Volume 1: Corporate Report & Statements · Mr. Hoh Chee Mun (MIA 8891) SHARE REGISTRAR Bina Management (M) Sdn Bhd Lot 10, the Highway Centre, Jalan 51/205, 46050 Petaling Jaya, Selangor

V o l u m e 1 : C o r p o r a t e R e p o r t & S t a t e m e n t s

CONTENTS Pages

Corporate Information 01

Corporate Chart 02

5 Year Group Financial Highlights 03

Profile of Board of Directors & Key Senior Management 04

Management Discussion & Analysis 09

Sustainability Statement 14

Corporate Governance Overview Statement 19

Audit Committee Report 29

Statement on Risk Management and Internal Control 32

Statement on Directors’ Responsibility in Preparing the Reports and Financial Statements 35

Additional Information 36

Analysis of Ordinary Shareholdings 38

Analysis of Warrant Holdings 40

List of Properties of the Group 42

Volume 1Corpora te Repor t & S ta tements

01

NOMINATING COMMITTEE

Mr. Huang Yan Teo (Chairman)

Mr. Leslie Looi Meng (Member)

Dato’ Liew Yew Cheng (Member)

COMPANY SECRETARIES

Ms. Hoh Leong Ching (MAICSA 7006654)

Mr. Hoh Chee Mun (MIA 8891)

SHARE REGISTRAR

Bina Management (M) Sdn BhdLot 10, the Highway Centre, Jalan 51/205, 46050 Petaling Jaya, Selangor Darul EhsanTel: +603-7784 3922Fax: +603-7784 1988

AUDITORS

Nexia SSY (AF 2009) Chartered AccountantsUOA Business Park, Tower 3, 5th Floor, K03-05-08,1 Jalan Pengaturcara U1/51A, Section U1, 40150 Shah Alam, Selangor Darul EhsanTel: +603-5039 1811Fax: +603-5039 1822

REGISTERED OFFICE22-2, Jalan 1/64, Off Jalan Kolam Air/Jalan Sultan Azlan Shah,51200 Kuala LumpurTel: +603-4045 1080Fax: +603-4045 1050

CORPORATE INFORMATION

BOARD OF DIRECTORS

DATO’ SRI LIEW KUEK HINSSAP, DIMP, PJK, JP

Non-Independent Non-Executive Chairman

DATO’ SRI LIEW YEW CHUNGSSAP, DIMP

Group CEO

DATO’ LIEW YEW CHENGDIMP

Non-Independent Non-Executive Director

DATO’ PADUKA CHEONG SIEW KAIDJMK, AMS, JP

Independent Non-Executive Director

HUANG YAN TEOPIS, PPN


LESLIE LOOI MENG Independent Non-Executive Director

AUDIT COMMITTEE

Mr. Leslie Looi Meng(Chairman)

Mr. Huang Yan Teo (Member)


REMUNERATION COMMITTEE

Mr. Leslie Looi Meng (Chairman)



CORPORATE ADMINISTRATION AND COMPLIANCE COMMITTEE

Mr. Leslie Looi Meng (Chairman)


Dato’ Sri Liew Yew Chung (Member)

PRINCIPAL PLACE OF BUSINESS

No 1, Jalan Istimewa 2,Taman Perindustrian Desa Cemerlang,81800 Ulu Tiram, Johor Darul TakzimTel: +607-861 5288 Fax: +607-861 5186Website: www.londonbiscuits.com.my Email: [email protected]

DATE OF INCORPORATION23 June 1981

STOCK EXCHANGE LISTINGMain Market, Bursa Malaysia Securities BerhadStock Name: LONBISCStock Code: 7126Sector: Consumer Products & Services

PRINCIPAL BANKERS

• OCBC Bank (Malaysia) Berhad• HSBC Bank Malaysia Berhad • Malayan Banking Berhad

SUBSIDIARIES

• Kinos Food Industries (M) Sdn Bhd• Kinos Food Trading Sdn Bhd• Kim Choaw Sdn Bhd

02

CORPORATE CHARTCORPORATE CHART

100%

KINOS FOOD INDUSTRIES (M) SDN BHD

LONDON BISCUITS BERHADGroup of Companies

100% KINOS FOOD TRADING

SDN BHD

100%KIM CHOAW

SDN BHD

03

5-YEAR GROUP FINANCIAL HIGHLIGHTS

Financial Year2018

(RM’000)

Restated2017

(RM’000)2016

(RM’000)2015

(RM’000)2014

(RM’000)

Revenue 308,703 426,021 436,508 402,539 359,995

Profit Before Income Tax (before minority interest)

18,341 21,283 24,995 22,741 21,514

Profit After Income Tax attributable to equity holders of the Company

13,658 1,734 22,419 18,198 17,312

Profit Attributable To Members 13,658 1,438 18,588 15,023 14,349

FINANCED BY

Shareholders’ Funds 368,907 333,098 519,852 486,472 421,676

STATISTICS

Earnings per share (Sen) (Fully diluted)

7.29 0.77 9.98 8.29 9.71

Net Asset per share (Sen) 197.77 178.57 278.70 260.80 257.82

REVENUE

500,000

450,000

400,000

350,000

300,000

250,000

200,000

50,000

100,000

150,000

-2018

(RM’000)

308,703

2016(RM’000)

436,508

2015(RM’000)

402,539

2014(RM’000)

359,995

2017(RM’000)

426,021

SHAREHOLDERS’ FUNDS

600,000

500,000

400,000

300,000

200,000

100,000

-2018

(RM’000)

368,907

2016(RM’000)

519,852

2015(RM’000)

486,472

2014(RM’000)

2017(RM’000)

PROFIT AFTER TAX ATTRIBUTABLE TO SHAREHOLDERS

2018(RM’000)

2016(RM’000)

2015(RM’000)

2014(RM’000)

17,312

2017(RM’000)

1,734

-

5,000

10,000

15,000

20,000

25,000

EARNINGS PER SHARE

20140

2

4

6

8

10

12

2015201620172018

7.29

0.77

9.98

8.29

9.71

333,078

18,198

421,676

13,658

22,419

04

PROFILE OF BOARD OF DIRECTORS & KEY SENIOR MANAGEMENT(CONTINUED)

DIRECTORSDATO’ SRI LIEW KUEK HIN SSAP, DIMP, PJK, JP

Non-Independent Non-Executive ChairmanMalaysian, aged 79, male

Dato’ Sri Liew Kuek Hin was appointed as the Non-Independent Non-Executive Chairman on 27 December 1993.

Dato’ Sri Liew Kuek Hin joined his family-owned businesses, which includes logging, transportation, sawmilling, plywood manufacturing, plantations, palm oil mill and hotel operations, after his study in Nanyang University, Singapore.

Dato’ Sri Liew Kuek Hin is a substantial shareholder of the Company through his direct and indirect shareholdings in LBB. He is the spouse of Datin Sri Lim Yook Lan and is the parent of Dato’ Sri Liew Yew Chung, Dato’ Liew Yew Cheng, Ms. Liew Yet Mei and Dato’ Liew Yet Lee. He has abstained from deliberating and voting in respect of transactions between the Group and related parties involving himself.

His shareholdings in the Company as below:Direct Interest: 312 (0.000%)Indirect Interest: 55,750,676 (21.737%) (Deemed interested by virtue of his shareholdings in Meileelanusa Sdn Bhd and his family members’ shareholdings in LBB)

DATO’ SRI LIEW YEW CHUNG SSAP, DIMP

Group CEO Malaysian, aged 48, male

Dato’ Sri Liew Yew Chung was appointed to the Board on 27 December 1993. In 1994, he was appointed as a General Manager and in 2000, he was appointed as the Group Managing Director / Chief Executive Officer.

He obtained his Bachelor of Science in Business Administration from the Drexel University, Philadelphia, United States in 1991 and majoring in Economics and Finance Accounting. In 1992, he obtained his Masters of Business Administration, majoring in Accounting Control.

His current directorship in other public company includes Khee San Berhad.

Dato’ Sri Liew Yew Chung is a substantial shareholder of the Company through his direct and indirect shareholdings in LBB. He is the son of Dato’ Sri Liew Kuek Hin and Datin Sri Lim Yook Lan, and is the sibling of Dato’ Liew Yew Cheng, Ms. Liew Yet Mei and Dato’ Liew Yet Lee. He has abstained from deliberating and voting in respect of transactions between the Group and related parties involving himself.

His shareholdings in the Company as below:Direct Interest: 2,667,481 (1.040%)Indirect Interest: 53,083,507 (20.697%) (Deemed interested by virtue of his parents’ shareholdings in Meileelanusa Sdn Bhd and his family members’ shareholdings in LBB)

DATO’ LIEW YEW CHENG DIMP

Non-Independent Non-Executive DirectorMalaysian, aged 45, male

Dato’ Liew Yew Cheng was appointed to the Board on 27 December 1993. He is also a Member of Audit Committee, Remuneration Committee and Nominating Committee.

He has obtained his Diploma in Business and Management from the Drexel University, Philadelphia, United States in 1994.

Dato’ Liew Yew Cheng is the son of Dato’ Sri Liew Kuek Hin and Datin Sri Lim Yook Lan, and the sibling of Dato’ Sri Liew Yew Chung, Ms. Liew Yet Mei and Dato’ Liew Yet Lee. He is a substantial shareholder of the Company by virtue of his direct and indirect shareholdings in LBB. He has abstained from deliberating and voting in respect of transactions between the Group and related parties involving himself.

His shareholdings in the Company as below:Direct Interest: 38 (0.000%)Indirect Interest: 55,750,950 (21.737%) (Deemed interested by virtue of his parents’ shareholdings in Meileelanusa Sdn Bhd and his family members’ shareholdings in LBB)

05

PROFILE OF BOARD OF DIRECTORS & KEY SENIOR MANAGEMENT(CONTINUED)

DATO’ PADUKA CHEONG SIEW KAI DJMK, AMS, JP

Independent Non-Executive DirectorMalaysian, aged 80, male

He was appointed to the Board on 20 November 2001 as an Independent Non-Executive Director.

He has obtained his Diploma in Accountancy from the Institute of Public Accountants, Australia in 1961. He is a Member of Malaysian Institute of Accounts, a fellow member of Malaysian Institute of Taxation and Member of the Malaysian Association of Company Secretaries.

He is also an expertise in income tax advisory work. He leads a group of companies which provides corporate and consultancy services in Kuala Lumpur.

He is not related to any Director and/or Major Shareholder of LBB and he does not hold any directorship in other listed companies in Malaysia.

He does not hold any share directly or indirectly in the Company.

HUANG YAN TEO PIS, PPN

Independent Non-Executive DirectorMalaysian, aged 71, male

Mr. Huang Yan Teo was appointed to the Board on 20 November 2001. He is also a Chairman of Nominating Committee and a Member of Audit Committee and Remuneration Committee.

He became a Member of the Association of Chartered Certified Accountants (ACCA) in 1975 and obtained his Fellowship in 1980. He also became a Member of the Malaysian Institute of Accountants (“MIA”) in 1975 and in 1992, as a Member of Chartered Tax Institute of Malaysia (“CTIM”).

He served at an audit firm, Messrs. Coopers & Lybrand from 1966 to 1974 and he was appointed as the Group Financial Controller in a commercial firm from 1974 to 1981. Now, he is the Managing Partner of a Chartered Accountants firm, Messrs. Baker Tilly HYT.

His current directorship in other public company includes Khee San Berhad as an Independent Non-Executive Director.

He does not have any family relationship with any Director and /or Major Shareholder of LBB.


LESLIE LOOI MENGIndependent Non-Executive DirectorMalaysian, aged 49, male

He was appointed to the Board on 26 August 2005. He is also a Chairman of the Audit Committee and Remuneration Committee and also a Member of Nominating Committee.

He graduated with Bachelor of Arts (Law) from the University of Kent, Canterbury, United Kingdom in 1990 and in 1990, he is a Barrister at Law (Middle Temple) and admitted to both the Malaysian Bar and the Singapore Bar.

He is a partner of the legal firm, Messrs. Dennis Nik & Wong and manages the Johor Bahru Branch. His scope of experience includes civil and corporate litigation (i.e. boardroom and shareholders disputes, corporate liquidation / insolvency and restructuring), corporate acquisitions, tax-restructuring schemes, cross-border joint ventures and corporate bank financing.

His current directorship in other public company includes Khee San Berhad as an Independent Non-Executive Director.

He does not have any family relationship with any Director and /or Major Shareholder of LBB.


None of the Directors has convictions for any offence within the past 5 years, other than traffic offences, if any. Except as disclosed in the Profile set out above, none of the Directors has any conflict of interest in any business arrangement involving the Company.

A summary of the attendance of the Directors at board meetings held during the financial year is set out in page 22 of Volume 1 of this Annual Report.

06

Name DATO’ SRI LIEW YEW CHUNG DATO’ LIEW YET LEE

Age 48 44

Gender Male Female

Nationality Malaysian Malaysian

Position Group Chief Executive Officer Chief Technology / Management System Officer

Qualification • Bachelor of Science in Business Administration from the Drexel University, Philadelphia, United States in 1991 and majoring in Economics and Finance Accounting.

• Masters of Business Administration, majoring in Accounting Control from the Drexel University, Philadelphia, United States in 1992.

• Bachelor of Business majoring in Hospitality Management from Edith Cowan University, Western Australia in 1996

Working Experience He joined the Company in 1994 as a General Manager and in 2000, he was appointed as the Group Chief Executive Officer.

She started her career in London Biscuits Berhad as an Executive Manager in 1993 and currently, she is the Chief Technology / Management System Officer.

Date which first appointed to Key Senior Management

1 February 1994 1 August 2014

Directorship in public companies and listed issuers

Khee San Berhad Nil

Family relationship with any Director and/or Shareholder

Son of Dato’ Sri Liew Kuek Hin and Datin Sri Lim Yook Lan and sibling of Dato’ Liew Yew Cheng, Ms. Liew Yet Mei and Dato’ Liew Yet Lee.

Daughter of Dato’ Sri Liew Kuek Hin and Datin Sri Lim Yook Lan and sibling of Dato’ Sri Liew Yew Chung, Dato’ Liew Yew Cheng and Ms. Liew Yet Mei.

Conflict of Interest Nil Nil

List of convictions of offences within the past five (5) years

Nil Nil

PROFILE OF BOARD OF DIRECTORS & KEY SENIOR MANAGEMENT (CONTINUED)

07


Name WONG KIND LOOK TANG LI SENG

Age 37 41

Gender Male Female


Position Group General Manager– Corporate and Administration

Department

Group General Manager– Operations Support Department

Qualification • LLB (Hons), Liverpool• Barrister at Law Lincoln’s Inn

Rima College, Johor Bahru - Diploma in Private Secretarialship

Working Experience • 2004 - Abdul Raman Saad & Associates

• 2005 - Executive, Corporate Affairs in LBB

• 2009 - Group Manager, Corporate Affairs

• 2014 - Group General Manager, Corporate and Administration Department

She started her career in LBB since 7 October 1999. Currently, she is the Group General Manager – Operations Support Department.


1 August 2014 1 August 2014


Nil Nil


Nil Nil



Nil Nil

08


Name LIM HENG MIN LIM KHENG TAT

Age 49 34

Gender Male Male


Position Group General Manager – Manufacturing

Group General Manager– Customer Service Department

Qualification • United Business Institutes, Brussels, Belgium – Master of Business Administration in 2006

• Society of Business Practitioner, United Kingdom – Post Graduate Diploma in Business Administration in 1991

Bachelor Degree of Civil Engineering

Working Experience • 1989 - Production Supervisor in Lau Fatt Kae Sdn Bhd

• 1992 - Production Senior Supervisor in Red Box (M) Berhad

• 1995 - Assistant Production Manager in Apollo Food Holding Berhad

• 1998 - Group General Manager – Manufacturing in LBB

• 2008 – 2010, Structural Design Engineer in THW Consultants Sdn Bhd

• 2010 – 2013, Online Merchandising Senior Specialist in Dell Global Business Sdn Bhd

• 2013 – Present, Group General Manager, Customer Service Department in LBB


1 August 2014 1 October 2013


Nil Nil


Nil Nil



Nil Nil

09

MANAGEMENT DISCUSSION & ANALYSIS

1. INTRODUCTION

London Biscuits Berhad (“LBB” or “the Company”) is involved in the manufacture and distribution of sugar confectionery products and snack food. LBB’s operations and manufacturing facilities are located in Ulu Tiram and Pasir Gudang, Johor.

LBB manufactures three main product segments, which can be categorised as follows :

Cake Confectionery Potato Chips Snack Confectionery

• Roll Cakes• Layer Cakes• Pie Cakes• Novelty Shaped Cakes

• Assorted flavoured chips in canister packaging

• Extruded Corn Snacks• Jellies & Puddings• Chocolate Dip Biscuits

2. FINANCIAL REVIEW

LBB underwent a change of its financial year end from 30 June to 30 September during the previous financial period ended 30 September 2017 (“FPE2017”). As such, no comparative figures are available for this current financial year as the preceding audited financial statements were prepared for the 15-month period during FPE2017. However, we have annualised the FPE2017 financial results to illustrate the changes in performance between the current financial year ended 30 September 2018 (“FYE2018”) and FPE2017. It is important to note that the annualised figures are not actual figures recorded by LBB in FPE2017 and are meant for illustration purpose only.

During the course of carrying out the annual financial audit for FYE2018, there were several audit findings which require some restatements to the FPE2017 audited financial statements. Also, the newly appointed external auditor who came on board on 20 December 2018 has highlighted several pertinent financial entries which needed corrections. LBB’s Board of Directors takes guidance from the auditor and fully support these adjustments and restatements.

a) Adjustments and restatements of the audited financial statements i. Profit After Tax (“PAT”)

(RM ‘000)FPE2017

(15 Months)Restated FPE2017

(15 Months) Variance

Profit Before Tax (“PBT”) 21,283 21,283 NA

Taxation

Income Tax (132) (1,106)

Deferred Tax (3,911) (18,443) > 100%

Total Taxation (4,044) (19,549)

PAT Attributable to Owners 15,171 1,438 (90.5%)

The variance of 90.5% in the Restated FPE2017 PAT Attributable to Owners arose predominantly from the increase in deferred tax liability. This was due to a deferred tax adjustment as a result of LBB’s under provision of tax liabilities during FPE2017.

ii. Property, Plant & Equipment (“PPE”)

(RM ‘000)FPE2017



PPE 406,657 387,304 (4.8%)

The PPE was restated from RM406.7 million to RM387.3 million, a variant of 4.8%. The differential amount of RM19.4 million was initially classified in LBB’s PPE. However, since the said PPE was meant for the utilisation of an associate company, hence it has been de-recognised from the total PPE and reclassified as amount due from associate company.

iii. Cash & Bank Balances

(RM ‘000)FPE2017



Cash & Bank Balances 67,824 9,274 (86.3%)

The FPE2017 cash & bank balances was restated to RM9.3 million from RM67.8 million reported in the earlier financial statements. This restatement was deemed necessary to reflect the actual cashflow position as at the financial period-end date, which was 30 September 2017.

10

MANAGEMENT DISCUSSION & ANALYSIS (CONTINUED)

LBB received several undeposited cheques for an aggregated amount of RM77.0 million for payments on certain trade receivables which was classified as collections for FPE2017. Although these cheques were subsequently cleared, a restatement is necessary to remain the amount as “trade receivables” as at the FPE date.

Similarly, a reverse scenario occurred during the same time, whereby several cheques issued by LBB to third parties totalling RM1.1 million were unpresented at FPE date, and hence was written back as “other payables”.

In addition to the above, an amount of RM17.7 million which was earlier deemed to be paid out from LBB’s cash hoard was indeed drawn against the company’s bank overdraft facility. Hence, the corresponding amount was restated back as cash reserve in FPE2017.

iv. Trade Receivables

(RM ‘000)FPE2017



Trade Receivables 182,890 200,937 9.9%

The variance in the Restated FPE2017 trade receivables was a result of the corresponding adjustment on the RM77.0 million in cash & bank balances as described in the earlier section. Nonetheless, with the adoption of MFRS 9 as a prudent practise, LBB made an impairment of RM59.2 million on certain trade receivables, thus resulted with a net variant of only 9.9% in the Restated FPE2017 trade receivables account.

b) Review of Statement of Comprehensive Income

The summary of the Statement of Comprehensive Income is as follows:

(RM ‘000)

Restated FPE2017

(15 Months)

Restated FPE2017

(annualised) FYE2018

Variance (FYE2018 vs. annualised Restated FPE2017)

Revenue 426,021 340,817 308,703 (9.4%)

Selling & Distribution Expenses 29,433 23,546 12,106 (48.6%)

Administrative Expenses 36,671 29,337 28,479 (2.9%)

Shr. of Profit of Assoc. Co. 403 322 934 > 100%

Finance Costs 22,019 17,615 21,203 20.4%

Profit Before Tax (“PBT”) 21,283 17,026 18,341 7.7%

Profit After Tax (“PAT”) 1,438 1,150 13,658 > 100%

LBB registered a 9.4% decrease in revenue from RM340.8 million recorded for the Annualised Restated FPE2017 to RM308.7 million in FYE2018. The decline was mainly due to intense competition which put a dent onto LBB’s revenue growth.

The revenue performance of LBB is as follows:

(RM ‘000)

Restated FPE2017

(15 months)

Restated FPE2017

(annualised) % FYE2018 %

Domestic Market Revenue 305,322 244,258 71.7% 226,949 73.5%

Export Market Revenue 120,699 96,559 28.3% 81,754 26.5%

Total Revenue 426,021 340,817 100.0% 308,703 100.0%

During FYE2018, domestic sales dropped by 7.1% to RM226.9 million, compared to the Annualised Restated FPE2017 period. It accounted for 73.5% of total revenue, a slight improvement compared to 71.7% recorded during Annualised Restated FPE2017. Export sales, which accounted for the balance 26.5% of total revenue, experienced a 15.3% decline to RM81.8 million in FYE2018. The reduced sales in the export market was also caused by competitive market in the Asean region amid fluctuating Ringgit currency rates.

Finance cost rose 20.4% to RM21.2 million in FYE2018 as a direct impact from higher bank borrowings taken to finance LBB’s purchases of PPE and upgrading works on its existing production line, as well as to fund working capital requirements.

11


During the financial year under review, both the selling & distribution as well as administrative expenses declined by 48.6% and 2.9% respectively in FYE2018 compared with Annualised Restated FPE2017. Profit contributions from associated companies was higher at RM0.9 million, against RM0.3 million recorded previously. As a result, LBB achieved a PBT of RM18.3 million, an increase of 7.7% over Annualised Restated FPE2017.

LBB chalked up a PAT of RM13.7 million for FY2018, a significant jump compared to only RM1.2 million recorded during the Annualised Restated FPE2017, due to a one-off deferred tax adjustment of RM18.4 million during FPE2017.

c) Review of Statement of Financial Position

(RM ‘000)Restated FPE2017 FYE2018

Variance(FYE2018 vs. Restated

FPE2017)

Total Assets 702,328 815,425 16.1%

Total Liabilities 369,231 446,518 20.9%

Shareholders’ Equity 333,098 368,907 10.8%

Total Borrowings 314,809 386,848 22.9%

Cash and Bank Balances 9,274 19,403 109.2%

Net Assets per Share (RM) 1.79 1.98 10.6%

For FYE2018, total assets were RM815.4 million, an increase of RM113.1 million or 16.1% from RM702.3 million registered in Restated FPE2017. The increase was mainly attributed to RM52.5 million in additional PPE and other receivables, deposits & prepayments of RM19.8 million during FYE2018.

Total liabilities rose by RM77.3 million or 20.9% to RM446.5 million in FYE2018, following the hike in bank borrowings to finance LBB’s capital expenditure for PPE. As at FYE2018, LBB’s total bank borrowings stood at RM386.8 million, representing a net gearing ratio of 1.00x. The net gearing ratio was 0.92x in FPE2017.

Shareholders’ equity saw a net increase of RM35.8 million in FYE2018, which was primarily resulted from the PAT of RM13.7 million, RM16.0 million in revaluation surplus of its properties and share issuance proceed of RM6.2 million.

Net assets per share shown an improvement during the financial year, inched up to RM1.98 in FYE2018 compared to RM1.79 in Restated FPE2017.

3. BUSINESS OPERATIONS REVIEW

LBB strives to remain competitive in its market environment and is continuously seeking methods to improve quality control and operational efficiency. It has invested RM52.5 million in PPE during FYE2018 to increase its capacity for manufacturing processes. These additional capacities will enable LBB to a better position to introduce new product range, in addition to fulfilling the anticipation of higher demand for its products. These strategies work seamlessly alongside the sales and marketing team’s effort to boost sustainable sales growth over the longer term.

As at to date, LBB has nine existing factories, all located in the vicinity of the State of Johor, which consist of production, warehouse and office facilities, on the back of a total workforce of over 400 employees and support staff. These factors contribute to the magnitude and scale of LBB’s operations in catering for both the domestic and export markets.

LBB is one of the largest cake producers in South East Asia with four different categories of cakes in its portfolio. Its continued effort to upgrade and expand its manufacturing capabilities will sustain its leadership position in this region. It has three production lines for Potato Chips products which currently produces six different flavours. Its revenue stream is mainly derived from three categories of product ranges, such as the well-known brands like London, Hiro, Mizu, Kinos Potato Bites, CaCa, Sumi, NiNi and BOBO. Its products are distributed in both the domestic wholesale and modern trade, as well as to over 35 export destinations.

To support the export market, LBB has established an extensive global sales network covering various strategic regions such as Singapore, Thailand, Indonesia, Vietnam, Hong Kong, Taiwan, Yemen, United Arab Emirates, and Saudi Arabia. Besides defending its market position in these areas, it also aims to continue expanding its geographical footprint by appointing new distributors in new overseas markets in the near term.

12


4. BUSINESS RISKS OVERVIEW

LBB faces several risk factors that may affect its profitability. Those risks include the following: a) Labour shortages and wage fluctuations

LBB’s production activities are labour intensive in nature, thus it is prone to labour shortage. By that same breadth, it is also subject to wage fluctuations as witnessed by the government’s amendments of Levy Payment Structure on foreign workers and the increase in minimum wage level in peninsular Malaysia. In an effort to reduce the over-reliance to the labour issues, LBB will continue to invest heavily to further automate its plants and machineries.

b) Fluctuation of raw materials prices

The fluctuation of raw materials’ prices has been an inherent issue for the food-based industry. Realising this, LBB has taken necessary steps to reduce the risk of constant price fluctuations by engaging with its various raw material suppliers to strive for favourable longer term supply arrangements. At the same time, it is constantly exploring with new supplier base so as not to be overly reliant on only few key suppliers. Nonetheless, all these initiatives are carried out without compromising of its product quality and health safety.

c) Fluctuation of foreign currency exchange rate

Significant fluctuation of foreign currency exchange rate is an inevitable threat which could impact LBB’s profitability as most of its raw materials are sourced abroad. However, as a significant portion of its end products are exported, there is ample cushion to offset foreign currency fluctuations. Nonetheless, the management will continue to monitor the currency movements closely and, if necessary, take proactive hedging positions to mitigate such risk.

d) Changes in consumers’ preferences

LBB is aware of the continuous shift in consumers’ taste preference and as such it is constantly introducing new flavours onto its existing product range, as well as new products and product packaging to the market. As LBB possesses a strong distribution network, long history of close working relationship with major distributors, as well as significant presence in most retail outlet chain stores in the country as well as overseas markets, it is in a significant advantage when rolling out new products to the market.

e) Product quality

It is paramount important to produce quality food-base products. Deterioration of product quality would bring severe negative impact to its brand equities and long term impact on its reputation. As a mitigating step, LBB has implemented strict quality control systems and assurance processes to ensure there is no deterioration in product quality. Its manufacturing facilities possess HACCP and ISO certifications, and is a Halal certified confectionery manufacturer.

f) Interest rate & liquidity risk

LBB is exposed to interest rate and liquidity risks as it has considerably high bank borrowings. The board is cognisant of this exposure and will monitor its cashflow position diligently while exploring alternate avenues of funding, such as through the capital markets. This will help mitigate over-reliance on banking facilities which is prone to interest rate movements.

