corporation berhad (company no. 805792-x) homeritz corporation berhad (company no. 805792-x) ......

CORPORATION BERHAD (Company No. 805792-X)

Annual Report 2017

HOMERITZ CORPORATION BERHAD(Company No. 805792-X)

Contents

Corporate Structure

100% 100% 100%HOME UPHOLSTERY

INDUSTRIES SDN BHD (“HUI”)

EMBRACE INDUSTRIES SDN BHD (“EISB”)

U. S. FURNITURE MANUFACTURING SDN BHD (“USF”)

01 Corporate Information

02 Managing Director’s Statement

04 Financial Highlights

05 Management Discussion And Analysis

10 Board Of Directors’ Profile

12 Statement On Corporate Social Responsibility

13 Statement On Corporate Governance

26 Additional Compliance Information

27 Audit Committee Report

29 Statement On Risk Management And Internal Control

32 Profiles Of Key Senior Management

32 Statement On Directors’ Responsibilities

33 Directors’ Report

38 Statement By Directors

38 Statutory Declaration

39 Independent Auditors’ Report

42 Statements Of Financial Position

43 Statements Of Profit Or Loss And Other Comprehensive Income

44 Statements Of Changes In Equity

45 Statements Of Cash Flows

47 Notes To The Financial Statements

87 List Of Properties

89 Analysis Of Shareholdings

91 Analysis Of Warrants Holdings

93 Notice Of Annual General Meeting

96 Statement Accompanying Notice Of Annual General Meeting

Form Of Proxy

BOARD OF DIRECTORS

CHUA FEN FATT(Managing Director)

TEE HWEE ING(Executive Director)

MOHD KHASAN BIN AHMAD(Independent Non-Executive Director)

DATUK TAY PUAY CHUAN(Independent Non-Executive Director)

TEO SENG KUANG(Independent Non-Executive Director)

AUDIT COMMITTEE

ChairmanMohd Khasan Bin Ahmad(Independent Non-Executive Director)

MembersDatuk Tay Puay Chuan (Independent Non-Executive Director)Teo Seng Kuang(Independent Non-Executive Director)

NOMINATING COMMITTEE

ChairmanDatuk Tay Puay Chuan (Independent Non-Executive Director)

MembersMohd Khasan Bin Ahmad(Independent Non-Executive Director)Teo Seng Kuang(Independent Non-Executive Director)

REMUNERATION COMMITTEE

ChairmanTeo Seng Kuang(Independent Non-Executive Director)

MembersMohd Khasan Bin Ahmad(Independent Non-Executive Director)Datuk Tay Puay Chuan (Independent Non-Executive Director)

SENIOR INDEPENDENT NON EXECUTIVE DIRECTOR

Datuk Tay Puay Chuan (Independent Non-Executive Director)

COMPANY SECRETARY

Pang Kah Man (MIA 18831)

AUDITORS

Crowe Horwath (AF 1018)Chartered AccountantsNo. 8, Jalan Pesta 1/1Taman Tun Dr Ismail 1Jalan Bakri84000 Muar, Johor

REGISTRAR

Tricor Investor & Issuing House Services Sdn Bhd (11324-H) Unit 32-01, Level 32, Tower AVertical Business Suite Avenue 3Bangsar SouthNo. 8, Jalan Kerinchi59200 Kuala LumpurTelephone number : 603 2783 9299Facsimile number : 603 2783 9222

REGISTERED OFFICE

No. 7, 1st FloorJalan Pesta 1/1Taman Tun Dr Ismail 1Jalan Bakri84000 Muar, JohorTelephone number : 606 9541 705Facsimile number : 606 9541 707

PRINCIPAL PLACE OF BUSINESS

Lot 8726 PTD 6023Batu 8 Kawasan Perindustrian Bukit Bakri84200 Muar, JohorTelephone number : 606 9865 000Facsimile number : 606 9860 942

PRINCIPAL BANKERS

AmBank (M) BerhadHSBC Bank (Malaysia) Berhad

WEB-SITE ADDRESS

www.homeritzcorp.com

DATE OF LISTING

19 February 2010

STOCK EXCHANGE LISTING

Main Market of Bursa Malaysia Securities BerhadStock Name : HOMERIZStock Code : 5160Sector : Consumer Products

Corporate Information

1ANNUAL REPORT 2017 HOMERITZ CORPORATION BERHAD (Company No. 805792-X)

GROUP’S PERFORMANCE REVIEW

In FYE 2017, the Group continued to strengthen the position as one of the leading upholstered home furniture manufacturers in Malaysia with a growth of 7.2% in revenue and 10% in Profit after Tax (“PAT”) compared with the corresponding period of last financial year. The growth in revenue and PAT was mainly attributed to the strengthening of USD exchange rate and increase in the volume sold.

In comparison with the corresponding period last financial year, the average USD exchange rate against RM for FYE 2017 were strengthening by about 4 % whereas the sales volume increased by 3%.

The strengthening in USD not only improved both revenue and profit but also cushion the rising of labour cost.

Managing Director’s Statement

Dear valued shareholders,

On behalf of the Board of Directors, it is my pleasure to present to

you the Annual Report and the Audited Financial Statements of

Homeritz Corporation Berhad (“Homeritz” or “the Group”) for the

financial year ended 31 August (“FYE”) 2017.

Australasia

North America

Europe

CentralAmerica

South America

South Africa

Middle East

Japan

HOMERITZ CORPORATION BERHAD

HOMERITZ CORPORATION BERHAD (Company No. 805792-X) ANNUAL REPORT 20172

During the year under review, the Group focused in its core business of design, manufacture, and sale of upholstered home furniture which includes upholstered sofas, upholstered dining chairs and upholstered bed frames. We continue diversifying our customer’s base spanning across more than 40 countries, including Europe, Australia, New Zealand, North and South America, South Africa and the Middle East.

DIVIDENDS

The Board of Directors is proposing a final single tier tax-exempt dividend equivalent to 2.2 cents per share for FYE 2017. The proposed final dividend is subject to shareholders’ approval in the forthcoming Annual General Meeting.

The total dividend paid and proposed by the Company in respect of the FYE 2017 is 4.2 cents per share. This represents more than 40% of the consolidated net profit attributable to owners of the Company for FYE 2017.

OUTLOOK AND PROSPECTS

The Group is operating in global economic uncertainties as well as facing the fluctuation in foreign exchange rates. Moving forward, the Group will continue to remain focused in its core business and continuing to develop new products, new design for existing products, derive better cost efficiencies and effective cost management across all functions. Our Group will continue diversifying its customer’s base and broadening geographical coverage into other regions.

The Board expects that the Group will continue to be profitable in the financial year ending 2018.

APPRECIATION

On behalf of the Board of Directors, I would like to express my heartfelt appreciation to fellow board members and management team for their untiring efforts and invaluable contributions to the continued growth and success of our Group. The gratitude and thanks are also extended to our business associates, suppliers, bankers, customers, regulatory bodies, shareholders for their ongoing support and assistance. Let us continue to strive together in many years to come.

With Best Wishes

CHUA FEN FATTMANAGING DIRECTOR

Managing Director’s Statement (Cont’d)


Financial Highlights

REVENUE(RM’000)

EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (RM’000)

PROFIT ATTRIBUTABLE TO OWNERS OF THE COMPANY (RM’000)

NET ASSETS PER SHARE (RM)


103,

246

112,

905

127,

176

146,

419

157,

567

14,7

00

15,1

18 20,2

47

23,5

51 28,0

26

72,7

85

81,4

03

92,1

50

102,

023

116,

557

0.24 0.

27 0.31 0.

34

0.39

2012 2013 2014 2015 2016 2017

2012 2013 2014 2015 2016 2017

2012 2013 2014 2015 2016 2017

2012 2013 2014 2015 2016 2017

Financial Year End

2012 RM’000

2013RM’000

2014RM’000

2015RM’000

2016RM’000

2017RM’000

Revenue 103,246 112,905 127,176 146,419 157,567 168,958

Profit before tax 17,673 20,566 26,450 33,518 36,166 39,121

Profit after tax 16,750 17,941 24,303 25,699 28,026 30,888

Profit attributable to owners of the Company

14,700 15,118 20,247 23,551 28,026 30,888

Equity attributable to owners of the Company

72,785 81,403 92,150 102,023 116,557 132,445

Deposit, bank and cash balance 24,472 34,710 51,586 52,331 57,016 60,782

Number of ordinary shares in issue (‘000)

300,000* 300,000* 300,000* 300,000 300,010 300,010

Net assets per share (RM) 0.24 0.27 0.31 0.34 0.39 0.44

Note:*Adjusted for bonus issue completed on 8 July 2015

168,

958

132,

445

30,8

88

0.44

Management Discussion And Analysis

1) OVERVIEW OF THE GROUP’S BUSINESS AND OPERATIONS

The Group is one of the leading upholstered home furniture manufacturers in Malaysia. The Group is principally an integrated Original Design Manufacture (“ODM”) and Original Equipment Manufacturer (“OEM”) player whom produce a complete range of upholstered home furniture products. As an ODM, we design and manufacture furniture for sale to our customers whereas, as an OEM, we manufacture furniture based on their designs provided to us. The Group’s customer are mainly overseas wholesalers and retailer. The Group’s primary activity revolves around the design, manufacture and sale of upholstered home furniture which include the following products:-

• upholstered sofas;• upholstered dining chairs;• upholstered bed frames; and• other home furniture such as cushion seats, sofa beds and tables.

Our products are mainly focused on ‘medium to high end range’ of upholstered home furniture and the designs are mostly catered to Western stylishness and preferences which are our focus markets. Presently, we export our products to more than 40 countries across the world covering Europe, Australasia, North and South America, Asia and Africa.

Presently, the Group’s manufacturing plants are all located in Kawasan Perindustrian Bukit Bakri, Muar, Johor with a total built-up area of approximately 510,000 sq ft. The close vicinity of all plants enables the Company to facilitate administrative control, have better control over production costs as well as quality of their products, leading to quicker time-to market, more efficiency and greater economies of scale.

Our performance to date, as a competitive player in the upholstered home furniture segment; is reflected in our corporate vision and mission of establishing our Group to be well respected by our clients and business associates for our product quality, competency, professionalism and contribution. This is clearly embodied in our Group’s Corporate Vision and Mission Statement as follows:-

To be one of the top 10 Asian players in the supply of conceptualized lifestyle home furniture worldwide; recognized for its brands, design innovations and quality commitment

Our Corporate Vision and Mission are expected to be realised through the following strategies:-

• Strengthen our R&D capabilities to continue improving on existing designs in order to develop new innovative designs.

• Continually upgrade our equipment and machinery to boost efficiency and productivity and to enhance our product quality.

• Diligently seek and test new raw materials to facilitate production of quality products at competitive costs.• Continue to diversify and introduce new products to clients.• Build upon and strengthen our own brand of home furniture products.• Adopt more aggressive marketing strategies and to continue to work hand-in-hand with our clients to secure

bigger segments of the market.• Improve production efficiency, hence becoming more competitive in pricing.• Continually motivate our staff and personnel to achieve the highest level of commitment and performance.


2) FINANCIAL PERFORMANCE REVIEW

a) Revenue

The Group’s revenue for FYE 2017 improved by 7.2% to RM168.958 million compared with the corresponding period last financial year, marking the compounded annual growth rate of 11.1% since FYE 2011. The growth in revenue was mainly attributed to the strengthening of USD exchange rate and increase in the volume sold.

The following chart shows the Group’s revenue growth since FYE 2011.

b) Profit before tax

The Group’s profit before tax (“PBT”) for FYE 2017 improved by 8.2% to RM39.121 million respectively as compared with FYE 2016, marking the compounded annual growth rate of 21.7% since FYE 2011. This improvement was attributed to the higher sales register and the strengthening of USD.

In comparison with the corresponding period last financial year, the average USD exchange rate against RM for FYE 2017 were strengthening by about 4 % whereas the sales volume increased by 3%.

The strengthening in USD not only improved both revenue and profit but also cushion the rising of labour cost.

The following chart illustrates the Group’s PBT since FYE 2011.

Revenue RM Million

Revenue RM Million

103.

246

112.

905

127.

176

146.

419

157.

567

FYE 2011 FYE 2012 FYE 2013 FYE 2014 FYE 2015 FYE 2016 FYE 201716

8.95

8

89.8

26

Management Discussion And Analysis (Cont’d)

PBT RM Million

PBT RM Million

17.6

73

20.5

66 26.4

50

33.5

18

36.1

66


39.1

21

12.0

36

6-years CAGR (FYE11-FYE17): 11.1%

6-years CAGR (FYE11-FYE17): 21.7%


2) FINANCIAL PERFORMANCE REVIEW (CONT’D)

c) Net Asset per share

The following chart illustrates the Group’s Net Asset per Share of the Group since FYE 2011:

d) Shareholders’ fund

The following chart illustrates the Shareholders’ Fund of the Group since FYE 2011:

e) Financial position and liquidity

The financial position and liquidity of the Group remains strong in FYE 2017, with average inventory turnover period of about 3 months and average trade receivables and payable turnover period of less than 1 month at the end of FYE 2017.

The Group is in net cash position with no bank borrowing. The Group cash position increased marginally from RM 57.016 million to RM60.782 million.

Net Asset Per Share (cents)

Net Asset Per Share (cents)

24

27

31

34

39FYE 2011 FYE 2012 FYE 2013 FYE 2014 FYE 2015 FYE 2016 FYE 2017

44

21

Shareholders’ fund RM Million

Shareholders’ fund RM Million

72.7

85

81.4

03 92.1

50

102.

023

116.

557


132.

445

62.8

85



f) Capital expenditure, structure and resources

To support the business growth, the Group continually upgrade the infrastructure, equipment and machinery to boost efficiency and productivity and to enhance the product quality. The Group’s capital expenditure incurred for FYE 2017 amounted to RM6.5 million, which a substantial amount of about RM2.4 million for construction of new factory buildings and RM3.6 million for upgrade and acquired new equipment and machineries.

g) Known trends and event

Known trends and events that are reasonably likely to have a materials effect on the Group’s operations, performance, financial condition and liquidity are those disclosed under risk relating to the business as are set out in page 8 of this Annual Report.

3) RISKS RELATING TO THE BUSINESS

a) Foreign Currency Exchange Risk

Most of the Group’s products are exported to foreign countries, primarily those in Europe, Australasia, North and South America, Asia and Africa while certain raw materials like leather, PU, fabric and wood are sourced from foreign countries such as India, Vietnam, Korea, Thailand and China.

The Group is exposed to foreign currency exchange risks as approximately 99% and 70% of our revenue and total purchases respectively are denominated in USD. Fluctuations in USD exchange rate will have an impact on the prices of imported raw materials as well as export earnings, which will in turn affect the profitability of the Group. The Group’s profit margin is generally expected to improve if the USD strengthens against RM which will then increase the profitability. Conversely, the weakening of USD against RM would generally reduce our profitability due to lower profit margin, dependent on the extent and effectiveness of the hedging strategies adopted.

At present, the Group have credit lines for foreign exchange forward contracts with several financial institutions. Should the need arises, the management can readily utilise such forward contracts to hedge the fluctuations in exchange rates between RM and USD, after taking into account the exposure period and the related transaction costs. Further, the Group also maintain a foreign currency account to facilitate the receipt of revenue collections which are denominated in USD to pay for some of our purchases which are also denominated in USD. Thus, it provides some form of natural hedging against any adverse foreign exchange fluctuations.

Notwithstanding the above, there is no assurance that any adverse fluctuations in foreign exchange rates would not have a material impact on the Group’s financial performance.

b) Labour Market

The furniture industry is a labour intensive one. As such, the Group are subject to risk of labour shortages and increase in labour costs. In addition, the Group have to resort to recruiting foreign workers as we face difficulty in employing local workforce. Hence, the Group are required to comply with the policies imposed by the Government of Malaysia with regards to the employment of these foreign workers. Any future changes to such policies may adversely affect our ability to employ foreign workers. In such event, if the Group are unable to find suitable replacements, the production would be interrupted and consequently, the Group’s revenue and profits would be adversely affected as well.




b) Labour Market (Cont’d)

The Group actively liaise with the relevant Government and recruitment agencies for timely renewals of work permits of such foreign workers in adherence to the Government’s policies. In addition, the Group endeavour to ensure all the foreign workers operate in a safe and conducive working environment. Measures the Group have implemented include the enforcement of stringent safety measures to prevent hazards or any untoward events from occurring in the work environment, provision of access to medical treatment when necessary.

Competitive remuneration and benefits packages, as well as training and career development opportunities are also extended to the foreign workers. Consequently, all efforts have resulted in the Group enjoying a cordial working relationship with foreign workers.

Nevertheless, the risk of over dependence on labour is partly mitigated by the usage of automated equipment and machinery where possible in certain manufacturing processes of the Group. Through the research activities, the management would also endeavour to review the production process flow to increase efficiency and minimise human handling through improved manufacturing processes and techniques where possible.

c) Availability and Volatility in Prices of Raw Materials

Prices of certain raw materials used in the production such as leather, wood and wood frame, foam, PU and fabric may fluctuate rapidly due to intervening factors such as global demand and supply conditions. As such, the prices of raw materials at the point of commitment to the customers may differ from those at the time of actual billing. Raw leather hide is the principal raw material in the Group’s upholstered furniture. As such, the cost of upholstered furniture is exposed to fluctuations in the price of cattle raw hide. The supply of cattle raw hide is principally dependent on the consumption of beef. Fluctuations in the price of raw leather hides will significantly affect operating margins. If there are significant increases in the costs of the major raw materials and the Group is unable to pass on such increases in the costs to the customers or the Group is unable to find alternative sources for such raw materials at competitive prices, the Group’s financial performance may be adversely affected.

d) Unfavourable Economic, Social and Political Conditions

Any adverse change in the political, economic and regulatory environment and uncertainties in Malaysia and regions where we operate could have unfavourable effect on the Group’s financial and business prospects. These include but not limited to the risk of war, terrorist attacks, riots, changes in political leadership, global economic downturn and unfavourable changes in government policies such as changes in the methods of taxation, interest rates, licensing or introduction of new regulations. Whilst the Group would continue to take effective measures such as prudent financial management and continue seeking new markets, there is no assurance that any change to these factors will not materially and adversely affect our financial position or business in the future.

4) FUTURE PROSPECT AND OUTLOOK OF THE GROUP

In view of the financial performance of the Group in FYE 2017, the Board of Directors is proposing a final single tier tax exempt dividend of 2.2 cents per share for shareholders’ approval at the forthcoming Annual General Meeting. In total, total dividend paid and proposed for FYE 2017 is 4.2 cents per share.

Our Group is operating in global economic uncertainties as well as facing the fluctuation in foreign exchange rates. Moving forward, our Group will continue to remain focused in its core business and continuing to develop new products, new design for existing products, derive better cost efficiencies and effective cost management across all functions. Our Group will continue diversifying its customer’s base and broadening geographical coverage into other regions.

The Board expects that our Group will continue to be profitable in the financial year ending 2018.


CHUA FEN FATTManaging Director,Aged 47, Male, MalaysianTenure of service: 8 years 2 months

Chua Fen Fatt was appointed to the Board on 2 November 2009. He is one of the founders of HUI in 1997 and since then, he has been the driving force in the Group and has been instrumental in the success, growth and development of the Group. He has had more than 30 years of hands-on experience in the furniture industry particularly in the upholstered home furniture. Throughout his working career, he has worked in different levels and capacities and involved in various aspects of the industry, from being a production operator to sample maker and product designer.

Prior to setting up of HUI, he was also involved in the sub-contracting of upholstered home furniture activities and started his own manufacturing business, Home Sofa Industries, in 1996. Over the years, he has accumulated various technical know-how and expertise in the art of manufacturing and designing upholstered home furniture.

As the Managing Director, he provides the Group with its corporate vision and business strategies and is primarily responsible for the overall business, strategic planning, design and development, and the entire operations of the Group.

Currently, he does not hold any directorship in any other public companies.

TEE HWEE INGExecutive DirectorAged 46, Female, MalaysianTenure of service: 8 years 2 months

Tee Hwee Ing was appointed to the Board on 2 November 2009. She is the co-founder of HUI together with Chua Fen Fatt in 1997. Prior to joining the Group, she worked with UOB Card Centre (Singapore) and Avenue Securities Sdn. Bhd. in 1990 and 1992 respectively. She has over 20 years of working experience in the upholstered home furniture industry. As the Executive Director, she is primarily responsible for the overall corporate and administrative functions of the Group.

Currently, she does not hold any directorship in any other public companies.

MOHD KHASAN BIN AHMADIndependent Non-Executive DirectorAged 56, Male, MalaysianTenure of service: 8 years 2 months

Mohd Khasan Bin Ahmad was appointed to the Board on 2 November 2009. He is also the Chairman of the Audit Committee and a member of the Nominating and Remuneration Committees of the Company. Mohd Khasan obtained a diploma in Accountancy and later graduated with a degree in Accountancy from Universiti Teknologi Mara. He is a member of the Malaysian Institute of Accountants (MIA). He served Bank Negara Malaysia for a period of about 7 years from 1986, the last 2 years of which he was seconded to the Capital Issues Committee (CIC) as its Principal Assistant Secretary. Subsequently, he joined the Securities Commission in 1993 for a period of about 5 years and his last capacity was an Assistant Manager in its Issues and Investment Division. During the tenure of his above appointments, he was involved in reviewing various corporate exercises, ranging from initial public offerings, mergers and acquisitions, reverse take-overs, issuance of bonds and other capital raising exercises.

