PANTECH CORPORATION SDN BHD (176321-P) Johor Bahru Head Office PLO 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 Office No. 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 Selangor Darul Ehsan, Malaysia 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 Email: [email protected]PANAFLO CONTROLS PTE LTD (200413822 D) Singapore Office No. 5 Tuas View Close Tradelink Place Singapore 637490 Tel: +65 6562 3048 Fax: +65 6562 3148 Email: info@panaflocontrols.com.sg PANTECH INTERNATIONAL (KSA) SDN BHD (890670-K) PLO 234, Jalan Tembaga Satu Pasir Gudang Industrial Estate 81700 Pasir Gudang Johor Darul Takzim, Malaysia Email: [email protected]PANTECH STEEL INDUSTRIES SDN BHD (509731-A) Manufacturer Lot 13258 & 13259 Jalan Haji Abdul Manan Off Jalan Meru 42200 Kapar Selangor Darul Ehsan, Malaysia Tel: +603 3393 1633 Fax: +603 3392 8966 Email: [email protected]PANTECH STAINLESS & ALLOY INDUSTRIES SDN BHD (733428-W) Manufacturer PLO 809, Jalan Kampung Pasir Gudang Baru, Pasir Gudang Industrial Estate, Zone 12B, 81700 Pasir Gudang, Johor Darul Takzim, Malaysia Tel: +607 251 8888 Fax:+607 251 9999 Email: [email protected]Cert. No. KLR0404021 MS ISO/IEC Guide 62:1999 OSH 18072007 CB 02 Cert. No. MY08/00161.1 MS ISO/IEC Guide 66:2000 EMS 12072004 CB 03 SG08/02 123.1 MY08/00171.1 Cert. No. SNG6003354 MS ISO/IEC Guide 62:1999 OSH 18072007 CB 02 Cert. No. MY08/00161.3 MS ISO/IEC Guide 66:2000 EMS 12072004 CB 03 SG08/02/123.3 MY08/00171.3 Cert. No. KLR0403926 annual report 2011 Pantech Group Holdings Berhad (733607-W)
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Pantech Group Holdings Berhad · The Bank of Nova Scotia Berhad United Overseas Bank Limited United Overseas Bank (Malaysia) Berhad SOLICITORS Adi Radlan & Co Ng Kee Chong & Co AUDITORS
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PANTECH CORPORATION SDN BHD(176321-P)
Johor Bahru Head OfficePLO 234, Jalan Tembaga Satu
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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
Ordinary Resolution 2
Ordinary Resolution 3
Ordinary Resolution 4
Ordinary Resolution 5
Ordinary Resolution 6
Ordinary Resolution 7
Ordinary Resolution 8
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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:
Ordinary Resolution 7
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.
Ordinary Resolution 8
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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.
He does not hold any directorships in any other public
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.
He does not hold any directorships in any other public
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.
He does not hold any directorships in any other public
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.
He does not hold any directorships in any other public
companies.
8
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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.
He does not hold any directorships in any other public
companies.
LOH WEI TAK
Independent Non-Executive Director
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.
He does not hold any directorships in any other public
companies.
HAJI YUSOFF BIN MOHAMED
Independent Non-Executive Director
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.
He does not hold any directorships in any other public
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
EXECUTIVE CHAIRMAN’S STATEMENTcont’d
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
1312
EXECUTIVE CHAIRMAN’S STATEMENTcont’d
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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.
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PANTECH GROUP HOLDINGS BERHAD (733607-W)
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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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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.
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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.
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PANTECH GROUP HOLDINGS BERHAD (733607-W)
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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.
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PANTECH GROUP HOLDINGS BERHAD (733607-W)
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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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
1324
CORPORATE GOVERNANCE STATEMENTcont’d
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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CORPORATE GOVERNANCE STATEMENTcont’d
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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CORPORATE GOVERNANCE STATEMENTcont’d
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
1328
ADDITIONAL COMPLIANCE STATEMENTcont’d
4. OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES ISSUED AND EXERCISED cont’d
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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:-
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.
ADDITIONAL COMPLIANCE STATEMENTcont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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
ADDITIONAL COMPLIANCE STATEMENTcont’d
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
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tate
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ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
1334
DIRECTORS’ REPORTcont’d
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.
