annual report - syf · 7 corporate information 8 corporate structure 9 5-year financial highlights...

AN

NU

AL R

EP

OR

T 2019

ANNUAL REPORTANNUAL REPORT

[Registration No. 199501035170 (364372-H)]

Local Resources

1 Algeria

2 Angola

3 Argentina

4 Aruba

5 Australia

6 Bahrain

7 Barbados

8 Brunei

9 Canada

10 Chile

11 China

12 Colombia

13 Congo

14 Curacao

15 Dominican Republic

16 Djibouti

17 El Salvador

18 Estonia

19 Fiji

20 French Polynesia

21 Gabon

22 Gambia

23 Greece

24 Guatemala

25 Guyana

26 Haiti

27 Honduras

28 Hungary

29 India

30 Indonesia

31 Ireland

32 Ivory Coast

33 Jamaica

34 Kenya

35 Kuwait

36 Liberia

37 Malawi

38 Maldives

39 Mauritius

40 Mexico

41 Netherlands Antilles

42 New Zealand

43 Nicaragua

44 Oman

45 Palestine

46 Panama

47 Papua New Guinea

48 Peru

49 Philippines

50 Poland

51 Qatar

52 Reunion

53 Romania

54 Saudi Arabia

55 Seychelles

56 Singapore

57 South Africa

58 South Korea

59 Sri Lanka

60 Suriname

61 Tanzania

62 Thailand

63 Togo

64 Trinidad & Tobago

65 Turkey

66 Uganda

67 United Arab Emirates

68 United States

69 Uruguay

70 Vietnam

71 Zambia

Global Presence

2 Notice Of The Twenty-Fourth (24th) Annual General Meeting

6 Statement Accompanying Notice Of Twenty-Fourth (24th) Annual General Meeting

7 Corporate Information

8 Corporate Structure

9 5-Year Financial Highlights And Indicators

10 Profile Of Directors

14 Key Senior Management’s Profiles

15 Chairman’s Statement And Management Discussion And Analysis

20 Corporate Governance Overview Statement

36 Additional Compliance Information

38 Statement Of Directors’ Responsibility In Respect Of The Audited Financial Statements

39 Statement On Risk Management And Internal Control

42 Audit Committee Report

45 Corporate Sustainability Statement

54 Analysis Of Shareholdings

57 Analysis of Warrants Holdings

60 List Of Properties

62 Financial Statements

Form Of Proxy

Annexure To Proxy Form

Contents

2

NOTICE IS HEREBY GIVEN THAT the Twenty-Fourth (24th) Annual General Meeting (“AGM”) of the Company will be held at Emerald 1 Room, RHR Hotel @ Kajang, Wisma MKH, Jalan Semenyih, 43000 Kajang, Selangor on Wednesday, 8 January 2020 at 10.00 a.m. for the following purposes:-

1. To receive the Audited Financial Statements for the financial year ended 31 July 2019 together with the Reports of the Directors and Auditors thereon.

AS ORDINARY BUSINESS

2. To approve the payment of Directors’ Fees to the Non-Executive Directors of the Company up to RM114,000 for the financial year ended 31 July 2019.

3. To approve the payment of Directors’ Benefits to the Non-Executive Directors of the Company up to an amount of RM70,000 from 9 January 2020 until the conclusion of the next AGM of the Company.

4. To re-elect the following Directors who retire by rotation in accordance with the Clause 103(1) of the Company’s Constitution and who being eligible offer themselves for re-election:-

(i) Datuk Mohamed Arsad Bin Sehan

(ii) Ng Wei Ping

5. To re-appoint Messrs. UHY as Auditors of the Company for ensuing year and to authorise the Directors to fix their remuneration.

AS SPECIAL BUSINESS

To consider and, if thought fit, pass the following resolutions with or without modifications:

6. AUTHORITY TO ISSUE AND ALLOT SHARES PURSUANT TO SECTIONS 75 AND 76 OF THE COMPANIES ACT, 2016

“THAT subject always to the Companies Act, 2016 (“the Act”), the Constitution of the Company and approvals from Bursa Malaysia Securities Berhad (“Bursa Securities”) and any other governmental/ regulatory authorities, the Directors of the Company be and are hereby empowered, pursuant to Sections 75 and 76 of the Act, to issue and allot shares in the capital of the Company from time to time at such price and upon such terms and conditions, for such purposes and to such person or persons whomsoever the Directors may in their absolute discretion deem fit (“General Mandate”), provided always that the aggregate number of shares issued pursuant to this resolution does not exceed ten per centum (10%) of the total number of issued shares of the Company for the time being; AND THAT the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Securities; AND FURTHER THAT such authority shall commence immediately upon the passing of this resolution and continue to be in force until the conclusion of the next AGM of the Company.”

(Please refer to Explanatory Note A)

(Ordinary Resolution 1)






Notice Of The Twenty-Fourth (24th) Annual General Meeting

SYF RESOURCES BERHAD [Registration No. 199501035170 (364372-H)] • Annual Report 2019

3



7. PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR RECURRENET RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (“PROPOSED RENEWAL OF RRPT MANDATE”)

“THAT pursuant to Paragraph 10.09 of the Main Market Listing Requirements (“Listing Requirements”) of Bursa Malaysia Securities Berhad (“Bursa Securities”), the Company and its subsidiaries (“the Group”) be and are hereby authorised to enter into and give effect to the recurrent related party transactions of a revenue or trading nature with the related parties as set out in the Statement/Circular to Shareholders dated 29 November 2019, provided that such transactions and/or arrangements are:-

(a) necessary for the day-to-day operations; (b) are undertaken in the ordinary course of business at arm’s length basis and are

on normal commercial terms which are not more favourable to the Related Party than those generally available to the public; and

(c) are not detrimental to the minority shareholders of the Company.

AND THAT such approval, shall continue to be in force until:

(a) the conclusion of the next AGM of the Company, at which time it will lapse, unless by a resolution passed at such AGM, the authority is renewed; or

(b) the expiration of the period within the next AGM of the Company after that date is required to be held pursuant to Section 340(2) of Companies Act, 2016 (“the Act”) (but shall not extend to such extension as may be allowed pursuant to Section 340(4) of the Act); or

(c) revoked or varied by ordinary resolution passed by the shareholders of the Company in general meeting, whichever is earlier;

AND THAT the estimated aggregate value of the transactions conducted pursuant to the Proposed Renewal of RRPT Mandate during a financial year will be disclosed, in accordance with the Listing Requirements, in the Annual Report of the Company for the said financial year;

AND THAT the Directors of the Company be and are hereby authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the Proposed Renewal of RRPT Mandate.”

8. PROPOSED RENEWAL OF AUTHORITY FOR THE COMPANY TO PURCHASE ITS OWN SHARES (“PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY”)

“THAT, subject to the Companies Act, 2016 (“the Act”), the provisions of Constitution of the Company, the Main Market Listing Requirements (“Listing Requirements”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) and the approvals of all relevant governmental and/or regulatory authorities, the Company be and is hereby authorised, to the fullest extent permitted by law, to purchase such amount of ordinary shares in the Company as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company provided that:-

i) the aggregate number of shares purchased or held as treasury shares does not exceed 10% of the total number of issued and paid-up shares of the Company as quoted on Bursa Securities as at the point of purchase;

Notice Of The Twenty-Fourth (24th) Annual General Meeting (Cont’d)


4

ii) the maximum fund to be allocated by the Company for the purpose of purchasing the shares be backed by an equivalent amount of retained profits; and

iii) the Directors of the Company may decide either to retain the shares purchased as treasury shares, or cancel the shares, or retain part of the shares so purchased as treasury shares and cancel the remainder, or resell the shares, or transfer the shares or distribute the shares as dividends;

AND THAT the authority conferred by this resolution will commence after the passing of this ordinary resolution and will continue to be in force until:-

i) the conclusion of the next AGM at which time it shall lapse unless by ordinary resolution passed at the meeting, the authority is renewed, either unconditionally or subject to conditions; or

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

iii) revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting;

whichever occurs first.

AND THAT the Directors of the Company be and are hereby authorised to take all such steps as are necessary or expedient to implement or to effect the purchase(s) of the shares with full power to assent to any condition, modification, variation and/or amendment as may be imposed by the relevant authorities and to take all such steps as they may deem necessary or expedient in order to implement, finalise and give full effect in relation thereto.”

9. To transact any other business of which due notice shall have been given in accordance with the Company’s Constitution and the Companies Act, 2016.

By Order of the Board SYF RESOURCES BERHAD

Tan Tong Lang (MAICSA 7045482) Thien Lee Mee (LS0009760) Company Secretaries

Kuala Lumpur29 November 2019

NOTES:-

1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint one (1) or more proxies to attend, vote and speak in his stead at the same meeting. A proxy may but need not be a member of the Company.

2. Where a member of the Company appoints more than one (1) proxy to attend and vote at the same meeting, the member shall specify the proportion of his/her shareholdings to be represented by each proxy, failing which the appointments shall be invalid.



5


3. Where a member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds. An Exempt Authorised Nominee refers to an authorised nominee defined under the Securities Industry (Central Depositories) Act 1991 (“SICDA”) which is exempted from compliance with the provisions of subsection 25A(1) of SICDA.

4. If the appointor is a corporation, the instrument appointing a proxy must be executed under its Common Seal or under the hand of an officer or attorney duly authorised.

5. The instrument appointing a proxy shall be signed by the appointor or of his/her attorney duly authorised in writing or, if the appointor is a corporation, either under its Common Seal or under the hand of an officer or attorney duly authorised.

6. The instrument appointing a proxy or the power of attorney or other authority, if any, under which it is signed or notarially certified copy of that power of attorney or authority, shall be deposited at the Share Registrar of the Company, Tricor Investor & Issuing House Services Sdn Bhd of Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur not less than 48 hours before the time set for holding the meeting or any adjournment thereof. You can also have the option to submit the proxy appointment electronically via TIIH Online at website https://tiih.online before the proxy form submission cut-off time as mentioned in the above. For further information on the electronic submission of proxy form, kindly refer to the Annexure to Proxy Form.

7. For the purpose of determining a member who shall be entitled to attend this meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to make available to the Company a Record of Depositors as at 27 December 2019 and only a depositor whose name appears on such Record of Depositors shall be entitled to attend, speak and vote at this meeting and entitled to appoint proxy or proxies.

8. Pursuant to Paragraph 8.29A(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, all the Resolutions set out in this Notice will be put to vote by poll.

1. EXPLANATORY NOTES ON ORDINARY BUSINESS

Explanatory Note A - Audited Financial Statements for The Financial Year Ended 31 July 2019

This agenda item is meant for discussion only as Section 340(1) (a) of the Companies Act, 2016 provide that the audited financial statements are to be laid in the general meeting and do not require a formal approval of the shareholders. Hence, this Agenda item is not put forward for voting.

2. EXPLANATORY NOTES ON SPECIAL BUSINESS

Ordinary Resolution 6 – Authority to Issue and Allot Shares Pursuant to Sections 75 and 76 of the Companies Act, 2016

Ordinary Resolution No. 6, if passed, will empower the Directors of the Company to issue and allot new shares at any time to such persons, in their absolute discretion, deem fit (“General Mandate”), provided that the number of shares issued pursuant to this General Mandate, when aggregated with the nominal value of any such shares issued during the preceding twelve (12) months, does not exceed 10% of the total issued share capital of the Company at the time of issue. This renewed General Mandate, unless revoked or varied at a general meeting, will expire at the conclusion of the next AGM of the Company.

With this renewed General Mandate, the Company will be able to raise funds expeditiously for the purpose of funding future investment, working capital and/or acquisition(s) at any time without convening a general meeting as it would be both costs and time consuming to organize a general meeting.


6

As at the date of this Notice, no new shares in the Company were issued pursuant to the General Mandate granted to the Directors at the Twenty-Third (23rd) AGM held on 8 January 2019 and which will lapse at the conclusion of the Twenty-Fourth (24th) AGM.

Ordinary Resolution 7 – Proposed Renewal of RRPT Mandate

Ordinary Resolution 7, if passed, will allow the Company and/or its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature with those related parties as set out in Statement/Circular to Shareholders dated 29 November 2019, which are necessary for the day-to-day operations of the Company and/or its subsidiaries, subject to the transactions being carried out in the ordinary course of business of the Company and/or its subsidiaries and on normal commercial terms which are generally available to the public and not detrimental to the minority shareholders of the Company.

For further information on this resolution, please refer to the Statement/Circular to Shareholders dated 29 November 2019.

Ordinary Resolution 8 – Proposed Renewal of Share Buy-Back Authority

Ordinary Resolution 8, if passed, will empower the Directors to purchase the Company’s shares through Bursa Securities up to ten percent (10%) of the issued and paid-up capital of the Company for the time being. This authority will be expired at the conclusion of the next Annual General Meeting unless earlier revoked or varied by ordinary resolution passed by shareholders at a general meeting.


Statement Accompanying Notice Of Twenty-Fourth (24th) Annual General Meeting(pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad)

1. No individual is standing for election as a Director at the forthcoming 24th AGM of the Company.

2. The profiles of the Directors who are standing for re-election at the 24th AGM are set out in the Company’s Annual Report 2019.



7

BOARD COMMITTEES

AUDIT COMMITTEE

Dato’ Mohamad Azmi Bin Ali (Chairman)Datuk Mohamed Arsad Bin SehanDato’ Abdul Rashid Bin Mat Amin

NOMINATION COMMITTEE

Datuk Mohamed Arsad Bin Sehan (Chairman)Dato’ Mohamad Azmi Bin AliDato’ Abdul Rashid Bin Mat Amin

REMUNERATION COMMITTEE

Datuk Mohamed Arsad Bin Sehan (Chairman)Dato’ Mohamad Azmi Bin AliDato’ Abdul Rashid Bin Mat Amin

RISK MANAGEMENT COMMITTEE

Dato’ Mohamad Azmi Bin Ali (Chairman) Dato’ Sri Chee Hong Leong, JP Ng Wei Ping, KeithLee Oon Kar

EMPLOYEES’ SHARE OPTION SCHEME COMMITTEE

Dato’ Sri Ng Ah Chai (Chairman)Dato’ Sri Chee Hong Leong, JPDato’ Mohamad Azmi Bin Ali

Corporate Information

BOARD OF DIRECTORS

DATO’ SRI NG AH CHAI Executive Chairman & Chief Executive Officer

DATO’ SRI CHEE HONG LEONG, JPExecutive Director

NG WEI PING, KEITHExecutive Director

DATO’ WONG GIAN KUINon-Independent Non-Executive Director

DATO’ MOHAMAD AZMI BIN ALIIndependent Non-Executive Director

DATUK MOHAMED ARSAD BIN SEHAN Independent Non-Executive Director

DATO’ ABDUL RASHID BIN MAT AMINIndependent Non-Executive Director

SECRETARIES

TAN TONG LANG(MAICSA 7045482)

THIEN LEE MEE(LS0009760)

REGISTERED OFFICE

Boardroom.com Sdn BhdSuite 10.02, Level 10The Gardens South Tower Mid Valley CityLingkaran Syed Putra 59200 Kuala Lumpur Tel : 03-2298 0263 Fax : 03-2298 0268

REGISTRAR

Tricor Investor & Issuing House Services Sdn Bhd Unit 32-01, Level 32, Tower AVertical Business Suite Avenue 3, Bangsar South No. 8, Jalan Kerinchi 59200 Kuala LumpurTel : 03-2783 9299 Fax : 03-2783 9222 Email : [email protected]

PRINCIPAL PLACE OF BUSINESS

Kawasan Perindustrian Sungai Lalang Lot 974, Mukim Semenyih 43500 Semenyih Selangor Darul Ehsan Tel : 03-8211 1119 Fax : 03-8727 1810 Website : www.syf.com.my

AUDITORS

UHY (AF 1411) Suite 11.05, Level 11 The Gardens South Tower Mid Valley CityLingkaran Syed Putra 59200 Kuala Lumpur Tel : 03 - 2279 3088 Fax : 03 - 2279 3099

STOCK EXCHANGE LISTING

Ordinary SharesMain Market of Bursa Malaysia Securities BerhadStock Name : SYFStock Code : 7082

WarrantsMain Market of Bursa Malaysia Securities BerhadStock Name : SYF-WBStock Code : 7082WB

PRINCIPAL BANKERS

Hong Leong Bank Berhad

OCBC Bank (Malaysia) Berhad

Bank of China (Malaysia) Berhad

HSBC Amanah Malaysia Berhad

Public Bank Berhad

CIMB Islamic Bank Berhad


8

[Registration No. 199501035170 (364372-H)]

Corporate Structure

100% SYF DEVELOPMENT SDN BHD

100% GIAT ARMADA SDN BHD

100% SYF CONSTRUCTION SDN BHD

PROPERTY DEVELOPMENT

MANUFACTURING

100% SENG YIP FURNITURE SDN BHD

100% TOMISHO SDN BHD

INVESTMENT HOLDING/DORMANT

100% SYF VENTURE SDN BHD

100% SYF PLANTATION SDN BHD

100% NURI MERIAH SDN BHD

100% NIKMAT SEKITAR SDN BHD


9

5-Year Financial Highlights And Indicators

2019Restated *

2018Restated *

2017 2016 2015RM’000 RM’000 RM’000 RM’000 RM’000

Revenue 241,808 250,762 456,981 416,246 316,240

L/EBITDA (40,668) 8,065 53,132 57,568 44,836

(Loss)/Profit before tax (52,013) (7,327) 39,587 45,152 31,265

(Loss)/Profit after tax (44,076) (8,959) 30,734 35,934 24,585

(Loss)/Profit attributable to owners of the parent (Continuing operations and discontinued operation)

(44,076) (14,084) 35,790 38,217 24,585

Total assets 395,105 452,477 613,837 535,754 425,413

Total borrowings 65,417 78,087 100,431 123,436 93,417

Shareholders' equity 240,736 296,328 321,653 280,589 241,602

Return on equity (%) -18% -5% 11% 14% 10%

Return on total assets (%) -11% -3% 6% 7% 6%

Net gearing ratio (times) 0.15 0.15 0.29 0.39 0.36

(Loss)/Earnings per share - basic (sen):

- (loss)/profit from continuing operations

- (loss)/profit from discontinued

operations

(7.1)

-

(1.4)

(0.8)

4.9

0.8

5.9

0.4

4.0

-

Total (7.1) (2.2) 5.7 6.3 4.0

Net assets per share (RM) 0.39 0.48 0.52 0.46 0.40

Note:* The figures in financial years ended 2018 and 2017 have been restated to reflect the impact arising from the

adoption of MFRS 9 and MFRS 15


10

Profile Of Directors

Dato’ Sri Ng Ah Chai, aged 57, is the Executive Chairman and Chief Executive Officer of the Company. He was appointed to the Board on 1 February 2001 and assumed the post of Group Managing Director of the Company on 4 August 2003. Dato’ Sri Ng was then re-designated to his current position on 28 September 2005.

Dato’ Sri Ng has over 30 years of experience in timber and furniture industries. His involvement in the timber trade began in 1985 when he started a saw milling business on a partnership basis. In 1991, he expanded his business into manufacturing tropical wood furniture for the local market. Ceasing the saw milling business in 1993, he co-founded Seng Yip Furniture Sdn Bhd (“Seng Yip”) which started as a kiln drying and timber processing business. With his vast experience and leadership skill, Seng Yip expanded into manufacturing furniture components and semi-finished parts in 1995. Subsequently in 1998, he ventured into finished rubber wood furniture.

Currently, Dato’ Sri Ng is also the Group Managing Director and major shareholder of Mieco Chipboard Berhad.

Dato’ Sri Ng is the father of Mr Ng Wei Ping, the Executive Director of the Company. He has no conflict of interest with the Company other than disclosed in the Circular/Statement to Shareholders dated 29 November 2019.

Dato’ Sri Ng has no convictions for any offences within the past 5 years (other than traffic offences, if any), nor any public sanction or penalty imposed by regulatory bodies during the financial year.

Dato’ Sri Ng attended four (4) out of five (5) Board Meetings of the Company held during the financial year ended 31 July 2019.

Dato’ Sri Chee Hong Leong, JP, aged 55, was appointed to the Board on 13 March 2003 and was re-designated as Executive Director on 2 December 2011. He graduated with a Bachelor of Engineering (Computer) in 1987 and a Master of Business Administration in 1989, both from McMaster University, Hamilton, Ontario, Canada. He began his career in 1990 coordinating the development in corporate and annual strategic plans for Leisure Holidays Group of Companies.

In 1992, Dato’ Sri Chee ventured into various businesses which involved designing and building individual bungalows for landowners of various housing projects in the Klang Valley as well as building and operating a 100,000 sq. ft. Information Technology Incubation Centre in University Putra Malaysia. Subsequently, he joined Tanco Resort Berhad from 1998 to 2002 where he held various positions from General Manager to Executive Director/ Chief Operating Officer.

Dato’ Sri Chee does not hold any directorship in other public companies and listed companies.

Dato’ Sri Chee does not have any family relationship with any director and/or major shareholder of the Company, nor any conflict of interest with the Company.

He has no convictions for any offences within the past 5 years (other than traffic offences, if any), nor any public sanction or penalty imposed by regulatory bodies during the financial year.

Dato’ Sri Chee attended four (4) out of five (5) Board Meetings of the Company held during the financial year ended 31 July 2019.

DATO’ SRI NG AH CHAIMalaysian/MaleExecutive Chairman and Chief Executive OfficerChairman of the Employees’ Share Option Scheme Committee

DATO’ SRI CHEE HONG LEONG, JPMalaysian/MaleExecutive DirectorMember of the Employees’ Share Option Scheme CommitteeMember of the Risk Management Committee


11

Profile Of Directors (Cont’d)

Mr Ng Wei Ping, Keith, aged 29, was appointed to the Board on 13 October 2017. He graduated with a Bachelor of Commerce in Economics & Finance from University of Melbourne, Australia.

Mr Keith has over 8 years’ experience with SYF Resources Berhad Group (SYF) in key areas of corporate development, investments and property development. With financial qualifications of a Bachelor of Commerce and subsequently completed the examinations of the Certified Financial Analyst Institute, he has contributed to the growth of SYF and was instrumental in spearheading SYF’s successful diversification into property development.

Mr Keith is currently also the Executive Director of Mieco Chipboard Berhad and a Director of Mieco Chipboard Berhad’s Group and several local private limited companies involved in property development. His involvement with Mieco Chipboard Berhad commenced in January 2017 when he takes on the role of General Manager overseeing business operations and investments.

Mr Keith is the son of Dato’ Sri Ng Ah Chai, the Executive Chairman and Chief Executive Officer and the major shareholder of SYF. He has no conflict of interest with the Company other than disclosed in the Circular/Statement to Shareholders dated 29 November 2019.


Mr Keith attended four (4) out of five (5) Board Meetings of the Company held during the financial year ended 31 July 2019.

Dato’ Wong Gian Kui, aged 60, was appointed to the Board on 26 June 2014 as an Alternate Director to Dato’ Sri Thong Kok Khee. Following the resignation of Dato’ Sri Thong Kok Khee as the Non-Executive Non-Independent Director on 15 October 2018, Dato’ Wong ceased to act as his Alternate Director with effect from the same date. Subsequently, Dato’ Wong was appointed as Non-Independent Non-Executive Director on 15 October 2018.

Dato’ Wong is an accountant by profession and has been a member of the Malaysian Institute of Certified Public Accountants since 1985 and a member of the Malaysian Institute of Accountants since 1988. Dato’ Wong was previously attached to Harun, Oh & Wong, a member of Horwath International firm of public accountants in Malaysia from 1981 to 1990 and Stoy Hayward London, Chartered Accountants from 1990 to 1991.

Currently, Dato’ Wong is the Executive Director of Insas Berhad, Inari Amertron Berhad and Ho Hup Construction Company Berhad and also the Independent Non-Executive Chairman of Yi-Lai Berhad.

Dato’ Wong does not have any family relationship with any director and/or major shareholder of the Company, nor any conflict of interest with the Company.


Dato’ Wong attended all five (5) Board Meetings of the Company held during the financial year ended 31 July 2019.

NG WEI PING, KEITHMalaysian/MaleExecutive DirectorMember of the Risk Management Committee

DATO’ WONG GIAN KUIMalaysian/MaleNon-Independent Non-Executive Director


12


Datuk Mohamed Arsad bin Sehan, aged 66, was appointed as a member to the Board on 19 October 2011. He was subsequently appointed as Chairman of the Nomination Committee and Remuneration Committee on 1 June 2018 respectively.

He holds a Bachelor of Economics (Statistics) degree from University of Malaya.

Datuk Mohamed Arsad had a long career of 31 years, from 1978 to 2009, in the banking industry with Bank Bumiputra Malaysia Berhad and Bank Kerjasama Rakyat Malaysia Berhad (“Bank Rakyat”). At Bank Rakyat, he held various senior management positions including that of General Manager of Commercial Banking, Assistant General Manager of Banking Operations, Sector Head of Financing and Division Head of Planning and Development and Corporate Services. He spent 7 years as the Managing Director and CEO of a private limited company dealing in the manufacture and supply of standby power systems on secondment from Bank Rakyat.

After retiring from Bank Rakyat, Datuk Mohamed Arsad spent 8 years as Managing Director and Executive Director of PureCircle Sdn Bhd, a wholly owned subsidiary of PureCircle Limited.

Currently, Datuk Arsad is the Independent Non-Executive Chairman of Bertam Alliance Berhad and Independent Non-Executive Director of KIP REIT Management Sdn Bhd.

Datuk Arsad does not have any family relationship with any director and/or major shareholder of the Company, nor any conflict of interest with the Company.


Datuk Arsad attended all five (5) Board Meetings of the Company held during the financial year ended 31 July 2019.

Dato’ Mohamad Azmi bin Ali, aged 62, was appointed to the Board on 1 March 2017. He was re-designated as the Chairman of the Audit Committee on 12 March 2018.

He is a member of CPA (Australia) and the Malaysian Institute of Accountants. He holds a Bachelor of Accounting degree from University Kebangsaan Malaysia. He had a long career in public services of 36 years from 1981 before retiring in 2017. Earlier in his career he was appointed as the Kelantan State’s Treasurer from 1983 to 1991. He had also served in Economic Planning Unit, Prime Minister’s Department in the Privitization Task Force and Foreign Investment Committee from 1992 to 2001. Following that, from 2002 to 2008, he was the head of Accountant’s General Office in Kuching. Dato’ Mohamad Azmi was also the Head Accountant of the Ministry of Education from 2008 to 2011. Susequently, he headed various division in the Accountant’s General Office before being appointed as the Deputy Accountant General of Malaysia in 2015.

Dato’ Mohamad Azmi does not hold any directorship in other public companies and listed companies.

Dato’ Mohamad Azmi does not have any family relationship with any director and/or major shareholder of the Company, nor any conflict of interest with the Company. He has no convictions for any offences within the past 5 years (other than traffic offences, if any), nor any public sanction or penalty imposed by regulatory bodies during the financial year.

Dato’ Mohamad Azmi attended all five (5) Board Meetings of the Company held during the financial year ended 31 July 2019.

DATUK MOHAMED ARSAD BIN SEHAN Malaysian/MaleIndependent Non-Executive Director Member of the Audit CommitteeChairman of the Nomination CommitteeChairman of the Remuneration Committee

DATO’ MOHAMAD AZMI BIN ALIMalaysian/MaleIndependent Non-Executive Director Chairman of the Audit Committee and Risk Management CommitteeMember of the Nomination, Remuneration and Employees’ Share Option Committee


13


Dato’ Abdul Rashid Bin Mat Amin, aged 69, was appointed to the Board on 1 June 2018.

An alumnus of the Malay College Kuala Kangsar, Dato’ Abdul Rashid pursued his training in forestry (1971-1976) at the Institut Pertanian Bogor in Indonesia where he graduated with a Bachelor of Forestry. He then furthered his studies at the University of Oxford (1982-1983) United Kingdom for his M.Sc in land use planning. Later on, he completed his Master in Business Administration (MBA major in marketing) at Universiti Putra Malaysia (2006-2008).

During his career, he served the Forestry Department for almost 30 years having worked in Terengganu, Kedah, Perak, Pahang and Headquarters in Kuala Lumpur. He was seconded as Director General of the Malaysia Timber Industry Board from 1998 to 2002 and subsequently assumed the position of Director General of Forestry in 2002 to 2005 before retiring from service.

In his many years of service, he has gained expertise in forest management, forest product marketing, land use planning, natural resources management, environmental studies and business studies.

He is currently also an Independent Non-Executive Director of Mieco Chipboard Berhad.

Dato’ Abdul Rashid does not have any family relationship with any director and/or major shareholder of the Company, nor any conflict of interest with the Company. He has no convictions for any offences within the past 5 years (other than traffic offences, if any), nor any public sanction or penalty imposed by regulatory bodies during the financial year.

Dato’ Abdul Rashid attended four (4) out of five (5) Board Meetings of the Company held during the financial year ended 31 July 2019.

DATO’ ABDUL RASHID BIN MAT AMINMalaysian/MaleIndependent Non-Executive Director Member of the Audit, Nomination and Remuneration Committee


14

Datin Sri Chee Ah Kuan, aged 56, graduated from the School of Business Studies, Tunku Abdul Rahman College. She is the spouse of Dato’ Sri Ng Ah Chai and the mother of Mr. Ng Wei Ping. She is the pioneer staff when Dato’ Sri Ng co-founded Seng Yip Furniture Sdn Bhd in 1993. She is presently overseeing the Group’s credit control and office management.

She does not hold any directorships in any other public companies. She has no conflict of interest with the Company other than disclosed in the Circular to Shareholders dated 29 November 2019 which is despatched together with this Annual Report 2019.

She has no conviction for any offences within the past five (5) years other than traffic offences, if any.

DATIN SRI CHEE AH KUANMalaysian/FemaleGeneral Manager, Credit Control

LEE OON KAR Malaysian/MaleFinancial ControllerMember of Risk Management Committee

Mr. Lee Oon Kar, aged 48, holds a Bachelor Degree in Accountancy from Universiti Utara Malaysia and he is a member of the Malaysian Institute of Accountants. Upon graduation, he joined Deloitte Kassim Chan and left as audit senior. He was with a few multi-national manufacturing companies before joining SYF in 2001.

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

He does not have any family relationship with any Directors and/or major/substantial shareholders of the Company and he does not have any personal interest in any business arrangement involving the Company. He has not committed any offences within the past five (5) years other than traffic offences, if any.

Key Senior Management‘s Profiles


15

Chairman’s Statement And Management Discussion And Analysis

BUSINESS OVERVIEW

SYF was founded in year 1995 and was principally involved in property development, rubberwood furniture manufacturing and materials processing. It was listed on Main Market of Bursa Malaysia Securities Berhad.

The Group has been engaged in its core activities of rubberwood furniture manufacturing and materials processing for over twenty years. In the year 2012, the Group ventured into property development to expand and diversify its business activities.

For the past two financial years, the Group has been aggressive in rationalization and downsizing the downstream division of the rubberwood furniture segment as global demand is decreasing, coupled with rising labour costs and high overhead costs. SYF is now shifting the focus and direction to business and operation in the property development segment.

a. Property Development Segment

Since its inception in year 2012, the property development segment had undertaken several projects involving industrial factories, residential houses, condominiums and commercial properties in the southern growth region of Klang Valley in Semenyih and Kajang, where the Group has a reputable development track record. The projects completed are Industrial Hi-Tech 5, Industrial Hi-Tech 6, Kiara Plaza, Wira Heights 3 (phases 1 and 2), Lavender Residence and Iris Residence with a total gross development value (GDV) of approximately RM800 million. SYF has established itself as a reliable and respected property developer and will leverage on its track record to providing more medium-priced products to cater to the local demand and current needs.

b. Rubberwood Furniture Segment

SYF is a long-established furniture and rubberwood components manufacturer in Malaysia, specializing in the production of kiln dried sawn timber, lamination board, dining furniture and bedroom furniture by using rubberwood as the main source of raw material. As a plantation sourced specie that can be replanted and is abundant in Malaysia, the use of rubberwood fulfils our pledge to support an eco-friendly environment. SYF’s manufacturing facilities cover more than 35 acres of industrial land and are fully integrated. With processes commencing from sawmilling, chemical treatment of sawn timber, kiln drying, materials processing and manufacturing of component parts to finishing and assembly of completed furniture, we are a one-stop manufacturer with end-to-end capability.

SYF ceased the production of bedroom furniture in the fourth quarter of current financial year.

On behalf of the Board of Directors

of SYF Resources Berhad (“SYF”

or “the Group”), I am pleased to

present the Annual Report and

audited financial statements of the

Group for the financial year ended

31 July 2019.


16

Chairman’s Statement And Management Discussion And Analysis (Cont’d)

OBJECTIVE AND STRATEGY

As a business entity, our main objective is to enhance shareholders’ value and provide a sustainable return on investment. In pursuit of our corporate objectives, the Group continues to focus on improving operational efficiency and controlling costs to achieve better performance and business growth.

The Group continues its effort to look for viable and sustainable ventures and to explore new products especially in the property development. Furthermore, SYF will continue to streamline its manufacturing facilities to achieve cost savings and improve efficiency in order to deliver maximum value to the shareholders.

CORPORATE DEVELOPMENT

On 29 January 2019, SYF Development Sdn Bhd, a wholly-owned subsidiary company had entered into a conditional share sale agreement with Kiara Susila Sdn Bhd (“KSSB”) for the proposed acquisition of the entire issued share capital of Giat Armada Sdn Bhd (“GASB”) for a cash purchase price of RM6.50 million together with the settlement of advances due from GASB to KSSB amounting to RM64.54 million. GASB is the proprietor of 3 parcels of contiguous commercial land measured approximately 22.42 acres located in Semenyih.

The disposal was completed on 5 July 2019. The acquisition is in the ordinary course of business and represents an opportunity for the Group to replenish its land bank and it is in line with the business development strategy and planning of the Group.

On 7 November 2019, SYF announced that it intends to undertake a renounceable rights issue of up to 451,723,359 Rights Shares together with up to 451,723,359 Warrants on the basis of one rights share and one free warrant for every two existing share held on the entitlement date to be determined later at an issue price of RM0.19 per rights share. The exercise is target to be completed within 6 months.

REVIEW OF FINANCIAL PERFORMANCE

The Group reported revenue of RM241.81 million during the financial year, a slight decrease of 4% from the preceding financial year of RM250.76 million, of which 69% of the revenue was contributed by the rubberwood furniture segment and the balance of 31% by the property development segment.

The decrease in the revenue was primarily attributed to the drop of 5% in the rubberwood furniture segment as a result of downsizing of downstream activities, sluggish market, competition, foreign workers shortage and cost escalation.

There are no significant changes in the property development segment’s revenue. All on-going projects, namely Lavender Residence and Iris Residence were completed during the financial year with certificate of completion (CCC) obtained except Wira Heights 3 (Phase 2) on 15 August 2019.