5. CORPORATE GOVERNANCE INITIATIVES

The Board of Directors and senior management have a clear vision and objective for LBB, which is to produce high quality products, while maintaining the brand awareness of its various products. LBB envisages to be the dominant player in the cake confectionery industry while expanding other related food-base products to become a one-stop centre for its customers and wholesalers. Much efforts and resources are put in place to maintain and improve its overall competitiveness.

As a public company, LBB recognises its obligation of adopting high corporate governance standards in its efforts to safeguard shareholders and stakeholders’ interests. The Board of Directors takes seriously the enumerations of the Malaysian Code on Corporate governance 2017 (MCCG 2017) and the Bursa Securities’ Listing Requirements.

In the Corporate Governance Overview Statement segment of this Annual Report, the Company has outlined three main principles which it has adopted and complied with, namely :

(a) Board leadership and effectiveness; (b) Effective audit and risk management; and (c) Integrity in corporate reporting and meaningful relationship with stakeholders.

13


LBB has also outlined in detail the Corporate Governance Report 2018 which is available at the company’s corporate website at www.londonbiscuits.com.my. All these initiatives are the key guiding attributes for the company going forward.

During FYE2018, LBB has made several changes to the membership composition of the Audit, Nomination and Remuneration Committees, whereby all committees are now headed by an Independent Non-Executive Director, whilst the majority members of all these committees consist of Independent Non-Executive Directors.

A new committee, Corporate Administration and Compliance Committee was set up during the financial year which is also majority-helmed by Independent Non-Executive Directors and chair by an Independent Non-Executive Director. The main purpose of this committee is to monitor the implementation of LBB’s various policies, as well as to review management’s proposals which are presented to the Board from time to time.

In an effort to improve the deliverables of the financial report procedure, LBB is currently on the lookout for a suitable candidate to head the Financial and Accounting Department. This person will be accountable for the day-to-day financial matters, and will be answerable to the Board of Directors and the Audit Committee on all financial and accounting related matters. He (or she) will also be mandated to introduce professional management accounting guidelines and procedures on matters relating to internal credit control, human resources, stock control, budgeting, peers benchmarking etc. At the same time, its accounting software and IT system will be gradually upgraded with the capability of real-time financial visibility and control across the organisation, in a move to manage its financial reporting system more efficiently and transparently. LBB’s determination to uphold the prudency and integrity of its financial reporting efforts shall be further enhanced.

The Board has in September 2018 appointed a third party professional firm, Messrs RCA Corporate Services Sdn Bhd to carry out its Internal Audit function. RCA was given full access to all business and supporting units to conduct ad hoc and periodic inspections of the respective functions. All findings and recommendations will be reported directly to the Audit Committee to preserve its neutrality and independence. Since its appointment, RCA has outlined a comprehensive programmes pertaining to internal control issues to be carried out throughout the current financial year and will recommend the implementation of business and operational best practices to LBB’s various business entities and supporting units.

6. OBJECTIVES

LBB acknowledges and executes several key measures to improve its profitability and increase shareholders’ values :

a) Develop new product range; b) Improve the quality and tastes of existing products; c) Sourcing for lower-priced raw material suppliers; and d) Acquire advanced machineries and improve plant automation to increase capacity, and operational efficiency and product

consistency.

7. OUTLOOK AND FUTURE PROSPECTS

LBB remains cautiously optimistic on its prospects amid the challenging external headwinds as witnessed by the ongoing China-US trade tensions alongside the potential slowdown in growth fears in major developed economies. On the local front, it expects the outlook to remain sluggish given the lack of fiscal expansion on the economy coupled with the volatility of the Ringgit against major foreign currencies, as well as fluctuating raw material prices.

LBB will be looking to introduce potato chips with premium flavourings such as matcha, cheese or salted eggs seasonings which will be positioned as premium ranged items. It will also continue its plan to launch novelty cakes with more refined sponge texture which will come with a higher brand positioning. These will serve to bolster the Group through the coming challenges.

Despite these prevailing challenges, the Board and the management remain confident in addressing these challenges head on through the implementation of proactive measures and improving operational efficiency, while preserving its product quality. LBB determines to preserve its revenue and earnings growth trend by broadening its geographical reach, products offering portfolio as well as effective cost control measures. All these will translate to stronger and sustainable income stream to LBB and its Group companies in the long term.

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SUSTAINABILITY STATEMENT

This inaugural Sustainability Statement is an overview of the Group’s approach to sustainability and its endeavour to incorporate sustainability-related concerns, which include economic, environmental and social performance, into the day-to-day business operations. Being a responsible corporate citizen, the Group presents itself with the obligation to help develop a sustainable global economy and create a better future for the generations to come.

SUSTAINABILITY GOVERNANCE STRUCTURE

The Group’s pursuit of sustainability is an ongoing journey and is determined to integrate the philosophy of sustainability as part of its overall business strategies and culture. The Board and the Senior Management team are tasked to establish and implement these sustainability strategies.

The Group applies the GRI reporting framework which comprises global standards as its principal framework in preparing for the sustainability reporting to the shareholders. The Group’s commitment to sustainability encompasses three (3) key areas : economy, environmental and social.

Sustainability Areas Descriptions

Economy Creation of long-term recurring values for the shareholders and stakeholders.

Environment Striving toward reducing environmental footprint by improving efficiency of resources utilisation, while supporting conservation efforts.

Social Dealing with customers and the public in accordance with good market practices, conducive workplace for the staff and community engagements through a variety of initiatives.

As one of the leading confectionery manufacturers in the country, the Group is committed to demonstrate a responsible corporate conduct, by adopting a holistic approach to sustainability, focusing on the three broad areas mentioned earlier. The Board fully support and endorse this strategy, whilst the responsibilities now lies with the key management and all employees to embark on the sustainability efforts to deliver the agreed goals.

The 17 Sustainable Development Goals (“SDGs”) or Global Goals, were introduced by the United Nations General Assembly in 2015, with a target to achieve these goal by year 2030. This Global Goals are a universal calling to end poverty, protect the planet and to ensure peace and prosperity.

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LBB’S SDG FOCUS AREAS

CorporateAdministration

and ComplianceCommittee

BOARD OFDIRECTORS

SustainabilityWorking

Committee

OperationalDivisions

Overseeing the implementation and monitoring of the sustainable

policies, measures and practices to achieve LBB’s sustainability

milestones and goals periodically.

Formulate Sustainability policies, strategy facilitate in achieving the goals,

conduct awareness and monitoring.

Day-to-day management of sustainability risks and issues.

Deliberate and approves sustainability initiatives and budget.

End hunger, achieve food security and improved nutrition and promote sustainable agriculture

Achieve gender equality and empower all women and girls

Promote sustained, inclusive and sustainable economic growth, full and productive employment and

decent work for all

Ensure sustainable consumption and production patterns

Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land

degradation and halt biodiversity loss

SUSTAINABILITY STATEMENT (CONTINUED)

To manage and realise the Group’s commitment to integrate sustainability throughout its value chain, the Group has developed a governance structure as shown below:

Of these 17 goals, the Group has identified five (5) SDGs which it intends to adopt and to focus on, as illustrated in the chart below. These five SDGs initiatives will be introduced and be embedded into the Group’s workplace and throughout its business operations value chain.

LBB’S SDG FOCUS AREAS

CorporateAdministration

and ComplianceCommittee

BOARD OFDIRECTORS

SustainabilityWorking

Committee

OperationalDivisions

Overseeing the implementation and monitoring of the sustainable

policies, measures and practices to achieve LBB’s sustainability

milestones and goals periodically.

Formulate Sustainability policies, strategy facilitate in achieving the goals,

conduct awareness and monitoring.

Day-to-day management of sustainability risks and issues.

Deliberate and approves sustainability initiatives and budget.

End hunger, achieve food security and improved nutrition and promote sustainable agriculture

Achieve gender equality and empower all women and girls

Promote sustained, inclusive and sustainable economic growth, full and productive employment and

decent work for all

Ensure sustainable consumption and production patterns

Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land

degradation and halt biodiversity loss

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The table below highlighted the main areas of interest of our stakeholders :-

Stakeholder Groups Focus Areas Engagement Approaches

Employees • Career development • Advancement• Work-life balance• Employee health and safety• Employee benefits

• Performance appraisal• Health check-up• Training programmes

Customers • Food safety • Product quality and branding• Customer-company relationship• Customer service and complaints

resolution• Pricing and promotion

• Feedback and enquiry forms• Social media platforms• Customer Relationship Management• Product standards and certifications

Wholesalers and Distributors • Enhancement of distribution platform• Market demand• Product quality and pricing• Product development and innovation

• Marketing plan• Product promotions• Events• Training• Feedback and surveys

Vendors and suppliers • Food safety• Product quality and branding• Customer-company relationship• Customer service management• Pricing and promotion

• Audit and evaluation• Meetings• Factory visits

Certification and Regulatory Bodies • Regulatory compliance• Approvals and permits• Standards and certifications

• Meetings and consultations• Training programmes and dialogues• Audit and verification

Local Communities • Quality of health and education• Indirect economic impact• Environmental impact of operations• Community well-being

• Community engagement • Donations and sponsorships

Shareholders and Investors • Financial performance• Regulatory compliance• Corporate Governance• Ethical business conduct• Investment and divestment• Internal control and risk management• Composition of the Board

• Meetings and briefings• Financial announcements and reporting• Policies and framework• Corporate website

Business Partners(Non-Suppliers)

• Financial performance• Corporate Governance• Business developments

• Meetings and discussions• Financial announcements and reporting• Corporate website

Media • Reputation and image• Financial performance• Business updates and corporate news• Public relations

• Social media platform• Conference and interviews• Events and functions

SCOPE

The emphasis is on quality control processes for the deliverable of the Group’s products and also the factors to maintain a harmonious environment in achieving these processes.

A) Economic Aspect

1) Financial Performance A snapshot of the Group’s financial performance for financial year ended 30 September 2018 is as follows :

REVENUE RM308,703,000

PROFIT BEFORE TAX RM18,341,000

RETURN ON EQUITY 3.70%

For more information about the Group’s financial performance, please refer to the Group’s Financial Highlights in page 3 of Volume 1 of this Annual Report.

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2) Procurement The Group supports local products and services by procuring its raw materials from established business entities locally to support local industries. The production processes are conducted under controlled environment to uphold the regulatory hygiene practices. All our raw materials and finished products adhere to the “Halal” standard and requirement in accordance to the strict guidelines from JAKIM.

B) Environment Aspect

The Group takes environmental issues seriously as it realises the impact which could have negative impact to the future generations. The company works closely with environmental regulators to ensure that it is in compliance with all standards at all times to reduce the impact to the environment. It manages its environmental initiatives diligently in ensuring low environmental footprint at all stages of its production lines through recycling process and managing its waste products in an effective and efficient manner.

1) Energy

At the same time, the Group is striving towards a more efficient sustainable management strategy in the use of its energy resources to reduce its carbon footprint. The Group has introduced the “Lights Off” campaign where the lightings are kept to a minimum during non-working hours; and installation of motion detector lighting system within certain office areas are just some of the initiatives implemented. Air- conditioners temperature in the office areas are preset to no lower than 25°C degrees is also another effort put in place to reduce energy usage.

2) Waste Management Stringent policy on waste management and recycling process were introduced which have resulted in a significant reduction of waste generated from the production areas.

3) Noise and Air Pollution The Group has engaged consultants to review the noise and air pollution generated from the production floor in ensuring that these pollution is within the allowable range, and in fact kept below the minimum statutory requirement levels.

C) Social Aspect

1) Product Quality and Food Safety System

Based on the World Health Organisation (WHO) data, an estimated 1 in 10 people in the world fall ill after consuming contaminated food. A substantial number of people die every year due to unsafe food intake. This has created a vicious cycle of emergence of diseases and malnutrition scenario which in turn affect the quality of lifestyle. The impact of contamination affects the whole class of society from infants, young children, to the elderly and the sick.

All these could have been averted if responsible food safety initiatives are introduced. Being a food-based producer, The Group takes seriously this issue and has put in much efforts to the implementation of strict hygienic conditions which are in compliant with the relevant regulatory bodies such as the Good Manufacturing Practice (“GMP”) and Hazard Analysis and Critical Control Points (“HACCP”). The Group is proud to have employed high standard of product quality and food safety systems in the manufacture of its products.These processes are constantly adhered to with the recent certification of ISO 22000 in October 2018, and in continual effort to ensure the processes constantly adhered to the regulation and food safety requirements, quality controls are put in place from point of receiving the purchased materials, to processing in production lines, and releasing of finished goods from warehouse. In-house facilities provided storage of materials with designed allocation for ‘sensitive’ and ‘non-sensitive’ ingredients, while packaging materials stored according to categories with inspection conducted prior to release for production use. As assurance step to food safety, production areas are designed with segregation between processing sections, and a ‘clean room’ is constructed with controlled airflow with monitored environment climate to minimize thus eliminate risk of cross-contamination. All finished goods are then packed and properly placed at allocated storing area in manufacturing plants before transferred to finished goods warehouse before released for consignment. Machineries and monitoring devices are scheduled for routine service and calibration to ensure well-operating and production of finished goods is controlled within specification, with process controls monitored to avoid any risk of product faulty and cross contamination in-line. The assurance of Good Hygiene Practice (“GHP”) among workers is supervised with facility equipped with hand-washing stations, while compliance of personal protective attire is monitored during operation.

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2) Employees’ welfare

The Group strongly believes that the employees are its greatest assets, and is the heart of the Group. To achieve the mission and vision of the Group, the employees demonstrated their undivided dedication, loyalty, leadership, integrity and team efforts.

The Group provides equal opportunities for employment advancement programme in an effort to build long and lasting relationship between the employer and employees. Various human resources initiatives have been introduced to ensure that the employees’ well-being is taken care of :- a) Medical benefits, group hospitalisation and insurance coverage; b) Long service awards are given to staff in honour of their dedication, commitment and hard work; and c) Employees share option scheme (“ESOS”) was implemented to instil sense of ownership amongst the staff.

The Group does not discriminate its staff and employees based on race, ethnicity, religion, cultural background or gender. 3) Workplace

The Group has created a safe, healthy and comfortable working environment for its employees. Some of the initiatives undertook by the Group in this area are as follows :-

a) 24 hours surveillance to ensure a safe workplace; b) Employees working in the production areas are required to put on their safety gears at all times to avoid injuries in the event of accidents in their respective workplace; c) Periodic briefing sessions for the employees on topics of safety procedures, precautionary actions and healthcare issues; d) Adhering to the Occupational, Safety and Health management system standard strictly; e) Ensuring the working place is free from any form of physical and verbal abuses; and f) Introduction of Whistle Blowing Policy for employees to report on any issues they encounter from either their superiors as well as subordinates.

4) Training and Development

The Group ensures that all employees are given sufficient training (both on-the-job training as well as offsite training sessions). This is the commitment from the Group to ensure a sound human resources development programme for its staff force and employees. The Human Resource Department plays a pivotal role in this area, whereby it has periodic dialogues and exchange of ideas with various departments to ensure that appropriate and effective training programmes are tailormade for the employees to meet the requirements for their respective work environment. Amongst some of the initiatives undertaken on training and development for the staff force are :-

a) All new employees are mandatorily required to undergo an induction programme to ensure familiarity with the company; b) On-going assessment to examine the needs for training, and designing of customised training programmes to ensure sufficient training to meet with the ever-changing environment; c) Employees’ training programmes are not only to improve their skillsets in one particular areas, but also with an expanded horizon. This is to improve the mobility of the employees within the Group.

5) Corporate Social Responsibility (“CSR”)

The Group recognises its obligations as a responsible corporate citizen, and the need to develop the community sustainability programme. As part of the CSR programme, the Group has participated in a number of charitable programmes during the Financial Year, such as the visit by certain Directors and employees to the Kiwanis Old Folks Home and a visit to a hospital’s Orphanage and Children Wards.

The Group is also participating actively in monetary contribution to local charities and community functions, as well as Sponsorship Programmes.

The Group recognises the importance of developing a comprehensive sustainability commitments, particularly in the areas of economic, environmental and social performance. Moving forward, the Group will further improve its sustainability initiatives while at the same time building a strong, sustainable and resilient business.

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CORPORATE GOVERNANCE OVERVIEW STATEMENT

The Board of Directors (“the Board”) of London Biscuits Berhad recognises the importance of the principles and recommendations as set out in the Malaysian Code on Corporate Governance 2017 (“MCCG 2017”). The Board is fully committed in maintaining high standards of corporate governance practices throughout the Group to protect and enhance long-term shareholders’ value and all stakeholders’ interests. The Board is pleased to present the following Corporate Governance Overview Statement (“CG Statement”) that describe the extent of how the Group has applied and complied the three (3) principles which are set out in the MCCG 2017 throughout the financial year under review:-

(a) Principle A: Board leadership and effectiveness;

(b) Principle B: Effective audit and risk management; and

(c) Principle C: Integrity in corporate reporting and meaningful relationship with stakeholders.

This CG Statement is prepared in compliance with the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) and to provide an overview of the extent of compliance with the three (3) Principles as set out in the MCCG 2017.

This CG Statement should also be read together with the Corporate Governance Report 2018 of the Company which is available on the Company’s corporate website at www.londonbiscuits.com.my.

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS

Roles and Responsibilities of the Board

The Board is primarily responsible to lead and control the Group’s overall strategic plans for business performance, overseeing the proper conduct of the businesses, risk management, internal control, management information systems, succession planning and communications with shareholders and stakeholders. These responsibilities include charting the strategic direction of the Group and supervising its affairs leading to the Group’s success while ensuring compliance with the relevant laws, regulations, guidelines and directives.

The Board is guided by its Charter which outlines its roles, powers, duties and functions. This allocation of responsibilities reflects the dynamic nature of the relationship necessary for the Group to adapt to changing circumstances. The Board Charter is available at the Company’s website at www.londonbiscuits.com.my.

All members of the Board exercise due diligence and care in discharging their duties and responsibilities to ensure that high ethical standards are applied through compliance with relevant rules and regulations, directives and guidelines, in particular the MCCG 2017 issued by Securities Commission Malaysia and the requirements of Bursa Securities. The Board members are also guided by the Company’s Code of Conduct and Ethics at all times. The Code of Conduct and Ethics is published at the Company’s website at www.londonbiscuits.com.my.

A capable and experienced Senior Management team is put in charge to oversee the day-to-day operations of the Group. However, all key matters such as approval of quarterly and annual financial results, acquisitions and disposals, investments, as well as material agreements are reserved for the Board.

In line with the practice of good corporate governance, the Board has established and implemented various processes to assist its members in carrying out their roles and responsibilities. The Board’s roles and responsibilities include the following:-

(a) Promote good corporate governance culture within the Group which reinforces ethical, prudent and professional behaviour;

(b) Review, challenge and decide on Management’s proposals for the Company and the Group, which includes corporate strategy, business plans and monitor the implementation processes by the Management;

(c) Oversee the resources and operational conducts of the Company and the Group’s businesses, to evaluate and assess Management’s performance to determine whether the businesses are being properly managed;

(d) Identify and understand the principal risks of the business of the Company and the Group while acknowledging that business decisions may involve the taking of appropriate risks;

(e) Set the risk appetite within which the Board expects Management to operate and to ensure that there is an appropriate risk management framework to identify, analyse, evaluate, manage and monitor significant financial and non-financial risks;

(f) Ensure that the Senior Management has the necessary skill set and experience, and there are foolproof measures in place to provide for the orderly succession plan of Senior Management;

(g) Ensure that the Company adopts an effective communication strategy to enable effective communications with shareholders and relevant stakeholders;

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CORPORATE GOVERNANCE OVERVIEW STATEMENT (CONTINUED)

(h) Review the adequacy and integrity of the Group’s internal control systems and to ensure there is a sound framework for internal control and risk management compliance with applicable laws, regulations, rules, directives and guidelines;

(i) Delegate certain responsibilities to the various Board Committees with clearly defined terms of reference to assist the Board in discharging its fiduciary responsibilities;

(j) Ensure that the strategic plans of the Company support long-term value creation, while adhering to statutory regulations on safety and occupational health, and promoting environmental friendly practices; and

(k) Ensure that the integrity of the Company and the Group’s financial and non-financial reports are preserved at all times.

To ensure the effective discharge of its functions and responsibilities, the Board has delegated specific responsibilities to the following Committees:-

(a) Audit Committee;(b) Nominating Committee;(c) Remuneration Committee; and(d) Corporate Administration and Compliance Committee.

The duties and responsibilities delegated to the various Committees are set out in the Terms of Reference of each of the Committees as approved by the Board. The Board retains full responsibility for the direction and control of the Company and the Group.

Board Composition and Balance

The Board currently has six (6) members, comprising one (1) Non-Independent Non-Executive Chairman, one (1) Non-Independent Executive Director, one (1) Non-Independent Non-Executive Director and three (3) Independent Non-Executive Directors. The profile of each of the Directors is set out in the “Directors’ Profile” of Volume 1 of this Annual Report.

The current board composition complies with the MMLR which requires at least half of the Board members to be represented by Independent Directors.

The Board of Directors comprises members with a diverse background of knowledge, experience, skills and expertise including financial, legal, taxation, secretarial and business management which are essential for the successful direction of the Group.

The Chairman and Group CEO

The roles of the Chairman, Dato’ Sri Liew Kuek Hin and Group Chief Executive Officer, Dato’ Sri Liew Yew Chung, are separated with clear defined duties to ensure balance of power and authority within the Group. The Chairman, who holds a non-executive position, is primary responsible for the leadership of the Board.

The Group Chief Executive Officer manages the day-to-day business operations and implements the Board’s decisions and policies. The Group Chief Executive Officer leads the senior management team of the Group to exercise and implement the decisions of the Board, manages the day-to-day operations, as well as manages the resources and inherent risks in order to achieve the objectives and goals set forth by the Board.

Qualified and Competent Company Secretary

The Board is assisted by suitably qualified and competent Company Secretaries, whom are the members of recognised professional bodies. The Company maintains two (2) named Company Secretaries namely, Ms. Hoh Leong Ching, a member of the Malaysia Institute of Corporate Secretarial and Administrative (MAICSA) and Mr. Hoh Chee Mun, a member of Malaysia Institute of Accountants (MIA).

The Company Secretaries play an advisory role to the Board in relation to the Group’s constitution, policies, compliances to the relevant regulatory, codes and guidelines. Any updates and new advisory notes would be highlighted to the Board during Board Meetings or circulated to the Board members via emails. This is to ensure that the Board members are kept up-to-date with new regulations, rules, laws, so that they are in compliance with such new regulatory requirements imposed by Bursa Securities and other authorities.

In order to discharge their duties more efficiently and effectively, the Company Secretaries from time to time attended seminars, workshops or conferences which are deemed relevant to them. This will equiped them with knowledge of latest regulatory frameworks and requirements, and in turn they are able to discharge their duties and responsibilities effectively.

The Company Secretaries attended all the Board, Committees Meetings and AGM to ensure that the meeting procedures were carried out in accordance to proper procedure. The procedures and conclusion of all the Board Meetings and Committees Meetings were minuted and approved by the Chairman of Meetings accordingly.

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Independent Directors

The assessments on the Independence of all the Independent Directors are carried out annually by the Nominating Committee and the results of these assessments have confirmed their independence.

The Board takes cognisant that Practice 4.2 of the MCCG 2017 recommendation that the tenure of an Independent Director should not exceed a cumulative term of nine (9) years. Upon completion of the nine-year tenure, the Independent Director may continue to serve on the Board subject to his/her re-designation as Non-Independent Director. In the event such director is to be retained as an Independent Director, the board must first produce the justification of such recommendation and seek shareholders’ approval during an AGM. If the board continues to retain an Independent Director after the said director serves a cumulative of twelfth (12) years, shareholders’ approval at the AGM must be sought annually through a two-tier voting process to retain the said director as an Independent Director.

Presently, Dato’ Paduka Cheong Siew Kai, Mr. Huang Yan Teo and Mr. Leslie Looi Meng, are the Independent Non-Executive Directors of the Company who have each served the board for more than twelve (12) years.

The Nominating and Remuneration Committees and the Board have assessed the independence of Dato’ Paduka Cheong Siew Kai, Mr. Huang Yan Teo and Mr. Leslie Looi Meng and recommend that they be re-appointed as Independent Non-Executive Directors. Both the Nominating and Remuneration Committees believe that they will continue to discharge their duties diligently and provide independent and objective judgements during board deliberations. Their re-appointments will be put forth for voting in the coming AGM of the Company through a two-tier voting process.

Supply and Access to Information

The Board recognises the process of decision making is highly dependable on the quality of information furnished. As such, the Board has unrestricted access to any information pertaining to the Company and the Group at all times, including access to the Senior Management and the Company Secretaries. All Directors have been granted full access to all relevant information prior to each the Board and Committees Meetings, in order for them to have comprehensive understanding of the issues to be deliberated upon or seek clarification, if any.

The Board is regularly updated on new regulations and regulatory requirements relating to their duties and responsibilities as Directors. If necessary, the Board may seek external professional advice in the areas of legal, financial, governance, in order to equip them with sufficient information and knowledge for them to discharge their duties and responsibilities in matters which are being deliberated. In such circumstance, the Company shall undertake to bare these professional fees accordingly.

Board Charter

The Company has adopted a Board Charter as a point of reference for board activities. It defines clearly the respective roles, responsibilities and authorities of the board of directors (both individually and collectively), the Board Committees and Management. It also sets the general direction of the Company.

The Board Charter is subject to review by the Board every three (3) year or on ad-hoc basis when the need arises. This is necessary to ensure its relevance and to remain consistent with the Board’s objectives and responsibilities in accordance with new regulations that may have come into force. The Board Charter is available on the Company’s website at www.londonbiscuits.com.my.

Code of Ethics and Conduct

The Company establishes appropriate standards of business conduct and ethical behaviour as a guide to ensure that the Directors and all employees of the Group discharge their respective duties and responsibilities with the highest professionalism and trustworthiness in order to uphold good corporate integrity.

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

Whistleblowing Policy

The Group has adopted the Whistleblowing Policy which is designed to enable any Director, officer, employee and members of the public to report instances of unethical, unlawful or undesirable conduct on a confidential basis without fear of intimidation or reprisal.

Appropriate action will be taken against any party(ies) found guilty of any wrong-doings, while the identity of the information provider shall be kept confidential at all times.

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Sustainability

The Group is committed towards sustainable development, employees’ welfare, environment as well as the community’s responsibilities which would be an integral part of the Group while carrying out its business and operations.

The Group is committed to the continuous efforts in maintaining a delicate balance between its sustainability plan and the interest of the shareholders and stakeholders. The Group’s sustainability practices for the financial year are disclosed in the Sustainability Statement of Volume 1 of this Annual Report.