He left the Securities Commission and joined the private sector in 1997. Currently, he sits on the Boards of Ta Win Holdings Berhad, Crest Builder Holdings Berhad, Mexter Technology Berhad and Sinmah Capital Berhad (formerly known as Farm’s Best Berhad) as Independent Non-Executive Director. He also sits on the Board of several other private limited companies.

Board Of Directors’ Profile


Board Of Directors’ Profile (Cont’d)

Notes to Board of Directors’ Profile:

a. Tee Hwee Ing is the spouse of Chua Fen Fatt. Save as disclosed, none of the directors has any family relationship with any director of the Company.

b. All directors does not have conflict of interest with the Company and has not been convicted for any offences within the past ten (10) years other than for traffic offences, if any.

c. Please refer to the analysis of shareholdings of this Annual Report for the details of the directors’ shareholdings in the Company.

d. Details of number of Board meetings attended by directors during the financial year are set out in page 21 of this Annual Report.

DATUK TAY PUAY CHUANIndependent Non-Executive DirectorAged 53, Male, MalaysianTenure of service: 8 years 2 months

Datuk Tay Puay Chuan was appointed to the Board on 2 November 2009. He is also the Chairman of the Nominating Committee and a member of the Audit and Remuneration Committees of the Company. He started his career with the Polis Di Raja Malaysia, Bukit Aman in 1987 and later left the police force as a Police Inspector in 1992. He joined Fajar Sawmill Sdn. Bhd. in 1993 and later joined Teong Sheng Sdn. Bhd. in mid 1994. In 1997, he obtained a Bachelor of Law (Honours) degree from University of London, United Kingdom. He was called to the Bar and admitted as an advocate and solicitor in 1998. He was the partner in Fazilah, Ong Chee Seong & Associates from 1998 to 2003 until he set up his own legal practice, Tay Puay Chuan & Co in Muar, Johor in 2003.

Currently, he sits on the Boards of Sern Kou Resources Berhad and Guan Chong Berhad as Independent Non-Executive Director.

TEO SENG KUANGIndependent Non-Executive DirectorAge 47, Male, MalaysianTenure of service: 6 years

Teo Seng Kuang was appointed to the Board on 5 January 2012. He is also the Chairman of the Remuneration Committee and a member of the Audit and Nominating Committees of the Company. He received his Master of Business Administration from Honolulu University, Hawaii, USA in 2003. He has a background of more than 15 years of working experience in management related position in sectors/industries such as manufacturing, electronic and furniture. He is a member of the Malaysian Institute of Management (“MIM”) and member of Financial Planning Association of Malaysia (“FPAM”). He currently work as manager in a private limited companies.

Currently, he does not hold any directorship in any other public companies.


Statement On Corporate Social Responsibility

Our Group has recognised and acknowledged the importance of a corporate culture that emphasizes good corporate social responsibility (“CSR”) and corporate citizenship. While delivering sustainable and growing stakeholders value through the core business, our Group also contributes and provides for the betterment of the employee welfare, market place and community.

COMMUNITY

During the financial year, our Group contributed to the community through donations made to school and charity fund.

ENVIRONMENT

Our Group promotes environmentally-conscious work practices in order to reduce environmental impact, enhance energy efficiency and recycling whenever possible. Generally, the upholstered furniture manufacturing industry does not have any major environmental issues or concerns because there are no emissions of noxious gases or production of toxic fluids or industrial wastes. Our manufacturing wastes such as saw dust and leather cuttings are relatively minor, and we easily eliminate such waste in a hygienic and orderly manner, in accordance with guidelines and regulations as stipulated by the Department of Environment (“DOE”).

MARKET PLACE

Our Group recognises that our ability to produce consistently high quality products is critical to the success of our business. As such, we place extensive and substantial emphasis on the ultimate quality of our products and maintain stringent quality control throughout our manufacturing processes. This enables us to produce high quality products to satisfy the demands and expectations of highly-demanding international customers. Being a manufacturer of export goods, we are required to adhere to the product quality requirements of countries in which we export to. These include, but are not limited to fire safety, fumigation and dye test requirements. To ensure that we keep ourselves updated with knowledge of the latest product quality requirements in such countries, we are a member of the Malaysian External Trade Development Corporation (MATRADE) whereby any updates or information on such requirements would be disseminated to members via email. In addition, we also work closely with our customers to ensure that our products are in proper compliance with prevailing local requirements or quality standards.

WORKPLACE

Our Group believes that human capital development is very important to ensure that we have the right and relevant skill set and knowledge in ensuring business sustainability and growth. As such, we have conducted trainings with emphasis on quality for the staff to improve further their quality of work and workplace. Health and Safety at the workplace is also another area of importance to us.

Our Group has set up a Work Safety Committee to develop policies and maintain a safe and healthy workplace for all its employees, contractors and visitors. Conducting fire drill trainings, meetings, periodic inspections on fire fighting equipment and prevention programme are carried out to continuously alert the employees on the importance of the safety and hygiene conditions of the workplace.


The Board of Directors (“Board”) recognises the importance of good corporate governance in ensuring that the interest of the Company and its subsidiaries (“Homeritz Group”), shareholders and other stakeholders are protected.

The new Malaysian Code of Corporate Governance 2017 (“the Code”) came into force on 26 April 2017 and superseded its earlier edition, Malaysian Code of Corporate Governance 2012 (“MCCG 2012”). However, all companies will be required to report their application of the recommended practices of the Code in their annual reports with effect from the financial year ending 31 December 2017. Hence, Homeritz Group will only be required to report its application of the recommended practices of the Code in the 2018 Annual Report.

This statement sets out the manner in which the Group has applied and the extent of compliance with the principles and recommendations set out in the MCCG 2012, the relevant chapters of the Main Market Listing Requirements (“Listing Requirements”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) on Corporate Governance (“CG”) and all applicable laws and regulations throughout the financial year under review.

APPLICATION OF PRINCIPLES AND RECOMMENDATIONS

Principle 1: Establish Clear Roles and Responsibilities

1.1 The Board should establish clear functions reserved for the board and those delegated to management

The Board of Directors is responsible for providing stewardship and oversight of management and operations of the Company.

The Board had since July 2013 established and formalised a Board Charter (‘the Charter”) that has set out the roles, responsibilities and powers of the Board, taking into account corporate governance obligations, best practices, and relevant regulations. The Charter is designed to provide guidance and clarity for Directors with regards to the role of the Board and its Committees, the requirement of Directors in carrying out their stewardship role and in discharging their duties towards the Company as well as the Board’s operating practices. Board Committees comprise Audit Committee (“AC”), Remuneration Committee (“RC”) and Nomination Committee (“NC”) as set out herein, are entrusted with specific duties and responsibilities to oversee the Group’s affairs, with authority to act on behalf of the Board in accordance with their respective Terms of Reference (“ToR”).

The Charter serve as a reference point for the Board activities and specifies matters reserved exclusively for Board’s approval as to promote high standards of CG. The respective ToR specifies the duties and responsibilities entrusted to the Board Committees to oversee the Group’s affairs with authority to act on behalf of the Board.

The Board reviews the Charter and the respective Board Committees’ authority and ToR from time to time and as when it is necessary to ensure consistency and continuous compliance with regulatory and legal requirements, which shall take precedence over any stipulation of the Charter as well as to ensure their relevance and enhance its efficiency thereof. Accordingly, the Board had on 8 December 2017, reviewed the Charter and the Board Committees’ ToR.

The salient features of the Charter and the Board Committees’ ToR are accessible through the Company’s website at www.homeritzcorp.com.

Statement On Corporate Governance


1.2 The Board should establish clear roles and responsibilities in discharging its fiduciary and leadership functions

1.2.1 Reviewing and adopting a strategic plan for the Group

The Board considers, and after discussion and amendment as required, approves strategic plan proposed by Management. All Board’s decisions are recorded in the minutes, including the deliberation for each decision, along with actions to be taken and the individuals responsible for implementation. Relevant Board decisions are communicated to Senior Management for implementation with a reasonable timeframe.

In conjunction with this, the Board also reviews and approves the annual forecast for the ensuing year, and sets the Key Performance Indicators (“KPIs”) in ensuring that the targets correspond to the Company’s strategy and business plan, reflect competitive industry trends and internal capabilities as well as provide sufficient stretch goals for the Management.

To ensure the successful realisation of the strategies, the Board actively engages with Management in monitoring the progress of initiatives and projects identified from time to time and, where required, identifies alternative measures to be taken.

1.2.2 Overseeing the conduct of the Group’s business

The Board has a collective responsibility for the oversight and overall management of the Group. The Non-Executive Directors are responsible for bringing independent judgment and scrutiny to decisions taken by the Board and providing objective challenges to Management.

The Non-Executive Directors do not participate in the day-to-day management of the Group and do not engage in any business dealing or other relationship with the Group. In this manner, the Non-Executive Directors fulfil a crucial corporate accountability role as they provide independent and objective views, opinions and judgement on issues being deliberated and act in the best interest of the Group, its stakeholders and shareholders, including minority shareholders. There is a schedule of key matters reserved to the Board for its deliberation and decision to ensure the direction and control of the Group are in its hands.

On the other hand, the Managing Director (“MD”) is responsible for the day-to-day management of the business and operations of the Group. He is supported by the Executive Director, Management team and other Board committees established. Management Team’s performance, under the leadership of the MD, is assessed by the Board through a status report which is tabled to the Board and which includes a comprehensive summary of the Group’s operating drivers and its financial performance during each reporting period. The Board is also kept informed of key strategic initiatives, significant operational issues and the Group’s performance, based on the approved KPIs as well as the follow-up or implementation of its decisions/recommendations by the Management.

The Board shall meet quarterly and at any such times as it deems necessary to fulfill its responsibilities. The Board is provided with an agenda and comprehensive board papers on a timely basis prior to Board meetings. This is to ensure the Directors discharge their duties and responsibilities competently and in a well-informed manner. The Company Secretary records all the deliberations including pertinent issues, the substance of inquiries and responses, Board members’ suggestions and the decision made in the Minutes of the Board meetings. The Minutes of every Board and Board Committees meeting are also circulated to the Directors for their perusal prior to confirmation of the Minutes at the following Board and Board Committees meeting.

Statement On Corporate Governance (Cont’d)


1.2.3 Identifying principal risks and ensuring the implementation of appropriate internal controls and mitigation measures.

The Board acknowledges that it is responsible for ensuring that a sound system of risk management and internal control is maintained and that it has reviewed the effectiveness of these systems to safeguard shareholders’ interest and the Group’s assets. Further details of the Group’s system of internal controls are set out in the Statement on Risk Management and Internal Control section of this Annual Report.

1.2.4 Succession planning

The Board recognises the importance to attract and retain key management personnel. Hence, the Board, through the NC has made concerted efforts to identify and groom middle management at all key areas as an integral part of the management succession plan. The plan also includes offering a competitive remuneration package to and providing training and career development opportunities for employees in all key functions of the Group’s operations.

Through the input and feedback provided by the MD, the NC continues to monitor the actions taken by the Group Human Resources Department to ensure the smooth transition of key personnel into critical positions, and that the development plans for the identified successors are put in place based on their readiness to assume the positions. Where there are key management positions to be filled, the Board will also discuss on the same to ensure that the candidates appointed or employed are of sufficient calibre.

1.2.5 Overseeing the development and implementation of a shareholder communications policy for the Group.

The Group acknowledges the need for investors to be informed of all material business and corporate developments affecting the Group. The Group recognises that timely and equal dissemination of relevant information should be made to all shareholders and stakeholders. The channels of communication to shareholders for information of the Group are as follow:

i. announcement of quarterly results on quarterly basis;ii. the issue of the Company’s Annual Reports;iii. announcements to Bursa Malaysia Securities Berhad;iv. ad-hoc press statements and interviews, where appropriate; andv. Company’s website at www.homeritzcorp.com.

1.2.6 Reviewing the adequacy and the integrity of the management information and internal controls system of the Group.

The Board acknowledges its overall responsibility for maintaining a sound system of internal controls that provides reasonable assessment of effective and efficient operations, internal financial controls and compliance with laws and regulations as well as with internal procedures and guidelines. The effectiveness of the systems of internal controls of the Group is reviewed periodically by the Audit Committee. Further details of the Group’s system of internal controls are set out in the Statement on Risk Management and Internal Control section of this Annual Report.




1.3 The Board should formalise ethical standards through a code of conduct and ensure its compliance

The Group has put in place a whistle-blowing policy and a summary of the Code of Conduct which is viewable on the Company’s website.

1.4 The Board should ensure that the Group’s strategies promote sustainability

The Board reviews operational practices which impact on sustainability of environment, governance and social aspects of its business on a regular basis. The Group’s Environmental, Social and Governance policy is published on the Company’s website.

1.5 The Board should have procedures to allow its members access to information and advice

Directors have comprehensive and timely access to information concerning the Company and the Group. Notice of Board meetings and Board papers with supporting documents, presentations and materials detailing Group performance and operational, financial and corporate matters are circulated to Directors, normally at least seven days in advance of Board meetings to ensure that Directors have sufficient time to study them and be prepared for discussion. Comprehensive minutes of Board meetings are maintained and circulated to Directors. Directors are entitled to request and receive supplementary information in order to be fully briefed before the meeting.

The Board has full, unrestricted and timely access to all information pertaining to the Group’s business affairs. All members of the Board have access to the advice and services of the Company Secretary and are entitled to obtain professional opinions or advice from external consultants when the need arises at the expense of the Group. Where such advice is considered necessary for the discharge of his duties and responsibilities as Director and, for the benefit of the Company, such Director shall first discuss the request with the Audit Committee Chairman furnishing satisfactory and explicit justification for such request, having done so, shall be free to proceed, where appropriate.

The Board is also notified of any corporate announcement released to Bursa Securities and the impending restriction on dealing with the securities of the Company prior to the announcement of the quarterly financial results.

1.6 The Board should ensure it is supported by a suitably qualified and competent Company Secretary

The Board is supported by a suitably qualified and competent Company Secretary in discharging its roles and responsibilities. Every Board member has ready and unrestricted access to the advice and the services of the Company Secretary in ensuring the effective functioning of the Board. The Company Secretary attends all Board meetings and is responsible for ensuring that Board procedures as well as statutory and regulatory requirements relating to the duties and responsibilities of the Directors are complied with.

The Company Secretary also ensures compliance of listing and related statutory obligations and procedures are followed and minimises deviation. The Directors are also regularly updated and advised by the Company Secretary on new statutory and regulatory requirements issued by regulatory authorities, and the resultant implications to the Company and the Directors in relation to their duties and responsibilities. The Company Secretary briefs the Board on proposed contents and timings of material announcements to be made to Bursa Malaysia Securities Berhad (“Bursa Securities”).

The Board is assisted by the NC in the appointment and assessment of the Company Secretary, as specified in its ToR. The removal of the Company Secretary is a matter for the Board, as a whole to decide.



Principle 2: Strengthen Composition

2.1 The Board should establish a NC which should comprise exclusively Non-Executive Directors, a majority of whom must be independent

The NC was established on 02 November 2009. In line with Recommendation 2.1 of the MCCG 2012, the NC is chaired by an Independent Non-Executive Director who is also the Senior Independent Non-Executive Director.

During financial year under review, the NC had convened two (2) meeting and undertaken the following activities:-

i. Assessed the effectiveness of the Board, the Board Committees, the contribution of each Director and the Company Secretary on an annual basis;

ii. Reviewed the board structure, size, composition, the required mix of skills and the term of office of the Board and the Board Committee particularly the AC and make recommendations to the Board of Directors for the creation of additional committees or the change in mandate or dissolution of committees;

iii. Reviewed the Board the continuation in service of Executive Director(s) and Director(s) who are due for retirement by rotation;

iv. Assessed the independence of the Independent Directors annually; andv. Reviewed the training needs for the Director.

2.2 The NC should develop, maintain and review the criteria to be used in the recruitment process and annual assessment of Directors

The NC’s ToR specifies in details its duties and functions, which relate to the recruitment of Directors and the criteria used and procedures in their selection and in evaluating the overall effectiveness of the Board.

The NC’s annual review of the criteria to be used in the appointment process to the Board of Directors largely focuses on ensuring a good mix of skills, experience and strength in the qualities that are relevant for the Board to discharge its responsibilities in an effective and competent manner. The other factors considered by the NC in its review include the candidates’ ability to spend sufficient time and commitment on the Company’s matters, the ability to satisfy the test of independence taking into account the candidate’s character, integrity and professionalism, as well as having a balanced mix of age and diversity of Directors on the Board. The Board diversity factor as reviewed by the NC includes experience, skills, competence, race, age, culture and nationality, to facilitate optimal decision-making by harnessing different insights and perspectives.

The Board noted the 30% female representation on the Board as set out in Recommendation 2.2 of the MCCG 2012. Insofar as board diversity is concerned, the Board does not set a gender diversity policy as the appointment of new Directors is based on merits, among others, the skills-set, experience and knowledge without giving regards to the gender of the appointed Directors. The NC is mindful of its responsibilities to ensure that new appointments should provide the appropriate mix of skills, experience, strength and other qualities which would be relevant to enhance the composition of the Board.

The NC will carry out the annual assessment exercise on performance and effectiveness of the Board, the Board Committees as well as individual Directors annually and the Company Secretary will facilitate the NC in carrying out the annual assessment exercise. The Board’s effectiveness is assessed in the following key areas of composition, strategy, corporate / management reporting, human capital, risk management and investor relations.



The annual assessment on the Board’s performance and effectiveness for the financial year ended 31 August (“FYE”) 2017 was conducted via questionnaires in end-July 2017. The Board, through the questionnaires and recommendation from the NC, will examine the Board Committees, including their respective Chairman, to ascertain whether their functions and duties are effectively discharged in accordance with their respective ToR.

As a post evaluation process, the Company Secretary summarised the results of evaluation and reported to each Board and Board Committee member by providing with individual results together with a peer average rating on each area of assessment on 30 October 2017. Thus, allowing the Directors to know their standing and the Board to take actions on the outcome of evaluation by recommending remedial measures on areas that need improvements, if any.

From the annual assessment and review conducted, the NC was satisfied that all the Executive, Non-Executive and Independent Directors on the Board possess sufficient qualification to remain on the Board and have discharged their stewardship duties and responsibilities towards the Company as a Director effectively. Save for the NC members who are also a member of the Board and have abstained from assessing their own individual performance as Director of the Company, each of the NC members view that all the Directors have good personal attributes and possess sufficient experience and knowledge in various fields that are vital to the Company’s industry. The NC concluded that the Board and Board Committees were functioning effectively as a whole with a high level of compliance and integrity and the Board Committee and its members have carried out their duties in accordance with their respective ToR.

2.3 The Board should establish formal and transparent remuneration policies and procedures to attract and retain directors

The RC was established on 02 November 2009. The RC comprises three (3) members of whom are all Independent Non-Executive Directors.

During financial year under review, the RC had convened two (2) meeting and undertaken the following activities:-

• to consider and recommend to the Board the remuneration framework for Executive Directors; • to formulate the remuneration packages to attract, retain and motivate Executive Directors of the quality

required to manage the business of the Group successfully;• to act in line with the directions of the Board of Directors; and• to consider and examine such other matters as the RC considers appropriate. The remuneration and entitlements of the Non-Executive Directors shall be a matter to be decided by the Board as a whole with the Director concerned abstained from deliberation and voting on his individual remuneration.

The RC adopts the principles recommended by the MCCG 2012 in determining the Directors’ remuneration whereby the Executive Directors’ remuneration is designed to link rewards to the Group’s performance whilst the remuneration of the Non-Executive Directors is determined in accordance with their experience, expertise and the level of responsibilities undertaken. The Directors’ fees are subject to the approval of the shareholders of the Company at the Annual General Meetings.



Details of Directors’ remuneration paid and payable to the Directors of the Company for FYE 2017 by category and successive bands of RM50, 000 are as follows:

Executive Non-Executive Directors Directors Total (RM) (RM) (RM)

Allowances 7,000 10,500 17,500Bonuses 500,000 - 500,000EPF 323,000 - 323,000Fee - 133,056 133,056Salaries 1,200,000 - 1,200,000SOCSO 1,657 - 1,657Benefits-in-kind 28,000 - 28,000

2,059,657 143,556 2,203,213

Number of Directors Executive Non-Executive Directors Directors Total

RM 1 - RM 50,000 - 2 2RM 50,001 - RM 100,000 - 1 1RM 100,001 - RM 150,000 - - -RM 150,001 - RM 200,000 - - -RM 200,001 - RM 250,000 - - -RM 250,001 - RM 300,000 - - -RM 300,001 - RM 350,000 - - -RM 350,001 - RM 400,000 - - -RM 400,001 - RM 450,000 - - -RM 450,001 - RM 500,000 - - -RM 500,001 - RM 550,000 - - -RM 550,001 - RM 600,000 - - -RM 600,001 - RM 650,000 - - -RM 650,001 - RM 700,000 - - -RM 700,001 - RM 750,000 - - -RM 750,001 - RM 800,000 - - -RM 800,001 - RM 850,000 - - -RM 850,001 - RM 900,000 - - -RM 900,001 - RM 950,000 - - -RM 950,001 - RM 1000,000 - - -RM 1,000,001 - RM 1,050,000 2 - 2

Details of individual Director’s remuneration are not disclosed in this report as the Board is of the view that the above Directors’ remuneration disclosure by band and analysis between Executive and Non-Executive Directors has appropriately served the accountability and transparency aspects of the MCCG 2012.



