contents...contents 2 notice of annual general meeting 6 statement accompanying notice of annual...

CONTENTS

2 Notice of Annual General Meeting

6Statement Accompanying Notice of Annual General Meeting

7Corporate Information

8Group Structure

9Five-Year Financial Highlights

11Chairman's Statement

12Management Discussion and Analysis

15Sustainability Statements

18Directors' Profile

21Profile of Key Senior Management

22Corporate GovernanceOverview Statement

32Audit Committee Report

34Statement on Directors’ Responsibilities

35Statement on Risk Management and Internal Control

38Additional Compliance Information

39Directors’ Report

43Statements of Comprehensive Income

44Statements of Financial Position

46Statements of Changes in Equity

48Statements of Cash Flows

51Notes to the Financial Statements

100Statement by Directors

100Statutory Declaration

101Independent Auditors’ Report

105Analysis of Shareholdings

107List of Properties

Proxy Form

CAM RESOURCES BERHADANNUAL REPORT 2017


2

NOTICE OFANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Seventeenth Annual General Meeting of the Company will be held at Function Room , Level 2, Hotel Sri Petaling, 30, Jalan Radin Anum, Bandar Baru Sri Petaling, 57000 Kuala Lumpur on Friday, 22 June 2018 at 11.00 a.m. for the following purposes:-

AGENDA

Ordinary Business

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

(Please refer to Note A)

2. To approve the increase and payment of the Directors’ Fees of RM177,500.00 for the financial year ended 31 December 2017.

(Resolution 1)

3. To re-elect the following Directors, who retire by rotation in accordance with Article 91 of the Company’s Articles of Association, comprising part of the Constitution of the Company:-

(i) Mr. Hia Wan Kiga(ii) Ms. Tan Kim Hong(iii) Mr. Chai Moi Kim

(Resolution 2) (Resolution 3)(Resolution 4)

4. To re-appoint Messrs. Baker Tilly Monteiro Heng as Auditors of the Company and to authorise the Directors to fix their remuneration.

(Resolution 5)

Special Business

To consider and if thought fit, to pass the following Ordinary Resolutions with or without modifications:-

5. Authority to Issue Shares Pursuant to Section 75 and 76 of the Companies Act, 2016 (“Authority to Issue Shares”)

“THAT subject always to the Companies Act 2016 (“Act”), the Articles of Association of the Company, the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Malaysia”) and the approvals of the relevant governmental or regulatory authorities, where such approval is required, the Directors be and are hereby authorised and empowered pursuant to Section 75 and 76 of the Act to issue and allot shares in the Company to such persons, at any time until the conclusion of the next AGM and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares to be issued does not exceed ten per centum (10%) of the total number of issued shares of the Company for the time being.”

(Resolution 6)



3

NOTICE OF ANNUAL GENERAL MEETING

(Cont’d)

6. PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

“THAT, subject always to the Companies Act, 2016 (“the Act”), the Constitution of the Company and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad or other regulatory authorities, approval be and is hereby given to the Company and/or its subsidiaries to enter into related party transactions with the mandated related party, particulars of which are set out in Section 1.4 of the Circular dated 27 April 2018, provided that such transactions are:- (a) recurrent transaction of a revenue or trading nature; (b) necessary for the day-to-day operations of the Company and/or its subsidiaries; (c) carried out in the ordinary course of business of the Company and/or its subsidiaries,

made on an arm’s length basis and on normal commercial terms with those generally available to the public; and

(d) not detrimental to the interests of the minority shareholders of the Company.

(Resolution 7)

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

(a) the conclusion of the next annual general meeting (“AGM”) of the Company following this annual general meeting where the authority is approved, at which time the authority will lapse unless renewed by a resolution passed at the meeting; or

(b) the expiration of the period within which the next AGM after that date is required to be held pursuant to Section 340(2) of the Act (but shall not extend to such extensions as may be allowed pursuant to Section 340(4) of the Act); or

(c) revoked or varied by a resolution passed by the shareholders of the Company at a general meeting;

whichever is earlier,

AND THAT the Directors of the Company be authorised to do, carry out and complete all such acts, things and arrangements (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the transactions as contemplated/authorised by the Proposed Shareholders’ Mandate.”

7. PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY

“THAT, subject to the compliance with Sections 112, 113 and 127 of the Companies Act 2016 and all other applicable laws, rules and regulations, approval be and is hereby given to the Company to purchase such amount of ordinary shares in the Company (“Shares”) as may be determined by the Directors of the Company from time to time through Bursa Malaysia Securities Berhad (“Bursa Securities”) as the Directors may deem fit and expedient in the interest of the Company provided that the aggregate number of Shares to be purchased and held pursuant to this resolution does not exceed 10% of the existing total number of issued shares of the Company including the Shares previously purchased and retained as treasury shares (if any), upon such terms and conditions as set out in Part B of the Statement to the Shareholders dated 27 April 2018.

(Resolution 8)



4

NOTICE OF ANNUAL GENERAL MEETING(Cont’d)

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

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

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

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

whichever occurs first,

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

8. CONTINUATION IN OFFICE OF INDEPENDENT NON-ExECUTIVE DIRECTORS

“THAT approval be and is hereby given to the following directors who have served as Independent Non-Executive Directors of the Company for a cumulative term of more than nine (9) years to continue to act as Independent Non-Executive Directors of the Company until the conclusion of the next Annual General Meeting of the Company:-

(i) Mr. Chai Moi Kim(ii) Mr. Chia Kay Joo(iii) Encik Azizul Bin Mohd Othman

(Resolution 9)(Resolution 10)(Resolution 11)

9. To transact any other business for which due notice shall been given in accordance with the Companies Act 2016.

By Order of the BoardLIM MING TOONG (MAICSA 7000281)ANNA LEE AI LENG (LS0009729)Company Secretaries

Kuala Lumpur27 April 2018

NOTES:

A The Audited Financial Statements is meant for discussion only as an approval from shareholders is not required pursuant to the provision of 340(1) of the Companies Act, 2016. Hence, this item on the Agenda is not put forward for voting by shareholders of the Company.

(1) A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation. A proxy appointed to attend and vote at the Meeting shall have the same rights as the shareholder to speak at the Meeting.

(2) Amembermay appointmore than one (1) proxy to attend and vote at theAGM, provided that themember specifies theproportion of the member’s shareholdings to be represented by each proxy.

(3) Whereamember is anauthorisednomineeasdefinedunder theSecurities Industry (CentralDepositories)Act, 1991, itmayappoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

(4) 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 (“omnibusaccount”), there is no limit to thenumber of proxieswhich theexemptauthorised nominee may appoint in respect of each omnibus account it holds.



5

NOTICE OF ANNUAL GENERAL MEETING

(Cont’d)

(5) The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or,iftheappointorisacorporation,eitherundersealorunderthehandofanofficerorattorneydulyauthorised.

(6) To be valid, the duly completed proxy formmust be deposited at theCompany’sRegistrar, Tricor Investor& IssuingHouseServices Sdn Bhd, Unit 32-01, level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200KualaLumpurnotlessthanforty-eight(48)hoursbeforethetimeforholdingthemeetingoratanyadjournmentthereof.

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

(8) For purpose of determining who shall be entitled to attend this meeting, the Company shall be requesting Bursa Malaysia DepositorySdn.Bhd. tomake available to theCompany, aRecord ofDepositors (“ROD”) as at 15 June 2018 and only aDepositorwhosenameappearsonsuchRODshallbeentitledtoattendthismeetingorappointproxytoattendand/orvote inhis/herbehalf.

EXPLANATORY NOTE ON SPECIAL BUSINESS:

(9) Resolution6-AuthoritytoIssueShares

TheproposedOrdinaryResolution6, if approved,will give flexibility to theDirectors of theCompany to issue sharesup to amaximum of ten per centum (10%) of the issued share capital of the Company at the time of such issuance of shares and for such purposes as they consider would be in the best interest of the Company without having to convene separate general meetings. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company.

ThisistherenewalofthemandateobtainedfromtheshareholdersatthelastAnnualGeneralMeeting(“thepreviousmandate”).The previous mandate was not utilised and no proceeds were raised. The purpose of this general mandate sought will provide flexibility to theCompany for anypossible fund raising activities but not limited for futher placement of shares for purposeoffundingcurrentand/orfutureinvestmentprojects,workingcapital,repaymentofborrowingsand/oracquisitions.

(10) Resolution 7 - Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of revenue or trading nature.

TheproposedOrdinaryResolution7,ifpassed,willprovidearenewedmandatefortheCompanyand/oritssubsidiariestoenterinto recurrent transactions involving the interests of related parties, which are of a revenue or trading nature and necessary for theGroup’sday-to-dayoperations,subjecttothetransactionsbeingcarriedoutintheordinarycourseofbusinessandontermsnot to the detriment of the minority shareholders of the Company.

Please refer to the Circular to Shareholders dated 27 April 2018 dispatched together with the Annual Report 2017.

(11) Resolution 8 – Proposed Renewal of Share Buy-Back Authority TheproposedOrdinaryResolution8, ifapproved,willempower theCompany topurchaseand /orholdup to tenpercentum

(10%) of the existing total issued shares of the Company. This authority unless revoked or varied by the Company at a General Meeting will expire at the next Annual General Meeting.

Please refer to the Statement to Shareholders in relation to the Proposed Renewal of Share Buy-Back Authority dated 27 April 2018 for further information.

(12) Resolutions9–11-ContinuinginOfficeasIndependentNon-ExecutiveDirectors

TheproposedResolutions9to11,ifpassed,willallowthenameddirectorstoremainasindependentdirectorsnotwithstandingthat they have served a cumulative term of over nine years as independent directors.

TheBoardaftertheannualassessmentoftheindependenceofthethreeindependentDirectorsnamely,ChaiMoiKim,ChiaKayJooandAzizulBinMohdOthman,whohaveservedasIndependentNon-ExecutiveDirectorsoftheCompanyforacumulativetermofmorethannine(9)years,andrecommendedthemtoremainasIndependentNon-ExecutiveDirectorsof theCompanydespitetheirtenureintheBoardbasedonthefollowingjustifications:-

(a) theyfulfilledthecriteriaunderthedefinitionofIndependentDirectorasstatedintheMainMarketListingRequirementsofBursaSecurities,andthus,theywouldabletoprovidecheckandbalanceandbringanelementofobjectivitytotheBoard;

(b) they have cumulative knowledge of the Group’s business and operations, and have made and continue to make valuable contributionsthroughtheirroleintheAuditCommittee;

(c) theyhavedevotedsufficienttimeandattentiontotheirprofessionalobligationsforinformedandbalanceddecisionmakingby actively participated in board discussion and provided an independent voice to the Board through their vast experience invariousindustries;and

(d) they have exercised their due care during their tenure as IndependentNon-ExecutiveDirectors of theCompany andcarried out their professional duties in the best interest of the Company and shareholders.



6

STATEMENT ACCOMPANYINGNOTICE OF ANNUAL GENERAL MEETING

Pursuant to Paragraph 8.27(2) of Bursa Malaysia Securities Berhad Main Market Listing Requirements

No individual is standing for election as a Director at the forthcoming 17th Annual General Meeting of the Company.