Board Diversity

The Board recognises that diversity is an essential element contributing to the sustainable development of the Group and does not discriminate on the basis of ethnicity, age, gender, nationality, political affiliation, religious affiliation, marital status, education background or physical ability. The Group does not establish any specific target in the composition in terms of gender, age or ethnic of its Board members or members of Senior Management.

The Board acknowledges the recommendation of MCCG 2017 on gender diversity. It believes that the overriding factors in selection of a Director must be based on individual merits such as skill, experience, competency and wealth of knowledge, while taking into consideration diversity of the Board. The Board is satisfied with the composition of its current members and is of the view that with the current mix of skills, knowledge, experience and strength, the Board is able to discharge its duties effectively and in a competent manner.

Board Meetings

The Board meets every quarter to consider all matters relating to the financial results, overall controls, business performance and strategy of the Group. Additional meetings will be convened, when necessary, for urgent and important decisions which need to be concluded upon, in between the scheduled meetings.

The relevant reports (including Minutes of meetings), meeting agenda and Board papers are distributed to all Directors in advance to allow the Directors sufficient time to peruse and prepare themselves for effective discussion and decision making process during the meetings.

During the financial year under review, the Directors’ attendance at the Board Meetings were as follows:-

Name Designation No. of Board Meetings Attended

Dato’ Sri Liew Kuek HinChairman / Non-Independent Non- Executive Director

5/5

Dato’ Sri Liew Yew Chung Group Chief Executive Officer 5/5

Dato’ Liew Yew Cheng Non-Independent Non-Executive Director 5/5

Dato’ Paduka Cheong Siew Kai Independent Non-Executive Director 3/5

Huang Yan Teo Independent Non-Executive Director 5/5

Leslie Looi Meng Independent Non-Executive Director 5/5

Datin Sri Lim Yook Lan (Resigned on 26 September 2018)

Non-Independent Non-Executive Director 4/5

Liew Yet Mei(Resigned on 26 September 2018)


Dato’ Liew Yet Lee(Resigned on 26 September 2018)


The Board is satisfied with the level of commitment given by the Directors towards fulfilling their responsibilities as Directors. This, amongst others, is evidenced by the attendance record of the Directors at Board meetings.

The minimum 50% attendance requirement as stipulated in the MMLR has been complied with.

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Directors’ Training

The Directors and representatives of the Company continually attended relevant training programmes and seminars to keep themselves abreast with the various issues facing the changing business environment within which the Group operates. These sessions have further enhanced their knowledge and professionalism in discharging their fiduciary duties to the Group.

During the financial period and up to the date of this Statement, the briefing, seminars and conferences attended by the Board Members includes:-

Directors Seminars / Conferences

Dato’ Sri Liew Kuek Hin • Moving towards Sustainability Development Seminar• Embracing the new financial instrument standards (MFRS 9 and MFRS 15) Seminar

Dato’ Sri Liew Yew Chung • Moving towards Sustainability Development Seminar• Embracing the new financial instrument standards (MFRS 9 and MFRS 15) Seminar

Dato’ Liew Yew Cheng • Moving towards Sustainability Development Seminar• Embracing the new financial instrument standards (MFRS 9 and MFRS 15) Seminar

Dato’ Paduka Cheong Siew Kai • Moving towards Sustainability Development Seminar• Embracing the new financial instrument standards (MFRS 9 and MFRS 15) Seminar• MIA International Accountants Conference 2017• Seminar Percukaian Kebangsaan 2017• The Companies Act, 2016 – Addressing the Transitional Issues• Malaysian Tax Conference 2018• Seminar on “Introduction to MBRS”• Seminar on “MBRS for Preparers – Financial Statements”• National Tax Conference 2018

Huang Yan Teo • Moving towards Sustainability Development Seminar• Embracing the new financial instrument standards (MFRS 9 and MFRS 15) Seminar

Leslie Looi Meng • Moving towards Sustainability Development Seminar• Embracing the new financial instrument standards (MFRS 9 and MFRS 15) Seminar

Datin Sri Lim Yook Lan(Resigned on 26 September 2018)

• Moving towards Sustainability Development Seminar• Embracing the new financial instrument standards (MFRS 9 and MFRS 15) Seminar





Board Committees

To ensure the effective discharge of its fiduciary duties and responsibilities more effectively, the Board delegates specific responsibilities to the Board Committees established by the Board.

All Board Committees function within and in accordance with clearly defined terms of reference which were approved by the Board from the onset. These Board Committees have unrestricted authority to examine issues and submit reports of their findings to the Board. As the Board Committees have no authority to make decisions on matters reserved for the Board, the recommendations would then be deliberated by the Board as a whole for decision making.

(a) Nominating Committee The Nominating Committee is empowered by the Board to recommend to the Board the right candidates with the necessary skills, experiences and competencies to be filled in the Board and Board Committees, re-election and reappointment of Directors. The Nominating Committee assesses the effectiveness of the Board as a whole, the Board Committees and the contribution of all individual Directors on an annual basis. The Terms of Reference of the Nominating Committee is available at the Company’s website as www.londonbiscuits.com.my. The Board through the Nominating Committee, conducted the annual assessment for 2018 on effectiveness of the Board, Board Committees and individual Directors. The annual review was carried out based on specific pre-set criteria, covering areas such as Board composition and structures, roles and responsibilities of the Board and the Committees, and qualities and contribution of individual Directors.

For individual Directors, they are provided with questionnaires to carry out the assessments with absolute anonymity and are based on their competence, capability, time commitment, integrity, participation and contribution in Board and in the Committees. These results are then tabulated and presented to the Nominating Committee for review and recommendation to the Board for notation.

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There are three (3) members in the Nominating Committee, of whom two (2) are Independent Non-Executive Director. The Chairman of this Committee is Mr. Huang Yan Teo, an Independent Non-Executive Director who assumed the chairmanship role with effect from 26 September 2018 upon the resignation of Ms. Liew Yet Mei. The Nominating Committee met once during the Financial Year. Details of the members’ attendance are as follows:-

Members of Nominating Committee Designation Number of Meetings Attended

Mr. Huang Yan Teo(Redesignated on 26 September 2018)

(Chairman) 1/1

Mr. Leslie Looi Meng Member 1/1

Dato’ Liew Yew Cheng (Appointed on 26 September 2018)

Member 0/0

Ms. Liew Yet Mei (Resigned on 26 September 2018)

(Chairman) 1/1

The following issues were reported to the Board during the Nominating Committee meeting held during the financial year:

• reviewed and assessed the existing Board structure, size, balance and composition, and the effectiveness and performance of the Board and Board Committees, members of the Board and the independence of the Independent Directors;

• assessed and recommended the proposed re-election of retiring Directors at the forthcoming Annual General Meeting of the Company;

• reviewed the term of office and performance of the Audit Committee and each of its members, and assessed whether the Audit Committee and its members have carried out their duties in accordance with their Terms of Reference; and

• review of the retention of Independent Directors whose tenure have exceeded twelve (12) years.

(b) Remuneration Committee

The Company’s policy on the Directors’ remuneration is to attract, retain and motivate Directors to effectively oversee the business of the Group. The Remuneration Committee is primarily responsible for reviewing and recommending the appropriate level of remuneration packages for the Board and key Senior Management staff. It is nevertheless the ultimate responsibility of the entire Board to approve the remuneration of Directors.

During the financial year, three (3) new members were appointed to replace the outgoing members. The new committee lineup includes two (2) Independent Non-Executive Directors, namely Mr. Leslie Looi Meng who also acts as the Chairman of the Committee, and Mr. Huang Yan Teo. The third member of the Committee is Dato’ Liew Yew Cheng, who is the Company’s Non- Independent Non-Executive Director. With the Committee majority helmed by Independent Non-Executive Directors shall instill greater transparency in reviewing and recommending the remuneration packages of Directors, in particular the Executive Directors. The Director whom remuneration package is being reviewed shall abstain in deliberation and voting on the decision.

During the financial period under review, the Remuneration Committee met once with full attendance of its Members and has carried out the following key activities:

(i) set, review, recommend and advise on elements of the remuneration such as reward structure, fringe benefits and other terms of employment of Directors;

(ii) advise the Board on the performance of the Directors, and an assessment of their entitlements to performance related pay; and

(iii) review the history of and proposals for the remuneration package of the Board’s Committees.

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Details of the members’ attendance are as follows:-

Members of Remuneration Committee Designation Number of Meetings Attended

Mr. Leslie Looi Meng (Chairman) (Appointed on 26 September 2018) Chairman 0/0

Dato’ Liew Yew Cheng (Appointed on 26 September 2018) Member 0/0

Mr. Huang Yan Teo (Appointed on 26 September 2018) Member 0/0

Dato’ Liew Yet Lee (Chairman) (Resigned on 26 September 2018) Chairman 1/1

Dato’ Sri Liew Kuek Hin (Resigned on 26 September 2018) Member 1/1

Ms. Liew Yet Mei (Resigned on 26 September 2018) Member 1/1

The Board believes that appropriate and competitive remuneration is crucial to attract, retain and motivate Directors of the necessary calibre, expertise and experience to lead the Group. In line with this philosophy, remuneration for the Executive Directors is aligned to individual and the Company’s performance. For Non-Executive Directors, the fees are set based on the responsibilities shouldered by the respective Directors. Individual Directors do not participate in determining their own remuneration package.

The remuneration of Executive Directors is made up of basic salaries, monetary incentives and fringe benefits; and is linked to their personal performance targets. Salaries for Executive Directors consist of both fixed (i.e. base salary) and variable (performance-based incentive) remuneration components. The remuneration levels of Executive Directors are structured to enable the Company to attract and retain the most qualified Executive Directors. The Company may provide competitive benefits to Executive Directors, such as a fully expensed car or cash alternative in lieu of car, company driver, fuel expenses, private medical insurance and life insurance. Allowances relating to business expenses (i.e. entertainment and travel) incurred are reimbursed such that no additional compensation is given to the Executive Directors.

The remuneration of Non-Executive Directors is made up of Directors’ fees, meeting allowances and other benefits. The level of remuneration for Non-Executive Directors shall reflect the experience and level of responsibilities undertaken by the Non-Executive Director concerned. The remuneration of a Non-Executive Director shall and is not based on commission, percentage of profits, or turnover. Non-Executive Directors are not entitled to receive performance-based bonuses. The remuneration of Non-Executive Directors is reviewed by the Remuneration Committee and Board annually.

The aggregate remuneration of Directors paid or payable by the Company and the Group for the financial period under review were as follows:-

Company Group

Name of DirectorsFees (RM

Salaries and Bonus

(RM)

Benefits-in-kind(RM)

Others (RM)

Fees (RM)

Salaries and Bonus

(RM)

Benefits-in-kind(RM)

Others(RM)

Executive Director

Dato’ Sri Liew Yew Chung

4,000 1,200,000 43,368 223,000 4,000 1,200,000 43,368 223,000

Non-Independent Non-Executive Director

Dato’ Sri Liew Kuek Hin 16,000 1,200,000 113,070.50 225,200 16,000 1,200,000 113,070.50 225,200

Dato’ Liew Yew Cheng 5,000 120,000 16,000 - 5,000 120,000 16,000 -

Datin Sri Lim Yook Lan (Resigned on 26 September 2018)

29,000 - - - 29,000 - - -


36,000 - 17,400 - 36,000 - 17,400 -


8,500 410,000 23,950 - 8,500 410,000 23,950 -


Dato’ Paduka Cheong Siew Kai

27,000 - - - 27,000 - - -

Huang Yan Teo 40,000 - - - 40,000 - - -

Leslie Looi Meng 40,000 - - - 40,000 - - -

TOTAL 205,500 2,930,000 213,788.50 448,200 205,500 2,930,000 213,788.50 448,200

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The top five Management of the Company in each remuneration band are as follows :-

Range of Remuneration Number RM200,001 to RM250,000 4 RM250,001 to RM450,000 - RM450,001 to RM500,000 1

(c) Audit Committee

The composition of the Audit Committee, its function and a summary of its activities are set out in the Audit Committee Report of Volume 1 of this Annual Report.

(d) Corporate Administration And Compliance Committee (“CACC”)

The CACC was established on 26 September 2018 and the CACC works hand-in-hand with the senior management of the Company to review on management’s proposals and monitor the implementation of the Company’s policies. The CACC was administered in accordance with the Terms of Reference of the CACC.

The Members of the CACC as follow:

• Mr. Leslie Looi Meng (Chairman) • Mr. Huang Yan Teo • Dato’ Sri Liew Yew Chung

(e) ESOS Committee

The formation of the Employees Share Option Scheme (“ESOS”) Committee was on an ad-hoc basis. The ESOS Committee was originally set up to manage the policy and administrative of an ESOS which was implemented on 2 January 2014. The ESOS would have been be dissolved upon the expired or the termination of the ESOS. Nonetheless, as the ESOS was extended to 1 January 2024, hence the Board decided to extend the tenure of this Committee to coincide with the lifespan of the ESOS.

The ESOS Committee was administered in accordance with the objectives and regulations set out in the ESOS Policy and By- Laws. It recommend the rules and regulations or impose such terms and conditions in such manner as it deems fit and with such powers and duties which are conferred upon by the Board.

The ESOS Committee’s members are as follows:-

• Mr. Wong Kind Look (Chairman) • Mr. Lim Heng Min • Mr. Kong Ching Ho

The ESOS Committee did not meet during the financial year.

PRINCIPLE B : EFFECTIVE AUDIT AND RISK MANAGEMENT

Audit Committee

The Audit Committee’s main function is to assist the Board of Directors in discharging its statutory duties and responsibilities relating to risk management and accounting and reporting practices of the company. The Audit Committee is also tasked to oversee issues relating to compliance with the relevant rules and regulations governing listed companies. The Board of Directors relies heavily on the Audit Committee in providing advice in the areas of financial reporting, external audit, risk management, internal control environment and internal audit process, review of related party transactions as well as situations involving conflict of interest.

The Audit Committee is given full and direct access to both the internal and external auditors who, in turn, have access at all times to the Chairman of the Audit Committee. The composition, attendance of meetings and summary of activities of the Audit Committee during the financial year are as disclosed in Audit Committee Report of the Annual Report.

The Terms of Reference of the Audit Committee is available at the company website at www.londonbiscuits.com.my.

The Audit Committee is chaired by an Independent Director who is distinct from the Chairman of the Board. The Audit Committee met six (6) times during this financial year. As a normal practice, the Audit Committee meetings were held prior to the Board meetings. This was to ensure that all critical issues highlighted can be brought to the attention of the Board on a timely manner. The minutes of the Audit Committee meetings are tabled to the Board for their attention and for further actions, where appropriate.

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Assessment of External Auditors

Through the Audit Committee, the Group has established a transparent and appropriate relationship with the Group’s External Auditors. From time to time, representatives of the external auditors were invited to present the Audit Committee on specific issues arising from the annual audit of the Group. The External Auditors has confirmed that they have been independent while carrying out their audit engagement in accordance with the terms of all relevant professional and regulatory requirements.

In line with Practice 8.3 of the MCCG 2017, the Audit Committee has assessed the suitability, objectivity and independence of the External Auditor. The assessment is conducted on yearly basis by the Audit Committee, using the prescribed External Auditors Evaluation Form, where the external auditors were evaluated based on their competence, adequacy of experience and resources, quality of the audit performances, independence and objectivity, reasonableness of audit fees and comparison of audit and non-audit fees.

The Audit Committee, as part of its review exercise, has obtained assurance from the External Auditors confirming that the latter have in place the policy of mandatory rotation for Signing Partners of an audit engagement every five (5) years to ensure objectivity, independence and integrity of the audit. The External Auditors are also required to declare their independence throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements.

The Audit Committee was satisfied with the performance, suitability and independence of the External Auditors of the Company based on the quality of services and sufficiency of resources they provided to the Group, in terms of the firm and the professional employees assigned to the audit.

Whistleblowing Policy

The Board is committed to maintaining the highest standard of ethical and legal conduct within the Group. In line with this commitment and in order to enhance good corporate governance and transparency, a Whistleblowing Policy is adopted with the aim to provide an avenue for raising concerns related to possible improprieties in matters of financial reporting, compliance and other malpractices at the earliest opportunity, in an appropriate manner and without fear of retaliation.

The Whistleblowing Policy also provides the contact via email address available at the Company’s website at www.londonbiscuits.com.my, should any employees or stakeholders be in doubt of the Management’s independence and objectivity on the concerns raised.

Risk Management and Internal Control

The Directors are mindful of their responsibilities in relation to the maintenance of a sound risk management and internal controls system which provide reasonable assessment and review of the Company’s effectiveness to safeguard shareholders’ investment and Group’s assets. The Board is continuously reviewing the adequacy and improving the integrity of the system of risk management and internal controls.

The Group has in place an on-going process which lays the foundation for effective control framework in identifying, evaluating and managing the principal risks of the Group in a proactive manner.

The Internal Audit Department undertakes regular and systematic reviews on system of internal control and governance to ensure reasonable assurance that such system operates satisfactorily and effectively within the respective subsidiaries of the Group. The Internal Audit Department reports to the Audit Committee on a quarterly basis. However, the frequency of such reports can increase if circumstances arise.

PRINCIPLE C : INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS

Communication with Stakeholders

The Company places great emphasis on the importance of timely and equitable dissemination of information to the stakeholders. The Company has a number of formal channels for effective dissemination of information to the stakeholders particularly through the annual report, announcements to Bursa Malaysia Securities Berhad, Company’s website and investor relations programmes.

The Annual Report and quarterly reports are effective channels to disseminate the Group’s activities and financial performance to its shareholders. The Company also maintains a website at www.londonbiscuits.com.my through which shareholders and stakeholders can easily gain access to information about the Group and historical announcements made by the Company.

To maintain a high level of transparency and to effectively address any issues and concerns, the Group has a dedicated electronic mail, i.e. [email protected], to which shareholders and stakeholders can raise their requests, queries and concerns directly to the relevant party within the Company.

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Conduct of General Meetings

The Company’s AGM is the principal forum for dialogue with the shareholders, whereby the Directors would be available to respond to queries and concerns. The External Auditors are also present at the meeting to provide their professional and independent clarifications on queries which may be raised by any shareholders.

Shareholders are encouraged to attend these general meetings of the Company. Shareholders are notified and provided with the notice of AGM at least twenty eight (28) days prior to the date of meeting and the notice of the meeting would be advertised at the major national newspapers.

Each shareholder could vote in person or by appointing a proxy or proxies to attend and vote on his/her behalf. Any Special Business included in the Notice of the AGM would be accompanied by an explanation of the effects of the proposed resolutions. Shareholders are given the opportunity to participate in the question and answer session on the proposed resolutions and the operations of the Group prior to the voting process. Separate resolutions would be prepared for different transactions and the outcome of the resolutions voted upon would be declared by the Chairman during the AGMs and subsequently announced to Bursa Securities on the same day after the Meetings.

Poll Voting

In accordance with Paragraph 8.29A of the Listing Requirements, all resolutions passed by the shareholders at the 36th AGM held on 30 March 2018, were voted by way of a poll. The poll voting procedures were briefed by the Company Secretary before the voting process takes place, while the process and results of the poll voting were verified by an independent scrutineer. The Company will ensure that all the resolutions to be tabled at the forthcoming 37th AGM be carried out by way of poll voting.

This Report was made in accordance with a resolution of the Board dated 24 January 2019.

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AUDIT COMMITTEE REPORT

The Audit Committee (“AC”) was established on 27 November 2001 to oversee and advise the Board in the areas of financial reporting, external audit, risk management, internal control environment and internal audit process, review of related party transactions as well as conflict of interest situations of the Company and its subsidiaries (“the Group”).

1. COMPOSITION OF THE AUDIT COMMITTEE

The AC comprises of the following members, majority of whom are Independent Non-Executive Directors:-

Leslie Looi Meng Chairman, Independent Non-Executive Director

Huang Yan Teo Independent Non-Executive Director

Dato’ Liew Yew Cheng (Appointed on 24 December 2018) Non-Independent Non-Executive Director

Dato’ Sri Liew Kuek Hin (Resigned on 26 September 2018) Non-Independent Non-Executive Director

The Independent Non-Executive Director, Mr. Huang Yan Teo is a member of the Malaysian Institute of Accountants and Malaysian Institute of Taxation. All members of the AC are financially literate. The details of the members of the Committee are contained in the “Directors’ Profile” as set out in Volume 1 of this Annual Report.

The Company Secretaries of the Board, Ms. Hoh Leong Ching and Mr. Hoh Chee Mun, are also the Secretaries of the Committee.

2. TERMS OF REFERENCE

The Terms of Reference of the AC are available at the Company’s website at www.londonbiscuits.com.my.

3. ATTENDANCE

The AC convened five (5) meetings during the financial year ended 30 September 2018. The details of the attendance of the members were as follows:-

AC Members

Date of Meetings

28.11.2017 04.01.2018 27.02.2018 30.05.2018 28.08.2018 Total

Leslie Looi Meng √ √ √ √ √ 5/5

Huang Yan Teo √ √ √ √ √ 5/5

Dato’ Sri Liew Kuek Hin (Resigned on 26 September 2018)

√ √ √ √ √ 5/5

Dato’ Liew Yew Cheng N/A N/A N/A N/A N/A N/A

The Notices of Meeting, Minutes of the Committee Meetings, Reports and Papers were distributed to all the members of the AC at least seven (7) days in advance prior to the respective meetings, to allow the members to have sufficient time to peruse these documents for effective discussion and notation.

The Executive Director and Group General Manager – Accounts & Finance Division were invited to the AC Meetings, to report on the overall operations of the Group. The External Auditors were also invited to attend the AC’s Meeting as and when necessary.

4. FUNCTIONS AND DUTIES

The activities carried out by the AC during the financial year included the followings:-

a) Financial Reporting

- Reviewed and discussed quarterly results and annual financial statements of the Group, prior to submitting the same for the approval by the Board, which particularly in relation to:- • Compliance with accounting standards and regulatory requirements; • Changes and implementation of major accounting policies; and • Significant matters highlighted including financial reporting issues, significant judgements made by management, significant and unusual events or transactions, and how these matters are addressed.

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AUDIT COMMITTEE REPORT (CONTINUED)

(b) Internal Audit

- Reviewed and approved the Internal Audit Plans for the year 2017/2018 proposed by the Internal Auditors;

- Reviewed the quarterly internal audit reports, the recommendations of the audit findings, shortcomings, and actions taken by the Management to implement the recommendations; and

- Reviewed the adequacy of the scope, functions, competency and resources of the Internal Audit functions.

(c) External Auditors

- Reviewed and discussed the annual audited financial statements of the Group with the External Auditors prior to submission to the Board for its consideration and approval;

- Reviewed with the External Auditors without the presence of the Executive Board members and Management, and to discuss issues arising from their reviews regarding the financial matters, and their evaluation of the system of internal controls;

- Reviewed and discussed with the External Auditors their scope of work and Audit Memorandum Planning for the financial year in relation to its independences, audit process, consideration of fraud in audited financial statements and risk assessment; and

- Reviewed and discussed with the External Auditors on the personnel involved in the audit works and proposed audit fee, thereafter submitted to the Board for its approval.

(d) Recurrent Related Party Transactions (“RRPTs”)

- Reviewed the transaction limit of the RRPTs of a revenue or trading nature on a quarterly basis to ensure compliances to the Mandate approved by shareholders; and

- Reviewed the information, procedures and processes contained in the Shareholders’ Circular in relation to the RRPTs between the Group and the related parties with the Management Team before tabling and recommending the same for Board approval.

(e) Related Party Transactions

- Raised enquiries if there were any related party transactions involved between the Group and Directors or Major Shareholders of the Group.

(f) Other Activities

i. Whistleblowing Policy

Reviewed and updated the Whistleblowing Policy with the Internal Auditors.

ii. Terms of Reference of AC

Reviewed and updated the existing Terms of Reference of the AC to be in line with the requirements of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and Malaysian Code of Corporate Governance 2017.

iii. Statements in Annual Report

Prepared the Report of AC, reviewed the Statement on Corporate Governance and Statement of Risk Management and Internal Control for insertion into the Company’s Annual Report before tabling and recommending for the Board’s approval.

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AUDIT COMMITTEE REPORT (CONTINUED)

5. INTERNAL AUDIT FUNCTION

The Internal Audit Function is carried out by the Group’s in-house Internal Audit Department.

The total costs incurred for the Internal Audit Function in respect of the financial year ended 30 September 2018 amounted to RM13,825. (Financial Period Ended 2017: RM18,950).

The principal activity of the Internal Audit Function is to conduct regular and systematic review of the Group’s system of risk management and internal controls, recommending cost-effective measures to mitigate these risks, enhance operational efficiency and implementation of sound governance processes. The Internal Audit Department reports directly to the AC Chairman.

The AC has full access to the Internal Audit Functions for internal audit purposes. The AC determines the adequacy of the work scope, functions, competency and resources of the Internal Audit Function.

The activities carried by the Internal Audit Function during the financial year ended includes the followings:-

- Conducted audits of the various departments of the Group to be in compliance with internal control procedures;

- Conducted follow-up audits on the implementation of recommendations and Management’s actions taken to improve on the audit findings;

- Reviewed and prepared Annual Audit Plan which is approved by the AC on an annual basis in alignment with the business and environmental risk; and

- Reviewed and updated the Whistleblowing Policy of the Group and recommended to the Committee for its approval before tabling for the Board’s approval.

The internal audit activities have been carried out in accordance with the Internal Audit Plan 2017/2018 which was approved by the AC.

In September 2018, RCA Corporate Services Sdn. Bhd. has been appointed to carry out the Group’s Internal Audit Functions.

This Report was made in accordance with a resolution of the Board dated 24 January 2019.

32

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

1. INTRODUCTION

Pursuant to paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Board of Directors (“the Board”) of London Biscuits Berhad (“the Company”) is pleased to present the Statement on Risk Management and Internal Control which outlines the nature and scope of risk management and internal control of the Company and its subsidiaries (“the Group”) for the financial year ended 30 September 2018.

The Board recognises the fact that the practice of good risk management and internal control is an important process to safeguard shareholders’ investments and the Group’s assets.

2. BOARD’S RESPONSIBILITIES

The Board upholds its overall responsibility for the Group’s system of internal control, including the assurance of its adequacy and integrity, and its alignment with the corporate objectives. The system of internal controls covering the risk management, financial, organisational, operation and compliance.

The Board also affirms that it will continuously improve the process for identifying, evaluating, monitoring and managing the significant risks faced by the Group so as to safeguard shareholders and stakeholders interests. However, in view of the limitation inherent in any system of internal controls and risk management, it should be noted that a system of internal controls and risk management framework are designed to manage the principal risks of the Group rather than to eliminate the risks of failure. As such, the internal control system can only provide reasonable and adequate, but not absolute, assurance against material misstatement of management and financial information or against loss or fraud.

The Board is assisted by the Key Management in implementing the Board’s policies and procedures on risk and control by identifying and assessing the risks faced, and in the design, operation and monitoring of suitable internal controls to manage and control these risks.

3. RISK MANAGEMENT FRAMEWORK

As an integral part of the system of risk management, the Board maintained an ongoing group-wide risk management process in identifying, evaluating and managing the significant risks that could affect the Group’s continued growth as well as achievement of the Group’s business objectives.

Risk management is firmly embedded in the Group’s management systems and its policy is reviewed every year to ensure that it remains relevant and adequate to manage the Group’s risks, which continue to evolve along with the changing nature of business environments. The Board strongly believes that prudent risk management is vital for business sustainability and the progressive enhancement of shareholders’ values.