Principle 3: Reinforce Independence

3.1 The Board should undertake an assessment of its Independent Directors annually

The Board has adopted the legal and regulatory definition of Independent Directors as specified in the Listing Requirements of Bursa Securities. All the Directors have given their undertakings to comply with the Listing Requirements and the Independent Directors have confirmed their independence in writing annually.

On the other hand, the NC is specifically tasked to assess the independence of Independent Directors upon admission, annually and when any new interest or relationship develops using the Policy on Assessing Independence of Directors (“Policy”) which was approved by the Board in July 2013. This is in line with Recommendation 3.1 of the MCCG 2012 as one (1) of the factors in determining their eligibility to stand for re-election/re-appointment.

Based on the results of annual assessment of the independence of Independent Directors tabled on 30 October 2017, the NC was satisfied that all the Independent Directors had satisfied the criteria for an independent director as prescribed in the Listing Requirements and Practice Note 13 of Bursa Securities and they are independent of management and free from any business or other relationship which could interfere with the exercise of independent judgment, objectivity or the ability to act in the best interests of the Company.

3.2 The tenure of an Independent Director should not exceed a cumulative term of nine (9) years.

The Board has implemented a nine (9) year policy for Independent Directors, as to in line with Recommendation 3.2 of the MCCG 2012. Upon completion of the nine (9) years, an Independent Director may continue to serve on the Board subject to the Director’s re-designation as a Non-Independent Director.

3.3 The Board will justify in the notice convening the Annual General Meeting and submit for shareholders’ approval the retention of all Independent Directors who have served the Group for an aggregate of more than nine (9) years at every Annual General Meeting

In the event the Board intends to retain an Independent Director who has served the Group for an aggregate of more than nine (9) years, it would have to justify in the notice convening the Annual General Meeting and seek shareholders’ approval the retention of such Independent Director at every Annual General Meeting. As at the date of this Statement, none of the Independent Directors has reached nine (9) years of service since their appointment as Directors.

3.4 The positions of Chairman and/or Chief Executive Officer (“CEO”) should be held by different individuals, and the Chairman must be a Non-Executive member of the board

Due to the relatively small size of the Group, the Board is of the view that the current size and composition is optimum and well balanced, and caters effectively to the scope of the Group’s operations. Hence, the Board does not intend to appoint an Independent Chairman and/or CEO to the Board.

Notwithstanding that the Board does not have an independent Chairman and/or CEO, the Board is of the opinion that its strong representation of high caliber Independent Non-Executive Directors of which forms a majority of the Board, provides the necessary check and balance in ensuring that the strategies proposed by the Management are fully discussed and deliberated, and the interests of the shareholders, employees, customers, suppliers and other stakeholders are taken into consideration.

Datuk Tay Puay Chuan also performs the role as the Senior Independent Director to facilitate communications with any shareholders and stakeholders whose concerns could not be appropriate be dealt with by the MD and/or the Executive Director.



3.5 The Board must comprise a majority of Independent Directors where the Chairman of the Board is not an Independent Director

The Board currently consists of five (5) members with two (2) Executive Directors of whom one is also the MD and three (3) Independent Non-Executive Directors. Notwithstanding that the Board does not have a Chairman, the existing Independent Non-Executive Directors has accounted for more than fifty (50%) of the Board composition.

On the other hand, the Company also complies with the requirement of the Listing Requirements of Bursa Securities for Independent Non-Executive Directors to make up at least one-third (1/3) of the Board membership.

Principle 4: Foster Commitment

4.1 The Board should set out expectations on time commitment for its members and protocols for accepting new directorships All the Directors are expected to devote sufficient time to carry out their responsibilities and are required to notify the Board before accepting any new directorships. This includes attendance of at least fifty percent (50%) of all Board of Directors and Board Committee meetings, or as determined from time to time by the Board. The Board ordinarily schedules at least five (5) meetings in a year. The Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of the Company. This is evidenced by the attendance record of the Directors at Board Meetings during the financial year under review, as set out in the table below:

Directors Number of Meetings Attended

Chua Fen Fatt 5/5Tee Hwee Ing 5/5Mohd Khasan Bin Ahmad 5/5Teo Seng Kuang 5/5Datuk Tay Puay Chuan 5/5

Where any directions or decisions are required expeditiously or urgently for the Board between the regular meetings, special meetings of the Board will be convened by the Company Secretary, after consultation with the Managing Director. The agenda for the meeting of the Board is set by the Company Secretary in consultation with the Managing Director.

Notwithstanding that no specific quantum of time has been fixed, all the Board members must be able to commit sufficient time to the Company’s matters and are required to notify the Board before accepting any new directorships. To ensure the Directors have the time to focus and fulfill 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 (“PLC”) as prescribed in Paragraph 15.06 of Listing Requirements.



4.2 The Board should ensure its members have access to appropriate continuing education programme The requirement to undertake continuing education is built into the Charter and the training undertaken by the Directors are reviewed by the NC annually. All the Directors have attended the Mandatory Accreditation Programme. Details of training programme attended by the Directors during the financial year under review and up to the date of this Statement are set out as below:

Directors Training Programme Attended

Chua Fen Fatt • Autodesk AutoCAD Essential (AutoCAD) • Autodesk Inventor Essential (Autodesk Inventor)

Tee Hwee Ing • Autodesk AutoCAD Essential (AutoCAD) • Autodesk Inventor Essential (Autodesk Inventor)

Mohd Khasan Bin Ahmad • Capital Market Conference 2017 • The Draft Malaysian Code on Corporate Governance 2016 • CG Breakfast Series: Anti-Corruption And Integrity – Foundation of Corporate Sustainability

Teo Seng Kuang • Autodesk AutoCAD Essential (AutoCAD) • Autodesk Inventor Essential (Autodesk Inventor)

Datuk Tay Puay Chuan • Autodesk AutoCAD Essential (AutoCAD) • Malaysian Companies Act with Comparison between Companies Act 1965 and Companies Act 2016

Principle 5: Uphold Integrity in Financial Reporting

5.1 The AC should ensure financial statements comply with applicable financial reporting standards

The Board aims to present a balanced, insightful and timely assessment of the Group’s financial position and prospects by ensuring quality financial reporting through the annual audited financial statements and quarterly financial results to its stakeholders, in particular, shareholders, investors and the regulatory authorities. The AC assists the Board in overseeing the Group’s financial reporting processes and reviews the financial statements in ensuring the accuracy, consistency and the application of accounting standards and policies, the Companies Act 2016 (“the Act”), Listing Requirements and other legislative and reporting requirements; and for reasonableness and prudence in making estimates, statements and explanation prior to submission to the Board for its approval.

In preparing the financial statements, the Directors have:

• Selected suitable accounting policies and applied them consistently;• Made judgements and estimates that are reasonable and prudent;• Ensured that all applicable financial reporting standards have been followed; and• Prepared financial statements on the going concern basis as the Directors have a reasonable expectation,

having made enquiries that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future

The Board is responsible to ensure that the financial statements are properly drawn up in accordance with the provisions of the Companies Act 2016 in Malaysia and applicable approved Financial Reporting Standards issued by the Malaysian Accounting Standards Board (“MASB”) in Malaysia so as to give a true and fair view of the state of affairs of the Group and of the Company as at the end of the financial year and of the results of their operations and cash flows for the year ended on that date. A statement by the Directors of their responsibilities in preparing the financial statements is set out separately on page 32 of this Annual Report.



5.2 The AC should have policies and procedures to assess the suitability and independence of External Auditors

The Board, through the AC maintains a formal and transparent relationship with the Group’s External Auditors in seeking valuable professional advice and in ensuring compliance with the applicable approved Financial Reporting Standards issued by the MASB.

The AC, without the presence of Executive Board members and Management also meets with the External Auditors at least twice during each financial year to exchange free and honest views on issues which the External Auditors may wish to discuss in relation to their audit findings.

The AC is delegated with the task of assessing whether the External Auditors are suitable for re-appointment, of which the competency and independence are key considerations.

On the other hand, the AC also seeks written assurance from the External Auditors, confirming that they are, and have been, independent throughout the conduct of the audit engagement with the Company in accordance with the independence criteria set out by the Malaysian Institute of Accountants. The External Auditors provides such declaration in their annual audit plan presented to the Audit Committee prior to the commencement of audit for a particular financial year.

Accordingly, the AC had on 8 December 2017, assessed the independence of Messrs. Crowe Horwath (“CH”) as External Auditors of the Company as well as reviewed the level of non-audit services to be rendered by CH to the Company for the financial year under review. Having satisfied itself with their technical competency and audit independence and fulfillment of criteria as set out in the External Auditors Assessment and Independence Policy, the AC unanoimously recommended their re-appointment to the Board, upon which the shareholders’ approval will be sought at the forthcoming Annual General Meeting.

Further details of roles and responsibilities of the AC, including activities undertaken during the financial year under review, are set out in the AC Report on pages 27 to 28 of this Annual Report.

Principle 6: Recognise and Manage Risk

6.1 The Board should establish a sound framework to manage risks The Board recognizes that identification and prioritization of the Group’s business risks is a critical element of a broader risk management program. As an on-going process, significant business risks faced by the Group are identified and evaluated and consideration is given on the potential impact of achieving the business objectives. This includes examining principal business risks in critical areas, assessing the likelihood of material exposures and identifying the measures taken to mitigate, avoid or eliminate these risks. Further details of the Group’s risk management framework are set out in the Statement on Risk Management and Internal Control section of this Annual Report.

6.2 The Board should establish an internal audit function which reports directly to the AC

The Board recognises that effective monitoring on a continuous basis is a vital component of sound internal control systems. The Group has an out-sourcing arrangement with an independent internal audit service provider(“Internal Auditors”) in relation to its internal audit function to examine and evaluate the adequacy and effectiveness of the Group’s internal control systems of the business units. The Internal Auditors report directly to the AC on the adequacy and effectiveness of the Group’s internal controls during the quarterly AC meetings. Further details of the Group’s internal audit function are set out in the Statement on Risk Management and Internal Control section of this Annual Report.



Principle 7: Ensure Timely and High Quality Disclosure

7.1 The Board should ensure the Group has appropriate corporate disclosure policies and procedures

The Board has established a Corporate Disclosure Policy which serves as a guide to ensure broad dissemination of material information in a comprehensive, accurate and timely manner and in accordance with all applicable legal and regulatory requirements. This aims to promote effective communication with shareholders and encourage their participation and feedback at the Annual General Meetings.

Not only is this policy established to comply with the requirements of Listing Requirements of Bursa Securities pertaining to continuing disclosure, but it also adopts the recommendations as recommended in the MCCG 2012. The Board ensures that the Group complies with all the applicable corporate disclosure laws and regulations.

7.2 The Board should encourage the Group to leverage on information technology for effective dissemination of information

The Board supports the use of information technology for the effective dissemination of information. The Company has established a website at www.homeritzcorp.com which has served as a useful reference source of information to the shareholders, investment analysts, business partners and other stakeholders.

Principle 8: Strengthen Relationship between the Group and Shareholders

8.1 The Board should take reasonable steps to encourage shareholder participation at general meetings

The Board values the participation of shareholders at general meetings and recognises their contributions as valuable feedback for the conduct of the Group’s businesses. Notice of the Annual General Meeting and Annual Reports are sent to shareholders at least twenty-one (21) days prior to the meeting.

This would allow the shareholders to make necessary arrangements to attend and participate either in person, by corporate representative, by proxy or by attorney together with the Notice of Annual General Meeting, which provides information to shareholders with regard to, among others, details of the Annual General Meeting, their entitlement to attend the Annual General Meeting, the right to appoint proxy and also qualification of proxy.

In line with Paragraph 7.21A(2) of Main Market Listing Requirements for further promoting participation of members through proxies, the Chairman of the Annual General Meeting will brief the members, corporate representatives and proxies present of their right to speak and vote on the resolutions set out in the Notice of the Tenth Annual General Meeting dated 28 December 2017. The Articles of Association further entitles a member to vote in person, by corporate representative, by proxy or by attorney. Essentially, a corporate representative, proxy or attorney shall be entitled to vote as if they were a member of the Company.

To in line with Section 327 of the Companies’ Act 2016, the Board may adopt electronic voting as to facilitate greater shareholder participation at general meetings.

8.2 Poll voting

Under Recommendation 8.2 of the MCCG 2012 and Paragraph 8.29A(1) of the Listing Requirements, a PLC must, among others, ensure that any resolution set out in the notice of any general meeting, is voted by poll. For this purpose, the share registrar will be appointed as the Poll Administrator and an independent scrutineer will be appointed to validate the votes cast at the Tenth Annual General Meeting.



At the commencement of all general meetings, the Chairman of the Annual General Meeting will inform the shareholders of their rights to a poll voting. Separate resolutions are proposed for substantially separate issues at the meeting and the Chairman of the Annual General Meeting will declare the number of proxy votes received, both for and against each separate resolution where appropriate. The outcome of the Tenth Annual General Meeting will be announced to Bursa Securities on the same meeting day.

8.3 The Board should promote effective communication and proactive engagements with shareholders

The Board values dialogue with both institutional and individual investors, and recognises that timely and equal dissemination of relevant information should be made to these groups without favouring one group over another. Management meets with shareholders and investment analysts from time to time to explain the Group’s strategy, performance and major developments, and to receive feedback.

The proceedings of the Tenth Annual General Meeting will include the Chairman’s briefing on the Company’s overall performance for the financial year under review, the presentation of the external auditors’ unqualified report to the shareholders, and a Q&A session during which the Board members and senior management will interact and converse with shareholders at the Tenth Annual General Meeting within the bounds of propriety. To maintain a high level of transparency and enable the Board to effectively review and address any issues or concerns, shareholders may direct their queries and/or concerns to the Senior Independent Non-Executive Director, Datuk Tay Puay Chuan, via a dedicated electronic mail at [email protected].

COMPLIANCE STATEMENT

The Board is pleased to report that this Statement provides the CG practices of the Group with reference to the MCCG 2012. The Board considers and is satisfied that the Group has fulfilled its obligations under the broad principles as set out in the MCCG 2012. However, the Board has reserved several Recommendations with their commentaries and has rationalized and provided justifications as below for the deviation in this Statement. Nevertheless, the Group will continue to strengthen its governance practices as set out in the Code to safeguard the best interests of its shareholders and other stakeholders going forward.

Deviation from the Recommendations of the MCCG 2012:

1) Recommendation 2.2

The NC should develop, maintain and review the criteria to be used in the recruitment process of Directors.

The Board does not set a gender policy as the appointment of new Directors is based on merits, among others, the skills-set, experience and knowledge without giving regards to the gender of the appointed Directors. Nevertheless, the Board recognises the value of female members of the Board. To-date, the female representation in the Board consists of 20% of the number of the Directors.

2) Recommendation 3.4

The positions of Chairman and/or CEO should be held by different individuals, and the Chairman must be a Non-Executive member of the board

This Statement was presented and approved at the meeting of the Board on 8 December 2017.



Additional Compliance Information

1. Utilisation of Proceeds

There were no proceeds raised from any proposal during the financial year.

2. Audit and Non-Audit Fees

The amount of audit and non-audit fees incurred for the services rendered to the Group by the External Auditors for the financial year under review are as per below table:

Company Subsidiaries (RM) (RM)

Audit 18,000 44,500Non-Audit Fee 2,500 -

20,500 44,500

3. Material Contracts

During the financial year under review, there were no material contracts entered into by the Company and its subsidiaries involving Directors’ and / or substantial Shareholders’ interests.


The Audit Committee comprises three (3) members, all of whom are Independent Non-Executive Directors. The current composition meets the requirement of paragraphs 15.09 and 15.10 of the Main Market Listing Requirements (“Listing Requirements”) of Bursa Malaysia Securities Berhad (“Bursa Securities”). Should there be a vacancy in the Audit Committee resulting in the non-compliance of paragraphs 15.09(1) and 15.10 of the Listing Requirements, the Company must fill up the vacancy within three (3) months thereof. The Audit Committee members and their attendance records are outlined in the Statement on Corporate Governance (“CG”).

The Audit Committee reviews and updates its Term of Reference (“ToR”) from time to time as to keep itself up to date with new changes in regulations and best practices and to ensure its effectiveness and relevance to the Board’s objectives. The salient features of the ToR can be viewed on the Company’s website at www.homeritzcorp.com.

SUMMARY OF ACTIVITIES

A total of five (5) Audit Committee meetings were held for the financial year ended 31 August (“FYE”) 2017. The details of attendance of each Audit Committee member are as follows:

Name of Members Attendance

Mohd Khasan Bin Ahmad 5/5Datuk Tay Puay Chuan 5/5Teo Seng Kuang 5/5

The main activities undertaken by the Committee during the financial year under review included the following:

• reviewed the unaudited quarterly financial results of the Group prior to making recommendations for the Board’s approval and subsequent announcements;

• reviewed the potential related party transaction and any conflict of interest situation that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of management integrity;

• reviewed and evaluated factors relating to the independence of the External Auditors. The Audit Committee worked closely with the External Auditors in establishing procedures in assessing the suitability and independence of the External Auditors, in confirming that they are, and have been, independent throughout the conduct of the audit engagement with the Group in accordance with the independence criteria set out by the International Federation of Accountants and the Malaysia Institute of Accountants.

• considered and recommended to the Board of Directors the appointment of the External and Internal Auditors and payments of fees;

• reviewed the internal audit planning, internal audit reports, audit findings, audit recommendations made and management’s responses to these recommendations and actions taken to improve the system of internal control and procedures;

• reviewed with the External Auditors the audit planning memorandum covering the audit objectives and approach, audit plan, key audit areas and relevant technical pronouncements and accounting standards issued by Malaysian Accounting Standards Board;

Audit Committee Report


Audit Committee Report (Cont’d)

• reviewed with the External Auditors the audit review memorandum covering the results of the audit of the audited financial statements and audit report in particular, accounting issues and significant audit adjustments arising from the external audit;

• reviewed the annual financial statements of the Group prior to submission to the Board for consideration and approval;

• reviewed the application of Corporate Governance principles and the extent of the Group’s compliance with the recommendations set out under the Malaysian Code of Corporate Governance 2012;

• reviewed the Statement on Risk Management and Internal Control for disclosure in this Annual Report; and

• reviewed the Annual Report to ensure adherence to legal and regulatory reporting requirements and appropriate resolution of all accounting matters requiring significant judgement.

INTERNAL AUDIT FUNCTION

The Board acknowledges that it is responsible for maintaining sound systems of internal control which provide reasonable assessment of effective operations, internal financial controls and compliance with laws and regulations as well as with internal Procedures and guidelines.

The Group has engaged an external independent consultant (“Internal Auditor” or IA”) to carry out the internal audit function to assist the Audit Committee in maintaining sound systems of internal control. The internal audits were undertaken to provide independent assessment on the accuracy, efficiency and effectiveness of the Group‘s internal control systems. The IA report directly to the Audit Committee. The IA present and discuss Internal Audit Plan with the Audit Committee and present the result of reviews directly to the Audit Committee which includes significant internal audit findings, recommendations for improvements, Management’s response and proposed action plans.

During the FYE 2017, the external independent consultant have conducted review on internal control of the selected subsidiaries focusing on the following areas:-

• Expenditure Requisition; • Sourcing and selection of supplier;• Ordering and receiving of goods;• Procure to Pay;• Debt Management/Credit Control; and• Sales and Receiving cycle.

An overview of the Group’s approach in maintaining sound systems of internal control is set out in the Statement on Risk Management and Internal Control on pages 29 to 31 of this Annual Report.


INTRODUCTION

In pursuant to Paragraph 15.26 (b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Board is pleased to present its Statement on Risk Management and Internal Control which illustrates the nature and scope of risk management and internal control of the Group during the financial year.

BOARD RESPONSIBILITY

The Board acknowledges that it is responsible for ensuring that a sound system of risk management and internal control is maintained and that it has reviewed the effectiveness of these systems to safeguard shareholders’ interest and the Group’s asset.

During the financial year under review, the Board is of the view that the Company’s overall risk management and internal control system is operating adequately and effectively, in all material aspects, based on the risk management framework and practices adopted by the Group and have received the same assurance from both the Group Managing Director and Group Accountant of the Company.

However, in view of limitations that are inherent in any systems of risk management and internal control, such systems are designed to manage, rather than eliminate, the risk of failure to achieve business objectives of the Group and can only provide reasonable rather than obsolete assurance against material misstatement or loss.

RISK MANAGEMENT FRAMEWORK

The Board considers risk management to be fundamental to good management practice and a significant aspect of corporate governance. Effective management of risk will provide an essential contribution towards the achievement of the Group’s strategic and operational objectives and goals.

Risk management forms an integral part of the Group’s decision making and routine management, and are incorporated within the strategic and operational planning processes at all levels across the Group.

In order to achieve a sound system of risk management and internal control, the Board and management ensure that the risk management and control framework is embedded into the culture, processes and structures of the Group and to the achievement of its business objectives.

The Group has an Executive Risk Management Committee which is chaired by the Group Managing Director and comprises senior management of the Group, to provide oversight and added impetus to the risk management process.

There are steps to management of risks identified in the risk register which consists of:

a) Identifying the risks to achieving strategic and operational objectives

b) Determining and assessing the existing controls in place

c) Assessing the impact and likelihood of the risk after taking account of existing controls to derive the residual risk

d) Determining further control improvements to mitigate the risk and indicate what their impact on residual risk will be when they are fully implemented.

