its issued share capital from the open market. The average price paid for the shares repurchased was RM0.46 per share.

The repurchased transactions were financed by internally generated funds. These shares repurchased were held as treasury

shares and treated in accordance with the requirements of Section 67A of the Companies Act, 1965.

The shares purchased were retained as treasury shares. The Company has the right to re-issue these shares at a later date. As

treasury shares, the rights attached as to voting, dividends and participation in other distribution are suspended.

No repurchase of ordinary shares were made during the previous and current financial year.

As at the financial year end, the Group held 820,800 of the Company’s shares and the number of outstanding shares in issue

after setting treasury shares off against equity are 451,114,327.

No treasury shares were sold during the previous and current financial year.

22. REVALUATION RESERVE

Group

The revaluation reserve is arising from revaluation of lands and buildings and is not available for distribution as dividends.

23. EMPLOYEES SHARE OPTION RESERVE

Group and Company

Employees share option reserve represents the equity-settled share option granted to employees. The reserve is made up

of the cumulative value of services received from employees recorded over the vesting period commencing from the grant

date of equity-settled share option, and is reduced by the expiry or exercise of the share option.

The employees share option reserve is not available for distribution as dividends.


cont’d

ANNUAL REPORT 2011


13 85

24. IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“ICULS”)

Group and Company

2011 2010

RM RM

Equity component

As at 1 March 2009, as at 28 February 2010 and as at 1 March 2010 - -

Arising from rights issue with warrants during the financial year 49,979,816 -

Converted to ordinary shares during the financial year (828,662) -

As at 28 February 2011 49,151,154 -

Liability component


Arising from rights issue with warrants during the financial year 23,169,493 -

Converted to ordinary shares during the financial year (384,149) -

Amortisation charged during the financial year (861,896) -

As at 28 February 2011 21,923,448 -

Total 71,074,602 -

On 22 December 2010, the Company issued and allotted the renounceable rights issue of RM74,841,040 nominal value

of 7-Year 7% ICULS at 100% of its nominal value on the basis of two RM0.10 nominal value of ICULS for every one existing

ordinary share of RM0.20 each held in the Company together with 74,841,040 free detachable warrants on the basis of one

warrant for every ten ICULS subscribed for.

The ICULS were listed on the Bursa Malaysia Securities Berhad on 27 December 2010.

The ICULS represent the unconverted portion of the original RM74,841,040 nominal value of 7-Year 7% ICULS issued and

allotted at 100% of the nominal value, net of deferred tax and the amount allocated to warrants reserve.

The salient features of the ICULS are as follows:-

(a) The ICULS are convertible into fully paid-up ordinary shares of RM0.20 each at any time during the tenure of the ICULS

from the date of issue of the ICULS up to and including the maturity date on 21 December 2017, at the rate of six

RM0.10 nominal value of ICULS for one fully paid-up ordinary shares of RM0.20 each in the Company.

(b) The ICULS have a tenure period of seven years from the date of issue and will not be redeemable in cash. All outstanding

ICULS will be mandatorily converted by the Company into new ordinary shares at the conversion price of RM0.60 each

on the maturity date.

(c) The interest on the ICULS is at the rate of 7% per annum on the nominal value of the ICULS and is payable twice per

annum. The first half-year interest coupon payment for the ICULS is due to be paid on 22 June 2011.

(d) Upon conversion of the ICULS into new ordinary shares, such shares would rank pari passu in all respects with the

existing ordinary shares of the Company in issue at the date of allotment of the new ordinary shares except that the

newly converted ordinary shares shall not be entitled to any rights, allotments of dividends and/or other distribution

if the entitlement date is before the new shares allotment.

On issuance of the ICULS which contain both liability and equity component, the fair value of the liability portion is

determined using a market interest rate for an equivalent financial instrument and the Company is using 13% per annum as

the discounting factor. These amounts are carried as liability until extinguished on conversion or maturity of the ICULS. The

remaining proceeds are allocated to the ICULS which is recognised and included in shareholders’ equity.


ANNUAL REPORT 2011


1386

25. WARRANTS RESERVE

Group and Company

2011 2010

RM RM


Arising from rights issue of ICULS with warrants during the financial year 7,484,104 -

As at 28 February 2011 7,484,104 -

On 22 December 2010, the Company issued 748,410,400 ICULS at the nominal value of RM0.10, together with 74,841,040 free detachable warrants to the holders of the ICULS on the basis of one free detachable warrants for every ten ICULS subscribed.

The fair value of the warrants is estimated using the Vanilla American model, taking into account the terms and conditions upon which the warrants are acquired. The fair value of the warrants measured at issuance date and the assumptions are as follows:-

Valuation model Vanilla

Exercise type American

Tenure 10 years

5-day volume weighted average price of Pantech share at 23 December 2010 RM0.58

Conversion price RM0.60

Volatility rate 20 %

Each warrant entitles the registered holder of ICULS to subscribe for one new ordinary share in the Company at any time on or after 22 December 2010 up to the date of expiry on 21 December 2020, at an exercise price of RM0.60 per share or such adjusted price in accordance with the provisions in the Deed Poll. The warrants were listed on the Bursa Malaysia Securities Berhad on 27 December 2010.

No warrants were exercised during the current financial year.

As at the reporting date, 74,841,040 warrants remained unexercised.

26. FINANCE LEASE CREDITORS

Group

2011 2010

RM RM

Minimum lease payment

- within 1 year 1,243,544 1,198,689

- after 1 year but not later than 5 years 2,358,890 1,564,158

3,602,434 2,762,847

Less: Interest in suspense (356,485) (258,625)

3,245,949 2,504,222

Total principal sum payable

- within 1 year 1,073,837 1,057,260

- after 1 year but not later than 5 years 2,172,112 1,446,962

3,245,949 2,504,222


cont’d

ANNUAL REPORT 2011


13 87

26. FINANCE LEASE CREDITORS cont’d

The interest rates on the finance lease range from 2.33% to 4.25% (2010: 2.33% to 4.25%) per annum.

Included in the above total principal sum payable is an amount of RM64,169 denominated in Singapore Dollar currency.

27. BORROWINGS

Group Company

2011 2010 2011 2010

RM RM RM RM

Current

Secured:-

Term loans 76,483 75,269 - -

Unsecured:-

Term loans 12,034,275 5,977,514 4,002,663 -

Trade loans:-

- Bankers’ acceptance 53,982,721 59,728,084 - -

- Trust receipts 587,174 301,873 - -

- Onshore foreign currency loan 18,288,466 9,203,728 - -

Collaterised loan obligations - 20,835,704 - -

84,892,636 96,046,903 4,002,663 -

Total current 84,969,119 96,122,172 4,002,663 -

Non-current

Secured:-

Term loans 139,201 214,617 - -

Unsecured:-

Term loans 53,302,936 20,718,832 14,000,000 -

Total non-current 53,442,137 20,933,449 14,000,000 -

Total borrowings 138,411,256 117,055,621 18,002,663 -

(i) The term loans, bankers’ acceptance, trust receipts and bank overdrafts of the Group are obtained by way of corporate guarantee from the Company and negative pledge on a subsidiary company’s assets.

A term loan of a subsidiary company is obtained by way of facility agreement, specific debenture and corporate

guarantee from the Company.

The term loans of the Group and of the Company bear interest at rates ranging from 3.39% to 7.55% (2010: 4.18% to

7.25%) per annum respectively.

All term loans of the Group and of the Company are repayable by monthly or quarterly installments.

The bankers’ acceptance bears interest at rates ranging from 2.21% to 4.45% (2010: 2.21% to 5.15%) per annum.

The trust receipts bear interest at the rate of 6.25% (2010: 6.25%) per annum.

The bank overdrafts bear interest at rates ranging from 6.80% to 7.30% (2010: 6.30% to 7.25%) per annum. The bank

overdrafts facility is unutilised as at the reporting date.


ANNUAL REPORT 2011


1388

27. BORROWINGS cont’d

(ii) Collaterised Loan Obligations (“CLO”) is payable upon maturity on 20 September 2010. It bears interest at the rate of

8.38% (2010: 8.38%) per annum of which the interest portion is payable twice per annum.

As a condition to the granting of the above CLO, the Group is required to subscribe to a subordinated bond

(Note 11).

(iii) The onshore foreign currency loan of the Group is obtained by way of corporate guarantee from the Company.

It bears interest at rates ranging from 1.30% to 2.15% (2010: 1.41% to 1.70%) per annum.

The currency exposure profile of the borrowings is as follows (foreign currency balances are unhedged):-

Group Company

2011 2010 2011

RM RM RM

Ringgit Malaysia 119,535,616 107,550,020 18,002,663

US Dollar 18,288,466 9,203,728 -

Singapore Dollar 587,174 301,873 -

138,411,256 117,055,621 18,002,663

28. DEFERRED TAX LIABILITIES

Group

2011 2010

RM RM


Transferred (to)/from profit or loss (963,200) 267,539

Transferred from other comprehensive income 925,509 -

(Over)/Under provision in prior financial year (38,400) 26,568

Currency translation difference (245) 177


The balance in the deferred tax liabilities is made up of temporary differences arising from:-

Group

2011 2010

RM RM

Carrying amount of qualifying property, plant and equipment in excess of

their tax base 2,536,999 3,543,674

Provision for leave entitlement - (4,830)

Revaluation of land and building 925,509 -

3,462,508 3,538,844


cont’d

ANNUAL REPORT 2011


13 89

29. TRADE PAYABLES Group Trade payables comprise amounts outstanding for trade purchases. The credit terms granted to the Group ranged from 30

days to 90 days (2010: 30 days to 90 days).