It is the responsibilities of the key management personnel, Head of subsidiary companies and Heads of Departments to identify, evaluate and monitor risks on an ongoing basis with defined parameters. The deliberation of risks and related mitigating responses are carried out at regular management meetings of the Group. Significant risks are conveyed to the Board at the quarterly scheduled meetings and corresponding internal control measures will be implemented, if necessary.

4. INTERNAL AUDIT FUNCTION

The Group has an Internal Audit Department (“IAD”) to assist the Audit Committee in discharging its responsibilities by reviewing the adequacy and the integrity of the Group’s internal control systems, management information systems and the system on compliance with the applicable laws, regulations, rules and guidelines. The Internal Auditors report directly to the Audit Committee and are independent of the Management and its operations, as the duty to review the adequacy and the effectiveness of the system of internal control of the Group has been delegated by the Board to the Audit Committee and IAD.

The Audit Committee had approved the Internal Audit Plan for the internal control system of the Group. The Internal Auditors carry out continuous internal audit reviews on the business processes that manage the principal risks identified on a quarterly basis.

All findings and recommendations, together with the Management’s actions for further improvements, were submitted to the Audit Committee on a quarterly basis for further deliberation. In assessing the adequacy and effectiveness of the system, the Audit Committee reports to the Board on its activities, audit findings and the necessary recommendations or action plans needed to rectify those issues, if any.

During the financial year ended 30 September 2018, the Internal Auditors have conducted various approved internal audit plans which are in line with the corporate goals of the Group. All internal Auditors’ reports were diligently deliberated by the Audit Committee during its Audit Committee Meetings and recommendations made to the Board and/or the Management was acted upon thereafter.

33

During the financial year, the areas and departments which underwent the audit process by the Internal Auditors are as follows:-

• Account Finance Department• Finish Goods Warehouse• Production Department• Plant Audit• Raw Material Warehouse• Administration Department• IT Division• Payroll & Time Management Department• Raw Material Warehouse – Internal Quality Control

The costs incurred for the aforesaid internal audit function for the financial year ended 30 September 2018 amounted to RM13,825 (financial period ended 2017: RM18,950).

5. KEY ELEMENTS

The key elements of risk management and internal control system are described as follows:-

- Establishment of a conducive control environment in respect of the overall attitude, awareness and the actions of the Directors and Management regarding the risk management and internal control system and its importance to the Group;

- Establishment of the relevant terms of reference and organisational structures to enhance the Group’s ability to achieve its strategies and operational objectives;

- Established of clear and detailed organisational structure to focus on the related reporting responsibilities and accountabilities to ensure clarity of task ownership;

- Board meetings and Management meetings are held regularly to discuss, identify and manage issues pertaining to business operations, financial performance, human resources and business plans;

- Development of comprehensive policies and procedures manuals including Staff Handbook to ensure compliance with internal controls and the relevant laws and regulations, provide guidelines on, and authority limits over various operational, financial, human resources, as well as occupational health and safety issues;

- Internal policies and procedures as set out in the Group’s policies and procedures covering various operational and management aspects are regularly updated to address operational deficiencies and change of risk profile;

- Communications channel such as intranet, email, teleconferencing as effective means of communications and knowledge sharing among the employees;

- A Code of Ethics which defines the ethical standards is introduced to all employees and is implemented at workplace to ensure standardisation of their respective work practice. New employees are briefed on the Group’s culture, organisational structure, job descriptions, responsibilities and key performance index expectations upon joining the Group by their immediate supervisors. Documented copies of the same are filed in their respective personnel files for future references;

- Recruitment of experienced, skilled and professional staff to correspond with the respective job scopes and responsibilities to ensure adequate control is in place;

- Major capital expenditure and assets disposals are appraised and approved by the Board of Directors of the subsidiaries as well as the Board of the holding company to ensure at least two-level approving process;

- All Heads of Departments are required to prepare annual strategic plan, capital and operating expenditure budgets to be aligned with the strategic planning and budgeting process of the Group; and

- The Group’s financial performance and statements will first be reviewed by the Audit Committee, afterwhich will be reported to the Board. Consistency in reporting and comprehensive management reports format is crucial for an effective monitoring of significant variances and deviation from standard operating procedures and budget, if any.

The system of internal control was satisfactory and has not resulted in any material losses, contingencies or uncertainties that would require disclosure in the Annual Report.

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONTINUED)

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STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONTINUED)

6. REVIEW BY THE BOARD

The Board had reviewed the report of the Audit Committee on the findings and recommendations by the Internal Auditors where necessary actions have been taken by the Management.

The Board had received verbal assurance from Group CEO, Dato’ Sri Liew Yew Chung, being the person primarily responsible for the management of the financial affairs of the Company that the Group’s risk management and internal control systems are operated adequately and effectively, in all material aspects, based on the Group’s policies and procedures.

7. OPINION AND CONCLUSION

The Board is pleased to report that there were no major internal control weaknesses identified during the financial year, after considering the system of risk management and internal controls described in this statement to be satisfactory and the risks to be at an acceptable level within the context of the Group’s business environment. There is also no significant breakdown or weaknesses in the current system for the financial year ended 30 September 2018. As the development of an efficient system of internal controls is an ongoing process, the Board and the Management will continue to take necessary measures to strengthen the risk management and internal controls environment and processes of the Group, in order to safeguard the interests of shareholders.

During the financial year under review, there were no material losses caused by the failure in internal controls.

8. REVIEW BY EXTERNAL AUDITORS

As required under Paragraph 15.23 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the External Auditors have reviewed this Statement on Risk Management and Internal Control pursuant to the scope set out in the Recommended Practice Guide issued by the Malaysian Institute of Accountants. The Practice Guide does not require the External Auditors to consider whether the Statement covers all risks and controls, or to form an opinion on the adequacy and effectiveness of the risk management and internal controls system of the Group.

The External Auditors had reported to the Board that nothing has come to their attention that causes them to believe that this Statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and integrity of the internal controls system within the Group.

This Statement is made in accordance with the resolution of the Board dated 24 January 2019.

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STATEMENT ON DIRECTORS’ RESPONSIBILITY IN PREPARING THE REPORTS AND FINANCIAL STATEMENTS

This Statement in prepared in accordance to the Paragraph 15.26(a) of the Main Market Listing Requirements on Bursa Malaysia Securities Berhad.

The Board of Directors understand that there is requirement under Companies Act, 2016 to prepare the financial statements for every financial year which give a true and fair view of the state of affairs of the Company and the Group.

In preparing the financial statements of the Company and the Group for the financial year ended 30 September 2018, the Directors had:-• ensured the compliance with the Companies Act, 2016 and approved accounting policies and standards been applied;• adopted the appropriate accounting policies, which are consistently applied;• made reasonable and prudent judgements and estimates; • prepared the financial statements on a going concern basis; and• ensured the Company and the Group have adequate resources to continue in on-going operations for the foreseeable future.

On the other hand, the Directors have full responsibilities for taking reasonable steps to safeguard the assets of the Group and to prevent and detect fraud and other irregularities. In additional, the Directors had ensured that accounting records and other records are properly maintained to explain the transactions and financial position of the Company and the Group.

36

ADDITIONAL INFORMATION

1. SHARE BUY-BACK

There was no share buy-back of the Company’s share during the financial year.

2. NON-AUDIT FEES

There was no non-audit fees incurred during the financial year under review.

During the financial year, the amount of audit fees paid or payable to the External Auditors, Nexia SSY by the Company and the Group respectively were as follows:-

Company (RM) Group (RM)

Statutory audit feespaid/payable 382,000 500,000

3. OPTIONS, WARRANT OR CONVERTIBLE SECURITIES

There were no options, warrants or convertible securities issued to any parties during the financial year.

The Company has increased its warrants from 37,281,357 to 46,601,683 by way of issuance of 9,320,326 Additional Warrants on 23 January 2019 arising from the adjustments pursuant to the Proposed Bonus Issue approved by the shareholders at an Extraordinary General Meeting held on 12 December 2018. The new warrants were listed and quoted on the Main Market of Bursa Malaysia Securities Berhad on 24 January 2019.

4. DEPOSITORY RECEIPT PROGRAMME

During the financial year, the Company did not sponsor any Depository Receipt Programme.

5. IMPOSITION OF SANCTIONS AND/OR PENALTIES

There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or Management by the relevant regulatory authorities during the financial year.

6. MATERIAL CONTRACT

The Board is not aware of any material contracts entered into by the Company (not being contracts entered into in the ordinary course of business of the Company) involving the Directors and Major Shareholders for the financial year under review.

7. REVALUATION POLICY

The Group has adopted a policy to revalue at a regular interval of at least once in every five (5) years for its landed properties with additional valuations in the intervening years where market conditions indicate that the carrying values of the revalued land and buildings materially differ from the market value. There has been a revaluation exercise on the Group’s landed properties during the financial year where the total revaluation surplus was RM20,112,468.

8. UTILISATION OF PROCEEDS

The proceeds from corporate proposals are utilised for the purpose of repayment of bank borrowings and funding the continuing growth and expansion and working capital requirement of the Group.

37

ADDITIONAL INFORMATION (CONTINUED)

9. RECURRENT RELATED PARTY TRANSACTIONS OF REVENUE OR TRADING NATURE

The recurrent related party transaction undertaken by the Group during the financial year were as follows:-

Related Parties Nature of Relationship Nature of Transaction

Transacted Value from 1 October 2017 to 30 September 2018(RM)

Khee San FoodIndustries Sdn Bhd

The Company has an effective interest of 20.00% in Khee San Food Industries Sdn Bhd via its direct shareholdings in Khee San Bhd.

Purchase of sweets and confectionery products including contract manufacturing of deposited candies, hard and chewy candies/sweets, wafers and chewing gums on a perpetual basis from Khee San Food Industries Sdn Bhd by the Company.

46,627,978.30

Khee San FoodIndustries Sdn Bhd

The Company has an effective interest of 20.00% in Khee San Food Industries Sdn Bhd via its direct shareholdings in Khee San Bhd.

Sale of assorted raw materials such as packaging materials, sugar and flavourings on a perpetual basis by the Company to Khee San Food Industries Sdn Bhd.

30,901,035.33

Between Kinos FoodIndustries (M) Sdn Bhd and Khee San Food IndustriesSdn Bhd

Kinos Food Industries (M) Sdn Bhd is the wholly-owned subsidiary of London Biscuits Berhad and the Company has an effective interest of 20.00% in Khee San Food Industries Sdn Bhd via its direct shareholdings in Khee San Berhad.

Rental of machineries, such as fryer machine, for the purposes of producing the products, such as potato chips and others, on a perpetual basis by Kinos Food Industries (M) Sdn Bhd from Khee San Food Industries Sdn Bhd, a subsidiary of Khee San Berhad. The transaction will be on an arm’s length basis and based on a rate which would be lower than market rate or at market rate.

310,129.28

The Company intends to seek its Shareholders’ approval to renew the shareholders’ mandate for the Recurrent Related Party Transactions at the forthcoming Annual General Meeting.

10. EMPLOYEES’ SHARE OPTION SCHEME (“ESOS”)

The current ESOS scheme of the Company is governed by the by-laws approved by the Shareholders at the Annual General Meeting held on 27 December 2013 and commenced on 2 January 2014 for a period of five (5) years and subject to extension or renewal for a further period of five (5) years. The ESOS has been extended to further period of five (5) years to 1 January 2024.

During the financial year under review, there was no ESOS option offered and subscribed by the Directors, senior management and eligible employees of the Group.

The percentage of share options applicable to the Directors and senior management under the ESOS are as follows:-

Directors and Senior Management During the Financial YearSince Commencement of the ESOS up to 30 September 2018

Aggregate maximum allocation Nil 46.02%

Actual granted and accepted Nil 46.02%

The Company did not grant any options over the ordinary shares pursuant to the ESOS to any Non-Executive Directors during the financial year under review.

38

ANALYSIS OF SHAREHOLDINGS AS AT 23 JANUARY 2019

1. ANALYSIS BY SIZE OF SHAREHOLDINGS

Size of HoldingsNo. of

Shareholders% of Total

ShareholdersNo. of

Shares Held% of Issued

Share CapitalLess than 100 44 1.002 1,446 ◊

100 – 1,000 220 5.008 56,197 0.0221,001 – 10,000 1,863 42.408 8,644,275 3.37810,001 – 100,000 1,993 45.368 57,585,286 22.452100,001 - less than 5% 272 6.192 159,227,487 62.0815% and Above 1 0.023 30,968,750 12.074

Grand Total 4,393 100.000 256,483,441 100.000

◊ Negligible

2. SUBSTANTIAL SHAREHOLDERS

Direct Interest Indirect Interest

NameNo. of Shares

HeldPercentage

(%)No. of Shares

HeldPercentage

(%)

Meileelanusa Sdn Bhd 50,037,123 19.509 - -Dato’ Liew Yet Lee 2,715,838 1.059 53,035,150 (1) 20.678

Dato’ Sri Liew Yew Chung 2,667,481 1.040 53,083,507 (1) 20.697Datin Sri Lim Yook Lan 280,608 0.109 55,470,380 (2) 21.627Liew Yet Mei 49,588 0.019 55,701,400 (1) 21.717

Dato’ Sri Liew Kuek Hin 312 ◊ 55,750,676 (2) 21.737Dato’ Liew Yew Cheng 38 ◊ 55,750,950 (1) 21.737

Note: ◊ Negligible 1) Deemed interested by virtue of his/her parents’ shareholdings in Meileelanusa Sdn. Bhd. and his/her family members’ shareholdings in

London Biscuits Berhad. 2) Deemed interested by virtue of his/her shareholdings in Meileelanusa Sdn. Bhd. and his/her family members’ shareholdings in London

Biscuits Berhad.

3. INTEREST OF DIRECTORS

a) Interest in shares of the Company


Name of DirectorsNo. of Shares

HeldPercentage

(%)No. of Shares

HeldPercentage

(%)

Dato’ Sri Liew Kuek Hin 312 ◊ 55,750,676 (1) 21.737Dato’ Sri Liew Yew Chung 2,667,481 1.040 53,083,507 (2) 20.697Dato’ Liew Yew Cheng 38 ◊ 55,750,950 (2) 21.737Dato’ Paduka Cheong Siew Kai - - - -Huang Yan Teo - - - -Leslie Looi Meng - - - -

Note: ◊ Negligible 1) Deemed interested by virtue of his shareholdings in Meileelanusa Sdn. Bhd. and his family members’ shareholdings in London Biscuits

Berhad. 2) Deemed interested by virtue of his parents’ shareholdings in Meileelanusa Sdn. Bhd. and his family members’ shareholdings in London

Biscuits Berhad.

b) Interest in Subsidiaries

By virtue of Dato’ Sri Liew Kuek Hin, Dato’ Sri Liew Yew Chung and Dato Liew Yew Cheng’s interests in the Company, they are also deemed to be interested in the shares of all the subsidiaries of the Company to the extent of their interest in the Company.

Save as disclosed above, none of the other Directors have any interest in the shares of subsidiaries as at 23 January 2019.

Issued and Paid-Up Capital : 256,483,441 No. of Shareholders : 4,403Class of Shares : Ordinary Share Voting Rights : One (1) vote per ordinary share

39

ANALYSIS OF SHAREHOLDINGS AS AT 23 JANUARY 2019 (CONTINUED)

4. LIST OF 30 LARGEST SHAREHOLDERS (without aggregating the securities from different securities accounts belonging to the same Depositor)

NameNo. of Shares

Held% of Issued

Share Capital

1. CIMB GROUP NOMINEES (TEMPATAN) SDN BHDBENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR MEILEELANUSA SDN BHD (49646JLK2)

30,968,750 12.074

2. LIM KIAN HUAT 12,815,000 4.9963. ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD

BENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR MEILEELANUSA SDN. BHD.10,753,750 4.193

4. MEILEELANUSA SDN BHD 7,804,623 3.0435. MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD

BENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR TAN CHING CHING 5,160,000 2.012

6. CIMB GROUP NOMINEES (ASING) SDN. BHD.BENEFICIARY : EXEMPT AND FOR DBS BANK LTD (SFS)

5,137,500 2.003

7. CARTABAN NOMINEES (ASING) SDN BHDBENEFICIARY : BBH AND CO BOSTON FOR FIDELITY PURITAN TRUST: FIDELITY SERIES INTRINSIC OPPORTUNITIES FUND

5,000,000 1.949

8. NG JIN GEE 4,575,000 1.7849. LIM LIEN TEIK 4,412,500 1.72010. MAYBANK NOMINEES (TEMPATAN) SDN BHD

BENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR LEW U SING 3,125,000 1.218

11. CIMSEC NOMINEES (TEMPATAN) SDN BHDBENEFICIARY : CIMB BANK FOR LIEW YET LEE (M68107)

2,666,250 1.040

12. CIMSEC NOMINEES (TEMPATAN) SDN BHDBENEFICIARY : CIMB BANK FOR LIEW YEW CHUNG (M68106)

2,666,250 1.040

13. JF APEX NOMINEES (TEMPATAN) SDN BHDBENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR KOH CHEE MENG (MARGIN)

2,625,000 1.023

14. AMSEC NOMINEES (TEMPATAN) SDN BHDBENEFICIARY : PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR LIM PEI TIAM @ LIAM AHAT KIAT (SMART)

2,500,000 0.975

15. YAYASAN GURU TUN HUSSEIN ONN 2,500,000 0.97516. KOH CHEE MENG 2,187,500 0.853

17. ANDREW HO THO KONG 1,975,000 0.770

18. RHB NOMINEES (TEMPATAN) SDN BHDBENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR CHEN TONG YEE

1,937,500 0.755

19. HLB NOMINEES (TEMPATAN) SDN BHDBENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR EDNA LOBO

1,600,000 0.624

20. CHEN TONG YEE 1,441,250 0.562

21. MAYBANK NOMINEES (TEMPATAN) SDN BHDBENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR WANG CHOON SEANG

1,275,000 0.497

22. CIMSEC NOMINEES (TEMPATAN) SDN BHDBENEFICIARY : CIMB BANK FOR FONG CHOON KAI (M52070)

1,250,000 0.487

23. KENANGA NOMINEES (TEMPATAN) SDN BHD BENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR PANG SHIEW WAI

1,250,000 0.487

24. TOHTONKU SDN. BERHAD 1,237,500 0.48225. PUBLIC NOMINEES (TEMPATAN) SDN BHD

BENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR CHUAH SWEE HUAT (E-KLC)

1,173,750 0.458

26. CARTABAN NOMINEES (ASING) SDN BHDBENEFICIARY : EXEMPT AN FOR BARCLAYS CAPITAL SECURITIES LTD (SBL/PB)

1,170,125 0.456

27. LEE SWAI LIN 1,156,250 0.45128. LAI CHOON MENG 1,125,000 0.43929. LIM PAY KAON 1,125,000 0.43930. UOB KAY HIAN NOMINEES (TEMPATAN) SDN BHD

BENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR KOON POH TAT1,093,750 0.426

TOTAL 123,707,248 48.232

40

ANALYSIS OF WARRANT HOLDINGS AS AT 23 JANUARY 2019

Number of Outstanding Warrants : 46,601,683 Exercise Price of Warrants : RM1.00Exercise Period of Warrants : 27 January 2015 to 26 January 2020Voting Rights at Meeting of Warrant Holders : One (1) vote per Warrant

1. ANALYSIS BY SIZE OF WARRANT HOLDINGS

Size of Warrant Holdings

No. of Warrant Holders

% of Total Warrant Holders

No. of Warrants Held

% of Total Warrants

Less than 100 219 7.469 6,363 0.014100 - 1,000 927 31.617 464,448 0.9971,001 - 10,000 1,382 47.135 4,266,576 9.15510,001 - 100,000 331 11.289 10,241,171 21.976100,001 - Less than 5% 71 2.422 18,840,625 40.4295% And Above 2 0.068 12,782,500 27.429Grand Total 2,932 100.000 46,601,683 100.000

2. SUBSTANTIAL WARRANT HOLDERS


Name of Warrant HoldersNo. of Warrants

Held Percentage (%)No. of Warrants

Held Percentage (%)

Meileelanusa Sdn Bhd 9,787,425 21.002 - -Dato’ Liew Yet Lee 543,167 1.166 10,387,028 (1) 22.289Dato’ Sri Liew Yew Chung 533,496 1.145 10,396,699 (1) 22.310Datin Sri Lim Yook Lan 56,121 0.120 10,874,074 (2) 23.334Liew Yet Mei 9,917 0.021 10,920,278 (1) 23.433Dato’ Sri Liew Kuek Hin 62 ◊ 10,930,133 (2) 23.454Dato’ Liew Yew Cheng 7 ◊ 10,930,188 (1) 23.454

Note: ◊ Negligible 1) Deemed interested by virtue of his/her parents’ shareholdings in Meileelanusa Sdn. Bhd. and his/her family members’ shareholdings in London Biscuits Berhad. 2) Deemed interested by virtue of his/her shareholdings in Meileelanusa Sdn. Bhd. and his/her family members’ shareholdings in London Biscuits Berhad.

3. DIRECTORS’ WARRANT HOLDINGS


Name of DirectorsNo. of Warrants

Held Percentage (%)No. of Warrants

Held Percentage (%)

Dato’ Sri Liew Kuek Hin 62 ◊ 10,930,133 (1) 23.454Dato’ Sri Liew Yew Chung 533,496 1.145 10,396,699 (2) 22.310Dato’ Liew Yew Cheng 7 ◊ 10,930,188 (2) 23.454Dato’ Paduka Cheong Siew Kai - - - -Huang Yan Teo - - - -Leslie Looi Meng - - - -

Note: ◊ Negligible 1) Deemed interested by virtue of his shareholdings in Meileelanusa Sdn. Bhd. and his/her family members’ shareholdings in London Biscuits Berhad. 2) Deemed interested by virtue of his parents’ shareholdings in Meileelanusa Sdn. Bhd. and his family members’ shareholdings in London Biscuits Berhad.

41

5. LIST OF 30 LARGEST WARRANT HOLDERS (without aggregating the securities from different securities accounts belonging to the same Depositor)

NameNo. of Shares

Held% of Issued

Share Capital

1. MEILEELANUSA SDN BHD 9,787,425 21.002

2. LIM KIAN HUAT 2,995,075 6.427

3. ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHDBENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR OOI CHIN HOCK (8058312)

1,102,125 2.365

4. ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHDBENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR TIE MING CHUNG (7002470)

1,066,875 2.289

5. MAYBANK NOMINEES (TEMPATAN) SDN BHDBENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR LEW U SING

750,000 1.609

6. LAU GEAK SIAM 687,500 1.475

7. CIMSEC NOMINEES (TEMPATAN) SDN BHDBENEFICIARY : CIMB BANK FOR LIEW YET LEE (M68107)

533,250 1.144

8. CIMSEC NOMINEES (TEMPATAN) SDN BHDBENEFICIARY : CIMB BANK FOR LIEW YEW CHUNG (M68106)

533,250 1.144

9. LAU SICK MING 530,500 1.138

10. OOI CHIN HOCK 505,375 1.084

11. CARTABAN NOMINEES (ASING) SDN BHDBENEFICIARY : BBH AND CO BOSTON FOR FIDELITY PURITAN TRUST: FIDELITY SERIES INTRINSIC OPPORTUNITIES FUND

500,000 1.073

12. CHIENG YU SOON 495,000 1.062

13. HOW LEE CHIN 487,500 1.046

14. LEE NYUK YIN 453,750 0.974

15. KENANGA NOMINEES (TEMPATAN) SDN BHDBENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR LIM YOK CHIN (04LJ833S-004)

437,500 0.939

16. WONG MOI FONG 425,000 0.912

17. KHOO LEE CHIN 407,375 0.874

18. AFFIN HWANG NOMINEES (TEMPATAN) SDN. BHD.BENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR ONG AIK LIN (ONG1097M)

375,000 0.805

19. MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHDBENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR CHEE PENG WAI

375,000 0.805

20. MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHDBENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR LOW CHEE HIAN (STF)

369,000 0.792

21. MOHD NAJID BIN MD YAHYA 327,125 0.702

22. NG SI YOON 325,000 0.697

23. ONG CHEE KEAN 300,000 0.644

24. SIEW NYUK LEE 258,625 0.555

25. MAYBANK NOMINEES (TEMPATAN) SDN BHDBENEFICIARY : SAW LOONG KANG

250,000 0.536

26. PANG LEE PING 250,000 0.536

27. SEAH HOOI CHENG 250,000 0.536

28. LAI YOK CHEE 243,750 0.523

29. WONG CHIOU MUN 234,625 0.503

30. CIMSEC NOMINEES (TEMPATAN) SDN BHDBENEFICIARY : CIMB BANK FOR NG KIM LIONG (MY1655)

223,625 0.480

TOTAL 25,479,250 54.675

ANALYSIS OF WARRANT HOLDINGS AS AT 23 JANUARY 2019 (CONTINUED)

42

LIST OF PROPERTIES OF THE GROUP

AS AT 30 SEPTEMBER 2018

Year ofRevaluation (Acquisition)

Location Postal Address

Tenure & Usage

(Approx. ageof buildings)

(Years)

LandArea

(sq. m.)Description

Net Book Value as at

30 September

2018(RM)

2018 (1995)

H.S.(D) No 191720,PTD No 91909,Mukim of Plentong,District of Johor Bahru,State of Johor

No. 91, Jalan Cemerlang,Taman Perindustrian DesaCemerlang,81800 Ulu Tiram,Johor Bahru, Johor

FreeholdOwn use

(22 years)

1,189.0

Industrial land with officeand factory building formanufacturing of corn extruded products

3,280,000

2018 (1995)

H.S.(D) No 191719,PTD No 91908,Mukim of Plentong,District of Johor Bahru,State of Johor

No. 93, Jalan Cemerlang,Taman Perindustrian DesaCemerlang,81800 Ulu Tiram,Johor Bahru, Johor

FreeholdOwn use

(22 years)

1,189.0

Industrial land with officeand factory building formanufacturing of corn extruded products

3,280,000

2018 (1999)

GRN 136988, Lot 111742(f.k.a H.S.(D) 237256, PTD No 115212),Mukim of Plentong,District of Johor Bahru,State of Johor

No. 3 Jalan Istimewa 2,Taman Perindustrian DesaCemerlang,81800 Ulu Tiram,Johor Bahru, Johor

FreeholdOwn use

(18 years)

1.388.0

Industrial land with officeand factory building for warehouse and manufacture of bakery products

3,840,000

2018 (1999)



FreeholdOwn use

(18 years)

1.388.0


3,260,000

2018 (1999)



FreeholdOwn use

(18 years)

1,338.0


3,900,000

2018 (1999)



FreeholdOwn use

(18 years)

1,338.0


3,260,000

2018(1999)


No 11, Jalan Istimewa 2,Taman Perindustrian DesaCemerlang,81800 Ulu Tiram,Johor Bahru, Johor

FreeholdOwn use

(18 years)

1,337.8


3,490,000

43

LIST OF PROPERTIES OF THE GROUP (CONTINUED)

AS AT 30 SEPTEMBER 2018

Year ofRevaluation (Acquisition)

Location Postal Address

Tenure & Usage

(Approx. ageof buildings)

(Years)

LandArea

(sq. m.)Description

Net Book Value as at

30 September

2018(RM)

2018 (1999)

GRN 136983, Lot 111737(f.k.a H.S.(D) 237251, PTD No. 115207),Mukim of Plentong,District of Johor Bahru,State of Johor

No 15, Jalan Istimewa 2,Taman Perindustrian Desa Cemerlang,81800 Ulu Tiram,Johor Bahru, Johor

FreeholdOwn use

(18 years)

1,337.8

Industrial land with office and factory building for warehouse andmanufacture of bakery products

3,260,000

2018 (1999)

GRN 136874, Lot 111687(f.k.a H.S.(D) 237310),Mukim of Plentong,District of Johor Bahru,State of Johor


FreeholdOwn use

(17 years)

1,213.3

Industrial land with office and factory building for warehousing

2,520,000

2018 (2000)

GRN 136873, Lot 111686(f.k.a H.S.(D) 237309),Mukim of Plentong,District of Johor Bahru,State of Johor


FreeholdOwn use

(17 years)

891.8

Industrial land with office and factory building forwarehousing

2,070,000

2018(2003)

GRN 136989, Lot 111743(f.k.a H.S.(D) 237257, PTD No. 115213),Mukim of Plentong,District of Johor Bahru,State of Johor


FreeholdOwn use

(14 years)

5,423.0

Industrial land with office and factory building forwarehousing

12,230,000

2018 (2009)

H.S.(D) No 493396,PTD No. 192059,Mukim of Plentong,District of Johor Bahru,State of Johor

No. 1 Jalan Istimewa 7,Taman Perindustrian Desa Cemerlang,81800 Ulu Tiram,Johor Bahru, Johor

FreeholdOwn use

(9 years)

10,494.7 Industrial Land 15,700,000

KINOS FOOD INDUSTRIES (M) SDN. BHD.