The Heads of department are required to undertake risk assessments against their business plan, strategies and other significant activities and to maintain risk registers that reflect an appropriate risk profile. The risk registers are used as one of the business tools to highlight the risks exposures and their risks mitigation. The risk registers are updated as and when there are changes to business environment or regulatory guidelines. Policies, procedures, guidelines, templates and the likes are being developed to assist in ensuring an awareness of what is an acceptable level of risk and that risks and opportunities are managed consistently and effectively across the Group. Periodic operational/management meetings are held to ensure that the risks identified are monitored and related internal controls are communicated to the management.

Statement On Risk Management And Internal Control


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

The Board affirms that there is an on-going process for identifying, evaluating and managing the significant risks faced by major companies in the Group. The results of this process, including risk mitigating measures taken by Management to address key risks identified, are periodically reviewed by the Board.

INTERNAL CONTROL SYSTEM

Internal Audit Function

The Board recognises that effective monitoring on a continuous basis is a vital component of sound internal control systems. The Group has an out-sourcing arrangement with an independent internal audit service provider in relation to its internal audit function to examine and evaluate the adequacy and effectiveness of the Group’s internal control systems of the business units. The internal audit adopts a risk-based approach and prepares its audit strategy and plan based on the risk profiles of individual business units of the Group. These plans are updated and approved by the Audit Committee regularly.

For the financial year, the outsourced internal audit function carried out audits in accordance with the internal audit plan approved by the Audit Committee. The result of their reviews is reported directly to the Audit Committee which includes significant internal audit findings, recommendations for improvements, Management’s response and proposed action plans. Follow-up reviews of the implementation of action plans are carried out to ensure that the matters highlighted in the internal audit reports have been adequately addressed. Based on the internal audit reviews conducted, none of the weaknesses noted has resulted in any material losses, contingencies or uncertainties that would require a separate disclosure in this annual report. The internal audit appraises and contributes towards improving the Group’s risk management and control systems, and reports to the Audit Committee on a regular basis. The professional fee incurred for the internal audit function in respect of FYE 2017 was RM24,000.

The other features of the Group’s systems of internal control include the following:

a) Control Environment

i. Policies and ProceduresClearly defined policies and procedures are in place and are undergoing constant improvements to ensure that they continue to support the Group’s business activities as the Group continues to grow.

ii. Organisation Structure and Authorisation ProceduresThe Group maintains a formal organization structure with clear lines of reporting to Board Committees and Senior Management including defined lines of accountability within which senior management operates, such as roles and responsibilities, authority limits, review and approval procedures, etc.

iii. Whistleblowing Policy and ProcedureThe Group has a whistleblowing policy and procedure to provide an avenue for staff or any external party to report any breach or suspected breach of any laws or regulations and the Groups’ policies and procedures, in a safe and confidential manner.

iv. Annual ForecastAnnual Forecast is prepared for management control and future planning. Actual performance is monitored against forecast on a quarterly basis to identify and to address significant variances.

v. Human Resource Management PolicyAppointment of staff is based on the required level of qualification, experience and competency to fulfil their responsibilities. Training and development is provided for selected staff to further enhance their skills and capabilities. In addition, a formal employee appraisal to evaluate and measure employee’s performance and their competency is performed at least once a year.


vi. Succession planningIdentify and groom middle management at all key areas as an integral part of the management succession plan. The plan also includes offering a competitive remuneration package to and providing training and career development opportunities for employees in all key functions of the Group’s operations.

b) Information and Communication

i. Pertinent information to meet the Group’s business objectives is communicated through established reporting lines across the Group. This is to ensure that matters that require the Board and Senior Management’s attention are highlighted for review, deliberation and resolution on a timely basis.

ii. Periodic management meetings are held to provide a forum where management undertakes overall responsibility for periodic reviews to identify, discuss and resolve key operational issues, to further improve its effectiveness.

c) Review and Monitoring Process

i. Periodic management meetings are held to provide a forum where management undertakes overall responsibility for periodic reviews to identify, discuss and resolve key operational issues, to further improve its effectiveness. In addition to the above, scheduled and ad-hoc meetings are held at operational and management levels to identify, discuss and resolve business and operational issues, as and when necessary.

ii. The Board monitors the Group’s performance by reviewing its quarterly financial results, annual report, audited financial statements, Group’s risk profile and internal control issues identified by the External Auditors, Internal Auditors and the management and examines the announcement to Bursa Securities. These are reviewed by the Audit Committee before they are tabled to the Board for approval.

iii. The Audit Committee also monitors the implementation of the recommendations proposed by the External Auditors and Internal Auditors.

REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS

As required by paragraph 15.23 of the Listing Requirements of Bursa Securities, the External Auditors have reviewed this Statement on Risk Management and Internal Control for inclusion in the annual report of the Group for FYE 2017. Their review was performed in accordance with the Recommended Practice Guide (“RPG”) 5 issued by the MIA.

The External Auditors have opined to the Board that nothing has come to their attention that causes them to believe that this Statement intended to be included in the annual report is not prepared, in all material aspects, in accordance with the disclosures required by paragraphs 41 and 42 of the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers to be set out, nor is factually inaccurate.

CONCLUSION

The Board has reviewed the adequacy and effectiveness of the system of risk management and internal controls, and that relevant actions have been or are being taken, as the case may be, to remedy the significant weaknesses identified from the review, which was largely based on the outcome of observations raised by the Internal Auditors and External Auditors directly to the Audit Committee.

The Board is of the view that the risk management and internal control systems are satisfactory and report that there were no significant internal control deficiencies or weaknesses that resulted in material losses or contingencies that would require disclosure in the Group’s Annual Report for the financial year under review.

This Statement was approved at the meeting of the Board on 8 December 2017.

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


The Directors are responsible for the preparation of financial statements for each financial year. They are responsible for ensuring that these financial statements give a true and fair view of the state of affairs of the Group and of the Company and the results and cash flows of the Group and of the Company for the financial year then ended. The financial statements are prepared on a going concern basis, in accordance with applicable approved accounting standards and comply with the provisions of the Companies Act 2016. It is the duty of the Directors to review the appropriateness of the basis before adopting the financial statements and present them before the Annual General Meeting together with their Report and the Auditors’ Report thereon.

The Directors are responsible for ensuring that proper accounting and other records are kept to sufficiently explain the transactions recorded. In preparing the financial statements, the Directors are required to exercise judgment to make certain estimates that are reasonable, prudent and relevant to be incorporated in the financial statements. The Directors are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps to prevent and detect fraud and other irregularities.

This above statement is approved at the meeting of the Board on 8 December 2017.

Statement On Directors’ Responsibilities In Relation To The Audited Financial Statements

Profiles Of Key Senior Management

CHUA FEN FATT Managing Director

Chua Fen Fatt is one of the founders of HUI in 1997 and since then, he has been the driving force in the Group and has been instrumental in the success, growth and development of the Group.

TEE HWEE INGExecutive Director

Tee Hwee Ing is the co-founder of HUI together with Chua Fen Fatt in 1997. As the Executive Director, she is primarily responsible for the overall corporate and administrative functions of the Group.

All the key members of senior management are also members of the Board. Their profiles are set out on page 10.


Directors’ Report

The directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 August 2017.

PRINCIPAL ACTIVITIES The Company is principally engaged in the business of investment holding and the provision of management services. The principal activities of the subsidiaries are disclosed in Note 6 to the financial statements.

RESULTS Group Company RM RM Profit after tax for the financial year 30,888,170 14,796,698

DIVIDENDS

Dividends paid or declared by the Company since the end of the previous financial year were as follows:-

(a) A final single tier tax exempt dividend of 3.00 sen per share amounting to RM9,000,300 in respect of the financial year ended 31 August 2016 was declared on 25 January 2017 and subsequently paid on 16 February 2017. The payment was made to the shareholders whose name appeared in the Company’s Record of Depositors on 31 January 2017.

(b) A first interim single tier tax-exempt dividend of 1.00 sen per ordinary share amounting to RM3,000,100 in respect of the financial year ended 31 August 2017 was declared on 27 April 2017 and subsequently paid on 16 June 2017. The payment was made to the shareholders whose name appeared in the Company’s Record of Depositors on 26 May 2017.

(c) A second interim single tier tax-exempt dividend of 1.00 sen per ordinary share amounting to RM3,000,100 in respect of the financial year ended 31 August 2017 was declared on 27 July 2017 and subsequently paid on 29 September 2017. The payment was made to the shareholders whose name appeared in the Company’s Record of Depositors on 30 August 2017.

The Board of Directors proposed a final single tier tax exempt dividend of 2.20 sen per share for the financial year ended 31 August 2017. This dividend is subject to the shareholders’ approval at the forthcoming Annual General Meeting and has not been included as a liability in the financial statements. Such dividend, if approved by the shareholders, will be counted for in equity as an appropriation of retained profit for the financial year ending 31 August 2018.

RESERVES AND PROVISIONS

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


Directors’ Report (Cont’d)

ISSUES OF SHARES AND DEBENTURES

During the financial year:-

(a) there were no changes in the issued and paid-up share capital of the Company; and

(b) there were no issues of debentures by the Company.

OPTIONS GRANTED OVER UNISSUED SHARES

During the financial year, no options were granted by the Company to any person to take up any unissued shares in the Company.

BAD AND DOUBTFUL DEBTS

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for impairment losses on receivables, and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for impairment losses on receivables.

At the date of this report, the directors are not aware of any circumstances that would require the further writing off of bad debts, or the additional allowance for impairment losses on receivables in the financial statements of the Group and of the Company.

CURRENT ASSETS

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ensure that any current assets, which were unlikely to be realised in the ordinary course of business, including their value as shown in the accounting records of the Group and of the Company, have been written down to an amount which they might be expected so to realise.

At the date of this report, the directors are not aware of any circumstances which would render the values attributed to the current assets in the financial statements misleading.

VALUATION METHODS

At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

CONTINGENT AND OTHER LIABILITIES

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

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

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



CONTINGENT AND OTHER LIABILITIES (CONT’D)

No contingent or other liability of the Group and of the Company has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations when they fall due.

CHANGE OF CIRCUMSTANCES

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

ITEMS OF AN UNUSUAL NATURE

The results of the operations of the Group and of the Company during the financial year were not, in the opinion of the directors, substantially affected by any item, transaction or event of a material and unusual nature.

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, in the opinion of the directors, 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.

DIRECTORS

The names of directors who served during the financial year until the date of this report are as follows:-

Chua Fen FattTee Hwee Ing (f)Mohd Khasan Bin AhmadDatuk Tay Puay ChuanTeo Seng Kuang

DIRECTORS’ INTERESTS

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

Number of Ordinary Shares Balance At Balance At 01.09.2016 Bought Transferred 31.08.2017

Chua Fen Fatt- Direct 103,259,701 - - 103,259,701- Indirect (1) 68,000,000 - (3,000,000) 65,000,000Tee Hwee Ing (f)- Direct 68,000,000 - (3,000,000) 65,000,000- Indirect (1) 103,259,701 - - 103,259,701Mohd Khasan Bin Ahmad 30,000 - - 30,000Datuk Tay Puay Chuan 30,000 - - 30,000Teo Seng Kuang- Direct - - - -- Indirect (2) 34,500 - - 34,500


DIRECTORS’ INTERESTS (CONT’D)

Number of Warrants Balance At Balance At 01.09.2016 Bought Transferred 31.08.2017

Chua Fen Fatt- Direct 17,209,954 - - 17,209,954- Indirect (1) 8,000,000 - - 8,000,000Tee Hwee Ing (f)- Direct 8,000,000 - - 8,000,000- Indirect (1) 17,209,954 - - 17,209,954Mohd Khasan Bin Ahmad 5,000 - - 5,000Datuk Tay Puay Chuan 5,000 - - 5,000Teo Seng Kuang- Direct - - - -- Indirect (2) 5,750 - - 5,750

Notes :

(1) Deemed interest by virtue of his/her spouse’s interests in the Company.

(2) Deemed interest by virtue of his nominee’s interest in the Company.

By virtue of their interests in the shares of the Company, Mr. Chua Fen Fatt and Madam Tee Hwee Ing are also deemed to have an interest in the shares of its subsidiaries to the extent that the Company has an interest.

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director has received or become entitled to receive any benefit (other than benefits included in the aggregate amount of remuneration received or due and receivable by the directors as disclosed in Note 20 to the financial statements, or the fixed salary of a full-time employee of the Company or related corporations) 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 except for any benefits which may be deemed to arise from transactions entered into in the ordinary course of business with companies in which certain directors have substantial financial interests as disclosed in Note 28 to the financial statements.

Neither during nor at the end of the financial year was the Group or the Company a party to any arrangements whose object is 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.

DIRECTORS’ REMUNERATION

The details of the directors’ remuneration paid or payable to the directors of the Group and of the Company during the financial year are disclosed in Note 20 to the financial statements.




INDEMNITY AND INSURANCE COST

During the financial year, there is no indemnity given to or professional indemnity insurance effected for directors, officers or auditors of the Group and of the Company.

SUBSIDIARIES

The details of the Company’s subsidiaries are disclosed in Note 6 to the financial statements.

SIGNIFICANT EVENT DURING THE REPORTING PERIOD

The significant event during the reporting period is disclosed in Note 32 to the financial statements.

AUDITORS

The auditors, Messrs. Crowe Horwath, have expressed their willingness to continue in office.

The auditors’ remuneration are disclosed in Note 23 to the financial statements.

Signed in accordance with a resolution of the directors dated 8 December 2017.

Chua Fen Fatt

Tee Hwee Ing (f)


Statement By DirectorsPursuant To Section 251(2) Of The Companies Act 2016

Statutory DeclarationPursuant To Section 251(1)(b) Of The Companies Act 2016

We, Chua Fen Fatt and Tee Hwee Ing (f), being two of the directors of Homeritz Corporation Berhad, state that, in the opinion of the directors, the financial statements set out on pages 42 to 85 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 of 31 August 2017 and of their financial performance and cash flows for the financial year ended on that date.

The supplementary information set out in Note 33 to the financial statements on page 86, which is not part of the financial statements, is prepared in all material respects, in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants and the directive of Bursa Malaysia Securities Berhad.

Signed in accordance with a resolution of the directors dated 8 December 2017.

Chua Fen Fatt

Tee Hwee Ing (f)

I, Chua Fen Fatt, being the director primarily responsible for the financial management of Homeritz Corporation Berhad, do solemnly and sincerely declare that the financial statements and supplementary information set out on pages 42 to 86 are, to the best of my knowledge and belief, 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 }Chua Fen Fatt at Muar in the state }of Johor Darul Takzim }on 8 December 2017 }

Before me : Lim Pei Ling (No. J238) Chua Fen FattCommissioner for Oaths


Independent Auditors’ Report To The Members Of Homeritz Corporation Berhad(Incorporated In Malaysia)Company No.: 805792 - X

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

We have audited the financial statements of Homeritz Corporation Berhad, which comprise the statements of financial position as at 31 August 2017 of the Group and of the Company, and 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 42 to 85.

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 August 2017, 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 Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current 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.

We have determined the matters described below to be the key audit matters to be communicated in our report.

Carrying Value of Inventories Refer to Note 8 in the financial statements

Key Audit Matter How our audit addressed the key audit matter

The Group held inventories RM32 mil as at 31 August 2017.

The carrying value of inventories is stated at the lower of cost and net realisable value and estimate by the management.

The Group determines the amount of impairment for slow moving or obsolete inventories based upon the age of the slow moving inventories.

Our procedures included, among others:-

• Performing ageing test on the inventories and reviewing the impairment for slow moving inventories, where applicable;

• Comparing the net realisable value to the cost of inventories at the end of the reporting period to assess the reasonableness of inventories write-down.


Independent Auditors’ Report To The Members Of Homeritz Corporation Berhad (Cont’d)(Incorporated In Malaysia)Company No.: 805792 - X

Information Other than the Financial Statements and Auditors’ Report Thereon

The directors of the Company are responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon.

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

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

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

Responsibilities of the Directors for the Financial Statements

The directors of the Company are responsible for the preparation of 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 these financial statements.

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

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

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Company’s internal control.

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


Independent Auditors’ Report To The Members Of Homeritz Corporation Berhad (Cont’d)(Incorporated In Malaysia)Company No.: 805792 - X

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

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

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

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

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

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

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Company for the current 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 REPORTING RESPONSIBILITIES

The supplementary information set out in Note 33 on page 86 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

OTHER MATTERS

This report is made solely to the members of the Company, as a body, in accordance with Section 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.

Crowe Horwath Ng Kim KiatFirm No.: AF 1018 Approval No.: 02074/10/2018 JChartered Accountants Chartered Accountant

Muar, Johor Darul TakzimDate : 8 December 2017


Statements Of Financial PositionAs At 31 August 2017

Group Company Note 2017 2016 2017 2016 RM RM RM RM

ASSETSNon-current Assets Property, plant and equipment 5 43,980,296 39,971,501 - - Investment in subsidiaries 6 - - 53,259,199 53,259,199 Goodwill 7 478,506 478,506 - -

44,458,802 40,450,007 53,259,199 53,259,199

Current Assets Inventories 8 32,716,695 26,400,946 - - Trade receivables 9 8,449,687 3,715,977 - - Other receivables, deposits and prepayments 10 3,963,235 5,281,244 21,578 21,372 Amount owing from subsidiaries 11 - - 455,243 7,420,761 Current tax assets 370,000 1,348,390 - - Derivative assets 12 128,551 15,839 - - Fixed deposits with licensed banks 13 29,000,000 31,424,243 9,000,000 6,000,000 Cash and bank balances 31,782,333 25,592,175 1,414,722 636,816

106,410,501 93,778,814 10,891,543 14,078,949

TOTAL ASSETS 150,869,303 134,228,821 64,150,742 67,338,148

EQUITY AND LIABILITIESShare capital 14 60,002,000 60,002,000 60,002,000 60,002,000 Reserves 15 72,442,957 56,555,287 987,786 1,191,588

TOTAL EQUITY 132,444,957 116,557,287 60,989,786 61,193,588

Non-current LiabilityDeferred tax liabilities 16 1,906,000 1,906,000 - -

1,906,000 1,906,000 - -

Current Liabilities Trade payables 17 4,254,285 3,802,211 - - Other payables and accruals 18 8,814,091 5,633,723 151,056 138,960 Dividend payable 3,000,100 6,000,200 3,000,100 6,000,200 Current tax liabilities 449,870 329,400 9,800 5,400

16,518,346 15,765,534 3,160,956 6,144,560

TOTAL LIABILITIES 18,424,346 17,671,534 3,160,956 6,144,560

TOTAL EQUITY AND LIABILITIES 150,869,303 134,228,821 64,150,742 67,338,148

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


Statements Of Profit Or Loss And Other Comprehensive IncomeFor The Financial Year Ended 31 August 2017


REVENUE 19 168,957,816 157,566,985 15,000,000 13,500,000 OTHER INCOME 1,995,621 2,774,944 - - CHANGES IN INVENTORIES OF FINISHED GOODS AND WORK-IN-PROGRESS 75,200 384,983 - -

RAW MATERIALS USED (86,036,918) (82,501,675) - -

DEPRECIATION (2,538,318) (2,394,636) - - STAFF COSTS 21 (23,203,119) (19,947,628) (7,000) (7,000) OTHER EXPENSES (21,743,170) (20,925,138) (304,619) (291,099)

RESULTS FROM OPERATING ACTIVITIES 37,507,112 34,957,835 14,688,381 13,201,901 INTEREST INCOME 1,613,529 1,278,300 141,725 128,362 FINANCE COST 22 - (69,867) - -

PROFIT BEFORE TAX 23 39,120,641 36,166,268 14,830,106 13,330,263 TAX EXPENSE 24 (8,232,471) (8,140,278) (33,408) (31,345)

PROFIT AFTER TAX AND TOTAL COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR 30,888,170 28,025,990 14,796,698 13,298,918

PROFIT AFTER TAX AND TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO : Owners of the Company 30,888,170 28,025,990 14,796,698 13,298,918

30,888,170 28,025,990 14,796,698 13,298,918

EARNINGS PER ORDINARY SHARE (SEN) 25 - Basic (Sen) 10.30 9.34

- Diluted (Sen) 10.30 9.25



Statements Of Changes In EquityFor The Financial Year Ended 31 August 2017

Group Attributable To Owners of The Company Non- Distributable Distributable Share Share Retained Total Note capital Premium profits equity RM RM RM RM

Balance at 1 September 2015 60,000,000 - 42,022,547 102,022,547

Profit after tax and total comprehensive income for the financial year - - 28,025,990 28,025,990

Dividend to owners of the Company- by the Company 26 - - (13,500,450) (13,500,450)

Conversion of warrants 14 2,000 7,200 - 9,200

Balance at 31 August 2016 / 1 September 2016 60,002,000 7,200 56,548,087 116,557,287


Dividend to owners of the Company- by the Company 26 - - (15,000,500) (15,000,500)

Balance at 31 August 2017 60,002,000 7,200 72,435,757 132,444,957

Company Attributable To Owners of The Company Non- Distributable Distributable Share Share Retained Total Note capital Premium profits equity RM RM RM RM

Balance at 1 September 2015 60,000,000 - 1,385,920 61,385,920 Profit after tax and total comprehensive income for the financial year - - 13,298,918 13,298,918

Conversion of warrants 14 2,000 7,200 - 9,200 Dividends to owners of the Company 26 - - (13,500,450) (13,500,450)

Balance at 31 August 2016 / 1 September 2016 60,002,000 7,200 1,184,388 61,193,588


Dividends to owners of the Company 26 - - (15,000,500) (15,000,500)