The currency exposure profile of the trade payables is as follows (foreign currency balances are unhedged):-

Group

2011 2010

RM RM


US Dollar 6,384,839 5,162,590

Singapore Dollar 4,650,940 2,438,485

GBP Sterling 110,683 63,403

EURO 11,675 12,875

23,353,865 18,216,329

30. OTHER PAYABLES

Group Company

2011 2010 2011 2010

RM RM RM RM

Non-trade payables 6,254,601 2,517,740 49,337 53,934

Deposits received 74,319 85,836 - -

Accruals of expenses 2,436,263 2,544,380 1,067,725 105,024

8,765,183 5,147,956 1,117,062 158,958

The currency exposure profile of the other payables is as follows (foreign currency balance is unhedged):-

Group Company

2011 2010 2011 2010

RM RM RM RM

Ringgit Malaysia 8,494,439 5,117,981 1,117,062 158,958

US Dollar 200,480 - - -

Singapore Dollar 70,264 29,975 - -

8,765,183 5,147,956 1,117,062 158,958

31. REVENUE

Group Company

2011 2010 2011 2010

RM RM RM RM

Sales of goods 335,778,998 401,578,364 - -

Dividend income - - 25,718,070 18,922,328

Management fee - - 2,185,822 2,280,000

335,778,998 401,578,364 27,903,892 21,202,328


ANNUAL REPORT 2011


1390

32. PROFIT BEFORE TAX

Profit before tax has been determined after charging/(crediting), amongst others, the following items:-

Group Company

2011 2010 2011 2010

RM RM RM RM

Allowance for impairment of receivables 900,832 22,444 - -

Amortisation of prepaid land lease payments 216,183 101,437 - -

Auditors’ remuneration

- statutory 110,000 99,000 15,000 10,000

- non statutory 22,100 20,300 3,400 3,400

- other auditors 33,600 33,814 - -

Bad debts written off 1,275,005 50,113 - -

Depreciation 5,266,453 5,172,808 - -

Directors’ remuneration

- fees 456,000 326,000 126,000 126,000

- other emoluments 4,691,023 5,727,276 1,426,390 1,441,267

Direct operating expenses: -

- revenue generating investment properties during

the financial year 403,535 305,227 - -

Employees Share Option Scheme expenses 5,599,602 - 5,599,602 -

Hire of machinery 42,931 81,637 - -

Interest expense

- hire purchase/finance lease 171,498 200,754 - -

- term loans/bonds 2,294,488 2,801,507 707,326 -

- bank overdrafts 47,604 116,986 - -

- ICULS liability component interest 112,046 - 112,046 -

- onshore foreign currency loan 175,126 55,459 - -

- revolving credit 321,594 - - -

- trust receipts/bankers’ acceptance 2,216,331 2,815,366 - -

Inventories written down 184,092 4,970,534 - -

Property, plant and equipment written off 2,098 19,557 - -

Rental

- premises 848,398 866,696 - -

- factory and warehouse 601,308 832,539 - -

- office equipment 11,126 11,168 - -

- crane 33,340 17,673 - -

- forklift 9,500 - - -

- lorry 30 1,100 - -

(Gain)/Loss on foreign exchange

- realised (336,482) (1,342,248) 16,495 22,267

- unrealised (435,227) 47,751 - -


cont’d

ANNUAL REPORT 2011


13 91

32. PROFIT BEFORE TAX cont’d

Group Company

2011 2010 2011 2010

RM RM RM RM

Rights issue expense 1,507,722 - 1,507,722 -

Allowance for impairment of receivables no longer

required (1,120,363) (425,959) - -

Dividend income

- subsidiary companies - - (25,718,070) (18,922,328)

- others (296) (296) - -

Fair value gain adjustment on investment

properties (470,000) - - -

Fair value gain on derivatives financial instruments (33,020) - - -

Gain on disposal of investment property (175,000) - - -

Gain on disposal of property, plant and equipment (216,508) (6,728) - -

Interest income from fixed deposits (1,220,261) (348,446) (328,983) (11,619)

Interest income from current bank accounts (198,292) - (198,292) -

Interest income from intercompany loans - - (854,148) -

Rental income (324,600) (318,600) - -

Reversal of inventories written down (12,099,580) (4,168,271) - -

The estimated monetary value of benefits provided to the Directors of the Group during the financial year by way of usage

of the Group’s assets and other benefits amounted to RM63,294 (2010: RM80,550).

The remuneration paid to the Directors of the Company is categorised as follows:-

Fees

Other

emoluments

Benefits-

in-kind Total

RM RM RM RM

2011

Executive Directors 210,000 3,374,573 50,886 3,635,459

Non-Executive Directors 126,000 - - 126,000

Total 336,000 3,374,573 50,886 3,761,459

2010

Executive Directors 150,000 4,651,064 71,150 4,872,214

Non-Executive Directors 126,000 - - 126,000

Total 276,000 4,651,064 71,150 4,998,214


ANNUAL REPORT 2011


1392

32. PROFIT BEFORE TAX cont’d

The remuneration paid to the Directors of the Company analysed into bands are as follows:-

Number of Directors <RM100,000

RM100,000

to

RM1,000,000

RM1,000,001

to

RM2,000,000

2011

Executive Directors - 3 1

Non-Executive Directors 4 - -

2010

Executive Directors - 2 2

Non-Executive Directors 4 - -

33. TAX EXPENSE

Group Company

2011 2010 2011 2010

RM RM RM RM

In Malaysia

Current year’s taxation 8,119,417 14,833,734 5,385,765 3,489,778

(Over)/Under provision of taxation in prior year (1,161,560) (91,382) (98,692) 48,264

Transferred (from)/to deferred tax liabilities (963,200) 277,200 - -

Transferred (to)/from deferred tax assets 2,456,773 (1,179,000) 311,511 -

8,451,430 13,840,552 5,598,584 3,538,042

Outside Malaysia

Current year’s taxation - 2,029,867 - -

Over provision of taxation in prior year (24,259) - - -

Transferred from deferred tax liabilities - (9,661) - -

(Over)/Under provision of deferred taxation in prior

year (38,400) 26,568 - -

(62,659) 2,046,774 - -

Total 8,388,771 15,887,326 5,598,584 3,538,042

Malaysian income tax is calculated at the statutory tax rate of 25% (2010: 25%) of the estimated taxable profits for the

financial year.


cont’d

ANNUAL REPORT 2011


13 93

33. TAX EXPENSE cont’d

The reconciliation of income tax expense applicable to profit before tax at the statutory tax rate to the income tax expense

at the effective tax rate of the Group and of the Company are as follows:-

Group Company

2011 2010 2011 2010

RM RM RM RM

Profit before tax 37,369,202 66,758,306 19,156,320 19,143,875

Tax expense at Malaysian statutory tax rate of 25%

(2010: 25%) 9,342,300 16,689,577 4,789,080 4,785,969

Tax effects in respect of:-

Expenses not deductible for tax purposes 4,596,607 1,916,786 2,174,686 212,703

Utilisation of reinvestment allowance - (123,290) - -

Utilisation of allowance on value of increased export (915,740) - - -

Income not subject to tax (3,877,157) (2,430,933) (1,266,490) (1,508,894)

Expenses allowable for double deduction (23,020) (100,000) - -

(Over)/Under provision of deferred taxation in prior year (38,400) 26,568 - -

Deferred tax assets not recognised in current year 490,000 - - -

(Over)/Under provision of taxation in prior year (1,185,819) (91,382) (98,692) 48,264

Total tax expense 8,388,771 15,887,326 5,598,584 3,538,042

Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance with the

Finance Act, 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividend paid,

credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders

(“single tier system”). However, there is a transitional period of six years, expiring on 31 December 2013, to allow companies

to pay franked dividends to their shareholders under limited circumstances.

Companies also have an irrevocable option to disregard the Section 108 balance and opt to pay dividends under the single

tier system. The change in the tax legislation also provides for the Section 108 balance to be locked-in as at 31 December

2007 in accordance with Section 39 of the Finance Act, 2007.

During the previous financial years, the Company has elected to adopt the Single Tier Income Tax System. As such, the

Company may frank the payment of dividends out of its entire unappropriated profit.

However, the above amounts are subject to the approval of the Inland Revenue Board of Malaysia.

34. EARNINGS PER SHARE

(a) Basic Earnings Per Share

The earnings per share have been calculated based on Group’s profit after tax for the financial year attributable to

owners of the parent of RM28,994,270 (2010: RM50,870,980) and the weighted average number of ordinary shares in

issue during the financial year of 449,200,022 (2010: 449,020,227).