2018 (1985)

Title No. PN 6715,Lot No. 51709,Mukim of Plentong,District of Johor Bahru,State of Johor

PLO. 233 Jalan Tembaga 1, Kawasan PerindustrianPasir Gudang,81700 Pasir Gudang, Johor

60 yearsLeaseholdexpiring in

2045

(32 years)

8,093.7

Industrial land with a two storey office with a single storey factory for manufacturing of bakery products

8,970,000

KIM CHOAW SDN. BHD.

2018 (1985)

H.S.(D) No 124988,PTD No. 71051,Mukim of Plentong,District of Johor Bahru,State of Johor

PLO. 308, Jalan Tembaga 2, Kawasan PerindustrianPasir Gudang,81700 Pasir Gudang, Johor

60 yearsLeaseholdexpiring in

2045

(32 years)

8,093.7

Industrial land with a two storey office with a single storey factory formanufacturing of bakery products

8,510,000

TOTAL 77,570,000

Note:Revalued by Independent Professional Valuer* The last Revaluation of the Properties were performed on 29 September 2018

V o l u m e 2 : R e p o r t s & F i n a n c i a l S t a t e m e n t s

CONTENTS Pages

Reports and Financial Statements

• Directors’ Report 01

• Statement by Directors 6

• Statutory Declaration 6

• Independent Auditors’ Report 7 – 11

• Statements of Financial Position 12 – 13

• Statements of Comprehensive Income 14

• Consolidated Statement of Changes in Equity 15

• Statement of Changes in Equity 16

• Statements of Cash Flows 17 – 19

• Notes to the Financial Statements 20 – 88

Volume 2Repor ts & F inanc ia l S ta tements

Company No: 72057-H London Biscuits Berhad (Incorporated in Malaysia)

1

Directors’ Report for the year ended 30 September 2018 The Directors hereby submit their report together with the audited financial statements of the Group and of the Company for the financial year ended 30 September 2018.

Principal activities

The principal activities of the Company are manufacturing and trading of confectionery and other related foodstuffs. The principal activities of the subsidiaries are as stated in Note 8 to the financial statements.

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

Financial results

Group Company RM’000 RM’000

Profit for the financial year 13,658 9,868

Profit attributable to:

Owners of the Company 13,658 9,868

Non-controlling interest - -

13,658 9,868

Dividends

No dividends were paid, declared or proposed since the end of the previous financial period.

The Directors do not recommend the payment of any dividend in respect of the financial year ended 30 September 2018.

Reserves and provisions

All material transfers to or from reserves or provisions during the financial year have been disclosed in the financial statements.

Issue of shares and debentures

During the financial year, the Company issued 13,000,000 new ordinary shares for cash under private placements at RM0.475 per ordinary share amounting to RM6,175,000 for working capital purposes.

The new ordinary shares issued rank pari passu in all respects with the existing ordinary shares of the Company. There were no issue of debentures by the Company during the financial year.


2

Issue of warrants

There were no issue of warrants by the Company during the financial year.

Directors

The Directors in office during the financial year and during the period from the end of the financial year to the date of this report are: Dato’ Sri Liew Kuek Hin, SSAP, DIMP, PJK, JP Dato’ Sri Liew Yew Chung, SSAP, DIMP Dato’ Liew Yew Cheng, DIMP Dato’ Paduka Cheong Siew Kai, DJMK, AMS, JP Huang Yan Teo, PIS, PPN Leslie Looi Meng Datin Sri Lim Yook Lan (Resigned on 26.9.2018) Liew Yet Mei (Resigned on 26.9.2018) Dato’ Liew Yet Lee, DIMP (Resigned on 26.9.2018) The names of the directors of the Company’s subsidiaries in office during the financial year and during the period from the end of the financial year to the date of this report are: Dato’ Sri Liew Yew Chung, SSAP, DIMP Wong Kind Look (Alternate Director to Dato’ Sri Liew Yew Chung) (Appointed on 1.4.2018) Dato’ Sri Liew Kuek Hin, SSAP, DIMP, PJK, JP (Resigned on 1.4.2018) Datin Sri Lim Yook Lan (Resigned on 1.4.2018) Directors' interests

According to the Register of Directors' Shareholdings, particulars of interests in the shares of the Company and its related companies during the financial year of those Directors who held office at the end of the financial year were as follows:

Number of ordinary shares in the Company At At 1.10.2017 Bought Sold 30.9.2018Shareholdings in the name of the Directors: Dato’ Sri Liew Kuek Hin, SSAP, DIMP ,PJK, JP 250 - - 250Dato’ Sri Liew Yew Chung, SSAP, DIMP 2,133,985 - - 2,133,985Dato’ Liew Yew Cheng, DIMP 31 - - 31Dato’ Paduka Cheong Siew Kai, DJMK, AMS, JP - - - -Huang Yan Teo, PIS, PPN - - - -Leslie Looi Meng - - - - Deemed interest: Dato’ Sri Liew Kuek Hin, SSAP, DIMP ,PJK, JP 44,600,544 - - 44,600,544Dato’ Sri Liew Yew Chung, SSAP, DIMP 42,466,809 - - 42,466,809Dato’ Liew Yew Cheng, DIMP 44,600,763 - - 44,600,763Dato’ Paduka Cheong Siew Kai, DJMK, AMS, JP - - - -Huang Yan Teo, PIS, PPN - - - -Leslie Looi Meng - - - -


3

Directors' interests (continued)

Number of warrants held in the Company At At 1.10.2017 Bought Sold 30.9.2018Warrants in the name of the Directors: Dato’ Sri Liew Kuek Hin, SSAP, DIMP ,PJK, JP 50 - - 50Dato’ Sri Liew Yew Chung, SSAP, DIMP 426,797 - - 426,797Dato’ Liew Yew Cheng, DIMP 6 - - 6Dato’ Paduka Cheong Siew Kai, DJMK, AMS, JP - - - -Huang Yan Teo, PIS, PPN - - - -Leslie Looi Meng - - - - Deemed interest: Dato’ Sri Liew Kuek Hin, SSAP, DIMP ,PJK, JP 8,920,108 - (176,000) 8,744,108Dato’ Sri Liew Yew Chung, SSAP, DIMP 8,493,361 - (176,000) 8,317,361Dato’ Liew Yew Cheng, DIMP 8,920,152 - (176,000) 8,744,152Dato’ Paduka Cheong Siew Kai, DJMK, AMS, JP - - - -Huang Yan Teo, PIS, PPN - - - -Leslie Looi Meng - - - -

Directors’ benefits

Since the end of the previous financial period, no Director has received or become entitled to receive any benefit (other than Directors’ remuneration as disclosed in Note 26 to the financial statements) by reason of a contract made by the Company or any related company with the Director or with a firm of which the Director is a member or with a company in which the Director has a substantial financial interest, except as disclosed in the financial statements. Neither during nor at the end of the financial year was the Company or any related company, a party to any arrangement whose object was to enable the Directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

Indemnity and insurance costs

During the financial year, neither indemnity coverage nor insurance premium were effected or paid for the Directors, Officers and Auditors of the Group and of the Company.

Other statutory information

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

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

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


4

Other statutory information

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

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

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

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

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

In the opinion of the Directors:

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

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

In the interval between the end of the financial year and the date of this report:

(a) no item, transaction or event of a material and unusual nature has arisen which, in the opinion of the Directors, would affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made; and

(b) no charge has arisen on the assets of the Group and of the Company which secures the liability of any other person nor has any contingent liability arisen in the Group and in the Company.

Subsequent events

The details of subsequent events are disclosed in Note 38 to the financial statements.


5

Auditors

The auditors, Nexia SSY, have indicated their willingness to continue in office.

The auditors’ remuneration is disclosed in Note 25 to the financial statements.

Signed on behalf of the Board in accordance with a resolution of the Directors dated 28 January 2019.

Dato’ Sri Liew Kuek Hin, SSAP, DIMP ,PJK, JP

Dato’ Sri Liew Yew Chung, SSAP, DIMP

Director

Director

Shah Alam


6

Statement by Directors Pursuant to Section 251(2) of the Companies Act 2016 We, Dato’ Sri Liew Kuek Hin, SSAP, DIMP, PJK, JP and Dato’ Sri Liew Yew Chung, SSAP, DIMP, being two of the Directors of London Biscuits Berhad, do hereby state that in the opinion of the Directors, the accompanying financial statements set out on pages 12 to 88 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 30 September 2018 and of their financial performance and cash flows for the financial year then ended. Signed on behalf of the Board in accordance with a resolution of the Directors dated 28 January 2019.

Dato’ Sri Liew Kuek Hin, SSAP, DIMP ,PJK, JP

Dato’ Sri Liew Yew Chung, SSAP, DIMP

Director

Director

Shah Alam

Statutory Declaration Pursuant to Section 251(1) of the Companies Act 2016 I, Dato’ Sri Liew Yew Chung, SSAP, DIMP, being the Director primarily responsible for the financial management of London Biscuits Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 12 to 88 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act 1960.

Subscribed and solemnly declared by the abovenamed Dato’ Sri Liew Yew Chung, SSAP, DIMP at Puchong in the state of Selangor on 28 January 2019.

Dato’ Sri Liew Yew Chung, SSAP, DIMP Director

Before me, Commissioner for Oaths NG SAY JIN (No. B195)

Company No: 646559 T

7

Independent Auditors’ Report to the Members of London Biscuits Berhad (Company No: 72057-H) (Incorporated in Malaysia)

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of London Biscuits Berhad, which comprise the statements of financial position as at 30 September 2018 of the Group and Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 12 to 88.

In our opinion, except for the effects of the matters described in the Basis for Qualified Opinion section of our report, the accompanying financial statements give a true and fair view of the financial position of the Group and the Company as at 30 September 2018, and of the financial performance and the cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

Basis for Qualified Opinion

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

We were appointed as auditors of the Company on 20 December 2018 and therefore did not observe the counting of physical inventories at the end of the financial year ended 30 September 2018. We were unable to satisfy ourselves by alternative means concerning those inventory quantities held at 30 September 2018, which are stated in the statements of financial position of the Group and the Company at RM26.891 million and RM20.794 million respectively. Since inventories enter into the determination of the financial performance and cash flows, we were unable to determine whether adjustments might have been necessary in respect of the profit for the year reported in the statement of comprehensive income and the net cash flows from operating activities reported in the statement of cash flows.

We wish to draw attention to the following matters where pursuant to ISA 510 concerning Initial Audit Engagements – Opening Balances, we carried out audit procedures to ascertain the existence, accuracy, presentation and completeness of opening balances and it was determined that certain opening balances contain misstatements that materially affect the current period’s financial statements. Consequently, the items in opening balances as described in detail in Note 39 to the financial statements, were adjusted and restated in the financial statements.

We noted that there were significant and material transactions between the Group and a customer and as explained in Note 29 to the financial statements, the operations were indicative of a related party relationship despite the absence of a legal nexus. Consequently, the inter-company transactions were adjusted and treated as related party transactions to reflect the operational arrangements described in Note 29 to the financial statements. The management are of the opinion that related party transactions disclosure would not apply due to the legal status of the said company.


8

Independent Auditors’ Report to the Members of London Biscuits Berhad (continued) (Company No: 72057-H) (Incorporated in Malaysia) Basis for Qualified Opinion (continued) As disclosed in Note 12 to the financial statements, the Group recognised an impairment of trade receivables of RM1.994 million for the year ended 30 September 2018, and RM59.216 million were adjusted retrospectively to comply with the impact of the Group’s early adoption of MFRS 9. In the computation of the expected credit loss (“ECL”), we were unable to ascertain the correctness of the ageing data of trade receivables as well as the related information utilised to calculate and to measure the ECL. Consequently, we are unable to determine whether adjustments are necessary in respect of the ECL and the ageing disclosure in Note 12 to the financial statements. As described in Note 38 to the financial statements, opening balances for plant and machinery-in progress has been adjusted to reflect the acquisition of a production line made on behalf of an associated company. During the current financial year, acquisition of plant and machinery totalling RM52.467 million was made. We were unable to obtain sufficient appropriate audit evidence in respect of these acquisitions. Notwithstanding, the Company has provided an external valuation report for the Group’s major plant and machinery from a professional valuer. Be that as it may, we are unable to determine whether adjustments are necessary to restate the value of the plant and machinery. Independence and Other Ethical Responsibilities

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current year. Matters giving rise to a modified opinion are by their nature key audit matters and consequently the matters described in our basis for qualified opinion section of our report has addressed the key audit matters and we have determined that there are no other key audit matters to communicate in our report. Information Other than the Financial Statements and Auditors’ Report Thereon The Directors of the Company are responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon. Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not express any form of assurance conclusion thereon.


9

Independent Auditors’ Report to the Members of London Biscuits Berhad (continued) (Company No: 72057-H) (Incorporated in Malaysia) Information Other than the Financial Statements and Auditors’ Report Thereon (continued) In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated.

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

Responsibilities of the Directors for the Financial Statements

The Directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error. In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

Auditors’ Responsibilities for the Audit of the Financial Statements

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

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

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


10

Independent Auditors’ Report to the Members of London Biscuits Berhad (continued) (Company No: 72057-H) (Incorporated in Malaysia)

Auditors’ Responsibilities for the Audit of the Financial Statements (continued)

Obtain an understanding of internal control relevant to the audit in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Company’s internal control.

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

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

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

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

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

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

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


11

Independent Auditors’ Report to the Members of London Biscuits Berhad (continued) (Company No: 72057-H) (Incorporated in Malaysia) Other Matters

1. The financial statements of London Biscuits Berhad for the financial year ended 30 September 2017 were audited by another firm of auditors who expressed an unmodified opinion on those financial statements on 18 January 2018.

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

Nexia SSY Jason Sia Sze Wan

AF: 2009 No. 02376/05/2020 J

Chartered Accountants Partner

Shah Alam 28 January 2019

Company No: 72057-H

London Biscuits Berhad (Incorporated in Malaysia)

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

12

Statements of Financial Position as at 30 September 2018 Group Company Restated Restated Note 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 ASSETS Non-current assets Property, plant and

equipment 6

440,714

387,304

313,875

259,637

Intangible assets 7 8,247 4,205 4,042 - Investment in subsidiaries 8 - - 31,726 31,726 Investment in associates 9 30,784 29,850 29,850 29,850 Other investments 10 21 21 21 21 479,766 421,380 379,514 321,234 Current assets Inventories 11 26,891 16,045 20,794 12,502 Trade receivables 12 212,817 200,937 186,668 178,192 Other receivables, deposits

and prepayments

13

22,020 2,180

21,185

1,690

Amount due from subsidiaries

14

-

-

39,510

58,991

Amount due from associate company

15

51,550

48,612

51,550

48,612

Tax recoverable 2,671 3,601 1,330 1,996 Fixed deposits with

licensed financial institutions

16

307

300

307

300

Cash and bank balances 17 19,403 9,274 19,186 9,275 335,659 280,949 340,530 311,558 TOTAL ASSETS 815,425 702,329 720,044 632,792

Company No: 72057-H



13

Statements of Financial Position

as at 30 September 2018 (continued) Group Company Restated Restated Note 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 EQUITY AND

LIABILITIES

Equity attributable to equity holders of the Company

Share capital 18 206,484 186,534 206,484 186,534 Reserves 19 162,423 146,564 118,355 111,376 TOTAL EQUITY 368,907 333,098 324,839 297,910 Non-current liabilities Borrowings 20 96,779 110,592 92,149 104,862 Deferred tax liabilities 21 35,338 26,555 28,110 23,103 132,117 137,147 120,259 127,965 Current liabilities Trade payables 22 11,035 15,661 7,549 10,544 Other payables, accruals

and deposits received

23 13,297 12,163 9,940 11,191

Borrowings 20 290,069 204,217 257,457 185,182 Provision for taxation - 43 - - 314,401 232,084 274,946 206,917 TOTAL LIABILITIES 446,518 369,231 395,205 334,882 TOTAL EQUITY AND

LIABILITIES

815,425 702,329 720,044 632,792

Company No: 72057-H



14

Statements of Comprehensive Income for the year ended 30 September 2018 Group Company Restated Restated

Note 1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 RM’000 RM’000 RM’000 RM’000 Revenue 24 308,703 426,021 284,698 362,205 Cost of sales (234,431) (325,069) (221,017) (288,081) Gross profit 74,272 100,952 63,681 74,124 Other operating income 4,923 8,051 2,251 2,892 Selling and distribution

expenses

(12,106)

(29,433)

(11,463)

(17,424) Administrative expenses (28,479) (36,671) (23,992) (30,079) Share of profit of associate

company

934

403

-

403 Profit from operations 39,544 43,302 30,477 29,916 Finance costs (21,203) (22,019) (18,975) (18,499) Profit before taxation 25 18,341 21,283 11,502 11,417 Taxation 27 (4,683) (19,549) (1,634) (17,991) Profit for the financial year 13,658 1,734 9,868 (6,574) Other comprehensive

income

- Revaluation surplus on properties

15,976

-

10,886

-

- Gain on disposal of subsidiary

-

1,550

-

-

Total comprehensive income/(loss)

29,634

3,284

20,754

(6,574)

Profit/(loss) attributable

to:

Owners of the Company 13,658 1,438 9,868 (6,574) Non-controlling interest - 296 - - 13,658 1,734 9,868 (6,574) Total comprehensive

income/(loss) attributable to:

Owners of the Company 29,634 2,988 20,754 (6,574) Non-controlling interest - 296 - - 29,634 3,284 20,754 (6,574) Earnings/(loss) per share

attributable to equity holders of the Company (sen)

28

7.29

0.77

5.27

Not applicable

Company No: 72057-H



15

Consolidated Statement of Changes in Equity for the year ended 30 September 2018

Group Non distributable Distributable

Note Share

capital

Share

premium

Warrant reserve

Revaluation

reserve

Retained earnings

Total

Non- controlling

interest Total

equity RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 30 September 2017 186,534 13,775 37,281 28,131 137,333 403,054 - 403,054 Adjustment on initial application of MFRS 9 - - - - (50,793) (50,793) - (50,793) Other adjustments - - - (6,701) (12,462) (19,163) - (19,163) - - - (6,701) (63,255) (69,956) - (69,956) Restated – as at 1 October 2017 186,534 13,775 37,281 21,430 74,078 333,098 - 333,098 Adjustments for the effects of Companies

Act 2016 - Share premium

19

13,775

(13,775)

-

-

-

-

-

- Revaluation surplus in properties - - - 15,976 - 15,976 - 15,976 Issue of shares 18 6,175 - - - - 6,175 - 6,175 Profit for the year - - - - 13,658 13,658 - 13,658 At 30 September 2018 206,484 - 37,281 37,406 87,736 368,907 - 368,907

At 1 July 2016 186,534 13,775 37,281 34,247 125,979 397,816 122,036 519,852 Profit for the year - - - - 16,721 16,721 2,068 18,789 Increase in non-controlling interest in

shares of subsidiaries

-

-

-

-

-

-

4,000

4,000 Dilution of interest in subsidiaries - - - - (5,367) (5,367) 5,367 - Derecognition of subsidiaries - - - (6,116) - (6,116) (133,471) (139,587) At 30 September 2017 186,534 13,775 37,281 28,131 137,333 403,054 - 403,054

Company No: 72057-H



16

Statement of Changes in Equity for the year ended 30 September 2018

Company Non-distributable Distributable Share Share Warrant Revaluation Retained Total Note capital premium reserve reserve earnings equity RM’000 RM’000 RM'000 RM’000 RM’000 RM’000

At 30 September 2017 186,534 13,775 37,281 23,057 104,617 365,264 Adjustment on initial application of MFRS 9 - - - (5,534) (49,358) (54,892) Other adjustments - - - - (12,462) (12,462) - - - (5,534) (61,820) (67,354) Restated – as at 1 October 2017 186,534 13,775 37,281 17,523 42,797 297,910 Adjustments for the effects of Companies Act 2016 - Share premium

19 13,775 (13,775) - -

- -

Revaluation surplus in properties - - - 10,886 - 10,886 Issue of shares 18 6,175 - - - - 6,175 Profit for the year - - - - 9,868 9,868 At 30 September 2018 206,484 - 37,281 28,409 52,665 324,839

At 1 July 2016 186,534 13,775 37,281 23,057 95,686 356,333 Profit for the year - - - - 8,931 8,931 At 30 September 2017 186,534 13,775 37,281 23,057 104,617 365,264

Company No: 72057-H



17

Statements of Cash Flows for the year ended 30 September 2018

Group Company Restated Restated

Note 1.10.2017 to 30.9.2018

1.7.2016 to 30.9.2017

1.10.2017 to 30.9.2018

1.7.2016 to 30.9.2017

RM’000 RM’000 RM’000 RM’000

Cash flows from operating activities

Profit before taxation 18,341 21,283 11,502 11,417 Adjustments for: Restatements - (76,768) - (1,557) Loss on disposal of

subsidiary

- 1,305 - - Bad debts written off 1,568 - - - Impairment of trade

receivables

1,994

-

1,687

- Depreciation of plant and

equipment

15,854 19,475 10,589 12,665 Gain on disposal of plant

and equipment

(405)

(58)

(405)

(39)

Impairment of inventories - 48 - 37 Reversal of inventories

impairment

- - (475) - Amortisation of intangible

assets

23 - 23 - Unrealised foreign

exchange (gain)/loss

(249) (5,212) 1,134 (1,034) Interest expense 21,055 22,018 12,074 18,499 Interest income (270) - (144) (4) Impairment on investment - 6 - 6 Profit sharing from

associates

(934) 403 - 403 Operating profit before

working capital changes

56,977 (17,500) 35,985 40,393 Decrease in inventories (10,846) (1,121) (19,114) (757) Decrease in trade and

other receivables

(35,072)

(41,831)

(22,452)

(113,649)

(Decrease)/increase in trade and other payables

(3,492)

1,315

(4,246)

8,191

Decrease/(increase) in amount due from subsidiaries

-

-

19,481

(11,291)

Company No: 72057-H



18

Statements of Cash Flows

for the year ended 30 September 2018 (continued) Group Company Restated Restated Note 1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 RM’000 RM’000 RM’000 RM’000 Increase in amount due

from associates

(2,938)

(29,259)

(2,938)

(29,259)

Cash generated from/(used in) operations

4,629 (88,396) 6,716 (106,372) Tax refunded 3,902 2,154 4,039 2,154 Tax paid - (1,013) - (962) Interest paid (21,055) (22,019) (12,074) (18,499) Net cash used in operating

activities (12,524) (109,274) (1,319) (123,679) Cash flows from investing activities

Purchase of property, plant and equipment

32

(59,067)

(24,720)

(56,874)

(3,390)

Proceeds from disposal of property, plant and equipment

- 1,449 2,230 1,423 Proceeds from disposal of

investment property

3,250

-

-

- Proceeds from disposal of

associate

-

(1,669)

-

(1,669)

Derecognition of subsidiary

- (6,025) - - Interest income received 270 - 144 4 Net cash used in

investing activities

(55,547)

(30,965)

(54,500)

(3,632)

Company No: 72057-H



19

Statements of Cash Flows

for the year ended 30 September 2018 (continued) Group Company Restated Restated Note 1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 RM’000 RM’000 RM’000 RM’000 Cash flows from

financing activities

Net changes in bankers’

acceptance

- 8,934 - - Proceeds from bankers’

acceptance

51,845 - 62,425 - Net proceeds

from/(repayment of) revolving credit

- (16,883) - 94,977 Net payment of finance

lease liabilities

(1,580) 2,104 (701) (17,895) Net proceeds/ (repayment) of loans and

borrowings

15,905 89,472 (4,217) - Placement of fixed

deposit

(7) - - - Proceeds from issue of

shares

18 6,175 - 6,175 - Net cash generated from

financing activities

72,338

83,627

63,682

77,082 Net increase/ (decrease) in cash

and cash equivalents

4,267

(56,612) 7,863 (50,229) Cash and cash

equivalents at beginning of the year

(10,558) 46,054 (10,355) 39,873 Cash and cash

equivalents at end of the year

17 (6,291) (10,558) (2,492) (10,356) Cash and cash

equivalents comprise:

Fixed deposits with

licensed financial institutions 16 307 300 307 300

Cash and bank balances 17 19,403 9,274 19,186 9,275 19,710 9,574 19,493 9,575 Bank overdrafts 20 (26,001) (20,132) (21,985) (19,931) (6,291) (10,558) (2,492) (10,356)

Company No: 72057-H


20

Notes to the Financial Statements for the year ended 30 September 2018 1. Corporate information

The Company is a public limited company, incorporated and domiciled in Malaysia and is listed on the Main Board, Bursa Malaysia Securities Berhad.

The registered office of the Company is located at 22-2, Jalan 1/64, Off Jalan Kolam Air/ Jalan Sultan Azlan Shah, 51200 Kuala Lumpur.

The principal place of business of the Company is located at No. 1, Jalan Istimewa 2, Taman Perindustrian Desa Cemerlang, 81800 Ulu Tiram, Johor Darul Takzim.

The principal activities of the Company are manufacturing and trading of confectionery and other related foodstuffs. The principal activities of the subsidiaries are as stated in Note 8. There have been no significant changes in the nature of these activities during the financial year.

The financial position and performance of the Group and of the Company were particularly affected by the adoption of the new accounting standards for financial instruments during the reporting period.

The number of employees in the Group and in the Company at the end of the financial year were 419 (2017: 442) and 268 (2017: 277) respectively.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 28 January 2019.

2. Basis of preparation of the financial statements

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

The financial statements of the Group and of the Company have been prepared under the historical cost convention, unless otherwise indicated in the summary of significant accounting policies (Note 3).

The preparation of financial statements in conformity with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia requires the Directors to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates.

The financial statements are presented in Ringgit Malaysia (RM), which is the Group’s functional currency. All financial information have been rounded to the nearest thousand (RM’000), unless otherwise stated.

Company No: 72057-H


21

3. Significant accounting policies

All significant accounting policies set out below are consistent with those applied in the previous financial period except as disclosed in Note 4.

(a) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the financial year end. The financial statements of the subsidiaries are prepared for the same reporting date as the Company.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. In preparing the consolidated financial statements, intragroup balances, transactions and unrealised gains or losses are eliminated in full. Uniform accounting policies are adopted in the consolidated financial statements for like transactions and events in similar circumstances.