Balance at 31 August 2017 60,002,000 7,200 980,586 60,989,786



Statements Of Cash FlowsFor The Financial Year Ended 31 August 2017


CASH FLOWS FROM OPERATING ACTIVITIESProfit before tax 39,120,641 36,166,268 14,830,106 13,330,263 Adjustments for : Bad debt written-off - 302,087 - - Depreciation 2,538,318 2,394,636 - - (Gain)/Loss on disposal of property, plant and equipment (50) 6,259 - - Net fair value gain on derivatives (112,712) (2,382,386) - - Property, plant and equipment written off 3 267 - - Unrealised (gain)/loss on foreign exchange (31,218) 56,868 - - Interest expenses - 69,867 - - Interest income (1,613,529) (1,278,300) (141,725) (128,362)

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 39,901,453 35,335,566 14,688,381 13,201,901

Changes In Working CapitalInventories (6,315,749) (248,342) - - Trade and other receivables, deposits and prepayment (3,450,622) 2,695,397 (206) (9,357)Trade and other payables and accruals 2,882,093 518,453 12,096 (2,400)

CASH GENERATED FROM OPERATIONS 33,017,175 38,301,074 14,700,271 13,190,144 Interest paid - (69,867) - - Interest received 1,613,529 1,278,300 141,725 128,362 Tax paid (7,257,797) (11,036,678) (29,008) (34,145)Tax refund 124,186 - - -

NET CASH FROM OPERATING ACTIVITIES 27,497,093 28,472,829 14,812,988 13,284,361

CASH FLOWS FOR INVESTING ACTIVITIES Net placement of fixed deposits with licensed banks with maturity period of more than three months (16,000,000) - (6,000,000) - Proceeds from disposal of property, plant and equipment 1,200 156,743 - - Purchase of property, plant and equipment 5(a) (5,821,063) (10,066,834) - -

NET CASH FOR INVESTING ACTIVITIES (21,819,863) (9,910,091) (6,000,000) -

BALANCE CARRIED FORWARD 5,677,230 18,562,738 8,812,988 13,284,361



Statements Of Cash FlowsFor The Financial Year Ended 31 August 2017 (Cont’d)


BALANCE BROUGHT FORWARD 5,677,230 18,562,738 8,812,988 13,284,361

CASH FLOWS FOR FINANCING ACTIVITIES Proceeds from conversion of warrants - 9,200 - 9,200 Repayment of term loans - (1,863,797) - - Repayment from subsidiary - - 6,965,518 - Dividend paid (18,000,600) (12,000,250) (18,000,600) (12,000,250)

NET CASH FOR FINANCING ACTIVITIES (18,000,600) (13,854,847) (11,035,082) (11,991,050)

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (12,323,370) 4,707,891 (2,222,094) 1,293,311 EFFECT OF EXCHANGE DIFFERENCES 89,285 (22,619) - - CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR 57,016,418 52,331,146 6,636,816 5,343,505

CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 27 44,782,333 57,016,418 4,414,722 6,636,816



Notes To The Financial StatementsFor The Financial Year Ended 31 August 2017

1. GENERAL INFORMATION

The Company is a public company limited by shares, incorporated and domiciled in Malaysia. The registered office and principal place of business are as follows:

Registered office : No. 7 (1st Floor), Jalan Pesta 1/1 Taman Tun Dr. Ismail 1 Jalan Bakri 84000 Muar Johor Darul Takzim

Principal place of business : Lot 8726, PTD 6023, Batu 8 Kawasan Perindustrian Bukit Bakri 84200 Muar Johor Darul Takzim

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors dated 8 December 2017.

2. PRINCIPAL ACTIVITIES

The Company is principally engaged in the business of investment holding and the provision of management services. The principal activities of the subsidiaries are disclosed in Note 6 to the financial statements.

3. BASIS OF PREPARATION

The financial statements of the Group are prepared under historical cost convention and modified to include other bases of valuation as disclosed in other sections under significant accounting policies, and in compliance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

3.1 During the current financial year, the Group has adopted the following new accounting standards and/or interpretations (including the consequential amendments, if any):-

MFRSs and/or IC Interpretations (including the Consequential Amendments)

MFRS 14 : Regulatory Deferral AccountsAmendments to MFRS 10, : Investment Entities – Applying the Consolidation ExceptionMFRS 12 and MFRS 128 Amendments to MFRS 11 : Accounting for Acquisitions of Interests in Joint OperationsAmendments to MFRS 101 : Disclosure Initiative Amendments to MFRS 116 : Clarification of Acceptable Methods of Depreciation and and MFRS 138 Amortisation Amendments to MFRS 116 : Agriculture – Bearer Plants and MFRS 141Amendments to MFRS 127 : Equity Method in Separate Financial Statements

Annual Improvements to MFRSs 2012 – 2014 Cycle

The adoption of the above accounting standards and interpretations (including the consequential amendments, if any) did not have any material impact on the Group’s financial statements.


Notes To The Financial StatementsFor The Financial Year Ended 31 August 2017 (Cont’d)

3. BASIS OF PREPARATION (CONT’D)

3.2 The Group has not applied in advance the following accounting standards and/or interpretations (including the consequential amendments, if any) that have been issued by the Malaysian Accounting Standards Board (MASB) but are not yet effective for the current financial year:-

MFRSs and/or IC Interpretations Effective date (including the Consequential Amendments)

MFRS 9 : Financial Instruments 1 January 2018 (IFRS 9 issued by IASB in July 2014)MFRS 15 : Revenue from Contracts with Customers 1 January 2018MFRS 16 : Leases 1 January 2019MFRS 17 : Insurance Contracts 1 January 2021IC Interpretation 22 : Foreign Currency Transactions and Advance Consideration 1 January 2018IC Interpretation 23 : Uncertainty over Income Tax Treatments 1 January 2019Amendments to MFRS 2 : Classification and Measurement of Share- Based 1 January 2018 Payment TransactionsAmendments to MFRS 4 : Applying MFRS 9 Financial Instruments with MFRS 1 January 2018 4 Insurance ContractsAmendments to MFRS 10 : Sale or Contribution of Assets between an Investor and Deferred and MFRS 128 its Associate or Joint Venture Amendments to MFRS 15 : Effective Date of MFRS 15 1 January 2018Amendments to MFRS 15 : Clarifications to MFRS 15 ‘Revenue from Contracts 1 January 2018 with Customers’Amendments to MFRS 107 : Disclosure Initiative 1 January 2017Amendments to MFRS 112 : Recognition of Deferred Tax Assets for Unrealised Losses 1 January 2017Amendments to MFRS 140 : Transfer of Investment Property 1 January 2018Annual Improvement to MFRS Standards 2014 – 2016 Cycles:• Amendments to MFRS 12 : Clarification of the Scope of Standard 1 January 2017Annual Improvement to MFRS Standards 2014 – 2016 Cycles:• Amendments to MFRS 1 : Deletion of Short-term Exemptions for First-time Adopters.• Amendments to MFRS 128 : Measuring an Associate or Joint Venture at Fair Value 1 January 2018

The adoption of the above accounting standards and/or interpretations (including the consequential amendments, if any) is expected to have no material impact on the financial statements of the Group upon their initial application.

4. SIGNIFICANT ACCOUNTING POLICIES

4.1 Critical Accounting Estimates and Judgements

Estimates and judgements are continually evaluated by the directors and management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and judgements that affect the application of the Group’s accounting policies and disclosures, and have a significant risk of causing a material adjustment to the carrying amounts of assets, liabilities, income and expenses are discussed below:-

(a) Depreciation of property, plant and equipment

The estimates for the residual values, useful lives and related depreciation charges for the property, plant and equipment are based on commercial factors which could change significantly as a result of technical innovations and competitors’ actions in response to the market conditions. The Group anticipates that the residual values of its property, plant and equipment will be insignificant. As a result, residual values are not being taken into consideration for the computation of the depreciable amount. Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.



4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

4.1 Critical Accounting Estimates and Judgements (cont’d)

(b) Income taxes

There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimate. The Group recognises tax liabilities based on its understanding of the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax expense and deferred tax balances in the year in which such determination is made.

(c) Impairment of inventories

Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories.

(d) Impairment of goodwill

Goodwill is tested for impairment annually and at other times when such indicators exist. This requires management to estimate the expected future cash flows of the cash-generating unit to which goodwill is allocated and to apply a suitable discount rate in order to determine the present value of those cash flows. The future cash flows are most sensitive to budgeted gross margins, growth rates estimated and discount rate used. If the expectation is different from the estimation, such difference will impact the carrying value of goodwill.

4.2 Basis of Consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries made up to the end of the reporting period.

Subsidiaries are entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed to, or has right to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Potential voting rights are considered when assessing control only when such rights are substantive. The Group also considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current liability to direct the activities of the investee that significantly affect the investee’s return.

Subsidiaries are consolidated from the date on which control is transferred to the Group up to the effective date on which control ceases, as appropriate.

Intragroup transactions, balances, income and expenses are eliminated on consolidation. Intragroup losses may indicate an impairment that requires recognition in the consolidated financial statements. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group.




4.2 Basis of Consolidation (cont’d)

(a) Business combinations

Acquisitions of businesses are accounted for using the acquisition method. Under the acquisition method, the consideration transferred for acquisition of a subsidiary is the fair value of the assets transferred, liabilities incurred and the equity interests issued by the Group at the acquisition date. The consideration transferred included the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs, other than the costs to issue debt or equity securities, are recognised in profit or loss when incurred.

In a business combination achieved in stages, previously held equity interests in the acquiree are remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss.

Non-controlling interests in the acquiree may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets at the date of acquisition. The choice of measurement basis is made on a transaction-by-transaction basis.

(b) Business combinations under common control

Business combinations under common control are accounted using the merger method of accounting. Under the merger method of accounting, the results of the subsidiaries are presented as if the merger had been effected throughout the current and previous financial years. The assets and liabilities combined are accounted based on the carrying amounts from the perspective of common control shareholder at the date of transfer. On consolidation, the cost of the merger is cancelled with the par values of the shares received. Any resulting credit difference is classified as equity and be regarded as a non-distributable reserve. Any resulting debit difference is first charged against any suitable capital reserves and then against revenue reserves in case where there are no suitable capital reserves or they are insufficient to cover the merger deficit.

(c) Non-controlling interests Non-controlling interests are presented within equity in the consolidated statements of financial position, separately from equity attributable to owners of the Company. Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.

(d) Changes in ownership interests in subsidiaries without change of control

All changes in the parent’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of consideration paid or received is recognised directly in equity of the Group.




4.2 Basis of Consolidation (cont’d)

(e) Loss of control

Upon the loss of control of a subsidiary, the Group recognises any gain or loss on disposal in profit or loss which is calculated as the difference between:-

(i) the aggregate of the fair value of the consideration received and the fair value of any retained interest in the former subsidiary; and

(ii) the previous carrying amount of the assets (including goodwill), and liabilities of the former subsidiary and any non-controlling interests.

Amounts previously recognised in other comprehensive income in relation to the former subsidiary are accounted for in the same manner as would be required if the relevant assets or liabilities were disposed of (i.e. reclassified to profit or loss or transferred directly to retained profits). The fair value of any investments retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under MFRS 139.

4.3 Goodwill

Goodwill is measured at cost less accumulated impairment losses, if any. The carrying value of goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying amount may be impaired. The impairment value of goodwill is recognised immediately in profit or loss. An impairment loss recognised for goodwill is not reversed in a subsequent period.

Under the acquisition method, any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interests recognised and the fair value of the Group’s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree’s identifiable assets and liabilities at the date of acquisition is recorded as goodwill.

Where the latter amount exceeds the former, after reassessment, the excess represents a bargain purchase gain and is recognised in profit or loss immediately.

4.4 Functional and Foreign Currencies

(a) Functional and presentation currency

The individual financial statements of each entity in the Group are presented in the currency of the primary economic environment in which the entity operates, which is the functional currency.

The consolidated financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional and presentation currency. All values are rounded to the nearest RM, unless otherwise stated.

(b) Foreign currency transactions and balances

Transactions in foreign currencies are converted into the respective functional currencies on initial recognition, using the exchange rates at the transaction dates. Monetary assets and liabilities at the end of the reporting period are translated at the exchange rates ruling as of that date. Non-monetary assets and liabilities are translated using exchange rates that existed when the values were determined. All exchange differences are recognised in profit or loss.




4.5 Financial Instruments

Financial assets and financial liabilities are recognised in the statements of financial position when the Group has become a party to the contractual provisions of the instruments.

Financial instruments are classified as financial assets, financial liabilities or equity instruments in accordance with the substance of the contractual arrangement and their definitions in MFRS 132. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as an expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.

A financial instrument is recognised initially at its fair value. Transaction costs that are directly attributable to the acquisition or issue of the financial instrument (other than a financial instrument at fair values through profit or loss) are added to/deducted from the fair value on initial recognition, as appropriate. Transaction costs on the financial instrument at fair value through profit or loss are recognised immediately in profit or loss.

Financial instruments recognised in the statements of financial position are disclosed in the individual policy statement associated with each item.

(a) Financial assets

On initial recognition, financial assets are classified as either financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables financial assets or available-for-sale financial assets, as appropriate.

(i) Financial assets at fair value through profit or loss

Financial assets are classified as financial assets at fair value through profit or loss when the financial asset is either held for trading or is designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise. Derivatives are also classified as held for trading unless they are designated as hedges. Fair value through profit or loss category also comprises contingent consideration in a business combination.

Financial assets at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. Dividend income from this category of financial assets is recognised in profit or loss when the Group’s right to receive payment is established.

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

(ii) Held-to-maturity investments

As at the end of the reporting period, there were no financial assets classified under this category.




4.5 Financial Instruments (cont’d)

(a) Financial assets (cont’d)

(iii) Loans and receivables financial assets

Trade receivables and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables financial assets. Loans and receivables financial assets are measured at amortised cost using the effective interest method, less any impairment loss. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

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

(iv) Available-for-sale financial assets

As at the end of the reporting period, there were no financial assets classified under this category.

(b) Financial liabilities

(i) Financial liabilities at fair value through profit or loss

Fair value through profit or loss category comprises financial liabilities that are either held for trading or are designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise. Derivatives are also classified as held for trading unless they are designated as hedges. Fair value through profit or loss category also comprises contingent consideration in a business combination.

(ii) Other financial liabilities

Other financial liabilities are initially measured at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

Financial liabilities are classifies as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.




4.5 Financial Instruments (cont’d)

(c) Equity instruments

Equity instruments classified as equity are measured initially at cost and are not remeasured subsequently.

Ordinary shares

Incremental costs directly attributable to the issue of new ordinary shares are shown in equity as a deduction, net of tax, from proceeds.

Dividends on ordinary shares are recognised as liabilities when approved for appropriation.

(d) Derivative Financial Instruments

Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into. Subsequently, they are remeasured at fair value with changes in fair value recognised in profit or loss. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

(e) Derecognition

A financial asset or part of it is derecognised when, and only when, the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in profit or loss.

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expires. 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.

4.6 Investment in Subsidiaries

Investments in subsidiaries are stated at cost in the statement of financial position of the Company, and are reviewed for impairment at the end of the reporting period if events or changes in circumstances indicate that the carrying values may not be recoverable. The cost of the investments includes transaction costs.

On the disposal of the investments in subsidiaries, the difference between the net disposal proceeds and the carrying amount of the investments is recognised in profit or loss.

4.7 Property, Plant and Equipment

All items of property, plant and equipment are initially measured at cost. Cost includes expenditure that are directly attributable to the acquisition of the asset and other costs directly attributable to bringing the asset to working condition for its intended use.

Subsequent to initial recognition, property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses.




4.7 Property, Plant and Equipment (cont’d)

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when the cost is incurred and it is probable that the future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. The carrying amount of parts that are replaced is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

Freehold land is not depreciated. Depreciation on other property, plant and equipment is charged to profit or loss (unless it is included in the carrying amount of another asset) on the straight-line method to write off the depreciable amount of the assets over their estimated useful lives. Depreciation of an asset does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated. The principal annual rates used for this purposes are:

Leasehold land over the lease period of 86-91 yearsFactory buildings 2%Factory equipment, plant and machinery 12.5-20%Showroom, renovation, office equipment, furniture and fittings 10-20%Motor vehicles 20%

Capital work-in-progress included in property, plant and equipment are not depreciated as these assets are not yet available for use.

The depreciation method, useful lives and residual values are reviewed and adjusted if appropriate, at the end of each reporting date to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment. Any changes are accounted for as a change in estimate.

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.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising from derecognition of assets, being the difference between the net disposal proceeds and the carrying amount, is recognised in profit or loss.

4.8 Leased Assets

Finance lease

A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental to ownership. 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. The corresponding liability is included in the statement of financial position as hire purchase payables.

Minimum lease payments made under finance leases are apportioned between the finance costs and the reduction of the outstanding liability. The finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised in the profit or loss and allocated over the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability for each accounting period.

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




4.9 Impairment

(a) Impairment of financial assets

All financial assets (other than those categorised at fair value through profit or loss and investment is subsidiaries), are assessed at the end of each reporting period whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset.

An impairment loss in respect of loans and receivables financial assets is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

(b) Impairment of non-financial assets

The carrying values of assets, other than those to which MFRS 136 : Impairment of Assets does not apply, are reviewed at the end of each reporting period for impairment when an annual impairment assessment is compulsory or there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. When the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount and an impairment loss shall be recognised. The recoverable amount of the asset is the higher of the assets’ fair value less costs to sell and its value-in-use, which is measured by reference to discounted future cash flows using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where it is not possible to estimate the recoverable amount of an individual asset, the Group determines the recoverable amount of the cash-generating unit to which the asset belongs.

An impairment loss is recognised in profit or loss. Any impairment loss recognised in respect of a cash-generating unit is allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit and then to reduce the carrying amounts of the other assets in the cash-generating unit on a pro rata basis.

In respect of assets other than goodwill, and when there is a change in the estimates used to determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in profit or loss immediately.




4.10 Inventories

Inventories are stated at the lower of cost and net realisable value. The cost of inventories are measured based on specific identification and first-in-first-out formula, where appropriate, and includes expenditure incurred in acquiring the inventories, production or conversion cost and other costs incurred and bringing them to their existing location and condition. In the case of work-in-progress and finished goods, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realisable value represents the estimated selling price less the estimated costs of completion and the estimated costs necessary to make the sale.

4.11 Income Taxes

(a) Current tax

Current tax assets and liabilities are expected amount of income tax recoverable or payable to the taxation authorities.

Current taxes are measured using tax rates and tax laws that have been enacted or substantively enacted at the end of the reporting period and are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss (either in other comprehensive income or directly in equity).

(b) Deferred tax

Deferred tax are recognised using the liability method for all temporary difference other than those that arise from goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantively enacted at the end of the reporting period.

Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. The carrying amounts of deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that the related tax benefits will be realised.

Current and deferred tax items are recognised in correlation to the underlying transactions either in profit or loss, other comprehensive income or directly in equity. Deferred tax arising from a business combination is adjusted against goodwill or negative goodwill.

Current tax assets and liabilities or deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same taxable entity (or on different tax entities but they intend to settle current tax assets and liabilities on a net basis) and the same taxation authority.




4.11 Income Taxes (cont’d)

(c) Goods and services tax (“GST”)

Revenues, expenses and assets are recognised net of GST except for the GST in a purchase of assets or services which are not recoverable from the taxation authorities, the GST are included as part of the costs of the assets acquired or as part of the expense item whichever is applicable.

In addition, receivables and payables are also stated with the amount of GST included (where applicable).

The net amount of the GST recoverable from or payable to the taxation authorities at the end of the reporting period is included in other receivables or other payables.

4.12 Cash and Cash Equivalents

Cash and cash equivalents comprise cash in hand, bank balances and demand deposits that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value with original maturity periods of three months or less. For the purpose of the statements of cash flows, cash and cash equivalents are presented net of bank overdrafts.

4.13 Employee Benefits

(a) Short-term benefits

Wages, salaries, paid annual leave and bonuses are measured on an undiscounted basis and are recognised in profit or loss in the period in which the associated services are rendered by employees of the Group.

(b) Defined contribution plans

The Group’s contributions to defined contribution plans are recognised in profit or loss in the period to which they relate. Once the contributions have been paid, the Group has no further liability in respect of the defined contribution plans.

4.14 Related Parties

A party is related to an entity (referred to as the “reporting entity”) if:-

(a) A person or a close member of that person’s family is related to a reporting entity if that person:-

(i) has control or joint control over the reporting entity;

(ii) has significant influence over the reporting entity; or

(iii) is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.




4.14 Related Parties (cont’d)

(b) An entity is related to a reporting entity if any of the following conditions applies:-

(i) The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(iii) Both entities are joint ventures of the same third party.

(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v) The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity.

(vi) The entity is controlled or jointly controlled by a person identified in (a) above.

(vii) A person identified in (a)(i) above has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

(viii) The entity, or any member of a group of which it is a part, provides key management personnel services to the reporting entity or to the parent of the reporting entity.

Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the reporting entity either directly or indirectly, including any director (whether executive or otherwise) of that entity.

4.15 Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using a valuation technique. The measurement assumes that the transaction takes place either in the principal market or in the absence of a principal market, in the most advantageous market. For non-financial asset, the fair value measurement takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

For financial reporting purposes, the fair value measurements are analysed into level 1 to level 3 as follows:-

Level 1 : Inputs are quoted prices (unadjusted) in active markets for identical assets or liability that the entity can access at the measurement date;

Level 2 : Inputs are inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly or indirectly; and

Level 3 : Inputs are unobservable inputs for the asset or liability.