7

CORPORATEINFORMATION

BOARD OF DIRECTORS

Lee Chin YenExecutiveChairman

Tan Hong ChengManagingDirector

Hia Wan KigaExecutiveDirector

Lee Poh ChooExecutiveDirector

Tan Kim HongExecutiveDirector

Chai Moi KimIndependentNon-ExecutiveDirector

Chia Kay JooIndependentNon-ExecutiveDirector

Azizul Bin Mohd OthmanIndependentNon-ExecutiveDirector

Chan Kee LoinIndependentNon-ExecutiveDirector

AUDIT COMMITTEE

Chai Moi KimChairmanIndependentNon-ExecutiveDirector

Chia Kay JooMemberIndependentNon-ExecutiveDirector

Azizul Bin Mohd OthmanMemberIndependentNon-ExecutiveDirector

REMUNERATION COMMITTEE

Chai Moi KimChairmanIndependentNon-ExecutiveDirector


Azizul Bin Mohd OthmanMemberIndependentNon-ExecutiveDirector

NOMINATION COMMITTEE

Azizul Bin Mohd OthmanChairmanIndependentNon-ExecutiveDirector


Chai Moi KimMemberIndependentNon-ExecutiveDirector

COMPANY SECRETARIES

Lim Ming Toong (MAICSA 7000281)

Anna Lee Ai Leng(LS 0009729)

REGISTERED OFFICE

10th Floor, Menara Hap SengNo. 1 & 3 Jalan P. Ramlee50250 Kuala Lumpur, MalaysiaTel : +603-2382 4288Fax : +603-2382 4170

MANAGEMENT OFFICE

Batu 12, Jalan Hutan Melintang34600 Hutan MelintangPerak, MalaysiaTel : +605-641 1046Fax : +605-641 1115

SHARE REGISTRAR

Tricor Investor & Issuing House Services Sdn. Bhd.Unit 30-01, Level 30, Tower AVertical Business SuiteAvenue 3, Bangsar SouthNo. 8, Jalan Kerinchi59200 Kuala LumpurTel : +603-2783 9299Fax : +603-2783 9222

AUDITORS

Messrs. Baker Tilly Monteiro HongChartered AccountantsBaker Tilly MH TowerLevel 10, Tower 1, Avenue 5Bangsar South City59200 Kuala LumpurTel : +603-2297 1000Fax : +603-2282 9980

BANKERS

Malayan Banking BerhadHSBC Bank Malaysia Berhad RHB Bank BerhadAmBank BerhadBank Muamalat Malaysia Berhad STOCK ExCHANGE LISTING Main Market of Bursa Malaysia Securities BerhadStock Name : CAMRESStock Code : 7128



8

GROUPSTRUCTURE

CentralAluminium

ManufactorySdn. Bhd.

100%

100%

100% 100% 100%

100%

100%

100% 100%Advance

EagleMarketingSdn. Bhd.

CentralMelamineware

Sdn. Bhd.

Prestile Industries Sdn. Bhd.

CAM Plastic Industry

Sdn. Bhd.

100%Future Atlas

Sdn. Bhd.

Central Palm Oil

Mill Sdn. Bhd.

SaluranSuriamas Sdn. Bhd.

Kitchenally Sdn. Bhd.

Naprogen Sdn. Bhd.



9

2013 2014 2015 2016 2017

159,

573 21

4,30

8

212,

247

202,

578

259,

451

REVENUE(RM’000)

2013 2014 2015 2016 2017

3,11

8

8,84

2

6,75

9

4,58

8

9,44

1

PROFIT BEFORE TAX(RM’000)

NET ASSETS(RM’000)

2013 2014 2015 2016 2017

95,3

77

102,

495

102,

107

101,

823

107,

896

2013 2014 2015 2016 2017

1,86

5

6,67

4

7,19

1

2,19

3

6,07

3

PROFIT ATTRIBUTABLE TOOWNERS OF THE COMPANY

(RM’000)

At A Glance:

Revenue 2017: RM 259.45 million (2016: RM 202.58 million)

Profit Before Tax 2017: RM 9.44 million (2016: RM 4.59 million)

Total Assets 2017: RM 178.55 million (2016: RM 163.24 million)

Market Capitalisation RM74.8 million as at 31 December 2017

Key Business a) Manufacturing and trading of Aluminium, Stainless Steel, Melamine Tableware, Plastic Kitchenware

products; and b) Manufacturing and trading of Crude Palm Oil (‘CPO’), Palm Kernel (‘PK’), Oil Palm Fibre and other oil palm

related products.

Market presence Asia, Middle East and Africa and North America

FIVE-YEARFINANCIAL HIGHLIGHTS

(as at 31 December 2017)



10

FINANCIAL YEARS ENDED 31 DECEMBER2013 2014 2015 2016 2017

RM’000 RM’000 RM’000 RM’000 RM’000

FINANCIAL PERFORMANCERevenue 159,573 214,308 212,247 202,578 259,451 Gross profit 16,076 21,334 22,090 19,375 24,234 Profit before tax 3,118 8,842 6,759 4,588 9,441 Profit after tax 1,879 7,117 7,191 2,193 6,073 Profit Attributable to Owners of the Company 1,865 6,674 7,191 2,193 6,073

FINANCIAL POSITIONASSETS

Non-current assets 83,773 92,747 99,661 99,398 100,351 Current assets 76,037 79,768 67,000 63,838 78,197

Total Assets 159,810 172,515 166,661 163,236 178,548

LIABILITIES AND EQUITY

LIABILITIES

Non-current liabilities 27,703 31,438 29,243 26,149 31,415 Current liabilities 36,730 38,582 35,311 35,264 39,238

Total Liabilities 64,433 70,020 64,554 61,413 70,653

EQUITY

Paid-up share capital 49,200 49,200 49,200 49,200 54,378 Treasury shares (4,464) (4,464) (823) (1,382) (1,382)Non-controlling interest 1,905 2,348 - - - Retained profits 43,558 50,232 48,552 48,826 54,899 Reserves 5,178 5,178 5,178 5,178 -

Total Equity 95,377 102,494 102,107 101,822 107,895

Total Liabilities and Equity 159,810 172,514 166,661 163,235 178,548

SHARE INFORMATIONBasic earnings per share (sen) 1.05 3.77 3.70 1.14 3.16 Share price as at 31 December (RM) 0.240 0.245 0.300 0.285 0.390

Gross margin (%) 10.07% 9.95% 10.41% 9.56% 9.34%Return on net assets (%) 1.60% 5.23% 5.83% 1.80% 4.56%Return on equity (%) 1.96% 6.51% 7.04% 2.15% 5.63%Current ratio (times) 2.07 2.07 1.90 1.81 1.99 Gearing ratio (times) 0.51 0.54 0.47 0.43 0.47

FIVE-YEARFINANCIAL HIGHLIGHTS(as at 31 December 2017) (Cont’d)



11

On behalf of the Board of Directors, I am pleased to present to you the Company’s Annual Report and Audited Consolidated Financial Statements for the financial year ended 31 December 2017.

CHAIRMAN'SSTATEMENT

FINANCIAL PERFORMANCE

The year 2017 proved to be as challenging as our initial assessment of the business market condition and the economy. However, despite this challenging environment, all our core segments had made positive contributions to the group’s overall performance with the profit after tax increased to RM 6.1 million from RM 2.2 million in 2016.

The bulk of the profit growth was derived from the palm oil mill segment which had significantly contributed a higher volume and at the same time achieved better production efficiency. Whereas, the manufacturing segment recorded a marginal gain due to tougher competitive market conditions and a lower consumer sentiment.

OUTLOOK AND PROSPECTS

Despite our conservative and prudent approach of assessments, 2017 proved to be better than what we had expected. While we look forward to another year of optimistic performance, it pays to be extra diligent and stays focus especially in a global consumerism downtrend and thus we adopt the same cautious approach in the outlook for the coming year.

There are also other external factors affecting the market such as the fear of an escalating trade war between America and China, which may have an indirect impact on us, in response to the stainless steel and aluminium tariff imposed by the United States recently as well as the volatility of demand of CPO and palm oil derivatives. As part of our continuing efforts to combat the rapid change in this dynamic and challenging business environment, our Group will continue to focus on organic development and value creation with an emphasis on sustainable growth, innovation of our product range and the exploration of new markets and business opportunities.

As the adage goes, when an EAGLE sees a coming storm, it will always soar above the storm. We are the EAGLE, we will soar.

On behalf of the Board of Directors, I would like to express my sincere appreciation to the management and employees of the Group for their dedication, enthusiasm and commitment in performing their duties throughout the year.

I also wish to thank all our shareholders, banks, customers and business associates for their continuous support and confidence in the Group.

Last but not least, I wish to extend my gratitude to my fellow Board members for their unwavering commitment and invaluable counsel and contribution in steering the Group to greater heights. Thank you.

Lee Chin YenExecutiveChairman27 April 2018



12

The Management Discussions and Analysis (“MD&A”) provides an analysis of the financial performance for the financial year ended 31 December 2017, key business strategies, risks and future prospects of the Group. This MD&A should be read in conjunction with the accompanying financial statements as set out in pages 43 to 99 of this Annual Report.

OVERVIEW

The Company is an investment holding company with its subsidiaries that are principally involved in:

• Manufacturing and Trading

Manufacturing and trading of household products, which include:- i) Aluminium and stainless steel kitchenware, kitchen sinks and kitchen knives; ii) Plastic kitchenware; and iii) Melamine tableware.

• Palm Oil Milling

Manufacturing and trading of crude palm oil (‘CPO’), palm kernel (‘PK’), oil palm fiber and other related products.

For the manufacturing segment, the Group owns and operates its businesses in Malaysia serving both the domestic and export markets. Presently, the products are exported to Asia, the Middle East and Africa as well as North America. The Group had branches set up in Johor Bahru, Ipoh and Teluk Intan for the expansion of its marketing network in Malaysia and into neighbouring countries such as Indonesia and Singapore.

The aluminium and stainless steel household products are marketed under the brand names of “Eagle” and “CAM”, which have been in the market for more than 40 and 20 years respectively while the melamine tableware products are also marketed under the brand name of “Eagle” for more than 30 years. To further complement the Group’s range of household products, the Company had ventured into the production of plastic kitchenware products by acquiring the plastic production plant and machineries through its wholly owned subsidiary, CAM Plastic Sdn. Bhd.. The acquisition was completed in year 2013. All the plastic kitchenware products under this company are marketed under trademarks of ‘Kiwi’, ‘Goldenware’ and ‘Kiwiware’, which have been in the market for more than 20 years.

Throughout the years 2010 to 2012, the Group had expanded its revenue streams further by investing in the downstream palm oil industries such as the processing of palm fiber and the manufacturing and trading of crude palm oil, palm kernel, palm fibre and other related products. Presently, the products are distributed to the domestic market.

In addition to that, the Company had announced the approval of the Feed-In Tariff (“FIT”) application, granted by the Sustainable Energy Development Authority Malaysia (“SEDA”) to its wholly owned subsidiary, Future Atlas Sdn. Bhd. for a 2.000 MW biogas plant. The plant will generate renewable energy to be sold to Tenaga Nasional Berhad under the SEDA FiT System for a period of sixteen (16) years commencing from the scheduled FiT commencement date of 24 May 2019. The FIT approval does not have any significant impact on the performance of the Group for the financial year ending 31 December 2017. However, it is expected to contribute positively to the future earnings of the Group after the effective period from 29 May 2019.