The Group’s loss after tax recorded at RM44.08 million as compared to RM14.08 million (restated) in the previous financial year. The big loss was primarily due to the following:

(a) Rubberwood Furniture Segment

• Drop in selling price up to 15% and further sales discount due to competition and sluggish market; • Shortage of foreign workers that affected production efficiency and cost increase due to levy and minimum

wages;• Clearance sales due to cessation of production of bedroom furniture;• Provision of compensation voluntary separation scheme (VSS) to staff amounting RM1.29 million for

cessation of bedroom furniture division;


17


• Obsolete inventories written off amounting to RM12.96 million due to defective and housekeeping of warehouses upon downsizing and rationalisation of operation;

• Inventories written down of RM8.00 million due to low quality timber wood and outdated furniture models.

(b) Property Development Segment

• Liquidated damages of RM2.50 million for delay in delivery of vacant procession for Lavender Residence project;

• Free first year maintenance fee and sinking funds totalling RM1.58 million for both Lavender Residence and Iris Residence projects;

• Additional sales discount of RM3.81 million on Iris Residence project and Wira Heights 3 (Phase 2) project to boost sales;

• Impact from adoption of MFRS 15 Revenue from Contracts with Customers amounting to RM0.93 million.

The above-mentioned expenses are mostly non-recurring in nature.

The Group’s net assets decreased from RM296.33 million (restated) to RM240.74 million and net assets per share dropped from RM0.48 to RM0.39. The decline was mainly attributable to the net loss of RM44.08 million incurred during the financial year, interim dividend paid of RM7.56 million, treasury shares acquired from share buy-back amounting to RM3.71 million.

The Group’s net gearing ratio maintained at 0.15 time due to decrease in both bank borrowings and equity of the Group. The ratio is considered low and manageable.

REVIEW OF OPERATIONS

In property development segment, SYF completed two projects, namely Lavender Residence and Iris Residence by obtaining CCC during the financial year and another project, Wira Heights 3 (phase 2) immediately after the financial year.

Lavender Residence is a two-block condominium, comprising 276 units in Sungai Long, with GDV of RM135.05 million.


18

Iris Residence is a one block condominium, comprising 252 units in Sungai Long, with GDV of RM123.28 million.

Wira Heights 3 (phase 2) is a landed residential project in Sungai Long, comprising of 6 units of semi-detached house and 3 units of bungalow. The GDV is RM15.61 million.

Vacant possession was handed over to purchasers in time except Lavender Residence due to difficulties in obtaining approval from certain authorities.

As for the rubberwood furniture segment, SYF has been actively carried out downsizing exercise on the downstream furniture export activities with the disposals of few assets relating thereto. During the financial year, the Group ceased production of its’ bedroom furniture division. However, the exercise will not affect the existing upstream materials processing activities which continue to be operated. The upstream activities still remain as the Group’s main contributor in the revenue at the moment.

ANTICIPATED OR KNOWN RISKS

The key risks identified associated with our business are:

(a) shortage and rising cost of foreign workers; (b) shortage and price fluctuation of raw materials; and (c) marketability of property.

Due to high dependency on foreign workers in the furniture and property development industries, the shortage of labour and any changes in government policy, such as levy and minimum wages, would affect the cost and efficiency of production and construction progress. To control and mitigate this risk, automation and hiring of local workers or subcontracting are amongst the measures continuously being explored and implemented.

Another significant risk that the Group is facing is the stability of raw material supply and cost. This is an inherent risk faced by all wood-based manufacturers and the Group strives to minimize the impact by having additional materials collection/storage centres and tendering for concession rights to extract rubber logs.

The current soft economy and weak consumer sentiment cause uncertainties and apprehension amongst businesses, especially the property development and construction industry. Demand for residential properties continue to be affected by stringent bank lending requirements. The Group will engage more estate agents and to offer rebates or discount to purchasers to boost sales. Meanwhile, extra caution is being exercised before acquiring land bank or projects and launching any new project.

PROSPECT AND FUTURE OUTLOOK

As the local economic outlook for the next twelve months gets cloudier coupled with ongoing global trade conflict, continued uncertainties in Brexit negotiations and excessive financial market volatility, the Group will be more prudent and cautious in its business activities for the next financial year.

In the property market, condition remains depressed but it is expected to improve following government’s moves to address a chronic oversupply. As all existing property projects have been completed and subsequent ones not ready for development yet, the Group has been actively sourcing for suitable projects with a shorter time frame to launch. Such potential projects would need to fit the criteria of being in line with market demand and with the ability to raise end-financing. In addition, the Group will leverage on its proven track record particularly in the development of industrial factories whilst ensuring that any project undertaken, whether through outright purchase or joint venture, would not be beyond the financial resources available.



19

As for the rubberwood furniture segment, the Group will continue to streamline the manufacturing facilities to meet the challenges ahead. The current downsizing will not affect the Group’s existing upstream materials processing activities which will continue to be operated. The Group has an established and stronger presence in the materials processing segment and not in the downstream furniture industry that is more competitive and is dominated by major players.

The Group will persevere in executing and implementing out the strategy formulated to meet the challenging conditions. At the same time, the Group intends to pare down borrowings for interest savings and to build up liquid resources to take advantage of any future opportunities that may arise.

BOARD CHANGES

There were no changes to the Board during the financial year.

DIVIDEND

An interim dividend of 1.25 sen per ordinary share for the financial year ended 31 July 2019 has been declared and paid on 24 January 2019.

APPRECIATION

On behalf of the Board, I would like to thank all our valued customers, business partners, bankers, professional advisers and staffs for their invaluable contribution and continued support.

Finally, I would also like to express my gratitude to our shareholders for their investment and my fellow board members for their insights, guidance and advice.

Thank you.

For and on behalf of the Board

DATO’ SRI NG AH CHAIExecutive Chairman & Chief Executive Officer



20

Corporate Governance Overview Statement

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

This corporate governance overview outlines the corporate governance practices which have been adopted by the Board of the Company during the financial year ended 31 July 2019, where possible, and applicable laws to be a dynamic framework within which the Company would conduct its business.

Please note that the following statement is to be read together with the Corporate Governance Report, which is available on the Company’s website at www.syf.com.my.

PRINCIPLE A : BOARD LEADERSHIP AND EFFECTIVENESS

PART I – BOARD RESPONSIBILITIES

Board’s Leadership on Objectives and Goals

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

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

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

The roles and responsibilities of the Board are clearly defined in the Board Charter, which is available on the Company’s website www.syf.com.my.

The roles and responsibilities of the Independent Non-Executive Directors and Executive Directors are clearly defined and properly segregated. All the Independent Non-Executive Directors are independent of the Executive Directors, management and major shareholders of the Company, and are free from any business or other relationship with the Group that could materially interfere with the exercise of their independent judgement. This offers a strong check and balance on the Board’s deliberations.

The Board will normally hold meetings at least four (4) times in each financial year to consider:-

i) relevant operational reports from the management;ii) reports on the financial performance;iii) specific proposals for capital expenditure and acquisitions, if any;iv) major issues and opportunities for the Company, if any; and v) quarterly financial statements for announcement to authorities.


21

Corporate Governance Overview Statement (Cont’d)

PRINCIPLE A : BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)

PART I – BOARD RESPONSIBILITIES (CONT’D)

Board’s Leadership on Objectives and Goals (cont’d)

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

• Audit Committee;• Nomination Committee;• Remuneration Committee;• Employees’ Share Option Scheme (“ESOS”) Committee; and• Risk Management Committee.

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

The positions of Executive Chairman and Chief Executive Officer (“CEO”) are held by different individuals

The Board is mindful the dual role of Executive Chairman and CEO held by Dato’ Sri Ng Ah Chai and is of the view that there are sufficient experienced and independent-minded Directors on the Board to provide sufficient check and balance.

The Executive Chairman provides overall leadership to the Board and is primarily responsible for the orderly conduct and function of the Board to ensure that contributions by Directors are forthcoming on matters being deliberated and that no Board member dominates the discussion. The Executive Chairman is principally responsible to implement and execute corporate strategies, policies and decisions adopted by the Board as well as to oversee the overall business operations. Given that there are three (3) Independent Non-Executive Directors and one (1) Non-Independent Non-Executive Directors of the Board would be able to function independently of management.

Board Commitment Under the Board Charter, the directorships in other public listed companies in Malaysia held by any Board member at any one time shall not exceed any number as may be prescribed by the relevant authorities. In addition, at the time of appointment, the Board shall obtain the Director’s commitment to devote sufficient time to carry out his responsibilities. Directors are required to notify the Chairman before accepting any new directorship(s). The notification would include an indication of time that will be spent on the new appointment(s). Any Director is, while holding office, at liberty to accept other Board appointment in other companies so long as the appointment is not in conflict with the Company’s business and does not affect the discharge of his/her duty as a Director of the Company. To ensure the Directors have the time to focus and fulfil their roles and responsibilities effectively, one (1) criterion as agreed by the Board is that they must not hold directorships at more than five (5) public listed companies as prescribed in Paragraph 15.06 of the LR.

Each Board member is expected to achieve at least 50% attendance of total Board Meetings in any applicable financial year with appropriate leave of absence be notified to the Chairman and/or Company Secretaries, where applicable.

The Directors have demonstrated their ability to devote sufficient time and commitment to their roles and responsibilities as Directors of the Company. The Board was satisfied with the level of time and commitment given by the Directors of the Company towards fulfilling their duties and responsibilities. This is evidenced by the attendance record of the Directors as set out in the section below.


22



Board Commitment (cont’d)

For the financial year ended 31 July 2019, the Board held five (5) meetings. Details of each director’s attendance are as follows:-

Name of Directors Attendance

Dato’ Sri Ng Ah Chai 4/5Dato’ Sri Chee Hong Leong, JP 4/5Ng Wei Ping 4/5Dato’ Wong Gian Kui 5/5Datuk Mohamed Arsad Bin Sehan 5/5Dato’ Mohamad Azmi Bin Ali 5/5Dato’ Abdul Rashid Bin Mat Amin 4/5

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

The Board meets on a quarterly basis, with amongst others, review the operations, financial performance, reports from the various Board Committees and other significant matters of the Group. Where any direction or decisions are required expeditiously or urgently from the Board between the regular meetings, special Board meetings maybe convened by the Company Secretaries, after consultation with the Chairman.

The tentative dates for Board and Board Committee meetings for the year will be circulated by the Company Secretaries well in advance towards the end of the previous year to ensure that each of the Directors is able to attend the planned Board and/or Board Committee meetings including that of the Annual General Meeting. At the end of each Board and Audit Committee meetings, the date of the next meetings is to be re-confirmed.

Qualified and competent Company Secretaries

The Board is supported by two (2) suitably qualified and competent Company Secretaries. Both Company Secretaries of SYF are qualified to act as Company Secretary under Section 235(2) of the Companies Act, 2016.

The Company Secretaries provide the required support to the Board in carrying out its duties and stewardship role, providing the necessary advisory role with regards to the Company’s constitution, Board’s policies and procedures as well as compliance with all regulatory requirements, codes, guidance and legislation. The Directors are regularly updated by the Company Secretaries on new statutory as well as regulatory requirements relating to Directors’ duties and responsibilities or the discharge of their duties as Directors of the Company.

The Board is satisfied with the support rendered by the Company Secretaries to the Board in the discharge of its roles and responsibilities.



23



Access to information and advice

In ensuring the effective functioning of the Board, all Directors have individual and independent access to the advice and support services of the company secretaries, internal auditors and external auditors and, may seek advice from the Management on issues under their respective purview.

For each Board meeting, notice calling the meeting is issued at least seven (7) days in advance of the meeting with the relevant agenda detailing the matters to be transacted at the meeting and the Board papers detailing the key issues so that the Directors have ample time to review and consider the relevant information.

The Directors may also interact directly with, or request further explanation, information or updates, on any aspect of the Company’s operations or business concerns from the Management to enable the Board to discharge its duties in relation to the matter being deliberated.

Subsequent to the meeting, the Minutes will be circulated to the Board and Board Committee for confirmation to ensure that deliberations and decisions are accurately recorded.

The Board and Board Committee’s Chairman of the meeting signs the minutes as a correct record of the proceeding and thereafter, the said minutes of all proceedings are kept in the statutory book of the Company to be made available for inspection under the Companies Act, 2016.

Where applicable, the Director whether as a full board or in their individual capacity, are encouraged to seek independent professional advice from the following parties:

i) for corporate and/or governance matters, the external Company Secretaries;ii) for audit and/or audit-related matters, any representatives of the audit engagement team of the External

Auditors or the outsourced Internal Auditors;iii) for any other specific issues where professional advice is required to enable the Board to discharge its duties

in connection with specific matters, the Board may proceed to do so, upon the approval of the Executive Chairman/Chief Executive Officer, in relation to the quantum of fees to be incurred.

DEMARCATION OF RESPONSIBILITIES

Board Charter

The Board Charter serves as a guide to the Board members of their roles and responsibilities in discharging their duties and Directors. The principles of good corporate governance as set out in the MCCG and Main Market Listing Requirements (“Main LR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) were taken into consideration during the process of finalizing the Board Charter.

The Board Charter is subject to review by the Board as and when necessary to ensure it complies with all applicable laws, rules and regulations of the regulators and remain consistent with the policies and procedures of the Board.

The Board Charter was reviewed and approved by the Board on 28 September 2018. A full copy of the Board Charter is available for reviewing at the Company’s website at www.syf.com.my.



24



DEMARCATION OF RESPONSIBILITIES (CONT’D)

Code of Conduct and Ethics

The Directors and the employees of the Group are expected to behave ethically and professionally for or on behalf of the Company comply with the Code of Conduct and Ethics of the Company.

The Board will review the Code of Conduct and Ethics when necessary to ensure it remains relevant and appropriate. The detailed of the Code of Conduct and Ethics are available for reference at the Company’s website at www.syf.com.my.

Whistle Blowing Policy

The Board has formalised a Whistle-blowing Policy, with the aim to provide an avenue for raising concerns related to possible breach of business conduct, non-compliance of laws and regulatory requirements as well as other malpractices. The details of the Whistle-blowing Policy are available for reference at the Company’s website at www.syf.com.my.

As at the date of this Statement, the Company has not received any complaint under this procedure.

Strategies Promoting Sustainability

The Board is aware of the importance of business sustainability and reviews operational practices which impact on sustainability of environment, governance and social aspects of its business on a regular basis. The Group is committed to the continuous efforts in maintaining a delicate balance between its sustainability agenda and other stakeholders’ interest.

The Sustainability Statement of the Group for the financial year ended 31 July 2019 are disclosed on pages 45 to 53 of this Annual Report.

PART II – BOARD COMPOSITION

Size and Composition of the Board

The Board has total seven (7) members comprising the following members:

• One (1) Executive Chairman & Chief Executive Officer• Two (2) Executive Directors• One (1) Non-Independent Non-Executive Director• Three (3) Independent Non-Executive Directors

The three (3) independent Directors represent compliance with the requirement for one-third (1/3) Independent Directors in the Board, pursuant to Paragraph 15.02(1) of Main LR of Bursa Securities. The Board took note of the requirement of Practice 4.1 of the MCCG which requires at least half of the Board comprises Independent Directors.

The Board is of the view that the current composition of the Board facilitates effective decision making and independent judgement where no individual shall dominate the Board’s decision making.

The individual profile of the Directors is available for reviewing at pages 10 to 13 of this Annual Report.



25


PART II – BOARD COMPOSITION (CONT’D)

Tenure of Independent Directors

The Board is mindful that the recommendations of the MCCG where the tenure of an independent director should not exceed a cumulative term limit of nine (9) years. Upon completion of the nine (9) years, an independent director may continue to serve on the board as a non-independent director. If the Board intends to retain an independent director beyond nine (9) years, it should justify and seek annual shareholders’ approval.

The Board is also mindful of Practice 4.2 of the Code which requires the Board to seek annual shareholders’ approval through a two-tier voting process, if the Board continues to retain the independent director after the twelfth (12th) year.

The Company does not impose a limit on the length of service for both Executive and Independent Non-Executive Directors. The Board is of the view that the length of tenure should not be a criterion affecting a directors’ independence. As long serving directors, they have proved that their working experiences, networking and familiarization with the business operations and are able to contribute actively in the Board or Committee Meetings without compromising their independent judgement. The Board, through the executive Directors, undertakes annual assessment of the independence of the affected Independent Directors as it believes the executive Directors who have intimate working relationship amongst the Directors are well placed to ascertain their independence.

Diverse Board and Senior Management Team

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

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

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

In identifying suitable candidates for appointment to the Board, the Nomination Committee will consider candidates on merit against objective criteria and with due regard for the benefits of diversity on the Board.

Gender Diversity

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

New Candidates for Board Appointment

The NC assesses the effectiveness of the Board and the Board Committees, as well as performance of individual Directors on an annual basis. In furtherance to these annual assessments, the NC is able to identify gaps in the Board composition and the needs to identify and select new members to the Board.



26



New Candidates for Board Appointment (cont’d)

The NC, in making a recommendation to the Board on the candidate for recruitment or new Board appointment, shall have regard to:

i. Size, composition, mix of skills, experience, competencies and other qualities of the existing Board, level of commitment, resources and time that the recommended candidate can contribute to the existing Board and Group;

ii. The candidate’s skills, knowledge, expertise and experience, professionalism, integrity and, in the case of a candidate for the position of Independent Non-Executive Director, the independence criteria as set out in paragraph 1.01 of the LR as well as the necessary skill and experience to bring an independent and objective judgment on issues considered by the Board and the ability to discharge such responsibilities as expected from Independent Non-Executive Directors; and

iii. The appropriate number of Independent Directors to fairly reflect the interests of the minority shareholders and that Independent Directors should make up at least 1/3 of the membership of the Board.

The final decision as to who shall be appointed as Director remains the responsibility of the full Board after considering the recommendation of the NC.

During the financial year ended 31 July 2019, there was no new Director appointed to the Board of the Company.

Nomination Committee

The Company has established the Nomination Committee (“NC”) comprising exclusively of Non-Executive Directors, all of whom are independent, with the responsibilities of assessing the balance composition of Board members, nominate the proposed Board member by looking into his skills and expertise for contribution to the Company on an ongoing basis.

The present members of the Nomination Committee are as follows:

• Datuk Mohamed Arsad Bin Sehan (Chairman, Independent Non-Executive Director)• Dato’ Mohamad Azmi Bin Ali (Member, Independent Non-Executive Director)• Dato’ Abdul Rashid Bin Mat Amin (Member, Independent Non-Executive Director)

In line with the amendment of Main LR, the Terms of Reference of the Nomination Committee has been reviewed and updated on 28 September 2018.

The Nomination Committee had undertaken the following activities for the financial year ended 31 July 2019:-

a) Conducted the annual assessment of the performance of the Board as a whole for the financial year ended 31 July 2019;

b) Conducted its annual assessment of the Independent Directors and made its recommendations to the Board;c) Considered and recommended to the Board, the re-election of the Directors who are subject to retirement

by rotation at the forthcoming AGM of the Company;d) Reviewed the independence of Independent Directors; and e) Reviewed the revised Terms of Reference of the NC to align with the recommendation of the MCCG.



27



Employees’ Share Option Scheme (“ESOS”) Committee The Company has established the ESOS Committee comprising two (2) Executive Directors and one (1) Independent Non-Executive Director, with the responsibilities of administering the Company’s ESOS in accordance with the approved ESOS Bye-Laws and regulation.

The present members of the ESOS Committee are as follows:• Dato’ Sri Ng Ah Chai (Chairman, Executive Chairman & Chief Executive Officer)• Dato’ Sri Chee Hong Leong, JP (Member, Executive Director)• Dato’ Mohamad Azmi Bin Ali (Member, Independent Non-Executive Director)

Annual assessment of the Directors, Board as a whole and Board Committees

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

The Board has, through the Nomination Committee, conducted the following annual assessments in the financial year ended 31 July 2019:-

a) Directors’ self-assessment;b) Evaluation on the effectiveness of the Board as a whole and Board Committees;c) Assessment of Independent Directors; and d) Review of the term of office and performance of Audit Committee and each of its members.

The annual assessment of individual Directors, Board as a whole and Board Committees which commences with the completion of a set of self-assessment form detailing all assessment criteria to be completed by all Directors for evaluation by the Nomination Committee. Criteria for the self-assessment includes self-ratings on the Director’s knowledge, support of the goals of the Company, time commitment, and active participation on the Board.

Based on the assessments conducted for the financial year ended 31 July 2019, the Nomination Committee was satisfied with the performance of the Board as a whole, the Board Committees and each individual Director.

Re-election of Directors

In accordance with Clause 103(1) of the Company’s Constitution, one-third (1/3) of the Directors for the time being, or if their number is not three (3) or a multiple of three (3), then the number nearest to one-third (1/3) shall retire from office and be eligible for re-election, provided always that Directors shall retire from office once at least in each three (3) years in compliance with the Paragraph 7.26 of Main LR of Bursa Securities.

At the forthcoming 24th AGM, Datuk Mohamed Arsad Bin Sehan and Ng Wei Ping are due for retirement and being eligible, have offered themselves for re-election.

Upon review, the Nomination Committee were satisfied with the performance of the abovementioned Directors and recommended their re-election to the Board for approval. The Board has in turn, recommended the same to be considered by the shareholders at the forthcoming 24th AGM of the Company.



28



Continuing Education and Training of Directors

The Board acknowledges the importance of continuous education and training to equip themselves for the effective discharge of its duties.

The Board has cultivated the following best practices:

a) All newly appointed Directors are required to attend the Mandatory Accreditation Training Programme (“MAP”) as prescribed by Bursa Securities within the stipulated timeframe;

b) All Directors are encouraged to attend talks, training programmes and seminars to update their knowledge on the latest regulatory and business environment;

c) The Directors may be requested to attend additional training courses according to their individual needs as a Director/Board Committee’s member on which they serve; and

All Directors have attended MAP prescribed by Bursa Securities. In addition to that, the Directors are briefed and updated at the quarterly meetings by the External Auditors, Internal Auditors and/or the Company Secretary on relevant amendments to the Listing Requirements, corporate governance practices and principles, risk management and internal control approaches, Malaysian Financial Reporting Standards as well as auditing requirements. The Directors also gained insights to the market development through constructive and active deliberations at the Board meetings.

The Directors, on their own efforts, continue to equip themselves with latest knowledge and updates on the business and economic environment via trade fairs, industrial periodicals, professional journals and attending the following:

• Governance Symposium 2019 – Building a Governance Eco-System;• Audit Committee Conference;• In house training on understanding financial reporting and implication of inaccurate & delay in reporting;• Evaluating effective internal audit function – Audit Committee’s Guide on How To; and • Corporate Liability On Corruption : A Basic Awareness & Implementation Framework.

PART III – REMUNERATION

Remuneration Committee (“RC”)

The RC comprising exclusively of Non-Executive Directors, all of whom are independent. The present members of the RC are as follows:

• Datuk Mohamed Arsad Bin Sehan (Chairman, Independent Non-Executive Director)• Dato’ Mohamad Azmi Bin Ali (Member, Independent Non-Executive Director)• Dato’ Abdul Rashid bin Mat Amin (Member, Independent Non-Executive Director)

The RC is authorised by the Board to establish a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual Directors. The RC shall meet at least once a year and at such time, the Chairman of the RC may request for a meeting as and when deemed necessary.



29


PART III – REMUNERATION (CONT’D)

Remuneration Committee (“RC”) (cont’d)

The following works were undertaken by the RC during the financial year ended 31 July 2019:

(a) Reviewed and confirmed the minutes of the RC Meeting held in financial year ended 31 July 2019;(b) Reviewed the Directors’ fees payable to Non-Executive Directors for the financial year ended 31 July 2019 and

recommended the same to the Board for approval;(c) Reviewed the Directors’ benefits payable to the Directors of the Company for the period from 9 January

2020 until the next AGM of the Company pursuant to Section 230(1)(b) of the Companies Act, 2016 and recommended the same to the Board for approval;

(d) Reviewed the revision of the remuneration package of the Executive Directors;(e) Reviewed the revised Terms of Reference of the RC to align with the recommendation of the MCCG.

In line with the amendment of Main LR, the Terms of Reference of the RC has been reviewed and updated on 28 September 2018. A copy of the Terms of Reference of the RC is available for reviewing at the Company’s website at www.syf.com.my.

Remuneration Policies and Procedures The Company has established a formal remuneration policy for the Executive Directors and senior management to align with business strategy and long term objectives of the Company. The Board as a whole, determines the level of fees of Non-Executive Directors and Executive Directors.

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

For the financial year ended 31 July 2019, the Board decided that the Directors’ Fees for the Independent Directors be maintained as the previous financial year for each Director.

The relevant resolutions in relation to the Directors’ Fees payable to the Independent Directors are to be presented to the shareholders for approval at the forthcoming 24th AGM.

Remuneration of Directors

The remuneration packages of Executive Directors include salaries, benefits in kinds, incentives and bonus which are linked to the Group’s performance. The fees of Non-Executive Directors consist of fixed fees and meeting allowances for their attendances and participation in Board and Board Committee meetings.

The respective Directors are abstained from discussing and deliberating on their own remuneration and Directors’ fees and it has to be approved by shareholders at the AGM. The details of the remuneration of the Directors of the Company comprising remuneration received/receivable from the Company and subsidiary company during the financial year ended 31 July 2019 are as follows:-



30


PART III – REMUNERATION (CONT’D)

Remuneration of Directors (cont’d) Salaries and * other Directors Fees emoluments Total (RM) (RM) (RM)

Dato’ Sri Ng Ah Chai - 1,714,429 1,714,429Dato’ Sri Chee Hong Leong, JP - 417,469 417,469Ng Wei Ping - 269,181 269,181Datuk Mohamed Arsad Bin Sehan 36,000 13,500 49,500Dato’ Mohamad Azmi Bin Ali 42,000 13,500 55,500Dato’ Abdul Rashid Bin Mat Amin 36,000 12,000 48,000Dato’ Wong Gian Kui - 4,500 4,500

* Other emoluments include the meeting allowance for the Directors’ attendance in Board and Board’s Committee Meetings.

Remuneration of top five (5) senior management

The Board is of the view that, given that the disclosure of the remuneration of the top five (5) senior management will give rise to recruitment and talent retention issues and may lead to the performing senior management staff being lured away by the competitors and hence, the Group may lose high caliber personnel who have been contributing to the Group’s performance.

The Board will ensure that the remuneration for the senior management personnel is commensurate with their performance in order to attract, retain and motivate them to contribute positively to the Group’s performance.

PRINCIPLE B : EFFECTIVE AUDIT AND RISK MANAGEMENT

PART I - AUDIT COMMITTEE

Separation of the positions of the Chair of the Audit Committee (“AC”) and the Board

The AC currently comprises of three (3) members, all of whom are Independent Non-Executive Directors. The Company complied with the Practice 8.1 of the MCCG which stipulates that the Chairman of the Audit Committee (“AC”) is not the Chairman of the Board.

The AC Chairman is Dato’ Mohamad Azmi Bin Ali, who is not the Chairman of the Board. The Chairman of the AC is a member of the Malaysian Institute of Accountants, and a member of CPA (Australia).

The composition of the AC is set out in the Audit Committee Report of this Annual Report.



31

PRINCIPLE B : EFFECTIVE AUDIT AND RISK MANAGEMENT (CONT’D)

PART I - AUDIT COMMITTEE (CONT’D)

Former Key Audit Partner

In compliance with Practice 8.2 of the MCCG, the AC has instituted a policy by way of inclusion in the Terms of Reference of the AC that requires a former key audit partner to observe a cooling-off period of at least two (2) years before being appointed as a member of the AC. The Terms of Reference of the AC has been updated accordingly in order for the AC to formalize such policy.

None of the members of the Board was former key audit partners. Hence, no former key audit partner is appointed to the AC.

Assessment of Suitability and Independence of External Auditors

In compliance with Practice 8.3 of the MCCG, the Company has established a transparent arrangement with the External Auditors to meet their professional requirements. From time to time, the External Auditors highlight to the AC and Board of Directors on matters that require the Board’s attention.

The AC is responsible for reviewing the audit, recurring audit-related and non-audit services provided by the External Auditors. The AC has been explicitly accorded the power to communicate directly with both the External Auditors and Internal Auditors. The terms of engagement for services provided by the External Auditors are reviewed by the AC prior to submission to the Board for approval. The effectiveness and performance of the External Auditors are reviewed annually by the AC.

In assess or determine the suitability and independence of the External Auditors, the Audit Committee has taken into consideration of the following:

i) the adequacy of the experience and resources of the External Auditors;

ii) the External Auditors’ ability to meet deadlines in providing services and responding to issues in a timely manner as contemplated in the external audit plan;

iii) the nature of the non-audit services provided by the External Auditors and fees paid for such services relative to the audit fee; and

iv) whether there are safeguards in place to ensure that there is no threat to the objectivity and independence of the audit arising from the provision of non-audit services or tenure of the External Auditors.

Annual appointment or re-appointment of the External Auditors is via shareholders’ resolution at the Annual General Meeting on the recommendation of the Board. The External Auditors are invited to attend the Annual General Meeting of the Company to respond and reply to the Shareholders’ enquiries on the conduct of the statutory audit and the preparation and contents of the audited financial statement.

Where necessary, the Audit Committee will meet with the External Auditors without the presence of Executive Director and members of management to ensure that the independence and objectivity of the External Auditors are not compromised and matters of concerns expressed by the Audit Committee are duly recorded by the Company Secretaries.



32


PART I – AUDIT COMMITTEE (CONT’D)

Assessment of Suitability and Independence of External Auditors (cont’d)

In presenting the Audit Planning Memorandum to the Audit Committee, the External Auditors have highlighted their internal policies and procedures with respect to their audit independence and objectivity which include safeguards and procedures and independent policy adopted by the External Auditors. The External Auditors have also provided the required independence declaration to the Audit Committee and the Board for the financial year ended 31 July 2019.

The Audit Committee was satisfied with the competence and independence of the External Auditors for the financial year under review. Having regard to the outcome of the annual assessment of the External Auditors, the Board approved the Audit Committee’s recommendation for the shareholders’ approval to be sought at the Annual General Meeting on the re-appointment of Messrs UHY as the External Auditors of the Company for the financial year ending 31 July 2020.

The external auditors had provided a confirmation of their independence to the Audit Committee that they are and have been independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements.

PART II – RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORK

Risk Management Committee (”RMC”)

The Risk Management Committee was established on 5 October 2018 to ensure that a risk management structure is embedded throughout the Group and risk management policies consistently adopted, the Risk Management Committee reports to the AC and comprises the following members:-

1) Chairman : Dato’ Mohamad Azmi Bin Ali, Independent Non-Executive Director 2) Member : Dato’ Sri Chee Hong Leong, JP, Executive Director 3) Member : Ng Wei Ping, Executive Director 4) Member : Lee Oon Kar, Senior Manager, Finance

The primary task of the Risk Management Committee is to identify and assess the various risks inherent in its operating environment and review the adequacy of controls implemented to mitigate such risks.

Effective Risk Management and Internal Control Framework

The Board fulfils its responsibilities in the risk governance and oversight functions through the Risk Management Committee for maintaining a sound system of internal controls which provides reasonable assessment of effective and efficient operations, internal financial controls and compliance with laws and regulations as well as adherence with internal procedures and guidelines. The internal control system is designed to meet the Group’s needs and to manage and minimise the risks to which it is exposed. The Board regularly review its effectiveness, adequacy and integrity of the risk management framework and internal control systems to safe guard shareholders’ investments and the Company’s assets.



33


PART II – RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORK (CONT’D)

Effective Risk Management and Internal Control Framework (cont’d)

The Board established an independent internal audit function that reports directly to the Audit Committee assisted by the RMC. This internal audit function is outsourced to an independent professional firm.

An overview of the state of internal controls within the Group as set out on pages 39 to 41 of this Annual Report under the Statement on Risk Management and Internal Control.

Internal Audit Function

The Directors are responsible for the Group’s system of internal controls and its effectiveness. The principal aim of the system of internal controls is the management of financial and business risks that are significant to the fulfilment of the Company’s business objectives, which is to enhance the value of shareholders’ investment and safeguarding the Group’s assets.

The Company outsourced its internal audit function to an independent internal audit service provider, namely Messrs. RSL PLT who reports directly to the AC. The functions of the Internal Auditors is to assist the AC in providing independent assessment and review on the adequacy, efficiency and effectiveness of the key controls and processes in the operating units, as well as the governance aspect of the Group and to ensure compliance with the established policies and procedures of the Group.

The internal controls are tested for effectiveness and efficiency by the Internal Auditors. The report of the internal audit is tabled for AC’s review and comments, and the audit findings will then be communicated to the Board.

The AC Report as set out in this Annual Report provides further details of the Internal Audit Function.

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

PART I – COMMUNICATION WITH STAKEHOLDERS

Continuous Communication between Company and Stakeholders

The Board acknowledges the importance of an effective, transparent and regular communication with its stakeholders. As a public listed company, the Company has put in place procedures to abide by the corporate disclosure requirements of material information as set out by Bursa Securities. The Board members are kept informed of material matters which require public disclosures and they approve the announcement of material matters prior to public disclosure. The Board is mindful that material information is to be announced timely and that confidential information should be sensitively handled to avoid leakages leading to improper use of such information. In such circumstance, the Company will also closely monitor the market activity of its securities during a period where information is withheld. Where it is believed that such information has inevitably been leaked, immediate announcement will be made.

SYF’s website consists of the relevant corporation information including the board charter, annual report, etc. Shareholders and investors are also kept informed of all major developments within the Group through announcements via the website of Bursa Securities at www.bursamalaysia.com. The Company also engages with fund managers and analysts from time to time.



34


PART I – COMMUNICATION WITH STAKEHOLDERS (CONT’D)

Corporate Disclosure Policies

The Board recognises the importance of keeping the shareholders informed and updated of development concerning the Group. In this regard, the Group strictly adheres to the disclosure requirements of Bursa Securities. The Group practices open communication with its investors.

In order to maintain its commitment of effective communication with shareholders, the Group embrace the practice of comprehensive, timely and continuing disclosures of information to its shareholders as well as the general investing public.

The Group also endeavour to provide additional disclosures of information on a voluntary basis, where necessary. The management believes that consistently maintaining a high level of disclosure and extensive communication is vital to shareholders and investors in making informed investment decisions.

PART II – CONDUCT OF GENERAL MEETINGS

Notice of Annual General Meeting

The Board is endeavour to dispatch its notice of annual general meeting (“AGM”) at least 28 days before the meeting and mindful that the sufficient notice and time given would allow the shareholders to make necessary arrangements to attend and participate either in person, by corporate representative, by proxy or by attorney. This would also enable the shareholders to properly consider the resolutions that will be discussed and decided at the meeting.