(b) Diluted Earnings Per Share

For the purpose of calculating diluted earnings per share, profit after tax for the financial year attributable to owners of

the parent and weighted average number of ordinary shares in issue during the financial year have been adjusted for

dilutive effects of all potential ordinary shares (share options granted to employees, ICULS and exercise of warrants).


ANNUAL REPORT 2011


1394

34. EARNINGS PER SHARE cont’d

(b) Diluted Earnings Per Share cont’d

Diluted earnings per share for the current financial year have been calculated based on the Group’s adjusted profit after tax for the financial year attributable to owners of the Company of RM28,890,842 and the adjusted weighted average number of ordinary shares in issue during the financial year of 469,960,128.

There is no diluted earnings per share applicable during the previous financial year.

The weighted average number of ordinary shares used in the previous financial year’s basic earnings per share calculation has been adjusted for the effect of bonus shares issued during the current financial year for comparison purposes.

35. EMPLOYEE BENEFITS EXPENSE

Group Company

2011 2010 2011 2010

RM RM RM RM

Staff costs 17,698,394 19,246,799 1,426,390 1,453,635

Employee benefits expense of the Group and of the Company consist of, among others, the following items:-

Group Company

2011 2010 2011 2010

RM RM RM RM

Directors’ remuneration 4,691,023 5,727,276 1,426,390 1,441,267

Defined contribution plan 1,286,097 1,194,809 139,380 155,387

36. EMPLOYEES SHARE OPTION SCHEME

(a) The Pantech Group Holdings Berhad Employees Share Option Scheme (“ESOS”) is governed by the by-laws and approved by the shareholders at an Extraordinary General Meeting held on 10 February 2010. The tenure of the ESOS is for 5 years from 3 March 2010 and expiring on 2 March 2015.

The salient features of the ESOS are as follows:-

(i) The Option Committee appointed by the Board of Directors to administer the ESOS, may from time to time grant options to eligible employees of the Group to subscribe for new ordinary shares of RM0.20 each in the Company.

(ii) Subject to the discretion of the Option Committee, any employee whose employment has been confirmed shall be eligible to participate in the ESOS.

(iii) The total number of ordinary shares to be issued under the ESOS shall not exceed in aggregate 15% of the issued paid-up share capital (excluding treasury shares) of the Company at any point of time during the tenure of the ESOS.

(iv) The exercise price for each share shall be the higher of weighted average market price of the shares as quoted in the Daily Official List issued by the Bursa Malaysia Securities Berhad for the five market days immediately preceding the grant date or the par value of the ordinary shares; and provided that the exercise price is not provided at a discount of more than 10% from the five days weighted average market price of the shares immediately preceding the grant date.

(v) All of the new ordinary shares issued upon exercise of the options granted under the ESOS will rank pari passu in all respects with the existing ordinary shares of the Company in issue at the date of allotment of the new ordinary shares except that the newly allotted ordinary shares shall not be entitled to any rights, allotments of

dividends and/or other distribution if the entitlement date is before the shares allotment date.


cont’d

ANNUAL REPORT 2011


13 95

36. EMPLOYEES SHARE OPTION SCHEME cont’d

(b) Number of Unexercised Share Option

Company

2011 2010

Granted during the financial year 48,435,000 -

Forfeited during the financial year (1,955,000) -

Exercised during the financial year (26,000) -

At end of financial year 46,454,000 -

Company

2011 2010

Analysed as:-

Exercisable in financial year 2011 9,286,000 -





46,454,000 -

(c) Option Price

Company

RM

Option granted in financial year 2011

- on grant date 0.86

- after Bonus Issue, ICULS and Warrants 0.67

(d) Share Option Exercised During The Financial Year

Share option exercised during the financial year resulted in the issuance of 26,000 new ordinary shares at the exercise

price of RM0.86 (2010: RMNil) each.

(e) Fair Value of Share Option Granted During The Financial Year

The fair value of share option granted during the financial year was estimated by an external valuer using the Binomial

Tree Method, taking into consideration of the terms and conditions upon which the option was granted.


ANNUAL REPORT 2011


1396

36. EMPLOYEES SHARE OPTION SCHEME cont’d

(e) Fair Value of Share Option Granted During the Financial Year cont’d

The fair value of the share option measured at grant date and the assumptions are as follow:-

2011

Fair value of share option granted on 3 March 2010 based on vesting date (RM)

- 3 March 2010 0.165

- 3 March 2011 0.226

- 3 March 2012 0.253

- 3 March 2013 0.267

- 3 March 2014 0.272

Expected volatility of Company share price (%) 40.00

Option term (years) 5

Risk free rate of interest (%) per annum 3.68

Expected dividend yield (%) per annum 5.00

37. RELATED PARTY DISCLOSURES

(a) The transactions of the Group and of the Company with the related parties were as follows:-

Group Company

2011 2010 2011 2010

RM RM RM RM

Transactions with subsidiary companies:-

- management fee received - - 2,185,822 2,280,000

- dividend received (net) - - 20,555,043 15,700,640

- loan interest received - - 854,148 -

Transactions with an associate company:-

- sales 66,796,689 154,248,705 - -

- purchases - 2,081 - -

- rental received 60,000 60,000 - -

- dividend received (net) 15,750 120,000 - -

Transaction with joint venture company:-

- purchases 956,117 692,300 - -

- sales - 12,847 - -

(b) The outstanding balances arising from related party transactions as at the reporting date are disclosed in Notes 8, 9

and 10 to the Financial Statements.


cont’d

ANNUAL REPORT 2011


13 97

37. RELATED PARTY DISCLOSURES cont’d

(c) The remuneration of key management personnel is same with the Directors’ remunerations as disclosed in Note 32 to

the Financial Statements. The Company has no other members of key management personnel apart from the Board

of Directors.

The following are movements in share option of key management personnel.

Group

2011 2010

Granted during the financial year 17,650,000 -

At end of financial year 17,650,000 -

The share option was granted to key management personnel on terms and conditions similar to those offered to

employees of the Group as disclosed in Note 36 to the Financial Statements.

38. CAPITAL COMMITMENTS

Group

2011 2010

RM RM

Authorised and contracted for:-

Purchase of - factory buildings - 20,523,041

- leasehold land 3,447,444 -

- plant and machinery 5,515,547 11,830,341

- equipment, air-conditioner, furniture and fittings 367,986 -

- computers and telecommunication 42,555 -

- forklifts and motor vehicles 958,450 -

39. RENTAL COMMITMENTS

The future rental expense commitments are as follows:-

Group

2011 2010

RM RM

Year 2011 - 1,009,654

Year 2012 1,298,383 601,342

Year 2013-2018 3,322,106 2,961,101

4,620,489 4,572,097


ANNUAL REPORT 2011


1398

40. OPERATING LEASE ARRANGEMENTS

The Group has entered into non-cancellable operating lease agreements on its assets. These leases have remaining non-cancellable lease terms of between 1 to 3 years (2010: 1 to 3 years).

The future minimum lease payments receivable under non-cancellable operating leases contracted for as at the reporting

date but not recognised as receivables are as follows:-

Group

2011 2010

RM RM

Within next twelve months 239,250 109,800

More than twelve months 265,000 11,250

504,250 121,050

41. CONTINGENT LIABILITIES

Company

2011 2010

RM RM

Unsecured:-

Corporate guarantees given to licensed financial institutions for credit facilities

granted to subsidiary companies 508,213,261 499,083,685

Corporate guarantees given to finance lease creditors for finance lease facilities

granted to subsidiary companies 2,637,271 1,999,415

Corporate guarantees given to third parties for supply of goods and services to

subsidiary companies 3,718,106 2,000,000

514,568,638 503,083,100

42. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

(a) On 3 March 2010, the Company launched the Employees Share Option Scheme (“ESOS”) by granting the ESOS option to eligible employees and Directors of the Group. The tenure of the ESOS is for 5 years from 3 March 2010 and expiring on 2 March 2015 at an exercise RM0.86. The price subsequently adjusted to RM0.67 in accordance with Bye-Laws following the completion of Bonus Issue and Rights Issue during the financial year.

The salient features, other terms of the ESOS and details of the share option granted during the financial year are disclosed in Note 36 to the Financial Statements.

The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose in this report the names of the persons to whom options have been granted during the financial year and details of their shareholdings pursuant to Section 169 (11) of the Companies Act, 1965 except for information on employees who were granted options representing 400,000 and above ordinary shares of RM0.20 each.