GROUP STRATEGY AND OBJECTIVE

The Group’s long term objective is to be a leading manufacturer and distributor of high quality household and palm oil products. The vision of the Group is as follows:-

To continuously enhance our product quality and operational efficiency; To continuously develop new products to meet the needs and requirements of customers; To strengthen our market position through the widening of our business network globally; and To keep pace with the ever evolving global dynamics.

The Group’s strategy is to put emphasis on organic growth of our existing core segments while striving for sustainability and improvements of earnings from these segments as well as keeping vigilant lookout for additional diversified revenue streams.

MANAGEMENT DISCUSSIONAND ANALYSIS(as at 31 December 2017)



13

FINANCIAL PERFORMANCE REVIEW

For the year under review, our group’s revenue had risen by 28% to RM 259.45 million from RM 202.58 million in the previous year, mainly due to the good performance of the palm oil mill segment.

Other operational income recorded was also higher in 2017 at RM 2.44 million as compared to RM 2.11 million in 2016, mostly due to contribution from the by-products of the palm oil mill segment.

Overall, the Goup’s profit before tax had increased from RM 4.59 million in 2016 to RM 9.44 million in 2017, in line with the higher revenue achieved.

Manufacturing and Trading Segment

The revenue contribution from the manufacturing and trading segment was lower at RM 58.27 million as compared to RM 62.06 million in 2016 which led to a lower profit before tax of RM 0.43 million as compared to RM 0.68 million in the previous year in this segment.

Palm Oil Mill Segment

The Palm Oil Mill segment gained RM 60.67 million in revenue to a total of RM201.18 million in 2017. The increase in revenue had also resulted in the rise of profit before tax from RM 4.47 million in 2016 to RM 9.45 million in 2017. The improvement of this segment was partly due to the recovery from the El Nino weather phenomenon which had affected the production output as well as the supply chain of fresh fruits bunches (“FFB”).

Liquidity and Capital Resources

As at 31 December 2017, the deposit, cash and bank balances had increased to RM 19.66 million as compared to RM 6.46 million at the end of 2016.

The Group has periodically undergone reviewed and assessed on its financial stability and flexibility on the efficiency, as well as the efficiency of the Group’s working capital management and its ability to comfortably meet the short term and long term financial obligations and commitments. In support of the Group’s vision of long term growth, adequate funds are allocated for capital expenditures, including the improvements of our existing production capacity and its efficiency.

The Group’s gearing ratio had increased from 0.43 time as at 31 December 2016 to 0.47 times by the end of 2017 as a results of the drawdown of additional term loans and finance lease in support of additional capital expenditure in year 2017.

The total capital expenditure for year 2017 is RM 7.13 million, comprising mainly of acquisition of plants, machineries and tools as well as capital work-in-progress.

RENOVATION, FURNITURE, FIXTURE, FITTINGS

2%

OFFICE EQUIPMENT& COMPUTERS

1%MOTORVEHICLES

2%

PLANT, & MACHINERY, FACTORYEQUIPMENT & TOOLS AND

CAPITAL WORK-IN-PROGRESS95%

MANAGEMENT DISCUSSIONAND ANALYSIS

(as at 31 December 2017) (Cont’d)



14

The Management is confident with the current credit facilities combined with our existing cash on hand as well as anticipated operating cash flows will be adequate to meet with the working capital and capital expenditure requirements for the foreseeable future.

Potential Risks Overview

(i) Business risks The Group is inevitably subject to certain business risk inherent in the manufacturing industry such as shortages

of labour and raw materials, increase in the cost of labour and raw materials, change in general economic, technological, business and credit conditions, fluctuation of foreign exchange rate and change in government policies. Although the Group seeks to limit these risks through or via the utilisation of automated production process and prudent management policies, no assurance can be given that any change to these factors will not have a material effect on the Group’s business.

(ii) Financial risks The Group is exposed to the financial risk such as credit risk, foreign currency risk, interest rate risk and liquidity

risk. The Group’s financial risk management objectives and policies have been highlighted in pages 95 to 98 of this Annual Report.

(iii) Dependency on major customers and suppliers

For the financial year ended 2017, the revenue contribution from two major customers in the palm oil mill segment contributed about 53.03% to the Group’s revenue as set out in page 93 of this Annual Report. Save as disclosed, there is no other single customer or supplier in the Group that contributed more than 10% of the Group’s revenue.

OUTLOOK OF GROUP FUTURE PROSPECTS

The Group recognises the importance of continuously monitoring and realigning our business plans in view of the challenging market condition ahead in year 2018. The market remains volatile due to global market uncertainties as well as lower consumer sentiments. The Group will strive to improve its financial position and to stabilise short term financial performance as well as to improve long term financial potential by expanding into new markets and exploring new business opportunities.

FORWARD-LOOKING STATEMENTS

Certain statements in this MD&A are based on historical data which may not be reflective of the future results, and others are forward-looking in nature which are subject to uncertainties and contingencies.

These statements reflects the expectations of the management regarding the future growth, general industry and economic outlook, financial and operating conditions, business risk and opportunities as well as plans and strategies of the Group. Whenever used, words such as “will,” “expect,” and other terms of similar meaning are intended to identify such forward-looking statements. Forward-looking statements, including these, are based on the current beliefs and expectations of our management and are subject to future uncertainties that are beyond the Management’s control that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements.

MANAGEMENT DISCUSSIONAND ANALYSIS(as at 31 December 2017) (Cont’d)



15

SUSTAINABILITY STATEMENTS

SUSTAINABILITY APPROACH

The Board is mindful to the need of sustainable principles to provide valuable insight into business opportunities and risks towards enhancing the Group’s business model and value. Sustainability has been increasingly seen as an integral part of value creation, whether in operational efficiency, customer satisfaction, employee well-being, ongoing community support or investor confidence.

Through the Group’s stakeholder engagements, we have identified material economic, environmental and social (“EES”) matters as our groundwork for our commitment towards sustainability practices.

SUSTAINABILITY GOVERNANCE STRUCTURE

The Board is primary responsible for the sustainability performance of the Group. The key management personnel is empowered to initiate sustainable strategy and to oversee the incorporation of sustainability in the Group’s business to assist the Board in identifying and managing material sustainability matters and reporting the same to the Board.

IDENTIFYING MATERIAL SUSTAINABILITY MATTERS

The Board believes that stakeholder engagement plays a vital role in linking our Group’s business strength and long-term success. The Group relies on the information from internal and external parties that relevant to the Group’s operations to identify the key sustainability matters. This information is gathered and assess through discussion with each stakeholder by way of the following methodologies:-

Key Stakeholder Group Engagement MethodsEmployees • Discussion

• Programmes Authorities/ government/ regulators • Discussion

• Annual renewal Customers • Survey Local community • Programmes

Material sustainability matters within the Group are identified and outlined as follows:-Material Sustainability Matters Key EES Themes

a) Technological improvement and Intellectual Property Development Economic b) Business expansion and customer satisfaction Economicc) Environmental compliance Environmental d) Human rights and labour practices Social e) Occupational health and safety management Social f) Human capital development Social g) Local communities development Social

These focus areas will continue to be reviewed periodically for its relevancy across the Group.

MANAGING SUSTAINABILITY MATTERS

(a) Technological Improvement and Intellectual Property (“IP”) Development

To keep pace with the dynamic and competitive business environment, the Group has continuously explored on areas of technological improvement to develop new products as well as to maintain quality and productivity expectations. Throughout the years, the Group continues to invest on capital expenditure, such as plant and machinery, moulds (for modified and new products) etc., to remain cost competitive and operational efficiency towards providing sustainable business growth.

In manufacturing segment, the Group has continuously promoted and developed brand recognition, domestically and internationally. Each brand name such as Eagle, CAM, Kiwi and Goldenware, has been established and marketed exceeding 20 to 40 years. This will ease the Group’s efforts to introduce new products among existing and potential customers. The Group has consistently monitored and renewed its intellectual property rights to prevent any unlawful use of these brand names.



16

MANAGING SUSTAINABILITY MATTERS (cont’d)

(b) Business Expansion and Customer Satisfaction

To sustain the Group business growth, the Group has been actively exploring and developing new business opportunities to the Group. Throughout the year from 2010 to 2012, the Group had invested in downstream palm oil industries such as processing of palm fibre, crude palm oil, palm kernel and other palm oil related products.

In year 2016 and 2017, the Group had announced on its intention to participate in Feed-in Tariff (“FiT”) approval, granted by the Sustainable Energy Development Authority Malaysia (“SEDA”), to invest in Biogas Power Plant and Biomass Power plant to generate renewable energy to be sold to Tenaga Nasional Berhad for a period of 16 years under the approved FiT rate. The commissioning of the biogas power plant is expected to be completed by mid of year 2019 which will increase the Group revenue stream.

The Group recognises the importance of mastering customer satisfaction as a business growth driver and success in order to remain competitive. Effective communication of customer needs is vital to create a brand loyalty and a recurring stream of customers. Customer satisfaction and expectation survey is carried out annually to identify areas for improvement to serve our customers better as well as to develop new products design to sustain the Group’s business growth.

(c) Environmental Compliance

The Group has always committed to comply with the regulatory requirements of Malaysian Department of Environment (“DOE”) on preservation of our environment and at the same time enhancing the living standard of the community with more job opportunities in a sustainable manner.

i. Treatment of Emission

The Group has installed filtration system to all plants to remove any dust or particles before discharging the emissions into the atmosphere.

ii. Waste and effluent management

The Group has engaged the service of the waste management company as recommended by DOE to handle the industrial waste and sludge.

As for general waste such as paper, the Group has constantly communicated with our staff on reducing the usage of paper by printing on double-sided format, only necessary document or email is printed and any unused papers, recycled papers and boxes are sent for recycling use instead of discarding.

The Group has also installed waste effluent treatment system in dealing with the effluent that being discharged during the production process within the parameter as required by DOE.

Further to that, the Group has further explored into the business opportunity of enhancing utilisation of palm wastes comprising of empty fruit bunch (“EFB”) and Palm Oil Mill Effluent (“POME”) for power generation. This could assist in mitigating the negative environmental impact of produced wastes as well as turning them optimally for the benefits of the Group.

(d) Human Rights and Labour Practices

i. Minimum Wages

The Group is fully complied with the Minimum Wages Order 2016 and has revised the monthly basic salary for employees with a basic salary of below RM1,000 to the minimum wage requirement .

ii. Sexual Harassment

The Group is committed to ensuring that every employee is treated with respect and dignity, and a policy has been developed to prevent harassments in the workplace, as well as educating the employee to recognise and respect it.

iii. Child Labour Practice

The Children and Young Persons (Employment) Act 1966 defines a “child” as any person below 15 years old, while a “young person” as anyone under 18 years of age. All our employees meet the minimum age requirement stipulated under this Act.

iv. Promoting Workplace Diversity

Promoting inclusiveness and diversity in terms of age, gender and ethnicity will make our workplace a more interesting and personally enriching environment for all.

SUSTAINABILITY STATEMENTS(Cont’d)



17

MANAGING SUSTAINABILITY MATTERS (cont’d)

(e) Occupational Health and Safety Management

The promotion of Occupational Safety & Health (OSH) is shared between the Management and employees to reduce illness, injury and property damage at work. Although accidents at workplace cannot be totally prevented, the Group aims to provide a safe workplace and to protect its employees from any foreseeable occupational hazards. Appropriate protective equipments are provided to the employees and such equipments are maintained with regular check of compliances to the safety rules and regulations as set by the Company.