The transfer of fair value between levels is determined as of the date of the event or change in circumstances that caused the transfer.




4.16 Revenue and Other Income

Revenue is measured at the fair value of the consideration received or receivable, net of returns, goods and services tax, cash and trade discounts.

(a) Sale of goods

Revenue from sale of goods is recognised when significant risks and rewards of ownership of the goods have been transferred to the buyer and where the Group does not have continuing managerial involvement and effective control over the goods sold.

(b) Dividend income

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

(c) Interest income

Interest income is recognised on an accrual basis using the effective interest method.

(d) Government grant

Government grant that compensates the Group for expenses incurred are recognised in profit or loss on a systematic basis over the period necessary to match them with the related costs which they are intended to compensate for.

4.17 Operating Segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating segment’s operating results are reviewed regularly by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

4.18 Research and Development Expenditure

Research and development expenditures charged to profit or loss in the financial year in which it is incurred except insofar as it relates to a clearly defined project which the benefits therefrom can reasonably be regarded as assured. Expenditure so deferred is limited to the value of the future benefit and is stated at cost incurred less grants received, if any. Such deferred expenditure shall be amortised through profit or loss over the period of the project, upon commencement of commercial production.



5 P

RO

PE

RTY

, PLA

NT

AN

D E

QU

IPM

EN

T

Gro

up -

At

31 A

ugus

t 20

17

S

how

roo

m,

r

eno

vati

on,

Fa

cto

ry

offi

ce

e

qui

pm

ent,

eq

uip

men

t,

C

apit

al

Fr

eeho

ld

Leas

eho

ld

Fact

ory

p

lant

and

fu

rnit

ure

Mo

tor

wo

rk-in

-

la

nd

land

b

uild

ing

m

achi

nery

and

fitt

ing

s

veh

icle

s

pro

gre

ss

To

tal

RM

R

M

RM

R

M

RM

R

M

RM

R

M

At

cost

At

1 Se

pte

mb

er 2

016

16,

093,

683

1

,865

,475

18

,205

,554

17

,474

,132

2

,156

,465

3

,110

,898

2

98,3

76

59,2

04,5

83

Ad

dit

ions

-

-

3

10,5

44

3,6

64,0

15

78,

474

4

59,4

98

2,0

35,7

35

6,5

48,2

66

Dis

po

sals

-

-

-

(3,6

80)

-

-

-

(3

,680

)W

rite

-off

-

-

-

-

(6

,970

) -

-

(6

,970

)R

ecla

ssifi

cati

on

-

-

2

,334

,111

-

-

-

(2

,334

,111

) -

At

31 A

ugus

t 20

17

16,

093,

683

1

,865

,475

20

,850

,209

21

,134

,467

2

,227

,969

3

,570

,396

-

65

,742

,199

Less

: A

ccum

ulat

ed d

epre

ciat

ion

At

1 Se

pte

mb

er 2

016

-

2

29,3

59

2,8

69,9

55

13,0

69,1

10

1,6

58,1

31

1,3

30,7

19

-

19,1

57,2

74

Cha

rge

for

the

finan

cial

yea

r -

20,

886

4

00,6

54

1,5

83,7

73

116

,266

4

16,7

39

-

2,5

38,3

18

Dis

po

sals

-

-

-

(2,5

30)

-

-

-

(2

,530

)W

rite

-off

-

-

-

-

(6

,967

) -

-

(6

,967

)

At

31 A

ugus

t 20

17

-

2

50,2

45

3,2

70,6

09

14,6

50,3

53

1,7

67,4

30

1,7

47,4

58

-

21,6

86,0

95

Less

: Im

pai

rmen

t lo

sses

At

1 Se

pte

mb

er 2

016

75,

808

-

-

-

-

-

-

75

,808

A

dd

itio

ns

-

-

-

-

-

-

-

-

At

31 A

ugus

t 20

17

75,

808

-

-

-

-

-

-

7

5,80

8

75,

808

2

50,2

45

3,2

70,6

09

14,6

50,3

53

1,7

67,4

30

1,7

47,4

58

-

21,7

61,9

03

Car

ryin

g a

mo

unt

At

31 A

ugus

t 20

17

16,

017,

875

1

,615

,230

17

,579

,600

6

,484

,114

4

60,5

39

1,8

22,9

38

-

43,9

80,2

96



5 P

RO

PE

RTY

, PLA

NT

AN

D E

QU

IPM

EN

T (C

ON

T’D

)

Gro

up -

At

31 A

ugus

t 20

16

S

how

roo

m,

r

eno

vati

on,

Fa

cto

ry

offi

ce

e

qui

pm

ent,

eq

uip

men

t,

C

apit

al

Fr

eeho

ld

Leas

eho

ld

Fact

ory

p

lant

and

fu

rnit

ure

Mo

tor

wo

rk-in

-

la

nd

land

b

uild

ing

m

achi

nery

and

fitt

ing

s

veh

icle

s

pro

gre

ss

To

tal

RM

R

M

RM

R

M

RM

R

M

RM

R

M

At

cost

At

1 Se

pte

mb

er 2

015

8,0

81,5

46

1,8

65,4

75

18,2

05,5

54

16,0

45,0

14

1,9

29,8

91

3,1

45,7

52

-

49,2

73,2

32A

dd

itio

ns

8,0

12,1

37

-

-

1

,502

,218

2

29,6

54

292

,746

2

98,3

76

10,3

35,1

31D

isp

osa

ls

-

-

-

(7

3,10

0)

-

(3

27,6

00)

-

(4

00,7

00)

Wri

te-o

ff

-

-

-

-

(3,0

80)

-

-

(3,0

80)

At

31 A

ugus

t 20

16

16,

093,

683

1

,865

,475

18

,205

,554

17

,474

,132

2

,156

,465

3

,110

,898

2

98,3

76

59,2

04,5

83

Less

: A

ccum

ulat

ed d

epre

ciat

ion

At

1 Se

pte

mb

er 2

015

-

2

08,4

73

2,5

05,8

61

11,6

01,7

58

1,5

46,8

32

1,1

40,2

25

-

17,0

03,1

49C

harg

e fo

r th

e fin

anci

al y

ear

-

2

0,88

6

364

,094

1

,540

,331

1

14,1

12

355

,213

-

2

,394

,636

Dis

po

sals

-

-

-

(72,

979)

-

(164

,719

) -

(237

,698

)W

rite

-off

-

-

-

-

(2

,813

) -

-

(2

,813

)

At

31 A

ugus

t 20

16

-

2

29,3

59

2,8

69,9

55

13,0

69,1

10

1,6

58,1

31

1,3

30,7

19

-

19,1

57,2

74

Less

: Im

pai

rmen

t lo

sses

At

1 Se

pte

mb

er 2

015

75,

808

-

-

-

-

-

-

7

5,80

8A

dd

itio

ns

-

-

-

-

-

-

-

-

At

31 A

ugus

t 20

16

75,

808

-

-

-

-

-

-

7

5,80

8

75,

808

2

29,3

59

2,8

69,9

55

13,0

69,1

10

1,6

58,1

31

1,3

30,7

19

-

19,2

33,0

82

Car

ryin

g a

mo

unt

At

31 A

ugus

t 20

16

16,

017,

875

1

,636

,116

15

,335

,599

4

,405

,022

4

98,3

34

1,7

80,1

79

298

,376

39

,971

,501



5. PROPERTY, PLANT AND EQUIPMENT (CONT’D) (a) Purchase of property, plant and equipment are as follows:-

Group 2017 2016 RM RM

Aggregate cost of property,plant and equipment acquired 6,548,266 10,335,131Unpaid balance included in sundry payables (Note 18) (956,860) (314,797)Cash paid in respect of acquisitions in previous financial year 229,657 46,500

Cash paid during the financial year 5,821,063 10,066,834

(b) There is no property, plant and equipment in the Company throughout the current and previous financial years.

6. INVESTMENT IN SUBSIDIARIES

Company 2017 2016 RM RM

Unquoted shares - at cost 53,259,199 53,259,199

The principal activities of the subsidiaries, all of which are incorporated in Malaysia, and the equity interest held by the Company are shown below:-

Name of Subsidiary Principal Activities Equity Interest 2017 2016

Home Upholstery Industries Sdn. Bhd. Design, manufacture and sale of upholstery 100% 100% furniture products.U.S. Furniture Manufacturing Sdn. Bhd. Property investment holding. 100% 100% Embrace Industries Sdn. Bhd. Design, manufacturing and sale of furniture 100% 100% and furniture parts.

7. GOODWILL Group 2017 2016 RM RM

At cost At 1 September/31 August 478,506 478,506



7. GOODWILL (CONT’D)

Impairment testing of goodwill

Goodwill arising from business combinations has been allocated to each cash-generating unit (“CGU”) for impairment testing on an annual basis by comparing the carrying amount with the recoverable amount of the CGU based on value-in-use. Value-in-use is determined by discounting the future cash flows to be generated from the continuing use of the CGU based on the following assumptions:

• Cash flows are projected based on the management’s five-year business plan.

• Discount rates used for cash flows discounting purpose are the pre-tax discount rate which reflects specific risks relating to the relevant operating segments. The discount rate applied for cash flow projection is 8.10% (2016: 8.10%).

• Growth rate of 6.50% (2016: 6.50%) for the CGU is determined based on the management’s estimate of the industry trends and past performances of the CGU.

The management is not aware of any reasonably possible change in the above key assumptions that would cause the carrying amounts of the CGU to materially exceed their recoverable amounts.

8. INVENTORIES


At cost Raw materials 26,695,324 20,524,772 Work-in-progress 4,008,134 3,597,752 Finished goods 1,847,419 2,182,601 Consumable tools 165,818 95,821

32,716,695 26,400,946

Recognised in profit or loss Inventories recognised as cost of sales 85,961,718 82,116,692

9. TRADE RECEIVABLES

The Group’s normal trade terms range from cash term to 90 days credit (2016: cash term to 90 days credit) from the date of invoices. Other credit terms are assessed and approved on a case-by-case basis.



10. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

Group Company 2017 2016 2017 2016 RM RM RM RM

Other receivablesAdvance to supplier 1,532,506 3,333,689 - - Goods and services tax recoverable 690,503 373,516 - - Sundry receivables 197,074 168,732 18,378 18,172

2,420,083 3,875,937 18,378 18,172 Deposits 165,170 152,260 2,000 2,000 Prepayments 1,377,982 1,253,047 1,200 1,200

3,963,235 5,281,244 21,578 21,372

11. AMOUNT OWING FROM SUBSIDIARIES

This represents non-trade balances which is unsecured, interest free and repayable on demand.

12. DERIVATIVE ASSETS

Group Contract/ Notional Derivative Derivative Amount Assets Liabilities RM RM RM

2017Forward foreign exchange contracts 4,779,758 128,551 -

2016Forward foreign exchange contracts 5,290,180 15,839 -

The Group does not apply hedge accounting.

(a) The Group uses forward foreign exchange contracts to manage some of its transaction exposure. These contracts are not designated as cash flow or fair value hedges and are entered into for periods consistent with currency translation exposure and fair value changes exposure. Such derivatives do not qualify for hedge accounting. The settlement dates on forward foreign exchange contracts range from 1 - 2 months (2016: 1 - 5 months) after the end of the reporting period.

(b) The Group recognises a gain of RM112,712 (2016: gain of RM2,382,386) arising from fair value changes of derivatives during the financial year as disclosed in Note 23 to the financial statements. The fair value changes were attributed to changes in foreign exchange spot and forward rate. The method and assumptions applied in determining the fair value of derivative are disclosed in Note 31.4 to the financial statements.



13. FIXED DEPOSITS WITH LICENSED BANKS

(a) The effective interest rates for all deposits placed with licensed banks of the Group and the Company at the end of the reporting period are ranging from 3.70% - 3.90% (2016: 3.35% - 4.00%) and 3.70% - 3.90% (2016: 3.35%) per annum respectively.

(b) The maturity periods for all deposits placed with licensed bank of the Group and of the Company at the end of the reporting period are 3 - 4 months (2016: 2 - 3 months) and 2 - 4 months (2016: 2 months) respectively.

14. SHARE CAPITAL

Group and Company 2017 2016 Number of Number of shares RM shares RM

Authorised Ordinary shares of RM 0.20 each N/A N/A 500,000,000 100,000,000

N/A Not applicable pursuant to Companies Act 2016 which came into operation on 31 January 2017 as disclosed in item (b) below.

2017 2016 Number of Number of shares RM shares RM

Issued and fully paid-upOrdinary shares with no par value (2016 - par value of RM 0.20 each) At 1 September 300,010,000 60,002,000 300,000,000 60,000,000 - Conversion of share from warrants - - 10,000 2,000

At 31 August 300,010,000 60,002,000 300,010,000 60,002,000

(a) The holders of ordinary shares (except treasury shares) are entitled to receive dividends as and when declared by the Company, and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.

(b) On 31 January 2017, the concepts of authorised share capital and par value of share capital were abolished in accordance with the Companies Act 2016.

Warrants 2015/2020

A total 50,000,000 free warrants were issued by the Company on 10 July 2015 on the basis of one (1) free warrant for every four (4) existing ordinary shares held. Each warrant entitles the holder the right to subscribed for one (1) new ordinary share of the Company at an exercise price of RM 0.92 per new ordinary share. During the financial year ended 31 August 2016, an issue of 10,000 new ordinary share for pursuant to the conversion of warrants by warrant holder. The warrants will expire on 9 July 2020.



14. SHARE CAPITAL (CONT’D)

Warrants 2015/2020 (cont’d)

The salient terms of the Warrants 2015/2020 are as follows:-

(a) The Warrants are constituted by a Deed Poll executed on 22 June 2015.

(b) The Warrants are traded separately.

(c) The Warrants can be exercised any time during the tenure of 5 years commencing from the date of issue, 10 July 2015 to 9 July 2020 (“Exercised Period”). Warrants not exercised during the Exercised Period will lapse and cease to be valid.

(d) Each Warrant entitles the registered holder to subscribe for one new ordinary share (“Shares”) in the Company.

(e) Subject to the provisions in the Deed Poll, the Exercise Price and the number of Warrants held by each Warrant holder shall from time to time be adjusted by the Company in consultation with the approved adviser and certified by the auditors appointed by the Company.

(f) Subject to the provisions in the Deed Poll, the Company is free to issue shares to shareholders either for cash or as a bonus distribution and further subscription rights upon such terms and conditions as the Company sees fit but the Warrant holders will not have any participating rights in such issues unless otherwise resolved by the Company in general meeting.

15. RESERVES


Non-distributableShare premium 7,200 7,200 7,200 7,200

Distributable Retained profits 72,435,757 56,548,087 980,586 1,184,388

72,442,957 56,555,287 987,786 1,191,588

(a) Share premium

The Group have adopted the transitional provision set out in Section 618(3) of the Companies Act 2016 (‘’Act’’) where the sum standing to the credit of the share premium may be utilised within twenty four (24) months from the commencement date of 31 January 2017 in the manner as allowed for under the Act. Therefore, the Group and the Company has not consolidated the share premium into share capital until the expiry of the transitional period.

(b) Retained profits

Retained profits are those available for distribution by way of dividends.

Under the single tier tax system, tax on the Company’s profits is the final tax and accordingly, any dividends to the shareholders are not subject to tax.



16. DEFERRED TAX LIABILITIES


(a) Movements of deferred tax liabilitiesAt 1 September 1,906,000 2,156,000 Deferred tax income relating to the reversal of temporary differences - (281,000)Underprovision in prior financial year - 31,000

At 31 August 1,906,000 1,906,000

(b) Components of deferred tax liabilitiesExcess of capital allowances over corresponding book depreciation 1,914,000 1,919,000 Others (8,000) (13,000)

1,906,000 1,906,000

17. TRADE PAYABLES The normal trade terms granted to the Group range from cash term to 120 days credit (2016: cash term to 120 days credit) from the date of invoices.

18. OTHER PAYABLES AND ACCRUALS


Deposit from customers 4,646,189 2,702,520 - - Accruals 1,866,999 1,439,058 151,056 138,960Sundry payables 2,300,903 1,492,145 - -

8,814,091 5,633,723 151,056 138,960

Included in sundry payables is an amount of RM956,860 (2016: RM314,797) payable for the purchase of property, plant and equipment (Note 5(a)).



19. REVENUE


Dividend income - - 15,000,000 13,500,000 Invoiced value of goods sold net of discount and returns 168,957,816 157,566,985 - -

168,957,816 157,566,985 15,000,000 13,500,000

20. DIRECTORS’ REMUNERATION


Executive directors of the Company Allowance 7,000 7,000 7,000 7,000 Bonuses 500,000 500,000 - - Defind contribution plan (“EPF”) 323,000 323,000 - - Salaries 1,200,000 1,200,000 - - SOCSO 1,657 1,344 - -

2,031,657 2,031,344 7,000 7,000

Non-executive directors of the Company Allowance 10,500 10,500 10,500 10,500 Fee 133,056 120,960 133,056 120,960

143,556 131,460 143,556 131,460

2,175,213 2,162,804 150,556 138,460

Estimated monetary value of benefits-in-kind - Executive directors of the Company 28,000 39,975 - -



20. DIRECTORS’ REMUNERATION (CONT’D)

The number of directors of the Group whose total remuneration during the financial year fell within the following bands is analysed as below:-

Number of Directors 2017 2016

Executive directors:RM1,000,001 - RM1,050,000 2 2

Non-executive directors:RM1 - RM50,000 2 2RM50,001 - RM100,000 1 1

21. STAFF COSTS


Executive directors’ remuneration (Note 20) 2,031,657 2,031,344 7,000 7,000

Other staff costsSalaries and other emoluments 17,621,471 14,977,592 - - EPF 644,405 552,552 - - SOCSO 56,451 45,920 - - Other staff related expenses 2,849,135 2,340,220 - -

21,171,462 17,916,284 - -

Total staff costs 23,203,119 19,947,628 7,000 7,000

22. FINANCE COST


Interest on : Term loans - 69,867



23. PROFIT BEFORE TAX


Profit before tax is arrived at after charging:-Auditor’s remuneration- current 62,500 60,500 18,000 18,000 - underprovision in prior financial year 2,000 5,500 - - - other services 2,500 2,500 2,500 2,500 Bad debt written-off - 302,087 - - Depreciation 2,538,318 2,394,636 - - Loss on disposal of property, plant and equipment - 6,259 - - Property, plant and equipment written off 3 267 - - Realised loss on foreign exchange - 2,790,114 - - Research and development expenses 1,640,026 1,595,521 - - Unrealised loss on foreign exchange - 56,868 - - And crediting : Gain on disposal of property, plant and equipment (50) - - - Government grant (52,318) (114,947) - - Interest income (1,613,529) (1,278,300) (141,725) (128,362)Net fair value gain on derivative (112,712) (2,382,386) - - Realised gain on foreign exchange (1,440,542) - - - Unrealised gain on foreign exchange (31,218) - - -

24. TAX EXPENSE


(a) Components of tax expense Current tax expense - Malaysian income tax 8,532,659 7,961,000 34,000 31,000 Deferred tax income relating to reversal of temporary differences - (281,000) - - (Over)/Underprovision in prior years:- - current tax (300,188) 429,278 (592) 345 - deferred tax - 31,000 - -

8,232,471 8,140,278 33,408 31,345



24. TAX EXPENSE (CONT’D)


(b) Reconciliation of tax expense Profit before tax 39,120,641 36,166,268 14,830,106 13,330,263

Tax at statutory income tax rate 24% 9,389,000 8,680,000 3,559,000 3,199,000 Tax effect of non-taxable income (52,000) (567,000) (3,600,000) (3,240,000)Tax effect of non-deductible expenses 41,659 173,000 75,000 72,000 Tax effect of double deduction relief (348,000) (347,000) - - Utilisation of tax incentive (486,000) (259,000) - - (Over)/underprovision in prior years:- - current tax (300,188) 429,278 (592) 345 - deferred tax - 31,000 - - Others (12,000) - - -

8,232,471 8,140,278 33,408 31,345

25. EARNINGS PER ORDINARY SHARE

(a) Basic Earnings Per Ordinary Share

Basic earnings per ordinary share is calculated by dividing the profit attributable to the owners of the Company by the weighted average number of ordinary shares in issue during the financial year.


Profit after tax attributable to owners of the Company 30,888,170 28,025,990

Units Units

Number of ordinary shares in issue at beginning of the financial year 300,010,000 300,000,000 Effect of conversion of warrant - 5,956

Weighted average number of ordinary shares in issue 300,010,000 300,005,956

Basic earning per ordinary share (sen) 10.30 9.34



25. EARNINGS PER ORDINARY SHARE (CONT’D)

(b) Diluted Earnings Per Ordinary Share

The calculation of diluted earnings per share was based on the profit attributable to owner of the Company and the weighted average number of ordinary shares outstanding on the assumption that all the dilutive potential ordinary shares are fully converted, as follows:-


Profit after tax attributable to owners of the Company 30,888,170 28,025,990

Units Units

Weighted average number of ordinary shares in issue 300,010,000 300,005,956 Exercise warrant - 9,752 Effect of dilution of warrants - 3,060,612

300,010,000 303,076,320

Dilluted earning per ordinary share (sen) 10.30 9.25

There is no dilutive effect of the potential ordinary shares convertible under warrants issued for year ended 31 Aug 2017 since the exercise price is above the average market value of the Company’s shares.