(b) On 8 March 2010, Pantech International (KSA) Sdn. Bhd. (“PKSA”), a subsidiary of the Company, has signed a Memorandum of Understanding (“MOU”) with Abdul Rahman Al-Otaishan Trading Group (“AROT”) to document a framework between PKSA and AROT which may lead to a possible exclusive business relationship between the parties in Saudi Arabia and non-exclusive business relationship in the Gulf Cooperation Council States. Both parties had on 3 September 2010 mutually agreed to extend the MOU for a further 6 months from 4 September 2010 expiring on 3 March 2011 to facilitate both parties to continue their negotiations that may lead to form an investment company in Saudi Arabia. On 3 November 2010, PKSA and Abdul Rahman Al-Otaishan Group For Contracting (“AROG”) had entered into a Shareholders’ Agreement (“SA”) to incorporate a joint venture company in the Kingdom of Saudi Arabia, under the name of Pantech Al-Otaishan LLc (“PO”). Upon signing of the above SA, the MOU with AROT, which is an affiliated company of AROG, shall be deemed terminated.


cont’d

ANNUAL REPORT 2011


13 99

42. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR cont’d

(c) On 18 March 2010, the Company increased its equity interest in a wholly-owned subsidiary company, Pantech Steel Industries Sdn. Bhd. (“PSISB”), comprising 7,000,000 ordinary shares of RM1.00 each for a total cash consideration of RM7,000,000 satisfied wholly in cash upon the issuance of share capital by PSISB.

(d) On 28 July 2010, the Company increased its equity interest in a subsidiary company, Pantech International (KSA) Sdn. Bhd. (“PKSA”), comprising 810,000 ordinary shares of RM1.00 each for a total cash consideration of RM810,000 satisfied wholly in cash upon the issuance of share capital by PKSA.

(e) On 26 November 2010, the Company increased its issued and fully paid-up ordinary share capital by the issuance of 74,841,027 new ordinary shares of RM0.20 each through bonus issue on the basis of one bonus share for every five existing ordinary shares of RM0.20 each held.

(f ) On 22 December 2010, the Company issued RM74,841,040 nominal value of 7-Year 7% Irredeemable Convertible

Unsecured Loan Stocks (“ICULS”) at 100% of its nominal value on the basis of two RM0.10 nominal value of ICULS for every one existing ordinary share of RM0.20 each held in the Company together with 74,841,040 free detachable warrants on the basis of one warrant for every ten ICULS subscribed for. Both of the ICULS and the warrants were listed on the Main Market of Bursa Malaysia Securities Berhad with effect from 27 December 2010. The first half-year interest coupon payment for the ICULS is due to be paid on 22 June 2011.

43. SIGNIFICANT EVENTS AFTER THE REPORTING DATE

(a) At the forthcoming Annual General Meeting, a final single tier dividend, in respect of the financial year ended 28 February 2011, of 1.20 sen per ordinary share amounting to a dividend payable of RM5,430,000 will be proposed for shareholders’ approval. The financial statements for current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 28 February 2012.

(b) A special second interim single tier dividend of 0.60 sen per ordinary share in respect of the financial year ended 28 February 2011 amounted to RM2,710,819 is paid on 30 March 2011.

(c) On 29 April 2011, a wholly-owned subsidiary company, Pantech Corportion Sdn. Bhd., had entered into a Sales and Purchase Agreement to purchase a leasehold land held under PLO 641, Zone 12B, Pasir Gudang Industrial Area, Mukim of Plentong, measuring in area approximately 5.844 acres for total consideration of RM3,835,310.

44. OPERATING SEGMENTS – GROUP

(a) Business Segments

The Group is organised on three major operating segments. These operating segments are monitored separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit in the consolidated financial statements. The following summary describes the operations in each of the Group’s reportable segments:-

Operating segments Business activities

Trading Trading, supply and stocking of high pressure seamless and specialised steel pipes, fittings,

flanges, valves and other related products for use in the oil and gas, gas reticulation,

marine, onshore and offshore heavy engineering, power generation, petrochemicals, palm

oil refining and other related industries.

Manufacturing Manufacturing and supply of butt-welded carbon steel fittings such as elbows, tees,

reducers, end-caps and high frequency induction long bends as well as stainless steel

and alloy pipes, fittings and related products for use in the oil and gas, marine, onshore

and offshore heavy engineering, petrochemical and chemical, palm oil refinery and

oleochemical, power generation, pharmaceutical, water and other related industries.

Investment holding Investment holding, property investment and management service.

Transfer prices between operating segments are on negotiated basis.


ANNUAL REPORT 2011


13100

44

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ANNUAL REPORT 2011


13 101

44. OPERATING SEGMENTS – GROUP cont’d

(a) Business Segments cont’d

Trading Manufacturing

Investment

holding Eliminations Notes Consolidated

RM RM RM RM RM

2011

Assets

Segment assets 283,871,578 152,150,591 209,313,408 (132,148,159) D 513,187,418

Investment in an

associate company 1,789,618 - - - 1,789,618

Investment in joint

venture company 379,118 - - - 379,118

Additions to non-

current assets

other than financial

instruments and

deferred tax assets 1,251,329 51,264,547 143 (391,769) E 52,124,250

Liabilities

Segment liabilities 28,838,029 40,463,283 28,168,060 (40,358,704) F 57,110,668

2010

Assets

Segment assets 293,342,990 86,345,336 111,320,613 (107,196,490) D 383,812,449

Investment in an

associate company 1,771,224 - - - 1,771,224

Investment in joint

venture company 323,626 - - - 323,626

Additions to non-

current assets

other than financial

instruments and

deferred tax assets 439,086 8,492,285 - - E 8,931,371

Liabilities

Segment liabilities 22,443,808 21,536,563 8,366,143 (23,290,496) F 29,056,018


ANNUAL REPORT 2011


13102



Notes to the nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements:

A. Inter-segment revenues are eliminated on consolidation.

B. The following items are added to/(deducted from) segment profit to arrive at “profit before tax” presented in the consolidated income statement:-

2011 2010

RM RM

Segment profit 42,023,759 72,659,270

Interest income 1,418,553 348,446

Finance costs (6,164,798) (6,645,049)

Share of results of associate company 34,144 348,780

Share of results of joint venture company 57,544 46,859

Profit before tax 37,369,202 66,758,306

C. Other non-cash (expenses)/income consist of the following items as presented in the respective notes to the financial statements:-

2011 2010

RM RM

Allowance for impairment of receivables (900,832) (22,444)

Bad debts written off (1,275,005) (50,113)

Property, plant and equipment written off (2,098) (19,557)

Inventories written down (184,092) (4,970,534)

Reversal of inventories written down 12,099,580 4,168,271

Allowance for impairment of receivables no longer required 1,120,363 425,959

Gain on disposal of property, plant and equipment 216,508 6,728

Fair value gain adjustment on investment properties 470,000 -

Employees Share Option Scheme expenses (5,599,602) -

5,944,822 (461,690)

D. The following items are added to segment assets to arrive at total assets reported in the consolidated statement of financial position:-

2011 2010

RM RM

Segment assets 513,187,418 383,812,449

Investment in an associate company 1,789,618 1,771,224

Investment in joint venture company 379,118 323,626

Deferred tax assets 6,054,600 2,719,000

Tax recoverable 642,995 2,148,500

Total assets 522,053,749 390,774,799


cont’d

ANNUAL REPORT 2011


13 103



Notes to the nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial

statements: cont’d

E. Additions to non-current assets other than financial instruments and deferred tax assets consist of:-

2011 2010

RM RM

Property, plant and equipment 45,375,910 8,764,439

Capital work-in-progress 6,748,340 166,932

52,124,250 8,931,371

F. The following items are added to segment liabilities to arrive at total liabilities reported in the consolidated

statement of financial position:-

2011 2010

RM RM

Segment liabilities 57,110,668 29,056,018

Finance lease creditors 3,245,949 2,504,222

Borrowings 138,411,256 117,055,621

Tax payable 2,555,548 5,728,701

Deferred tax liabilities 3,462,508 3,538,844

Total liabilities 204,785,929 157,883,406

(b) Geographical Information

The Group’s revenue and non-current assets information based on geographical location are as follows:-

Revenue Non-current assets

2011 2010 2011 2010

RM RM RM RM

Malaysia * 323,726,448 361,377,691 140,296,424 84,415,671

Republic of Singapore 12,052,550 40,200,673 660,084 828,164

335,778,998 401,578,364 140,956,508 85,243,835

* Company’s home country


ANNUAL REPORT 2011


13104


(b) Geographical Information cont’d

Non-current assets information presented above consist of the following items as presented in the consolidated

statement of financial position:-

2011 2010

RM RM

Property, plant and equipment 104,139,888 58,321,926

Prepaid land lease payments 18,678,044 18,894,227

Capital work-in-progress 6,748,340 166,932

Investment in an associate company 1,789,618 1,771,224

Investment in a joint venture company 379,118 323,626

Available for sale investments 6,900 6,900

Deferred tax assets 6,054,600 2,719,000

Investment properties 3,160,000 3,040,000

140,956,508 85,243,835

(c) Major Customers

The Group does not have any revenue from a single external customer which represents 10% or more of the Group’s

revenue.

45. FINANCIAL INSTRUMENTS

Risk Management Objectives and Policies

The Group is exposed to various risks in relation to financial instruments. The Group’s financial assets and liabilities by

category are summarised in note 3.13 and 3.14. The main types of risks are foreign currency risk, interest rate risk, credit risk

and liquidity risk.

Financial risk management policy is established to ensure that adequate resources are available for the development of the

Group’s businesses whilst managing its foreign currency risk, interest rate risk, credit risk and liquidity risk. The Group operates

within clearly defined policies and procedures that are approved by the Board of Directors to ensure the effectiveness of the

risk management process.