The Group has also organised in-house briefings and demonstrations on firefighting measures at workplace by the officers from Jabatan Bomba and Penyelamat Malaysia.

(f) Human Capital Development

The Board believes that human capital is one of the important components of the Group’s long term sustainability. We have conducted briefings and trainings to improve on the skills, knowledge and competencies of our employees.

During the year, there were a few gathering occasions held for employees to foster relationship among them.

(g) Local Communities Development

As part of the community, we contribute to the society with our caring and support for others in various ways such as monetary and material contributions and jobs opportunities:-

l Being one of the sponsors through its subsidiary for the maintenance and services of the charity home;

l Donation of monetary and material contributions on occasional basis by the Group; and

l To provide job opportunities by engaging the service of Bethany Home, a training center for disabled children and adults in performing certain works.

The Board is of the view that our existing sustainability practices adopted are reasonably adequate and manageable to steer the Group’s sustainability growth. However, the Board will review and consider suggestions, ideas and the need of other relevant sustainability practices for implementation as the Group evolves.

SUSTAINABILITY STATEMENTS(Cont’d)



18

LEE CHIN YEN ExecutiveChairmanMalaysian, male, aged 69

Mr. Lee Chin Yen was appointed as the Executive Chairman/ Director of CAM Resources Berhad on 29 December 2000.

He was appointed as the Managing Director of Central Aluminium Manufactory Sdn. Bhd. (CAluminium) in 1979, a Director of Central Melamineware Sdn. Bhd. (CMelamine) in 1988 and Advance Eagle Marketing Sdn. Bhd. (AEMkt) in 1989. A founding member and the driving force in the Group, he commenced his career in 1972 as an apprentice in Choo Chin Wah Company, a company principally involved in the manufacturing of aluminium in Thailand. After acquiring all the technical expertise, he returned to Malaysia in 1975 and formed a partnership with Mr. Tan Hong Cheng and others to manufacture aluminium household products in 1975. In 1979, this partnership was incorporated into a private limited company under the name of CAluminium and he was appointed as the Managing Director. At present, he is also a committee member of a few associations in Teluk Intan, Perak.

Mr. Lee has no directorships in other public companies and listed issuers.

He has attended all Board of Directors’ Meetings held during the financial year ended 31 December 2017. He is the father of Ms. Lee Poh Choo, the Executive Director of the Company and he has no conflict of interest with the Company. He does not have any convictions for any offences within the past five (5) years, other than traffic offences, if any. There were no sanctions and/or penalties imposed on him by any relevant regulatory bodies, which were material and made public during the financial year ended 31 December 2017.

TAN HONG CHENG ManagingDirectorMalaysian, male, aged 69

Mr. Tan Hong Cheng was appointed as the Managing Director/ Director of CAM on 29 December 2000.

He was appointed as the Managing Director of CMelamine in 1988, a Director of CAluminium in 1979 and AEMkt in 1989. He began his career in Loke Hup Porcelain as a shop assistant. In 1975, he formed a partnership with Mr. Lee Chin Yen and others to manufacture aluminium household products. This partnership was subsequently incorporated as CAluminium. He has more than 31 years of experience in the manufacturing of aluminium and stainless steel products. At present, he is the Chairman of Board of Directors for San Min Private School and Chong Ming Primary School in Teluk Intan. He also serves as the Vice President of the Chinese Chamber of Commerce of Lower Perak District and a Director of Anson Bay Medical Centre.

Mr. Tan has no directorships in other public companies and listed issuers. He has attended five (5) out of six (6) Board of Directors’ Meetings held during the financial year ended 31 December 2017. He is the father of Ms. Tan Kim Hong, the Executive Director of the Company and he has no conflict of interest with the Company. He does not have any convictions for any offences within the past five (5) years, other than traffic offences, if any. There were no sanctions and/or penalties imposed on him by any relevant regulatory bodies, which were material and made public during the financial year ended 31 December 2017.

HIA WAN KIGA ExecutiveDirectorMalaysian, male, aged 64

Mr. Hia Wan Kiga was appointed as Non-Executive Director of CAM on 29 December 2000 and a Non-Executive Director of CAluminium since 1999. Subsequently, he was re-designated as Executive Director on 22 February 2010.

He began his career as an apprentice in Sungai Besar Engineering Sdn. Bhd., a company involved in the engineering works. In 1975, he set up his own partnership company which was incorporated into a private limited company under the name of Hia Union Engineering Sdn. Bhd. in year 2004, a company principally involved in agriculture engineering. He is presently a committee member of a few local associations.

He does not hold directorship in any other public companies.

He has attended all Board of Directors’ Meetings held during the financial year ended 31 December 2017. He does not have any family relationship with any Director and/ or major shareholder of the Company and has no conflict of interest with the Company. He does not have any convictions for any offences within the past five (5) years, other than traffic offences, if any. There were no sanctions and/or penalties imposed on him by any relevant regulatory bodies, which were material and made public during the financial year ended 31 December 2017.

DIRECTORS’PROFILE



19

TAN KIM HONG ExecutiveDirectorMalaysian, female, aged 45

Ms. Tan Kim Hong was appointed as the Executive Director of CAM on 15 January 2002 and a Factory Manager of CMelamine. She joined the Group in 1993 as a clerk and subsequently promoted to her current position since 2000. She is responsible for overseeing the overall production processes and maintenance of product quality in CMelamine.

She does not hold directorship in any other public companies.

She has attended all Board of Directors’ Meetings held during the financial year ended 31 December 2017. She is the daughter of Mr. Tan Hong Cheng, the Managing Director of the Company and she has no conflict of interest with the Company. She does not have any convictions for any offences within the past five (5) years, other than traffic offences, if any. There were no sanctions and/or penalties imposed on her by any relevant regulatory bodies, which were material and made public during the financial year ended 31 December 2017.

LEE POH CHOO ExecutiveDirectorMalaysian, female, aged 43

Ms. Lee Poh Choo was appointed as the Executive Director of CAM on 15 January 2002.

She graduated from Campbell University, USA in 1998 with a Bachelor’s degree in Business Administration. She joined CAluminium in 1998 and was responsible for the area of MIS and Marketing. Since December 1998, she assumed the role of Factory Manager before being promoted to General Manager on 2013 to oversee the overall administrative and business operation in CAluminium.

Ms. Lee has no directorships in other public companies and listed issuers.

During the financial year ended 31 December 2017, she has attended all Board meetings. She is the daughter of Mr. Lee Chin Yen, the Executive Chairman of the Company and she has no conflict of interest with the Company. She does not have any convictions for any offences within the past five (5) years, other than traffic offences, if any. There were no sanctions and/or penalties imposed on her by any relevant regulatory bodies, which were material and made public during the financial year ended 31 December 2017.

CHAI MOI KIM IndependentNon-ExecutiveDirectorMalaysian, male, aged 60

Mr. Chai Moi Kim was appointed as an Independent Non-Executive Director of CAM on 15 January 2002. He sits on the Audit Committee and the Remuneration Committee as Chairman and also serves as a member of the Nomination Committee of the Company.

He is a member of the Malaysia Institute of Certified Public Accountants, the Malaysia Institute of Accountants and the Chartered Tax Institute of Malaysia. He started his career in 1980 as an Article clerk with an established local audit firm, and subsequently worked with several other established audit firms including an international audit firm until 1988. He left for FACB Group of Companies as the Group Accountant in 1989. In 1992, he joined MBF Holdings Berhad as a Senior Manager of the corporate department where he served until 1994. In 1995, he set up his own audit practice, Kim & Co.

He also sits in the Board of Grand Hoover Berhad as Independent Non-Executive Director.


DIRECTORS’PROFILE

(Cont’d)



20

AZIZUL BIN MOHD OTHMAN IndependentNon-ExecutiveDirectorMalaysian, male, aged 56

Tuan Haji Azizul bin Mohd Othman was appointed as an Independent Non-Executive Director of CAM on 15 January 2002. He serves as the Chairman of the Nomination Committee and a member of the Audit Committee and the Remuneration Committee of the Company.

Presently, he is the Executive Chairman of Redhill Point Sdn. Bhd. and Managing Director of Noble Institute of Advanced Technical Skills (NiATS). He is also the Vice President of the Organisation of Petroleum Training Institutes of Malaysia (OPTIMA) and Chairman of Pertubuhan Kebajikan Anak-Anak Yatim Darussalam.

Tuan Haji Azizul has no directorships in other public companies and listed issuers.

He has attended five (5) out of six (6) Board of Directors’ Meetings held during the financial year ended 31 December 2017. He does not have any family relationship with any Director and/ or major shareholder of the Company and has no conflict of interest with the Company. He does not have any convictions for any offences within the past five (5) years, other than traffic offences, if any. There were no sanctions and/or penalties imposed on him by any relevant regulatory bodies, which were material and made public during the financial year ended 31 December 2017.

CHIA KAY JOO IndependentNon-ExecutiveDirectorMalaysian, male, aged 71

Mr. Chia Kay Joo was appointed as an Independent Non-Executive Director of CAM on 15 January 2002. He serves as a member of the Audit, Remuneration and Nomination Committees of the Company.

He obtained a Bachelor degree in Law from University of London in 1981 and was called to English Bar in 1982 and admitted as an advocate and solicitor in Malaysia in 1985. He has been practicing in the legal profession for approximately 33 years. He was a High Court Interpreter from 1971 to 1981 and a judicial officer serving as the Magistrate at the Teluk Intan Magistrate Court from 1982-1984. He left the judicial service to set up his own legal practice in 1985. Presently, he serves as the legal adviser to a number of Associations and Chinese Guilds.

Mr. Chia has no directorships in other public companies and listed issuers.


CHAN KEE LOIN IndependentNon-ExecutiveDirectorMalaysian, male, aged 54

Mr. Chan Kee Loin was appointed as an Independent Non-Executive Director of CAM on 1 July 2009.

He was educated in the Tuanku Abdul Rahman College where he completed a three years extra-mural course in Financial Accounting in 1987 and a finalist in professional examination of the Chartered Association of Certified Accountants, United Kingdom. His career began in early 1988 as an audit assistant in a small firm of Public Accountants in Johor Bahru. In early 1989, he left for a medium size public accounting firm in Kuala Lumpur where he was promoted as a Director in year 2000. His experience in these firms includes statutory audits, due diligence audits, share and business valuation and rendering professional services as adviser, coordinator and Reporting Accountants for corporate exercises. He left the latter in mid-2009 and ceased working full time.

He also sits in the Board of Leon Fuat Berhad as an Independent Non-Executive Director.


DIRECTORS’PROFILE(Cont’d)



21

PROFILE OF KEY SENIOR MANAGEMENT

LEE POH HONG Group Accounts ManagerMalaysian, female, aged 40

Ms. Lee Poh Hong was appointed as the Group Accounts Manager on 15 July 2008. She holds a Bachelor’s Degree in Business and she is currently a member of the Malaysian Institute of Accountants.

She began her career with Central Aluminium Manufactory Sdn. Bhd. as an accounts manager in 2001 and subsequently, got promoted as the Group Accounts Manager on 15 July 2008. Ms. Lee has over 16 years of experience in overseeing a variety of finance functions within the Group.

She is the daughter of Mr. Lee Chin Yen and also a sister of Ms. Lee Poh Choo, the Executive Chairman and Executive Director of the Company. She has no conflict of interest with the Company and has not been convicted of any offences within the past 5 years, other than traffic offences, if any. There were no sanctions and/or penalties imposed on her by any relevant regulatory bodies, which were material and made public during the financial year ended 31 December 2017.