26. DIVIDENDS

Group and Company 2017 2016 RM RM

In respect of the financial year ended 31 August 2015 Final single tier tax-exempt dividend of 2.50 sen per share on 300,010,000 ordinary shares - 7,500,250

In respect of the financial year ended 31 August 2016 First interim single tier tax-exempt dividend of 2.00 sen per share on 300,010,000 ordinary shares - 6,000,200

Final single tier tax-exempt dividend of 3.00 sen per share on 300,010,000 ordinary shares 9,000,300 -

In respect of the financial year ended 31 August 2017First interim single tier tax-exempt dividend of 1.00 sen per share on 300,010,000 ordinary shares 3,000,100 -

Second interim single tier tax-exempt dividend of 1.00 sen per share on 300,010,000 ordinary shares 3,000,100 -

15,000,500 13,500,450



26. DIVIDENDS (CONT’D)

The Board of Directors proposed a final single tier tax exempt dividend of 2.20 sen per share for the financial year ended 31 August 2017. This dividend is subject to the shareholders’ approval at the forthcoming Annual General Meeting and has not been included as a liability in the financial statements. Such dividend, if approved by the shareholders, will be counted for in equity as an appropriation of retained profit for the financial year ending 31 August 2018.

27. CASH AND CASH EQUIVALENTS

For the purpose of the statements of cash flows, cash and cash equivalents comprise the following:-


Cash and bank balances 31,782,333 25,592,175 1,414,722 636,816 Fixed deposits with licensed banks 29,000,000 31,424,243 9,000,000 6,000,000

60,782,333 57,016,418 10,414,722 6,636,816 Less: Fixed deposits with licensed bank with maturity period of more than three months (16,000,000) - (6,000,000) -

44,782,333 57,016,418 4,414,722 6,636,816

28. RELATED PARTY DISCLOSURES

(a) Identities of Related Parties

Parties are considered to be related to the Group if the Group or the Company has the ability, directly or indirectly, to control or jointly control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control.

In addition to the information detailed elsewhere in the financial statements, the Group has related party relationships with its directors, key management personnel and entities within the same group of companies.

(b) Significant Related Party Transactions and Balances

Other than those disclosed elsewhere in the financial statements, the Group and the Company also carried out the following significant transactions with the related parties during the financial year:


Subsidiaries- Dividend received - - 15,000,000 13,500,000



28. RELATED PARTY DISCLOSURES (CONT’D)

(c) Compensation of Key Management Personnel

Key management personnel include the Group and the Company’s executive and non-executive directors and are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group or the Company either directly or indirectly. Details on the compensation for these key management personnel are disclosed in Note 20.

29. OPERATING SEGMENTS

The Group operates principally within the business of design, manufacture and sale of upholstery furniture products in Malaysia. Accordingly, information by business segments on the Group’s operations as required by MFRS 8 is not presented.

(a) Geographical Information

In presenting information on the basis of geographical segments, segmental information on non-current assets is not presented, as all assets are located in Malaysia. Segmental revenue is presented based on the geographical location of customers.

2017 2016 RM RM

Africa and Middle East 2,431,142 4,890,757 Americas and European Countries 71,650,840 65,367,023 Asia and Oceanian (excluding Malaysia) 92,466,899 85,753,946 Malaysia 2,408,935 1,555,259

168,957,816 157,566,985

(b) Major Customers

The following are major customers with revenue equal to or more than 10% of Group revenue:-

Revenue 2017 2016 RM RM

Customer A 22,995,871 -Customer B 18,956,199 19,921,594Customer C - 16,053,190



30. CAPITAL COMMITMENTS

At 31 August, the Group has the following capital commitments in respect of property, plant and equipment:-


Approved and contracted for 1,509,312 1,556,168

31. FINANCIAL INSTRUMENTS

The Group’s activities are exposed to variety of market risks (including foreign currency risk and interest rate risk), credit risk and liquidity risk. The Group’s overall financial risk management policy focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.

31.1 Financial Risk Management Policies

The Group’s policies in respect of the major areas of treasury activity are as follows:-

(a) Market Risk

(i) Foreign Currency Risk

The Group is exposed to foreign currency risk on transactions and balances that are denominated in currencies other than the respective functional currency of entities within the Group. The currencies giving rise to this risk are primarily Euro and United States Dollar (“USD”). Foreign currency risk is monitored closely on an ongoing basis to ensure that the net exposure is at an acceptable level. On occasion, the Group enters into forward foreign exchange contracts to hedge against its foreign currency risk. The Group also holds cash and cash equivalents denominated in foreign currencies for working capital purposes.



31.

FIN

AN

CIA

L IN

STR

UM

EN

TS (C

ON

T’D

)

31.1

Fin

anci

al R

isk

Man

agem

ent

Po

licie

s (c

ont

’d)

(a)

Mar

ket

Ris

k (c

ont

’d)

(i)

Fore

ign

Cur

renc

y R

isk

(co

nt’d

)

The

Gro

up’s

exp

osu

re t

o fo

reig

n cu

rren

cy r

isk

(a c

urre

ncy

oth

er t

han

the

func

tio

nal c

urre

ncy

of t

he e

ntit

ies

wit

hin

the

Gro

up) b

ased

o

n ca

rryi

ng a

mo

unts

of

the

finan

cial

inst

rum

ents

at

the

end

of

rep

ort

ing

per

iod

is s

umm

aris

ed b

elo

w:-

Fore

ign

Cur

renc

y E

xpo

sure

The

Gro

up

U

nite

d

Rin

gg

it

Eur

o

Stat

es D

olla

r

Mal

aysi

a O

ther

s

Tota

l

RM

R

M

RM

R

M

RM

At

31 A

ugus

t 20

17Fi

nanc

ial a

sset

s Tr

ade

rece

ivab

les

-

7

,632

,094

8

17,5

93

-

8

,449

,687

D

eriv

ativ

e as

sets

-

128

,551

-

-

1

28,5

51

Cas

h an

d b

ank

bal

ance

s

2

7,77

6

7,4

03,4

00

24,

340,

110

1

1,04

7

31,

782,

333

2

7,77

6

15,

164,

045

2

5,15

7,70

3 1

1,04

7

40,

360,

571

Fina

ncia

l lia

bili

ties

Trad

e p

ayab

les

-

(1

,685

,764

) (2

,568

,521

) -

(4,2

54,2

85)

Oth

er p

ayab

les

and

acc

rual

s

-

(111

,975

) (4

,052

,936

) (2

,991

) (4

,167

,902

)

-

(1,7

97,7

39)

(6,6

21,4

57)

(2,9

91)

(8,4

22,1

87)

Net

Fin

anci

al A

sset

s

27

,776

1

3,36

6,30

6

18,

536,

246

8

,056

3

1,93

8,38

4 Le

ss :

N

et fi

nanc

ial a

sset

s d

eno

min

ated

in t

he

resp

ecti

ve e

ntit

ies’

fun

ctio

nal c

urre

ncy

-

-

(18,

536,

246)

-

(18,

536,

246)

Fo

rwar

d f

ore

ign

exch

ang

e co

ntra

cts

cont

ract

ed n

oti

ona

l

-

(4

,779

,758

) -

-

(4

,779

,758

)

Cur

renc

y ex

po

sure

2

7,77

6

8,5

86,5

48

-

8

,056

8

,622

,380



31.

FIN

AN

CIA

L IN

STR

UM

EN

TS (C

ON

T’D

)

31.1

Fin

anci

al R

isk

Man

agem

ent

Po

licie

s (c

ont

’d)

(a)

Mar

ket

Ris

k (c

ont

’d)

(i)

Fore

ign

Cur

renc

y R

isk

(co

nt’d

)

Fore

ign

Cur

renc

y E

xpo

sure

(co

nt’d

)

The

Gro

up

U

nite

d

Rin

gg

it

Eur

o

Stat

es D

olla

r

Mal

aysi

a O

ther

s

Tota

l

RM

R

M

RM

R

M

RM

At

31 A

ugus

t 20

16Fi

nanc

ial a

sset

sTr

ade

rece

ivab

les

-

3

,697

,890

1

8,08

7

-

3

,715

,977

D

eriv

ativ

e as

sets

-

15,

839

-

-

1

5,83

9 C

ash

and

ban

k b

alan

ces

22,

979

1

1,32

2,73

8

14,

228,

536

1

7,92

2

25,

592,

175

2

2,97

9

15,

036,

467

1

4,24

6,62

3

17,

922

2

9,32

3,99

1

Fina

ncia

l lia

bili

ties

Trad

e p

ayab

les

-

(1

,462

,193

) (2

,340

,018

) -

(3,8

02,2

11)

Oth

er p

ayab

les

and

acc

rual

s

-

(85,

140)

(2

,830

,281

) (1

5,78

2)

(2,9

31,2

03)

-

(1,5

47,3

33)

(5,1

70,2

99)

(15,

782)

(6

,733

,414

)

Net

Fin

anci

al A

sset

s

2

2,97

9

13,

489,

134

9

,076

,324

2

,140

2

2,59

0,57

7 Le

ss :

N

et fi

nanc

ial a

sset

s d

eno

min

ated

in t

he

resp

ecti

ve e

ntit

ies’

fun

ctio

nal c

urre

ncy

-

-

(9,0

76,3

24)

-

(9

,076

,324

)

Forw

ard

fo

reig

n ex

chan

ge

cont

ract

s

co

ntra

cted

no

tio

nal

-

(5,2

90,1

80)

-

-

(5,2

90,1

80)

Cur

renc

y ex

po

sure

2

2,97

9

8,1

98,9

54

-

2

,140

8

,224

,073



31. FINANCIAL INSTRUMENTS (CONT’D)

31.1 Financial Risk Management Policies (cont’d)

(a) Market Risk (cont’d)

(i) Foreign Currency Risk (cont’d)

Foreign Currency Risk Sensitivity Analysis The following table details the sensitivity analysis to a reasonably possible change in the foreign currencies at the end of the reporting period, with all other variables held constant:-

Group Increase/(Decrease) 2017 2016 RM RM

Effects on profit after taxUSD - strengthened by 10% 652,578 623,121 - weakened by 10% (652,578) (623,121)

Euro - strengthened by 10% 2,111 1,746 - weakened by 10% (2,111) (1,746)

(ii) Interest rate risk

The Group does not have any interest-bearing borrowings and hence, is not exposed to interest rate risk.

(iii) Equity price risk

The Group does not have any quoted investments and hence, is not exposed to equity price risk.

(b) Credit Risk

The Group’s exposure to credit risk, or the risk of counterparties defaulting, arises mainly from trade and other receivables. The Group manages its exposure to credit risk by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis. For other financial assets (including cash, bank balances and derivatives), the Group minimises credit risk by dealing exclusively with high credit rating counterparties.

The Group uses ageing analysis to monitor the credit quality of the trade receivables. Any receivables having significant balances past due, which are deemed to have higher credit risk, are monitored individually.





(b) Credit Risk (cont’d)

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of the trade and other receivables as appropriate. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified (where applicable). Impairment is estimated by management based on prior experience and the current economic environment.

The Company provides financial guarantees to financial institutions for credit facilities granted to certain subsidiaries. The Company monitors the results of the subsidiaries and repayments made by the subsidiaries on an ongoing basis.

(i) Credit Risk Concentration Profile

The Group’s major concentration of credit risk relates to the amounts owing by three (3) (2016: three (3)) customers which constituted approximately 49% (2016: 44%) of its trade receivables at the end of the reporting period.

The credit risk concentration profile of the Group’s trade receivables by geographical region at the end of the reporting period is as follows:

Group 2017 2016 RM % of Total RM % of Total

Africa and Middle East 427 0% 42,082 1%Americas and European Countries 4,389,979 52% 1,609,783 43%Asia and Oceania (excluding Malaysia) 3,312,676 39% 1,990,438 54%Malaysia 746,605 9% 73,674 2%

8,449,687 100% 3,715,977 100%

(ii) Exposure to Credit Risk

At the end of the reporting period, the maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statement of financial position of the Group and of the Company after deducting any allowance for impairment losses (where applicable).





(b) Credit Risk (cont’d)

(iii) Ageing Analysis

The ageing analysis of the trade receivables is as follows:-

Gross Individual Carrying Amount impairment Value RM RM RM

GroupAt 31 August 2017 Not past due 8,046,027 - 8,046,027 Past due:- less than 3 months 397,554 - 397,554 - over 3 months 6,106 - 6,106

8,449,687 - 8,449,687

At 31 August 2016 Not past due 3,080,097 - 3,080,097 Past due:- less than 3 months 635,880 - 635,880 - over 3 months - - -

3,715,977 - 3,715,977

The Group believes that no impairment allowance is necessary in respect of these trade receivables that are past due but not impaired because they are companies with good collection track record and no recent history of default.

(c) Liquidity Risk

Liquidity risk arises mainly from general funding and business activities. The Group practices prudent risk management by maintaining sufficient cash balance and the availability of funding through certain committed credit facilities.





(c) Liquidity Risk (cont’d)

Maturity Analysis

The following table sets out the maturity profile of the financial liabilities at the end of the reporting date based on contractual undiscounted cash flows:-

Contractual Carrying Undiscounted Within The Group Amount Cash flows 1 year RM RM RM

At 31 August 2017 Non-derivative Financial liabilitiesTrade payables 4,254,285 4,254,285 4,254,285 Other payables and accruals 4,167,902 4,167,902 4,167,902

8,422,187 8,422,187 8,422,187

At 31 August 2016 Non-derivative Financial liabilitiesTrade payables 3,802,211 3,802,211 3,802,211 Other payables and accruals 2,931,203 2,931,203 2,931,203

6,733,414 6,733,414 6,733,414

The Company

At 31 August 2017Other payables and accruals 151,056 151,056 151,056

At 31 August 2016Other payables and accruals 138,960 138,960 138,960

31.2 Capital Risk Management

The Group defines capital as the total equity and debt of the Group. The objective of the Group’s capital management is to maintain an optimal capital structure and ensuring availability of funds in order to support its businesses and related shareholder(s) value. To achieve this objective, the Group may make adjustments to the capital structure in view of changes in economic conditions, such as adjusting the amount of dividend payment, returning of capital to shareholders or issuing new shares.

The Group monitors and maintains a prudent level of total debt to total equity ratio to optimise shareholder(s) value and to ensure compliance with debt covenants and regulatory, if any.

There was no change in the Group’s approach to capital management during the financial year.




31.3 Classification of Financial Instruments


Financial assets

Loans and receivablesTrade receivables 8,449,687 3,715,977 - - Other receivables 197,074 168,732 18,378 18,172 Amount owing from subsidiaries - - 455,243 7,420,761 Fixed deposits with licensed banks 29,000,000 31,424,243 9,000,000 6,000,000 Cash and bank balances 31,782,333 25,592,175 1,414,722 636,816

69,429,094 60,901,127 10,888,343 14,075,749

Fair value through profit or loss Derivative assets 128,551 15,839 - -

Financial liabilities

Other financial liabilities Trade payables 4,254,285 3,802,211 - - Other payables and accruals 4,167,902 2,931,203 151,056 138,960

8,422,187 6,733,414 151,056 138,960



31.

FIN

AN

CIA

L IN

STR

UM

EN

TS (C

ON

T’D

)

31.4

Fai

r V

alue

Info

rmat

ion

The

fair

val

ues

of

the

finan

cial

ass

ets

and

fina

ncia

l lia

bili

ties

of

the

Gro

up w

hich

are

mat

urin

g w

ithi

n th

e ne

xt 1

2 m

ont

hs a

pp

roxi

mat

ed t

heir

ca

rryi

ng a

mo

unts

due

to

the

rel

ativ

ely

sho

rt-t

erm

mat

urit

y o

f th

e fin

anci

al in

stru

men

ts.

The

follo

win

g t

able

set

s o

ut t

he f

air

valu

e p

rofil

e o

f fin

anci

al in

stru

men

ts t

hat

are

carr

ied

at

fair

val

ue a

nd t

hose

no

t ca

rrie

d a

t fa

ir v

alue

at

the

end

of

the

rep

ort

ing

per

iod

:-

Gro

up -

At

31 A

ugus

t 20

17

Fair

Val

ue O

f Fi

nanc

ial I

nstr

umen

ts

Car

ried

At

Fair

Val

ue

Tota

l Fai

r C

arry

ing

Le

vel 1

Le

vel 2

Le

vel 3

V

alue

A

mo

unt

R

M

RM

R

M

RM

R

M

Fina

ncia

l Ass

ets

Der

ivat

ive

asse

t :

-

forw

ard

fo

reig

n ex

chan

ge

cont

ract

s

-

12

8,55

1 -

128,

551

128

,551

Gro

up -

At

31 A

ugus

t 20

16

Fair

Val

ue O

f Fi

nanc

ial I

nstr

umen

ts

Car

ried

At

Fair

Val

ue

Tota

l Fai

r C

arry

ing

Le

vel 1

Le

vel 2

Le

vel 3

V

alue

A

mo

unt

R

M

RM

R

M

RM

R

M

Fina

ncia

l Lia

bili

ties

Der

ivat

ive

liab

ility

:-

fo

rwar

d f

ore

ign

exch

ang

e co

ntra

cts

-

15,8

39

-

1

5,83

9

15,8

39




31.4 Fair Value Information (cont’d)

Fair Value of Financial Instruments Carried at Fair Value

(i) The fair values above have been determined using the following basis:

The fair values of forward foreign exchange contracts are determined by discounting the difference between the contractual forward prices and the current forward prices for the residual maturity of the contract using a risk-free interest rate (government bonds).

(ii) There were no transfer between level 1 and level 2 during the financial year.

32. SIGNIFICANT EVENT DURING THE REPORTING PERIOD

The Companies Act 2016 came into operation on 31 January 2017 (except for Section 241 and Division 8 of Part III of the said Act) and replaced Companies Act 1965.

Amongst the key changes introduced under the Companies Act 2016 that have affected the financial statements of the Group and of the Company upon its initial implementation are:-

(i) Removal of the authorised share capital; and

(ii) Ordinary shares ceased to have par value.

The Companies Act 2016 was applied prospectively and the impacts on implementation are disclosed in the respective notes to the financial statements.



33. SUPPLEMENTARY INFORMATION DISCLOSURE OF REALISED AND UNREALISED PROFITS/(LOSSES)

The breakdown of the retained profits of the Group and of the Company at the end of the reporting period into realised and unrealised profits are presented in accordance with the directive issued by Bursa Malaysia Securities Berhad and prepared in accordance with Guidance on Special Matter No. 1,Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants, as follows:-


Total retained profits of the Company and its subsidiaries:- - realised 122,734,974 107,110,865 980,586 1,184,388 - unrealised (1,560,231) (1,761,029) - -

121,174,743 105,349,836 980,586 1,184,388 Less: Consolidation adjustments (48,738,986) (48,801,749) - -

At 31 August 72,435,757 56,548,087 980,586 1,184,388


List Of Properties At 31 August 2017

Registered Owner Location

Description and existing use

Tenure/Expiry of

Lease

Age of Buildings

(Years)

Category of Land Use/ Land Area/

Built Up Area

Net Book Value as at 31.08.2017

RM

Date of valuation/

acquisition

USF Lot No. 8726, PN 9634,Mukim of Jalan Bakri, District of Muar, State of Johor

A plot of industrial land erected with a block of single-storey factory building together with a three-storey office annexe, an extended first floor factory and lean to sheds, showroom and other ancillary structures*

Leasehold for a term of

99 years/ Expiring

on 29 December

2094

17 Industrial/ 9,030 sq. m./ 9,051 sq. m.

3,948,970 15.01.2008

HUI Lot PTD No. 9495, HSD 31616, Mukim of Jalan Bakri, District of Muar, State of Johor

A plot of industrial land erected with a block of single-storey factory building and a guard house.

Freehold 10 Industrial/ 7,262 sq. m./ 4,391 sq. m.

2,581,828 15.01.2008

HUI HS (D) 35993, Lot PTD 11373, Mukim of Jalan Bakri, District of Muar, State of Johor

Two (2) adjoining plots of industrial land erected with a block of single-storey factory building together with a double-storey office annexe, a production office and other ancillary structures.

Freehold 10 Industrial/24,282 sq. m./ 17,217 sq. m.

9,877,955 15.01.2008

HUI HS(D) 33704 and HS(D) 33703, Lots PTD 10628 and 10629, both in the Mukim of Jalan Bakri, District of Muar, State of Johor

Two (2) adjoining plots of industrial land erected with two blocks of single-storey factory building together with a double-storey office annexe, and other ancillary structures.

Freehold 7 Industrial/ 15,544 sq. m./ 9,290 sq. m.

5,669,199 10.09.2007


List Of PropertiesAt 31 August 2017 (Cont’d)

Registered Owner Location

Description and existing use

Tenure/Expiry of

Lease

Age of Buildings

(Years)

Category of Land Use/ Land Area/

Built Up Area

Net Book Value as at 31.08.2017

RM

Date of valuation/

acquisition

HUI HS(D) 33687, Lot PTD 10634 in the Mukim of Jalan Bakri, District of Muar, State of Johor

A plot of industrial land with a block of single-storey factory building

Freehold <1 Industrial/ 7,851 sq. m./ 5,116 sq. m.

3,751,212 18.11.2010

EISB Lot No. 8721, PN 9639, Mukim of Jalan Bakri, District of Muar, State of Johor

A plot of industrial land erected with a block of single-storey factory building together with a double-storey office annexe, and other ancillary structures

Leasehold for a term of

99 years/ Expiring

on 29 December

2094

17 Industrial/ 4,076 sq. m./ 2,338 sq. m.

1,379,642 16.01.2009

EISB GRN 85821 Lot 4941, Mukim of Jalan Bakri, District of Muar, State of Johor

A plot of agriculture land

Freehold N/A Agriculture/ 4.0746

hectares. N/A

8,012,137 7.09.2015

Note: * HUI owns the factory building which was built on Lot 8726.