(a) Foreign Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because

of changes in foreign exchange rates.

The Group is exposed to foreign currency risk mostly on its sales and purchases that are denominated in a currency

other than the functional currency of the Group. The currencies giving rise to this risk are primarily US Dollar, Singapore

Dollar, GBP Sterling and EURO.

The Group uses forward exchange contracts to hedge its foreign currency risk and forward exchange contracts have

maturities of less than one year from the reporting date. Where necessary, the forward exchange contracts are rolled

over at maturity.


cont’d

ANNUAL REPORT 2011


13 105

45. FINANCIAL INSTRUMENTS cont’d

Risk Management Objectives and Policies cont’d

(a) Foreign Currency Risk cont’d

Based on carrying amounts as at the reporting date, foreign currency denominated financial assets and liabilities

which expose the Group to currency risk are disclosed below:-

USD SGD GBP EURO

RM RM RM RM

28 February 2011

Financial assets 19,153,699 6,135,074 - 2,537

Financial liabilities (24,873,785) (5,705,935) (110,683) (11,675)

Net exposure (5,720,086) 429,139 (110,683) (9,138)

All financial assets and financial liabilities of the Company are denominated in Ringgit Malaysia currency.

Foreign currency sensitivity analysis

The following table illustrates the sensitivity of profit in regards to the Group’s financial assets and financial liabilities

and the RM/USD exchange rate, RM/SGD exchange rate, RM/GBP exchange rate and RM/EURO exchange rate with ‘all

other things are being equal’.

It assumes a +/- 3% change of the RM/USD, RM/SGD, RM/GBP and RM/EURO exchange rates respectively for the

financial year ended at 28 February 2011. The percentages have been determined based on the average market

volatility in exchange rates in the previous 12 months. The sensitivity analysis is based on the Group’s foreign currency

financial instruments held at each reporting date and also takes into account forward exchange contracts that offset

effects from changes in currency exchange rates.

If the RM had strengthened against the USD, SGD, GBP and EURO by 3% respectively, this would have the following

impact:-

Increase/(Decrease) on profit for the year

USD SGD GBP EURO Total

RM RM RM RM RM

28 February 2011 171,603 (12,874) 3,321 274 162,324

If the RM had weakened against the USD, SGD, GBP and EURO by 3% respectively, then the impact to profit for the

year would be the opposite effect.

Exposures to foreign exchange rates vary during the financial year depending on the volume of overseas transactions.

Nonetheless, the analysis above is considered to be representative of the Group’s exposures to foreign currency risk.

(b) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate

because of changes in market interest rates.

The Group’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates.

The Group’s variable rate borrowings are exposed to the risk of change in cash flows due to changes in interest rates.

Investment in equity securities and short term receivables and payables are not significantly exposed to interest rate

risk.

The Group’s interest rate management objective is to manage interest expenses consistent with maintaining an

acceptable level of exposure to interest rate fluctuation.


ANNUAL REPORT 2011


13106



(b) Interest Rate Risk cont’d

Interest rate sensitivity

At 28 February 2011, the Group is exposed to changes in market interest rates through bank borrowings at variable

interest rates. Other borrowings are at fixed interest rates. The exposure to interest rates for the Group’s short term

placement is considered immaterial.

The interest rate profile of the Group’s and of the Company’s significant interest-bearing financial instruments, based

on carrying amounts as at the end of the reporting period is as follows:-

Group Company

RM RM

Fixed rate instruments

Financial assets

Fixed deposits with licensed banks 63,244,173 55,250,000

Amount due from subsidiary companies - 30,883,318

Financial liabilities

Finance lease creditors (3,245,949) -

Bankers’ acceptance (53,982,721) -

Onshore foreign currency loan (18,288,466) -

Term loans (18,002,663) (18,002,663)

(30,275,626) 68,130,655

Floating rate instruments

Financial liabilities

Term loans (47,550,232) -

Trust receipts (587,174) -

Net financial liabilities (48,137,406) -

The following table illustrates the sensitivity of profit to a reasonably possible change in interest rates of +/- 50

basis points (“bp”). These changes are considered to be reasonably possible based on observation of current market

conditions. The calculations are based on a change in the average market interest rates for each period, and the

financial instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are

held constant.

Increase/(Decrease) on

profit for the year

+50 bp -50 bp

RM RM

Group

28 February 2011 (240,687) 240,687


cont’d

ANNUAL REPORT 2011


13 107



(c) Credit Risk

Credit risk is the risk that counterparty fails to discharge an obligation to the Group and the Company. The Group’s and

the Company’s maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at the

reporting date, as summarised below:-

Group Company

2011 2010 2011 2010

RM RM RM RM

Classes of financial assets – carrying amounts:-

Cash and cash equivalents 138,382,662 62,615,919 75,344,096 4,493,448

Trade receivables 58,208,300 39,644,851 - -

Other receivables 7,309,306 6,114,487 540,628 741

Amount due from an associate company 7,749,426 41,339,687 - -

Amount due from subsidiary companies - - 35,043,745 17,610,226

211,649,694 149,714,944 110,928,469 22,104,415

The Group continuously monitors defaults of customers and other counterparties, identified either individually or by

group, and incorporate this information into its credit risk controls. Where available at reasonable cost, external credit

ratings and/or reports on customers and other counterparties are obtained and used. The Group’s policy is to deal only

with creditworthy counterparties.

The Group’s management considers that all the above financial assets that are not impaired or past due for each of the

reporting dates under review are of good credit quality.

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

Allowance for impairment loss

Individually Collectively

Gross impaired impaired Total Net

RM RM RM RM RM

2011

Within terms 30,190,465 - - - 30,190,465

Past due 1 to 30 days 12,575,492 - - - 12,575,492

Past due 31 to 60 days 6,179,512 - - - 6,179,512

Past due 61 to 90 days 5,209,348 - - - 5,209,348

Past due 91 to 120 days 1,058,237 - - - 1,058,237

Past due more than 120

days 4,120,534 1,125,288 - 1,125,288 2,995,246

59,333,588 1,125,288 - 1,125,288 58,208,300


ANNUAL REPORT 2011


13108



(c) Credit Risk cont’d

None of the Group’s financial assets are secured by collateral or other credit enhancements and none of the carrying

amount of financial assets whose terms have been renegotiated that would otherwise be past due or impaired.

In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure to any single

counterparty or any group of counterparties having similar characteristics. Trade receivables consist of a large number

of customers in various industries and geographical areas. Based on historical information about customer default

rates, the management consider the credit quality of trade receivables that are not past due or impaired to be good.

The credit risk for cash and cash equivalents and short term placements is considered negligible, since the

counterparties are reputable banks with high quality external credit ratings.

(d) Liquidity Risk

Liquidity risk is the risk arising from the Group and the Company not being able to meet its obligations due to shortage

of funds.

In managing its exposures to liquidity risk, the Group and the Company maintains a level of cash and cash equivalents

and bank credit facilities deemed adequate by the management to ensure that it will have sufficient liquidity to meet

its liabilities when they fall due.

The following table shows the areas where the Group and the Company are exposed to liquidity risk:-

Group Company

Current Non-current Current Non-current

Less than 1

year 1 to 5 years

More than

5 years

Less than 1

year 1 to 5 years

More than

5 years

RM RM RM RM RM RM

28 February 2011

Non-derivative financial

liabilities

Term loans 12,340,545 49,447,184 4,751,337 4,002,663 14,000,000 -

Bankers’ acceptance 53,982,721 - - - - -

Trust receipts 587,174 - - - - -

Onshore foreign currency

loans 18,288,466 - - - - -

Irredeemable Convertible

Unsecured Loan Stocks 3,697,408 13,561,518 4,664,522 3,697,408 13,561,518 4,664,522

Finance lease creditors 1,243,544 2,358,890 - - - -

Trade payables 23,353,865 - - - - -

Other payables 8,765,183 - - 1,117,062 - -

Amount due to a joint

venture company 357,353 - - - - -

Total undiscounted financial

liabilities

122,616,259 65,367,592 9,415,859 8,817,133 27,561,518 4,664,522

The above amounts reflect the contractual undiscounted cash flows, which may differ from the carrying values of the financial liabilities at the reporting date.


cont’d

ANNUAL REPORT 2011


13 109

46. CAPITAL MANAGEMENT OBJECTIVE

The primary capital mana gement objective of the Group is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to sustain future development of the business. There is no change to the objectives in financial year 2011.

The Group manages its capital by regularly monitoring its current and expected liquidity requirement and modify the combination of equity and borrowings from time to time to meet the needs. Shareholders equity and gearing ratio of the Group as at 28 February 2011 is as follows:-

RM

Total equity 317,267,820

Borrowings 141,657,205

Debt-to-equity ratio 0.45

The Group has complied with Practice Note No. 17/2009 of Bursa Malaysia Securities Berhad which requires the Group to maintain a consolidated shareholders’ equity not less than 25% of the issued and paid-up capital of the Company and such

shareholders’ equity is not less than RM40 million.

47. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of financial assets and liabilities of the Group and of the Company at the reporting date approximate

their fair values 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.