Acquisitions of subsidiaries are accounted for using the acquisition method. The acquisition method of accounting involves allocating the cost of the acquisition to the fair value of the assets acquired and liabilities and contingent liabilities assumed at the date of acquisition. The cost of an acquisition is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the acquisition.

Any excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represents goodwill. Any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in profit or loss.

(b) Subsidiaries

Subsidiaries are those entities which the Group has power to exercise control over the financial and operating policies so as to obtain benefits from their activities, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity.

In the Company’s separate financial statements, investments in subsidiaries which are eliminated on consolidation are stated at cost less impairment losses, unless the investment is held for sale.

On disposal of such investments, or when control of a subsidiary is lost as a result of a transaction, event or other circumstance, the Group would derecognise all assets, liabilities and non-controlling interests at their carrying amount and recognise the fair value of the consideration received. Any retained interest in the former subsidiary is recognise at its fair value at the date when control is lost and the difference between net disposal proceeds and their carrying amounts is recognised in profit or loss.

Company No: 72057-H


22

3. Significant accounting policies (continued)

(c) Investments in associates and joint ventures

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.

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

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

An associate or a joint venture is equity accounted for from the date on which the investee becomes an associate or a joint venture.

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

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

The financial statements of the associated companies and joint ventures are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to align the accounting policies of the associated companies and joint ventures with those of the Group.

After application of the equity method, the Group determines whether it is necessary to recognise any impairment loss with respect to its investment in the associated company or joint venture. At each reporting date, the Group determines whether there is objective evidence that the investment in the associated company or joint venture is impaired. If there is such evidence, the carrying amount of the investment in the associated company or joint venture is tested for impairment, by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss is recognised in profit or loss. Reversal of an impairment loss is recognised to the extent that the recoverable amount of the investment subsequently increases.

Company No: 72057-H


23


(c) Investments in associates and joint ventures (continued)

Upon loss of significant influence over the associated company or joint control over the joint venture, the Group measures and recognises any restrained investment as its fair value. Any difference between the carrying amount of the associated company or joint venture upon loss of significant influence or joint control and the fair value of the restrained investment and proceeds from disposal is recognised in profit or loss.

In the Company’s separate financial statements, investments in associated companies and joint ventures are accounted for at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.

(d) Goodwill or reserve arising on consolidation

Goodwill or reserve arising on consolidation represents the difference of the fair value of purchase consideration of subsidiaries acquired over the Group's share of the fair values of their identifiable assets and liabilities at the date of acquisition.

Goodwill acquired in a business combination is initially measured at cost being the 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. Following the initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

(e) Property, plant and equipment, and depreciation

All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Repairs and maintenance are charged to profit or loss as incurred.

Subsequent to recognition, property, plant and equipment except for freehold land and leasehold land and building are stated at cost less accumulated depreciation and any accumulated impairment losses.

Freehold land stated at cost modified by revaluation, has an indefinite useful life and is therefore not depreciated.

Leasehold land and building stated at cost, is depreciated over the remaining useful life. Subsequent to recognition, leasehold land and building are stated at cost less accumulated depreciation and any accumulated impairment losses. The two (2) leasehold land and buildings of the Group have a lease term of 60 years expiring in year 2045.

No depreciation is provided for machinery-in-progress until the assets are ready for their intended use.

Company No: 72057-H


24


(e) Property, plant and equipment, and depreciation (continued)

The Directors estimate the useful lives of these property, plant and equipment to be within 5 to 100 years.

The Group anticipates that the residual values of its property, plant and equipment will be insignificant. As a result, residual values are not being taken into consideration for the computation of the depreciable amount.

Depreciation of other property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rates:

Freehold buildings 1% - 2% Furniture and fittings 10% Motor vehicles 20% Office and laboratory equipment 10% Plant and machinery 5% Plant and machinery at group cost 6 2/3% Renovations and electrical fittings 10% - 25%

The Group adopts a policy to revalue at a regular interval of at least once in every five years for its freehold land and buildings with additional valuations in the intervening years where market conditions indicate that the carrying values of the revalued land and buildings materially differ from the market value. Surpluses arising from the revaluation are recognised in other comprehensive income and accumulated in equity under the revaluation reserve. Deficits arising from the revaluation, to the extent that they are not supported by any previous revaluation surpluses, are recognised in statement of comprehensive income. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The residual values, useful lives and depreciation methods are reviewed at each financial year end, and adjusted prospectively, if appropriate 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. The difference between the net disposal proceeds, if any, and the net carrying amount is recognised in profit or loss in the year the property, plant and equipment is derecognised, and any unutilised portion of the revaluation surplus on that item is taken directly to retained earnings.

Company No: 72057-H


25


(f) Intangible assets

Computer software is initially measured at cost. Following initial recognition, computer software is measured at cost less accumulated amortisation and accumulated impairment losses. The useful lives of computer software are assessed to be finite. Computer software are amortised over their estimated useful lives of five to ten years and assessed for impairment whenever there is an indication that they may be impaired. The amortisation period and method are reviewed at least at each financial year end. Changes in the expected useful lives or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on computer software with finite lives is recognised in profit or loss. Projects-in-progress are not amortised as these computer software are not yet available for use. Gains or losses arising from derecognition of computer software are measured as the difference between the net disposal proceeds and the carrying amount of the asset and is recognised in profit or loss when the asset is derecognised.

Amortisation of intangible assets (other than goodwill) is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rate:

Purchased software 10% Intangible assets with indefinite useful lives are not amortised but tested for impairment annually or more frequently if the events or changes in circumstances indicate that the carrying value mat be impaired either individually of at the cash-generating unit level. The useful life of an intangible asset with an indefinite life is also reviewed annually to determine whether the useful life assessment continues to be supportable.

(g) Leases

i Classification

A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental to ownership. Leases of land and buildings are classified as operating or finance lease in the same way as leases of other assets and the land and buildings elements of a lease of land and buildings are considered separately for the purposes of lease classification. All leases that do not transfer substantially all the risks and rewards are classified as operating leases, with the following exceptions:

- Property held under operating leases that would otherwise meet the definition of an investment property is classified as an investment property on a property-by-property basis and, if classified as investment property, is accounted for as if held under a finance lease; and

- Land held for own use under an operating lease, the fair value of which cannot be measured separately from the fair value of a building situated thereon at the inception of the lease, is accounted for as being held under a finance lease, unless the building is also clearly held under an operating lease.

Company No: 72057-H


26


(g) Leases (continued)

ii Finance lease

Assets acquired by way of hire purchase or finance lease are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and accumulated impairment losses. The corresponding liability is included in the statement of financial position as borrowings.

In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the Group’s incremental borrowing rate is used. Any initial direct costs are also added to the carrying amount of such assets.

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

The depreciation policy for leased assets is in accordance with the depreciation for property, plant and equipment as described in Note 3(e).

iii Operating lease

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

In the case of lease of land and buildings, the minimum lease payments or up-front payments made are allocated, whenever necessary, between the land and the buildings elements in proportion to the relative fair values for leasehold interests in the land element and buildings elements of the lease at the inception of the lease. The up-front payments represent prepaid lease payments and are amortised on a straight-line basis over the lease term.

(h) Inventories

Inventories are stated at the lower of cost (determined on the first-in, first-out basis) and net realisable value on the weighted average cost basis. Cost of finished goods and work-in-progress include cost of raw materials, direct labour, other direct costs and appropriate production overheads (based on normal operating capacity).

Cost of raw materials comprise all costs of purchase, cost of conversion plus other costs incurred in bringing the inventories to their present location and condition.

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

Due allowance is made for all obsolete and slow moving inventories.

Company No: 72057-H


27


(i) Receivables

Receivables are recognised initially at invoiced value which is their fair value and subsequently measured at amortised cost using the effective interest method, less loss allowance. Bad debts are written off in the period in which they are identified.

(j) Cash and cash equivalents

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

(k) Payables

Payables are stated at cost, which is the fair value of the consideration to be paid in the future for goods and services received.

(l) Interest bearing loans and borrowings

All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

(m) Provision for liabilities

Provision for liabilities is recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each financial year end 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, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

(n) Equity instruments

Ordinary shares are classified as equity instruments. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

The transaction costs of an equity transaction are accounted for as a deduction from equity, net of tax. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided.

The consideration paid, including attributable transaction costs on repurchased ordinary shares of the Company that have not been cancelled, are classified as treasury shares and presented as a deduction from equity. No gain or loss is recognised in profit or loss on the sale, re-issuance or cancellation of treasury shares. When treasury shares are reissued by resale, the difference between the sales consideration and the carrying amount is recognised in equity.

Company No: 72057-H


28


(o) Income tax

Income tax on the profit or loss for the year comprises current and deferred tax. Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the financial year end. Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity. Deferred tax is provided for, using the liability method on temporary differences at the financial year end between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination, and at the time of the transaction, affects neither accounting profit or loss nor taxable profit or loss. The carrying amount of deferred tax assets are reviewed at each financial year end and reduced to the extent that it has become probable that sufficient taxable profit will be available to allow all or part of the deferred tax assets to be utilised. Unrecognised deferred tax assets are reassessed at each financial year end and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.

Deferred tax 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 and tax laws that have been enacted or substantively enacted at the financial year end.

Deferred tax is 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.

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

Company No: 72057-H


29


(p) Revenue recognition

i Sale of goods

Sales are recognised when control of the products has been transferred, being when the products are delivered to the customers and there is no unfulfilled obligation that could affect the customer’s acceptance of the products.

ii Other income

a. Interest income

Interest income is recognised on an accrual basis (taking into account the effective yield on the asset) unless its collectability is in doubt.

b. Rental income

Rental income from operating leases (net of any incentives given to the leases) is recognised on an accrual basis.

c. Dividend income

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

(q) Employee benefits

i Short term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the 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.

ii Defined contribution plan

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 construction obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. As required by law, the Group makes contributions to the statutory provident fund, the Employees Provident Fund. Such contributions are recognised as an expense in profit or loss in the period as incurred.

Company No: 72057-H


30


(q) Employee benefits (continued)

iii Termination benefits

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

iv Share-based payments

The Employees’ Share Option Scheme (“ESOS”), an equity-settled, share based compensation plan, allows the Group’s employees to acquire ordinary share of the Company. The total fair value of share options granted to employees is recognised as an employee cost with a corresponding increase in the share options reserve within equity over the vesting period and taking into account the probability that the options will be vested.

The fair value of share options is measured at grant date, taking into account, if any, the market vesting conditions upon which the options were granted but excluding the impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable on vesting date.

At the end of each reporting period, the Group revises its estimates of the number of options that are expected to become exercisable on vesting date. It recognises the impact of the revision of original estimates, if any, in profit or loss, with a corresponding adjustment to equity over the remaining vesting period. The equity amount is recognised in the share option reserve (“Warrant Reserve”) until the options are exercised, upon which it will be transferred to share capital. The share option reserve in relation to the unexercised option at the expiry of the share option scheme will be transferred to retain earnings.

If the options are exercised, the Group issues new shares to the employees. The proceeds received less any directly attributable transaction costs are recognised in ordinary shares capital.

Company No: 72057-H


31


(r) Foreign currencies

i Functional and presentation currency

The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the Company’s functional currency.

ii Foreign currency transactions

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s reporting currency (foreign currencies) are recorded in the functional currencies using the exchange rates prevailing at the date of the transactions. At each financial year end, monetary items denominated in foreign currencies are translated at the rates prevailing at the financial year end. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are included in profit or loss for the period except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation. Exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation, where that monetary item is denominated in either the functional currency of the reporting entity or the foreign operation, are initially taken directly to the foreign currency translation reserve within equity until the disposal of the foreign operation, at which time they are recognised in profit or loss. Exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation, where that monetary item is denominated in a currency other than the functional currency of either the reporting entity or the foreign operation, are recognised in profit or loss for the period. Exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation, regardless of the currency of the monetary item, are recognised in profit or loss in the Group’s financial statements or the individual financial statements of the foreign operation, as appropriate.

Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.

Company No: 72057-H


32


(r) Foreign currencies (continued)

ii Foreign currency transactions (continued)

The principal closing rates used in translation of foreign currency amounts are as follows:

2018 2017 RM RM 1 Euro (EUR) 4.823 4.982 1 Hong Kong Dollar (HKD) 0.529 0.541 1 Japanese Yen (JPY) 0.036 0.039 1 Singapore Dollar (SGD) 3.029 3.113 1 United States Dollar (USD) 4.141 4.228 1 Thai Bath (THB) 0.128 0.127 100 Indian Rupee (IDR) 0.028 0.031

(s) Impairment of assets

The carrying amounts of assets, other than investment property, construction contract assets, property development costs, inventories, deferred tax assets and non-current assets (or disposal groups) held for sale, are reviewed at each financial year end to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated to determine the amount of impairment loss.

For goodwill, intangible assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at each financial year end or more frequently when indicators of impairment are identified.

For the purpose of impairment testing of these assets, recoverable amount is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, recoverable amount is determined for the cash-generating unit (CGU) to which the asset belongs to.

Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s CGUs, or groups of CGUs, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units.

An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.

Company No: 72057-H


33


(s) Impairment of assets (continued)

An impairment loss is recognised in profit or loss in the period in which it arises, except for assets that were previously revalued where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation. Impairment loss on goodwill is not reversed in a subsequent period. An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of an asset other than goodwill is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period.

(t) Financial instruments

Financial instruments carried on the statement of financial position include cash and bank balances, deposits with financial institutions, investments, receivables, payables and borrowings. The recognition methods adopted are disclosed in the respective accounting policy statements.

Financial instruments are classified as assets, liabilities or equity in accordance with the substance of the contractual arrangement. Interests, dividends and gains and losses relating to a financial instrument classified as a liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are recognised directly in equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.

Financial assets

Financial assets are recognised in the statement of financial position when the Group becomes a party to the contractual provisions of the instrument. Regular way purchases and sales of financial assets are recognised and derecognised using trade date accounting.

On initial recognition, financial assets are measured at fair value, plus transaction costs for financial assets not at ‘fair value through profit or loss’. Effective interest method is a method of calculating the amortised cost of financial assets and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial assets or a shorter period to the net carrying amount of the financial assets.

After initial recognition, financial assets are classified into one of four categories: financial assets at ‘fair value through profit or loss’, ‘held-to-maturity’ investments, loans and receivables and ‘available-for-sale’ financial assets.

Company No: 72057-H


34


(t) Financial instruments (continued)

Financial assets (continued)

i Financial assets at ‘fair value through profit or loss’

Financial assets are classified as financial assets at ‘fair value through profit or loss’ when the financial assets are either ‘held for trading’, or upon initial recognition, financial assets are designated as financial assets at ‘fair value through profit or loss’.

A financial asset is classified as ‘held for trading’ if:

- it is acquired principally for the purpose of selling it in the near term; or - on initial recognition, it is part of a portfolio of identified financial instruments that are

managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or

- it is a derivative that is not designated as an effective hedging instrument.

Financial assets (other than ‘held for trading’) are designated as financial assets at ‘fair value through profit or loss’ upon initial recognition if:

- it eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or recognising the gains and losses on them on different bases; or

- a group of financial assets is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

- a contract contains one or more embedded derivatives, the entire hybrid contracts are designated as financial assets at ‘fair value through profit or loss’.

After initial recognition, financial assets at ‘fair value through profit or loss’ are measured at fair value. Gains or losses on the financial assets at ‘fair value through profit or loss’ are recognised in profit or loss.

ii ‘Held-to-maturity’ investments

‘Held-to-maturity’ investments are non-derivative financial assets with fixed or determinable payments and fixed maturity and that the Group has the positive intention and ability to hold the investments to maturity.

After initial recognition, ‘held-to-maturity’ investments are measured at amortised cost using the effective interest method less any accumulated impairment losses. Gains or losses are recognised in profit or loss when ‘held-to-maturity’ investments are derecognised or impaired.

Company No: 72057-H


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iii Loans and receivables

Loans and receivables are non-derivative financial assets (such as trade receivables, loans assets, unquoted debt instruments and deposits held in banks) with fixed or determinable payments that are not quoted in an active market.

After initial recognition, loans and receivables are measured at amortised cost using the effective interest method less any accumulated impairment losses. Gains or losses are recognised in profit or loss when loans and receivables are derecognised or impaired.

iv ‘Available-for-sale’ financial assets

Financial assets are classified as ‘available-for-sale’ financial assets when the financial assets are either designated as such upon initial recognition or are not classified in any of the three preceding categories.

Investment in quoted equity and debt instruments that are traded in active market and certain unquoted equity instruments (when the fair value can be determined using a valuation technique) are classified as ‘available-for-sale’ financial assets. ‘Available-for-sale’ financial assets are measured at fair value.

Gains or losses on ‘available-for-sale’ financial assets are recognised in other comprehensive income, except for impairment losses and foreign exchange gains or losses on monetary instruments, until the ‘available-for-sale’ financial assets are derecognised.

The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial assets are derecognised.

Interest calculated using the effective interest method is recognised in profit or loss. Dividends on ‘available-for-sale’ equity instruments are recognised in profit or loss when the Group’s right to receive payment is established.

v Investment in unquoted equity instruments carried at cost

Investment in equity instruments which do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such an unquoted equity instruments, are measured at cost less any accumulated impairment losses.

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vi Reclassifications of financial assets

The Group does not reclassify derivative out of the financial assets at ‘fair value through profit or loss’ category while they are held or in issue. Equally, the Group does not reclassify other financial assets out of the financial assets at ‘fair value through profit or loss’ category if upon initial recognition, those financial assets were designated as financial assets at ‘fair value through profit or loss’. Other financial assets are not reclassified into the financial assets at ‘fair value through profit or loss’ category after initial recognition under another category.

When it is no longer appropriate to classify an investment as ‘held-to-maturity’ as a result of a change in intention and ability, the investment is reclassified as held for sale and re-measured at fair value. Any difference between the carrying amount and fair value of the investment is recognised in other comprehensive income.

vii Impairment of financial assets

At the end of each financial year, the Group assesses whether there is any objective evidence that financial assets held, other than financial assets at ‘fair value through profit or loss’, are impaired.

Financial assets are impaired if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the financial assets which have an impact on the estimated future cash flows of the financial assets that can be reliably measured.

For investment in equity instruments classified as ‘available-for-sale’ financial assets, objective evidence that the financial assets are impaired include the disappearance of an active trading market for the financial assets because of significant financial difficulties, and a significant and/or prolonged decline of the market price below the cost.

For other financial assets, objective evidence could include:

- significant financial difficulties of the issuer; or - default or significant delay in payments and delinquency in interest or principal

payments; or - a breach of contract; or - the lender granting to the borrower a concession that the lender would not otherwise

consider; or - it becoming probable that the borrower will enter bankruptcy or other financial re-

organisation; or - observable data indicating that there is a measurable decrease in the estimated future

cash flows from the financial assets since the initial recognition of those assets.

Impairment losses, in respect of ‘held-to-maturity’ investments carried at amortised cost are measured as the differences between the assets’ carrying amounts and the present values of their estimated future cash flows discounted at the ‘held-to-maturity’ investments’ original effective interest rate.

Company No: 72057-H


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vii Impairment of financial assets (continued)

For certain category of financial assets, such as trade receivables, if it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the assets are included in a group with similar credit risk characteristics and collectively assessed for impairment. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.

The carrying amounts of the financial assets are reduced directly, except for the carrying amounts of trade and other receivables, and staff loan receivables which are reduced through the use of an allowance account, and when these becomes uncollectible. Any impairment loss is recognised in profit or loss immediately.

If, in later periods, the amount of any impairment loss decreases, the previously recognised impairment losses are reversed directly, except for the amounts related to trade receivables which are reversed to write back the amount previously provided in the allowance account. The reversal is recognised in profit or loss immediately.

If there is objective evidence that impairment losses have been incurred on financial assets carried at cost, the amount of any impairment loss is measured as the differences between the carrying amounts of the financial assets and the present value of their estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed.

For ‘available-for-sale’ financial assets, if a decline in fair value has been recognised in other comprehensive income and there is objective evidence that the assets are impaired, the cumulative losses that have been recognised are reclassified to profit or loss.

Impairment losses recognised in profit or loss for an investment in an equity instrument classified as ‘available-for-sale’ financial assets are not reversed through profit or loss. If the fair value of a debt instrument classified as an ‘available-for-sale’ financial asset subsequently increases, and the increase can be objectively related to an event occurring after the impairment losses were recognised in profit or loss, the impairment losses are reversed and recognised in profit or loss.

viii Derecognition of financial assets

Financial assets are derecognised when the contractual rights to the cash flows from the financial assets expire or the Group transfers the financial assets and the transfer qualifies for derecognition.

On derecognition of financial assets in their entirety, the differences between the carrying amounts and the sum of the consideration received and any cumulative gains or losses that have been recognised in other comprehensive income are recognised in profit or loss.

Company No: 72057-H


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Financial liabilities

Financial liabilities are recognised on the statement of financial position when the Group becomes a party to the contractual provisions of the instrument. On initial recognition, financial liabilities are measured at fair value, plus transaction costs for financial liabilities not at ‘fair value through profit or loss’. After initial recognition, financial liabilities are either classified as financial liabilities at ‘fair value through profit or loss’ or amortised cost using the effective interest method.

i Financial liabilities at ‘fair value through profit or loss’

Financial liabilities are classified as financial liabilities at ‘fair value through profit or loss’ when the financial liabilities are either ‘held for trading’ or upon initial recognition, the financial liabilities are designated as financial liabilities at ‘fair value through profit or loss’.

A financial liability is classified as ‘held for trading’ if:

- it is incurred principally for the purpose of repurchasing it in the near term; or - on initial recognition, it is part of a portfolio of identified financial instruments that are

managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or

- it is a derivative that is not designated as an effective hedging instrument.

Financial liabilities (other than ‘held for trading’) are designated as financial liabilities at ‘fair value through profit or loss’ upon initial recognition if:

- it eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring liabilities or recognising the gains and losses on them on different bases; or

- a group of financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

- a contract contains one or more embedded derivatives, the entire hybrid contracts are designated as financial liabilities at ‘fair value through profit or loss’.

After initial recognition, financial liabilities at ‘fair value through profit or loss’ are measured at fair value. Gains or losses on the financial liabilities at ‘fair value through profit or loss’ are recognised in profit or loss.

ii Financial liabilities at amortised cost using the effective interest method

Effective interest method is a method of calculating the amortised cost of financial liabilities and allocating the interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liabilities or a shorter period to the net carrying amount of the financial liabilities.

After initial recognition, financial liabilities other than financial liabilities at ‘fair value through profit or loss’ are measured at amortised cost using the effective interest method. Gains or losses are recognised in profit or loss when the financial liabilities are derecognised or impaired.

Company No: 72057-H


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Financial liabilities (continued)

iii Derecognition of financial liabilities

Financial liabilities are derecognised when the obligation specified in the contract is discharged, cancelled or expires.

Any difference between the carrying amounts of financial liabilities derecognised and the consideration paid is recognised in profit or loss.

(u) Borrowing costs

Borrowing costs are recognised in the profit or loss using the effective interest method.

(v) Contingencies

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation.

A contingent liability also arises in extremely rare cases where these is a liability that cannot be recognised because it cannot be measured reliably.

The Group does not recognise a contingent liability but discloses its existence in the financial statements.

A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group. The Group does not recognise contingent assets but discloses its existence where inflows of economic benefits are probable, but not virtually certain.

(w) Segment reporting

For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segments results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 28, including the factors used to identify the reportable segments and measurement basis of segment information.

Company No: 72057-H


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(x) Earnings per share

i Basic earnings per share

Basic earnings per share is calculated by dividing: the profit attributable to owners of the Company, excluding any costs of servicing

equity other than ordinary shares by the weighted average number of ordinary shares outstanding during the financial

year, adjusted for bonus elements in ordinary shares issued during the year and excluding treasury shares.

ii Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account: the after income tax effect of interest and other financing costs associated with

dilutive potential ordinary shares the weighted average number of additional ordinary shares that would have been

outstanding assuming the conversion of all dilutive potential ordinary shares.

(y) Related parties

Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individual or other entities.

Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly.

Company No: 72057-H


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4. Adoption of new and revised Malaysian Financial Reporting Standards and interpretations

(a) MFRSs that have been issued and effective

The following revised MFRSs issued by MASB have been adopted, and the adoptions are not expected to have any or significant impact to the financial statements:

Title Effective DateAmendments to MFRS 12: Disclosure of Interests in Other Entities 1 January 2017Amendments to MFRS 107: Disclosure Initiative 1 January 2017Amendments to MFRS 112: Recognition of Deferred Tax Assets for

Unrealised Loss 1 January 2017

(b) New and revised MFRSs that have been issued but only effective for financial period beginning on 1 January 2018 and onwards

The following revised MFRSs issued by MASB, have not been adopted, and the adoptions are

not expected to have any or significant impact to the financial statements: Effective for financial period beginning on 1 January 2018

Title Effective Date Amendments to MFRS 1: First-time Adoption of Malaysian Financial

Reporting Standards 1 January 2018

Amendments to MFRS 2: Share-based Payment 1 January 2018 Amendments to MFRS 4: Insurance Contracts 1 January 2018 Amendments to MFRS 128: Investment in Associates and Joint Ventures 1 January 2018 Amendments to MFRS 140: Investment Property 1 January 2018 IC Interpretation 22: Foreign Currency Transactions and Advance

Considerations 1 January 2018

Effective for financial period beginning on 1 January 2019

Title Effective Date MFRS 16 Leases 1 January 2019 Amendments to MFRS 3: Business Combinations 1 January 2019 Amendments to MFRS 11: Joint Arrangements 1 January 2019 Amendments to MFRS 112: Income Taxes 1 January 2019 Amendments to MFRS 119: Employee Benefits 1 January 2019 Amendments to MFRS 123: Borrowings Costs 1 January 2019 Amendments to MFRS 128: Investment in Associates and Joint Ventures 1 January 2019 IC Interpretation 23: Uncertainty over Income Tax Treatments 1 January 2019

Effective for financial period beginning on 1 January 2020

Title Effective Date Amendments to MFRS 3: Business Combinations 1 January 2020 Amendments to MFRS 101: Presentation of Financial Statements 1 January 2020 Amendments to MFRS 108: Accounting Policies, Changes in Accounting

Estimates and Errors 1 January 2020

Company No: 72057-H


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4. Adoption of new and revised Malaysian Financial Reporting Standards and interpretations (continued)

(b) New and revised MFRSs that have been issued but only effective for financial period

beginning on 1 January 2018 and onwards (continued)

The following revised MFRSs issued by MASB, have not been adopted, and the adoptions are not expected to have any or significant impact to the financial statements: Effective for financial period beginning on 1 January 2021 Title Effective Date Amendments to MFRS 17: Insurance Contracts 1 January 2021 Effective for financial period beginning on 1 January 2021 Title Effective Date Amendments to MFRS 10: Consolidated Financial Statement Deferred Amendments to MFRS 128: Investments in Associates and Joint Ventures Deferred The Group and the Company are in the process of assessing the impact of implementing these Standards and Amendments since the effects would only be observable for future financial year.