22

The Board of Directors (“the Board”) of CAM Resources Berhad (“CAM” or “the Company”) strives to ensure good corporate governance practices are implemented and maintained throughout the Company and its subsidiaries (“the Group”) as a fundamental part of discharging its duties to enhance shareholders’ values. This statement provides an overview on the application of the principles as set out in the Malaysian Code on Corporate Governance 2017 (“MCCG 2017”) and the extent to which the Company has complied with the three (3) key principles and practices of the MCCG 2017 during the financial year under review, and this is to be read together with the CG Report 2017 of the Company which is available on Bursa Malaysia’s website: http://www.bursamalaysia.com/corporate/about-us/corporate-governance/cg-report-2017/ and the Company’s website at www.camres.com.my.

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS

1.1 Board Responsibilities

The Board is responsible for formulating and reviewing the strategic plans and key policies of the Company, and charting the course of the Group’s business operations whilst providing effective oversight of Management’s performance, risk assessment and controls over business operations.

The Board delegates and confers some of its authority and discretion on the Chairman, Executive Directors, and Management as well as on properly constituted Board Committees comprising exclusively of Non-Executive Directors. The Board Committees comprise the Audit Committee, Nomination Committee and Remuneration Committee.

Board Committees have been established to assist the Board in its oversight function with reference to specific responsibility areas. It should however be noted that at all times, the Board retains collective oversight over the Board Committees. These Committees have been constituted with clear terms of reference and they are actively engaged to ensure that the Group is in adherence with good corporate governance. The Chairman of the relevant Board Committees report to the Board on key issues deliberated by the Board Committees at their respective meetings. The terms of reference of the Commitees are published on the Company’s websites.

The positions of the Chairman and the Managing Director (“MD”) are held by two different individuals.

There is a clear division of responsibilities between the Chairman of the Board and the MD to ensure that there is a balance of power and authority. The Chairman is responsible for running the Board and ensuring that all Directors receive sufficient and reliable information on financial and non-financial matters to enable them to participate actively in Board decisions whilst the MD is responsible over the operating units, organisation effectiveness and implementation of the Board’s policies and decisions.

To enhance accountability, the Board has established clear functions reserved for the Board and those delegated to Management. There is a formal schedule of matters reserved to the Board for its deliberation and decision to ensure the direction and control of the Company are in its hands.

The role of Management is to support the Executive Directors and implement the running of the general operations and business of the Company, in accordance with the delegated authority of the Board.

In general, the Non-Executive Directors are independent of Management. Their roles are to constructively challenge Management and monitor the success of Management in delivering the approved targets and business plans within the risk appetite set by the Board. They have free and open contact with Management at all levels, and they engage with the external and internal auditors to address matters concerning Management and oversight of the Company’s business and operations.

Key matters reserved for the Board’s approval include the annual business plan and budget, capital management and investment policies, authority limits/levels, risk management policies, declaration of dividends, business continuity plan, issuance of new securities, business restructuring, expenditure above a certain limit, material acquisitions and disposals of assets.

In performing their duties, all Directors have accessed to advice and services of a suitably qualified Company Secretary. The Company Secretary acts as a corporate governance counsel and ensures good information flow within Board, Board Committees and Senior Management. The Company Secretary attends all meetings of the Board and Board Committees and advises the Directors on the requirements encapsulated in the Company’s Constitution and legislative promulgations such as the Companies Act 2016, Main Market Listing Requirements (“MMLR”), etc.

CORPORATE GOVERNANCEOVERVIEW STATEMENT



23

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (cont'd)

1.1 Board Responsibilities (cont'd)

The Company Secretaries were entrusted to record the Board’s deliberations, in terms of issues discussed, ensure that deliberations at Board and Board Committee meetings are well documented, and subsequently communicated to Management for appropriate actions. The minutes of the previous Board and Board Committee meetings are distributed to the Directors/ Committee prior to the meeting for their perusal before confirmation of the minutes at the commencement of the following Board meeting. The Directors may comment or request clarification before the minutes are tabled for confirmation as a correct record of the proceedings of the meeting. Management provides Directors with complete and timely information prior to meetings and on-going basis to enable them to make informed decisions.

1.2 Board Charter

The Company has in place a Board Charter that sets out, among others, the responsibilities, authorities, procedures, evaluations and structures of the Board and Board Committees, as well as the relationship between the Board with its Management and shareholders.

The Board shall review its Charter from time to time to ensure it remains consistent with its objectives and responsibilities and the prevailing regulatory requirements. The responsibilities of the Board are stipulated in the Charter which is available in the Company’s website at www.camres.com.my.

1.3 Code of Conduct

The Board has adopted a Code of Conduct for the Directors of the Company, which covers a wide range of business practices and procedures. The Code of Conduct describes the standards of business conduct and ethical behaviour for Directors in the performance and exercise of their responsibilities as Directors of the Company or when representing the Company, which is available in the Company’s website at www.camres.com.my.

The Board has also adopted a whistleblowing policy that sets out the guidelines and practices that govern the company as well as the Group, where applicable. All employees are encouraged to report genuine concerns about unethical behaviour or malpractices. Any such, concern should be raised with senior management, and an appropriate action will be taken by the Company. If for any reason, it is believed that this is not possible or appropriate, then the concern should be reported to the Independent Non-Executive Director of the Company who can be contacted via email at [email protected].

The Board has yet to identify a Senior Independent Non-Executive Director to whom concerns may be conveyed by shareholders and the general public. However, the Chairman of the Board encourages the active participation of each and every Board member in the decision making process.

1.4 Board Meetings

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

Lee Chin Yen Tan Hong Cheng Lee Poh Choo Tan Kim Hong Hia Wan Kiga Chai Moi Kim Tuan Haji Azizul Bin Mohd OthmanChia Kay Joo Chan Kee Loin

6/65/66/66/66/66/65/66/66/6

To ensure that the Directors have the time to focus and fulfil their roles and responsibilities effectively, the Directors must not hold directorships in more than five (5) public listed companies and shall notify the Chairman before accepting any new directorship.


(Cont’d)



24


1.4 Board Meetings (cont'd)

To facilitate the Directors’ time planning, an annual meeting schedule is prepared and circulated at the beginning of every year, as well as the tentative closed periods for dealings in securities by Directors based on the targeted dates of announcements of the Group’s quarterly results.

1.5 Professional Development of Director

The Board acknowledge the importance of continuous training to keep abreast with regulatory updates and development in the business environment.

All the Directors have completed the mandatory accreditation program and attended various training programs. The training program, conferences, seminars and exhibitions attended by the Directors during the financial year are as follows:

Directors Course Title and Organiser Date attended

1. Tn. Haji Azizul Bin Mohd Othman

HRDF and Trainers' Conference and Exhibition 2017 27 & 28 November 2017

2. Mr. Chai Moi Kim National GST Conference 2017 (Chartered Tax Institute of Malaysia)

28 February & 1 March 2017

Mastering MPERS Fully Illustrated – Translation of the Standard into Practical Examples, and Impact of 2015 Updates (Malaysian Institute of Accountants)

23 & 24 May 2017

National Tax Conference 2017 (Chartered Tax Institute of Malaysia)

25 & 26 July 2017

2018 Budget Seminar (Chartered Tax Institute of Malaysia)

9 November 2017

3. Mr. Chan Kee Loin Sustainability Reports and Management Discussions & Analysis – What a Director Needs to Know(Bursatra Sdn Bhd)

18 November 2017

4. Mr. Chia Kay Joo 2018 Budget Seminar (Malaysian Institute of Accountants)

12 December 2017

5. Mr. Hia Wan Kiga 2018 Malaysia National Budget Highlights Seminar (Deloitte Tax Services Sdn Bhd)

9 December 2017

6. Mr. Lee Chin Yen 2018 Malaysia National Budget Highlights Seminar (Deloitte Tax Services Sdn Bhd)

9 December 2017

7. Ms. Lee Poh Choo Safety & Health Conference 2017: Moving Forward – Powering Up (FMM Institute)

14-15 March 2017

A Winning Performance of Machinery Safety 24-25 July 2017(Shuzam Group Sdn Bhd)20th Conference and Exhibition on Occupational Safety and Health (COSH2017): “OSH Sustainability Through Professionalism”

18-19 September 2017

(National Institute of Occupational Safety and Health)8. Mr. Tan Hong Cheng 2018 Budget Seminar (Malaysian Institute of

Accountants) 4 December 2017

9. Ms. Tan Kim Hong 2018 Budget Seminar (Malaysian Institute of Accountants)

4 December 2017

The Company will continue to identify suitable training for the Directors to equip and update themselves with the necessary knowledge in discharging their duties and responsibilities as Directors.

CORPORATE GOVERNANCEOVERVIEW STATEMENT(Cont’d)



25


2. Board Composition

The Board comprises competent members with a wide spectrum of skills and experience whom it believes can lead CAM to achieve its operational performance goals and attain good corporate standing in terms of governance and credibility. It currently comprises nine (9) members, four (4) Independent Non-Executive Directors and five (5) Executive Directors. The composition of the Board fulfils the MMLR of having at least two (2) or one-third (1/3) of the Board comprising independent directors. The Directors’ Profile is disclosed on pages 18 to 20 in the Annual Report 2017.

The Independent Non-Executive Directors do not participate in the day-to-day management of the Company and do not involve themselves in business transactions or relationships with the Company, in order not to compromise their objectivity. In staying clear of any potential conflict of interest, the Independent Non-Executive Directors remain in a position to fulfil their responsibility to provide check and balance to the Board.

The Board has established separate Nomination Committee and Remuneration Committee to assist in ensuring that its members remain relevant to the Company, having in place a remuneration policy which is competitive to attract and retain suitably qualified directors.

2.1 Tenure of Independent Director

Independence is important for ensuring objectivity and fairness in Board’s decision making. The independence of Directors is measured based on the criteria prescribed under the MMLR in which a Director should be independent and free from any business or other relationship that could interfere with the exercise of independent judgement or the ability to act in the best interests of the Company. The Independent Directors, in addition to compliance with the criteria set out under the MMLR, have also declared that they will continue to bring independent and objective judgement to the Board during the review of Directors’ independence as part of the annual assessment carried out by the Nomination Committee.

The Board acknowledges and takes cognizance of the MCCG 2017 that the tenure of an Independent Director should not exceed a cumulative term limit of nine years and that if the Board continues to retain an independent director after the twelfth year, the Board should seek annual shareholders’ approval through a two-tier voting process.

As at the reporting date, Mr. Chai Moi Kim, Mr. Chia Kay Joo and Encik Azizul Bin Mohd Othman, the Independent Non-Executive Directors who have served for a period of more than a cumulative period of 12 years and the Board with the recommendation from the Normination Committee, shall continue to retain them as independent Directors after 13 years at this AGM whereby the Board shall seek shareholders’ approval through a two tier voting process and the manner to obtain the shareholders’ approval on the resolution shall follow the MCCG 2017.