ANNUAL REPORT 2011


13110

48. DISCLOSURE OF REALISED AND UNREALISED PROFITS/(LOSSES)

Bursa Malaysia Securities Berhad has, on 25 March 2010 and 20 December 2010, issued directives requiring all listed

corporations to disclose the breakdown of unappropriated profits or accumulated losses into realised and unrealised on

group and company basis, as the case may be, in quarterly reports and annual audited financial statements.

The breakdown of unappropriated profit as at the reporting date that has been prepared by the Directors in accordance

with the directives from Bursa Malaysia Securities Berhad stated above and Guidance on Special Matter No. 1 issued on 20

December 2010 by the Malaysian Institute of Accountants are as follows:-

Group Company

2011 2011

RM RM

Total unappropriated profit of the Company and its subsidiary companies:

- Realised 200,825,333 8,556,420

- Unrealised 141,965 -

200,967,298 8,556,420

Total unappropriated profit of the Associate Company:

- Realised 1,750,042 -

- Unrealised 13,359 -

1,763,401 -

Total unappropriated profit of the Joint Venture Company:

- Realised 220,118 -

- Unrealised (1,440) -

218,678 -

Total 202,949,377 8,556,420

Consolidation adjustments (44,835,964) -

158,113,413 8,556,420

The above disclosures were reviewed and approved by the Board of Directors in accordance with a resolution of the Directors

on 24 June 2011.


cont’d

ANNUAL REPORT 2011


13 111

No. Title deed Address

(Land area)

Gross

build-up

area Sq.ft. Tenure

Description/

existing use

Net book

value @

28.2.2011

RM’000

Approximate

age of

building

Years

Date of

last

revaluation

1 Pending for Title to be

issued by the Authority

PLO 809,

Jalan Kampung

Pasir Gudang Baru,

Industrial Estate Zone 12B,

81700 Pasir Gudang.

Johor Darul Takzim.

(899,775)

220,660

60 years

Leasehold

2 Blocks single

storey factory

buildings

with 1 unit

3-storey office

and ancillary

buildings

42,162 1 -

2 Geran 95058, 95059 and

95060

Lot No. 23190, 23191 and

23192

Mukim Kapar

District of Klang,

Selangor Darul Ehsan.

Lot 13257, 13258 and

13259 Jalan Haji Abdul

Manan, Off Jalan Meru,

41050 Klang,


(544,353)

247,990

Freehold 5 units of single

storey detached

factories

( Identified for

reference

as Factory A, B,

C, D and E)

29,870 Factory A,

B & C - 21

Factory D - 19

Factory E - 4

3.3.2011

3 Lot PT NO 34277, HS(M)

29537, Mukim and District

of Klang, HS (D) 114965,

Lot PT 17296,

Pekan Baru Hicom,

Daerah Petaling,


No. 3, Jalan Trompet 33/8,

Seksyen 33, 40400 Shah

Alam,


(123,548)

25,968

Leasehold

expiring on

11.12.2096 &

28.11.2096

A single-storey

detached

warehouse

with 2-storey

office buildings

annexed

5,868 13 15.1.2011

4 PTD 71061, HS(D) 125023,

Mukim Plentong,

District of Johor Bahru,

Johor Darul Takzim.

PLO 234, Jalan Tembaga

Satu,

Pasir Gudang Industrial

Estate,

81700 Pasir Gudang,

Johor Darul Takzim.

(87,120)

42,300

Leasehold

expiring on

30.9.2045

A single storey

detached

warehouse with

a 3-storey

office building

annexed

4,468 12 11.1.2011

5 Part of Plot 157, Plot 158,

Plot 159 and part of Plot

160, Precinct 1,

Port Klang Free Zone

held under Master Title

Pajakan Negeri 7324, Lot

7894, Mukim and District

of Klang, Selangor Darul

Ehsan.

Persiaran Port Klang FZ 7,

Jalan FZ 6-P1,

Port Klang Free Zone/

KS12,

42920 Pulau Indah,

Selangr Darul Ehsan.

(304,920)

48,383

Leasehold

expiring on

30.06.2017

A single-storey

warehouse and

an office block

3,200 3 13.1.2011

6 Geran 73035 , Lot 64305,

Mukim Plentong,


Johor Darul Takzim

No. 4, Jalan Mutiara 4,

Taman Perindustrian

Plentong,

81750 Masai,

Johor Darul Takzim.

(11,808)

11,640

Freehold A single storey

semi-detached

factory with a

3-storey

office annexed

2,260 11 11.1.2011

7 Pajakan Negeri 6725,

Lot 51748, Mukim

Plentong,


Johor Darul Takzim.

PLO 304, Jalan Perak 4,

Pasir Gudang Industrial

Estate,

81700 Pasir Gudang.

Johor Darul Takzim.

(99,555)

26,400

Leasehold

expiring on

20.09.2050

A parcel of

industrial land

erected upon

with a single-

storey

warehouse with

1 1/2-storey

office section

and a guard

house

1,782 23 11.1.2011

8 Geran 178037 , Lot 57101,

Mukim of Plentong,


Johor Darul Takzim.

No. 1 and 1A,

Jalan Molek 2/1,

Taman Molek,

81100 Johor Bahru,

Johor Darul Takzim.

(2,702)

4,500

Freehold A double storey

corner

shophouse

700 20 12.1.2011

9 Geran 252790 , Lot 75931,

Mukim Plentong,


Johor Darul Takzim.

No. 18 & 18A, Jalan

Lampam 41,

Tanjong Puteri Resort,

81700 Pasir Gudang,

Johor Darul Takzim.

(1,540)

3,080

Freehold A double storey

intermediate

shophouse

200 14 11.1.2011

LIST OF PROPERTIESas at 28 February 2011

ANNUAL REPORT 2011


13112

ANALYSIS OF SHAREHOLDINGS as at 30 June 2011

Authorized Share Capital : RM500,000,000.00

Issued and Fully Paid-Up Share Capital : RM90,526,712.00

Class of Shares : Ordinary Shares of RM0.20 Each

Voting Rights : One Vote Per Ordinary Share

No. of Shareholders : 3,821

DISTRIBUTION OF SHAREHOLDINGS AS AT 30 JUNE 2011

Category

No. of

Shareholders

% of

Shareholders

No.

of Shares*

%

of Shares*

Less than 100 81 2.12 2,004 0.00

100 – 1,000 119 3.12 69,928 0.02

1,001 – 10,000 1,922 50.30 11,052,155 2.44

10,001 – 100,000 1,498 39.20 43,870,683 9.69

100,001 – less than 5% of issued shares 196 5.13 210,165,490 46.43

5% and above of issued shares 5 0.13 187,473,300 41.42

Total 3,821 100.00 452,633,560 100.00

Note:

* Inclusive of 820,800 treasury shares retained by the Company.

LIST OF SUBSTANTIAL SHAREHOLDERS AS AT 30 JUNE 2011

Direct Indirect

No. Names No. of Shares %* No. of Shares %*

1. CTL Capital Holding Sdn. Bhd. 101,196,480 22.40 - -

2. GL Management Agency Sdn. Bhd. 74,895,960 16.58 - -

3. Koperasi Permodalan Felda Berhad 39,193,100 8.67 - -

4. Lembaga Tabung Haji 26,670,360 5.90 - -

5. Dato’ Chew Ting Leng - - 101,196,480 22.40(a)

6. Datin Shum Kah Lin - - 101,196,480 22.40(b)

7. Dato’ Goh Teoh Kean - - 74,895,960 16.58(c)

8. Datin Lee Sock Kee - - 74,895,960 16.58(d)

Notes:

* Excluding a total of 820,800 shares bought-back by the Company and retained as treasury shares

ANNUAL REPORT 2011


13 113

DIRECTORS’ INTERESTS IN SHARES AS AT 30 JUNE 2011

Direct Indirect

No. Names No. of Shares %* No. of Shares %*


2. Dato’ Goh Teoh Kean - - 74,895,960 16.58(c)

3. Tan Ang Ang 7,944,600 1.76 1,278,000 0.28(e)

4. To Tai Wai 12,320,580 2.73 - -

5. Tan Sui Hin 270,000 0.06 - -

6. Haji Abdul Karim Bin Ahmad 30,000 0.01 - -

7. Haji Yusoff Bin Mohamed 3,000 0.00 - -

8. Loh Wei Tak - - - -

Notes:(a) Deemed interested by virtue of his and his spouse Datin Shum Kah Lin’s interest in CTL Capital Holding Sdn. Bhd. pursuant to Section 6A of the

Companies Act , 1965 (“Act“)(b) Deemed interested by virtue of her and her spouse Dato’ Chew Ting Leng’s interest in CTL Capital Holding Sdn. Bhd. pursuant to Section 6A of the

Act(c) Deemed interested by virtue of his and his spouse Datin Lee Sock Kee’s interest in GL Management Agency Sdn. Bhd. pursuant to Section 6A of the

Act(d) Deemed interested by virtue of her and her spouse Dato’ Goh Teoh Kean’s interest in GL Management Agency Sdn. Bhd. pursuant to Section 6A of

the Act(e) Deemed interested by virtue of his spouse Madam Yong Yui Kiew’s direct shareholding in the Company pursuant to Section 134(12) of the Act