(c) New MFRSs that have been issued and have been early adopted The following new MFRSs issued by MASB, have been adopted, and the impact from their

adoptions have been disclosed in the financial statements:

Title Effective Date MFRS 9 Financial Instruments 1 January 2018 MFRS 15 Revenue from Contracts with Customers 1 January 2018

The Group adopted MFRS 9 Financial Instruments on 1 October 2017. MFRS 9 replaces the guidance in MFRS 139 Financial Instruments: Recognition and Measurement on the classification and measurement of financial assets and financial liabilities, impairment methodology of financial assets and on hedge accounting. MFRS 9 replaces MFRS 139 with a forward looking expected credit loss (“ECL”) model. Under MFRS 9, loss allowances, will be measured on either 12 months ECLs or Lifetime ECLs. As allowed by the transitional provision of MFRS 9, the Group elected not to restate the comparatives. Effects arising from the initial application of the new impairment model and the recognition of equity investments to fair value through profit and loss (“FVTPL”) to the opening balance as at 1 October 2017 is disclosed in the Statements of Changes in Equity. The Group adopted MFRS 15 Revenue from Contract with Customers on 1 October 2017. MFRS 15 replaces the guidance in MFRS 118 Revenue. MFRS 15 provides a single model for accounting for revenue arising from contracts with customers, focusing on the nature, amount, timing and uncertainty of revenue and cash flows, recognising revenue in accordance with the 5-step core principle. The application of MFRS 15 does not have a material effect on the Group’s financial statements.

Company No: 72057-H


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5. Significant accounting estimates

Key Sources of Estimation Uncertainty

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, reported amounts of assets, liabilities, income and expenses, and disclosures made. They are assessed on an on-going basis and are based on historical experience and other relevant factors, including expectations of future events that are believed to be reasonable under the circumstances.

The key assumptions concerning the future and other key sources of estimation uncertainty at the financial year end that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

(a) Depreciation of property, plant and equipment and intangible assets The Group depreciates and amortises the property, plant and equipment and intangible assets respectively over their estimated useful lives and after taking into account their estimated residual values, using the straight line method. The estimated useful lives applied by the Group as disclosed in Note 3(e) and Note 3(f) respectively, reflect the Directors’ estimates of the periods that the Group expects to derive future economic benefits from the use of the Group’s property, plant and equipment and intangible assets.

(b) Impairment of property, plant and equipment, intangible assets and goodwill

The Group carried out the impairment test based on a variety of estimation including the value-in-use of the cash-generating unit (CGU), or events and/or changes in circumstances indicate that it might be impaired to which the property, plant and equipment, intangible assets and goodwill are allocated. Estimating the value-in-use requires the Group to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows.

(c) Impairment of investment in subsidiaries and associates

The investments are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with the accounting policy. The recoverable amounts of these investments have been determined based on their fair value less costs to sell. The fair value less costs to sell was arrived at by using valuation techniques. The Group uses its judgement to select a variety of methods and make assumptions that are mainly based on market condition existing at each financial year end.

There could be further adjustments to the carrying value of the investments should the going concern basis be inappropriate.

(d) Allowances for doubtful debts

The collectability of receivables is assessed on an ongoing basis. Receivables which are initially recognised at invoiced value which is their fair value will be measured at amortised cost using the effective interest method less loss allowance. Bad debts are written off in the period in which they are identified.

A considerable amount of judgement is required in assessing the ultimate realisation of these receivables, including the creditworthiness and the past collection history of each customer when forming an expectation in calculating their expected credit loss model which is used to measure the amortised cost.

Company No: 72057-H


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5. Significant accounting estimates (continued)

(e) Deferred tax assets

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

(f) Income tax

Significant judgement is involved in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

(g) Contingent liabilities As disclosed in Note 35, a contingent liability is not recognised but is disclosed in the notes to the financial statements and when a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision.

(h) Fair value estimates of certain financial instruments The Group carries certain financial assets and liabilities at fair value, which required extensive use of accounting estimates and judgement. While significant components of fair value measurement were determined using verifiable objective evidence, the amount of changes in fair value will differ if the Group uses different valuation methodologies. Any changes in fair value of these assets and liabilities would affect profit or loss/equity.

Company No: 72057-H


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6. Property, plant and equipment

Group Freehold land and buildings

Leasehold

land and buildings

Furniture

and fittings

Motor vehicles

Plant and machinery

Plant and machinery

-in-progress

Office and laboratory equipment

Renovations and

electrical fittings

Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cost/valuation

At 1 October 2017 48,268 13,430 4,847 7,160 416,675 6,371 9,797 9,703 516,251 Additions - - 4,758 - 41,226 - 4,581 1,902 52,467 Revaluations 13,021 4,040 - - - - - - 17,061 Disposals (1,690) - (186) (297) (2,168) - (299) - (4,640) At 30 September 2018 59,599 17,470 9,419 6,863 455,733 6,371 14,079 11,605 581,139

Accumulated depreciation At 1 October 2017 613 1,328 4,771 3,242 102,968 - 6,322 9,703 128,947 Charge for the year 229 411 122 970 13,310 - 82 730 15,854 Revaluations (842) (1,739) - - - - - - (2,581) Disposals - - (186) (142) (1,168) - (299) - (1,795) At 30 September 2018 - - 4,707 4,070 115,110 - 6,105 10,433 140,425

Net book value At 30 September 2018 59,599 17,470 4,712 2,793 340,623 6,371 7,974 1,172 440,714

Company No: 72057-H


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6. Property, plant and equipment (continued)

Group (restated) Freehold land and buildings

Leasehold

land and buildings

Furniture

and fittings

Motor vehicles

Plant and machinery

Plant and machinery

-in-progress


Renovations and

electrical fittings

Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Cost/valuation

At 1 July 2016 48,950 13,430 4,849 5,968 400,376 5,080 9,754 9,197 497,604 Additions - - 4 1,894 20,982 1,291 43 506 24,720 Disposals (682) - (6) (702) (4,683) - - - (6,073) At 30 September 2017 48,268 13,430 4,847 7,160 416,675 6,371 9,797 9,703 516,251

Accumulated Depreciation At 1 July 2016 333 817 4,634 2,375 90,649 - 6,210 9,136 114,154 Charge for the year 292 511 137 1,348 16,507 - 113 567 19,475 Disposals (12) - - (481) (4,188) - (1) - (4,682) At 30 September 2017 613 1,328 4,771 3,242 102,968 - 6,322 9,703 128,947

Net book value At 30 September 2017 47,655 12,102 76 3,918 313,707 6,371 3,475 - 387,304

Company No: 72057-H


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Company Freehold land and buildings

Furniture and fittings

Motor vehicles

Plant and machinery


Renovations and

electrical fittings

Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cost/valuation At 1 October 2017 48,268 5,459 5,379 281,213 2,550 15,308 358,177 Additions - 4,756 - 40,891 5,260 1,902 52,809 Revaluations 13,021 - - - - - 13,021 Disposals (1,690) - (297) - - - (1,987) At 30 September 2018 59,599 10,215 5,082 322,104 7,810 17,210 422,020 Accumulated depreciation At 1 October 2017 613 4,899 2,655 74,923 2,271 13,179 98,540 Charge for the year 229 117 629 8,800 107 707 10,589 Disposals - - (142) - - - (142) Revaluations (842) - - - - - (842) At 30 September 2018 - 5,016 3,142 83,723 2,378 13,886 108,145 Net book value At 30 September 2018 59,599 5,199 1,940 238,381 5,432 3,324 313,875

Company No: 72057-H


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Company (restated) Freehold land and buildings

Furniture and fittings

Motor vehicles

Plant and machinery


Renovations and

electrical fittings

Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cost/valuation

At 1 July 2016 48,950 5,455 4,973 279,317 2,507 14,969 356,171 Additions - 4 1,108 1,896 43 339 3,390 Disposals (682) - (702) - - - (1,384) At 30 September 2017 48,268 5,459 5,379 281,213 2,550 15,308 358,177 Accumulated depreciation At 1 July 2016 333 4,762 2,175 63,978 2,176 12,254 85,678 Charge for the year 292 137 961 10,945 95 925 13,355 Disposals (12) - (481) - - - (493) At 30 September 2017 613 4,899 2,655 74,923 2,271 13,179 98,540 Net book value At 30 September 2017 47,655 560 2,724 206,290 279 2,129 259,637

Company No: 72057-H


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The carrying amount of property, plant and equipment held under finance lease arrangements as at the financial year end is as follows:-

Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 Motor vehicles 2,439 3,564 1,731 2,515

The valuation of property, plant and equipment were valued based on valuations by independent external valuer who holds a recognised qualification and has relevant experience. The fair values of the market comparable approach using certain unit of comparison such as price per square foot which reflects the recent transaction prices for similar properties within the same area, without significant adjustments.

Had the revalued land and buildings been carried at historical cost less accumulated depreciation. The net book value of the freehold land and buildings that would have been included in the financial statements of the Group and Company are as follows:-

Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 Freehold land and buildings Cost 48,267 53,617 48,267 48,267 Accumulated depreciation (228) (1,797) (228) (630) Net book value 48,039 51,820 48,039 47,637

Company No: 72057-H


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7. Intangible assets

Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 Goodwill and software At beginning of the year 4,205 4,205 - - Additions 4,065 - 4,065 - Less: Impairment loss/amortisation

charge (23) -

(23) - At end of the year 8,247 4,205 4,042 -

Cost 8,778 4,713 4,065 - Less: Accumulated impairment/

amortisation (531) (508)

(23) - Net book value 8,247 4,205 4,042 -

(a) Goodwill on consolidation At beginning of the year 4,205 4,205 - - Less: Impairment loss - - - - At end of the year 4,205 4,205 - -

Cost 4,713 4,713 - - Less: Accumulated impairment (508) (508) - - Net book value 4,205 4,205 - -

(b) Purchased software At beginning of the year - - - - Additions 4,065 - 4,065 - Less: Amortisation charge (23) - (23) - At end of the year 4,042 - 4,042 -

Cost 4,065 - 4,065 - Less: Accumulated

amortisation (23) -

(23) - Net book value 4,042 - 4,042 -

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8. Investment in subsidiaries

Company 2018 2017 RM’000 RM’000 Unquoted shares, at cost At beginning/ end of the year 31,726 31,726

The details of subsidiaries are as follows:-

Country of Equity interest held Name of companies incorporation 2018 2017 Principal activities

% % Kinos Food Industries

(M) Sdn Bhd* Malaysia 100 100 Investment holding,

manufacturing and trading of confectioneries and snack food

Kim Choaw Sdn Bhd*^ Malaysia 100 100 Investment property holding

Kinos Food Trading Sdn Bhd*^

Malaysia 100 100 Temporarily ceased operations

* Audited by Nexia SSY, a member of Nexia International. ^ Wholly owned by Kinos Food Industries (M) Sdn. Bhd.

9. Investment in associates

Group Company Restated Restated 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 Quoted shares, at cost At beginning of the year 29,850 28,584 29,850 28,584 Acquisition of shares - 863 - 863 Group’s share on post-acquisition

reserve 934 403

- 403 At end of the year 30,784 29,850 29,850 29,850

Quoted market value 11,818 15,281 11,818 15,281

Company No: 72057-H


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9. Investment in associates (continued)

Country of Equity interest held Name of companies incorporation 2018 2017 Principal activities

% % Khee San Berhad*# Malaysia 20 20 Investment holding Khee San Food

Industries Sdn Bhd*^ Malaysia 20 20 Manufacturer of candy

confectionery and wafer products

Khee San Marketing Sdn Bhd*^

Malaysia 20 20 Temporarily ceased operations

* Audited by an auditor other than Nexia SSY. # Listed on the Main Board of Bursa Malaysia. ^ Wholly owned by Khee San Berhad.

10. Other investments

Group and Company 2018 2017 RM’000 RM’000 Quoted and unquoted shares, at cost Quoted in Malaysia – shares in corporation 53 53 Unquoted outside Malaysia – shares in corporation 1 1 Unquoted shares at cost in Malaysia – bonds 4,000 4,000 Total cost 4,054 4,054 Less: Impairment on investments (4,033) (4,033) At beginning/end of the year 21 21

Market value: Quoted in Malaysia 12 39

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11. Inventories

Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 At cost: Raw materials 10,484 7,407 6,034 5,858 Work-in-progress 5,015 5,286 4,843 5,156 Finished goods 8,234 3,914 6,672 1,964 Consumables - spare parts 3,245 - 3,246 - 26,978 16,607 20,795 12,978 Less: Allowance for inventories (87) (562) (1) (476) 26,891 16,045 20,794 12,502

Total inventories charged out in

the statement of comprehensive income under cost of goods sold 270,357 374,193 222,899 293,547

The reconciliation of movement in allowance for inventories are as follows:- Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 At beginning of the year 562 641 476 439 Additions - 49 - 37 Reversals (475) (128) (475) - At end of the year 87 562 1 476

Company No: 72057-H


54

12. Trade receivables

Group Company Restated Restated 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 Trade receivables 275,052 201,962 248,334 179,215 Less: Allowance for doubtful debts (62,235) (1,025) (61,666) (1,023) 212,817 200,937 186,668 178,192

Trade receivables are non-interest bearing and the normal trade credit terms granted to customers ranged from 30 to 180 (2017: 30 to 180) days. On initial recognition, the Group recognised them at their original invoiced amount, which is their fair values. The Group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.

The Group applies the MFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables.

To measure the expected credit losses, trade receivables have been grouped on shared credit risk characteristics and the days past due. The expected loss rates are based on the payment profiles of sales over a period of 12 months before 30 September 2018 or 1 October 2017 respectively and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.

On that basis, the loss allowance as at 30 September 2018 and 1 October 2017 (on adoption of MFRS 9) was determined as follows for the trade receivables:

Group 30 September 2018

Current

More than 30

days past due

More than 60

days past due

More than 120 days past

due

Total Expected loss rate 1% 3% 5% 9%-28% Gross carrying amount

of trade receivables

35,155

32,128

90,918

116,857

275,058 Loss allowances - - (875) (61,360) (62,235)

1 October 2017 Current

More than 30

days past due

More than 60

days past due

More than 120 days past

due

Total Expected loss rate 1% 3% 5% 9%-28% Gross carrying amount

of trade receivables

84,741

50,152

30,927

82,514

248,334 Loss allowances - - - (1,025) (1,025)

Company No: 72057-H


55

12. Trade receivables (continued)

The closing loss allowance for trade receivables as at 30 September 2018 reconciled to the opening loss allowances as at 1 October 2017 is as follows:-

Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 At 30 September – calculated

under MFRS 139

1,025

1,025

1,023

1,023 Amounts restated through

opening retained earnings

59,216

-

58,649

- At 1 October – calculated

under MFRS 9

60,241

1,025

59,672

1,023 Increase in loss allowance

recognised in profit or loss during the year

1,994

-

1,994

- Receivables written off during the

year as uncollectible

-

-

-

- Unused amount reversed - - - - At 30 September – MFRS 9 62,235 1,025 61,666 1,023

Trade receivables are written of when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst other, the failure of a debtor to engage in a repayment plan with the Group, and failure to make contractual payments for a period greater than 120 days past due.

Impairment losses on trade receivables are presented as net impairment losses within operating profit. Subsequent recoveries of amounts previously written off are credited against the same line item.

In prior years, the impairment of trade receivables was assessed based on the incurred loss model. Individual receivables which were known to be uncollectible were written off by reducing the carrying amount directly. The other trade receivables were assessed collectively to determine whether there was objective evidence that an impairment had been incurred but not yet identified. For these receivables the estimated impairment losses were recognised in a separate provision for impairment. The Group considered the there was evidence of impairment if any of the indicators as mentioned in Note 3(t)(vii) were present. Receivables for which an impairment was recognised were written-off against the allowances made earlier when there was no expectation of recovering additional cash.

Company No: 72057-H


56

12. Trade receivables (continued)

The currency exposure profile of trade receivables is as follows:

Group Company Restated Restated 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 Ringgit Malaysia 131,627 79,100 116,427 71,779 Unites States Dollar 80,335 119,135 69,477 104,983 Singapore Dollar 413 1,430 345 1,430 Indonesia Rupiah 31 1,272 31 - Hong Kong Dollar 368 - 345 - Thai Baht 43 - 43 - 212,817 200,937 186,668 178,192

13. Other receivables, deposits and prepayments

Group Company Restated Restated 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 Other receivables 2,499 498 1,731 62 Deposits 385 384 330 330 Prepayments 19,136 1,298 19,124 1,298 22,020 2,180 21,185 1,690 These amounts are generally arise from transactions out the usual operating activities of the Group.

14. Amount due from subsidiaries

The amount due from subsidiaries represents advances and payments made on behalf by the Company which are unsecured, interest free and is repayable on demand.

These amounts generally arise from transactions out of the usual operating activities of the Group.

Company No: 72057-H


57

15. Amount due from associates

The amount due to subsidiaries represents advances and payments made on behalf by the Company which is unsecured, interest free and is repayable on demand.

These amounts are generally arise from transactions out the usual operating activities of the Group.

16. Fixed deposits with licenced financial institution

The average interest rate and maturity periods of fixed deposits at the statement of financial position date were as follows:-

Group Company 2018 2017 2018 2017

Interest rate (%) 2.75% -

3.25% 3.26% -

3.50% 2.75% -

3.25% 3.26% -

3.50%

Maturity period (months) 1 month -

12 months 1 month -

12 months 1 month -

12 months 1 month -

12 months

17. Cash and cash equivalents

As at the financial year end the breakdown of cash and cash equivalents for purposes of presentation in the statements of cash flows is as follows:- Group Company Restated Restated 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 Fixed deposits with licensed

financial institution (Note 16) 307 300 307 300 Cash 64 38 59 32 Bank balances 19,339 9,236 19,127 9,243 19,403 9,274 19,186 9,275 Bank overdrafts (Note 20) (26,001) (20,132) (21,985) (19,931) (6,291) (10,558) (2,492) (10,356)

Company No: 72057-H


58

18. Share capital Group and Company 2018 2017 2018 2017 ’000 Unit ’000 Unit RM’000 RM’000 Issued and fully paid, ordinary shares At beginning of the year 186,534 186,534 186,534 186,534 Adjustments for the effects of

Companies Act 2016: - Share premium (Note 19a) - - 13,775 - Issue of shares 13,000 - 6,175 - At end of the year 199,534 186,534 206,484 186,534

During the financial year, the Company issued 13,000,000 new ordinary shares for cash under private placements at RM0.475 per ordinary share amounting to RM6,175,000 for working capital purposes.

The new ordinary shares issued rank pari passu in all respects with the existing ordinary shares of the Company.

19. Reserves

Group Company

Restated Restated 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 Non-distributable Share premium - 13,775 - 13,775 Revaluation reserves 37,406 21,430 28,409 17,523 Warrant reserves 37,281 37,281 37,281 37,281 74,687 72,486 65,690 68,579 Distributable Retained earnings 87,736 74,078 52,665 42,797 162,423 146,564 118,355 111,376

Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 (a) Share premium

At beginning of the year 13,775 13,775 13,775 13,775 Adjustments for the

effects of Companies Act 2016 (Note 18)

(13,775)

-

(13,775)

- At end of the year - 13,775 - 13,775

Company No: 72057-H


59

19. Reserves (continued) Group Company Restated Restated 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 (b) Revaluation reserves

At beginning of the year 21,430 34,247 17,523 23,057 Surplus from properties 15,976 - 10,886 - Derecognition of

subsidiaries - (6,116) - - Adjustment on initial

application of MFRS 9 - (6,701) - (5,534) At end of the year 37,406 21,430 28,409 17,523

Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 (c) Warrants reserves

At beginning/end of the year 37,281 37,281 37,281 37,281

The current ESOS scheme of the Company is governed by the by-laws approved by the Shareholders at the Annual General Meeting held on 27th December 2013 and commenced on 2nd January 2014 for a period of five (5) years, which has now been extended to 1 January 2024.

During the financial period under review, there was no ESOS option offered and subscribed by the Directors, senior management and eligible employees of the Group. The percentage of share options applicable to the Directors and senior management under the ESOS are as follows:-

Directors and senior management

During the financial year ended 30.9.2018

Since commencement of the ESOS up to 30.9.2018

Aggregate maximum allocation Nil 46.02%

Actual granted and accepted Nil 46.02%

The Company did not grant any options over the ordinary shares pursuant to the ESOS to any Directors during the financial year under review.

(d) Retained earnings The retained earnings can be distributed by way of single tier dividends which are not taxable in the hands of the shareholders.

Company No: 72057-H


60

20. Borrowings Group Company Restated Restated 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 Current Bank overdraft 26,001 20,132 21,985 19,931 Bankers’ acceptance 172,423 120,578 149,606 107,459 Revolving credit 48,000 44,000 44,000 40,000 Hire purchase payables 2,285 2,079 506 520 Unrated medium term notes 10,000 - 10,000 - Term loans 2,059 4,405 2,059 4,249 Bills payable 29,301 13,023 29,301 13,023 290,069 204,217 257,457 185,182 Non-current Hire purchase payables 6,779 8,565 2,149 2,835 Unrated medium term notes 90,000 100,000 90,000 100,000 Term loans - 2,027 - 2,027 96,779 110,592 92,149 104,862 386,848 314,809 349,606 290,044

Total borrowings Bank overdraft 26,001 20,132 21,985 19,931 Bankers’ acceptance 172,423 120,578 149,606 107,459 Revolving credit 48,000 44,000 44,000 40,000 Hire purchase payables 9,064 10,644 2,655 3,355 Unrated medium term notes 100,000 100,000 100,000 100,000 Term loans 2,059 6,432 2,059 6,276 Bills payable 29,301 13,023 29,301 13,023 At end of the year 386,848 314,809 349,606 290,044

The effective interest rates incurred for borrowings and their maturity periods during the financial year are as follows:- Group Company 2018 2017 2018 2017

Interest rate (%) 2.57% -

8.50% 2.85% -

6.60% 2.57% -

8.50% 2.85% -

6.60%

Terms of repayment of borrowings are as follows: (a) Bank overdrafts : Repayable on demand (b) Bankers’ acceptance : 30 to 150 days (c) Revolving credit : 30 to 150 days (d) Hire purchase payables : within 5 to 9 years from first drawdown date (e) Unrated medium term notes : within 3 to 7 years from the first issue date since 26 July 2016 (f) Bills payable : 30 to 150 days (g) Term loans : within 5 to 10 years from first drawdown date ending November

2015 to February 2020

Company No: 72057-H


61

20. Borrowings (continued) Certain borrowings of related companies are secured by the Company’s corporate guarantees as disclosed in Note 35. (a) Hire purchase liabilities

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

Minimum lease payments - not later than 1 year 2,485 2,674 620 668 - later than 1 year and

not later than 2 years

4,352

5,471

1,007

1,459 - later than 2 years and


3,300

4,109

1,359

1,732 Total minimum lease

payments

10,137

12,254

2,986

3,859 Less: Future finance

charges on hire purchase payables

(1,073)

(1,610)

(331)

(504) Present value of finance

lease liabilities

9,064

10,644

2,655

3,355

Present value of finance

lease liabilities

- not later than 1 year 2,285 2,079 506 520 - later than 1 year and


4,385

4,563

860



2,394

4,002

1,289

1,740 9,064 10,644 2,655 3,355

(b) Unrated medium term notes Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000

Repayment terms - not later than 1 year 10,000 - 10,000 - - later than 1 year and


20,000

20,000

20,000



70,000

80,000

70,000

80,000 100,000 100,000 100,000 100,000

Company No: 72057-H


62

20. Borrowings (continued) (c) Term loans


Repayment terms - not later than 1 year 2,059 4,406 2,059 4,249 - later than 1 year and


-

2,027

-

2,027 2,059 6,433 2,059 6,276

21. Deferred tax liabilities

Group Company Restated Restated 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 At beginning of the year 26,555 3,201 23,103 554 Effect of revaluation reserve 4,173 6,701 3,438 5,534 Reversal of impairment related

to Khee San Berhad - (1,790) - - Under provision in prior year 4,403 716 - 433 Recognised in the statements

of comprehensive income (Note 27) 207 17,727 1,569 16,582

At end of the year 35,338 26,555 28,110 23,103

Group Company Restated Restated 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 Presented after

appropriate offsetting Deferred tax assets (47,155) (50,099) (31,319) (31,860) Deferred tax liabilities 82,493 76,654 59,429 54,963 At end of the year 35,338 26,555 28,110 23,103

Company No: 72057-H


63

21. Deferred tax liabilities (continued)

The components and movements of deferred tax assets and liabilities during the financial year prior to offsetting are as follows:-

Deferred tax assets

Unabsorbed tax losses

and unutilised

capital allowances

Unutilised reinvestment

allowances

Other deductible temporary difference Total

Group RM’000 RM’000 RM’000 RM’000 At 1 October 2017 11,163 24,045 14,891 50,099 Recognised in the

statements of comprehensive income (Note 27)

- current year (1,576) (1,002) (364) (2,944) - underprovision in prior

years - - - - At 30 September 2018 9,587 23,041 14,527 47,155 At 1 July 2016 10,071 26,698 14,891 51,660 Recognised in the


- current year 1,092 (2,653) - (1,561) At 30 September 2017 11,163 24,045 14,891 50,099


and unutilised

capital allowances


allowances


Company RM’000 RM’000 RM’000 RM’000 At 1 October 2017 - 31,860 - 31,860 Recognised in the


- current year 264 (15,059) 14,254 (541) At 30 September 2018 264 16,801 14,254 31,319

Company No: 72057-H


64

21. Deferred tax liabilities (continued)

The components and movements of deferred tax assets and liabilities during the financial year prior to offsetting are as follows:-

Deferred tax assets (continued)


and unutilised

capital allowances


allowances


Company RM’000 RM’000 RM’000 RM’000 At 1 July 2016 - 14,845 - 14,845 Recognised in the


- current year - 16,582 - 16,582 - underprovision in prior

years - 433 - 433 At 30 September 2017 - 31,860 - 31,860

Deferred tax liabilities

Revaluation reserve Excess of capital allowances

over depreciation Group Company Group Company RM’000 RM’000 RM’000 RM’000 At 1 October 2017 6,701 5,534 69,953 49,429 Recognised in the statements

of comprehensive income (Note 27)

- current year 4,135 3,438 1,704 1,028 At 30 September 2018 10,836 8,972 71,657 50,457 At 1 July 2016 - - 54,858 51,652 Recognised in the statements of comprehensive income (Note 27) - current year 6,701 5,534 15,095 (2,223) - underprovision in prior years At 30 September 2017 6,701 5,534 69,953 49,429

Company No: 72057-H


65

22. Trade payables

Trade payable are non-interest bearing and the credit terms are granted to the Group and the Company ranged from 30 to 120 days (2017: 30 to 120 days) from date of invoice.

The currency exposure profile of trade payables is as follows:

Group Company Restated Restated 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 Ringgit Malaysia 10,747 15,661 7,298 10,544 Unites States Dollar 251 - 251 - Singapore Dollar 37 - - - 11,035 15,661 7,549 10,544

23. Other payables, accruals and deposits received

Group Company Restated Restated 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 Other payables 6,460 6,739 5,560 6,382 Provisions and accruals 6,644 3,552 4,223 3,209 GST payables 193 1,872 157 1,600 13,297 12,163 9,940 11,191

Company No: 72057-H


66

24. Revenue Group Company

1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 RM’000 RM’000 RM’000 RM’000 Sale of goods Local sales 226,949 305,322 224,260 277,739 Export sales 81,754 120,699 60,438 84,466 308,703 426,021 284,698 362,205

Group and Company

Revenue represents the invoiced value of goods sold less returns, discounts and relevant government sales tax.