The Annual General Meeting is the principal forum for dialogue with the shareholders. The shareholders will be notified of the meeting together with a copy of the Company’s Annual Report at least twenty-eight (28) days before the meeting. The Notice of AGM, which sets out the business to be transacted at the AGM, is also published in a major local newspaper. The Board will ensure that each item of special business included in the notices of the AGM or extraordinary general meeting is accompanied by a full explanation of the effects of any proposed resolution. Shareholders are given the opportunity to participate in the question and answer session on the Group’s operations and proposed resolutions. The Directors, senior management and the external auditors are available to respond to shareholders’ queries during the AGM.

In compliance with Practice 12.1 of the MCCG, the notice of 23rd AGM together with the Annual Report and Circular were dispatched to shareholders at least twenty-eight (28) days prior to the meeting date.

Poll Voting

In line with Paragraph 8.29A of the Main LR of Bursa Securities, the Company will ensure that any resolution set out in the notice of any general meeting, or in any notice of resolution which may properly be moved and is intended to be moved at any general meeting, is voted by poll. At the same time, the Company will appoint at least one (1) scrutineer to validate the votes cast at the general meeting.

During the 23rd AGM and the Extraordinary General Meeting (“EGM”) held on 8 January 2019 and 8 May 2019 respectively, the resolutions tabled were all voted by poll.



35


PART II – CONDUCT OF GENERAL MEETINGS (CONT’D)

Voting in asbentia and Remote Shareholders’ Participation at General Meeting(s)

Prior to implementing the voting in absentia and remote shareholders’ participation at general meeting(s), the Board noted several factors need to be fulfilled prior to making such consideration:-

a) relevant amendments to the Constitution of the Company to outline the procedures for enabling such Voting/Participation;

b) Availability of technology and infrastructure;c) Affordability of the technology and infrastructure;d) Sufficient number of shareholders residing/locating at particular remote location(s); ande) Age profile of the shareholders.

In view thereof, the Board will not recommend the adoption of such Voting/Participation at the forthcoming 24th AGM of the Company.

COMPLIANCE STATEMENT

The Board is satisfied that to the best of its knowledge, the Company is substantially in compliance with the principles and practices set out in the MCCG as well as the relevant LR for the financial year ended 31 July 2019. Any practices in the Code which have not been implemented during the financial year will be reviewed by the Board and implemented where possible and relevant to the Group’s business.

This Statement was made in accordance with the resolution of the Board dated 21 November 2019.



36

Additional Compliance Information

1. UTILISATION OF PROCEEDS FROM CORPORATE PROPOSALS

The Company entered into a conditional share sale agreement on 26 July 2017 with Mieco Chipboard Berhad for the Disposal of its entire equity interest in Great Platform Sdn Bhd (“GPSB”), for RM7,063,341 together with the settlement of advance owing by GPSB amounting to RM51,528,809, for a total cash consideration of RM58,592,150. This transaction was completed on 27 February 2018.

As of to-date, the Company has fully utilised the proceeds, the utilization of proceeds is set out below:-

Original Revised Balance timeframe timeframeDescription Original Actual yet to be Revised for forof utilisation utilisation utilisation utilised utilisation utilisation utilisation RM’000 RM’000 RM’000 RM’000

Repayment of bank 40,000 40,000 - 15,000 (1) Within 6 borrowings months(3)

Working capital 3,092 3,092 - - (1) -Expenses for the Disposal 500 500 - - (1) -To fund future acquisition 15,000 - 15,000 - Within 18 - of land bank months(2)

58,592 43,592 15,000 15,000

Notes:- (1) The respective proceeds have been utilised.(2) Within 18 months from the date of completion of the Disposal.(3) Within 6 months from the date the shareholders of SYF approve the Proposed Variation.

2. AUDIT AND NON-AUDIT FEES

Details of the audit and non-audit fees payable to the External Auditors for the financial year ended 31 July 2019 are set out as follows:

Company Group (RM) (RM)

Audit Services Rendered 40,000 134,500Non-Audit Services Rendered (a) Review of Statement on Risk Management and Internal Control 3,000 3,000(b) Examination of Housing Development Accounts - 2,000


37

Additional Compliance Information (Cont’d)

3. RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR A TRADING NATURE

At the Twenty-Third Annual General Meeting held on 8 January 2019, the Company had obtained a general mandate from its shareholders for the recurrent related party transactions of a revenue and trading nature (“RRPTs”).

The details of the RRPTs entered by the Group during the financial year ended 31 July 2019 are disclosed in the Audited Financial Statements in the Annual Report.

4. REVALUATION POLICY

The Group has adopted the revaluation policy to revalue its properties every five years.

5. MATERIAL CONTRACTS INVOLVING DIRECTORS AND SUBSTANTIAL SHAREHOLDERS

Save as disclosed below, there were no material contracts entered into by the Company or its subsidiary companies involving the interests of the Directors, Chief Executive who is not a Director or major shareholders in the financial year ended 31 July 2019:-

On 29 January 2019, the Company’s indirect wholly-owned subsidiary, SYF Development Sdn. Bhd. entered into a conditional share sale agreement (“SSA”) with Kiara Susila Sdn. Bhd. (“KSSB”) for the proposed acquisition of the entire equity interest in Giat Armada Sdn. Bhd. (“GASB”), for a cash purchase price of RM6,500,000 together with the settlement of advances owing by GASB to KSSB amounting to RM64,535,134. The SSA was completed on 5 July 2019.

6. EMPLOYEES’ SHARE OPTION SCHEME

The Employees’ Share Option Scheme of the Company (“ESOS”) was established and implemented on 11 May 2012 and the ESOS is governed by its ESOS By-Laws approved by the shareholders at an Extraordinary General Meeting held on 1 March 2012.

The ESOS became effective for a period of five (5) years from 11 May 2012 until 8 April 2017. On 24 February 2017, the Company extended the duration of the ESOS for another five (5) years until 8 April 2022 in accordance with the terms of the ESOS By-Laws.

Further details of ESOS during the financial year ended 31 July 2019 are set out in the pages 144 to 146 of this Annual Report.


38

The Directors are responsible for the preparation of financial statements prepared for each financial year and ensure that the financial statements give a true and fair view of the financial position of the Group and the Company as at 31 July 2019, and of their financial performance and their cash flows for the year ended then.

In ensuring the preparation of these financial statements, the Directors have observed the following criteria:

(i) Overseeing the overall conduct of the Group and the Company’s business;(ii) Identifying principal risks and ensuring that an appropriate system of internal control exists to manage these

risks;(iii) Reviewing the adequacy and integrity of Internal Controls and Management Information System within the

Group and the Company;(iv) Adopting suitable accounting policies and apply them consistently;(v) Making judgements and estimates that are reasonable and prudent; and(vi) Ensuring compliance with the application of Approved Accounting Standards in Malaysia. The Directors are responsible for ensuring that the Group and the Company keep proper accounting records and other records which are closed with reasonable accuracy at any time the financial position of the Group and the Company.

The Directors are collectively responsible to ensure that the financial statements comply with the Listing Requirements of Bursa Securities, the provisions of the Companies Act, 2016 and applicable approved accounting standards in Malaysia.

The Directors are also responsible for taking such reasonable steps to safeguard the assets of the Group and the Company to minimise fraud and other irregularities.

The Directors are satisfied that in preparing the financial statements of the Group and the Company for the financial year ended 31 July 2019, the Group and the Company have used the appropriate accounting policies and applied them consistently and supported by reasonable and prudent judgments and estimates. The Directors also consider that all applicable approved accounting standards have been complied with and further confirm that the financial statements have been prepared on a going concern basis.

Statement Of Directors’ Responsibility In Respect Of The Audited Financial Statements


39

Statement On Risk Management And Internal Control

INTRODUCTION

As stated in Paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Board of Directors (“Board”) of the Company is required to make a statement in this Annual Report about the state of risk management and internal control in the Company as a Group. The Board recognises the importance of good practice of corporate governance and is committed to maintain a sound system of internal control to safeguard shareholders’ investments and Group’s assets. The Board is pleased to provide the following Statement on Risk Management and Internal Control which has been prepared in accordance with the “Statement on Risk Management and Internal Control – Guidelines for Directors of Listed Issuers” (“the Guidelines”).

RESPONSIBILITY OF THE BOARD

The Board affirms its overall responsibility for maintaining an adequate and sound risk management framework and system of internal control, and for reviewing its adequacy and integrity to safeguard shareholders’ investment and the Company’s assets. The review of the Group’s risk management and system of internal control is a concerted and continuing process. In the pursuit of this objective, the Directors are aware that the internal control system is designed to manage rather than eliminate the risk of failure to achieve the Group’s objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.

The Board has received assurance from the Managing and Executive Directors of the Company that the Group’s risk management and internal control is operating adequately and effectively, in all material aspects based on the risk management and internal control system of the Group.

KEY ELEMENTS OF INTERNAL CONTROL

Key Internal Control Processes

The key processes that the Directors have established in reviewing the adequacy and integrity of the system of internal control are as follows:

(a) The Group’s internal audit function reports to the Audit Committee. The Audit Committee, on behalf of the Board, reviews and holds discussions with management on the action taken on internal control issues identified in reports prepared by the internal auditors and the management;

(b) An accounting system which ensures that all financial transactions are correctly recorded, collated and consolidated into the monthly and quarterly management financial statements, allowing management to focus on areas of material change. A data backup system is in place to ensure recovery of information in the event of untoward incidents;

(c) Investment decisions are documented and approved by the Board for the acquisition or disposal of business operations, acceptance of projects, application of capital expenditure and approval on borrowings;

(d) Staff recruitment goes through a process and there is a performance appraisal system as well as training and development programs in place to achieve the objective of ensuring staff are competent to carry out their duties and responsibilities;

(e) The Audit Committee and the Board monitor and review the Group’s performance and financial results at quarterly meetings; and


40

Statement On Risk Management And Internal Control (Cont’d)

KEY ELEMENTS OF INTERNAL CONTROL (CONT’D)

Key Internal Control Processes (Cont’d)

(f) Authority limits are defined for board members and senior management within an appropriate organisation structure.

The above processes serve to ensure that there is a platform for the timely identification, evaluation and management of significant risks affecting the business.

Risk Management Framework

The Board recognises the importance of risk management and as such a Risk Committee, chaired by an Independent Non-Executive Director, has been tasked to identify, evaluate and develop controls to manage the key risks inherent in the Group’s operations and business environment.

In performing its role, the committee carries out periodic reviews of the various risks and controls in consultation with the respective management staffs involved including but not limited to the following areas:-

a) External – Economic conditions, industry competition, technology changes.

b) Regulatory – Changes in laws and regulations, non-compliance with statutory requirements including securities and exchange requirements.

c) Financial – Borrowings, forex fluctuation, credit control, budgetary control, fraud.

d) Corporate governance – Unauthorised or inappropriate press statements, communication of corporate mission, strategic plans to management staff.

e) Customers – Customer service, relationship management, loss of key customers, customer preference.

f) Products – Product knowledge, quality control.

g) Suppliers – Shortage of raw materials, timely delivery/vacant possession, quality.

h) Operations – Increasing cost of production/development, use of illegal software, IT system breakdown, fire prevention, security, machinery breakdowns.

i) Human capital - Staff turnover, succession planning, illegal foreign workers.

INTERNAL AUDIT FUNCTIONS

Independent reviews of internal control are essential in order to provide an objective assurance to the Board. At present, the review mechanism is under the purview of the Audit Committee. Functionally, the internal auditors report directly to the Audit Committee and are responsible to conduct reviews on the systems of risk management and internal control; report the weaknesses of the systems of risk management and internal control; and to provide recommendations for improvement to the management.

The Group’s internal audit function is outsourced to an independent professional service firm. During the financial year, the internal auditors have performed the internal audit according to the Internal Audit Plan approved by Audit Committee. For the financial year ended 31 July 2019, two (2) Internal Audit Reviews had been carried out:-


41

Audit Period Reporting Month Audited Areas

1 April 2018 to 31 March 2019 June 2019 Human Resource - Payroll process - Attendance - Individual files - Leave application - Recruitment - Termination - Staff motivation - Staff training

1 August 2018 to 31 July 2019 September 2019 Project Planning (Property Development) - Initial planning process - Project planning guidelines - Project approval stage - Staff management

The professional fees incurred for the above assignments were RM31,600.

REVIEW OF STATEMENT BY THE EXTERNAL AUDITORS

As required by 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. Their review was performed in accordance with Audit and Assurance Practice Guide (“AAPG”) 3: Guidance for Auditors on Engagements to Report on the Statement on Risk Management and Internal Control included in the Annual Report issued by the Malaysian Institute of Accountants (“MIA”). AAPG 3 does not require the external auditors to form an opinion on the adequacy and effectiveness of the risk management and internal control systems of the Group.

Based on their review, the External Auditors have reported to the Board that nothing has come to their attention that causes them to believe that this statement is not prepared, in all material respects, in accordance with the disclosures required by paragraph 41 and 42 of the Guidelines, nor is factually inaccurate.

CONCLUSION

For the financial year under review and up to the date of issuance of the statement in the Annual Report, the Board is of the opinion that the internal control system currently in place is adequate and effective to safeguard the Group’s interests and assets. The Board will continually assess the adequacy and effectiveness of the Group’s risk management and system of internal control and to strengthen it, as and when necessary.

The statement was approved by the Board on 21 November 2019.

Statement On Risk Management And Internal Control (Cont’d)


42

Audit Committee Report

The Audit Committee (“AC”) of the Company was established to serves as a committee of the Board of Directors of the Company (“the Board”) and to assist the Board in fulfilling its statutory duties and fiduciary responsibilities.

COMPOSITION OF AC

The AC comprises the following members:-

Dato’ Mohamad Azmi Bin Ali (Chairman, Independent Non-Executive Director)Datuk Mohamed Arsad Bin Sehan (Member, Independent Non-Executive Director)Dato’ Abdul Rashid Bin Mat Amin (Member, Independent Non-Executive Director)

Dato’ Mohamad Azmi Bin Ali is the member of the Malaysian Institute of Accountants, Accordingly, the Company complies with Paragraph 15.09 of the Main LR of Bursa Securities. None of the AC members are alternate Director.

The Terms of Reference of the AC has been reviewed and updated on 28 September 2018 and is accessible via the Company’s website www.syf.com.my.

MEETING ATTENDANCE

There were six (6) AC meetings held during the financial year ended 31 July 2019, which were attended by the AC members as follows:-

Members Attendance at Meeting

Dato’ Mohamad Azmi Bin Ali 6/6Datuk Mohamed Arsad Bin Sehan 6/6Dato’ Abdul Rashid Bin Mat Amin 5/6

The AC meetings were convened with proper notices and agenda. The Chairman of the AC reported the key issues discussed at each meeting to the Board. The management was invited to all Audit Committee meetings to facilitate direct communication and to provide clarification on audit issues and the Group’s operations.

All deliberations during the AC meetings were duly minuted. Minutes of the AC meetings were tabled for confirmation for every succeeding AC meeting and the Minutes were distributed to each Board member for their notation.

SUMMARY OF ACTIVITIES

The work carried out by the AC during the financial year ended 31 July 2019 include the following:-

Financial Reporting

a) Reviewed the unaudited quarterly reports on consolidated results and financial statements to ensure that the financial reporting and disclosure requirements on the relevant authorities have been complied with, focusing particularly on:-

- the going concern assumption;- compliance with accounting standards and regulatory requirements;- any changes in accounting policies and practices;- significant issues and unusual event; and - significant adjustment arising from the audit, if any


43

Audit Committee Report (Cont’d)

In fulfilling its oversight responsibilities, the AC reviewed and discussed with the management and External Auditors on the salient accounting and audit issues, significant risk and audit focus areas, any deficiency on internal control, reasonableness of significant judgements, amendments to the reporting standards and other legal requirements.

External Audit

a) Reviewed, evaluated and approved Messrs. UHY Audit Planning Memorandum for the financial year ended 31 July 2019. The statutory responsibilities of the Auditors, audit approach, areas of audit emphasis, engagement team, timing of audit, accounting standards updates and other updates amongst others were discussed and brought to the attention of AC;

b) Reviewed the Audit Review Memorandum presented by the External Auditors which serves to provide the AC a status update of the key findings and issues arising from the audit. A summary of key audit findings was presented to the AC;

c) Reviewed with the External Auditors the approved accounting standards applicable to the financial statements of the Group;

d) Reviewed the annual audited financial statements of the Company and the Group prior to the submission to the Board for approval;

e) Reviewed and assessed the independent and performance of the External Auditors; andf) Conducted independent meeting (without the presence of the management) with the External Auditors,

Internal Audit

a) Reviewed the letter of engagement of Messrs. RSL PLT as Internal Auditors of the Group;b) Reviewed and approved the Internal Audit Plan to ensure that the scope and coverage of the internal audit

on the Group’s operations is adequate and that all the risk areas are audited by the Internal Auditors;c) Reviewed and deliberated internal audit reports containing approaches of internal audit reviews, findings, the

recommendation action plans and the management’s response and the status of implementation of the action plans; and

d) Reviewed the effectiveness of internal audit processes as well as the adequacy of the scope, functions, competency and resources of the internal audit function and whether it has the necessary authority to carry out its works.

Risk Management and Internal Control

a) Reviewed the adequacy and effectiveness of the policies and procedures and system of internal controls to monitor risks in specific areas, based on the outsourced Internal Auditors’ reports on specific business functions within the Group;

b) Reviewed the Statement on Risk Management and Internal Control for inclusion in this Annual Report.

Related Party Transactions

a) Reviewed any related party transactions and conflict of interests situation that may arise within the Group, including any transaction, procedures or course of conduct that raises questions of management integrity and to ensure its compliance with Main LR of Bursa Securities;

b) Reviewed the quarterly report on recurrent related party transactions for compliance with Main LR of Bursa Securities;

c) Reviewed the Circular to Shareholders in relation to the proposed renewal of shareholders’ mandate for recurrent related party transactions of revenue or trading nature prior to its approval by the Board.


44

Other activities

a) Reviewed the Audit Committee Report prior to submission to the Board for consideration and inclusion in the Annual Report.

b) Reviewed the Terms of Reference of Audit Committee and proposed amendment to the Terms of Reference to ensure it is in line with the updated provisions of Main LR of Bursa Securities and the principles and best practices of the Malaysian Code on Corporate Governance 2017;

c) Reviewed the allocation of Options under Employees Share Option Scheme to ensure that it had been carried out according to the criteria and procedures as contained in the By-Laws:

d) Reviewed the suitability and independence of External Auditors; and e) Reviewed the proposed corporate exercises.

INTERNAL AUDIT FUNCTION

The Group outsourced its internal audit function to Messrs. RSL PLT as Internal Auditors of the Group to assist the AC in discharging its duties and responsibilities more effectively. Messrs. RSL PLT acted independently and with due professional care and presented the Internal Audit Reports on the findings and recommendations to the Audit Committee.

The internal audit reviews were conducted using a risk-based approach and were guided by a recognized framework. The internal audit reviews involved walkthrough of the process and procedures, discussion with key staff, review documentation as well as observation of the current practices.

The AC has full and direct access to the outsourced Internal Auditors, reviews its internal audit plan and reports on audits performed, and monitors its performance. The AC also reviews the adequacy of the scope, functions, competency and resources of outsourced internal audit functions from time to time.

In respect of the financial year ended 31 July 2019, the Internal Auditors had carried out internal audit reviews on the following functional areas:

1) Human Resources; and 2) Project Planning (Property Development).

The audit findings and recommendations for improvement and the status of the implementation status of management’s action plans were presented at the AC meetings.

The fees incurred in maintaining the outsourced internal audit function for the financial year ended 31 July 2019 amounted to RM31,600-00.

This Report have been reviewed by the AC and approved by the Board for inclusion in this Annual Report.

Audit Committee Report (Cont’d)


45

This FY 2019 Sustainability Statement (the Statement) provides an overview of SYF Resources Berhad’s (SYF or the Group) sustainability initiatives and practices, highlighting the economic, environmental and social impact created. This is also the first year that SYF is formally disclosing its sustainability initiatives, with guidance from Bursa Malaysia’s Sustainability Reporting Guide.

SYF recognises the importance of managing sustainable value drivers in driving the future growth of the Group. The Statement highlights the Group’s policies and practices in managing the sustainability aspects of its business, including economic, environmental and social.

SCOPE

The Statement covers the Group’s subsidiaries in the rubberwood furniture manufacturing and property development division – Seng Yip Furniture Sdn Bhd, Tomisho Sdn Bhd, SYF Development Sdn Bhd and SYF Construction Sdn Bhd. These are the Group’s material business segments and subsidiaries. All reported information covers the period from 1 August 2018 to 31 July 2019.

The Statement has been prepared in accordance with Practice Note 9 of Bursa Malaysia’s Main Market Listing Requirements, guided by the Bursa Malaysia’s Sustainability Reporting Guide.

SUSTAINABILITY GOVERNANCE

SYF believes that sustainability governance is important in ensuring the effective implementation of sustainability initiatives. A robust governance structure promotes oversight on the established initiatives and management processes. Currently, responsibility for sustainability management resides with the respective departments within the Group.

STAKEHOLDERS

The Group strives to be inclusive and responsible corporate citizens through the engagement of stakeholders. In FY 2019, SYF engaged with different stakeholders through various methods.

Stakeholders Engagement Activities Frequency of engagement

Board of directors - Board meetings- Annual General Meeting

- At least four times a year- Once a year

Employees - Safety briefings- On-the-job training- Performance appraisals

- Throughout the year- Throughout the year- At least once a year

Customers - Customer feedback mechanism - Once a year

Investors - Analyst briefings- Annual General Meeting- Financial statements

- Ad hoc basis- Once a year- At least four times a year

Government and regulatory authorities

- Meetings - As and when required

Media - Media releases - As and when required

Local communities - CSR events - Ad hoc basis

Corporate Sustainability Statement


46

Corporate Sustainability Statement (Cont’d)

THE 17 SUSTAINABLE DEVELOPMENT GOALSThe 17 Sustainable Development Goals (SDGs) introduced at the 2015 United Nations Conference on Sustainable Development provide a global action plan to governments in addressing critical areas for sustainable development. The SDGs are aimed at promoting collaboration between governments, the private sector and other stakeholders in tackling issues related to the economy, environment and society. SYF supports the SDGs and aims to shape the Group’s long-term sustainability strategy and initiatives based on these goals.

MATERIALITY

A materiality survey with internal stakeholders has been undertaken, to identify and prioritise sustainability issues that are significant to SYF – it is important to understand the sustainability drivers that will significantly affect the Group’s business operations. Thirteen material sustainability matters have been identified across the economic, environmental and social themes.


47

Imp

ort

ance

to

Man

agem

ent

Importance to Employees

1

2

3

14

46

9

13

87

5

12

11

10 Material SustainabilityMatters

0% 25% 50% 75% 100%

100%

75%

50%

25%

0%


SYF MATERIALITY MATRIX

Sustainability Matters

1 Commitment to Good Business Conduct 8 Employee Training

2 Service Quality 9 Workforce Diversity

3 Human Rights 10 Material & Waste Management

4 Financial Sustainability 11 Energy Management

5 Occupational Health & Safety 12 Community Engagements

6 Supply Chain Management 13 Carbon Emissions

7 Employee Rights & Benefit 14 Water Management

Moving forward, SYF aims to be more inclusive and systematic by integrating external parties into the stakeholder engagement process. The Group recognises that the material sustainability matters identified and reporting content may change as the stakeholder universe expands. The relevance of each topic to the business operations of the Group will be reviewed in the near, medium and longer term.


48


ECONOMIC

The Group recognises its responsibilities as a good corporate citizen, fulfilling them through its contributions towards a sustainable marketplace. Managing financial sustainability, commitment to good business conduct and practices, and supply-chain management are important sustainability matters to SYF.

Commitment to Good Business Conduct

The Group aspires to achieve the highest standards of integrity and governance in the conduct of its daily business operations. The Code of Conduct and Ethics for Directors intends to establish a standard of ethical behaviour and uphold the spirit of responsibility. SYF has also established a Whistleblowing Policy, which provides an avenue to all stakeholders to report any instance of suspected and/or known misconduct or criminal offence directly to the Group Executive Director or the Chairman of the Audit Committee.

Financial Sustainability

SYF generated RM241.81 million of revenue in FY 2019 but incurred a net loss of RM44.08 million. Moving forward, the Group will continue evaluating various alternative methods to improve its financial results. These may include the rationalisation and downsizing of its loss-making furniture manufacturing segment. The Group’s current downsizing exercise will not affect its existing upstream material-processing activities, which will keep operating.

For further details, please refer to the Management, Discussion and Analysis section as well as the Financial Statements section of this Annual Report.

Supply-Chain Management

Sustainable supply-chain management is critical to a responsible future. SYF maintains a good rapport with its contractors and suppliers. The Group ensures that they abide by the regulations established by the Department of Environment as well as the Department of Occupational Safety and Health.

SOCIAL

SYF places high importance on customer service and aspires to be a responsible employer by maintaining a safe and conducive working environment for all its employees. Social themes that are crucial to SYF’s success comprise service quality, occupational safety and health, employee training, employee rights and benefits, workforce diversity, human rights and community engagement.

Service Quality

Continuous quality management is a critical success factor for SYF’s business operations. The Group periodically conducts quality assessments on its furniture products and property developments to maintain customer satisfaction and loyalty. In addition, the Group engages with its customers to identify opportunities for improvements to its manufacturing processes and service quality.

Occupational Safety and Health

Workplace safety and employee health are prioritised in the Group’s day-to-day operations and decision-making processes. SYF has established an Occupational Safety and Health Policy, which requires all employees to practice the highest standards of safety and health management, as stipulated under the Occupational Safety and Health Act 1994.


49

Occupational Safety and Health Policy

• Provide and maintain a safe and conducive work environment and system.

• Ensure all employees receive the necessary information, training and supervision as regards the methods of executing their day-to-day activities without any risk to their safety and health.

• Investigate all accidents, diseases and unsafe incidents and also take appropriate measures to ensure that these events do not recur.

• Comply with the relevant safety and health requirements stipulated under the Occupational Safety and Health Act 1994, as well as all the relevant guidelines and regulations.

• Review and update the Occupational Safety and Health Policy as and when required.

SYF has established a safety and health committee for each operating factory. These safety and health committees are responsible for the following:

• Conduct periodical inspections at the factories to ensure that all safety measures have been properly implemented.

• Investigate matters raised on the findings of unsafe incidents or threats to safety and health at the workplace. • Attempt to resolve the identified issues.

Safety and Health Committee Semenyih Plant Rompin Plant Simpang Pertang Plant

Management Representatives 6 4 5

Employee Representatives 6 4 5

SYF recorded 2,001,023 of total man-hours worked by its employees.

Safety and Health Performance Indicators

Semenyih Plant

Kapar Plant

Rompin Plant

Simpang Pertang Plant

Total

Total man-hours worked 995,049 700,807 91,639 213,528 2,001,023

Total near misses recorded 0 0 0 0 0

Total injuries recorded 2 0 0 0 2

Total fatalities 0 0 0 0 0

The occupational safety and health at the Group’s property construction sites are managed by its third-party contractor, who is responsible for ensuring the compliance with safety rules and regulations. As part of safety procedure, weekly on-site safety briefings and monthly fire hazard briefings are conducted for all staff.

Employee Rights and Benefits

The Group is committed to ensuring its compliance with employee rights and benefits under the legal requirements of the applicable laws and regulations in Malaysia.



50

Employee Training

SYF believes that employee learning and development programmes ensure that they are equipped with the necessary skill sets and expertise to effectively carry out their responsibilities. In FY 2019, all employee development activities were conducted through on-the-job training. SYF does not maintain any data on the training programmes conducted in FY 2019, however, the Group will endeavour to systematically record the number of hours of training delivered to all employees in the near future.

Workforce Diversity

SYF is committed to the principle of equal employment opportunities for all employees. It also believes that maintaining a diverse workforce provides a broad range of expertise and experience to enhance the Group’s capabilities in delivering results.

As at 31 July 2019, SYF had 96 permanent employees and 1,037 contract employees.

By Employment Contract and Gender Male Female Total

Permanent 48 48 96

Contract 1022 15 1037

Total 1070 63 1133

Permanent Employees by Designation and Gender Male Female Total

Management 10 6 16

Executive 12 8 20

Non-Executive 26 34 60

Total 48 48 96

Permanent Employees by Ethnicity and Gender Male Female Total

Malay 11 21 32

Chinese 33 17 50

Indian 3 9 12

Others 1 1 2

Total 48 48 96


Benefits Provided to Full-Time Employees

• General Benefits: Contributions to the Employees Provident Fund (EPF), the Social Security Organisation (SOCSO), the Employment Insurance Scheme (EIS) and its Employees’ Share Option Scheme (ESOS)

• Healthcare: Medical benefits, hospitalisation and surgical insurance scheme, and personal accident insurance scheme

• Allowance: Travel claims

• Leave: Annual leave, medical leave, hospitalisation leave, compassionate leave and maternity leave


51

Human Rights

SYF practices zero tolerance on all forms of discrimination, harassment and violence in the workplace. All employees are encouraged to speak up and escalate their grievances through the whistleblowing mechanism established by the Group.

Community Engagement

SYF is committed to improving the welfare of the communities in its regions of operations. While the Group did not undertake any corporate social responsibility initiatives in FY 2019, it strives to maintain its focus on corporate social responsibility.

ENVIRONMENT

SYF has established an Environmental Policy that aligns the Group’s aspirations as a responsible corporate citizen. This policy requires all its employees to abide by all the guidelines and legislative requirements stipulated under the Environmental Quality Act 1974, including the Regulations of the Environmental Quality (Clean Air) Regulation 2014.

Environmental Policy

• Abide by all guidelines and regulations in consonance with the preservation of the related environmental aspects stipulated in the Environmental Quality Act 1974.

• Plan, evaluate and implement appropriate actions to reduce the environmental impact from business activities.

• Avoid pollution and improve the quality of environmental management, especially from the aspects of air quality, in line with the Regulations of the Environmental Quality (Clean Air) Regulation 2014.

• Disseminate this policy to the relevant stakeholders in order to understand and support the management of SYF in the conduct of business activities, for the prosperity of future generations.

• Review and update the Environmental Policy as and when required.

This is the first year that SYF is providing a systematic report on its environmental footprint. As such, the Group’s environmental disclosures are predominantly focused on the impact created at the factory sites of its furniture manufacturing division. Limited information is available on the property development division given that construction work is outsourced to a third party. In the near future, SYF will evaluate the relevance and feasibility of disclosing its environmental impact within the property development division.

SYF has identified material and waste management, energy management and carbon emissions as important environmental aspects in the Group’s business activities.

Material & Waste Management

SYF is committed to complying with the regulations and standards established by the Department of Environment, Malaysia to ensure responsible material and waste management. Licensed waste disposal contractors have been appointed for proper disposal of scheduled waste. The scheduled waste disposed of by its factory in Semenyih amounted to 830 kg in FY 2019. Property construction waste, on the other hand, is managed by the Group’s third-party contractor for property development projects. SYF did not collect any data on the waste disposed of by the contractor in FY 2019.



52

ELECTRICITY CONSUMPTION FOR FY 31 JULY 2019

Semenyih53%

SYF Development4%Head Office

5%

Kapar9%

Rompin &Simpang Pertang

29%

FUEL CONSUMPTION FOR FY 31 JULY 2019

Semenyih36%

Kapar1%

Rompin &Simpang Pertang

63%


At the head office, employees are also encouraged to practice responsible consumption of paper by printing sparingly and using double-sided printing. The Group does not have any data on general waste disposed of at its head office and factories. Moving forward, SYF will evaluate the feasibility of measuring the quantum of general waste disposal and establish the necessary monitoring processes to collect this information.

Energy Management

SYF uses diesel as a fuel for the machinery and equipment at its furniture manufacturing plants and construction sites. All the machinery and equipment undergo frequent maintenance to optimise fuel consumption. Fuel consumption at its factories in Semenyih, Kapar, Rompin and Simpang Pertang summed up to 827,276 litres in FY 2019.

The Group strives to minimise electricity consumption at its plants and headquarters. Environmental awareness programmes are carried out during the year to help reduce electricity consumption. At its head office, employees are encouraged to switch off all lights, air conditioning units and electronic devices during their break time. The total electricity consumption at the plants in Semenyih, Kapar, Rompin and Simpang Pertang as well as its headquarters and SYF Development’s office stood at 18,684.25 MWh in FY 2019.

Carbon Emissions

SYF aims to monitor its carbon footprint, in line with the overarching goal to protect and conserve the environment. The Group’s Greenhouse Gas (GHG) emission accounting is based on the GHG Protocol classification of direct and indirect emissions. In FY 2019, carbon emissions for the Group were calculated under the following categories:

Direct (Scope 1) Emissions Energy Indirect (Scope 2) Emissions

Description: Emissions from sources owned or controlled by the Group.

Description: Emissions from the generation of purchased or acquired electricity consumed by the Group.

Scope 1 emissions are attributable to the consumption of fuel for company pooled vehicles and the operations of its factories. Scope 1 emissions are derived using the emission factor published by the IPCC Guidelines for National GHG Inventories.

Scope 2 emissions are attributable to the electricity consumed by the Group’s factories and headquarters as well as SYF Development’s office. Scope 2 emissions are derived using the emission factor published by the Malaysian Green Technology Corporation for the Peninsular grid.


53


The Group’s overall carbon emissions amounted to 15,180.19 metric tonnes of carbon emission equivalent (tCO2e) in FY 2019. SYF endeavours to improve its monitoring and tracking systems for carbon emissions. This involves enhancing the scope and boundary when calculating emissions and incorporating Scope 3 emissions in the future. Scope 3 emissions refer to indirect emissions in the value chain of the company’s activities.