DIRECTORS’ OPTIONS UNDER EMPLOYEES SHARES OPTIONS SCHEME AS AT 30 JUNE 2011

No. Name

Number

of options

offered

Number

of options

exercised

1. Dato’ Chew Ting Leng 4,500,000 -

2. Dato’ Goh Teoh Kean 4,500,000 -

3. Tan Ang Ang 4,500,000 -

4. To Tai Wai 3,150,000 -

5. Tan Sui Hin 250,000 -

6. Haji Abdul Karim Bin Ahmad 250,000 -

7. Haji Yusoff Bin Mohamed 250,000 -

8. Loh Wei Tak 250,000 -

30 LARGEST SHAREHOLDERS AS AT 30 JUNE 2011

No. Shareholders Shareholdings %*

1. CTL CAPITAL HOLDING SDN. BHD. 60,713,880 13.44

2. KOPERASI PERMODALAN FELDA MALAYSIA BERHAD 39,193,100 8.67

3. GL MANAGEMENT AGENCY SDN. BHD. 34,121,760 7.55

4. GL MANAGEMENT AGENCY SDN. BHD. 26,774,200 5.93

5. LEMBAGA TABUNG HAJI 26,670,360 5.90

ANALYSIS OF SHAREHOLDINGS as at 30 June 2011cont’d

ANNUAL REPORT 2011


13114

30 LARGEST SHAREHOLDERS AS AT 30 JUNE 2011 cont’d

No. Shareholders Shareholdings %*

6. CTL CAPITAL HOLDING SDN. BHD. 21,482,600 4.75

7. AMSEC NOMINEES (TEMPATAN) SDN. BHD.

PLEDGED SECURITIES ACCOUNT – AMBANK (M) BERHAD FOR CTL CAPITAL HOLDING SDN. BHD.

19,000,000 4.21


PLEDGED SECURITIES ACCOUNT – AMBANK (M) BERHAD FOR GL MANAGEMENT AGENCY SDN. BHD.

14,000,000 3.10

9. CITIGROUP NOMINEES (TEMPATAN) SDN. BHD.

EMPLOYEES PROVIDENT FUND BOARD (PHEIM)

11,709,360 2.59

10. LEE LIANG MONG 9,585,000 2.12

11. CITIGROUP NOMINEES (TEMPATAN) SDN. BHD.

EXEMPT AN FOR PRUDENTIAL FUND MANAGEMENT BERHAD

9,200,000 2.04

12. LEE LIANG MONG 6,930,000 1.53

13. MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD

GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD (LGF)

5,592,300 1.24


PLEDGED SECURITIES ACCOUNT – AMBANK (M) BERHAD

FOR LEE LIANG MONG (PANTECH – LA)

5,401,500 1.20

15. AMSEC NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT – AMBANK (M) BERHAD FOR TO TAI WAI (PANTECH-LA)

5,000,000 1.11

16. EB NOMINEES (TEMPATAN) SENDIRIAN BERHAD

PLEDGED SECURITIES ACCOUNT FOR TAN ANG ANG (SFC)

4,878,600 1.08


GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD (DR)

4,818,000 1.07

18. TO TAI WAI 4,376,406 0.97


GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD (LPF)

4,157,700 0.92

20. AMSEC NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT – AMBANK (M) BERHAD FOR NG LEE LEE (PANTECH-LA)

3,804,258 0.84

21. AMANAHRAYA TRUSTEES BERHAD

PUBLIC ISLAMIC OPPORTUNITIES FUND

3,723,000 0.82

22. LIM SOON BENG 3,656,960 0.81

23. SHUM BI SHIAN 3,144,942 0.70

24. TAN ANG ANG 3,066,000 0.68

25. TO TAI WAI 2,944,174 0.65

26. HSBC NOMINEES (TEMPATAN) SDN. BHD.

HSBC (M) TRUSTEE BHD FOR MAAKL PROGRESS FUND (4082)

2,903,750 0.64

27. FREDDIE CHEW SUN GHEE 2,899,640 0.64

28. NG LEE LEE 2,678,382 0.59


PLEDGED SECURITIES ACCOUNT – AMBANK (M) BERHAD FOR LIM SOON BENG (PANTECH-LA)

2,500,000 0.55

30. HONG LEONG ASSURANCE BERHAD

AS BENEFICIAL OWNER (UNITLINKED GF)

2,100,000 0.47

TOTAL 347,025,872 76.81


ANALYSIS OF SHAREHOLDINGS as at 30 June 2011

cont’d

ANNUAL REPORT 2011


13 115

Issue Size : 748,410,400 nominal value of 2010/2017 ICULS

Conversion Price : RM0.60

Maturity Date of ICULS : 21/12/2017

No. of ICULS Holders : 1,529

DISTRIBUTION OF ICULS HOLDINGS

Size of Holdings

No. of ICULS

Holders

% of ICULS

Holders

No. of ICULS

Holdings

% of ICULS

Holdings

<100 1 0.07 2 0.00

100 –1,000 35 2.29 18,800 0.00

1,001 – 10,000 450 29.43 3,164,218 0.43

10,001 – 100,000 810 52.97 29,365,698 4.01

100,001 – < 5% issued ICULS 230 15.04 304,248,800 41.57

5% and above of issued ICULS 3 0.20 395,143,282 53.99

1,529 100.00 731,940,800 100.00

DIRECTORS’ INTERESTS IN ICULS AS AT 30 JUNE 2011

Direct Indirect

No. Names No. of ICULS % No. of ICULS %


2. Dato’ Goh Teoh Kean - - 128,381,300 17.54(b)

3. Tan Ang Ang 13,472,400 1.84 2,130,000 0.29(c)

4. To Tai Wai 21,118,800 2.89 - -

5. Tan Sui Hin 150,000 0.20 - -


7. Haji Yusoff Bin Mohamed - - - -


Notes:

(a) Deemed interested by virtue of his interest in CTL Capital Holding Sdn. Bhd. pursuant to Section 6A of the Companies Act, 1965 (“Act“)

(b) Deemed interested by virtue of his interest in GL Management Agency Sdn. Bhd. pursuant to Section 6A of the Act

(c) Deemed interested by virtue of his spouse Madam Yong Yui Kiew’s direct ICULS holding in the Company pursuant to Section 134(12) of the Act

30 LARGEST ICULS HOLDERS AS AT 30 JUNE 2011

No. ICULS Holders

ICULS

Holdings %



173,463,982 23.70



128,381,300 17.54

3. KOPERASI PERMODALAN FELDA MALAYSIA BERHAD 93,298,000 12.75


PLEDGED SECURITIES ACCOUNT – AMBANK (M) BERHAD FOR LEE LIANG MONG (PANTECH-LA)

36,527,500 4.99

ANALYSIS OF IRREDEEMABLE CONVERTIBLE UNSECURED

LOAN STOCKS (“ICULS”) HOLDINGS as at 30 June 2011

ANNUAL REPORT 2011


13116

30 LARGEST ICULS HOLDERS AS AT 30 JUNE 2011 cont’d

No. ICULS Holders

ICULS

Holdings %



21,118,800 2.89

6. MAYBAN NOMINEES (TEMPATAN) SDN. BHD.

PLEDGED SECURITIES ACCOUNT FOR RAVINDRA A/L PANCHALINGAM

20,000,000 2.73



11,111,900 1.52


PLEDGED SECURITIES ACCOUNT – AMBANK (M) BERHAD FOR SHUM BI SHIAN (PANTECH-LA)

10,986,200 1.50



10,553,700 1.44



9,320,500 1.27



8,362,400 1.14

12. CIMSEC NOMINEES (TEMPATAN) SDN. BHD.

CIMB BANK FOR LIAW HEN KYUN @ ALEX LIAW (MQ0039)

8,000,000 1.09

13. BHLB TRUSTEE BERHAD

EXEMPT AN FOR PHILLIP CAPITAL MANAGEMENT SDN. BHD. (2)

7,745,700 1.06

14. NG HO FATT 7,208,600 0.99

15. LIM KHUAN ENG 7,075,100 0.97



6,929,500 0.95

17. TEO YONG FONG 6,664,500 0.91

18. FREDDIE CHEW SUN GHEE 6,232,900 0.85

19. TAN ANG ANG 5,110,000 0.70

20. MARY TAN @ TAN HUI NGOH 5,047,000 0.69

21. RAVINDRA A/L PANCHALINGAM 3,650,000 0.50

22. ANDREW LIM CHEONG SENG 3,600,000 0.49

23. GINA GAN 3,543,900 0.48

24. HONG LEONG ASSURANCE BERHAD

AS BENEFICIAL OWNER (UNITLINKED GF)

3,500,000 0.48

25. TEO AH SENG 3,178,900 0.43

26. DB (MALAYSIA) NOMINEE (TEMPATAN) SENDIRIAN BERHAD

EXEMPT AN FOR KUMPULAN SENTIASA CEMERLANG SDN. BHD. (TSTAC/CLNT)

3,075,000 0.42


PLEDGED SECURITIES ACCOUNT FOR KONG CHIONG LEE (SFC)