2.2 Nomination Committee (“NC”)

The NC comprises entirely of Independent Non-Executive Directors and the NC’s duties are as follows:

• To recommend candidates for Board membership; • To recommend candidates to fill the seats on Board Committees; • To assess the contribution of each individual Director; • To review annually the Board structure, size, composition and the balance between Executive Directors,

Non-Executive Directors and Independent Directors to ensure that the Board has the appropriate mix of skills and experience including core competencies which Directors should bring to the Board and other qualities to function effectively and efficiently;

• To take the necessary steps to ensure that women candidates are sought as part of the Company’s recruitment exercise to meet its gender diversity policy;

• To review annually the independence of Independent Directors; • To ensure existence of an appropriate framework and succession plan for the Executive Directors and senior

management of the Company; • To identify suitable orientation, educational and training programmes for continuous development of

Directors; • To establish and implement processes for assessing the effectiveness of the Board as a whole, the Board

Committees and assessing the contribution of each Director; and • To consider other matters as referred to the Committee by the Board.


(Cont’d)



26


2.2 Nomination Committee (“NC”) (cont'd)

The NC met once during the financial period. All the meetings were attended by all members of the Committee and the following activities were carried out:

• Reviewing the structure of the Board and the Board Committees; • Reviewing the tenure of Independent Non-Executive Directors and their independence; • Evaluation of the performance of the Board and Board Committees; and • Nominating the directors who are due for retirement by rotation and are eligible to stand for re-election.

Generally, the NC is responsible for identifying and recommending suitable candidates for Board membership and also for assessing the performance of the Directors on an on-going basis. The Board will have the ultimate responsibility and final decision on the appointment. This process shall ensure that the Board membership accurately reflects the long-term strategic direction and needs of the Company while it determines the skills matrix needed to support strategic direction and needs of the Company.

The NC evaluates and matches the criteria of the candidate, and will consider diversity, including gender, where appropriate, and recommends to the Board for appointment. In its effort to promote boardroom diversity, the NC has taken various steps to ensure that women candidates are sought from various sources as part of its recruitment exercise.

The NC will contact those persons identified to determine interest in serving the Company. This communication will ensure that prospective Board members have clarity regarding the nominating process as well as Director/Board profiles, roles and responsibilities, expectations of time commitments and other information as required.

The new Director(s) duly appointed by the Board are then recommended for re-election at the AGM. The Company shall then provide orientation and on-going education to the Board.

In making the selection, the Board is assisted by the NC to consider the following aspects:

• Probity, personal integrity and reputation – the person must have the personal qualities such as honesty, integrity, diligence and independence of mind and fairness.

• Competence and capability – the person must have the necessary skills, ability and commitment to carry out the role.

2.3 Diverse Board and Senior Management Team

The Board views that the workplace and Board diversity is important to facilitate the decision-making process by harnessing different insights and perspectives.

The Group adopted a policy of non-discrimination of any form, whether based on race, age, religion and gender throughout the organisation, which including the selection of Board members. The Board encourages a dynamic and diverse composition by nurturing suitable and potential candidates equipped with competency, skills, experience, character, time commitment, integrity and other qualities in meeting the future needs of the Company. Notwithstanding the challenges in achieving the appropriate level of diversity on the Board, the Board continues to work towards addressing this as and when vacancies arise and suitable candidates are identified. The Company’s prime responsibility in new appointments is always to select the best candidates available.

The Board is presently of the view that there is no necessity yet to fix a specific gender diversity policy as the Board has Seven (7) male and two (2) female directors. The appointment of any Director(s) should be based on their merit, qualification and working experience.




27


2.3 Diverse Board and Senior Management Team (cont'd)

The current diversity of the Board and Key Senior Management is as follows:

Gender Number

Male 7Female 3

Total 10

Age Number

40-49 years 350-59 years 360 years and above 4

Total 10

Ethnicity Number

Bumiputera 1Chinese 9

Total 10

2.4 Annual Assessment

The Board is tasked to review and evaluate its own performance and the performance of its Committees on an annual basis. The Board evaluation comprises a Board Assessment, an Individual (Self & Peer) Assessment and an Assessment of Independence of Independent Directors.

The assessment of the Board is based on specific criteria, covering areas such as the Board structure, Board operations, roles and responsibilities of the Board, the Board Committees and the Chairman’s role and responsibilities.

For Individual (Self & Peer) Assessment, the assessment criteria include interactive contribution, quality of input, and understanding of role.

The results of the assessment would form the basis of the NC’s recommendation to the Board for the re-election of Directors at the AGM.

Based on the annual assessment conducted, the NC was satisfied with the existing Board composition and concluded that each Directors has the requisite competence to serve on the Board and had sufficiently demonstrated their commitment to the Company in terms of time and participation during the year under review, and recommended to the Board the re-election of retiring Directors at the Company’s forthcoming AGM. All assessments and evaluations carried by the NC in discharge of its functions were properly documented.

The Board is of the view that its present size and composition is optimal based on the Group’s operations and that it reflects a fair mix of financial, technical and business experiences that are important to the stewardship of the Group.

In addition, the NC has reviewed and evaluated the performance of the Group Accounts Manager during the financial year.


(Cont’d)



28


3. Remuneration

The Remuneration Committee (“RC”) is assigned with the duty to assist the Board in the review of remuneration policy for the Board and make recommendation thereof. The RC comprises entirely of Independent Non-Executive Directors.

The RC and the Board ensure that the Company’s remuneration policy remains supportive of the Company’s corporate objectives and is aligned with the interest of shareholders, and that the remuneration packages of Directors and key Senior Management Officers are sufficiently attractive to attract and to retain persons of high calibre.

The RC is tasked to review annually the performance of the Executive Directors and submit recommendations to the Board on specific adjustments in remuneration and/or reward payments that reflect their respective contributions for the year, and which depend on the performance of the Group, achievement of goals and/or quantified organisational targets as well as strategic initiatives set at the beginning of each year.

The Board as a whole determines the remuneration of Non-Executive Directors and recommends the same for shareholders’ approval.

The remuneration package of the Executive Directors consists of monthly salary, bonus (if any) and fees and Directors and Officers Liability Insurance in respect of any liabilities arising from acts committed in their capacity as Directors and Officers of the Company.

Details of the Directors’ remuneration during the financial year 2017 are as follows:

Group CompanySalaries,

Bonus, EPF,

Others

Fees Benefits-in-kind

Salaries, Bonus,

EPF, Others

Fees Benefits-in-kind

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Executive Directors Lee Chin Yen 529 15 16 - 15 -Tan Hong Cheng 688 15 19 - 15 -Hia Wan Kiga 164 15 7 - 15 -Lee Poh Choo 207 15 5 - 15 -Tan Kim Hong 245 15 11 - 15 -

Non-Executive Directors Tn Haji Azizul Bin Mohd Othman

- 15 - - 15 -

Chai Moi Kim - 17 - - 17 -Chan Kee Loin - 15 - - 15 -Chia Kay Joo - 15 - - 15 -




29


3. Remuneration (cont'd)

The number of Directors/senior management whose remuneration falls within the following bands is tabulated as below:

Group Company

Remuneration Band (RM)

Executive Director/

Senior Management

Non-Executive Director

Executive Director

Non-Executive Director

50,000 and below - 4 5 4150,001 – 200,000 1 - - -250,001 – 300,000 3 - - -550,001 – 600,000 1 - - -650,001 - 700,000 1 - - -

PRINCIPLE B – EFFECTIVE AUDIT AND RISK MANAGEMENT

I. Audit Committee (“AC”)

The AC is relied upon by the Board to, amongst others, provide advice in the areas of financial reporting, external audit, internal control environment and internal audit process, review of related party transactions as well as conflict of interest situation. The AC also undertakes to provide oversight on the risk management framework of the Group.

The AC is chaired by an independent director who is distinct from the Chairman of the Board and majority of the members of the AC are financially literate. The composition of the AC, including its roles and responsibilities as well as a summary of its activities carried out in year 2017, are set out in the AC Report of this Annual Report.

The AC has yet to adopt a policy that requires a former key audit partner to observe a cooling-off period of at least two (2) years before being appointed as a member of the AC. Nonetheless, the AC shall observe the said application in the event that a former key audit partner is appointed to the Board of the Company.

The AC is responsible for reviewing audit, recurring audit-related and non-audit services provided by the external auditors. These recurring audit-related and non-audit services comprise regulatory reviews and reporting, interim reviews, tax advisory and compliance services.

The terms of engagement for services provided by the external auditors are reviewed by the AC prior to submission to the Board for approval.

The AC has reviewed the provision of non-audit services by the external auditors during the year and concluded that the provision of these services did not compromise the external auditors’ independence and objectivity as the amount of the fees paid for these services was not significant when compared to the total fees paid to the external auditors. The external auditors had provided a confirmation of their independence to the AC that they are and have been independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements.

Having satisfied with Messrs. Baker Tilly Monteiro Heng’s performance, technical competency and audit independence as well as fulfilment of criteria as set out in the Auditor Independent Policy, the AC recommended the re-appointment of Messrs. Baker Tilly Monteiro Heng to the Board, upon which the shareholders’ approval will be sought at the AGM.

Based on the AC’s assessment of the external auditors, the Board satisfied with the independence, quality of service and adequacy of resources provided by the external auditors in carrying out the annual audit for financial year 2017. In view thereof, the Board has recommended the re-appointment of the external auditors for the approval of shareholders at the forthcoming AGM.


(Cont’d)



30

PRINCIPLE B – EFFECTIVE AUDIT AND RISK MANAGEMENT (cont'd)

II. Risk Management and Internal Control Framework

The Board has overall responsibility for maintaining a sound system of risk management and internal control of the Group that provides reasonable assurance of effective and efficient business operations, compliance with laws and regulations as well as internal procedures and guidelines.

The Board has established Enterprise Risk Management ("ERM") Framework and Internal Control Procedures to assist the Board in fulfilling its responsibilities in relation to risk management. These responsibilities include ensuring that management maintains a sound and effective risk management framework to safeguard the interest of shareholders, customers, staff and the Group’s asset as well as to assess the effectiveness of internal controls in providing an independent view on specific risks and control issues, the state of internal controls, trends and events.

The Board has established Board Risk Management Committee (“BRMC”) to assist the Board in managing the risks and internal control of the Group. The BRMC is comprised a majority of Independent Non-Executive Directors in fulfilling its responsibilities in relation to risk management. These responsibilities include ensuring that management maintains a sound and effective risk management framework to safeguard shareholders’ investments and the Group’s assets to manage the principal risk exposure of the Group.

The Company continues to maintain and review its internal control procedures to ensure the protection of its assets and its shareholders’ investment.

The Company has outsourced its internal audit function to a professional services firm, namely Bizsery Management Services Sdn. Bhd. to assist the AC in discharging its duties and responsibilities in respect of reviewing the adequacy and effectiveness of the Group’s risk management and internal control systems.

The Statement on Risk Management and Internal Control as included in this Annual Report provides the overview of the internal control framework adopted by the Company during the financial year ended 31 December 2017.

PRINCIPLE C – INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH THE STAKEHOLDERS

I. Communication with stakeholders

The Board recognises the importance of being transparent and accountable to the Company’s stakeholders and acknowledges the continuous communication between the Company and stakeholders would facilitate mutual understanding of each other’s objectives and expectations. As such, the Board consistently ensures the supply of clear, comprehensive and timely information to their stakeholders via various disclosures and announcements including quarter and annual financial statements which provides investors with up-to-date financial information of the Group. All these announcements and other information about the Company are available on the Company’s website at www.camres.com.my which shareholders, investors and public may access.

In addition to the above, shareholders and investors can make inquiries about investor relations matters with designated management personnel directly responsible for investor relations matters via dedicated e-mail address available on the corporate website.