Office/Plant

Emissions from Company

Pooled Vehicles(Scope 1)

Emissions from Plant

Operations(Scope 1)

Emissions from Purchased Electricity(Scope 2) Total

Semenyih Plant 36.32 761.81 6,844.08 7,642.21

Kapar Plant - 28.77 1,199.95 1,228.72

Rompin & Simpang Pertang Plant - 1,381.23 3,829.92 5,211.15

SYF Development Office 0.09 - 465.56 465.65

Head Office 5.09 - 627.36 632.45

Total 2,213.22 12,501.31 14,714.53


54

Analysis Of Shareholdings

ANALYSIS OF SHAREHOLDINGS ACCORDING TO THE RECORD OF DEPOSITORS AS AT 31 OCTOBER 2019

Total Issued Share Capital : RM154,809,753.00 divided into 619,239,012 ordinary shares (includes 26,846,800 treasury shares) Class of Shares : Ordinary SharesTotal No. of Shareholders : 3,446Voting Rights : One (1) vote per Ordinary Share on a poll

DISTRIBUTION SCHEDULE OF SHAREHOLDINGS AS AT 31 OCTOBER 2019

Size of Holdings No. of Holders % No. of Shares# %#

1 to 99 6 0.174 116 0.000100 to 1,000 132 3.831 76,066 0.0131,001 to 10,000 1,733 50.290 8,778,810 1.48210,001 to 100,000 1,276 37.028 48,811,520 8.240100,001 to 29,619,609* 293 8.503 256,430,300 43.28729,619,610 and above** 6 0.174 278,295,400 46.978

Total# 3,446 100.000 592,392,212 100.000

Remark: * - Less than 5% of Issued Shares ** - 5% and above of Issued Shares

Note: # excluding a total of 26,846,800 Ordinary Shares bought back by the Company and retained as treasury shares

SUBSTANTIAL SHAREHOLDERS AS AT 31 OCTOBER 2019

No. of Ordinary Shares heldNo. Name of Substantial Shareholders Direct %^ Indirect %^

1. Dato’ Sri Ng Ah Chai 337,276,200 56.93 1,920,000# 0.32#

2. Dato’ Sri Chee Hong Leong, JP 37,656,600 6.36 - -3. Insas Berhad* - - 50,015,200* 8.44*4. Dato’ Sri Thong Kok Khee* - - 50,015,200* 8.44*

Note: ^ Calculated based on 592,392,212 Ordinary Shares (issued share capital of 619,239,012 Ordinary Shares less

Treasury Shares of 26,846,800)* Deemed interest by virtue of interest held by Insas Plaza Sdn Bhd and Montego Assets Limited, wholly-owned

subsidiaries of Insas Berhad pursuant to Section 8 of the Companies Act, 2016.# Deemed Interest by virtue of his spouse pursuant to Section 59(11)(c) of the Companies Act, 2016.


55

DIRECTORS’ SHAREHOLDINGS AS AT 31 OCTOBER 2019

No. of Ordinary Shares heldNo. Name of Directors Direct %^ Indirect %^

1 Dato’ Sri Ng Ah Chai 337,276,200 56.93 1,920,000# 0.32#2 Dato’ Sri Chee Hong Leong, JP 37,656,600 6.36 - -3 Ng Wei Ping - - 339,196,200^^ 57.26^^

4 Dato’ Wong Gian Kui - - - -5 Datuk Mohamed Arsad Bin Sehan - - - -6 Dato’ Mohamad Azmi Bin Ali - - - -7 Dato’ Abdul Rashid Bin Mat Amin - - - -

Note: ^ Calculated based on 592,392,212 Ordinary Shares (issued share capital of 619,239,012 Ordinary Shares less

Treasury Shares of 26,846,800)# Deemed Interest by virtue of his spouse pursuant to Section 59(11)(c) of the Companies Act, 2016.^^ Deemed Interest by virtue of his parents pursuant to Section 197 of the Companies Act, 2016.

THIRTY LARGEST SHAREHOLDERS ACCORDING TO RECORD OF DEPOSITORS AS AT 31 OCTOBER 2019

No. Name of Shareholders No. of Shares %

1 M & A NOMINEE (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO’ SRI NG AH CHAI (M&A) 80,145,400 13.529

2 MAYBANK NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO’ SRI NG AH CHAI 48,500,000 8.187

3 INSAS PLAZA SDN BHD 47,530,000 8.023

4 MIDF AMANAH INVESTMENT NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO’ SRI NG AH CHAI (MGN-NAC0003M) 36,250,000 6.119

5 JF APEX NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO’ SRI NG AH CHAI (MARGIN) 33,870,000 5.717

6 M & A NOMINEE (TEMPATAN) SDN BHD INSAS CREDIT & LEASING SDN BHD FOR DATO’ SRI NG AH CHAI 32,000,000 5.401

7 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD PLEDGED SCURITIES ACCOUNT FOR DATO’ SRI NG AH CHAI (8103749) 22,650,000 3.823

8 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO’ SRI CHEE HONG LEONG, JP (CEB) 20,400,000 3.443

9 CIMSEC NOMINEES (TEMPATAN) SDN BHD CIMB BANK FOR DATO’ SRI NG AH CHAI (PBCL-0G0503) 18,577,000 3.135

10 MAYBANK NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO’ SRI CHEE HONG LEONG, JP 13,256,600 2.237

11 KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO’ SRI NG AH CHAI (001) 12,550,000 2.118

Analysis Of Shareholdings (Cont’d)


56

THIRTY LARGEST SHAREHOLDERS ACCORDING TO RECORD OF DEPOSITORS AS AT 31 OCTOBER 2019 (CONT’D)

No. Name of Shareholders No. of Shares %

12 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO’ SRI NG AH CHAI (100426) 11,447,600 1.932

13 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO’ SRI NG AH CHAI 11,227,000 1.895

14 RHB NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO’ SRI NG AH CHAI 11,000,000 1.856

15 KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO’ SRI NG AH CHAI 7,150,000 1.206

16 YAYASAN GURU TUN HUSSEIN ONN 7,138,600 1.205

17 RHB NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR TEE TIAM HOCK 5,557,100 0.938

18 LEE KAY HUAT 4,450,000 0.751

19 CGS-CIMB NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO’ SRI CHEE HONG LEONG, JP (MY1830) 4,000,000 0.675

20 CITIGROUP NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO’ SRI NG AH CHAI (473223) 3,500,000 0.590

21 DATO’ SRI NG AH CHAI 3,030,000 0.511

22 RHB NOMINEES (TEMPATAN) SDN BHD OSK CAPITAL SDN BHD FOR DATO’ SRI NG AH CHAI 2,800,000 0.472

23 JF APEX NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR CHENG KIEN WING (MARGIN) 2,714,100 0.458

24 M & A NOMINEE (ASING) SDN BHD MONTEGO ASSETS LIMITED 2,485,200 0.419

25 SAW TSE CHUEN 2,470,000 0.416


27 PUBLIC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR CHUA CHIN KUAN (E-BMM) 2,330,000 0.393

28 YEOH PHEK LENG 1,942,000 0.327

29 DATIN SRI CHEE AH KUAN 1,920,000 0.324

30 AFFIN HWANG NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR CHUA HOCK GEE 1,630,000 0.275

Total 454,976,800 76.803

Analysis Of Shareholdings (Cont’d)


57

Analysis Of Warrants Holdings

ANALYSIS OF WARRANTS HOLDINGS ACCORDING TO THE RECORD OF DEPOSITORS AS AT 31 OCTOBER 2019

Issued Size : 305,432,506 free detachable warrants on the basis of 1 bonus share together with 1 warrant for every 1 existing SYF share held pursuant to Bonus Issue with Warrants ExerciseNo. of Warrants Issued : 305,432,506Exercise Price of Warrants : RM0.70Total No. of Warrants Holders : 1,915

DISTRIBUTION SCHEDULE OF WARRANTS HOLDINGS AS AT 31 OCTOBER 2019

No. of No. of Size of Holdings Warrants Holders % Warrants Held %#

1 – 99 7 0.366 236 0.000100 - 1,000 665 34.726 616,010 0.2011,001 - 10,000 588 30.705 2,979,600 0.97610,001 - 100,000 480 25.065 20,322,660 6.654100,001 - 15,271,624* 171 8.929 155,341,300 50.85915,271,625 AND ABOVE ** 4 0.209 126,172,700 41.310

Total 1,915 100.000 305,432,506 100.000

Remark: * - Less than 5% of Issued Warrants ** - 5% and above of Issued Warrants

SUBSTANTIAL WARRANTS HOLDERS AS AT 31 OCTOBER 2019

No. of Warrants heldNo. Name of Warrants Holders Direct % Indirect %

1 Dato’ Sri Ng Ah Chai 157,638,100 51.61 - -2 Dato’ Sri Chee Hong Leong, JP 33,578,300 10.99 - -

DIRECTORS’ WARRANTS HOLDINGS AS AT 31 OCTOBER 2019

No. of Warrants heldNo. Name of Directors Direct % Indirect %

1 Dato’ Sri Ng Ah Chai 157,638,100 51.61 - -2 Dato’ Sri Chee Hong Leong, JP 33,578,300 10.99 - -3 Ng Wei Ping - - 157,638,100^ 51.61^

4 Dato’ Wong Gian Kui - - - -5 Datuk Mohamed Arsad Bin Sehan - - - -6 Dato’ Mohamad Azmi Bin Ali - - - -7 Dato’ Abdul Rashid Bin Mat Amin - - - -

Note:^ Deemed Interest by virtue of his parents pursuant to Section 197 of the Companies Act, 2016.


58

THIRTY LARGEST WARRANTS HOLDERS ACCORDING TO RECORD OF DEPOSITORS AS AT 31 OCTOBER 2019

No. Name of Warrants Holders No. of Warrants %

1 M & A NOMINEE (TEMPATAN) SDN BHD INSAS CREDIT & LEASING SDN BHD FOR DATO’ SRI NG AH CHAI 56,000,000 18.334

2 MIDF AMANAH INVESTMENT NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO’ SRI NG AH CHAI (MGN-NAC0003M) 36,172,700 11.843

3 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO’ SRI CHEE HONG LEONG, JP (CEB) 18,000,000 5.893

4 MAYBANK NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO’ SRI NG AH CHAI 16,000,000 5.238

5 MAYBANK NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO’ SRI CHEE HONG LEONG, JP 13,578,300 4.445

6 JF APEX NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO’ SRI NG AH CHAI (MARGIN) 10,455,700 3.423

7 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD PLEDGED SCURITIES ACCOUNT FOR DATO’ SRI NG AH CHAI (8103749) 9,000,000 2.946

8 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO’ SRI NG AH CHAI (100426) 8,923,800 2.921

9 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO’ SRI NG AH CHAI 8,113,500 2.656

10 CITIGROUP NOMINEES (ASING) SDN BHD EXEMPT AN FOR CITIBANK NEW YORK (NORGES BANK 1) 8,000,000 2.619

11 KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO’ SRI NG AH CHAI (001) 7,000,000 2.291

12 MOHD NAJID BIN MD YAHYA 6,600,000 2.160

13 INSAS PLAZA SDN BHD 5,777,100 1.891

14 YONG SWEE KOON 3,992,600 1.307

15 QUEK POH CHOO 2,980,000 0.975

16 KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO’ SRI NG AH CHAI 2,800,000 0.916

17 KHOO SE HAI 2,260,000 0.739


Analysis Of Warrants Holdings (Cont’d)


59

THIRTY LARGEST WARRANTS HOLDERS ACCORDING TO RECORD OF DEPOSITORS AS AT 31 OCTOBER 2019 (CONT’D)

No. Name of Warrants Holders No. of Warrants %

19 CGS-CIMB NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO’ SRI CHEE HONG LEONG, JP (MY1830) 2,000,000 0.654

20 MOHD FAIZAL BIN HAMZAH 1,570,800 0.514

21 GOH HONG POO 1,500,000 0.491

22 PUBLIC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR YAP SOON LEE (E-SS2) 1,240,000 0.405

23 CHIN BOON SIEW 1,150,000 0.376

24 LEONG KOK PENG 1,150,000 0.376

25 MUHAMMAD NAZIR BIN MOHD ALI 1,100,000 0.360

26 ONG CHEE HONG 1,100,000 0.360

27 SAW TSE CHUEN 1,060,000 0.347

28 AFFIN HWANG NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR YEW YAN LEA (YEW0029C) 1,052,700 0.344

29 KENANGA NOMINEES (TEMPATAN) SDN BHD RAKUTEN TRADE SDN BHD FOR MUHAMMAD FITRI BIN ZAINAL ABIDIN 1,031,000 0.337

30 LAI SHEK BOON 1,000,000 0.327

Total 232,836,300 76.231

Analysis Of Warrants Holdings (Cont’d)


60

List Of PropertiesAs At 31 July 2019

Owner, Title/Location Tenure

Approx. Age

(Years)Description/Existing Use

Size (Sq ft.)

NBV @ 31.07.19RM’000

Year ofRevaluation/Acquisition

Seng Yip Furniture Sdn BhdLot 971 (89), Mukim SemenyihJalan Sungai Lalang43500 SemenyihSelangor

Freehold 23 Land, factory and warehouse

91,916 6,845 2017

Seng Yip Furniture Sdn BhdLot 971 (90), Mukim SemenyihJalan Sungai Lalang43500 SemenyihSelangor

Freehold 23 Land, office and warehouse

84,532 8,564 2017

Seng Yip Furniture Sdn BhdLot 1224, Mukim SemenyihJalan Sungai Lalang43500 SemenyihSelangor

Freehold 23 Land, factory andwarehouse

120,547 8,751 2017



120,516 9,140 2017



123,917 7,186 2017



853,956 40,328 2017

Seng Yip Furniture Sdn BhdLot 4660, Pekan Simpang PertangDaerah JelebuNegeri Sembilan

LeaseholdExpiring

on18.06.89

7 Land and factory

90,527 1,044 2017


61

List Of Properties (Cont’d)As At 31 July 2019

Owner, Title/Location Tenure

Approx. Age

(Years)Description/Existing Use

Size (Sq ft.)

NBV @ 31.07.19RM’000

Year ofRevaluation/Acquisition

Seng Yip Furniture Sdn BhdLot 4654 & 4655Pekan Simpang Pertang72300 Daerah JelebuNegeri Sembilan

LeaseholdExpiring

on18.06.89

6 Land, factory and warehouse

167,481 4,885 2017

Seng Yip Furniture Sdn BhdLot 4664, Pekan Simpang Pertang72300 Daerah JelebuNegeri Sembilan

LeaseholdExpiring

on18.06.89

4 Vacant land 109,343 851 2017

Tomisho Sdn BhdLot 44711, Mukim KaparJalan Kapar, 42200 KlangSelangor

Freehold 14 Land, office, factory and warehouse

97,869 6,460 2017


63 Directors’ Report

69 Statement By Directors

69 Statutory Declaration

70 Independent Auditors’ Report To The Members

75 Statements Of Financial Position

78 Statements Of Profit Or Loss And Other Comprehensive Income

79 Statements Of Changes In Equity

82 Statements Of Cash Flows

85 Notes To The Financial Statements

Financial Statements

63SYF RESOURCES BERHAD [Registration No. 199501035170 (364372-H)] • Annual Report 2019

Directors’ Report

The Directors hereby present their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 July 2019.

PRINCIPAL ACTIVITIES

The principal activity of the Company is that of investment holding. The principal activities of the subsidiary companies are disclosed in Note 7 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 Loss for the financial year, attributable to the owners of the parent 44,076 11,289

RESERVES AND PROVISIONS

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

DIVIDENDS

Since the end of the last financial year, the Company paid:

RM’000

A first interim single-tier dividend of RM0.0125 per ordinary share in respect of the financial year ended 31 July 2019 on 24 January 2019 7,564

The Directors do not recommend any final dividend in respect of the current financial year.

ISSUE OF SHARES AND DEBENTURES

There was no issuance of shares or debentures during the financial year.

64 SYF RESOURCES BERHAD [Registration No. 199501035170 (364372-H)] • Annual Report 2019

Directors’ Report (Cont’d)

TREASURY SHARES

During the financial year, the Company repurchased 17,234,000 of its issued shares from the open market. The average price paid for the shares repurchased was RM0.22 per share. The total consideration paid for the repurchase, including transaction costs, was RM3,713,000. The repurchased transactions were financed by internal generated funds. The shares repurchased are being held as treasury shares in accordance with Section 127 of the Companies Act, 2016.

As at 31 July 2019, the Company held 23,758,000 treasury shares out of the total 619,239,000 issued ordinary shares. Further relevant details are disclosed in Note 17 to the financial statements.

OPTIONS GRANTED OVER UNISSUED SHARES No options were granted to any person to take up unissued shares of the Company during the financial year apart from the issue of options pursuant to the Employees’ Share Option Scheme (“ESOS”).

EMPLOYEES’ SHARE OPTION SCHEME

At an extraordinary general meeting held on 1 March 2012, the Company’s shareholders approved the establishment of an Employees’ Share Option Scheme (“ESOS”) of not more than 15% of the issued share capital of the Company at the point in time throughout the duration of the scheme to eligible Directors and employees of the Group.

The ESOS became effective for a period of five years from 11 May 2012 to 8 April 2017, and extended for another five years until 8 April 2022. The salient features and other terms of the ESOS and the movement of options over unissued shares of the Company granted under ESOS during the financial year are disclosed in Note 32 to the financial statements.

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

WARRANTS

The warrants 2014/2019 were constituted under the Deed Poll dated 26 November 2014. The salient terms of the warrants are disclosed in Note 33 to the financial statements.

As at the end of the financial year, the Company has the following outstanding warrants:

Number of Exercise price warrants per ordinary outstandingWarrants share Expiry date at 31.7.2019 Warrant 2014/2019 RM0.70 11 December 2019 305,432,506



DIRECTORS

The Directors in office since the beginning of the current financial year until the date of this report are:

Dato’ Sri Ng Ah Chai * Dato’ Sri Chee Hong Leong, JP * Ng Wei Ping * Datuk Mohamed Arsad Bin Sehan Dato’ Mohamad Azmi Bin Ali Dato’ Abdul Rashid Bin Mat Amin Dato’ Wong Gian Kui (appointed on 15.10.2018)Dato’ Sri Thong Kok Khee (resigned on 15.10.2018)Dato’ Wong Gian Kui (ceased on 15.10.2018) (Alternate Director to Dato’ Sri Thong Kok Khee)

* Director of the Company and its subsidiary companies

The Director who held office in subsidiary companies (excluding Directors who are also Directors of the Company) during the current financial year up to the date of this report are:

Lee Oon KarLim Kok Seong

The information required to be disclosed pursuant to Section 253 of the Companies Act, 2016 is deemed incorporated herein by such reference to the financial statements of the respective subsidiary companies and made a part hereof.

DIRECTORS’ INTERESTS

The interests and deemed interests in the ordinary shares, warrants and options over ordinary shares of the Company and of its related corporations (other than wholly-owned subsidiary companies) of those who were Directors at financial year end (including their spouses or children) according to the Register of Directors’ Shareholdings are as follows:

Number of ordinary shares At At 1.8.2018 Acquired Disposed 31.7.2019 SYF Resources BerhadDirect InterestsDato’ Sri Ng Ah Chai 337,276,200 - - 337,276,200 Dato’ Sri Chee Hong Leong, JP 37,656,600 - - 37,656,600 Indirect InterestsDato’ Sri Ng Ah Chai (1) 1,920,000 - - 1,920,000 Ng Wei Ping (2) 339,196,200 - - 339,196,200



DIRECTORS’ INTERESTS (CONT’D)

Number of options over ordinary shares At At 1.8.2018 Granted Exercised 31.7.2019 SYF Resources Berhad Direct InterestsDato’ Sri Ng Ah Chai 3,000,000 - - 3,000,000

Number of warrants 2014/2019 At At 1.8.2018 Acquired Disposed 31.7.2019 SYF Resources Berhad Direct InterestsDato’ Sri Ng Ah Chai 157,638,100 - - 157,638,100 Dato’ Sri Chee Hong Leong, JP 33,578,300 - - 33,578,300 Indirect Interests Ng Wei Ping (2) 157,638,100 - - 157,638,100 Note:

(1) Deemed interest through his spouse by virtue of Section 59(11)(c) of the Companies Act, 2016.(2) Deemed interest through his parents by virtue of Section 197 of the Companies Act, 2016.

By virtue of their interests in the shares of the Company, Dato’ Sri Ng Ah Chai and Ng Wei Ping are also deemed interested in the shares of all the subsidiary companies during the financial year to the extent the Company has an interest under Section 8 of the Companies Act, 2016.

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

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no Director of the Company has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of remuneration received or due and receivable by Directors as shown in Note 37(c) to the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest, other than certain Directors who have significant financial interests in the companies which traded with certain companies in the Group in the ordinary course of business and rental received or due and receivable by a Director as disclosed in Note 37(b) to the financial statements.

Neither during nor at the end of the financial year, was the 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, other than those arising from the share options granted under the Company’s ESOS and warrants.



INDEMNITY AND INSURANCE COSTS

There was no indemnity given to or insurance effected for any Directors, officers and auditors of the Company in accordance with Section 289 of the Companies Act, 2016.

OTHER STATUTORY INFORMATION

(a) Before the financial statements of the Group and of the Company were prepared, the Directors took reasonable steps:

(i) to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and no allowance for doubtful debts was required; and

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

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

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

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

(iii) not otherwise dealt with in this report or the financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading; or

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

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

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

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

(d) In the opinion of the Directors:

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

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

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



SIGNIFICANT EVENTS

The significant events are disclosed in Note 41 to the financial statements.

SUBSEQUENT EVENT

The subsequent event is disclosed in Note 42 to the financial statements.

SUBSIDIARY COMPANIES

The details of the subsidiary companies are disclosed in Note 7 to the financial statements.

AUDITORS’ REMUNERATION

The details of auditors’ remuneration are disclosed in Note 27 to the financial statements.

AUDITORS

The Auditors, Messrs. UHY, have expressed their willingness to continue in office.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors dated 21 November 2019.

DATO’ SRI NG AH CHAI DATO’ SRI CHEE HONG LEONG, JP

KUALA LUMPUR


Statutory DeclarationPursuant to Section 251(1)(b) of the Companies Act, 2016

Statement By DirectorsPursuant to Section 251(2) of the Companies Act, 2016

I, Lee Oon Kar (MIA Membership No. 14383), being the officer primarily responsible for the financial management of SYF Resources Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 75 to 173 are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the )abovenamed at Kuala Lumpur in the )Federal Territory on 21 November 2019 ) LEE OON KAR

Before me,

MOHAN A.S. MANIAM (W710) COMMISSIONER FOR OATHS

We, the undersigned, being two of the Directors of the Company, do hereby state that, in the opinion of the Directors, the financial statements set out on pages 75 to 173 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 31 July 2019 and of their financial performance and cash flows for the financial year then ended.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors dated 21 November 2019.

DATO’ SRI NG AH CHAI DATO’ SRI CHEE HONG LEONG, JP

KUALA LUMPUR


Independent Auditors’ ReportTo The Members Of SYF Resources Berhad[Registration No.: 199501035170 (364372-H)] (Incorporated In Malaysia)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

We have audited the financial statements of SYF Resources Berhad, which comprise the statements of financial position as at 31 July 2019 of the Group and of the Company, the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 75 to 173.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 July 2019, and of their financial performance and their cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia.

Basis for 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.

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 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 financial year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters How our audit addressed the key audit matters

1. Inventories valuation

The carrying amount of inventories of the Group for rubberwood furniture segment as at 31 July 2019 is RM32.43 million. There was a significant degree of judgement involved to ascertain that the cost of inventories accurately reflects the manufacturing costs incurred in bringing them to their physical location and condition. This particularly relates to the assessment of direct labour costs incurred, manufacturing overheads to be absorbed and other relevant production costs.

We performed the following audit procedures, amongst others:

- agreed the cost of raw materials to suppliers’ invoices on a sampling basis. For work-in-progress and finished goods, we assessed whether the absorption of the production overhead was based on the normal capacity of the production facilities; and

- assessed whether all costs included as inventories comprise cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. In particular, we considered the nature of the overheads absorbed to ascertain whether only directly attributable costs were included.


Independent Auditors’ ReportTo The Members Of SYF Resources Berhad (Cont’d)[Registration No.: 199501035170 (364372-H)] (Incorporated In Malaysia)

Key audit matters How our audit addressed the key audit matters

2. Carrying amount of land and property development costs and revenue recognition

Property development revenue for the financial year ended 31 July 2019 amounted to RM75.05 million. Property development revenue is accounted for under MFRS 15 Revenue from Contracts with Customers, and this revenue stream involves judgement.

Key management judgements include:

• estimating the budgeted costs to complete each project;

• the future profitability of each project; and• the percentage of completion at the end

of the reporting period.

Changes in these judgements could lead to a material change in the value of revenue recognised.

We performed a range of audit procedures which included reviewing contract documentation, variation orders and enquiring of key personnel regarding status of on-going contracts, adjustments for job costing and potential property development losses.

In relation to property development revenue/costs, we, amongst others and where applicable, agreed this to original signed contracts, letter of awards and approved variation orders. We evaluated the project progress and recovery of cost to supporting evidences include but not limited to verifying third party surveyors’ certificates, progress report and interviews with project team.

In assessing management’s assumptions in estimating the costs to completion for contracts, we verified the budgeted cost to sub-contractors’ contracts. We verified the property development costs incurred to date to sub-contractors’ progress claims and recalculating the percentage of completion at the reporting date.

We have considered the adequacy of the Group’s disclosures regarding this revenue stream and whether they are in accordance with MFRS 15 Revenue from Contracts with Customers.

3. Purchase price allocation for the acquisition of Giat Armada Sdn. Bhd. and carrying amount of intangible assets and bargain purchase gain arising from purchase price allocation

During the current financial year, the Company completed the purchase price allocation exercise to determine the fair value of the net assets of Giat Armada Sdn. Bhd..

MFRS 3 Business Combinations requires the Company to recognise the identifiable assets, liabilities and contingent liabilities at fair value at the date of acquisition, with the excess of the acquisition cost over the identified fair values recognised as goodwill.

This requires a significant amount of management estimation, particularly in relation to the identification and valuation of intangible assets and assignment of their useful lives. The intangible assets and bargain purchase gain recognised amounted to RM29.83 million and RM2.69 million respectively.

We have reviewed the valuation report prepared by the external specialists on the purchase price allocation.

Based on our review, we noted that the purchase price allocation has been performed in accordance with MFRS 3 Business Combinations, including the disclosures thereon, and that the intangible assets identified are appropriate and within a reasonable range of our audit expectations.

We also noted management’s key assumptions applied in the purchase price allocation in arriving at the fair value of the assets acquired and liabilities assumed, including the fair valuation of identified intangible assets, to be within a reasonable range of our audit expectations.

Key Audit Matters (Cont’d)



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 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.

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 Directors for the Financial Statements

The Directors of the Company are responsible for the preparation of the 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 the 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 skepticism 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.



Auditors’ Responsibilities for the Audit of the Financial Statements (Cont’d)

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 skepticism throughout the audit. We also: (Cont’d)

• 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 of 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 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 disclosure 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 financial 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.


OTHER MATTERS

(a) As stated in Note 2(a) to the financial statements, SYF Resources Berhad adopted Malaysian Financial Reporting Standards on 1 August 2018 with a transition date of 1 August 2017. These standards were applied retrospectively by Directors to the comparative information in these financial statements, including the statements of financial position as at 31 July 2018 and 1 August 2017, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows for the financial year ended 31 July 2018 and related disclosures. We were not engaged to report on the restated comparative information and it is unaudited. Our responsibilities as part of audit of the financial statements of the Group and of the Company for the financial year ended 31 July 2019 have in these circumstances, included obtaining sufficient appropriate audit evidence that the opening balances as at 1 August 2018 do not contain misstatements that materially affect the financial position of 31 July 2019 and financial performance and cash flows for the financial year then ended.

(b) 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.

UHY Firm Number: AF 1411Chartered Accountants

DATUK TEE GUAN PIANApproved Number: 01886/05/2020 JChartered Accountant

KUALA LUMPUR21 November 2019



Statements Of Financial PositionAs At 31 July 2019

Group 31.7.2019 31.7.2018 1.8.2017 Note RM’000 RM’000 RM’000 Restated Restated ASSETS Non-Current Assets Property, plant and equipment 4 93,749 110,803 132,354 Inventories 5 70,119 16,770 13,247 Intangible assets 6 29,826 - -

193,694 127,573 145,601

Current Assets Inventories 5 36,436 110,360 83,960 Contract assets 8 3,951 75,574 165,634 Trade receivables 9 92,134 42,062 26,331 Other receivables 10 9,290 30,715 13,392 Tax recoverable 5,996 5,495 - Fixed deposits with licensed banks 12 5,528 12,603 2,135 Cash and bank balances 13 29,969 33,582 7,414

183,304 310,391 298,866 Assets held for sale 14 18,107 14,513 8,587 Assets included in disposal group held for sale and discontinued operation 15 - - 160,783

201,411 324,904 468,236

Total Assets 395,105 452,477 613,837


Statements Of Financial Position (Cont’d)As At 31 July 2019

Group 31.7.2019 31.7.2018 1.8.2017 Note RM’000 RM’000 RM’000 Restated Restated EQUITY AND LIABILITIES Equity Share capital 16 154,810 154,810 154,810 Treasury shares 17 (5,670) (1,957) (5)Reserves 18 91,596 143,475 164,778 Reserve included in disposal group held for sale and discontinued operation 15 - - 2,070

Total Equity 240,736 296,328 321,653

Non-Current Liabilities Finance lease liabilities 19 772 1,636 2,776 Bank borrowings 20 10,530 18,129 18,630 Deferred tax liabilities 21 11,863 12,849 12,246

23,165 32,614 33,652

Current Liabilities Trade payables 22 15,908 37,550 46,318 Other payables 23 61,181 27,658 39,848 Finance lease liabilities 19 904 1,475 2,403 Bank borrowings 20 53,211 56,847 76,622 Tax payable - 5 7,976

131,204 123,535 173,167 Liabilities included in disposal group held for sale and discontinued operation 15 - - 85,365

131,204 123,535 258,532

Total Liabilities 154,369 156,149 292,184

Total Equity and Liabilities 395,105 452,477 613,837


Statements Of Financial Position (Cont’d)As At 31 July 2019

Company 31.7.2019 31.7.2018 1.8.2017 Note RM’000 RM’000 RM’000 ASSETS Non-Current Asset Investment in subsidiary companies 7 61,462 71,500 75,500

Current Assets Other receivables 10 2 21 2 Amount due from subsidiary companies 11 101,456 111,182 139,100 Tax recoverable 3 - - Cash and bank balances 13 289 566 206

101,750 111,769 139,308 Assets held for sale 14 - - 5,000

101,750 111,769 144,308

Total Assets 163,212 183,269 219,808 EQUITY AND LIABILITIES Equity Share capital 16 154,810 154,810 154,810 Treasury shares 17 (5,670) (1,957) (5)Retained earnings 18 6,557 25,410 34,592

Total Equity 155,697 178,263 189,397

Current Liabilities Other payables 23 400 193 289 Amount due to subsidiary companies 11 7,115 4,808 30,122 Tax payable - 5 -

Total Liabilities 7,515 5,006 30,411

Total Equity and Liabilities 163,212 183,269 219,808

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


Statements Of Profit Or Loss And Other Comprehensive IncomeFor The Financial Year Ended 31 July 2019


Group Company 2019 2018 2019 2018 Note RM’000 RM’000 RM’000 RM’000 Restated Continuing operations Revenue 24 241,808 250,762 130 3,130 Cost of sales 25 (275,488) (239,813) - - Gross (loss)/profit (33,680) 10,949 130 3,130 Other income 7,244 13,478 - 2,111 Selling and distribution expenses (3,874) (4,605) - - Administrative expenses (16,752) (19,590) (11,421) (5,108) Net gain/(loss) on impairment of financial instruments 5 (102) - (15) Finance costs 26 (4,956) (7,457) - - (Loss)/Profit before tax 27 (52,013) (7,327) (11,291) 118 Taxation 28 7,937 (1,632) 2 (11) (Loss)/Profit from continuing operations (44,076) (8,959) (11,289) 107 Loss from discontinued operation, net of tax 15(b) - (5,125) - - (Loss)/Profit for the financial year, representing total comprehensive (loss)/income for the financial year (44,076) (14,084) (11,289) 107 Other comprehensive income Items that will not be reclassified subsequently to profit or loss Revaluation decrease of leasehold land 4 (239) - - - Total comprehensive (loss)/income for the financial year, attributable to the owners of the Company (44,315) (14,084) (11,289) 107 Loss per share 29 Basic loss per share (sen): Loss from continuing operations (7.1) (1.4) Loss from discontinued operation - (0.8)

Total (7.1) (2.2) Diluted loss per share (sen): Loss from continuing operations (7.1) (1.4) Loss from discontinued operation - (0.8)

Total (7.1) (2.2)


A

ttri

but

able

to

Ow

ners

of

the

Par

ent

No

n-D

istr

ibut

able

D

istr

ibut

able

Res

erve

Incl

uded

In

Dis

po

sal

G

roup

Hel

d

Ass

ets

for

Sale

and

Sh

are

T

reas

ury

R

eval

uati

on

Dis

cont

inue

d

Ret

aine

d

Tota

l

C

apit

al

Sha

res

R

eser

ve

Op

erat

ion

E

arni

ngs

Eq

uity

N

ote

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

Gro

up

At

1 A

ugus

t 20

17, a

s p

revi

ousl

y re

por

ted

154,

810

(5

) 4

6,50

3

2,0

70

117

,393

3

20,7

71

Effe

ct o

f ad

optin

g M

FRS

9 an

d M

FRS

15

43

-

-

-

-

882

8

82

At

1 A

ugus

t 20

17, a

s re

stat

ed

1

54,8

10

(5)

46,

503

2

,070

1

18,2

75

321

,653

Lo

ss fo

r th

e fin

anci

al y

ear,

rep

rese

ntin

g t

otal

com

pre

hens

ive

loss

for

the

finan

cial

yea

r

-

-

-

-

(14,

084)

(1

4,08

4) Re

alis

atio

n of

ass

ets

reva

luat

ion

rese

rve

-

-

(4

,333

) (2

,070

) 6

,403

-

Tr

ansa

ctio

ns w

ith

ow

ners

: D

ivid

end

s to

ow

ners

of t

he C

omp

any

30

-

-

-

-

(9,2

89)

(9,2

89)

Shar

es re

pur

chas

ed

17

-

(1

,952

) -

-

-

(1

,952

)

-

(1

,952

) -

-

(9

,289

) (1

1,24

1) A

t 31

Jul

y 20

18

15

4,81

0

(1,9

57)

42,

170

-

1

01,3

05

296

,328

Statement Of Changes In EquityFor The Financial Year Ended 31 July 2019


A

ttri

but

able

to

Ow

ners

of

the

Par

ent

No

n-D

istr

ibut

able

D

istr

ibut

able

A

sset

s

S

hare

T

reas

ury

R

eval

uati

on

Ret

aine

d

Tota

l

C

apit

al

Sha

res

R

eser

ve

Ear

ning

s E

qui

ty

No

te

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

Gro

up

At

1 A

ugus

t 20

18, a

s p

revi

ousl

y re

por

ted

154

,810

(1

,957

) 4

2,17

0

100

,383

2

95,4

06

Effe

ct o

f ad

optin

g M

FRS

9 an

d M

FRS

15

43

-

-

-

922

9

22

At

1 A

ugus

t 20

18, a

s re

stat

ed

1

54,8

10

(1,9

57)

42,

170

1

01,3

05

296

,328

Lo

ss fo

r th

e fin

anci

al y

ear

-

-

-

(4

4,07

6)