3,000,000 0.41

28. SUNTHARALINGAM A/L V VELUPPILLAI 2,768,900 0.38

29. TEO KWEE HOCK 2,631,900 0.36

30. LIM BOON CHENG 2,570,200 0.35

TOTAL 614,656,382 83.98

ANALYSIS OF IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS

(“ICULS”) HOLDINGS as at 30 June 2011

cont’d

ANNUAL REPORT 2011


13 117

No. Warrants Issued : 74,841,400 Warrants 2010/2020Exercise Price of Warrants : RM0.60Expiry Date of Warrants : 21/12/2020No Of Warrant Holders : 1,793

DISTRIBUTION OF WARRANT HOLDINGS

Size of Holdings

No. of

Warrant

Holders

% of

Warrant

Holders

No. of

Warrant

Holdings

% of

Warrant

Holdings

<100 99 5.52 3,266 0.00

100 – 1,000 422 23.54 289,666 0.39

1,001 – 10,000 792 44.17 3,358,990 4.49

10,001 – 100,000 409 22.81 13,654,250 18.25

100,001 – < 5% Warrants 69 3.85 27,328,740 36.53

5% and above of issued Warrants 2 0.11 30,184,528 40.34

1,793 100.00 74,819,440 100.00

DIRECTORS’ INTERESTS IN WARRANTS AS AT 30 JUNE 2011

Direct Indirect

No. Names

No. of

Warrants %

No. of

Warrants %


2. Dato’ Goh Teoh Kean - - 12,838,130 17.16(b)

3. Tan Ang Ang 1,347,240 1.80 213,000 0.28(c)

4. To Tai Wai 2,111,880 2.82 - -

5. Tan Sui Hin 15,000 0.02 - -


7. Haji Yusoff Bin Mohamed - - - -


Notes:

(a) Deemed interested by virtue of his interest in CTL Capital Holding Sdn. Bhd. pursuant to Section 6A of the Companies Act, 1965 (“Act“)

(b) Deemed interested by virtue of his interest in GL Management Agency Sdn. Bhd. pursuant to Section 6A of the Act

(c) Deemed interested by virtue of his spouse Madam Yong Yui Kiew’s direct warrant holding in the Company pursuant to Section 134(12) of the Act

30 LARGEST WARRANT HOLDERS AS AT 30 JUNE 2011

No. Warrant Holders

Warrant

Holdings %

1 AMSEC NOMINEES (TEMPATAN) SDN. BHD.


17,346,398 23.18



12,838,130 17.16


PLEDGED SECURITIES ACCOUNT – AMBANK (M) BERHAD FOR LEE LIANG MONG (PANTECH-LA)

3,652,750 4.88

ANALYSIS OF WARRANT HOLDINGSas at 30 June 2011

118

ANNUAL REPORT 2011


13

30 LARGEST WARRANT HOLDERS AS AT 30 JUNE 2011 cont’d

No. Warrant Holders

Warrant

Holdings %



2,111,880 2.82

5 RHB CAPITAL NOMINEES (TEMPATAN) SDN. BHD.

PLEDGED SECURITIES ACCOUNT FOR FONG JONG HAN (CEB)

1,500,000 2.00

6 CITIGROUP NOMINEES (TEMPATAN) SDN. BHD.

EXEMPT AN FOR PRUDENTIAL FUND MANAGEMENT BERHAD

1,240,860 1.66



1,111,190 1.49



1,055,370 1.41

9 MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD


932,050 1.25

10 EB NOMINEES (TEMPATAN) SENDIRIAN BERHAD


836,240 1.12

11 EE LI CHEN 723,200 0.97

12 CIMSEC NOMINEES (TEMPATAN) SDN. BHD.

CIMB BANK FOR CHUNG MUI NYOK (MY0532)

700,000 0.94

13 MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD


692,950 0.93

14 GEORGE LEE SANG KIAN 634,260 0.85

15 SHUM BI SHIAN 548,820 0.73

16 TAN ANG ANG 511,000 0.68

17 CIMSEC NOMINEES (TEMPATAN) SDN. BHD.

CIMB BANK FOR LIAW HEN KYUN @ ALEX LIAW (MQ0039)

500,000 0.67

18 TEO YONG FONG 466,450 0.62

19 ECML NOMINEES (TEMPATAN) SDN. BHD.

PLEDGED SECURITIES ACCOUNT FOR YEAP GEK @ YEAP POH CHIM

361,000 0.48

20 MAYBAN NOMINEES (TEMPATAN) SDN. BHD.

PLEDGED SECURITIES ACCOUNT FOR LU KIEW HUONG

341,300 0.46

21 LOW EWE HUM 338,000 0.45

22 LOH CHOON YOW 331,000 0.44

23 DB (MALAYSIA) NOMINEE (TEMPATAN) SENDIRIAN BERHAD

EXEMPT AN FOR KUMPULAN SENTIASA CEMERLANG SDN BHD (TSTAC/CLNT)

307,500 0.41

24 NG HO FATT 300,020 0.40

25 EB NOMINEES (TEMPATAN) SENDIRIAN BERHAD

PLEDGED SECURITIES ACCOUNT FOR KONG CHIONG LEE (SFC)

300,000 0.40

26 MERCSEC NOMINEES (TEMPATAN) SDN. BHD.

PLEDGED SECURITIES ACCOUNT FOR TNTT REALTY SDN BHD

298,000 0.40

27 HDM NOMINEES (TEMPATAN) SDN. BHD.

PLEDGED SECURITIES ACCOUNT FOR NG CHEE THONG (M10)

290,800 0.39

28 HONG LEONG INVESTMENT BANK BERHAD

CLR FOR HONG LEONG ASSURANCE BERHAD

279,100 0.37

29 PUBLIC INVEST NOMINEES (TEMPATAN) SDN. BHD.

PLEDGED SECURITIES ACCOUNT FOR YEAP GEK @ YEAP POH CHIM (C)

271,000 0.36

30 KONG CHIONG LEE 252,900 0.34

TOTAL 51,072,168 68.26

ANALYSIS OF WARRANT HOLDINGSas at 30 June 2011

cont’d

PROXY FORM

(Before completing this form please refer to the notes below)

I/We ........................................................................................................ I/C No./Co. No./CDS A/C No. ......................................................................................

(Full Name in Capital Letters)

of.............................................................................................................................................................................................................................................................(Full Address)

being a member/members of PANTECH GROUP HOLDINGS BERHAD, hereby appoint the following person(s):-

Name of proxy, NRIC No. & Address No. of shares to be represented

1.

2.

or failing him/her, the Chairman of the Meeting as my/our proxy to attend and vote for me/us on my/our behalf at the Fifth

Annual General Meeting of the Company to be held at Millennium Ballroom, Level 2, Hotel Grand Millennium Kuala Lumpur, 160,

Jalan Bukit Bintang, 55100 Kuala Lumpur on Friday, 19th August 2011 at 11.00 a.m.. My/our proxy/proxies is to vote as indicated

below:-

RESOLUTION

FIRST PROXY SECOND PROXY

FOR AGAINST FOR AGAINST

ORDINARY BUSINESS

1. To approve the payment of Final Single Tier Dividend of 1.2 sen per

ordinary share of RM0.20 each for the financial year ended 28 February

2011.

2. To approve the increase in Directors’ Fees from RM126,000 to

RM138,000 for the financial year ending 29 February 2012.

3. To re-elect Dato’ Goh Teoh Kean who retires pursuant to Article 122.

4. To re-elect Mr Tan Sui Hin who retires pursuant to Article 122.

5. To re-elect Haji Yusoff Bin Mohamed who retires pursuant to Article

122.

6. To re-appoint Messrs SJ Grant Thornton as Auditors and to authorise

the Directors to fix their remuneration.

SPECIAL BUSINESS

7. Authority to issue shares by the Company pursuant to Section 132D of

the Companies Act, 1965.

8. Proposed Renewal of Share Buy-Back.

* Please indicate with a “ ” or “X” in the space provided how you wish your vote to be cast. If no instruction as to voting is given, the proxy will

vote or abstain from voting at his/her discretion

Signature of Shareholder(s)/Common Seal

Notes:1. A member entitled to attend and vote at the Meeting is entitled to appoint up to two (2) proxies attend and vote in his/her stead provided that he/

she specifies the proportion of his/her shareholding to be represented by each proxy. A proxy may but need not be a member of the Company. The provisions of Section 149(1)(b) & (c) of the Companies Act, 1965 shall not apply.

2. Where a member is an authorised nominee as defined under the Security Industry (Central Depositories) Act, 1991, it may appoint at least one (1) proxy in respect of each Securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

3. The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised in writing or, if the appointer is a corporation, either under the Corporation’s Common Seal or under the hand of an officer or attorney so authorised.

4. The Proxy Form must be deposited at the Registered Office of the Company at Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof.

No. of ordinary shares held

Signed this day of 2011.

AFFIX

STAMP

1st Fold Here

Fold This Flap For Sealing

Then Fold Here

THE SECRETARY


Level 15-2, Bangunan Faber Imperial Court

Jalan Sultan Ismail

50250 Kuala Lumpur

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