In an effort to encourage greater shareholders’ participation at the AGM, the Board takes cognisance in serving longer than the required minimum notice period for AGMs, whenever possible. The Chairman shall ensure that the Board is accessible to shareholders and an open channel of communication is cultivated.

The Company allows shareholders to appoint a proxy who may not be a member of the Company. If the proxy is not a member of the Company, he/she need not be an advocate, an approved company auditor or a person approved by the Registrar of Companies.

To further promote participation of members through proxies, which is in line with the MMLR, the Company had amended its Constitution to include explicitly the right of proxies to speak at general meetings.




31

PRINCIPLE C – INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH THE STAKEHOLDERS (cont'd)

I. Communication with stakeholders (cont'd) From the Company’s perspective, the AGM also serves as a forum for Directors and Management to engage with

the shareholders personally to understand their needs and seek their feedback. The Board welcomes questions and feedback from shareholders during and at the end of shareholders’ meeting and ensures their queries are responded in a proper and systematic manner.

II. Conduct of General Meetings

The AGM is the principal forum for shareholder dialogue, allow shareholders to review the Group’s performance via the Company’s Annual Report and pose questions to the Board for clarification.

At the 16th AGM held on 23 June 2017, all the directors (including the chair of the Board Committees) were present in person to engage directly with, and be accountable to the shareholders for their stewardship of the Company. During the AGM, shareholders participate in deliberating resolutions being proposed or on the Group’s operations in general. The Directors responded to all questions raised and provided clarification as required by the shareholders.

In line with good corporate governance practice, the notice of the Seventeenth AGM was issued at least 28 days before the AGM date. The Chairman ensures that the Board is accessible to shareholders and an open channel of communication is cultivated.

This statement is made in accordance with the resolution of the Board dated 6 April 2018.


(Cont’d)



32

The Board of Directors of CAM Resources Berhad (“the Board”) is pleased to present the Audit Committee (“AC”) Report for the financial year ended 31 December 2017.

COMPOSITION AND MEETINGS

The AC comprises of three (3) members as follows:● Chai Moi Kim – Chairman, Independent Non-Executive Director● Chia Kay Joo – Member, Independent Non-Executive Director● Tuan Haji Azizul bin Mohd Othman – Member, Independent Non-Executive Director

During the financial year ended 31 December 2017, the AC held a total of five (5) meetings and the details of attendance of each AC Member are as follows:

Name of Director Attendance

Chai Moi Kim 5/5Azizul Bin Mohd Othman 5/5Chia Kay Joo 5/5

Details of the members of the AC are contained in the Profile of Directors as set out on pages 18 to 20 of this Annual Report.

The AC Chairman, Mr. Chai Moi Kim, is a member of the Malaysian Institute of Accountants (MIA) and the Malaysian Institute of Certified Public Accountants. Accordingly, the Company complies with paragraph 15.09(1)(c)(i) of MMLR.

The Senior Management, external auditors and persons carrying out the internal audit function or activity, or both are invited to attend the meeting where considered necessary. The Company Secretary is responsible for distributing the agenda of the meetings and relevant information to the AC members well in advance of their meetings, and recording the proceedings of the AC meetings.

Minutes of the AC meeting were recorded and tabled for confirmation at the next following AC meeting and subsequently presented to the Board for notation. In 2017, the AC Chairman presented to the Board the Committee’s recommendations to approve the annual and quarterly financial statements. The AC Chairman also conveyed to the Board matters of significant concern as and when raised by the external auditors or internal auditors in the respective quarterly presentations.

The Board reviews the terms of office of the AC members and assesses the performance of the AC and its members through an annual Board Committee effectiveness evaluation. The Board is satisfied that the AC and its members discharged their functions, duties and responsibilities in accordance with the AC’s Terms of Reference (TOR), supporting the Board in ensuring the Group upholds appropriate CG standards.

TERMS OF REFERENCE

The terms of reference of the committee are available on the Company’s website at www.camres.com.my.

SUMMARY OF WORK OF THE AC

The summary of activities carried out by the AC during the financial year ended 31 December 2017 are as follows:

(a) reviewed the unaudited quarterly reports on the consolidated results of the Group to ensure adherence to the regulatory reporting requirements and appropriate resolution prior to Board’s approval;

(b) reviewed the annual audited financial statements of the Company and of the Group prior to Board’s consideration and approval;

(c) discussed and reviewed the audit plan of the external auditors in terms of their scope of audit prior to their commencement of their annual audit;

(d) reviewed the recurrent related party transactions to ensure that they were not detrimental to the interests of the minority shareholder every quarter;

AUDIT COMMITTEEREPORT



33

SUMMARY OF WORK OF THE AC (cont'd)

(e) discussed and reviewed with the external auditors, the applicability and the impact of the new accounting standards and new financial reporting regime issued by the Malaysian Accounting Standards Board;

(f) reviewed the internal audit report which outlined the recommendations towards correcting areas of weaknesses and ensured that there were management action plans established for the implementation of the recommendations of the persons carrying out the internal audit function or activity;

(g) reviewed the audit reports from the external auditors in relation to audit and accounting matters arising from the statutory audit; matters arising from the audit of the Group in meetings with the external auditors without the presence of the executive Board members and management;

(h) discussed and reviewed the re-appointment of external auditors and their audit fees, after taking into consideration the independence and objectivity of the external auditors and the cost effectiveness of their audit, before the recommendation to the Board of Directors for approval;

(i) met twice with the external auditors without the presence of the executive directors and management in the Audit Committee meetings to enquire on significant findings, fraud consideration, if any, and/or management cooperation level;

(j) reviewed with the external auditors, the Statement on Risk Management and Internal Control of the Group for inclusion in the annual report;

(k) reviewed and confirmed the minutes of the Audit Committee meetings, and also distributed the minutes to the other members of the Board; and

(l) reported on the proceedings of each Audit Committee Meeting (through the Audit Committee Chairman).

INTERNAL AUDIT FUNCTION

The Company recognised that an internal audit function is essential to ensuring the effectiveness of the Group’s systems of internal control and is an integral part of the risk management process. The internal audit function for the Group has been outsourced to Bizsery Management Sdn. Bhd. who conducts an independent review of the Group’s key processes and control system in place.

The internal audit activities have been carried out according to the internal audit plan that was approved by the AC. The Board had via the AC evaluated their effectiveness by reviewing the results of its works in AC meetings.

The internal audit activities carried out in accordance with the approved audit plan for financial year 2017 were on the following areas:

i) Review of Recurrence Related Party Transactions; ii) Review of Sales Audit; and iii) Review of Purchasing Audit.

The AC ensure that the internal auditors are given full access to all documents relating to the Company’s governance, financial statements and operational assessments, and direct access to the AC. The audit plan covers review of the adequacy of operational control, risk management, compliance with established policies and procedures, laws and regulations.

The internal auditors reported that overall, the internal control for the key areas reviewed are in place and adequate and there are no major exceptions noted and reported by the internal auditors that requires AC’s attention. Therefore, there are no reports which would result in material losses, contingencies or uncertainties that would require a separate disclosure in the Group’s annual report.

The cost incurred for the internal audit function in respect of the financial year ended 31 December 2017 was RM 21,000.

Further details on the internal control are set out in the “Statement on Risk Management and Internal Control” on page 35 to 37 of this Annual Report.

This Report is made in accordance with the resolution passed at the Board of Directors’ Meeting held on 6 April 2018.

AUDIT COMMITTEEREPORT

(Cont’d)



34

The Directors are required by the Companies Act 2016 (CA) to prepare the financial statements for each financial year which have been made out in accordance with the applicable Malaysian Financial Reporting Standards (MFRSs), the International Financial Reporting Standards (IFRSs) and the requirements of the CA in Malaysia.

The Directors are responsible to ensure that the financial statements give a true and fair view of the state of affairs of the Group and of the Company at the end of the financial year, and of the results and cash flows of the Group and of the Company for the financial year.

In preparing the financial statements, the Directors have: l Adopted appropriate accounting policies and applied them consistently; l Made judgements and estimates that are reasonable and prudent; and l Prepared the financial statements on a going concern basis.

The Directors are responsible to ensure that the Group and the Company keep accounting records which disclose the financial position of the Group and of the Company with reasonable accuracy, enabling them to ensure that the financial statements comply with the CA.

The Directors are responsible for taking such steps as are reasonably open to them to safeguard the assets of the Group and of the Company, and to detect and prevent fraud and other irregularities.

STATEMENT ONDIRECTORS’ RESPONSIBILITIES



35

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

INTRODUCTION

In compliance with paragraph 15.26 (b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”), principle as set out in the MCCG 2017 with guidance from the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers, the Board of Directors (“the Board”) is pleased to present the Statement on Risk Management and Internal Control.

BOARD RESPONSIBILITY

The Board acknowledges its responsibility for maintaining a sound system of risk management and internal control which includes strategic, operational, financial, compliance controls within the Group in order to safeguard shareholders’ investments and the Group’s assets. This system includes the establishment of an appropriate control environment and framework as well as review its effectiveness, adequacy and integrity.

The Board confirms that there is continuous process for identifying, evaluating and managing the significant risks that may affect the achievement of the business objectives and it is in place for the financial year under review. This ongoing process includes updating the risk management and internal control system whenever there are changes in the business environment and regulatory guidelines.

However, in view of the inherent limitations in any system of risk management and internal control, the system is designed to manage rather than to eliminate the risk of failure in achieving the Group’s goals and objectives. It can therefore only provide reasonable but not absolute assurance against material misstatements, losses or frauds and unforeseen emerging risks.

The Board has received assurance from both the Executive Chairman and the Finance Manager that the Group’s risk management and internal control system is operating adequately and effectively, in all material aspects for the financial year ended 2017 up to the date of issuance of this statement.

The key features of the risk management systems are described as follows:

RISK MANAGEMENT

The Board recognises the importance of risk management. Hence, during the year of review, the Group has in place a formal risk management process to identify, evaluate and manage the key risks impacting the Group to an acceptable level. This process is supported by framework, policies, detailed procedures and evaluation criteria to ensure clarity and consistency of application across the Group.

To fulfil its oversight responsibility, the Board is guided by the Board Risk Management Committee (“BRMC”). BRMC is governed by the defined lines of responsibilities and delegation of authorities which set out in the Terms of Reference.

The Group also maintains a database of risks and controls information captured in the format of risk registers. Key risks of major business units are identified, their impacts and the likelihood of occurrence are assessed and evaluated by comparing against the approved risk criteria. Risk profiles for these major operating units are presented to the Board for deliberation and approval. The overall process is facilitated by the outsourced service provider which is appointed by the Board.

INTERNAL CONTROL

The Audit Committee (“AC”) is also responsible for reviewing and monitoring the adequacy and effectiveness of the Group’s internal control system. In this respect, the Group’s Internal Audit undertakes the obligation to conduct regular reviews on the Group’s various operations and reports directly to the AC.

The External Auditors provide assurance in the form of their annual statutory audit of the financial statements. Further areas for improvement identified during the course of the statutory audit by the External Auditors are brought to the attention of the AC through their audit memorandum or discussion at AC meetings.