(44,

076)

Oth

er c

omp

rehe

nsiv

e in

com

e fo

r th

e fin

anci

al y

ear

-

-

(2

39)

-

(239

) To

tal c

omp

rehe

nsiv

e in

com

e fo

r th

e fin

anci

al y

ear

-

-

(2

39)

(44,

076)

(4

4,31

5) Re

alis

atio

n of

ass

ets

reva

luat

ion

rese

rve

-

-

(3

,020

) 3

,020

-

Tr

ansa

ctio

ns w

ith

ow

ners

: D

ivid

end

s to

ow

ners

of t

he C

omp

any

30

-

-

-

(7,5

64)

(7,5

64)

Shar

es re

pur

chas

ed

17

-

(3

,713

) -

-

(3

,713

)

-

(3,7

13)

-

(7,5

64)

(11,

277)

At

31 J

uly

2019

154,

810

(5

,670

) 3

8,91

1

52,

685

2

40,7

36

Statement Of Changes In Equity (Cont’d)For The Financial Year Ended 31 July 2019


Statement Of Changes In Equity (Cont’d)For The Financial Year Ended 31 July 2019


Non-Distributable Distributable Share Treasury Retained Total Capital Shares Earnings Equity Note RM’000 RM’000 RM’000 RM’000 Company At 1 August 2017 154,810 (5) 34,592 189,397 Profit for the financial year, representing total comprehensive income for the financial year - - 107 107 Transactions with owners: Dividends to owners of the Company 30 - - (9,289) (9,289)Shares repurchased 17 - (1,952) - (1,952) - (1,952) (9,289) (11,241) At 31 July 2018 154,810 (1,957) 25,410 178,263 At 1 August 2018 154,810 (1,957) 25,410 178,263 Loss for the financial year, representing total comprehensive loss for the financial year - - (11,289) (11,289) Transactions with owners: Dividends to owners of the Company 30 - - (7,564) (7,564)Shares repurchased 17 - (3,713) - (3,713) - (3,713) (7,564) (11,277) At 31 July 2019 154,810 (5,670) 6,557 155,697


Statements Of Cash Flows For The Financial Year Ended 31 July 2019

Group Company 2019 2018 2019 2018 Note RM’000 RM’000 RM’000 RM’000 Restated Cash Flows From Operating Activities (Loss)/Profit before tax - Continuing operations (52,013) (7,327) (11,291) 118 - Discontinued operation 15(b) - (4,852) - -

(52,013) (12,179) (11,291) 118 Adjustments for: Bad debts written off on: - Amount due from an unconsolidated subsidiary company 23 - 8 - - Trade receivables 27 701 - - Deposits written off 67 - - - Depreciation of property, plant and equipment 6,389 11,201 - - Finance costs 26 4,956 10,365 - - Impairment losses on: - Amount due from subsidiary companies - - - 15 - Investment in a subsidiary company - - 10,038 4,000 - Property, plant and equipment 307 - - - - Trade receivables - 102 - - Inventories written down 8,004 181 - - Inventories written off 12,961 - - - Property, plant and equipment written off 124 550 - - Provision for liquidated ascertained damages 23(d) 2,500 3,747 - - Unrealised loss/(gain) on foreign exchange 10 (745) - - Waiver of late payment interest income 83 - - - Gain on struck off of a subsidiary company (24) - - - Gain on disposal of: - Assets held for sale (1,330) (4,261) - (2,063)- Property, plant and equipment (1,418) (156) - - - Disposal group held for sale and discontinued operation 15(d) - (3,372) - - Bargain purchase gain on acquisition of a subsidiary company 7(a) (2,694) - - - Dividend income - - - (2,983)Interest income (560) (297) - (47)Reversal of impairment losses on trade receivables (5) - - - Reversal of inventories written down (752) - - -


Statements Of Cash Flows (Cont’d)For The Financial Year Ended 31 July 2019

Group Company 2019 2018 2019 2018 Note RM’000 RM’000 RM’000 RM’000 Restated Operating (loss)/profit before working capital changes (23,345) 5,837 (1,245) (960)Changes in working capital: Inventories 52,273 (37,841) - - Contract assets 71,623 90,059 - - Trade receivables (50,199) (15,717) - - Other receivables 21,425 (20,432) 19 (19) Trade payables (21,642) (12,364) - - Other payables (29,708) 40,845 207 (96) Amount due from/(to) subsidiary companies - - 12,025 2,589 43,772 44,550 12,251 2,474

Cash generated from operations 20,427 50,387 11,006 1,514 Interest paid (4,956) (10,365) - - Payment of liquidated ascertained damages 23(d) (4,021) (1,587) - - Tax paid (1,285) (14,504) (6) (6) Tax refund 573 - - -

Net cash from operating activities 10,738 23,931 11,000 1,508

Cash Flows From Investing Activities Dividend income - - - 2,983 Interest income 560 297 - 47 Net cash inflows from disposal of disposal group held for sale and discontinued operation 15(d) - 5,449 - - Net cash outflows from acquisition of a subsidiary company 7(a) (6,500) - - - Proceeds from disposal of: - Assets held for sale 6,300 12,848 - - - Property, plant and equipment 3,230 1,451 - - - Disposal group held for sale and discontinued operation - - - 7,063 Purchase of property, plant and equipment 4(g) (671) (22,984) - -

Net cash from/(used in) investing activities 2,919 (2,939) - 10,093


Statements Of Cash Flows (Cont’d)For The Financial Year Ended 31 July 2019


Group Company 2019 2018 2019 2018 Note RM’000 RM’000 RM’000 RM’000 Restated Cash Flows From Financing Activities Changes in bills payables (958) 7,112 - - Dividends paid 30 (7,564) (9,289) (7,564) (9,289) Drawdown of bank borrowings - 47,250 - - Purchase from treasury shares 17 (3,713) (1,952) (3,713) (1,952) Repayment of bank borrowings (6,896) (8,535) - - Repayment of finance lease liabilities (1,845) (3,666) - - Decrease/(Increase) in fixed deposits pledged with licensed banks 7,075 (8,573) - -

Net cash (used in)/from financing activities (13,901) 22,347 (11,277) (11,241)

Net (decrease)/increase in cash and cash equivalents (244) 43,339 (277) 360 Effects of exchange translation difference on cash and cash equivalents 12 - - - Cash and cash equivalents at the beginning of the financial year 22,745 (20,594) 566 206

Cash and cash equivalents at the end of the financial year 22,513 22,745 289 566 Cash and cash equivalents at the end of the financial year comprises: Fixed deposits with licensed banks 5,528 12,603 - - Cash and bank balances 29,969 33,582 289 566 Bank overdrafts (7,456) (10,837) - -

28,041 35,348 289 566 Less: Fixed deposits pledged with licensed banks (5,528) (12,603) - -

22,513 22,745 289 566


Notes To The Financial Statements31 July 2019

1. CORPORATE INFORMATION

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

The principal activity of the Company is that of investment holding. The principal activities of the subsidiary companies are disclosed in Note 7. There have been no significant changes in the nature of these activities of the Company and its subsidiary companies during the financial year.

The principal place of business of the Company were located at Kawasan Perindustrian Sungai Lalang, Lot 971, Jalan Vill, Mukim Semenyih, Jalan Sungai Lalang, 43500 Semenyih, Selangor Darul Ehsan. With effective from 29 July 2019, the Company’s principal place of business has been relocated to Kawasan Perindustrian Sungai Lalang, Lot 974, Jalan Vill, Mukim Semenyih, Jalan Sungai Lalang, 43500 Semenyih, Selangor Darul Ehsan.

The registered office of the Company is located at Suite 10.02, Level 10, The Gardens South Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur.

2. BASIS OF PREPARATION

(a) Statement of compliance

The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards 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 significant accounting policies below.

The financial statements of the Group and of the Company for the financial year ended 31 July 2019 are the first set of financial statements prepared in accordance with the MFRSs, including MFRS 1 “First-time Adoption of Malaysian Financial Reporting Standards”. The Group and the Company have consistently applied the same accounting policies as disclosed in Note 3 in its opening MFRS statements of financial position at 1 August 2017 (transition date) and throughout all years presented, as if these policies had always been in effect. Subsequent to the transition in the financial reporting framework to MFRSs on 1 August 2017, the restated comparative information has not been audited under MFRSs. However, the comparative statements of financial position as at 31 July 2018, comparative statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows for the financial year then ended have been audited under the previous financial reporting framework, Financial Reporting Standards (“FRSs”) in Malaysia. The explanation and financial impact on the transition to MFRSs are disclosed in Note 43.


Notes To The Financial Statements (Cont’d)31 July 2019

2. BASIS OF PREPARATION (CONT’D)

(a) Statement of compliance (Cont’d)

Standards issued but not yet effective

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

Effective dates for financial periods beginning on or after MFRS 16 Leases 1 January 2019 IC Interpretation 23 Uncertainty over Income Tax Treatments 1 January 2019 Amendments to MFRS 9 Prepayment Features with Negative 1 January 2019 Compensation Amendments to MFRS 119 Plan Amendment, Curtailment or Settlement 1 January 2019 Amendments to MFRS 128 Long-term Interests in Associates and 1 January 2019 Joint Ventures Annual Improvements to MFRSs 2015 - 2017 Cycle: • Amendments to MFRS 3 1 January 2019 • Amendments to MFRS 11 1 January 2019 • Amendments to MFRS 112 1 January 2019 • Amendments to MFRS 123 1 January 2019 Amendments to References to the Conceptual Framework in MFRS Standards 1 January 2020 Amendments to MFRS 3 Definition of a Business 1 January 2020 Amendments to MFRS 101 Definition of Material 1 January 2020 and MFRS 108 MFRS 17 Insurance Contracts 1 January 2021 Amendments to MFRS 10 Sales or Contribution of Assets between an Deferred until and MFRS 128 Investor and its Associate or Joint Venture further notice

The Group and the Company intend to adopt the above new standards and amendments to standards, if applicable, when they become effective.

The initial application of the abovementioned new standards and amendments to standards are not expected to have any significant impacts on the financial statements of the Group and of the Company except as mentioned below:

MFRS 16 Leases

MFRS 16, which upon the effective date will supersede MFRS 117 Leases, introduces a singles lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying assets is of low value. Specifically, under MFRS 16, a lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. Accordingly, a lessee should recognise depreciation of the right-of-use asset and interest on the lease liability, and also classifies cash repayments of the lease liability into a principal portion and an interest portion and presents them in the statements of cash flows. Also, the right-to-use asset and the lease liability are initially measured on a present value basis. The measurement includes non-cancellable lease payments and also includes payments to be made in optional periods if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. This accounting treatment is significantly different from the lessee accounting for leases that are classified as operating leases under the predecessor standard MFRS 117.




(a) Statement of compliance (Cont’d)

Standards issued but not yet effective (Cont’d)

MFRS 16 Leases (Cont’d)

In respect of the lessor accounting, MFRS 16 substantially carries forward the lessor accounting requirements in MFRS 117. Accordingly, a lessor continues to classify its leases as operating leases or finance leases and to account for those two types of leases differently.

The impact of the new standards and amendments to standards on the financial statements of the Group and of the Company are currently being assessed by management.

(b) Functional and presentation currency

The financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional currency. All financial information is presented in RM and has been rounded to the nearest RM in thousands except when otherwise stated.

(c) Significant accounting judgements, estimates and assumptions

The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.

Judgements

The following are the judgements made by management in the process of applying the Group’s accounting policies that have the most significant effect on the amounts recognised in the financial statements:

Satisfaction of performance obligations in relation to contracts with customers

The Group is required to assess each of its contracts with customers to determine whether performance obligations are satisfied over time or at a point in time in order to determine the appropriate method for recognising revenue. This assessment was made based on the terms and conditions of the contracts, and the provisions of relevant laws and regulations.

The Group recognises revenue over time in the following circumstances:

(i) the customer simultaneously receives and consumes the benefits provided by the Group’s performance as the Group performs;

(ii) the Group does not create an asset with an alternative use to the Group and has an enforceable right to payment for performance completed to-date; and

(iii) the Group’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced.

Where the above criteria are not met, revenue is recognised at a point in time. Where revenue is recognised at a point in time, the Group assesses each contract with customers to determine when the performance obligation of the Group under the contract is satisfied.




(c) Significant accounting judgements, estimates and assumptions (Cont’d)

Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next reporting period are set out below:

Useful lives of property, plant and equipment

The Group regularly review the estimated useful lives of property, plant and equipment based on factors such as business plan and strategies, expected level of usage and future technological developments. Future results of operations could be materially affected by changes in these estimates brought about by changes in the factors mentioned above. A reduction in the estimated useful lives of property, plant and equipment would increase the recorded depreciation and decrease the value of property, plant and equipment. The carrying amount at the reporting date for property, plant and equipment are disclosed in Note 4.

Impairment of property, plant and equipment

The Group assesses whether there is any indication that property, plant and equipment are impaired at the end of each reporting period. Impairment is measured by comparing the carrying amount of an asset with its recoverable amount. The recoverable amount is measured at the higher of the fair value less cost to sell for that asset.

Inventories valuation

Inventories are measured at the lower of cost and net realisable value. The Group estimates the net realisable value of inventories based on an assessment of expected sales prices. Demand level and pricing competition could change from time to time. If such factors result in an adverse effect on the Group’s products, the Group might be required to reduce the value of its inventories. Details of inventories are disclosed in Note 5.

Impairment of investment in subsidiary companies

The Company reviews its investment in subsidiary companies when there are indicators of impairment. Impairment is measured by comparing the carrying amount of an investment with its recoverable amount. Significant judgement is required in determining the recoverable amount. Estimating the recoverable amount requires the Company to make an estimate of the expected future cash flows from the cash-generating units and also to determine a suitable discount rate in order to calculate the present value of those cash flows.

The carrying amount at the reporting date for investment in subsidiary companies is disclosed in Note 7.

Deferred tax assets

Deferred tax assets are recognised for all unused tax losses, unabsorbed capital allowances and other deductible temporary differences to the extent that it is probable that taxable profit will be available against which the unused tax losses, unabsorbed capital allowances and other deductible temporary differences 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. Details of deferred tax assets are disclosed in Note 21.





Key sources of estimation uncertainty (Cont’d)

Determination of transaction prices

The Group is required to determine the transaction price in respect of each of its contracts with customers. In making such judgement, the Group assesses the impact of any variable consideration in the contract, due to discounts or penalties, the existence of any significant financing component and any non-cash consideration in the contract.

There is no estimation required in determining the transaction price, as revenue from sale of goods or rendering of services are based on invoiced values. Discounts are not considered as they are only given in rare circumstances.

Revenue from property development contracts

Revenue is recognised when the control of the asset is transferred to the customers and, depending on the terms of the contract and the applicable laws governing the contract, control of the asset may transfer over time or at a point in time.

If control of the asset transfers over time, the Group recognises property development revenue and costs over the period of the contract by reference to the progress towards complete satisfaction of that performance obligation at the reporting date. This is measure based on the proportion of property development costs incurred for work performed up to end of the reporting period as a percentage of the estimated total property development costs of the contract.

Significant judgement are used to estimate these total property development costs to complete the contracts. In making these estimates, management relies on past experience, the work of specialists and a continuous monitoring mechanism.

The carrying amount of assets of the Group arising from property development activities are disclosed in Note 8.

Revenue from construction contracts

Construction revenue and costs are recognised over the period of the contract in the profit or loss by reference to the progress towards complete satisfaction of that performance obligation.

The progress towards complete satisfaction of performance obligation is measured based on physical proportion of contract work-to-date certified by professional consultants. Significant judgement is required in determining the progress based on the certified work-to-date corroborated by the level of completion of the construction based on actual costs incurred to-date over the estimated total construction costs. The total estimated construction costs are based on approved budgets, which require assessments and judgements to be made on changes in, for example, work scope, changes in costs and costs to completion. In making the judgement, the Group evaluates based on past experience, the work of specialists and a continuous monitoring mechanism.





Key sources of estimation uncertainty (Cont’d)

Impairment of trade receivables

The Group reviews the recoverability of its receivables at each reporting date to assess whether an impairment loss should be recognised. The impairment provisions for receivables are based on assumptions about risk of default and expected loss rates. The customer’s credit worthiness is evaluated by reviewing, amongst others, the Group’s historical collection experience.

The carrying amounts at the reporting date for trade receivables are disclosed in Note 9.

Income taxes

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.

The Group recognises liabilities for tax based on estimates of whether additional taxes will be due. Where the final tax outcome of these tax matters is different from the amounts that were initially recognised, such differences will impact the income tax and/or deferred tax provisions in the period in which such determination is made. As at 31 July 2019, the Group and the Company have tax recoverable of RM5,996,000 and RM3,000 (31.7.2018: RM5,495,000 and Nil; 1.8.2017: Nil and Nil) and tax payable of Nil and Nil (31.7.2018: RM5,000 and RM5,000; 1.8.2017: RM7,976,000 and Nil) respectively.

Fair value of financial instruments

Management uses valuation techniques in measuring the fair value of financial instruments where active market quotes are not available. Details of the assumptions used are given in the Note 39(c) regarding financial assets and liabilities. In applying the valuation techniques, management makes maximum use of market inputs, and uses estimates and assumptions that are, as far as possible, consistent with observable data that market participants would use in pricing the instrument. Where applicable data is not observable, management uses its best estimate about the assumptions that market participants would make. These estimates may vary from the actual prices that would be achieved in an arm’s length transaction at the end of the reporting period.

3. SIGNIFICANT ACCOUNTING POLICIES

The Group and the Company apply the significant accounting policies set out below, consistently throughout all periods presented in the financial statements unless otherwise stated.

(a) Basis of consolidation

(i) Subsidiary companies

Subsidiary companies are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiary companies are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.



3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(a) Basis of consolidation (Cont’d)

(i) Subsidiary companies (Cont’d)

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary company is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.

Acquisition-related costs are expensed in profit or loss as incurred.

If the business combination is achieved in stages, the acquirer’s previously held equity interest in the acquiree is re-measured at its acquisition date fair value and the resulting gain or loss is recognised in profit or loss.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (which cannot exceed one year from the acquisition date), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date, if known, would have affected the amounts recognised at that date.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with MFRS 9 Financial Instruments either in profit or loss or other comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

Inter-company transactions, balances and unrealised gains or losses on transactions between Group companies are eliminated. Unrealised losses are eliminated only if there is no indication of impairment. Where necessary, accounting policies of subsidiary companies have been changed to ensure consistency with the policies adopted by the Group.

In the Company’s separate financial statements, investments in subsidiary companies are stated at cost less accumulated impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts are recognised in profit or loss. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. See accounting policy Note 3(m)(i) on impairment of non-financial assets.

(ii) Changes in ownership interests in subsidiary companies without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary company is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.




(a) Basis of consolidation (Cont’d)

(iii) Disposal of subsidiary companies

If the Group losses control of a subsidiary company, the assets and liabilities of the subsidiary company, including any goodwill, and non-controlling interests are derecognised at their carrying value on the date that control is lost. Any remaining investment in the entity is recognised at fair value. The difference between the fair value of consideration received and the amounts derecognised and the remaining fair value of the investment is recognised as a gain or loss on disposal in profit or loss. Any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities.

(iv) Goodwill on consolidation

The excess of the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total consideration transferred, non-controlling interest recognised and previously held interest measured at fair value is less than the fair value of the net assets of the subsidiary company acquired (ie. a bargain purchase), the gain is recognised in profit or loss.

Following the initial recognition, goodwill is measured at cost less accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment annually or more frequent when there is objective evidence that the carrying value may be impaired. See accounting policy Note 3(m)(i) on impairment of non-financial assets.

(b) Foreign currency transactions and balances

Transactions in foreign currency are recorded in the functional currency of the respective Group entities using the exchange rates prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at 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 retranslated.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are included in profit or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation. These are initially taken directly to the foreign currency translation reserve within equity until the disposal of the foreign operations, at which time they are recognised in profit or loss. Exchange differences arising on monetary items that form part of the Company’s net investment in foreign operation are recognised in profit or loss in the Company’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 reporting period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised in other comprehensive income. Exchange differences arising from such non-monetary items are also recognised in other comprehensive income.




(c) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. The policy of recognition and measurement of impairment losses is in accordance with Note 3(m)(i) on impairment of non-financial assets.

(i) Recognition and measurement

Cost includes expenditures that are directly attributable to the acquisition of the assets and any other costs directly attributable to bringing the asset to working condition for its intended use, cost of replacing component parts of the assets, and the present value of the expected cost for the decommissioning of the assets after their use. The cost of self-constructed assets also includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs. All other repair and maintenance costs are recognised in profit or loss as incurred.

The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment is based on the quoted market prices for similar items.

When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Property, plant and equipment are derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss. On disposal of a revalued asset, the amounts in revaluation reserve relating to those assets are transferred to retained earnings.

Land and buildings are measured at fair value less accumulated depreciation on buildings and impairment losses recognised after the date of the revaluation. Valuations are performed with sufficient regularity, usually every five years, to ensure that the carrying amount does not differ materially from the fair value of the land and buildings at the end of the reporting period.

As at the date of revaluation, accumulated depreciation, if any, is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Any revaluation surplus arising upon appraisal of land and building is recognised in other comprehensive income and credited to the revaluation reserve in equity. To the extent that any revaluation decrease or impairment loss has previously been recognised in profit or loss, a revaluation increase is credited to profit or loss with the remaining part of the increase recognised in other comprehensive income. Downward revaluation of land and building are recognised upon appraisal or impairment testing, with the decrease being charged to other comprehensive income to the extent of any revaluation surplus in equity relating to this asset and any remaining decrease recognised in profit or loss. Any revaluation surplus remaining in equity on disposal of the asset is transferred to retained earnings.

Capital work-in-progress consists of building under construction for intended use and is stated at cost.




(c) Property, plant and equipment (Cont’d) (ii) Subsequent costs

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the profit or loss as incurred.

(iii) Depreciation

Depreciation is recognised in the profit or loss on straight-line basis to write off the cost or valuation of each asset to its residual value over its estimated useful life. Freehold land is not depreciated. Leased assets are depreciated over the shorter of the lease term and their useful lives. Property, plant and equipment under construction are not depreciated until the assets are ready for its intended use.

Property, plant and equipment are depreciated based on the estimated useful lives of the assets as follows:

Freehold buildings and building improvements 2% Leasehold land Over the remaining lease period Leasehold buildings 2% Office equipment, furniture and fittings 5% - 20% Renovation and electrical upgrade 2% - 5% Tools and machinery 8% to 10% Motor vehicles 20%

The residual values, useful lives and depreciation method are reviewed at the end of each reporting period 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 property, plant and equipment.

(d) Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specific in an arrangement.

As lessee

(i) Finance lease

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance lease. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.



3. Significant Accounting Policies (Cont’d)

(d) Leases (Cont’d)

As lessee (Cont’d)

(i) Finance lease (Cont’d)

Minimum lease payments made under finance leases are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised as finance costs in the profit or loss. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

Leasehold land which in substance is a finance lease is classified as a property, plant and equipment.

(ii) Operating lease

Leases, where the Group does not assume substantially all the risks and rewards of ownership are classified as operating leases and, except for property interest held under operating lease, the leased assets are not recognised on the statements of financial position. Property interest held under an operating lease, which is held to earn rental income or for capital appreciation or both, is classified as investment property.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred.

Leasehold land which in substance is an operating lease is classified as prepaid land lease payments.

As lessor

Leases in which the Group does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

(e) Intangible assets

Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair values at the acquisition date (which is regarded as their cost).

Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.

See accounting policy Note 3(m)(i) on impairment of non-financial assets for intangible assets.



3. Significant Accounting Policies (Cont’d)

(f) Financial assets

Recognition and initial measurement

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

At initial recognition, the Group and the Company measure a financial asset at its fair value plus, for an item not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issuance of the financial instruments. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss.

Financial instrument categories and subsequent measurement

The Group and the Company determine the classification of financial assets at initial recognition and are not reclassified subsequent to their initial recognition unless the Group and the Company change its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

The Group and the Company’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

(i) Financial assets at amortised cost

The Group and the Company measure financial assets at amortised cost if both of the following conditions are met:

• The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and

• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortised cost are subsequently measured using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains or losses and impairment are recognised in profit or loss. Any gain and loss on derecognition is recognised in profit or loss.

The Group’s financial assets at amortised cost include trade and other receivables, fixed deposits with licensed banks and cash and bank balances. The Company’s financial assets at amortised cost include amount due from subsidiary companies and cash and bank balances.

(ii) Financial assets at fair value through other comprehensive income (“FVTOCI”)

The Group and the Company have not designated any financial assets at FVTOCI.

(iii) Financial assets at fair value through profit or loss (“FVTPL”)

The Group and the Company have not designated any financial assets at FVTPL.




(f) Financial assets (Cont’d)

Regular way purchase or sale of financial assets

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

Derecognition

A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received for financial instrument is recognised in profit or loss.

(g) Financial liabilities

Recognition and initial measurement

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

At initial recognition, the Group and the Company measure a financial liability at its fair value less, for an item not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issuance of the financial instruments.

The Group’s financial liabilities include trade and other payables and loans and borrowings. The Company’s financial liabilities include other payables and amount due to subsidiary companies.

Financial instrument categories and subsequent measurement

The subsequent measurement of financial liabilities depends on their classification as follows:

(i) Financial liabilities at amortised cost

Financial liabilities not categorised as fair value through profit or loss are subsequently measured at amortised cost using the effective interest method.

Interest expense and foreign exchange gains and losses are recognised in the profit or loss. Any gains or losses on derecognition are also recognised in the profit or loss.

The Group’s financial liabilities designated as amortised cost comprise trade and other payables and loans and borrowings. The Company’s financial liabilities designated as amortised cost comprise other payables and amount due to subsidiary companies.

(ii) Financial liabilities at fair value through profit or loss

The Group and the Company have not designated any financial liabilities at FVTPL.




(g) Financial liabilities (Cont’d)

Derecognition

A financial liability or part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expired. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

(h) Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs that are directly attributable to the issuance of the guarantee. Subsequent to initial recognition, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.

Liabilities arising from financial guarantees are presented together with other provisions.

(i) Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the statements of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

(j) Inventories

Inventories are stated at the lower of cost and net realisable value.

(i) Land held for property development

Land held for property development consists of purchase price of land, professional fees, stamp duties, commissions, conversion fees, other relevant levies and direct development cost incurred in preparing the land for development.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated cost necessary to make the sale. If net realisable value cannot be determined reliably, these inventories will be stated at the lower of cost or fair value less costs to sell. Fair value is the amount the inventory can be sold in an arm’s length transaction.

Land held for property development for which no significant development work has been undertaken or where development activities are not expected to be completed within the normal operating cycle, is classified as non-current asset.

Land held for property development is transferred to property development costs under current assets when development activities have commenced and are expected to be completed within the normal operating cycle.




(j) Inventories (Cont’d)

(ii) Property development costs

Cost is determined based on specific identification basis. Property development costs comprise costs of land, professional fees, direct materials, direct labour, other direct costs, attributable overhead, payments to subcontractors and borrowing costs capitalised for qualifying assets that incurred during the development period. The asset is subsequently recognised as an expenses in profit or loss when and as the control of the asset is transferred to the customer.

Property development costs attributable to unsold properties, upon completion, are transferred to completed properties held for sale.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and applicable selling expenses.

(iii) Completed properties held for sale

The cost of completed properties includes costs of land and related development cost or its purchase costs and incidental cost of acquisition.

Net realiasable value is the estimated selling price in the ordinary course of business less applicable variable selling expenses.

(iv) Other inventories

Cost of raw material comprise cost of purchase and other costs incurred in bringing it to their present location and condition are determined on a first-in-first-out basis. Cost of finished goods and work-in-progress consists of direct material, direct labour and an appropriate proportion of production overheads (based on normal operating capacity) are stated on a first-in-first-out basis.

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

(k) Construction contracts

Construction contracts are contract specifically negotiated for the construction of an asset or a combination of assets that are closely interrelated or interdependent in terms of their design, technology and functions or their ultimate purpose or use.

Cost incurred to fulfil the contracts, comprising cost of direct materials, direct labour, other direct costs, attributable overheads and payments to subcontractors are recognosed as an asset and amortised over to profit or loss systematically to reflect the transfer of the contracted service to the customer.

The Group uses the efforts or inputs to the satisfaction of the performance obligations to determine the appropriate amount to recognise in a given period. This is measured by reference to the contract costs incurred up to the end of the reporting period as a percentage of total estimated costs for each contract. Costs incurred in the financial year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. They are presented as inventories, prepayments or other assets, depending on their nature. When the carrying amount of the asset exceeds the remaining amount of consideration that the Group expects to receive in exchange of the contracted asset, an impairment loss is recognised in profit or loss.




(k) Construction contracts (Cont’d)

The Group presents as an asset the gross amount due from customers for contract work in progress for which costs incurred plus recognised profits (less recognised losses) exceed contract liabilities. Contract liabilities not yet paid by customers and retention monies are included within receivables and contract assets. The Group presents as a liability the gross amount due to customers for contract work for all contracts in progress for which contract liabilities exceed costs exceed costs incurred plus recognised profits (less recognised losses).

(l) Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, bank overdrafts and highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. For the purpose of statements of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

(m) Impairment of assets

(i) Non-financial assets

The carrying amounts of non-financial assets (except for inventories, contract assets, deferred tax assets and assets and disposal group classified as held for sale) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. For intangible assets that have indefinite useful lives, or that are not yet available for use, the recoverable amount is estimated each period at the same time.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units. Subject to operating segment ceiling test, for the purpose of goodwill impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to a cash-generating unit or a group of cash-generating units that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or cash-generating unit is the greater of its value-in-use and its fair value less costs of disposal. 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 or cash-generating unit.

An impairment loss is recognised if the carrying amount of an asset or cash-generating unit exceeds

its estimated recoverable amount. Impairment loss is recognised in profit or loss, unless the asset is carried at a revalued amount, in which such impairment loss is recognised directly against any revaluation surplus for the asset to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same asset. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to group of cash-generating units and then to reduce the carrying amounts of the other assets in group of cash-generating units on a pro rata basis.




(m) Impairment of assets (Cont’d)

(i) Non-financial assets (Cont’d)

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed only if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation or amortisation, had no impairment loss been recognised for asset in prior years. Such reversal is recognised in the profit or loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.

(ii) Financial assets

The Group and the Company recognise an allowance for expected credit losses (“ECLs”) for all debt instruments not held at FVTPL. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group and the Company expect to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

For trade receivables, other receivables, contract assets and inter-company balances, the Group and the Company apply a simplified approach in calculating ECLs. Therefore, the Group and the Company do not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group and the Company have established a provision matrix that is based on its historical credit loss experience and the economic environment.

(n) Share capital

(i) Ordinary shares

An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments. Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity.

Dividend distribution to the Company’s shareholders is recognised as a liability in the period they are approved by the Board of Directors except for the final dividend which is subject to approval by the Company’s shareholders.

(ii) Treasury shares

When issued share of the Company are repurchased, the amount of the consideration paid, including directly attributable costs, net of any tax effects, is recognised as a deduction from equity as treasury shares until the shares are cancelled, reissued or disposed of. No gain or loss is recognised in the statements of profit or loss and other comprehensive income on the sale, re-issuance or cancellation of the treasury shares.

When treasury shares are distributed as share dividends, the cost of the treasury shares is deducted against the retained earnings of the Company.

When treasury shares are sold or reissued subsequently, the difference between the sales consideration net of directly attributable costs and the carrying amount of the treasury shares is recognised in equity.




(o) Provisions

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

Provisions are reviewed at the end of each reporting period 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. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision. The expense relating to any provision is presented in the statements of profit or loss and other comprehensive income net of any reimbursement.

(p) Employee benefits

(i) Short-term employee benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the reporting period 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. Short-term non-accumulating compensated absences such as sick and medical leave are recognised when the absences occur.

The expected cost of accumulating compensated absences is measured as additional amount expected to be paid as a result of the unused entitlement that has accumulated at the end of the reporting period.

(ii) Defined contribution plans

As required by law, companies in Malaysia contribute to the state pension scheme, the Employee Provident Fund (“EPF”). Such contributions are recognised as an expense in the profit or loss as incurred. Once the contributions have been paid, the Group has no further payment obligations.

(iii) Equity-settled share-based payment transaction

The Group operates an equity-settled, share-based compensation plan for the employees of the Group. Employee services received in exchange for the grant of the share options is recognised as an expense in the profit or loss over the vesting periods of the grant with a corresponding increase in equity.

For options granted to the employees of the subsidiary companies, the fair value of the options granted is recognised as cost of investment in the subsidiary companies over the vesting period with a corresponding adjustment to equity in the Company’s financial statements.




(p) Employee benefits (Cont’d)

(iii) Equity-settled share-based payment transaction (Cont’d)

The total amount to be expensed over the vesting period is determined by reference to the fair value of the share options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to be vested. At the end of each reporting period, the Group revises its estimates of the number of share options that are expected to be vested. It recognises the impact of the revision of original estimates, if any, in the profit or loss, with a corresponding adjustment to equity.

When the options are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital when the options are exercised. When options are not exercised and lapsed, the share option reserve is transferred to retained earnings.

(q) Revenue recognition

(i) Revenue from contracts with customers

Revenue is recognised when the Group satisfied a performance obligation (“PO”) by transferring a promised good or services to the customer, which is when the customer obtains control of the good or service. A PO may be satisfied at a point in time or over time. The amount of revenue recognised is the amount allocated to the satisfied PO.

The Group recognises revenue from the following major sources:

(a) Revenue from property development

The Group recognises revenue from property development over time when control over the property has been transferred to the customers. The properties have no alternative use to the Group due to contractual restriction and the Group has an enforceable right to payment for performance completed to date. Revenue from property development is measured at the fixed transaction price agreed under the sale and purchase agreement.

Revenue is recognised over the period of the contract using output method to measure the progress towards completed satisfaction of the performance obligations under the sale and purchase agreement, i.e. based on the proportion of property development costs incurred of work performed up to the end of the reporting period as a percentage of the estimated total costs of development of the contract.

The Group becomes entitled to invoice customers for construction of promised properties based on achieving a series of performance-related milestones (i.e. progress billing). The Group will previously have recognised a contract asset for any work performed. Any amount previously recognised as a contract asset is reclassified to trade receivables at the point at which it is invoiced to the customer. If the progress billing exceeds the revenue recognised todate, the Group recognises a contract liability for the difference. There is not considered to be a significant financing component in contracts with customers as the period between the recognition of revenue and the progress billing is always less than one year.

Revenue from sales of completed properties is recognised at a point in time, being when the control of the properties has been passed to the purchasers. And, it is probable that the Company will collect the considerations to which it will be entitled to in exchange for the properties sold.