25. Profit before taxation Group Company 1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 RM’000 RM’000 RM’000 RM’000 Profit before taxation is arrived at after charging:

Allowance for doubtful debts/Expected credit loss 1,994 1 1,994 -

Allowance for inventories - 49 - 37 Auditors’ remuneration - current year 500 354 382 212 - under provision of prior

year

-

2

-

- Bad debts written-off 1,568 - - - Depreciation of property,

plant and equipment

15,854

19,475

10,589

13,355 Finance cost: - Bank overdraft interest 1,779 3,165 1,645 2,085 - Bankers’ acceptances

interest

7,961

8,025

6,902

6,201 - Hire-purchase interest 935 417 148 253 - Term loan interest 233 770 231 732 - Revolving credit interest 2,655 2,682 2,421 2,384 - Medium term notes

interest 7,492 6,330 7,492 6,330

- Interest expense - - 92 249 - Commitment fee - - 44 85 Impairment of investments - 6 - 6 Realised foreign exchange

loss

2,242

-

-

- Rental of operating lease - 631 - - Rental of equipment - 8 - - Rental of workers’

accommodation

-

146

-

- Staff costs (Note 26) 14,743 18,641 14,113 8,785

Company No: 72057-H


67

25. Profit before taxation (continued) Group Company 1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 RM’000 RM’000 RM’000 RM’000 and crediting: Fixed deposits interest

income

7

-

-

- Rental income - 225 - - Dividend income (gross) 209 199 209 199 Gain on disposal of

property, plant and equipment

405

58

405

39 Interest income 263 9 242 123 Realised foreign exchange

gain

-

1,436

-

- Unrealised foreign

exchange gain

249

3,777

-

1,034

26. Staff costs

Group Company 1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 RM’000 RM’000 RM’000 RM’000 Salaries, wages,

allowances, overtime, bonus and fees 8,222 14,459 7,818 6,752

Employees Provident Fund (“EPF”) 1,593 2,371 1,556 1,958

Social security contributions 58 119 54 66

Other staff related expenses 4,870 1,692 4,685 9

14,743 18,641 14,113 8,785

Included in staff costs are the remuneration of the Directors as follows:- Group Company

1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 RM’000 RM’000 RM’000 RM’000 Directors Salaries, allowances, EPF,

bonus and others 3,677 5,437 3,464 4,373 Fees 120 214 120 142 3,797 5,651 3,584 4,515

Company No: 72057-H


68

26. Staff costs (continued)

Included in staff costs are the remuneration of the senior management as follows:-

Group Company

1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 RM’000 RM’000 RM’000 RM’000 Senior management Salaries, allowances, EPF

and bonus 4,403 4,075 4,180 4,075 The Directors’ remuneration of each named Director, including those former Directors are as follows:-

Group Company

1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 RM’000 RM’000 RM’000 RM’000 Directors Executive Director Dato’ Sri Liew Yew Chung,

SSAP, DIMP 1,470 1,604 1,427 1,604 Non-Independent Non-

Executive Directors Dato’ Sri Liew Kuek Hin,

SSAP, DIMP ,PJK, JP 1,554 1,513 1,441 1,513 Datin Sri Lim Yook Lan 29 30 29 30 Dato’ Liew Yew Cheng,

DIMP 141 337 125 337 Liew Yet Mei 53 31 36 31 Dato’ Liew Yet Lee, DIMP 443 456 419 456 Independent Non-

Executive Directors Dato’ Paduka Cheong Siew

Kai, DJMK, AMS, JP 27 30 27 30 Huang Yan Teo, PIS, PPN 40 37 40 37 Leslie Looi Meng 40 37 40 37 3,797 4,075 3,584 4,075

Company No: 72057-H


69

27. Taxation

Group Company Restated Restated

1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 RM’000 RM’000 RM’000 RM’000 Malaysian income tax Current 65 1,286 65 1,139 Under provision in prior

year 8 (180) - (163) 73 1,106 65 976 Deferred tax Recognised in the


- current 207 17,727 1,569 16,582 - under provision in prior

year 4,403 716 - 433 4,610 18,443 1,569 17,015 Tax expenses for the year 4,683 19,549 1,634 17,991

Company No: 72057-H


70

27. Taxation (continued) Reconciliations of income tax expense applicable to the results before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company are as follows: Group Company Restated Restated

1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 RM’000 RM’000 RM’000 RM’000

Profit before taxation 18,341 21,283 11,502 11,417 Tax at Malaysian statutory

tax rate of 24% (2017: 24%)

4,402

5,108

2,760

2,740

Tax effects of: - income not subject to tax (2,541) (311) (1,976) (311) - expenses not deductible

for tax purposes 4,545

4,777

3,982

4,883 - utilisation of capital

allowances (6,134) (6,241) (4,701) (3,694) - utilisation of reinvestment

allowances -

(2,653)

-

(2,653) - income subject to tax - 175 - 175 - reversal and recognition of

deferred tax in income statement -

18,158

-

16,581

(Over)/underprovision of income tax in prior years 8

(180)

-

(163)

Overprovision of deferred tax liabilities in prior years 4,403

716

1,569

433

4,683 19,549 1,634 17,991

.

Company No: 72057-H


71

28. Earnings per share

Basic earnings per share is calculated by dividing the profit for the financial year attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year. Group Company Restated Restated

1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 RM’000 RM’000 RM’000 RM’000 Consolidated profit/(loss) for the year attributable to the owners of the parent

13,658

1,438

9,868

(6,574) Weighted average number of ordinary shares in issue (‘000)

187,316

186,534

187,316

186,534

Basic earnings per share (sen)

7.29

0.77

5.27

Not applicable

Diluted earnings per share (sen)

7.29

0.77

5.27

Not applicable

For diluted earnings per share calculation, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The dilutive potential ordinary shares for the year of the Group are share options granted to employees. Share options are deemed to have been converted onto ordinary shares at the beginning of the year or on the date when the options are granted whichever is the later.

29. Significant related party disclosures

(a) Transactions and balances with related parties

Transactions arising from normal business transactions of the Company and its subsidiaries with their related parties during the financial year are as follows:-


30.9.2018 1.7.2016 to

30.9.2017 1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 RM’000 RM’000 RM’000 RM’000

Sale of goods to a subsidiary

Kinos Food Industries Sdn Bhd

- - 33,864 28,267

Sale of goods to an associated company

Khee San Berhad 4,474 40,787 4,474 40,787

Company No: 72057-H


72

29. Significant related party disclosures (continued)

(a) Transactions and balances with related parties (continued)


30.9.2018 1.7.2016 to

30.9.2017 1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 RM’000 RM’000 RM’000 RM’000

Purchase from a subsidiary Kinos Food Industries Sdn Bhd - -

33,864 47,483

Purchase from an associated company

Khee San Berhad 43,817 46,460 43,817 46,460 Amount due from a subsidiary

Kinos Food Industries Sdn Bhd - -

39,510 58,991

Amount due from an associated company

Khee San Berhad 51,550 48,612 51,550 48,612 Identities of Related Parties Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control or jointly control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control. However, barring the above definition, the Group has working arrangements with Secret Ingredients Sdn Bhd (“SISB”), a private limited company incorporated in Malaysia, in which significant financial and operational transactions are carried out which the Group deems as the basis for related party transactions and recorded in the financial statements accordingly. The operational working arrangements is to protect the know-how of the manufacturing formulae and ingredients of the Group’s products. Therefore, SISB is solely responsible for initiating the production process with the preparation of the raw materials (premix) using SISB’s production line, which is located at the Group’s property. The premix is then transferred to the Group’s production line and the production of finished goods are completed by the Group. SISB also purchases the Group’s products for distribution and retailing purposes. Although the Group’s operations have been conducted in this manner for several years, SISB cannot be classified as a related party due to the non-existence of a legal nexus. Consequently, no disclosures of the related party transactions have been provided in the financial statements for the year ended 30 September 2018 but all the inter-company transactions have been treated and adjusted as if SISB is a related party.

Company No: 72057-H


73

29. Significant related party disclosures (continued)

(b) Compensation of Directors and key management personnel

The total remuneration of Directors and key management personnel during the financial year are as follow:

Group Company

1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 1.10.2017 to

30.9.2018 1.7.2016 to

30.9.2017 RM’000 RM’000 RM’000 RM’000

Salaries, allowances, EPF and bonus 4,403 4,075 4,403 4,075

The detailed remuneration of each named Directors including the former Directors of the Group and of the Company’s subsidiaries for the current financial year was as follow:

Salaries, allowances,

fees and bonus

Benefits in-kind

Total RM’000 RM’000 RM’000 Directors Dato’ Sri Liew Kuek Hin, SSAP, DIMP ,PJK, JP 1,241 313 1,554 Datin Sri Lim Yook Lan 29 - 29 Dato’ Sri Liew Yew Chung, SSAP, DIMP 1,204 266 1,470 Dato’ Liew Yew Cheng, DIMP 125 16 141 Liew Yet Mei 36 17 53 Dato’ Liew Yet Lee, DIMP 419 24 443 Dato’ Paduka Cheong Siew Kai, DJMK, AMS, JP 27 - 27 Huang Yan Teo, PIS, PPN 40 - 40 Leslie Looi Meng 40 - 40 3,161 636 3,797

* Denotes less than RM1,000

Company No: 72057-H


74

30. Financial risk management policies

The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s businesses whilst managing its risks. The Board reviews and agrees policies for managing each of these risks and they are summarised below. It is, and has been throughout the year under review, the Group’s policy that no trading in derivative financial instruments shall be undertaken.

The main areas of financial risks faced by the Group and the policy in respect of the major areas of treasury activity are set out as follows:

(a) Interest rate risk

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. As the Group has no significant interest-bearing financial assets, the Group’s income and operating cash flows are substantially independent of changes in market interest rates.

The Group’s interest-bearing financial assets are mainly short term in nature and have been mostly placed in fixed deposits or occasionally, in short term commercial papers.

The Group’s interest rate risk arises primarily from interest-bearing borrowings. The Group’s policy is to borrow principally on the floating rate basis but to retain a proportion of fixed rate debt. The objectives for the mix between fixed and floating rate borrowings are set to reduce the impact of an upward change in interest rates while enabling benefits to be enjoyed if interest rates fall.

Interest rate sensitivity analysis

i Fair value sensitivity analysis for fixed rate instrument

The Group does not account for any fixed rate financial liabilities at ‘fair value through profit or loss’ and does not designate derivatives as hedging instrument under fair value hedge accounting method. Therefore, a change in interest rate at the end of the reporting period would not affect profit or loss.

Company No: 72057-H


75

30. Financial risk management policies (continued)

(a) Interest rate risk (continued)

Interest rate sensitivity analysis (continued)

ii Interest rate risk sensitivity analysis

If the interest rates have been higher or lower and all other variables were held constant, the Group’s and the Company’s (loss)/profit before tax would decrease or increase accordingly. This is mainly attributable to the Group’s and the Company’s exposure to interest rates on its floating rate borrowings which are not hedged. The following analysis shows the Group’s and the Company’s sensitivity to interest rate exposure.

Group Company

(Increase)/decrease

in the Group’s results

(Increase)/ decrease



in the Company’s

results


in the Company’s

results 2018 2017 2018 2017

RM’000 RM’000 RM’000 RM’000 Effects on (loss)/ profit before taxation: 25 basis points 57 47 52 43 50 basis points 115 94 104 86 75 basis points 173 140 156 129 100 basis points 230 187 208 172

(b) Credit risk

The Group’s credit risk is primarily attributable to trade receivables. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis and the Group’s exposure to bad debts is not significant.

For transactions that are not denominated in the functional currency of the relevant operating unit, the Group does not offer credit terms without the specific approval from the Head of Credit Control. Since the Group trades only with recognised and creditworthy third parties, there is no requirement for collateral.

The credit risk of the Group’s other financial assets, which comprise cash and cash equivalents, marketable securities and non-current investments, arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these financial assets.

Company No: 72057-H


76


(b) Credit risk (continued)

Credit risks concentration profile

The Group’s and the Company’s concentration of credit risks relates to the amount owing by four (4) and two (2) major customers respectively which constituted 27.84% and 25.89% of its trade receivables respectively at the end of the reporting period.

The exposure of credit risks for trade receivables as at the end of the reporting period by geographical region is as follows:-

Group Company 2018 2017 2018 2017

RM’000 RM’000 RM’000 RM’000 Malaysia 138,756 79,758 121,929 72,588 Middle East 68,035 52,232 60,659 47,573 Hong Kong 16,983 14,209 17,148 13,939 Singapore 16,370 16,757 16,302 16,444 Taiwan 13,247 10,877 12,838 10,728 Others 21,661 28,129 19,458 17,943 275,052 201,962 248,334 179,215 As at the end of the reporting period, the maximum exposure of credit risk arising from trade receivables is represented by the carrying amount in the statement of financial position.

(c) Foreign currency risk

The Group is exposed to transactional currency risk primarily through sales and purchases that are denominated in a currency other than the functional currency of the operations to which they relate. The currencies giving rise to this risk are primarily United States Dollar, Hong Kong Dollar and Singapore Dollar.

Foreign exchange exposures in transactional currencies other than functional currencies of the operating entities are kept to an acceptable level.

Company No: 72057-H


77


(c) Foreign currency risk (continued)

Foreign currency risk sensitivity analysis

The sensitivity analysis to a reasonably possible change in the foreign currencies as at the end of the reporting period with all other variables held constant is as follows:-

Group Company

(Increase)/decrease


(Increase) /decrease



in the Company’s

results


in the Company’s

results 2018 2017 2018 2017

RM’000 RM’000 RM’000 RM’000 Effects on profit/(loss) before

taxation: USD: - strengthened by 5% (2017: 5%) (4,010) (5,954) (3,465) (5,245) - weakened by 5% (2017: 5%) 4,010 5,954 3,465 5,245 HKD: - strengthened by 5% (2017: 5%) (18) - (17) - - weakened by 5% (2017: 5%) 18 - 17 - SGD: - strengthened by 5% (2017: 5%) (14) (70) (12) (70) - weakened by 5% (2017: 5%) 14 70 12 70

* Denotes less than RM1,000

Company No: 72057-H


78

30. Financial risk management policies (continued) (d) Liquidity risk

The Group manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that refinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities at a reasonable level to its overall debt position. As far as possible, the Group raises committed funding from both capital markets and financial institutions and balances its portfolio with some short term funding so as to achieve overall cost effectiveness. The table below summarises the maturity profile of the Group’s and of the Company’s liabilities at the financial year end based on contractual undiscounted repayment obligations.

Maturity Group Carrying

amount Less than

1 year Between 2

and 5 years Over 5 years

2018

RM RM RM RM

Borrowings 354,965 267,313 87,652 -

Trade payables 11,035 11,035 - -

Other payables 13,277 13,277 - - 397,277 291,625 87,652 -

2017

Borrowings 309,598 197,991 111,607 -


Other payables 12,162 12,162 - - 344,641 233,034 111,607 -

Maturity Company Carrying

amount Less than

1 year Between 2

and 5 years Over 5 years

2018

RM RM RM RM

Borrowings 320,040 227,614 92,426 -


Other payables 9,940 9,940 - - 337,529 245,103 92,426 -

2017

Borrowings 283,927 178,709 105,218 -


Other payables 11,191 11,191 - - 305,662 200,444 105,218 -

Company No: 72057-H


79


(e) Capital management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The debt-to-equity ratio at the end of reporting period was as follows:

Note Group Company (Restated) (Restated) 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 Total borrowings 20 386,848 314,809 349,606 290,044 Less: Deposits with licensed financial

institution 16

(307) (300) (307) (300) Less: Cash and bank balances 17 (19,403) (9,274) (19,186) (9,275) Net debt 367,138 305,235 330,113 280,469

Total equity 368,907 333,098 324,839 297,910

Debt-to-equity ratio 0.99 0.92 1.02 0.94

Company No: 72057-H


80

31. Segment reporting

For management purposes, the Group is organised into the following operating divisions, all of which are conducted predominantly in Malaysia:

(i) Manufacturing and trading (ii) Investment holding operations

The Group presents its segment information based on local and exports market segments, which is the basis of presenting its monthly management reports. For each of the market segments, the Group Managing Director reviews internal management reports on a regular basis for performance and resource allocation decisions.

For the financial year ended 30 September 2018, the Group’s financial information is analysed by operating segments as follows:

Manufacturing Others

Elimination

Total RM’000 RM’000 RM’000 RM’000 2018 Revenue Local 260,813 - (33,864) 226,949 Export 81,754 - - 81,754

342,567 - (33,864) 308,703

Results Segment results 33,416 - - 33,416 Interest income 271 - - 271 Other operating income 5,103 - (180) 4,923 Interest in profit of associates

accounted for by equity method - - 934 934 Finance costs (21,203) - - (21,203) Profit before taxation 17,587 - 754 18,341 Taxation (4,683) - - (4,683) Profit after taxation 12,904 - 754 13,658

Net assets 368,907 - - 368,907

Other information Segment assets 815,425 - - 815,425 Segment liabilities 446,518 - - 446,518 Capital expenditure 52,467 - - 52,467 Material items in PL (inc. non-cash

items) - - - - Allowance for doubtful debts 3,423 - - 3,423 Amortisation 23 - - 23 Depreciation 11,155 211 - 11,366

Company No: 72057-H


81

31. Segment reporting (continued)

Manufacturing Others

Elimination

Total RM’000 RM’000 RM’000 RM’000 2017 Revenue Local 409,012 - (103,690) 305,322 Export 120,699 - - 120,699

529,711 - (103,690) 426,021

Results Segment results 26,469 - - 26,469 Interest income - - - - Other operating income 16,833 - 1,550 18,383 Interest in profit of associates

accounted for by equity method - - - - Finance costs (22,019) - - (22,019) Profit before taxation 21,283 - 1,550 22,833 Taxation (4,044) - - (4,044) Profit after taxation 17,239 - 1,550 18,789

Net assets 333,098 - - 333,098

Other information Segment assets 1,065,605 - (320,414) 745,191 Segment liabilities 477,295 - (135,158) 342,137 Capital expenditure - - - - Material items in PL (inc. non-cash

items) - - - - Allowance for doubtful debts - - - - Amortisation - - - - Depreciation 19,214 261 - 19,475

The Group’s geographical segments are based on the location of the customers.

Revenue information based on the geographical location of customers are as follows:-

2018 2017 % % Geographical locations Malaysia 79 72 Singapore 6 4 Hong Kong 2 4 Vietnam - 3 Others 13 17 100 100

Company No: 72057-H


82

31. Segment reporting (continued)

During the financial year, there were two customers contributing more than 10% of the Group’s revenue, totalling 29% and 12% respectively (2017: two customers contributing 33% and 14% respectively).

32. Purchase of property, plant and equipment

During the financial year, the Group acquired property, plant and equipment which were satisfied as follows:


Cash payments 59,067 24,720 56,874 3,390

33. Non-cancellable contracts

At the financial year end, the commitments in respect of non-cancellable operating lease for the rental of property, plant and machinery are as follows:


As lessee Future minimum lease payments - not later than 1 year 453 620 337 475

Company No: 72057-H


83

34. Capital commitments


Capital expenditure Approved and contracted but not provided for:

- plant, machinery and tools - 4,214 - 4,214

35. Contingent liabilities

Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 Corporate guarantees given to:- Financial institutions in respect of credit facilities granted to subsidiaries - - 6,500 11,500 Material litigation 1,823 1,823 1,823 1,823 1,823 1,823 8,323 13,323

The sum represents the aggregate of RM1.8 million in backwages and compensation in lieu of reinstatement awarded to Wah Keng Sen (“WKS”) by the Industrial Court of Malaysia, Johor Bahru on 28 September 2015. The Company has filed an appeal and has been granted leave by the Federal Court. The case has been fixed for e-review on 4 March 2019.

Company No: 72057-H


84

36. Categories of financial instruments

The table below provides an analysis of financial instruments categorised as follows: (a) Loans and receivables (“L&R”) (b) Fair value through profit or loss (“FVTPL”) (c) Other financial liabilities (“OFL”) Group Carrying

amount L&R FVTPL OFL RM’000 RM’000 RM’000 RM’000

2018 Non-derivative financial assets Other investments 21 - 21 - Trade receivables 212,817 212,817 - - Other receivables and deposits 2,884 2,884 - - Amount due from associates 51,550 51,550 - - Fixed deposits with licensed financial

institutions

307

307 - - Cash and bank balances 19,403 19,403 - - 286,982 289,961 21 -

Non-derivative financial

liabilities Trade payables 11,035 - - 11,035 Other payables, accruals and deposits

received 13,297 - - 13,297 Borrowings 386,848 - - 386,848 411,180 - - 411,180

2017 Non-derivative financial assets Other investments 21 - 21 - Trade receivables 200,937 200,937 - - Other receivables and deposits 882 882 - - Amount due from associates 48,612 48,612 - - Fixed deposits with licensed financial

institutions

300

300 - - Cash and bank balances 9,274 9,274 - - 260,026 260,005 21 - Non-derivative financial



Company No: 72057-H


85

36. Categories of financial instruments (continued)

Company Carrying amount L&R FVTPL OFL

RM’000 RM’000 RM’000 RM’000 2018 Non-derivative financial assets Other investments 21 - 21 - Trade receivables 186,668 186,668 - - Other receivables and deposits 2,061 2,061 - - Amount due from subsidiaries 39,510 39,510 - - Amount due from associates 51,550 51,550 - - Fixed deposits with licensed financial

institutions

307




2017 Non-derivative financial assets Other investments 21 - 21 - Trade receivables 178,192 178,192 - - Other receivables, deposits and

prepayments 392 392 - - Amount due from subsidiaries 58,991 58,991 - - Amount due from associates 48,612 48,612 - - Fixed deposits with licensed financial

institutions

300




Company No: 72057-H


86

37. Fair values (a) Financial instruments that are carried at fair value

Forward exchange contracts are measured at fair value different measurement hierarchies (i.e. Levels 1, 2, 3). The hierarchies reflect the level of objectiveness of inputs used when measuring the fair value.

(i) Level 1: Quoted prices (unadjusted) of identical asset in active markets (ii) Level 2: Inputs other at quoted prices included within Level 1 that are observable for the

asset, either directly (i.e. prices) or indirectly (i.e. derived from prices) (iii) Level 3: Inputs for the assets are not based on observable market data (unobservable

inputs)

The Group and the Company do not have any financial instruments measured at Level 1, 2 and 3 in current and previous financial years, except as disclosed in Note 10.

(b) Financial instruments that are not carried at fair value

The carrying amount of the financial instruments carried at amortised cost are reasonable approximation of their fair values due to their short term nature. Note Trade receivables 12 Other receivables and deposits 13 Amount due from subsidiaries 14 Amount due from associates 15 Fixed deposits with licensed financial institution 16 Cash and bank balances 17 Borrowings 20 Trade payables 22 Other payables, accruals and deposits received 23

Company No: 72057-H


87

38. Subsequent events (a) On 11 October 2018, the Company issued 2,600,000 new ordinary shares at an issue price of

RM0.550 each by way of private placements. These shares rank pari passu with the existing ordinary shares.

(b) On 5 December 2018, the Company’s auditors for the previous financial year ended 30 September 2017 resigned. In response to the new auditors, Nexia SSY’s queries to ascertain the existence, accuracy, presentation and completeness of opening balances, the following adjustments and restatements on discovery, were made in the financial statements:

i Cash and bank balances

As at 30 September 2017, stated in “Cash and bank balances” are amounts of RM67.824 Million of the Group and RM65.262 Million of the Company has been adjusted by RM77.000 Million representing incorrect classification of collections from two trade receivables as being banked-in but were actually collections not yet deposited into the respective banks. Unpresented cheques totalling RM1.083 Million has also been written back to “Other Payables”. These adjustments have caused the restatement of “Cash and bank balances” to “Bank overdrafts” of RM21.822 Million and RM20.865 Million in the Group and Company respectively.

ii Trade receivables

The amount of RM182.890 Million of the Group and RM160.149 Million of the Company has been restated to RM259.89 Million .and RM237.149 Million of the Group and Company respectively with the adjustments of RM77.000 Million of “Cash and bank balances”.

iii Property, plant and equipment

Included in “Property, plant and equipment” as at 30 September 2017 is an amount classified as “Plant and Machinery-In-progress” amounting to RM28.691 Million of which RM9.339 Million was adjustments transferred from “Plant and Machinery” and RM19.352 Million was described as the cost of a production line paid for by the Company which was intended for an associated company. The amount of RM19.352 Million has been adjusted to “Amount due from associates”.

The full restatement effects are disclosed in Note 39.

(c) On 10 December 2018, the Company issued 3,053,000 new ordinary shares at an issue price of

RM0.58 each by way of private placements. These shares rank pari passu with the existing ordinary shares.

(d) On 27 December 2018, Kinos Food Industries (M) Sdn Bhd (“KINOS”), a wholly-owned

subsidiary of the Company, issued 15,000,000 new Redeemable Convertible Preference Shares (“RCPS”) to COPE Opportunities IV Sdn Bhd (“COPE”) at the subscription price of RM1 per RCPS. In the event of COPE exercising the conversion of the RCPS into ordinary shares in KINOS, the Company’s shareholding in KINOS will be diluted from 100% to 63.45%.

(e) On 24 January 2019, the Company issued bonus shares of 1 for every 4 existing shares

totalling 51,296,652 bonus shares. Pursuant to this bonus issue, 9,320,326 new warrants were issued on the same date.

Company No: 72057-H


88

39. Comparative figures

(a) The financial statements of London Biscuits Berhad for the financial year ended 30 September 2017 were audited by another auditor, who has expressed an unmodified opinion on those financial statements on 18 January 2018.

(b) The comparative figures have been adjusted/ restated in view of the event as stated in Note 39(b) and the other notes to the financial statements to conform with current year’s presentation.

Group Previously

stated

Adjusted

Restated RM’000 RM’000 RM’000 Property, plant and equipment 406,657 (19,353) 387,304 Trade receivables 182,890 18,047 200,937 Non-trade receivables, deposits and

prepayments

8,440

(6,260)

2,180 Tax recoverable - 3,601 3,601 Deposits, cash and bank balances 67,824 (58,250) 9,574 Borrowings (287,921) (26,888) (314,809) Trade payables (22,880) 7,219 (15,661) Non-trade payables and accruals (11,080) (1,083) (12,163) Deferred tax (20,213) (6,342) (26,555) Amount due from associates 29,259 19,353 48,612 Revaluation reserve (28,131) 6,701 (21,430) Retained earnings (137,333) 63,255 (74,078)

187,512 - 187,512

Company Previously

stated

Adjusted

Restated RM’000 RM’000 RM’000 Property, plant and equipment 278,989 (19,352) 259,637 Trade receivables 160,148 18,044 178,192 Non-trade receivables, deposits and

prepayments

6,345

(4,655)

1,690 Tax recoverable - 1,996 1,996 Deposits, cash and bank balances 65,262 (55,987) 9,275 Borrowings (262,892) (27,152) (290,044) Trade payables (17,764) 7,220 (10,544) Non-trade payables and accruals (10,108) (1,083) (11,191) Deferred tax (17,365) (5,738) (23,103) Amount due from associates 29,259 19,353 48,612 Revaluation reserve (23,057) 5,534 (17,523) Retained earnings (104,617) 61,820 (42,797)

104,200 - 104,200

(c) The comparative figures were made up of 15 months period from 1 July 2016 to 30 September 2017 and therefore may not be comparable to current year’s figure.

Documents

Volume 1: Corporate Report & Statements · Mr. Hoh Chee Mun (MIA 8891) SHARE REGISTRAR Bina Management (M) Sdn Bhd Lot 10, the Highway Centre, Jalan 51/205, 46050 Petaling Jaya, Selangor