Authorised Share Capital : RM100, 000,000.00Issued and Fully Paid Up Share Capital : RM 60,002,000.00Class of Shares : Ordinary sharesVoting Right : One vote per ordinary shareNumber of Shareholders : 4,584

DISTRIBUTION OF SHAREHOLDINGS

No. of % of No. of % of issued Size of holdings Shareholders Shareholders Shares share capital

1 - 99 75 1.636 3,216 0.001100 - 1,000 601 13.111 382,276 0.1271,001 - 10,000 2,627 57.308 13,562,900 4.52110,001 - 100,000 1,128 24.607 33,713,900 11.238100,001 - 15,000,499 * 151 3.294 84,088,007 28.02815,000,500 AND ABOVE ** 2 0.044 168,259,701 56.085

Total 4,584 100.000 300,010,000 100.000

Notes:* Less than 5% of issued shares.** 5% and above of issued shares.

SUBSTANTIAL SHAREHOLDERS ACCORDING TO THE REGISTER OF SUBSTANTIAL SHAREHOLDERS(Holding 5% or more of the share capital)

No. of shares heldName of Shareholders Direct % Indirect %

Chua Fen Fatt 103,259,701 34.418 65,000,000(1) 21.665Tee Hwee Ing 65,000,000 21.665 103,259,701(1) 34.418

DIRECTORS’ SHAREHOLDINGS ACCORDING TO THE REGISTER OF DIRECTORS’ SHAREHOLDINGS

No. of shares heldName of Directors Direct % Indirect %

Chua Fen Fatt 103,259,701 34.418 65,000,000(1) 21.665Tee Hwee Ing 65,000,000 21.665 103,259,701(1) 34.418Mohd Khasan Bin Ahmad 30,000 0.009 - -Teo Seng Kuang - - 34,500(2) 0.011Datuk Tay Puay Chuan 30,000 0.009 - -

Note:(1) Deemed interest by virtue of his/her spouse’s substantial interest in the Company(2) Deemed interest by virtue of his nominees’ interest in the Company.

Analysis Of ShareholdingsAt 4 December 2017


Analysis Of ShareholdingsAt 4 December 2017 (Cont’d)

LIST OF TOP THIRTY (30) LARGEST SHAREHOLDERS AT 4 DECEMBER 2017 (AS PER THE RECORD OF DEPOSITORS)

No. of shares % of issuedNo. Name of Shareholders held share

1 Chua Fen Fatt 103,259,701 34.418

2 Tee Hwee Ing 65,000,000 21.665

3 Tee Hui Chein 9,691,300 3.230

4 Malacca Equity Nominees (Tempatan) Sdn Bhd Exempt An For Phillip Capital Management Sdn Bhd (EPF) 8,491,400 2.830

5 Malacca Equity Nominees (Tempatan) Sdn Bhd Exempt An For Phillip Capital Management Sdn Bhd 5,380,100 1.793

6 Yayasan Guru Tun Hussein Onn 3,535,300 1.178

7 Citigroup Nominees (Asing) Sdn Bhd Exempt An For Citibank New York (Norges Bank 14) 3,329,700 1.109

8 Quek Wee Seng 2,997,000 0.998


10 Mohamed Adlan Bin Ahmad Tajudin 2,405,000 0.801


12 RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Fong Siling (CEB) 1,700,000 0.566

13 Sultan Idris Shah 1,650,000 0.549

14 RHB Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Wong Yee Hui 1,330,300 0.443

15 Malacca Equity Nominees (Tempatan) Sdn Bhd Exempt An For Phillip Capital Management Sdn Bhd (EPF) 1,071,750 0.357

16 HLB Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Chaw Teck Long 1,066,500 0.355

17 Er Tzer Nam 1,036,350 0.345

18 Universal Trustee (Malaysia) Berhad Kenanga Islamic Fund 1,031,100 0.343

19 Teh Thian Kian 944,800 0.314

20 RHB Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Lai Chie King 860,000 0.286

21 Ng Chai Go 800,000 0.266

22 CIMB Group Nominees (Tempatan) Sdn Bhd CIMB Commerce Trustee Berhad For Phillip Master Equity Growth Fund (50144 Tr01) 767,100 0.255

23 Lee Chin Swan 759,000 0.252

24 Chua Fen Lee 723,300 0.241

25 Pua Yu Heng 665,700 0.221

26 Kok Ming-Nee 600,000 0.199

27 Public Invest Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Vennu Gopal A/L Gopala Pannikker (M) 600,000 0.199

28 Public Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Tong Lain Chai (E-Jah/Mua) 588,700 0.196

29 Public Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Haw Swee Beng (E-Spg/Pjn) 550,000 0.183

30 Wong Keen Hoong 515,000 0.171


Analysis Of Warrants Holdings At 4 December 2017

Number of Warrant Issued : 50,000,000Number of Warrant Exercised : 10,000Number of Warrant Unexercised : 49,990,000Exercise Price Per Warrant : RM0.92Number of holders : 1,683

DISTRIBUTION OF WARRANT HOLDINGS

No. of % of Warrants Warrants No. of % ofSize of holdings Holder Holder Warrants Warrants

1 - 99 427 25.371 19,705 0.039100 - 1,000 410 24.361 198,427 0.3981,001 - 10,000 520 30.898 2,108,713 4.21810,001 - 100,000 278 16.518 8,720,275 17.444100,001 - 2,499,499 * 45 2.674 9,398,576 18.8012,499,500 AND ABOVE ** 3 0.178 29,544,304 59.100

Total 1,683 100.000 49,990,000 100.000

Notes:* Less than 5% of issued warrants.** 5% and above of issued warrants.

DIRECTORS’ INTEREST ACCORDING TO THE REGISTER OF DIRECTORS’ WARRANT HOLDINGS

No. of Warrant heldName of Directors Direct % Indirect %

Chua Fen Fatt 17,209,954 34.426 8,000,000(1) 16.003Tee Hwee Ing 8,000,000 16.003 17,209,954(1) 34.426Mohd Khasan Bin Ahmad 5,000 0.010 - -Teo Seng Kuang - - 5,750(2) 0.011Datuk Tay Puay Chuan 5,000 0.010 - -

Notes:(1) Deemed interest by virtue of his/her spouse’s substantial interest in the Company.(2) Deemed interest by virtue of his nominees’ interest in the Company.


Analysis Of Warrants Holdings At 4 December 2017 (Cont’d)

LIST OF TOP THIRTY (30) LARGEST WARRANT HOLDERS AT 4 DECEMBER 2017 (AS PER THE RECORD OF DEPOSITORS)

No. of % of warrantNo. Name of Holders warrant issued

1 Chua Fen Fatt 17,209,954 34.426

2 Tee Hwee Ing 8,000,000 16.003

3 Tee Hui Chein 4,334,350 8.670

4 Quek Wee Seng 499,500 0.999

5 Yayasan Guru Tun Hussein Onn 465,400 0.930


7 Bong Kee Kien 361,200 0.722


9 Maybank Nominees (Tempatan) Sdn Bhd Liew Kum Fook 343,700 0.687

10 Choo Ah Ying 340,000 0.680

11 Maybank Nominees (Tempatan) Sdn Bhd Lim You Yong 300,000 0.600

12 Yong Chee Chau 300,000 0.600

13 Maybank Nominees (Tempatan) Sdn Bhd Beh Yew Keat 271,000 0.542

14 They Heng Chong @ Teh Chong Fay 255,700 0.511

15 Cimsec Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Too Sin Leong (Tmn Cheras-Cl) 250,000 0.500

16 Cimsec Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Tee Hui Mian (Muar-Cl) 249,100 0.498

17 Loh Ka Yau 248,400 0.496

18 Ng Chai Thiam 233,000 0.466

19 Wong Tai Yong 213,200 0.426

20 Chew Kong Tai 208,800 0.417

21 Chan Ai Lin 200,000 0.400

22 Teoh Teik Leong 196,000 0.392

23 Public Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Chieong Tuck Weng (E-KLC) 195,500 0.391

24 Tan Thian Paw 180,000 0.360

25 Er Tzer Nam 172,725 0.345

26 Maybank Nominees (Asing) Sdn Bhd Lee Chen Teng 170,000 0.340

27 Sj Sec Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Foo Tiang Yin (SMT) 170,000 0.340

28 Chung Fah Heng 164,500 0.329

29 RHB Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Cheng Kim Hee 163,000 0.326

30 Puang En Lun 161,650 0.323


Notice Of Annual General Meeting

NOTICE IS HEREBY GIVEN THAT THE TENTH ANNUAL GENERAL MEETING OF THE COMPANY WILL BE HELD AT LEVEL 9, CLASSIC 1 BANQUET MEETING HALL, HOTEL CLASSIC, 69 JALAN ALI, 84000 MUAR, JOHOR DARUL TAKZIM ON THURSDAY, 25 JANUARY 2018 AT 11.00 A.M. FOR THE TRANSACTION OF THE FOLLOWING BUSINESSES:-

AS ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the financial year ended 31 August 2017 together with the Reports of the Directors and the Auditors thereon.

2. To approve the payment of Directors’ fees for the financial year ended 31 August 2017.

3. To declare a final single tier tax exempt dividend of 2.2 sen per ordinary share in respect of the financial year ended 31 August 2017.

4. To re-elect the following Directors who retire in accordance with Article 81 of the Company’s Articles of Association:-

Tee Hwee Ing

Teo Seng Kuang

5. To re-appoint Messrs Crowe Horwath as Auditors of the Company and to authorise the Directors to determine their remuneration.

AS SPECIAL BUSINESS

To consider and, if thought fit, to pass the following resolutions with or without any modification as ordinary resolutions:-

6. Proposed Renewal of Authority to Issue Shares Pursuant to Section 75 of the Companies Act 2016 (“the Act”)

“THAT subject always to the Act, the Articles of Association of the Company and the approvals of the Bursa Malaysia Securities Berhad (“Bursa Securities”) and all other applicable laws, regulations and guidelines, the Directors of the Company be and are hereby given full authority, pursuant to Section 75 of the Act, to issue and allot new shares in the capital of the Company at any time upon such terms and conditions and for such purposes as the Directors may, in their discretion, deem fit, provided that the aggregate number of shares to be issued pursuant to this resolution does not exceed ten percent (10%) of the issued and paid-up share capital of the Company for the time being and that such authority shall continue in force until the conclusion of the next annual general meeting of the Company.

7. Proposed authority for the Company to purchase its own shares

“THAT, subject to compliance with the Act, the Memorandum and Articles of Association of the Company, the Main Market Listing Requirements of Bursa Securities and all other applicable laws, regulations and guidelines and the approvals of all relevant governmental and/or regulatory authorities, the Company be and is hereby given full authority, to seek shareholders’ approval for the authority for the Company to purchase and/or such amount of ordinary shares in the Company (“Shares”) through Bursa Securities upon such terms and conditions as the Directors may deem fit in the interest of the Company provided that:

(Please refer to Note A)

(Ordinary Resolution 1)








(i) the aggregate number of Shares so purchased and/or held pursuant to this ordinary resolution (“Purchased Shares”) does not exceed ten percent (10%) of the total issued and paid-up capital of the Company; and

(ii) the maximum amount of funds to be allocated for the Purchased Shares shall not exceed the aggregate of the retained profits and/or share premium of the Company;

THAT the Directors be and are hereby authorised to decide at their discretion either to retain the Purchased Shares as treasury shares (as defined in Section 127 of the Act) and/ or to cancel the Purchased Shares and/or to retain the Purchased Shares as treasury shares for distribution as share dividends to the shareholders of the Company and/or be resold through Bursa Securities in accordance with the relevant rules of Bursa Securities and/or cancelled subsequently and/or to retain part of the Purchased Shares as treasury shares and/or cancel the remainder and to deal with the Purchased Shares in such other manner as may be permitted by the Act, rules, regulations, guidelines, requirements and/or orders of Bursa Securities and any other relevant authorities for the time being in force;

AND THAT such approval and authorisation shall only continue to be in force until:

(i) the conclusion of the next Annual General Meeting (“AGM”) of the Company following the general meeting at which such resolution was passed at which time it shall lapse unless by ordinary resolution passed at that meeting, the authority is renewed, either unconditionally or subject to conditions; or

(ii) the expiration of the period within which the next AGM after that date is required by law to be held; or

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

whichever occurs first; AND FURTHER THAT the Directors of the Company be authorised to do all such

acts and things (including, without limitation executing all such documents as may be required) as they may consider expedient or necessary to give full effect to this mandate.”

8. To transact any other ordinary business of which due notice shall have been given.

NOTICE OF ENTITLEMENT DATE AND DIVIDEND PAYMENT

NOTICE IS ALSO HEREBY GIVEN THAT subject to the approval of the shareholders at the Tenth Annual General Meeting, the proposed final single tier tax exempt dividend of 2.2 sen per ordinary share in respect of the financial year ended 31 August 2017, will be paid on 1 March 2018 to depositors registered in the Record of Depositors of the Company at the close of business on 14 February 2018.

A depositor shall qualify for entitlement only in respect of:-

a) Shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 14 February 2018 in respect of ordinary transfers; or

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

Notice Of Annual General Meeting (Cont’d)



FURTHER NOTICE IS HEREBY GIVEN THAT for the purpose of determining a member who shall be entitled to attend this Tenth Annual General Meeting, the Company shall be requesting Bursa Malaysia Depository Sdn. Bhd. (Bursa Depository) in accordance with Article 12B of the Company’s Articles of Association and Section 34 (1) of the Securities Industry (Central Depositories) Act 1991 to issue a General Meeting Record of Depositors as at 18 January 2018. Only a depositor whose name appears on the Record of Depositors as at 18 January 2018 shall be entitled to attend the said meeting or appoint proxy/proxies to attend and/or vote on his behalf.

BY ORDER OF THE BOARD

Pang Kah Man (MIA 18831)Company Secretary

Muar, Johor Darul Takzim28 December 2017

Notes:-

(A) This Agenda item is meant for discussion only as provision of Section 340(1)(a) of the Act does not require a formal approval of the shareholders and hence, is not put forward for voting.

1. A proxy may but need not be a member of the Company pursuant to Section 334 of the Act. 2. To be valid, the form of proxy, duly completed must be deposited at the Registered Office of the Company at No.

7, (1st Floor), Jalan Pesta 1/1, Taman Dr Ismail 1, Jalan Bakri, 84000 Muar, Johor Darul Takzim not less than twenty-four (24) hours before the time of the Tenth Annual General Meeting.

3. In the event the member(s) duly executes the form of proxy but does not name any proxy, such member(s) shall be

deemed to have appointed the Chairman of the Meeting as his/their proxy, provided always that the rest of the form of proxy, other than the particulars of the proxy, have been duly completed by the member(s).

4. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same Annual General

Meeting. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless the member specifies the proportion of his/her shareholdings to be represented by each proxy.

5. If the appointer is a corporation, the form of proxy must be executed under its common seal or under the hand of

an officer or attorney duly authorised.

6. 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.

7. Only members registered in the Record of Depositors as at 18 January 2018 shall be eligible to attend the Tenth Annual General Meeting or appoint a proxy to attend and vote on his behalf.

Explanation Notes to the Agenda:-

8. Proposed Renewal of Authority to Allot and Issue Shares pursuant to Section 75 of the Act

(a) The proposed Ordinary Resolution no. 6 under Item 6, if passed, will empower the Directors of the Company, from the date of the Tenth Annual General Meeting to allot and issue shares in the Company up to an amount not exceeding ten percent (10%) of the issued capital of the Company for the time being for such purposes as they may deem fit and in the interest of the Company. This authority, unless revoked or varied at a general meeting will expire at the conclusion of the next Annual General Meeting of the Company.


(b) The mandate now sought is a renewal from the previous mandate obtained at the last Annual General Meeting held on 25 January 2017 which will expire at the conclusion of the forthcoming Annual General Meeting.

(c) The Company did not issue any new shares based on the previous mandate obtained at the last Annual General Meeting.

(d) The authority will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares, for purpose of funding future investment project(s), working capital and/or acquisitions.

9. Proposed authority for the Company to purchase its own shares

The proposed Ordinary Resolution no. 7 under item 7, if passed, will allow the Directors of the Company to exercise the power of the Company to purchase not more than ten percent (10%) of the total number of issued shares of the Company at any time within the time period stipulated in the Main Market Listing Requirements of Bursa Securities. This authority, unless revoked or varied by the Company at a general meeting, shall continue to be in full force until the conclusion of the next Annual General Meeting of the Company.

Further details are set out in the Statement to Shareholders dated 28 December 2017.

10. Personal data privacy

By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the Tenth AGM and/or any adjournment thereof, a member of the Company:

(i) consents to the collection, use and disclosure of the member’s personal data by the Company (or its agents) for the purpose of the processing and administration by the Company (or its agents) of proxies and representatives appointed for the Tenth AGM (including any adjournment thereof) and the preparation and compilation of the attendance lists, minutes and other documents relating to the Tenth AGM (including any adjournment thereof), and in order for the Company (or its agents) to comply with any applicable laws, listing rules, regulations and/or guidelines (collectively, the “Purposes”),

(ii) warrants that where the member discloses the personal data of the member’s proxy(ies) and/or representative(s) to the Company (or its agents), the member has obtained the prior consent of such proxy(ies) and/or representative(s) for the collection, use and disclosure by the Company (or its agents) of the personal data of such proxy(ies) and/or representative(s) for the Purposes, and

(iii) agrees that the member will indemnify the Company in respect of any penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.

Statement Accompanying Notice Of Annual General Meeting(Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad)

There is no Director standing for election at the Tenth Annual General Meeting of the Company.


Form Of Proxy

I/We, ........................................................................................ NRIC/Company No. ..........................................................................… (full name in capital letters)

of ........................................................................................................................................................................................................... (full address)

being a member/members of HOMERITZ CORPORATION BERHAD, hereby appoint ….........................................................

................................................................................................ NRIC/Company No. .........…...........…….……………………………… (full name in capital letters)

of …………….…………………………………………………………………………………................................................................ (full address)

or failing him/her ...................................................................NRIC/Company No..…...………………………….…………………… (full name in capital letters)

of ……………………........................................................................………….………………………………………………………… (full address)

as my/our proxy to vote for me/us on my/our behalf at the Tenth Annual General Meeting of the Company to be held at Level 9, Classic 1 Banquet Meeting Hall, Hotel Classic, 69 Jalan Ali, 84000 Muar, Johor Darul Takzim on Thursday, 25 January 2018 at 11.00 a.m. and at any adjournment thereof in respect of my/our shareholding in the manner indicated below :-

No. Ordinary Resolution For Against

1 Approval of Directors’ Fees for the financial year ended 31 August 2017

2 Declaration of a Final single tier tax-exempt dividend of 2.2 sen per ordinary share

3 Re-election of Tee Hwee Ing as Director

4 Re-election of Teo Seng Kuang as Director

5 Re-appointment of Messrs Crowe Horwath as Auditors

6 Proposed Renewal of authority for Directors to issue shares pursuant to Section 75 of the Companies Act 2016

7 Proposed authority for the Company to purchase its own shares

[Please indicate with a “x” in the spaces provided whether you wish your votes to be cast for or against the resolutions. In the absence of specific instructions, your proxy will vote or abstain as he/she thinks fit]

For appointment of two proxies, percentage of shareholdings to be represented by the proxies:

Proxy No. of Shares Percentage

1

2

Total 100%

Dated this ……………..…… day of ………………… 2018 ....................………………...…………….…………. Signature of Shareholder or Common Seal

HOMERITZ CORPORATION BERHAD(Company No. 805792-X)(Incorporated in Malaysia)

Notes:1. A proxy may but need not be a member of the Company pursuant to Section 334 of the Act. 2. To be valid, the form of proxy, duly completed must be deposited at the Registered Office of the Company at No. 7, (1st Floor), Jalan

Pesta 1/1, Taman Dr Ismail 1, Jalan Bakri, 84000 Muar, Johor Darul Takzim not less than twenty-fourth (24) hours before the time of the Tenth Annual General Meeting.

3. In the event the member(s) duly executes the form of proxy but does not name any proxy, such member(s) shall be deemed to have appointed the Chairman of the Meeting as his/their proxy, provided always that the rest of the form of proxy, other than the particulars of the proxy, have been duly completed by the member(s).

4. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same Annual General Meeting. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless the member specifies the proportion of his/her shareholdings to be represented by each proxy.

5. If the appointer is a corporation, the form of proxy must be executed under its common seal or under the hand of an officer or attorney duly authorised.

6. 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.

7. Only members registered in the Record of Depositors as at 18 January 2018 shall be eligible to attend the Tenth Annual General Meeting or appoint a proxy to attend and vote on his behalf.

CDS Account No.

No of shares held

Please fold here

Please fold here

The Company SecretaryHomeritz Corporation Berhad (805792-X)

No. 7 (1st Floor), Jalan Pesta 1/1Taman Tun Dr Ismail 1, Jalan Bakri

84000 MuarJohor Darul Takzim

Affix Stamp

HOMERITZ CORPORATION BERHAD(Company No. 805792-X)

Lot 8726, PTD 6023, Batu 8, Kawasan Perindustrian Bukit Bakri,

84200 Muar, Johor Darul Takzim, Malaysia.Tel : 606-986 5000 Fax : 606-986 0942

www.homeritzcorp.com

corporation berhad (company no. 805792-x) homeritz corporation berhad (company no. 805792-x) ......

Documents