(q) Revenue recognition (Cont’d)

(i) Revenue from contracts with customers (Cont’d)

(b) Sales of goods

Revenue is measured at the fair value of consideration received or receivable, net of returns and allowances, trade discount and volume rebates. Revenue from sale of goods is recognised when the transfer of significant risk and rewards of ownership of the goods to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods.

(c) Rendering of services

Revenue from services and management fees are recognised in the reporting period in which the services are rendered, which simultaneously received and consumes the benefits provided by the Group, and the Group has a present right to payment for the services.

(ii) Dividend income

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

(iii) Interest income

Interest income is recognised on accruals basis using the effective interest method.

(iv) Rental income

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

(r) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of the assets, which are assets that necessarily take a substantial period of time to get ready for theirs intended use or sale. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. Borrowing costs consist of interest and other costs that the Group incurred in connection with the borrowing of funds.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.




(s) Income taxes

Tax expense in profit or loss comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the financial year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial years.

Deferred tax is recognised using the liability method for all temporary differences between the carrying amounts of assets and liabilities in the statements of financial position and their tax bases. Deferred tax is not recognised for the temporary differences arising from the initial recognition of goodwill, the initial recognition of assets and liabilities in a transaction which is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

The measurement of deferred tax is based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, at the end of the reporting period. Deferred tax assets and liabilities are not discounted.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Unutilised reinvestment allowances and investment tax allowances, being tax incentives that is not a tax base of an asset, is recognised as a deferred tax asset to the extent that it is probable that the future taxable profits will be available against the unutilised tax incentive can be utilised.

(t) Segments reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-makers are responsible for allocating resources and assessing performance of the operating segments and make overall strategic decisions. The Group’s operating segments are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.

(u) Contingencies

Where it is not probable that an inflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent asset or contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent assets or contingent liabilities unless the probability of inflow or outflow of economic benefits is remote.




(v) Contract assets/contract liabilities

Contract asset is the right to consideration for goods or services transferred to the customers. In the case of property development, contract asset is the excess of cumulative revenue earned over the billing to-date.

Where there is objective evidence of impairment, the amount of impairment loss is determined by comparing the contract asset’s carrying amount and the present value of estimated future cash flows to be generated by the contract assets.

Contract liability is the obligation to transfer goods or services to customer for which the Company has received the consideration or has billed the customer. In the case of property development, contract liability is the excess of the billings to-date over the cumulative revenue earned.

(w) Assets and disposal group held for sale and discontinued operation

Assets and disposal group are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. Such assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.

The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset and disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset and disposal group. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

Property, plant and equipment are not depreciated once classified as held for sale.

A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which:

• represents a separate major line of business or geographical area of operations;• is part of a single co-ordinated plan to dispose of a separate major line of business or geographical

area of operations; or• is a subsidiary company acquired exclusively with a view to resale.

Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held for sale.

When an operation is classified as a discontinued operation, the comparative statements of profit or loss and other comprehensive income is re-represented as if the operation had been discontinued from the start of the comparative period.



4.

PR

OP

ER

TY, P

LAN

T A

ND

EQ

UIP

ME

NT

A

t V

alua

tio

n A

t C

ost

Free

hold

O

ffice

Le

aseh

old

b

uild

ing

s eq

uip

men

t,

Bui

ldin

g

Free

hold

Fr

eeho

ld

land

and

an

d b

uild

ing

fu

rnit

ure

To

ols

and

M

oto

r

wo

rk in

la

nd

bui

ldin

gs

b

uild

ing

s im

pro

vem

ents

an

d fi

ttin

gs

mac

hine

ry

vehi

cles

p

rog

ress

To

tal

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

31

.7.2

019

G

roup

Co

st/V

alua

tio

n

At

1 A

ugus

t 20

18

31,

437

5

0,82

4

7,6

09

3,58

1

5,4

75

70,

769

6

,177

-

1

75,8

72

A

dd

ition

s 5

86

-

-

-

15

1

80

20

2

80

1,0

81

D

isp

osal

s -

-

-

-

(7

66)

(13,

299)

(3

71)

-

(14,

436)

W

ritte

n of

f -

-

-

-

(4

57)

(736

) -

-

(1

,193

)

Tran

sfer

to

asse

ts h

eld

fo

r sa

le (N

ote

14)

(2,5

35)

(6,2

80)

-

-

-

-

-

-

(8,8

15)

A

dju

stm

ents

-

-

-

-

-

(7

00)

-

-

(700

)

At

31 J

uly

2019

2

9,48

8

44,

544

7

,609

3

,581

4

,267

5

6,21

4

5,8

26

280

1

51,8

09

A

ccum

ulat

ed

dep

reci

atio

n

At

1 A

ugus

t 20

18

-

1,0

13

154

91

3

3,9

12

55,

149

3

,928

-

6

5,06

9

Cha

rge

for

the

finan

cial

yea

r -

1

,016

1

29

72

2

21

4,1

58

793

-

6

,389

Dis

pos

als

-

-

-

-

(572

) (1

1,77

2)

(280

) -

(1

2,62

4)

Writ

ten

off

-

-

-

-

(409

) (6

60)

-

-

(1,0

69)

Tr

ansf

er t

o as

sets

hel

d

for

sale

(Not

e 14

) -

(2

51)

-

-

-

-

-

-

(251

)

At

31 J

uly

2019

-

1

,778

2

83

985

3

,152

4

6,87

5

4,4

41

-

57,

514

A

ccum

ulat

ed

imp

airm

ent

loss

es

A

t 1

Aug

ust

2018

-

-

-

-

-

-

-

-

-

C

harg

e fo

r th

e

fin

anci

al y

ear

-

-

546

-

-

-

-

-

5

46

A

t 31

Jul

y 20

19

-

-

546

-

-

-

-

-

54

6

Car

ryin

g a

mo

unt

A

t 31

Jul

y 20

19

29,

488

4

2,76

6

6,7

80

2,5

96

1,1

15

9,3

39

1,3

85

280

9

3,74

9



4.

PR

OP

ER

TY, P

LAN

T A

ND

EQ

UIP

ME

NT

(CO

NT’

D)

A

t V

alua

tio

n A

t C

ost

Free

hold

O

ffice

R

eno

vati

on

Le

aseh

old

b

uild

ing

s eq

uip

men

t,

and

Fr

eeho

ld

Free

hold

la

nd a

nd

and

bui

ldin

g

furn

itur

e

elec

tric

al

Too

ls a

nd

Mo

tor

la

nd

bui

ldin

gs

b

uild

ing

s im

pro

vem

ents

an

d fi

ttin

gs

upg

rad

e m

achi

nery

ve

hicl

es

Tota

l

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

31.7

.201

8

Gro

up

C

ost

/Val

uati

on

A

t 1

Aug

ust

2017

3

6,89

2

53,

834

7

,609

1

3,86

0

5,4

64

592

7

0,10

4

5,7

49

194

,104

Ad

diti

ons

-

-

-

-

11

7

1

2,2

15

445

2

,742

Dis

pos

als

(790

) -

-

-

-

-

(1

,550

) (1

7)

(2,3

57)

W

ritte

n of

f -

-

-

(6

71)

-

-

-

-

(671

)

Tran

sfer

to

asse

ts h

eld

fo

r sa

le (N

ote

14)

(4,6

65)

(3,0

10)

-

(9,6

08)

-

(663

) -

-

(1

7,94

6)

At

31 J

uly

2018

3

1,43

7

50,

824

7

,609

3

,581

5

,475

-

7

0,76

9

6,1

77

175

,872

Acc

umul

ated

d

epre

ciat

ion

A

t 1

Aug

ust

2017

-

-

3

9

3,2

75

3,6

48

133

5

0,98

0

2,9

60

61,

035

C

harg

e fo

r th

e

fin

anci

al y

ear

-

1,0

73

130

2

55

264

1

4

5,2

14

985

7

,935

Dis

pos

als

-

-

-

-

-

-

(1,0

45)

(17)

(1

,062

)

Writ

ten

off

-

-

-

(121

) -

-

-

-

(1

21)

Tr

ansf

er t

o as

sets

hel

d

for

sale

(Not

e 14

) -

(6

0)

-

(2,5

11)

-

(147

) -

-

(2

,718

)

Recl

assi

ficat

ion

-

-

(15)

1

5

-

-

-

-

-

A

t 31

Jul

y 20

18

-

1,0

13

154

9

13

3,9

12

-

55,

149

3

,928

6

5,06

9

Acc

umul

ated

im

pai

rmen

t lo

sses

At

1 A

ugus

t 20

17

-

-

-

715

-

-

-

-

7

15

Tr

ansf

er t

o as

sets

hel

d

for

sale

(Not

e 14

) -

-

-

(7

15)

-

-

-

-

(715

)

31 J

uly

2018

-

-

-

-

-

-

-

-

-

Car

ryin

g a

mo

unt

A

t 31

Jul

y 20

18

31,

437

4

9,81

1

7,4

55

2,6

68

1,5

63

-

15,

620

2

,249

1

10,8

03

A

t 1

Aug

ust

2017

3

6,89

2

53,

834

7

,570

9

,870

1

,816

4

59

19,

124

2

,789

1

32,3

54



4. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

(a) Certain freehold land and freehold buildings of the Group with carrying amount of RM72,253,000 (31.7.2018: RM81,248,000; 1.8.2017: RM88,080,000) have been pledged to licensed banks as securities for credit facilities granted to the Group as disclosed in Note 20(a).

(b) The carrying amount of property, plant and equipment of the Group held under finance leases arrangement are as follows:

Group 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 Motor vehicles 1,360 2,180 2,570 Tools and machinery 467 2,549 3,710 1,827 4,729 6,280

The leased assets are pledged as securities for the related finance lease liabilities as disclosed in Note 19.

(c) Included in the property, plant and equipment of the Group are motor vehicles with carrying amount of RM306,000 (31.7.2018: RM429,000; 1.8.2017: RM585,000) held in trust under the name of a Director of the Company.

(d) Certain of the freehold and leasehold land and buildings of the Group were revalued in July 2017 by an independent professional qualified valuer, KGV International Property Consultants (M) Sdn. Bhd..

The fair value of the land is within level 2 of the fair value hierarchy. The fair value was determined based on market comparable approach that reflect recent transaction price for similar properties.

The fair value of buildings is within level 3 of the fair value hierarchy. The fair value was determined using the cost approach that reflects the cost to a market participant to construct assets of comparable utility and age, adjust for obsolescence.

(e) Had the revalued freehold and leasehold land and buildings been included in the financial statements at cost less accumulated depreciation and accumulated impairment losses, the carrying amount of the revalued freehold and leasehold land and buildings would have been as follows:

Group 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 Freehold land 6,207 6,494 6,733 Leasehold land 2,885 3,165 3,209 Freehold buildings 28,245 32,707 36,639 Leasehold buildings 2,176 2,225 2,275 39,513 44,591 48,856

(f) During the financial year, the Group recognises impairment losses on its revalued leasehold land of RM307,000 (2018: Nil).



4. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

(g) The aggregate additional costs for the property, plant and equipment of the Group during the financial year acquired under finance leases financing and cash payments are as follows:

Group 31.7.2019 31.7.2018 RM’000 RM’000 Aggregate costs 1,081 2,742 Less: Finance leases financing (410) (451)

Cash payments 671 2,291

(h) The remaining lease terms of the leasehold land range from 70 to 77 (31.7.2018: 71 to 78; 1.8.2017: 72

to 79) years.

5. INVENTORIES

Group 31.7.2019 31.7.2018 1.8.2017 Note RM’000 RM’000 RM’000 Non-Current Land and property development costs (a) 70,119 16,770 13,247 Current Land and property development costs (a) 84 33,741 19,184 Completed properties (b) 3,926 - 3,995 Other inventories (c) 32,426 76,619 60,781 36,436 110,360 83,960 (a) Land and property development costs

Group 31.7.2019 31.7.2018 RM’000 RM’000 Non-Current Freehold land, at cost At 1 August 13,217 13,215 Additions - 2 Acquisition of a subsidiary company 48,174 -

At 31 July 61,391 13,217

Property development costs At 1 August 3,553 32 Additions 1,438 3,521 Acquisition of a subsidiary company 3,737 -

At 31 July 8,728 3,553

Total land and property development costs At 31 July 70,119 16,770 At 1 August 16,770 13,247



5. INVENTORIES (CONT’D)

(a) Land and property development costs (Cont’d)

Group 31.7.2019 31.7.2018 RM’000 RM’000 Restated Current Property development costs At 1 August, as previously reported 191,955 403,145 Effect of adopting MFRS 15 7,722 5,039

At 1 August, as restated 199,677 408,184 Additions 36,701 81,705 Transfer (to)/from inventories (4,349) 2,640 Less: Completed projects (221,492) (292,852)

At 31 July 10,537 199,677

Less: Cost recognised in profit or loss At 1 August, as previously reported 157,858 380,175 Effect of adopting MFRS 15 8,078 8,825

At 1 August, as restated 165,936 389,000 Recognised during the financial year 66,009 69,788 Less: Completed projects (221,492) (292,852)

At 31 July 10,453 165,936

Total land and property development costs At 31 July 84 33,741 At 1 August 33,741 19,184

(i) On 15 November 2011, a subsidiary company has entered into a joint venture agreement (“JVA”) with Astana Baru Sdn. Bhd., (“the Landowner”), a company in which certain Directors of the Company have substantial financial interest as disclosed in Note 37(b) to jointly develop a piece of freehold land. The Landowner is entitled to an agreed sum as specified in the JVA. The JVA has completed in previous financial year.

(ii) On 21 July 2014, a subsidiary company has entered into JVA with Luxmark View Sdn. Bhd. and Sheeco Properties Sdn. Bhd. respectively (“the Landowners”) to jointly develop three pieces of freehold land. The Landowners are entitled to an agreed sum as specified in the JVAs. The JVAs have completed during the financial year.




(a) Land and property development costs (Cont’d)

(iii) Included in the property development costs incurred during the financial year are the followings:

Group 31.7.2019 31.7.2018 RM’000 RM’000 Rental expenses - 1 (b) Completed properties

Group 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 At cost Completed properties 3,926 - 3,995

Group 31.7.2019 31.7.2018 RM’000 RM’000 At 1 August - 3,995 Transfer from/(to) land and property development costs 4,349 (2,640) Disposal during the financial year (423) (1,355)

At 31 July 3,926 -

(c) Other inventories

Group 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 At cost Raw materials 8,303 21,425 8,453 Consumables - 2,145 1,977 Work-in-progress 18,218 40,602 42,432 Finished goods 5,574 12,253 7,815 Goods-in-transit 331 194 104 32,426 76,619 60,781




(d) Other inventories (Cont’d)

Group 2019 2018 RM’000 RM’000 Recognised in profit or loss Inventories recognised in cost of sales 153,363 115,024 Inventories written off 12,961 - Inventories written down 8,004 181 Reversal of inventories written down (752) -

The reversal of inventories written down was made during the financial year when the related inventories were sold above their carrying amount.

6. INTANGIBLE ASSETS

Group 31.7.2019 31.7.2018 Note RM’000 RM’000 Cost/Carrying amount At 1 August - - Arising from acquisition of a subsidiary company 7(a) 29,826 -

At 31 July 29,826 - During the current financial year, the Company has completed the purchase price allocation (“PPA”) exercise

to determine the fair value of the net assets of Giat Armada Sdn. Bhd., within the stipulated time period, i.e. twelve (12) months from the acquisition date of 5 July 2019, in accordance to MFRS 3, Business Combinations.

Based on the PPA exercise conducted, RM29,826,000 has been identified as intangible assets arising from the fair value of the development lands, deferred tax liabilities of RM7,158,000 and bargain purchase gain of RM2,694,000 have also been recognised thereon.

7. INVESTMENT IN SUBSIDIARY COMPANIES

Company 31.7.2019 31.7.2018 RM’000 RM’000 In Malaysia Unquoted shares, at cost At 1 August 78,070 78,070 Less: Accumulated impairment losses (16,608) (6,570)

At 31 July 61,462 71,500



7. INVESTMENT IN SUBSIDIARY COMPANIES (CONT’D)

During the financial year, as a result of unfavourable performance of Tomisho Sdn. Bhd. (“TSB”) in rubberwood furniture segment, the Company carried out a review of the recoverable amount of TSB. The review led to the recognition of an impairment losses of RM10,038,000 (2018: RM4,000,000), which was recognised as administrative expenses in the statements of profit or loss and other comprehensive income.

Movement in the allowance for impairment losses of investment in subsidiary companies are as follows:

Company 31.7.2019 31.7.2018 RM’000 RM’000 At 1 August 6,570 2,570 Impairment losses recognised 10,038 4,000

At 31 July 16,608 6,570 The subsidiary companies and shareholdings therein are as follows: Place of business/ Country of Name of company incorporation Effective interest Principal activities 31.7.2019 31.7.2018 1.8.2017 % % %

Direct holding: Seng Yip Furniture Malaysia 100 100 100 Manufacture and trading Sdn. Bhd. of moulded timber, (“SYF”) furniture products and timber treatment processing Tomisho Sdn. Bhd. Malaysia 100 100 100 Manufacture and export (“TSB”) of furniture and component parts SYF Venture Sdn. Bhd. Malaysia 100 100 100 Investment holding Great Platform Malaysia - - 100 Manufacture and trading Sdn. Bhd.* of particle board and (“GPSB”) medium-density fibreboard Popular Vantage Malaysia - 100 100 Dormant Sdn. Bhd. # (“PVSB”)




The subsidiary companies and shareholdings therein are as follows: (Cont’d)

Place of business/ Country of Name of company incorporation Effective interest Principal activities 31.7.2019 31.7.2018 1.8.2017 % % %

Indirect holding: Subsidiary companies of SYF Venture Sdn. Bhd. SYF Development Malaysia 100 100 100 Property development Sdn. Bhd. (“SYFD”) SYF Construction Malaysia 100 100 100 Building contractor Sdn. Bhd. SYF Plantation Malaysia 100 100 100 Dormant Sdn. Bhd. Subsidiary companies of SYF Development Sdn. Bhd.

Nikmat Sekitar Malaysia 100 100 100 Dormant Sdn. Bhd. Nuri Meriah Sdn. Bhd. Malaysia 100 100 100 Dormant Giat Armada Sdn. Bhd. Malaysia 100 - - Property developer (“GASB”)

* As at 1 August 2017, the investment in GPSB has been presented as assets held for sale as disclosed in

Note 14

# Struck off during the financial year

(a) Acquisition of a subsidiary company

SYFD, an indirect wholly-owned subsidiary company of the Company, had on 29 January 2019 entered into a conditional share sale agreement with Kiara Susila Sdn. Bhd. (“KKSB”) to acquire 100% equity interest in GASB, a company incorporated in Malaysia, for cash consideration of RM6,500,000 together with the settlement of advances due from GASB to KSSB amounting to RM64,535,000. The acquisition was completed on 5 July 2019 and consequently GASB became an indirect wholly-owned subsidiary company of the Company.




(a) Acquisition of a subsidiary company (Cont’d)

Fair value of identifiable assets acquired and liabilities assumed

Group 31.7.2019 RM’000 Inventories 51,911 Intangible assets 29,826 Other receivables 88 Other payables (65,473) Deferred tax liabilities (7,158)

Total identifiable assets and liabilities 9,194 Net cash outflows arising from acquisition of a subsidiary company

Group 31.7.2019 RM’000 Purchase consideration settled in cash, representing net cash outflows on acquisition 6,500 Bargain purchase gain arising from business combination

Group 31.7.2019 RM’000 Fair value of consideration transferred 6,500 Fair value of identifiable assets acquired and liabilities assumed (9,194)

Bargain purchase gain arising from business combination (2,694)

(b) Additional investment in a subsidiary company

On 24 July 2019, GASB, a wholly-owned subsidiary company of SYFD, issued 999,998 new ordinary shares for a total cash consideration of RM999,998. SYFD has subscribed for the entire increase in the issued and paid up share capital of GASB.

(c) Struck off of a subsidiary company

On 26 May 2019, PVSB was struck off in accordance with Section 551(3) of the Companies Act, 2016. The subsidiary company shall be struck off from the register of The Companies Commissions of Malaysia upon publication of the Gazette pursuant to Section 551(3) of the Companies Act, 2016, which is pending as at the date of this report.

There are no significant restrictions on the ability of the subsidiary companies to transfer funds to the Group in the form of cash dividends or repayment of loans and advances.



8. CONTRACT ASSETS

Group 31.7.2019 31.7.2018 RM’000 RM’000 Restated Property development activities At 1 August, as previously reported - - Effect of adopting MFRS 15 75,574 165,634

At 1 August, as restated 75,574 165,634 Property development revenue recognised during the financial year 75,048 75,265 Less: Billings during the financial year (146,671) (165,325)

At 31 July 3,951 75,574 Presented as: Contract assets 3,951 75,574

Contract assets in relation to property development activities is the excess of revenue recognised in profit or loss over billings to purchasers as at the reporting date. This unbilled amount for work completed will be transferred to trade receivables when the right to bill becomes unconditional.

Contract value yet to be recognised as revenue

The Group applies the practical expedient in MFRS 15 on not disclosing the aggregate amount of the revenue expected to be recognised in the future as the Group recognises revenue from the satisfaction of the performance obligation using output methods in accordance with paragraph B16 of MFRS 15.

9. TRADE RECEIVABLES

Group 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 Restated Restated Trade receivables - Related parties 5,955 7,454 5,221 - Third parties 86,258 34,787 21,448 92,213 42,241 26,669 Less: Accumulated impairment losses (79) (179) (338) 92,134 42,062 26,331 Related parties represent companies in which certain Directors of the Company are also the director and/or

shareholder who have substantial financial interest.



9. TRADE RECEIVABLES (CONT’D)

The Group’s normal trade credit terms range from 1 to 90 days (31.7.2018: 1 to 90 days; 1.8.2017: 1 to 90 days). Other credit terms are assessed and approved on a case by case basis. Trade receivables are recognised at their original invoice amounts which represent their fair value on initial recognition.

Movement in the allowance for impairment losses on trade receivables are as follows:

Lifetime Credit Loss allowance impaired allowance RM’000 RM’000 RM’000 Group At 1 August 2018, as restated 10 169 179 Reversal of impairment losses (5) - (5) Written off - (95) (95)

At 31 July 2019 5 74 79 At 1 August 2017, as previously reported - 335 335 Effect of adopting MFRS 9 3 - 3

At 1 August 2017, as restated 3 335 338 Impairment losses recognised 7 95 102 Written off - (261) (261)

At 31 July 2018 10 169 179

The loss allowance account in respect of trade receivables is used to record loss allowance. Unless the Group is satisfied that recovery of the amount is possible, the amount considered irrecoverable is written off against the receivable directly.

The ageing analysis of trade receivables as at the end of the reporting period is as follows:

Gross Loss Net amount allowance amount RM’000 RM’000 RM’000 Group 31.7.2019 Not past due 56,193 (1) 56,192 Past due Less than 30 days 15,611 (2) 15,609 31 to 60 days 1,560 (2) 1,558 More than 60 days 18,775 - 18,775 35,946 (4) 35,942 Credit impaired Individual Impaired 74 (74) -

92,213 (79) 92,134



9. TRADE RECEIVABLES (CONT’D)

The ageing analysis of trade receivables as at the end of the reporting period is as follows: (Cont’d)

Gross Loss Net amount allowance amount RM’000 RM’000 RM’000

Group 31.7.2018 Not past due 13,355 (3) 13,352 Past due Less than 30 days 16,624 (2) 16,622 31 to 60 days 2,806 (5) 2,801 More than 60 days 9,287 - 9,287 28,717 (7) 28,710 Credit impaired Individual Impaired 169 (169) -

42,241 (179) 42,062

1.8.2017 Not past due 12,013 (2) 12,011 Past due Less than 30 days 6,800 - 6,800 31 to 60 days 226 - 226 More than 60 days 7,295 (1) 7,294

14,321 (1) 14,320 Credit impaired Individual Impaired 335 (335) -

26,669 (338) 26,331

Trade receivables that are not past due are creditworthy debtors with good payment records with the Group.

As at 31 July 2019, trade receivables of RM35,942,000 (31.7.2018: RM28,710,000; 1.8.2017: RM14,320,000) are past due but not impaired and are unsecured in nature. These relate to a number of independent customers from whom there is no recent history of default.

The trade receivables of the Group that are individually assessed to be impaired amounting to RM74,000 (31.7.2018: RM169,000; 1.8.2017: RM335,000), related to customers that are in financial difficulties and have defaulted on payments. These balances are expected to be recovered through the debts recovery process.

Included in trade receivables of the Group is RM33,011,000 (31.7.2018: RM25,285,000; 1.8.2017: RM13,360,000) that are past due but not impaired which were related to sales of properties. The Group has not made any impairment on its past due receivables as the Directors are of the view that most of the purchasers have obtained financing subsequently. The ownership of the titles will only be transferred to the purchasers upon full settlement of purchase price.



10. OTHER RECEIVABLES

Group 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 Restated Other receivables - Related parties 250 20 583 - Third parties (a) 4,036 21,499 4,884 4,286 21,519 5,467 Less: Accumulated impairment losses - (40) (40) 4,286 21,479 5,427 Deposits 2,504 3,604 3,316 Prepayments (b) 2,077 3,694 3,590 GST receivable 423 1,938 1,059 9,290 30,715 13,392

Company 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 GST receivable 2 21 2

Related parties represent companies in which certain Directors of the Company are also the director/shareholder who have substantial financial interest.

Movement in the allowance for impairment losses on other receivables are as follows:

Group 31.7.2019 31.7.2018 RM’000 RM’000 At 1 August 40 40 Written off (40) -

At 31 July - 40



10. OTHER RECEIVABLES (CONT’D)

(a) Included in the other receivables of the Group are the followings:

Group 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 Advances paid to landowners for the proposed joint venture - - 500 Balance of proceeds to be received from disposal of machineries and equipment 1,687 - - Materials purchased on behalf of a main contractor of a property development project - - 1,331

(b) Included in the prepayments of the Group are prepayment for extraction of rubberwood timber amounting to RM29,000 (31.7.2018: RM1,522,000; 1.8.2017: RM1,822,000).

11. AMOUNT DUE FROM/(TO) SUBSIDIARY COMPANIES

(a) Amount due from subsidiary companies

Company 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 Amount due from subsidiary companies 108,456 118,197 146,100 Less: Accumulated impairment losses (7,000) (7,015) (7,000) 101,456 111,182 139,100 This represents unsecured, non-interest bearing advances and repayable on demand.

Movement in impairment losses on amount due from subsidiary companies are as follows:

Company 31.7.2019 31.7.2018 RM’000 RM’000 At 1 August 7,015 7,000 Impairment losses recognised - 15 Written off (15) -

At 31 July 7,000 7,015 (b) Amount due to subsidiary companies

This represents unsecured, non-interest bearing advances and repayable on demand.



12. FIXED DEPOSITS WITH LICENSED BANKS

The fixed deposits of the Group were pledged as securities for the credit facilities granted to the Group as disclosed in Note 20(b).

The interest rates and maturities of the fixed deposits with licensed banks range from Nil to 3.25% (31.7.2018: Nil to 3.25%; 1.8.2017: Nil) and 30 to 365 (31.7.2018: 30 to 365; 1.8.2017: 365) days respectively.

13. CASH AND BANK BALANCES

Included in the cash and bank balances of the Group is an amount of RM1,344,000 (31.7.2018: RM15,932,000; 1.8.2017: RM1,529,000) maintained under the designated Housing Development Accounts pursuant to the Housing Development (Control and Licensing) Act, 1966 and Housing Regulations, 1991 in connection with a subsidiary company’s development projects. The utilisation of these balances are restricted before completion of the housing development projects and fulfilling all relevant obligations to the purchasers, such that the cash only can be withdrawn from such accounts for the purpose of completing the particular projects.

14. ASSETS HELD FOR SALE

The assets held for sale at the end of the reporting period of the Group and of the Company are as follows:

Group 31.7.2019 31.7.2018 1.8.2017 Note RM’000 RM’000 RM’000 Freehold land and buildings (a), (b), (c) 18,107 14,513 3,532 Leasehold land and buildings (c) - - 5,055

18,107 14,513 8,587

Company 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 Investment in a subsidiary company - - 5,000 (a) Freehold land and building classified as assets held for sale as at 31 July 2019

(i) During the current financial year, SYF, a wholly-owned subsidiary company of the Company, entered into a sale and purchase agreement with a third party for the disposal of freehold land and building for a total consideration of RM10,800,000 as disclosed in Note 41.

The disposal is pending completion as at 31 July 2019 and thus, the property, plant and equipment have been presented separately in the statements of financial position as assets held for sale.

Since the fair value less cost of disposal exceeded the net carrying amount, no impairment loss is recognised.

The disposal has been completed as at the date of this report.

(ii) In the financial year ended 31 July 2018, TSB, a direct wholly-owned subsidiary company of the Company, entered into a sale and purchase agreement with a third party for the disposal of freehold land and buildings for a total consideration of RM10,000,000.

The disposal has yet to be completed as at the date of this report.



14. ASSETS HELD FOR SALE (CONT’D)

(b) Freehold land and buildings classified as assets held for sale as at 31 July 2018

(i) During the financial ended 31 July 2018, SYF, a direct wholly-owned subsidiary company of the Company, entered into a sale and purchase agreement with a third party for the disposal of freehold land and building for a total consideration of RM6,300,000.

The disposal has been completed during the financial year ended 31 July 2019.

(ii) During the financial ended 31 July 2018, TSB, a direct wholly-owned subsidiary company of the Company, entered into a sale and purchase agreement with a third party for the disposal of freehold land and buildings for a total consideration of RM10,000,000.

The disposal has yet to be completed as at the date of this report.

(c) Freehold and leasehold land and buildings classified as assets held for sale as at 1 August 2017

During the financial year ended 31 July 2017, SYF, a direct wholly-owned subsidiary company of the Company, entered into two separate sale and purchase agreements with third parties for the disposal of freehold and leasehold land and buildings for total consideration of RM12,848,522.

The disposals have been completed during the financial year ended 31 July 2018.

15. DISPOSAL GROUP HELD FOR SALE AND DISCONTINUED OPERATION

On 26 July 2017, the Company has entered into a conditional share sale agreement with Mieco Chipboard Berhad (“Mieco”) for the disposal of its entire equity interest in GPSB, comprising its entire Boards segment for RM7,063,000 together with the settlement by Mieco of the amount due from GPSB to the Company amounting to RM51,529,000 for a total cash consideration of RM58,592,000.

The disposal of GPSB is pending completion as at 31 July 2017, and thus the assets and liabilities of GPSB have been presented separately in the statements of financial position as a disposal group held for sale and the results of GPSB is presented separately in the statements of profit or loss and other comprehensive income as discontinued operation. The carrying amount of the investment in GPSB has also been presented as assets held for sale on the Company’s statement of financial position as at 31 July 2017.

(a) The major classes of assets, liabilities and related assets revaluation reserve of GPSB included in disposal group held for sale and discontinued operation as at 31 July 2017 are as follows:

Statements of Financial Position

Group 1.8.2017 RM’000 Assets Property, plant and equipment 133,566 Inventories 11,404 Trade receivables 3,825 Other receivables 4,401 Tax recoverable 14 Fixed deposit with a licenced bank 2,000 Cash and bank balances 5,573 Assets included in disposal group held for sale and discontinued operation 160,783



15. DISPOSAL GROUP HELD FOR SALE AND DISCONTINUED OPERATION (CONT’D)

(a) The major classes of assets, liabilities and related assets revaluation reserve of GPSB included in disposal group held for sale and discontinued operation as at 31 July 2017 are as follows: (Cont’d)

Statements of Financial Position (Cont’d)

Group 1.8.2017 RM’000 Liabilities Trade payables 6,324 Other payables 18,899 Finance lease liabilities 7,926 Bank overdraft 1,893 Bank borrowings 49,205 Deferred tax liabilities 1,118 Liabilities included in disposal group held for sale and discontinued operation 85,365 Net assets directly associated with disposal group held for sale and discontinued operation 75,418 Reserve Assets revaluation reserve 2,070

(b) The results of GPSB and the result recognised on the remeasurement of disposal group are as follows:

Statements of Profit or Loss and Other Comprehensive Income

Group 2018 Note RM’000 Revenue 24 47,853 Cost of sales 25 (47,047)

Gross profit 806 Other income 194 Distribution expenses (1,615) Administrative expenses (1,329) Finance costs 26 (2,908)

Loss before tax (4,852) Taxation 28 (273)

Loss from discontinued operation (5,125) The loss from discontinued operation is attributable entirely to the owners of the Company.



15. DISPOSAL GROUP HELD FOR SALE AND DISCONTINUED OPERATION (CONT’D)

(c) Statements of Cash Flows

Cash flows attributable to GPSB are as follows:

Group 2018 RM’000 Net cash used in operating activities (24,061) Net cash used in investing activities (20,693) Net cash from financing activities 40,688

Effect on cash flows (4,066)

(d) Effect on disposal on the financial position of the Group

On 27 February 2018, the Company completed the disposal of its entire equity interest in GPSB for a cash consideration of RM7,063,000, which had resulted a gain of RM3,372,000.

The effect of the disposal of GPSB on the financial position of the Group as at the date of disposal was as follows:

Group 31.7.2018 RM’000 Property, plant and equipment (150,993) Inventories (19,141) Trade and other receivables (10,743) Tax recoverable (14) Fixed deposit with a licenced bank (2,000) Cash and bank balances (1,585) Trade and other payables 76,630 Finance lease liabilities 6,779 Bank overdraft 1,971 Bank borrowings 94,022 Deferred tax liabilities 1,383

Total net assets disposed (3,691) Gain on disposal (3,372)

Proceeds from disposal (7,063) Less: Cash and cash equivalents disposed 1,614

Net cash inflows from disposal (5,449)



16. SHARE CAPITAL

Group/Company Number of shares Amount 31.7.2019 31.7.2018 31.7.2019 31.7.2018 Units (‘000) Units (‘000) RM’000 RM’000 Issued and fully paid ordinary shares At 1 August/31 July 619,239 619,239 154,810 154,810 The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All

ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company’s residual assets. In respect of the Company’s treasury shares that are held by the Company, all rights are suspended until those shares are reissued.

17. TREASURY SHARES

Group/Company Number of shares Amount 31.7.2019 31.7.2018 31.7.2019 31.7.2018 Units (‘000) Units (‘000) RM’000 RM’000 At 1 August 6,524 10 (1,957) (5) Own shares acquired 17,234 6,514 (3,713) (1,952)

At 31 July 23,758 6,524 (5,670) (1,957)

The shareholders of the Company, by a resolution passed in the last Annual General Meeting held on 8 January 2019, renewed their approval for the Company’s plan to repurchase its own shares. The Directors of the Company are committed to enhance the value of the Company for its shareholders and believe that the repurchase plan can be applied in the best interest of the Company and its shareholders.