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
1336
DIRECTORS’ REPORTcont’d
DIRECTORS cont’d
According to the Register of Directors’ Shareholdings, the beneficial interests of those who were Directors at the end of the financial year in the shares of the Company are as follows:-
Number of ordinary shares of RM0.20 each
As at
1.3.2010 Bonus Issue Bought (Sold)
As at
28.2.2011
Dato’ Chew Ting Leng
- deemed interest through
CTL Capital Holding Sdn. Bhd. 84,330,400 16,866,080 - - 101,196,480
- 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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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
Dato’ Chew Ting Leng
- deemed interest through CTL Capital Holding Sdn. Bhd. - 173,463,982 - 173,463,982
Dato’ Goh Teoh Kean
- 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
Abdul Karim Bin Ahmad
- 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
Dato’ Chew Ting Leng
- deemed interest through CTL Capital Holding Sdn. Bhd. - 17,346,398 - 17,346,398
Dato’ Goh Teoh Kean
- deemed interest through GL Management Agency
Sdn. Bhd. - 12,838,130 - 12,838,130
Tan Ang Ang
- direct interest - 1,347,240 - 1,347,240
- deemed interest through his spouse, Yong Yui Kiew - 213,000 - 213,000
To Tai Wai
- direct interest - 2,111,880 - 2,111,880
Abdul Karim Bin Ahmad
- direct interest - 5,000 - 5,000
Tan Sui Hin
- direct interest - 15,000 - 15,000
DIRECTORS’ REPORTcont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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.
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
1354
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
13 55
2. BASIS OF PREPARATION cont’d
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
1356
2. BASIS OF PREPARATION cont’d
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.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011
cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
13 57
2. BASIS OF PREPARATION cont’d
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.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
1358
2. BASIS OF PREPARATION cont’d
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.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011
cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
13 59
2. BASIS OF PREPARATION cont’d
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.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011
cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
13 61
3. SIGNIFICANT ACCOUNTING POLICIES cont’d
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.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
1362
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011
cont’d
3. SIGNIFICANT ACCOUNTING POLICIES 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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
13 63
3. SIGNIFICANT ACCOUNTING POLICIES cont’d
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.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
1364
3. SIGNIFICANT ACCOUNTING POLICIES cont’d
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.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011
cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
13 65
3. SIGNIFICANT ACCOUNTING POLICIES cont’d
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.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
1366
3. SIGNIFICANT ACCOUNTING POLICIES cont’d
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.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011
cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
13 67
3. SIGNIFICANT ACCOUNTING POLICIES cont’d
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.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
1368
3. SIGNIFICANT ACCOUNTING POLICIES cont’d
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.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011
cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
13 69
3. SIGNIFICANT ACCOUNTING POLICIES cont’d
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,
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.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011
cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011
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
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 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.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
1386
25. WARRANTS RESERVE
Group and Company
2011 2010
RM RM
As at 1 March 2009, as at 28 February 2010 and as at 1 March 2010 - -
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
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011
cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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.
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.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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
At beginning of financial year 3,538,844 3,244,560
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
At end of financial year 3,462,508 3,538,844
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
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011
cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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):-
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).
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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.
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.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011
cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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 -
Exercisable in financial year 2012 9,292,000 -
Exercisable in financial year 2013 9,292,000 -
Exercisable in financial year 2014 9,292,000 -
Exercisable in financial year 2015 9,292,000 -
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.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011
cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011
cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
13100
44
. O
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)
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011
cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
13102
44. OPERATING SEGMENTS – GROUP cont’d
(a) Business Segments cont’d
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 -
The above amounts reflect the contractual undiscounted cash flows, which may differ from the carrying values of the financial liabilities at the reporting date.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011
cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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.
NOTES TO THE FINANCIAL STATEMENTS 28 February 2011
cont’d
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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,
Selangor Darul Ehsan.
(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,
Selangor Darul Ehsan.
No. 3, Jalan Trompet 33/8,
Seksyen 33, 40400 Shah
Alam,
Selangor Darul Ehsan.
(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,
District of Johor Bahru,
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,
District of Johor Bahru,
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,
District of Johor Bahru,
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,
District of Johor Bahru,
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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 - -
* Excluding a total of 820,800 shares bought-back by the Company and retained as treasury shares
ANNUAL REPORT 2011
PANTECH GROUP HOLDINGS BERHAD (733607-W)
13 113
DIRECTORS’ INTERESTS IN SHARES AS AT 30 JUNE 2011
Direct Indirect
No. Names No. of Shares %* No. of Shares %*
1. Dato’ Chew Ting Leng - - 101,196,480 22.40(a)
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
* Excluding a total of 820,800 shares bought-back by the Company and retained as treasury shares
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
PANTECH GROUP HOLDINGS BERHAD (733607-W)
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.
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.