The Company has the right to resell these shares at a later date. As treasury shares, the rights attached as to voting, dividends and participation in other distribution are suspended.

During the financial year, the Company repurchased 17,234,000 of its issued share capital from the open market at an average price of RM0.22 per share. The total consideration paid for the shares repurchased, including transaction costs, was RM3,713,000. The repurchased transactions were financed by internally generated funds. The ordinary shares repurchased are held as treasury shares in accordance with Section 127 of the Companies Act, 2016 in Malaysia.



18. RESERVES

Group 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 Non-distributable: Assets revaluation reserve 38,911 42,170 46,503 Distributable: Retained earnings 52,685 101,305 118,275 91,596 143,475 164,778 Company 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 Distributable: Retained earnings 6,557 25,410 34,592

Assets revaluation reserve

Assets revaluation reserve arose from the revaluation of freehold and leasehold land and buildings of the subsidiary companies, net of tax, and are not available for distribution as dividends to the shareholders.

The movement of assets revaluation reserve are as follows:

Group 31.7.2019 31.7.2018 RM’000 RM’000 At 1 August 42,170 46,503 Realisation of assets revaluation reserve (411) (425) Recognised in other comprehensive income (239) - Disposal of freehold and leasehold land and buildings (2,609) (3,908)

At 31 July 38,911 42,170



19. FINANCE LEASE LIABILITIES

Group 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 Minimum lease payments Repayable within one year 976 1,605 2,651 Repayable between one and two years 578 974 1,456 Repayable between two and five years 223 760 1,523 1,777 3,339 5,630 Less: Future finance charges (101) (228) (451) Present value of minimum lease payments 1,676 3,111 5,179 Present value of minimum lease payments Repayable within one year 904 1,475 2,403 Repayable between one and two years 554 905 1,341 Repayable between two and five years 218 731 1,435 1,676 3,111 5,179 Analysed as: Repayable within twelve months 904 1,475 2,403 Repayable after twelve months 772 1,636 2,776 1,676 3,111 5,179 Finance lease liabilities are secured by the followings:

(a) charge over the Group’s leased assets as disclosed in Note 4(b); and

(b) corporate guarantee by the Company.

Interest is charged at rates ranging from 2.26% to 3.60% (31.7.2018: 2.26% to 4.00%; 1.8.2017: 1.52% to 4.00%) per annum.

Finance lease liabilities of the Group amounting to RM274,000 (31.7.2018: RM371,000; 1.8.2017: RM503,000) are in relation to assets held in trust under the name of a Director of the Company.



20. BANK BORROWINGS

Group 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 Secured Bank overdrafts 7,456 10,837 31,688 Bills payables 41,863 42,821 39,626 Bridging loans - - 2,446 Term loans 14,422 21,318 21,492 63,741 74,976 95,252 Non-current Term loans 10,530 18,129 18,630 Current Bank overdrafts 7,456 10,837 31,688 Bills payables 41,863 42,821 39,626 Bridging loans - - 2,446 Term loans 3,892 3,189 2,862 53,211 56,847 76,622 63,741 74,976 95,252 The bank overdrafts, bills payables, bridging loans and term loans are secured by the followings:

(a) legal charge over freehold land and buildings of certain subsidiary companies as disclosed in Note 4(a);

(b) fixed deposits of subsidiary companies as disclosed in Note 12;

(c) fixed charge created over the Group’s assets;

(d) legal charge over a vacant commercial land of a company in which certain Directors of the Company have substantial financial interests;

(e) Specific debenture incorporated fixed and floating charge on a development project undertaken by a subsidiary company on part of the project land held under HS(D) 161991, PT37789, Mukim Semenyih, Daerah Ulu Langat, Negeri Selangor; and

(f) corporate guarantee by the Company.



20. BANK BORROWINGS (CONT’D)

Maturity of the bank borrowings are as follows:

Group 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 Within one year 53,211 56,847 76,622 Between one and two years 4,151 4,757 3,040 Between two and three years 3,421 5,049 4,569 Between three and four years 1,487 4,357 4,858 Between four and five years 303 2,461 4,122 After five years 1,168 1,505 2,041 63,741 74,976 95,252 Range of interest rates at the end of the reporting period are as follows:

Group 31.7.2019 31.7.2018 1.8.2017 % % % Bank overdrafts 7.85 7.15 - 7.85 7.15 - 7.85 Bills payables 3.47 - 8.51 3.13 - 8.51 3.35 - 8.15 Bridging loans - - 7.15 Term loans 4.99 - 8.25 4.99 - 8.35 4.65 - 7.72

21. DEFERRED TAX LIABILITIES

Group 31.7.2019 31.7.2018 Note RM’000 RM’000 At 1 August 12,849 12,246 Recognised in profit or loss 28 (8,144) 603 Acquisition of a subsidiary company 7(a) 7,158 -

At 31 July 11,863 12,849



21. DEFERRED TAX LIABILITIES (CONT’D)

The net deferred tax liabilities and assets shown on the statements of financial position after appropriate offsetting are as follows:

Group 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 Deferred tax liabilities 20,761 13,884 13,372 Deferred tax assets (8,898) (1,035) (1,126) 11,863 12,849 12,246 The components and movements of the deferred tax liabilities and assets are as follows:

Deferred tax liabilities of the Group:

Accelerated Other capital Revaluation Intangible temporary allowances surplus asset differences Total RM’000 RM’000 RM’000 RM’000 RM’000 At 1 August 2018 5,950 7,934 - - 13,884 Recognised in profit or loss (220) (215) - - (435) Arising from acquisition of a subsidiary company - - 7,158 - 7,158 Under provision in prior year 154 - - - 154 At 31 July 2019 5,884 7,719 7,158 - 20,761 At 1 August 2017 5,685 8,047 - (360) 13,372 Recognised in profit or loss 528 (113) - 360 775 Over provision in prior year (263) - - - (263) At 31 July 2018 5,950 7,934 - - 13,884



21. DEFERRED TAX LIABILITIES (CONT’D)

The components and movements of the deferred tax liabilities and assets are as follows: (Cont’d)

Deferred tax assets of the Group:

Other Unutilised Unutilised temporary capital reinvestment Unused differences allowances allowances tax losses Total RM’000 RM’000 RM’000 RM’000 RM’000 At 1 August 2018 (418) (281) (61) (275) (1,035) Recognised in profit or loss (1,501) (648) (34) (5,412) (7,595) Under provision in prior year (2) (151) (55) (60) (268)

At 31 July 2019 (1,921) (1,080) (150) (5,747) (8,898) At 1 August 2017 (139) - - (987) (1,126) Recognised in profit or loss (264) (281) (61) 740 134 Under provision in prior year (15) - - (28) (43)

At 31 July 2018 (418) (281) (61) (275) (1,035) Deferred tax assets and liabilities have not been recognised in respect of the following items:

Group 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 Deferred tax assets Unutilised capital allowances 4,209 1,912 - Unused tax losses 32,043 13,513 3,708

36,252 15,425 3,708 Deferred tax liabilities Accelerated capital allowances - - (63)

36,252 15,425 3,645

Company 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 Deferred tax asset Unused tax losses 2,357 1,965 2,086

The deferred tax assets have not been recognised in respect of the above temporary differences as they may

not have sufficient taxable profits to be used to offset or they have arisen from subsidiary companies that have recent history of losses.



22. TRADE PAYABLES

Group 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 Restated Restated Trade payables 9,794 23,855 34,200 Retention sum 5,879 7,163 307

15,673 31,018 34,507

Landowners’ entitlement - Related parties - - 2,129 - Third parties 235 6,532 9,682

235 6,532 11,811

15,908 37,550 46,318 Related parties represent companies in which certain Directors of the Company have substantial financial

interest.

The normal trade credit term granted to the Group range from 1 to 90 days (31.7.2018: 1 to 90 days; 1.8.2017: 1 to 90 days) depending on the terms of the contracts.

23. OTHER PAYABLES

Group 31.7.2019 31.7.2018 1.8.2017 Note RM’000 RM’000 RM’000 Restated Restated Other payables - Related parties 20,835 562 43 - Third parties 6,925 13,756 19,560

27,760 14,318 19,603 Accruals 17,841 8,596 17,936 Deposits (a), (b), (c) 14,941 2,584 2,280 Provision for liquidated ascertained damages (d) 639 2,160 - GST payable - - 29

61,181 27,658 39,848



23. OTHER PAYABLES (CONT’D)

Company 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 Other payables 223 17 84 Accruals 177 176 205

400 193 289

Related parties represent companies in which certain Directors of the Company have substantial financial interest.

(a) Included in the deposits of the Group as at 31 July 2019 are deposits of RM14,853,000 received from purchasers for the proposed disposal of freehold land and buildings as disclosed in Notes 14(a)(i) and 14(a)(ii).

(b) Included in the deposits of the Group as at 31 July 2018 are deposits of RM1,630,000 received from purchasers for the disposal of freehold land and buildings as disclosed in Notes 14(b)(i) and 14(b)(ii).

(c) Included in the deposits of the Group as at 1 August 2017 are deposits of RM1,284,852 received from the purchasers for the disposal of freehold and leasehold land and buildings as disclosed in Note 14(c).

(d) The movement in provision for liquidated ascertained damages is as follow:

Group 31.7.2019 31.7.2018 RM’000 RM’000 At 1 August 2,160 - Current year provision 2,500 3,747 Payment made (4,021) (1,587)

At 31 July 639 2,160

Provision for liquidated ascertained damages refer to liquidated ascertained damages expected to be claimed by the purchasers based on the terms of the applicable sale and purchase agreements.



24. REVENUE

Group Company 2019 2018 2019 2018 Note RM’000 RM’000 RM’000 RM’000 Restated Revenue from contracts with customers Continuing operations Sale of goods 166,339 174,131 - - Sale of completed properties 421 1,366 Property development 75,048 75,265 - - Management fees from subsidiary companies - - 130 147

241,808 250,762 130 147 Discontinued operation Sale of goods 15(b) - 47,853 - -

241,808 298,615 130 147

Revenue from other sources Dividend income - - - 2,983

241,808 298,615 130 3,130 Timing of revenue recognition At a point in time 171,131 223,350 130 147 Over time 70,677 75,265 - -

Total revenue from contracts with customers 241,808 298,615 130 147

Disaggregation of the Group’s revenue from contracts with customers:

Continuing operations Property development Rubberwood and furniture construction Total RM’000 RM’000 RM’000 2019 Major goods and services Sale of goods 166,339 - 166,339 Sale of completed properties - 421 421 Property development - 75,048 75,048

166,339 75,469 241,808



24. REVENUE (CONT’D)

Disaggregation of the Group’s revenue from contracts with customers: (Cont’d)

Continuing operations Property development Rubberwood and furniture construction Total RM’000 RM’000 RM’000 2019 Geographical market Malaysia 82,686 75,469 158,155 Asia Pacific and other Asian countries 20,668 - 20,668 Europe 2,125 - 2,125 North America 41,130 - 41,130 Others 19,730 - 19,730

166,339 75,469 241,808 Timing of revenue recognition At a point in time 166,339 421 166,760 Over time - 75,048 75,048

Total revenue from contracts with customers 166,339 75,469 241,808

Discontinued Continuing operations operation Property development Rubberwood and furniture construction Boards Total RM’000 RM’000 RM’000 RM’000 2018 (Restated) Major goods and services Sale of goods 174,131 - 47,853 221,984 Sale of completed properties - 1,366 - 1,366 Property development - 75,265 - 75,265

174,131 76,631 47,853 298,615 Geographical market Malaysia 94,263 76,631 47,853 218,747 Asia Pacific and other Asian countries 18,749 - - 18,749 Europe 2,649 - - 2,649 North America 36,804 - - 36,804 Others 21,666 - - 21,666

174,131 76,631 47,853 298,615



24. REVENUE (CONT’D)

Disaggregation of the Group’s revenue from contracts with customers: (Cont’d)

Discontinued Continuing operations operation Property development Rubberwood and furniture construction Boards Total RM’000 RM’000 RM’000 RM’000 2018 (Restated) Timing of revenue recognition At a point in time 174,131 1,366 47,853 223,350 Over time - 75,265 - 75,265

Total revenue from contracts with customers 174,131 76,631 47,853 298,615

25. COST OF SALES

Group 2019 2018 Note RM’000 RM’000 Restated Continuing operations Cost of goods sold 202,768 167,613 Cost of completed properties 424 1,355 Property development 72,296 70,845

275,488 239,813

Discontinued operation Sale of goods 15(b) - 47,047

275,488 286,860



26. FINANCE COSTS

Group 2019 2018 Note RM’000 RM’000 Continuing operations Interest expenses on: Bank overdrafts 881 3,161 Bills payables 2,465 2,385 Bridging loans - 141 Term loans 1,466 1,501 Finance lease liabilities 144 269

4,956 7,457

Discontinued operation Interest expenses on: 15(b) Bank overdraft - 76 Bills payables - 321 Term loans - 2,181 Finance lease liabilities - 330

- 2,908

4,956 10,365 27. (LOSS)/PROFIT BEFORE TAX

(Loss)/Profit before tax is derived at after charging/(crediting):

Group Company 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000 Restated Continuing operations and discontinued operation Auditors’ remuneration - Statutory audit - Current year 135 132 40 40 - Under/(Over) provision in prior years 3 (6) - - - Other 5 9 3 9 Bad debts written off on: - Amount due from an unconsolidated subsidiary company 23 - 8 - - Trade receivables 27 701 - - Deposits written off 67 - - - Depreciation of property, plant and equipment 6,389 11,201 - - - Continuing operations 6,389 7,935 - - - Discontinued operation - 3,266 - -



27. (LOSS)/PROFIT BEFORE TAX (CONT’D)

(Loss)/Profit before tax is derived at after charging/(crediting): (Cont’d)

Group Company 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000 Restated Continuing operations and discontinued operation (Cont’d) Inventories written down 8,004 181 - - Inventories written off 12,961 - - - Impairment losses on: - Amount due from a subsidiary company - - - 15 - Investment in a subsidiary company - - 10,038 4,000 - Property, plant and equipment 307 - - - - Trade receivables - 102 - - Non-executive Directors’ remuneration - Fees 114 114 114 114 - Allowances 44 32 44 32 Property, plant and equipment written off 124 550 - - Provision for liquidated ascertained damages 2,500 3,747 - - Rental of land and premises - A subsidiary company - - 72 72 - Company’s Director 190 383 - - - Third parties 1,392 1,678 - - Rental of machinery and equipment - 28 - - Waiver of late payment interest income 83 - - - Interest income (560) (297) - (47) - Continuing operations (560) (295) - (47) - Discontinued operation - (2) - - Gain on disposal of: - Assets held for for sale (1,330) (4,261) - (2,063) - Property, plant and equipment (1,418) (156) - - - Disposal group held for sale and discontinued operation - (3,372) - - Bargain purchase gain on acquisition of a subsidiary company [Note 7(a)] (2,694) - - - Gain on struck off of a subsidiary companies [Note 7(c)] (24) - - - Loss/(Gain) on foreign exchange - Realised 28 341 - - - Unrealised 10 (745) - - - Continuing operations 10 (553) - - - Discontinued operation - (192) - - Rental income of building (63) - - - Reversal of impairment losses on trade receivables (5) - - - Reversal of inventories written down (752) - - -



28. TAXATION

Group Company 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000 Tax expenses recognised in profit or loss Malaysian income tax Current tax provision - 60 - 11 Under/(Over) provision in prior years 8 471 (2) - 8 531 (2) 11 Real property gain tax 199 506 - - Deferred tax (Note 21) Relating to origination and reversal of temporary differences (7,955) 1,174 - - Arising from revaluation decrease of leasehold land (75) - - - Over provision in prior years (114) (306) - - (8,144) 868 - - (7,937) 1,905 (2) 11 Presented as: Tax expenses attributable to continuing operations - Income tax 8 523 (2) 11 - Real property gain tax 199 506 - - - Deferred tax (8,144) 603 - - (7,937) 1,632 (2) 11 Tax expenses attributable to discontinued operation [Note 15(b)] - Income tax - 8 - - - Deferred tax - 265 - - - 273 - - Total (7,937) 1,905 (2) 11



28. TAXATION (CONT’D)

Malaysian income tax is calculated at the statutory tax rate of 24% (2018: 24%) of the estimated assessable profits for the financial year.

A reconciliation of income tax expenses applicable to (loss)/profit before tax at the statutory income tax rate to income tax expenses at the effective income tax rate of the Group and of the Company are as follows:

Group Company 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000 Restated (Loss)/Profit before tax - Continuing operations (52,013) (7,327) (11,291) 118 - Discontinued operation - (4,852) - - (52,013) (12,179) (11,291) 118 At Malaysian statutory tax rate of 24% (2018: 24%) (12,483) (2,923) (2,710) 28 Income not subject to tax (960) (1,985) - (1,211) Expenses not deductible for tax purposes 490 3,289 2,616 1,105 Double tax relief - (72) - - Deferred tax assets not recognised 4,998 3,642 94 89 Deferred tax liabilities not recognised due to pioneer status - (717) - - Real property gain tax 199 506 - - Reversal of deferred tax liabilities arising from revaluation decrease of leasehold land (75) - - - Under/(Over) provision of income tax in prior years 8 471 (2) - Over provision of deferred tax in prior years (114) (306) - -

Tax expenses for the financial year (7,937) 1,905 (2) 11 Tax savings arising from tax losses:

Group 2019 2018 RM’000 RM’000 Income tax arising from utilisation of prior year losses not recognised - 664 The Group and the Company have the following estimated unutilised capital allowances, unutilised

reinvestment allowances and unused tax losses available for set-off against future taxable profits. The said amounts are subject to approval by the tax authorities.



28. TAXATION (CONT’D)

Group 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 Unutilised capital allowances - Continuing operations 8,709 3,711 - - Discontinued operation - - 9,208 8,709 3,711 9,208 Unutilised reinvestment allowances - Continuing operations 626 485 - Unused tax losses - Continuing operations 55,987 14,907 7,933 - Discontinued operation - - 7,349 55,987 14,907 15,282 65,322 19,103 24,490 Company 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 Unused tax losses 2,357 1,965 2,086

29. LOSS PER SHARE

(a) Basic loss per share

The basic loss per share is calculated based on the consolidated loss for the financial year attributable to the owners of the parent and the weighted average number of ordinary shares in issue during the financial year as follows:

Group 2019 2018 Loss attributable to the owners of parent (RM’000) - From continuing operations (44,076) (8,959) - From discontinued operation - (5,125)

Loss attributable to the owners of parent for basic earnings (RM’000) (44,076) (14,084) Weighted average number of ordinary shares in issue (in thousand of shares) 619,239 619,239 Basic loss per ordinary share (sen) - From continuing operations (7.1) (1.4) - From discontinued operation - (0.8) (7.1) (2.2)



29. LOSS PER SHARE (CONT’D)

(b) Diluted loss per share

Diluted loss per share is calculated based on the adjusted consolidated loss for the financial year attributable to the owners of the parent and the weighted average number of ordinary shares in issue during the financial year has been adjusted for the dilutive effects of all potential ordinary shares as follows:

Group 2019 2018 Loss attributable to the owners of parent (RM’000) - From continuing operations (44,076) (8,959) - From discontinued operation - (5,125)

Loss attributable to the owners of parent for basic earnings (RM’000) (44,076) (14,084) Weighted average number of ordinary shares used in the calculation of basic earnings per share (in thousands of shares) 619,239 619,239 Adjusted for: Assumed exercise of ESOS at no consideration (in thousand of shares) * 1,978 Warrants * *

619,239 621,217 Diluted loss per share (sen) - From continuing operations (7.1) (1.4) - From discontinued operation - (0.8)

(7.1) (2.2)

* The number of shares under ESOS and warrants was not taken into account in the computation of diluted loss per share as the ESOS and warrants do not have any dilutive effect on weighted average number of ordinary shares.

30. DIVIDENDS

Group and Company 2019 2018 RM’000 RM’000 Dividends recognised as distribution to ordinary shareholders of the Company: First and final single tier dividend of RM0.015 per ordinary share paid in respect of the financial year ended 31 July 2017 - 9,289 First interim single tier dividend of RM0.0125 per ordinary share paid in respect of the financial year ended 31 July 2019 7,564 - 7,564 9,289

The Directors do not recommend any final dividend for the current financial year.



31. STAFF COSTS

Group Company 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000 Salaries, wages and other emoluments 33,160 42,386 240 240 Defined contribution plans 990 1,291 29 29 Social security contributions 78 103 1 1 Voluntary separation scheme 1,294 - - - Other benefits 1,508 2,130 - - 37,030 45,910 270 270 Analysed as: Staff costs attributable to continuing operations 37,030 41,021 270 270 Staff costs attributable to discontinued operation - 4,889 - - 37,030 45,910 270 270 Included in the staff costs above is aggregate amount of remuneration received/receivable by the Executive

Directors of the Group and of the Company during the financial year as below:

Group Company 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000 Continuing operations Salaries, wages and other emoluments 2,795 2,775 240 215 Defined contribution plans 335 333 29 26 Social security contributions 4 4 1 1 3,134 3,112 270 242

32. EMPLOYEES’ SHARE OPTION SCHEME

At an extraordinary general meeting held on 1 March 2012, the Company’s shareholders approved the establishment of an ESOS of not more than 15% of the issued share capital of the Company at the point in time throughout the duration of the scheme to eligible Directors and employees of the Group.

The ESOS became effective for a period of five years from 11 May 2012 to 8 April 2017, and extended for another five years until 8 April 2022.

The salient features and other terms of the ESOS are as follows:

(a) Eligible employees are those who have been confirmed in writing as employees of the Group and must have completed service for a continuous period of at least one year.

(b) The option is personal to the grantee and is non-assignable.



32. EMPLOYEES’ SHARE OPTION SCHEME (CONT’D)

The salient features and other terms of the ESOS are as follows: (Cont’d)

(c) The option price shall be at a discount of not more than ten percent from the weighted average of the market price of the Company’s ordinary shares as shown in the daily official list issued by Bursa Malaysia Securities Berhad for the five trading days preceding the respective dates of the offer in writing to the grantee or at the par value of the ordinary shares of the Company, whichever is higher.

(d) The options granted may be exercised by the grantee by notice in writing to the Company in the prescribed form from time to time during the option period in respect of all or any part of the Company’s shares comprised in the option, provided that where an option is exercised in respect of a part of the new ordinary shares comprised therein, the number of the Company’s shares of which such option may be exercised shall not be less than one hundred and shall be in multiples of one hundred.

(e) Subject to any adjustments that may be made in accordance with the by-laws of the ESOS, the price payable for the exercise of an option under the ESOS shall be determined by the Option Committee at its discretion based on the five (5)-day weighted average market price of the underlying Company’s shares at the time the option is offered by the Option Committee with a discount of not more than ten percent (10%), if deemed appropriate, or the par value of the Company’s shares, whichever is higher.

Movements in the number of share options outstanding are as follows:

Number of Share Options Exercised Forfeited Outstanding during the during the Outstanding Exercisable at 1 August financial year financial year at 31 July at 31 July Unit (‘000) Unit (‘000) Unit (‘000) Unit (‘000) Unit (‘000) 31.7.2019 ESOS 6,310 - - 6,310 6,310 31.7.2018 ESOS 6,310 - - 6,310 6,310 Details of share options outstanding at the end of the reporting period are as follows:

Share Options Exercise price Exercise periods RM

31.7.2019 ESOS 0.25 9.4.2017 - 8.4.2022

31.7.2018 ESOS 0.25 9.4.2017 - 8.4.2022



32. EMPLOYEES’ SHARE OPTION SCHEME (CONT’D)

The fair value of share options granted was estimated by the management using Black-Scholes-Merton model, taking into account the terms and conditions upon which the options were granted. The fair value of share options measured at grant date and the assumptions are as follows:

31.7.2019 31.7.2018 1.8.2017 Fair value of share options (RM) 0.44 0.44 0.44 Weighted average share price (RM) 0.483 0.483 0.483 Weighted average exercise price (RM) 0.250 0.250 0.250 Expected volatility (%) 4.160 4.160 4.160 Expected option life (years) 5 5 5 Risk-free interest rate, p.a. (%) 3.456 3.456 3.456

The expected life of the share options is based on historical data and is not necessarily indicative of exercise patterns that may occur in the future. The expected volatility is based on the historical volatility, adjusted for unusual or extraordinary volatility arising from certain economic or business occurrences which is not reflective of its long term average level. While the expected volatility is assumed to be indicative of future trends, it may not necessarily be the actual outcome. No other features of the option grant were incorporated into the measurement of fair value.

Executive Directors of the Group and of the Company and other members of key management have been

granted the following number of options under the ESOS:

Group Company 31.7.2019 31.7.2018 31.7.2019 31.7.2018 Unit (‘000) Unit (‘000) Unit (‘000) Unit (‘000) ESOS At 1 August/31 July 5,279 5,279 3,000 3,000

33. WARRANTS

On 18 December 2014, the Company issued 305,432,000 bonus shares together with 305,432,000 free detachable warrants on the basis of one (1) new warrant for every one (1) bonus share of RM0.25 each. The Company executed the Deed Poll constituting the warrants and the issue price and exercise price of the warrants have been fixed at RM0.25 and RM0.70 each respectively.

The warrants may be exercised at any time commencing on the date of issue of warrants on 18 December 2014 but not later than 11 December 2019. Any warrants which have not been exercised at date of maturity will lapse and cease to be valid for any purpose.

The new ordinary shares allotted and issued upon exercise of the warrants shall rank pari passu in all respect with the existing ordinary shares of the Company, save and except that they shall not be entitled to any dividends, rights, allotments and/or other distributions, the entitlement date of which is prior to the date of allotment of the new ordinary shares arising from exercise of the warrants.

As at 31 July 2019, the total number of warrants that remain unexercised were 305,432,000 (31.7.2018: 305,432,000; 1.8.2017: 305,432,000).



34.

RE

CO

NC

ILIA

TIO

N O

F LI

AB

ILIT

IES

AR

ISIN

G F

RO

M F

INA

NC

ING

AC

TIV

ITIE

S

Th

e ta

ble

bel

ow s

how

the

det

ails

cha

nges

in t

he li

abili

ties

of th

e G

roup

aris

ing

from

fina

ncin

g a

ctiv

ities

, inc

lud

ing

bot

h ca

sh a

nd n

on-c

ash

chan

ges

:

No

n-ca

sh c

hang

es

Liab

iliti

es

Dis

po

sal

incl

uded

of

dis

po

sal

in d

isp

osa

l

gro

up h

eld

g

roup

hel

d

for

sale

and

fo

r sa

le a

nd

Fina

ncin

g

dis

cont

inue

d

New

fina

nce

Fore

ign

dis

cont

inue

d

A

t c

ash

o

per

atio

n le

ase

exch

ang

e o

per

atio

n A

t

1 A

ugus

t

flo

ws

(i)

[No

te 1

5(d

)] [N

ote

4(g

)] ad

just

men

t [N

ote

15(

a)]

31

July

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

Gro

up

31

.7.2

019

Fi

nanc

e le

ase

liab

ilitie

s 3

,111

(1

,845

) -

4

10

-

-

1,6

76

B

ank

bor

row

ing

s 6

4,13

9

(7,8

54)

-

-

-

-

56,

285

B

ank

over

dra

fts

10,

837

(3

,381

) -

-

-

-

7

,456

31.7

.201

8

Fina

nce

leas

e lia

bili

ties

5,1

79

(3,6

66)

(6,7

79)

451

-

7

,926

3

,111

Ban

k b

orro

win

gs

63,

564

4

5,82

7

(94,

022)

-

(4

35)

49,

205

6

4,13

9

Ban

k ov

erd

raft

s 3

1,68

8

(20,

773)

(1

,971

) -

-

1

,893

1

0,83

7

(i)

The

cash

flow

s fr

om lo

ans

and

bor

row

ing

s m

ake

up th

e ne

t am

ount

of p

roce

eds

from

or r

epay

men

t of fi

nanc

e le

ase

liab

ilitie

s, b

ank

over

dra

fts,

b

ills

pay

able

s, b

ridg

ing

loan

s an

d t

erm

loan

s in

the

sta

tem

ents

of c

ash

flow

s.



35. FINANCIAL GUARANTEES

Group 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 Continuing operations Bank guarantees issued by licensed banks in favour of third parties 6,255 5,734 4,476 Discontinued operation Bank guarantees issued by licensed banks in favour of third parties - - 1,657 6,255 5,734 6,133 Company 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 Continuing operations Corporate guarantees given to licensed bank and financial institutions for banking facilities granted to subsidiary companies 71,502 83,046 164,827 The Group and the Company have assessed the financial guarantee contracts and concluded that the

guarantees are more likely not to be called upon by the banks and accordingly not recognised as financial liability as at 31 July 2019.

36. COMMITMENTS

Group 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 Capital commitment Approved and contracted for: Discontinued operation - Purchase of property, plant and equipment - - 28,068 Operating lease commitment - As lessee Continuing operations Future minimum lease payments - Within one year 218 218 190 - Between one and two years 29 218 190 - Between two and five years 41 70 190 288 506 570 The Group has entered into commercial lease for certain of its land and premises. These leases have tenure

of 3 years (31.7.2018: 3 years; 1.8.2017: 3 years) with a renewal option included in the contracts. There are no restrictions placed upon the Group by entering into these leases.



37. RELATED PARTY DISCLOSURES

(a) Identifying related parties

For the purposes of these financial statements, parties are considered to be related to the Group if the Group or the Company 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 or the Company and the party are subject to common control. Related parties may be individuals or other entities.

Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel include all the Directors of the Group and certain members of senior management and chief executive officers of major subsidiary companies of the Group.

(b) Significant related party transactions

Other than related party balances disclosed elsewhere in the financial statements, the Group and the Company have the following transactions with related parties during the financial year:

2019 2018 RM’000 RM’000 Group Transaction with a Director Rental paid 190 383 Transactions with companies in which certain Directors of the Company are also the Director and/or shareholder that have substantial financial interests Sales 16,204 11,801 Purchases 6,794 3,168 Rental paid/payable 516 275 Sales commission received/receivable 57 - Landowner’s entitlement paid/payable - 2,245 Project management fee received/receivable - 2,400 Provision of corporate services - 150 Company Transactions with subsidiary companies Management fee received/receivable 130 147 Rental paid/payable 72 72

(c) Compensation of key management personnel

Information regarding compensation of key management personnel is as follows:

Group Company 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000 Short-term employee benefits 4,951 4,550 383 387



38. SEGMENT INFORMATION

For management purposes, the main business segments of the Group comprise the followings:

Rubberwood furniture Manufacture and trading of rubberwood furniture and component parts Property development and Property development and construction construction Boards (Discontinued operation) Manufacture and trading of particle board and medium-density board Others Investment holding and others

Except as indicated above, no operating segments have been aggregated to form the above reporting operating segments.

Performance is measured based on segment profit before tax, interest and depreciation, as included in the internal management reports that are reviewed by the Chief Executive Officer, who is the Group’s chief operating decision maker. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries.

Transactions between segments are carried out on agreed terms between both parties. The effects of such inter-segment transactions are eliminated on consolidation. The measurement basis and classification are consistent with those adopted in the previous financial year.

Segment assets

Segment assets information is neither included in the internal management reports nor provided regularly to the Chief Executive Officer. Hence no disclosure is made on segment assets.

Segment liabilities

Segment liabilities information is neither included in the internal management reports nor provided regularly to the Chief Executive Officer. Hence no disclosure is made on segment liabilities.



38. SEGMENT INFORMATION (CONT’D)

Continuing operations Property Per development Adjustments consolidated Rubberwood and Total and financial furniture construction Others segments eliminations statements RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 2019 Revenue External customers 166,339 75,469 - 241,808 - 241,808 Inter-segment 12,162 12,138 130 24,430 (24,430) - Total revenue 178,501 87,607 130 266,238 (24,430) 241,808 Results Segment results (39,483) (12,101) (12,845) (64,429) 16,812 (47,617) Interest income 99 461 - 560 - 560 Finance costs (4,211) (159) (586) (4,956) - (4,956) (Loss)/Profit before tax (43,595) (11,799) (13,431) (68,825) 16,812 (52,013) Taxation 7,918 (1) 78 7,995 (58) 7,937 (Loss)/Profit for the financial year (35,677) (11,800) (13,353) (60,830) 16,754 (44,076) Asset Addition to non-current assets 943 138 - 1,081 - 1,081 Non-cash expenses/ (income) Bad debts written off on: - Amount due from an unconsolidated subsidiary company - - 8 8 15 23 - Trade receivables 27 - - 27 - 27 Deposits written off 67 - - 67 - 67 Depreciation of property, plant and equipment 3,477 2,905 7 6,389 - 6,389 Impairment losses on investment in a subsidiary company - - 10,038 10,038 (10,038) - Impairment losses on property, plant and equipment - - 307 307 - 307 Inventories written down 8,004 - - 8,004 - 8,004 Inventories written off 12,961 - - 12,961 - 12,961 Property, plant and equipment written off 124 - - 124 - 124 Provision for liquidated ascertained damages - 2,500 - 2,500 - 2,500 Unrealised loss on foreign exchange 10 - - 10 - 10 Waiver of late payment interest income - 83 - 83 - 83 Gain on disposal of: - Assets held for sale (1,330) - - (1,330) - (1,330) - Property, plant and equipment (1,214) (204) - (1,418) - (1,418) Bargain purchase gain on acquisition of a subsidiary company - - - - (2,694) (2,694) Gain on struck off of a subsidiary company - - - - (24) (24) Reversal of impairment losses on trade receivables (5) - - (5) - (5) Reversal of inventories written down (752) - - (752) - (752)




Discontinued Continuing operations operation Per Property Adjustments consolidated Rubberwood development Total and financial furniture and construction Others Boards segments eliminations statements RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 2018 (Restated) Revenue External customers 174,131 76,631 - 47,853 298,615 (47,853) A 250,762 Inter-segment sales 17,032 45,708 3,130 - 65,870 (65,870) B - Total revenue 191,163 122,339 3,130 47,853 364,485 (113,723) 250,762 Results Segment results 3,295 (7,244) 21 (1,946) (5,874) 3,763 (2,111) Interest income 144 103 48 2 297 - 297 Finance costs (4,138) (2,736) (583) (2,908) (10,365) - (10,365) (Loss)/Profit before tax (699) (9,877) (514) (4,852) (15,942) 3,763 (12,179) Taxation (1,382) (97) (10) (273) (1,762) (143) (1,905) (Loss)/Profit for the financial year (2,081) (9,974) (524) (5,125) (17,704) 3,620 (14,084) Asset Addition to non-current assets 1,550 1,192 - 20,693 23,435 - 23,435 Non-cash expenses/ (income) Bad debts written off on trade receivables 701 - - - 701 - 701 Depreciation of property, plant and equipment 4,233 3,695 7 3,266 11,201 - 11,201 Impairment losses on: - Amount due from a subsidiary company - - 15 - 15 (15) - - Investment in a subsidiary company - - 4,000 - 4,000 (4,000) - - Trade receivables 102 - - - 102 - 102 Inventories written down 181 - - - 181 - 181 Property, plant and equipment written off 550 - - - 550 - 550 Provision for liquidated ascertained damages - 3,747 - - 3,747 - 3,747 Unrealised gain on foreign exchange (553) - - (192) (745) - (745) Gain/(Loss) on disposal of: - Assets held for sale (4,261) - - - (4,261) - (4,261) - Property, plant and equipment 99 (255) - - (156) - (156) - Disposal group held for sale and discontinued operation - - (3,372) - (3,372) - (3,372)




Adjustments and eliminations

(A) The amounts relating to the boards segment have been excluded from the revenue and is presented separately in the statements of profit or loss and other comprehensive income within one line item as “profit from discontinued operation, net of tax”.

(B) Inter-segment revenue are eliminated on consolidation.

Reconciliation of profit

Per consolidated Continuing financial operations statements RM’000 RM’000 2019 Segment loss (64,429) (64,429) Interest income 560 560 Finance costs (4,956) (4,956) Inter-segment sales elimination 2,657 2,657 Bad debts written off on amount due from a unconsolidated subsidiary company (15) (15) Bargain purchase gain on acquisition of a subsidiary company 2,694 2,694 Gain on struck off of a subsidiary company 24 24 Impairment losses on: - Amount due from a subsidiary company 10,038 10,038 - Investment in a subsidiary company 1,414 1,414 Loss before tax (52,013) (52,013) Per consolidated Continuing Discontinued financial operations operation statements RM’000 RM’000 RM’000 2018 (Restated) Segment loss (3,928) (1,946) (5,874) Interest income 295 2 297 Finance costs (7,457) (2,908) (10,365) Inter-segment sales elimination (252) - (252) Impairment losses on: - Amount due from a subsidiary company 15 - 15 - Investment in a subsidiary company 4,000 - 4,000 Loss before tax (7,327) (4,852) (12,179)




Geographical segments

Revenue and addition to non-current assets information based on the geographical location of customers and assets respectively are as follows:

Addition to Revenue non-current assets 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000 Restated Group Continuing operations Malaysia 158,155 170,894 1,081 2,742 Asia Pacific and other Asian countries 20,668 18,749 - - Europe 2,125 2,649 - - North America 41,130 36,804 - - Others * 19,730 21,666 - - 241,808 250,762 1,081 2,742

* No further segregation as no individual overseas country contributed more than 10% of the consolidated operating revenue or assets.

Major customer

Revenue from one major customer amounted to RM31,632,000 (2018: Nil), arising from sales in the rubberwood furniture segment.

39. FINANCIAL INSTRUMENTS

(a) Classification of financial instruments

Financial assets and financial liabilities are measured on an ongoing basis either at fair value or at amortised cost. The principal accounting policies in Note 3 describe how the classes of financial instruments are measured, and how income and expense, including fair value gains and losses, are recognised.



39. FINANCIAL INSTRUMENTS (CONT’D)

(a) Classification of financial instruments (Cont’d)

The following table analyses the financial assets and liabilities in the statements of financial position by the class of financial instruments to which they are assigned, and therefore by the measurement basis:

Financial Financial assets liabilities measured at measured at amortised amortised cost cost Total RM’000 RM’000 RM’000 Group 31.7.2019 Financial Assets Trade receivables 92,134 - 92,134 Other receivables 6,790 - 6,790 Fixed deposits with licensed banks 5,528 - 5,528 Cash and bank balances 29,969 - 29,969 134,421 - 134,421 Financial Liabilities Trade payables - 15,908 15,908 Other payables - 61,181 61,181 Finance lease liabilities - 1,676 1,676 Bank borrowings - 63,741 63,741 - 142,506 142,506 31.7.2018 Financial Assets Trade receivables 42,062 - 42,062 Other receivables 25,083 - 25,083 Fixed deposits with licensed banks 12,603 - 12,603 Cash and bank balances 33,582 - 33,582 113,330 - 113,330 Financial Liabilities Trade payables - 37,550 37,550 Other payables - 27,658 27,658 Finance lease liabilities - 3,111 3,111 Bank borrowings - 74,976 74,976 - 143,295 143,295





The following table analyses the financial assets and liabilities in the statements of financial position by the class of financial instruments to which they are assigned, and therefore by the measurement basis: (Cont’d)

Financial Financial assets liabilities measured at measured at amortised amortised cost cost Total RM’000 RM’000 RM’000 Group 1.8.2017 Financial Assets Trade receivables 26,331 - 26,331 Other receivables 8,743 - 8,743 Fixed deposits with licensed banks 2,135 - 2,135 Cash and bank balances 7,414 - 7,414 44,623 - 44,623 Financial Liabilities Trade payables - 46,318 46,318 Other payables - 39,819 39,819 Finance lease liabilities - 5,179 5,179 Bank borrowings - 95,252 95,252 - 186,568 186,568 Company 31.7.2019 Financial Assets Amount due from subsidiary companies 101,456 - 101,456 Cash and bank balances 289 - 289 101,745 - 101,745 Financial Liabilities Other payables - 400 400 Amount due to subsidiary companies - 7,115 7,115 - 7,515 7,515





The following table analyses the financial assets and liabilities in the statements of financial position by the class of financial instruments to which they are assigned, and therefore by the measurement basis: (Cont’d)

Financial Financial assets liabilities measured at measured at amortised amortised cost cost Total RM’000 RM’000 RM’000 Company 31.7.2018 Financial Assets Amount due from subsidiary companies 111,182 - 111,182 Cash and bank balances 566 - 566 111,748 - 111,748 Financial Liabilities Other payables - 193 193 Amount due to subsidiary companies - 4,808 4,808 - 5,001 5,001 1.8.2017 Financial Assets Amount due from subsidiary companies 139,100 - 139,100 Cash and bank balances 206 - 206 139,306 - 139,306 Financial Liabilities Other payables - 289 289 Amount due to subsidiary companies - 30,122 30,122 - 30,411 30,411

(b) Financial risk management objectives and policies

The Group’s financial risk management policy is to ensure that adequate financial resources are available for the development of the Group’s operations whilst managing its credit, liquidity, foreign currency and interest rate risks. The Group operates within clearly defined guidelines that are approved by the Board and the Group’s policy is not to engage in speculative transactions.




(b) Financial risk management objectives and policies (Cont’d)

The following sections provide details regarding the Group’s exposure to the abovementioned financial risks and the objectives, policies and processes for the management of these risks.

(i) Credit risk

Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from its receivables from customers and deposits with banks and financial institutions. The Company’s exposure to credit risk arises principally from amount due from subsidiary companies and financial guarantees given to banks and financial institutions for credit facilities granted to subsidiary companies. There are no significant changes as compared to prior periods.

The Group has adopted a policy of only dealing with creditworthy counterparties. Management has a credit policy in place to control credit risk by dealing with creditworthy counterparties and deposits with banks and financial institutions with good credit rating. The exposure to credit risk is monitored on an ongoing basis and action will be taken for long outstanding debts.

The Company provides unsecured advances to its subsidiary companies. It also provides unsecured financial guarantees to banks for banking facilities granted to certain subsidiary companies. The Company monitors on an ongoing basis the results of the subsidiary companies and repayments made by the subsidiary companies.

At each reporting date, the Group assesses whether any of the receivables and contract assets are credit impaired.

The gross carrying amounts of credit impaired trade receivables and contract assets are written off (either partial or full) when there is no realistic prospect of recovery. This is generally the case when the Group determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. Nevertheless, trade receivables and contract assets that are written off could still be subject to enforcement activities.

The carrying amounts of the financial assets recorded on the statements of financial position at the end of the reporting period represents the Group’s and the Company’s maximum exposure to credit risk except for financial guarantees provided to banks and financial institutions for banking facilities granted to certain subsidiary companies.

The Company’s maximum exposure to credit risk is RM71,502,000 (31.7.2018: RM83,046,000; 1.8.2017: RM164,827,000), representing the outstanding banking facilities of the subsidiary companies as at the end of the reporting period. There was no indication that any subsidiary company would default on repayment as at the end of the reporting period. There are no significant changes as compared to previous financial years.

At the end of the reporting period, the Group’s credit exposures are concentrated mainly on 5 (31.7.2018: 5; 1.8.2017: 7) debtors, which accounted for 7% (31.7.2018: 22%; 1.8.2017: 10%) of total trade receivables at the end of the reporting period. The Company has no significant concentration of credit risks except for advances to its subsidiary companies where risks of default have been assessed to be low.





(ii) Liquidity risk

Liquidity risk refers to the risk that the Group or the Company will encounter difficulty in meeting its financial obligations as they fall due. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities.

The Group’s and the Company’s funding requirements and liquidity risk are managed with the objective of meeting business obligations on a timely basis. The Group finances its liquidity through internally generated cash flows and minimises liquidity risk by keeping committed credit lines available.

The following table analyses the remaining contractual maturity for financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group and the Company can be required to pay.

On demand Total Total or within 1 to 2 2 to 5 After 5 contractual carrying 1 year years years years cash flows amount RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Group 31.7.2019 Non-derivative financial liabilities Trade payables 15,908 - - - 15,908 15,908 Other payables 61,181 - - - 61,181 61,181 Finance lease liabilities 976 578 223 - 1,777 1,676 Bank borrowings 54,133 4,741 5,805 1,333 66,012 63,741 132,198 5,319 6,028 1,333 144,878 142,506 31.7.2018 Non-derivative financial liabilities Trade payables 37,550 - - - 37,550 37,550 Other payables 27,658 - - - 27,658 27,658 Finance lease liabilities 1,605 974 760 - 3,339 3,111 Bank borrowings 58,193 5,846 13,197 1,794 79,030 74,976 125,006 6,820 13,957 1,794 147,577 143,295 1.8.2017 Non-derivative financial liabilities Trade payables 46,318 - - - 46,318 46,318 Other payables 39,819 - - - 39,819 39,819 Finance lease liabilities 2,651 1,456 1,523 - 5,630 5,179 Bank borrowings 77,886 4,126 15,159 2,084 99,255 95,252 166,674 5,582 16,682 2,084 191,022 186,568





(ii) Liquidity risk (Cont’d)

The following table analyses the remaining contractual maturity for financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group and the Company can be required to pay. (Cont’d)

On demand Total Total or within contractual carrying 1 year cash flows amount RM’000 RM’000 RM’000 Company 31.7.2019 Non-derivative financial liabilities Other payables 400 400 400 Amount due to subsidiary companies 7,115 7,115 7,115 Financial guarantees * 71,502 71,502 - 79,017 79,017 7,515 31.7.2018 Non-derivative financial liabilities Other payables 193 193 193 Amount due to subsidiary companies 4,808 4,808 4,808 Financial guarantees * 83,046 83,046 - 88,047 88,047 5,001 1.8.2017 Non-derivative financial liabilities Other payables 289 289 289 Amount due to subsidiary companies 30,122 30,122 30,122 Financial guarantees * 164,827 164,827 - 195,238 195,238 30,411

* Being corporate guarantee granted to banks and financial institutions for banking facilities of certain subsidiary companies, which will only encashed in the event of default by these companies.





(iii) Market risks

(a) Foreign currency risk

The Group is exposed to foreign currency risk on transactions that are denominated in currencies other than the respective functional currencies of Group entities. The currencies giving rise to this risk are primarily United States Dollar (“USD”) and Chinese Renminbi (“RMB”).

The Group has not entered into any derivative instruments for hedging or trading purposes. Where possible, the Group will apply natural hedging by selling and purchasing in the same currency. However, the exposure to foreign currency risk is monitored from time to time by management.

The carrying amounts of the Group’s foreign currency denominated financial assets and financial liabilities at the end of the reporting period are as follows:

Denominated in USD Total RM’000 RM’000 Group 31.7.2019 Financial assets Trade receivables 3,752 3,752 Cash and bank balances 204 204 Financial liabilities Other payables (1,161) (1,161) 2,795 2,795

Denominated in USD RMB Total RM’000 RM’000 RM ‘000 Group 31.7.2018 Financial assets Trade receivables 3,234 - 3,234 Fixed deposits with licensed banks 2,030 - 2,030 Cash and bank balances 260 2 262 Financial liabilities Other payables (1,542) - (1,542) Bills payables (6,144) - (6,144) (2,162) 2 (2,160)





(iii) Market risks (Cont’d)

(a) Foreign currency risk (Cont’d) Denominated in USD RMB Total RM’000 RM’000 RM ‘000 Group 1.8.2017 Financial assets Trade receivables 2,570 - 2,570 Fixed deposits with licensed banks 2,135 - 2,135 Cash and bank balances 541 8 549 Financial liabilities Other payables (3,375) (8) (3,383) Bills payables (8,596) - (8,596) (6,725) - (6,725)

Foreign currency risk sensitivity Foreign currency risk arises from Group entities which have a RM functional currency. The

exposure to currency risk of Group entities which do not have a RM functional currency is not material and hence, sensitivity analysis is not presented.

The following table demonstrates the sensitivity of the Group’s loss before tax to a reasonably

possible change in the USD and RMB exchange rates against RM with all other variables held constant.

Effects on loss before tax 2019 2018 RM’000 RM’000 Change in currency rate USD - Strengthen by 10% (2018: 10%) 280 (216) - Weaken by 10% (2018: 10%) (280) 216






(b) Interest rate risk

The Group’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates.

The Group’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates.

The Group manages its interest rate risk exposure from interest bearing borrowings by obtaining financing with the most favourable interest rates in the market. The Group constantly monitors its interest rate risk by reviewing its debts portfolio to ensure favourable rates are obtained. The Group does not utilise interest rate swap contracts for trading or speculative purposes.

The carrying amounts of the Group’s financial instruments that are exposed to interest rate risk are as follows:

Group 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 Fixed rate instruments Financial assets Fixed deposits with licensed banks 5,528 12,603 2,135 Financial liabilities Finance lease liabilities (1,676) (3,111) (5,179) Floating rate instruments Financial liabilities Bank overdrafts (7,456) (10,837) (31,688) Bills payables (41,863) (42,821) (39,626) Bridging loans - - (2,446) Term loans (14,422) (21,318) (21,492) (63,741) (74,976) (95,252)

Interest rate risk sensitivity analysis

Fair value sensitivity analysis for fixed rate instruments

The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, a change in interest rates at the end of reporting period would not affect profit or loss.






(b) Interest rate risk (Cont’d)

Interest rate risk sensitivity analysis (Cont’d)

Cash flow sensitivity analysis for floating rate instruments

A change in 1% interest rate at the end of the reporting period would have increased/(decreased) the Group’s loss before tax by RM637,000 (2018: RM749,000) arising mainly as a result of higher/lower interest expense on floating rate loans and borrowings. This analysis assumes that all other variable remain constant. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.

(c) Fair value of financial instruments

The carrying amounts of short-term receivables and payables, cash and cash equivalents and short-term loans and borrowings approximate their fair value due to the relatively short-term nature of these financial instruments and insignificant impact of discounting.

The carrying amount of long-term floating rate loans and borrowings approximate their fair value as the loans and borrowings will be re-priced to market interest rate on or near reporting date.

It was not practicable to estimate the fair value of investment in unquoted equity due to the lack of comparable quoted prices in an active market and the fair value cannot be reliably measured.

The table below analyses financial instruments not carried at fair value for which fair value is disclosed, together with their carrying amounts show in the statements of financial position.

Fair value of financial instruments Carrying not carried at fair value amount Level 1 Level 2 Level 3 RM’000 RM’000 RM’000 RM’000 Group 31.7.2019 Financial liabilities Finance lease liabilities (non-current) - 743 - 772 31.8.2018 Financial liabilities Finance lease liabilities (non-current) - 1,560 - 1,636 1.8.2017 Financial liabilities Finance lease liabilities (non-current) - 2,153 - 2,776




(c) Fair value of financial instruments (Cont’d)

(i) Policy on transfer between levels

The fair value of an asset to be transferred between levels is determined as of the date of the event or change in circumstances that caused the transfer.

There were no transfers between levels during current and previous financial years.

(ii) Level 1 fair value

Level 1 fair value is derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

(iii) Level 2 fair value

Level 2 fair value is estimated using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Non-derivative financial instruments

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period.

(iv) Level 3 fair value

Level 3 fair value for the financial assets and liabilities are estimated using unobservable inputs.

40. 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.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.



40. CAPITAL MANAGEMENT (CONT’D)

The Group monitors capital using a gearing ratio. The Group’s policy is to maintain a prudent level of gearing ratio that complies with debt covenants. The gearing ratios at the end of the reporting period are as follows:

Group 31.7.2019 31.7.2018 1.8.2017 RM’000 RM’000 RM’000 Total loans and borrowings 65,417 78,087 100,431 Less: Cash and bank balances (29,969) (33,582) (7,414)

Net debts 35,448 44,505 93,017 Total equity 240,736 296,328 321,653 Gearing ratio (times) 0.15 0.15 0.29 Gearing ratio is not applicable to the Company as the Company has no loans and borrowings.

There were no changes in the Group’s approach to capital management during the financial year.

The Group is not subject to any externally imposed capital requirements.

41. SIGNIFICANT EVENTS

During the financial year, the following significant events took place for the subsidiary companies:

(a) Seng Yip Furniture Sdn. Bhd. (“SYF”)

During the financial year, SYF, a direct wholly-owned subsidiary company of the Company, entered into a sale and purchase agreement with ISK Land Sdn. Bhd. for the disposal of freehold land and building held under GM 614, Lot No. 90, Pekan Batu 23, Sungai Lalang, District of Hulu Langat, State of Selangor for a total consideration of RM10,800,000.

The disposal is completed as at the date of this report.

(b) Tomisho Sdn. Bhd. (“TSB”)

During the financial year, TSB, a direct wholly-owned subsidiary company of the Company, entered into a sale and purchase agreement with Reiko Furniture Sdn. Bhd. for the disposal of machineries and equipment for a total consideration of RM2,300,000. The disposal is completed during the financial year.

42. SUBSEQUENT EVENT

On 7 November 2019, the Company announced that it intends to undertake a renounceable rights issue of up to 451,723,359 Rights Shares together with up to 451,723,359 Warrants on the basis of 1 Rights Share and 1 Warrant for every 2 existing shares held on the entitlement date to be determined later at an issue price of RM0.19 per Rights Share.



43. EXPLANATION OF TRANSITION TO MFRSs

As disclosed in Note 2(a), these are the first financial statements of the Group and of the Company prepared in accordance with MFRS Framework.

The accounting policies set out in Note 3 have been applied in preparing the financial statements of the Group and of the Company for the financial year ended 31 July 2019, the comparative information presented in these financial statements for the financial year ended 31 July 2018 and the preparation of the opening MFRS statements of financial position at 1 August 2017 (the Group’s and the Company’s date of transition to MFRSs).

In preparing the opening statements of financial position at 1 August 2017, the Group and the Company have adjusted amounts reported previously in financial statements prepared in accordance with previous FRSs.

An explanation of how the transition from previous FRSs to MFRSs has affected the Group’s and the Company’s financial position, financial performance and cash flows set out as follows:

(i) MFRS 9 Financial Instruments (IFRS 9 issued by IASB in July 2014)

The adoption of MFRS 9 resulted in changes in accounting policies and adjustments to the financial statements.

The accounting policies that relate to the recognition, classification, measurement and derecognition of financial instruments and impairment of financial assets are amended to comply with the provisions of this Standard, while the hedge accounting requirements under this Standard are not relevant to the Group and to the Company.

The Group and the Company applied MFRS 9 retrospectively, and have elected to restate the comparative periods in the financial year of initial adoption.

(a) Classification of financial assets and liabilities

Financial assets

MFRS 9 contains three (3) principal classification categories for financial assets:

(i) measured at amortised cost (“AC”); (ii) fair value through other comprehensive income (“FVTOCI”); and (iii) fair value through profit or loss (“FVTPL”).

The standard replaces the existing FRS 139 Financial Instruments: Recognition and Measurement categories of loans and receivables, held-to-maturity and available-for-sale. Classification under MFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flows characteristics.

Financial liabilities

MFRS 9 largely retains the existing requirements in FRS 139 for the classification of financial liabilities. There were no changes to the classification and measurement of financial liabilities to the Group and to the Company.



43. EXPLANATION OF TRANSITION TO MFRSs (CONT’D)

An explanation of how the transition from previous FRSs to MFRSs has affected the Group’s and the Company’s financial position, financial performance and cash flows set out as follows: (Cont’d)

(i) MFRS 9 Financial Instruments (IFRS 9 issued by IASB in July 2014) (Cont’d)

(b) Impairment

MFRS 9 requires impairment assessments to be based on an Expected Credit Loss (“ECL”) model, replacing the incurred loss model under FRS 139. The Group and the Company are required to record ECL on all of its debt instruments, loans and receivables, either on a 12-months or lifetime basis. The Group and the Company applied the simplified approach and records lifetime expected losses on all receivables. Based on readily information as at the date of this report, the Group and the Company do not expect any significant increase in impairment losses.

(c) Effect of changes in classification and measurement of financial assets of the Group and of the Company on 31 July 2018 and 1 August 2017

MFRS 9 measurement As at category 31.7.2018 Remeasurement - Amortised cost RM’000 RM’000 RM’000 MFRS 139 measurement category Group Financial assets Loans and receivables Trade receivables 42,072 (10) 42,062 Other receivables which are financial assets 25,071 12 25,083 Fixed deposits with licensed banks 12,603 - 12,603 Cash and bank balances 33,582 - 33,582 113,328 2 113,330 MFRS 9 measurement As at category 1.8.2017 Remeasurement - Amortised cost RM’000 RM’000 RM’000 MFRS 139 measurement category Group Financial assets Loans and receivables Trade receivables 26,334 (3) 26,331 Other receivables which are financial assets 8,743 - 8,743 Fixed deposits with licensed banks 2,135 - 2,135 Cash and bank balances 7,414 - 7,414 44,626 (3) 44,623






(c) Effect of changes in classification and measurement of financial assets of the Group and of the Company on 31 July 2018 and 1 August 2017 (Cont’d)

MFRS 9 measurement As at category 31.7.2018 Remeasurement - Amortised cost RM’000 RM’000 RM’000 MFRS 139 measurement category Company Financial assets Loans and receivables Amount due from subsidiary companies 111,182 - 111,182 Cash and bank balances 566 - 566 111,748 - 111,748 MFRS 9 measurement As at category 1.8.2017 Remeasurement - Amortised cost RM’000 RM’000 RM’000 MFRS 139 measurement category Company Financial assets Loans and receivables Amount due from subsidiary companies 139,100 - 139,100 Cash and bank balances 206 - 206 139,306 - 139,306






(c) Effect of impairment allowances on 1 August 2018 and 1 August 2017

Group RM’000

Impairment of financial assets Balances under MFRS 139 as at 31 July 2018 169 Impairment losses on trade receivables 10 Balance under MFRS 9 as at 1 August 2018 179

Balances under MFRS 139 as at 31 July 2017 335 Impairment losses on trade receivables 3

Balance under MFRS 9 as at 1 August 2017 338

(ii) MFRS 15 Revenue from Contracts with Customers

MFRS 15 establishes a five-step model that will apply to recognition of revenue arising from contracts with customers, and provide a more structured approach in measuring and recognising revenue. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The core principle in MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to the customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

The Group and the Company applied MFRS retrospectively, and have elected to restate the comparative periods in the financial year of initial adoption.

(a) Incremental costs

The Group previously recognised the commission expenses paid to sales agents in profit or loss as incurred as administrative and operating expenses. Under MFRS 15, these commission expenses had been capitalised and expensed by reference to the progress towards complete satisfaction of the performance obligation.

(b) Accounting for consideration payable to customer

The Group offers promotions to its customers and recognised these as promotion costs in profit or loss as incurred. Under MFRS 15, consideration payable to customers are accounted for as a reduction of the transaction price and therefore, of revenue.

Certain comparative figures in the statements of profit or loss and other comprehensive income have been reclassified to align the classification of cost of sales and expense line items across the Group.





(ii) MFRS 15 Revenue from Contracts with Customers (Cont’d)

Impact arising from the adoption of MFRS 9 and MFRS 15 on the Group’s financial statements are as follows:


As previously MFRS 9 MFRS 15 As stated adjustments adjustments restated RM RM RM RM Group 31.7.2018 Non-Current Assets Land and property development costs 16,770 - (16,770) - Inventories - - 16,770 16,770 Current Assets Land and property development costs 34,097 - (34,097) - Inventories 76,619 - 33,741 110,360 Contract assets - - 75,574 75,574 Trade receivables 116,209 (10) (74,137) 42,062 Equity Reserves 142,553 (10) 932 143,475 Current Liabilities Trade payables 37,385 - 165 37,550 Other payables 27,674 - (16) 27,658 1.8.2017 Non-Current Assets Land and property development costs 13,247 - (13,247) - Inventories - - 13,247 13,247 Current Assets Inventories 64,776 - 19,184 83,960 Contract assets - - 165,634 165,634 Trade receivables 185,897 (3) (159,563) 26,331 Equity Reserves 163,896 (3) 885 164,778 Current Liabilities Trade payables 45,653 - 665 46,318 Other payables 39,113 - 735 39,848





(ii) MFRS 15 Revenue from Contracts with Customers (Cont’d)

Impact arising from the adoption of MFRS 9 and MFRS 15 on the Group’s financial statements: (Cont’d)

Statements of Profit or Loss and Other Comprehensive Income

As previously MFRS 9 MFRS 15 As stated adjustments adjustments restated RM RM RM RM Group 2018 Revenue 255,746 - (4,984) 250,762 Cost of sales (240,560) - 747 (239,813) Selling and distribution expenses (8,889) - 4,284 (4,605) Administrative expenses (19,685) 95 - (19,590) Net loss on impairment of financial instruments - (102) - (102) Statements of Cash Flows

As previously MFRS 9 MFRS 15 As stated adjustments adjustments restated RM RM RM RM Group 2018 Cash flows from operating activities Loss before tax - Continuing operations (7,367) (7) 47 (7,327) Adjustments for: Impairment losses on trade receivables 95 7 - 102 Changes in working capital: Land and property development costs (14,650) - 14,650 - Inventories (19,761) - (18,080) (37,841) Contract assets - - 90,059 90,059 Trade receivables 69,709 (7) (85,419) (15,717) Trade payables (11,864) - (500) (12,364) Other payables 41,595 - (750) 40,845 The adoption of MFRS 9 and MFRS 15 have no financial impact on the Company’s financial statements.



44. COMPARATIVE INFORMATION

The following reclassifications were made to the financial statements of prior year to be consistent with current year presentation.


As previously As stated Reclassification restated RM RM RM Group 31.7.2018 Current Assets Other receivables 30,703 12 30,715 Cash and bank balances 33,594 (12) 33,582 Statements of Cash Flows

As previously As stated Reclassification restated RM RM RM Group 2018 Cash flows from operating activities Changes in working capital: Other receivables (20,420) (12) (20,432) Net increase in cash and cash equivalents 43,351 (12) 43,339 Cash and cash equivalents at the end of the financial year comprises: Cash and bank balances 33,594 (12) 33,582

45. DATE OF AUTHORISATION FOR ISSUE

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 21 November 2019.

This Page is intentionally left blank.

I/We ……………………………………………………………. NRIC/Company No. …………..............……………………….....… (Full Name in block letters)

of …………………………………………………………………………………………….......…........…………………………………........ (Full address)

being a member(s) of SYF RESOURCES BERHAD hereby appoint ........................………………………………………….......

……………………………….……………….……………….…………........................……NRIC No. ……….......……………….....… (Full Name in block letters)

of………………………………………………………………………………............……………………………......… or failing whom, (Full address)

……………………………….……………….……………….…………........................……NRIC No. ……….......……………….....… (Full name in block letters)

of………………………………………………………………………………............……………………………......….......................... (Full address) or failing him/her, the Chairman of the Meeting as my/our proxy to attend and vote for me/us on my/our behalf at the Twenty-Fourth (24th) Annual General Meeting of the Company to be held at Emerald 1 Room, RHR Hotel @ Kajang, Wisma MKH, Jalan Semenyih, 43000 Kajang, Selangor on Wednesday, 8 January 2020 at 10.00 a.m. and at any adjournment thereof.

The proportion of *my/our holding to be represented by *my/our proxies are as follows:

First Proxy (1) __________%_

Second Proxy (2) __________%_

My/Our proxy is to vote as indicated below:-

No. Agenda Resolutions FOR AGAINST

1 To approve the payment of Directors’ Fees to the Non-Executive Directors of the Company up to RM114,000 for the financial year ended 31 July 2019.

Ordinary Resolution 1

2 To approve the payment of Directors’ Benefits to the Non-Executive Directors of the Company up to an amount of RM70,000 from 9 January 2020 until the conclusion of the next AGM of the Company.


3 Re-election of Datuk Mohamed Arsad Bin Sehan Ordinary Resolution 3

4 Re-election of Ng Wei Ping Ordinary Resolution 4

5 Re-appointment of Messrs. UHY as Auditors for the ensuing year and to authorise the Directors to fix their remuneration.


6 Authority to Issue and Allot Shares pursuant to Sections 75 and 76 of the Companies Act 2016.


7 Proposed Renewal of RRPT Mandate Ordinary Resolution 7

8 Proposed Renewal of Share Buy-Back Authority Ordinary Resolution 8

Please indicate with an “X” in the spaces provided how you wish your vote to be cast. If no specific instruction is given on the voting, the proxy/proxies will vote or abstain from voting on the resolution at his/her discretion.

Dated this__________day of ___________________2019/2020

Form Of Proxy[Registration No. 199501035170 (364372-H)]

(Incorporated in Malaysia)

No. of Shares HeldCDS Account No.Tel No. (during office hours) …..........………………..................................................

Signature/Common Seal of Shareholder

The Share Registrar Tricor Investor & Issuing House Services Sdn Bhd

Unit 32-01, Level 32, Tower AVertical Business Suite

Avenue 3, Bangsar South No. 8, Jalan Kerinchi 59200 Kuala Lumpur

STAMP

Fold here

Fold here

NOTES :

1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint one (1) or more proxies to attend, vote and speak in his stead at the same meeting. A proxy may but need not be a member of the Company.

2. Where a member of the Company appoints more than one (1) proxy to attend and vote at the same meeting, the member shall specify the proportion of his/her shareholdings to be represented by each proxy, failing which the appointments shall be invalid.

3. Where a member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds. An Exempt Authorised Nominee refers to an authorised nominee defined under the Securities Industry (Central Depositories) Act 1991 (“SICDA”) which is exempted from compliance with the provisions of subsection 25A(1) of SICDA.

4. If the appointor is a corporation, the instrument appointing a proxy must be executed under its Common Seal or under the hand of an officer or attorney duly authorised.

5. The instrument appointing a proxy shall be signed by the appointor or of his/her attorney duly authorised in writing or, if the appointor is a corporation, either under its Common Seal or under the hand of an officer or attorney duly authorised.

6. The instrument appointing a proxy or the power of attorney or other authority, if any, under which it is signed or notarially certified copy of that power of attorney or authority, shall be deposited at the Share Registrar of the Company, Tricor Investor & Issuing House Services Sdn Bhd of Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur not less than 48 hours before the time set for holding the meeting or any adjournment thereof. You can also have the option to submit the proxy appointment electronically via TIIH Online at website https://tiih.online before the proxy form submission cut-off time as mentioned in the above. For further information on the electronic submission of proxy form, kindly refer to the Annexure to Proxy Form.

7. For the purpose of determining a member who shall be entitled to attend this meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to make available to the Company a Record of Depositors as at 27 December 2019 and only a depositor whose name appears on such Record of Depositors shall be entitled to attend, speak and vote at this meeting and entitled to appoint proxy or proxies.

8. Pursuant to Paragraph 8.29A(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, all the Resolutions set out in this Notice will be put to vote by poll.

1. EXPLANATORY NOTES ON ORDINARY BUSINESS

Explanatory Note A - Audited Financial Statements for The Financial Year Ended 31 July 2019

This agenda item is meant for discussion only as Section 340(1) (a) of the Companies Act, 2016 provide that the audited financial statements are to be laid in the general meeting and do not require a formal approval of the shareholders. Hence, this Agenda item is not put forward for voting.

2. EXPLANATORY NOTES ON SPECIAL BUSINESS

Ordinary Resolution 6 – Authority to Issue and Allot Shares Pursuant to Sections 75 and 76 of the Companies Act, 2016

Ordinary Resolution No. 6, if passed, will empower the Directors of the Company to issue and allot new shares at any time to such persons, in their absolute discretion, deem fit (“General Mandate”), provided that the number of shares issued pursuant to this General Mandate, when aggregated with the nominal value of any such shares issued during the preceding twelve (12) months, does not exceed 10% of the total issued share capital of the Company at the time of issue. This renewed General Mandate, unless revoked or varied at a general meeting, will expire at the conclusion of the next AGM of the Company.

With this renewed General Mandate, the Company will be able to raise funds expeditiously for the purpose of funding future investment, working capital and/or acquisition(s) at any time without convening a general meeting as it would be both costs and time consuming to organize a general meeting.

As at the date of this Notice, no new shares in the Company were issued pursuant to the General Mandate granted to the Directors at the Twenty-Third (23rd) AGM held on 8 January 2019 and which will lapse at the conclusion of the Twenty-Fourth (24th) AGM.

Ordinary Resolution 7 – Proposed Renewal of RRPT Mandate

Ordinary Resolution 7, if passed, will allow the Company and/or its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature with those related parties as set out in Statement/Circular to Shareholders dated 29 November 2019, which are necessary for the day-to-day operations of the Company and/or its subsidiaries, subject to the transactions being carried out in the ordinary course of business of the Company and/or its subsidiaries and on normal commercial terms which are generally available to the public and not detrimental to the minority shareholders of the Company.


Ordinary Resolution 8 – Proposed Renewal of Share Buy-Back Authority

Ordinary Resolution 8, if passed, will empower the Directors to purchase the Company’s shares through Bursa Securities up to ten percent (10%) of the issued and paid-up capital of the Company for the time being. This authority will be expired at the conclusion of the next Annual General Meeting unless earlier revoked or varied by ordinary resolution passed by shareholders at a general meeting.


This Page is intentionally left blank.

SYF RESOURCES BERHAD[Registration No. 199501035170 (364372-H)]

Kawasan Perindustrian Sungai Lalang, Lot 974, Mukim Semenyih, Jalan Sungai Lalang43500 Semenyih, Selangor Darul Ehsan.

T 603 8211 1119 F 603 8727 1810 www.syf.com.my

annual report - syf · 7 corporate information 8 corporate structure 9 5-year financial highlights...

Documents