36

KEY ELEMENTS OF INTERNAL CONTROL

The following are the key elements of the Group’s internal control system:-

• A well defined organisational structure with proper lines of responsibilities and delegation of authority for major transactions;

• The information systems capable of reporting financial and operational performance are available for monitoring and decision making;

• The control procedures are also in place to ensure the Group’s assets are subject to proper physical controls and periodic maintenance;

• The Audit Committee members are Independent Non-Executive Directors;

• The Audit Committee and the Board review and monitor the performance and results of the Group at quarterly meeting, deliberating on significant internal control and performance issues;

• A proper documentation of internal policies and procedures which relates to human resources, safety and health, environment, operating and insurance are subject to review, as and when required. Improvement from the review which helps to identify and close gap as well as compliance with the Group’s policies, regulatory requirements and standards;

• Timely and effective internal and external reporting involving the services of qualified professionals such as auditors and Company Secretary;

• Visit of plant by Executive Directors;

• The Group has obtained ISO certification for stainless steel and melamineware divisions. The system documentation and control procedures are audited annually for continuous compliance and enhancement of quality management system.

• Internal control requirements are embedded in the computerised system as well.

• The Credit Control assessment is conducted at subsidiary level by Marketing department on a monthly basis with the objective of maximising the turning of account receivables into cash flow from collections and minimising impaired debts written off.

INTERNAL AUDIT

In accordance with the Best Practice as set out in the Malaysian Code on Corporate Governance, the Board has engaged an independent professional firm to provide independent assurance on the effectiveness and efficiency of the Group’s system of risk management and internal control.

The internal audit function (“Internal Audit”) is to assist the Audit Committee of the Group to discharge its functions effectively. The Internal Audit performs checking on compliance with policies and procedures and effectiveness of the internal control systems and highlight significant findings in respect of non-compliances. Audits are carried out on subsidiaries in the Group, the frequency of audit is determined by the level of risk assessed, to provide an independent objective report on operational and management activities within the Group. The audit findings on internal control weaknesses and improvement are tabled at the Audit Committee meeting for deliberation and the Audit Committee’s expectation on the corrective measures will be communicated to the Management.

The Audit Committee reviews any internal control issues identified by the Internal Audit, the external auditors, regulator and Management, and evaluate the adequacy of the risk management and internal control systems. The Audit Committee also reviews the internal audit functions and quality of internal audits. The minutes of the Audit Committee meetings are tabled to the Board.

The Board has also adopted a Board Charter recommended by the Audit Committee. The primary purpose of the Board of Directors’ Charter is to formally define the structure, responsibilities, rights and procedures of the Board.

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL(Cont’d)



37

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

(Cont’d)

INTERNAL AUDIT (cont'd)

During the financial year under review, the internal auditors had performed audit reviews on various functions in the Group in accordance with the approved audit plan. The results of their review were tabled to the Audit Committee (“AC”) at their scheduled meetings. Senior Management is responsible for ensuring that corrective actions are taken within the stipulated time frame on the reported weaknesses. There were no significant control weaknesses identified during the financial year 2017. A number of minor control weaknesses identified which were mainly related to operational controls, had been reported to the AC periodically. Furthermore, the internal auditors work closely with and brief salient audit issues to the Management team during audit meetings. Respective heads of department will be called to attend these meetings (if required) to explain to the Management team and develop timely actions plans to rectify issues which are found not in compliance with the Group’s Procedures, Guidelines and Directions. Subsequent follow-up audits were conducted by the internal auditors to ensure that measures had been or are being taken by the Management to address these weaknesses.

The cost of internal audit function for the financial year ended 31 December 2017 was RM21,000 (2016: RM47,000).

REVIEW OF EFFECTIVENESS

The Board is commited to ensure that a sound system of internal control is in place and recognises that the system must continuously evolve to support the business and the size of the Group.

The process for identifying, evaluating and managing risks as outlined in this Statement had been in place for the year under review and up to the date of approval of this Statement.

After due and careful assessment and based on the information and assurance provided, save for those findings highlighted by the auditors, the Board is satisfied that there were no material losses or contingencies resulting from weakness in the system of internal control. The risks are considered to be at an acceptable level within the context of the Group’s business environment.

Nevertheless, the Board and its Management will continue to take proactive measures to strengthen the system of risk management and internal control of the Group.

The above Statement is made in accordance with the resolution passed at the Board of Directors’ meeting held on 6 April 2018.

REVIEW OF THE STATEMENT ON INTERNAL CONTROL

The External Auditors have reviewed this Statement on Risk Management and Internal Control based on limited assurance engagement for inclusion in the annual report of the Company for the financial year ended 31 December 2017 pursuant to the scope set out in the Audit and Assurance Practice Guide ("AAPG") and reported to the Board that nothing has come to their attention that causes them to believe that the Statement on Risk Management and Internal Controls intended to be included in the annual report is not prepared, in all material respects, in accordance with the disclosures required by paragraphs 41 and 42 of the Statement on Risk Management and Internal Controls: Guidelines for Directors of Listed Issuers to be set out, nor is factually inaccurate.

AAPG3 does not require the external auditors to consider whether the Directors’ Statement on Risk Management and Internal Control covers all risks and controls, or to form an opinion on the adequacy and effectiveness of the Group’s risk management and internal control system including the assessment and opinion by the Directors and Management thereon.

This statement ismade in accordancewith a resolution of theBoard ofDirectors dated6April 2018andhas beendulyreviewedbytheexternalauditors,pursuanttoparagraph15.23oftheMainMarketListingRequirementsofBursaSecurities.



38

1. UTILISATION OF PROCEEDS

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

2. AUDIT AND NON-AUDIT FEES

For the financial year ended 31 December 2017, the amounts of audit and non-audit fees paid by the Company and the Group to the External Auditors are as follows:

Group CompanyRM’000 RM’000

Audit fees 148 41Non audit fees 8 8

3. MATERIAL CONTRACTS

There were no material contracts entered into by the Group involving the interest of Directors and major shareholders, either still subsisting at the end of the financial year ended 31 December 2017 or entered into since the end of the previous financial year.

4. RECURRENT RELATED PARTY TRANSACTIONS

The RRPTs of the Group have been entered into in the normal course of business. Further details of the RRPTs of a revenue or trading nature conducted during the financial year are disclosed in page 88 of the financial statements of the Annual Report.

Please refer to Section A of the Circular to Shareholders dated 27 April 2018 on the name of the related parties and the Company’s relationship with the related parties.

ADDITIONAL COMPLIANCE INFORMATION



39

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

PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are disclosed in Note 12 to the financial statements.

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

RESULTS

Group Company RM RM

Profit for the financial year 6,073,248 9,985,727

Attributable to:Owners of the Company 6,073,248 9,985,727

DIVIDEND

No dividend has been paid or declared by the Company since the end of the previous financial year.

The directors do not recommend the payment of any dividends in respect of the financial year ended 31 December 2017.

RESERVES OR PROVISIONS

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

BAD AND DOUBTFUL DEBTS

Before the financial statements of the Group and of the Company were prepared, 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 doubtful debts and had satisfied themselves that there were no known bad debts and that adequate allowance had been made for doubtful debts.

At the date of this report, the directors are not aware of any circumstances which would render it necessary to write off any bad debts or render the amount of allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent.

CURRENT ASSETS

Before the financial statements of the Group and of the Company were prepared, 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 values as shown in the accounting records of the Group and of the Company had 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 of the Group and of the Company misleading.

DIRECTORS’ REPORT



4140

DIRECTORS

The directors in office during the financial year end and during the period from the end of the financial year to the date of the report are:

Azizul Mohd OthmanChai Moi KimChan Kee LoinChia Kay JooHia Wan Kiga*Lee Chin Yen*Lee Poh Choo*Tan Hong Cheng*Tan Kim Hong

*Directors of the Company and certain subsidiaries of the Group

Other than as stated above, the names of the directors of the subsidiaries of the Company in office during the financial year and during the period from the end of the financial year to the date of the report are:

Hia Yik Yang Lee Teng Kok Tan Ooi Khoi

DIRECTORS’ INTERESTS

According to the Register of Directors’ shareholdings required to be kept by the Company under Section 59 of the Companies Act 2016 in Malaysia, the interests of directors in office at the end of the financial year in shares in the Company and its related corporation during the financial year were as follows:

Number of ordinary sharesAt

1 January 2017 Bought Sold

At 31 December

2017

Direct interests:Lee Chin Yen 36,294,741 2,500,000 (8,000,000) 30,794,741 Tan Hong Cheng 22,167,350 - - 22,167,350 Hia Wan Kiga 20,895,374 - - 20,895,374 Lee Poh Choo 4,411,093 - - 4,411,093 Tan Kim Hong 557,700 - - 557,700

Indirect interests:Lee Chin Yen # ^ 4,850,120 13,593,350 - 18,443,470 Tan Hong Cheng # 1,392,655 - - 1,392,655 Lee Poh Choo ^ - 13,593,350 - 13,593,350

# Shares held by children who are not directors of the Company.^ SharesheldthroughCompanyinwhichthedirectorhassubstantialfinancialinterests.

By virtue of his interests in the ordinary shares of the Company and pursuant to Section 8 of the Companies Act 2016 in Malaysia, Lee Chin Yen is deemed to have an interest in the ordinary shares of the subsidiaries to the extent that the Company has an interest.

The other directors in office at the end of the financial year did not have any interest in ordinary shares of the Company and its related corporations during the financial year.

DIRECTORS'REPORT

(Cont’d)

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 method 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:

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

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

In the opinion of the directors, no contingent or other liability of the Group or of the Company has become enforceable, or is likely to become enforceable, within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations as and 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 MATERIAL AND UNUSUAL NATURE

In the opinion of the directors,

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

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made.

ISSUE OF SHARES AND DEBENTURES

During the financial year, no new issue of shares or debentures were made by the Company.

TREASURY SHARES

Treasury shares relate to ordinary shares of the Company that are repurchased and held by the Company in accordance with the requirements of Section 127 of the Companies Act 2016 in Malaysia.

There was no repurchase of the Company’s issued ordinary shares, nor any resale, cancellation or distribution of treasury shares during the financial year.

As at 31 December 2017, the Company held 4,896,956 treasury shares out of its 196,800,000 issued and paid-up ordinary shares. Such treasury shares are held at a carrying amount of RM1,381,799. Further details are disclosed in Note 20 to the financial statements.

DIRECTORS’ REPORT(Cont’d)



4342

Group Company2017 2016 2017 2016

Note RM RM RM RM

Revenue 5 259,451,486 202,578,237 10,430,100 2,000,000 Cost of goods sold (235,217,872) (183,202,827) - -

Gross profit 24,233,614 19,375,410 10,430,100 2,000,000

Other income 2,440,509 2,105,327 - -

Distribution expenses (7,993,404) (8,087,162) - - Administrative expenses (5,988,885) (5,965,173) (443,023) (564,315)Other expenses (773,774) (264,804) (1,350) (500)

(14,756,063) (14,317,139) (444,373) (564,815)

Profit from operations 11,918,060 7,163,598 9,985,727 1,435,185 Finance costs (2,476,748) (2,575,682) - -

Profit before tax 6 9,441,312 4,587,916 9,985,727 1,435,185 Tax expense 7 (3,368,064) (2,394,768) - -

Profit for the financial year, representing total comprehensive income for the financial year 6,073,248 2,193,148 9,985,727 1,435,185

Profit attributable to:Owners of the Company 6,073,248 2,193,148 9,985,727 1,435,185

Earnings per ordinary share attributable to the owners of the Company:- Basic/Diluted (sen) 8 3.16 1.14

STATEMENTS OF COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017

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

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director of the Company has received or become entitled to receive any benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable, by the directors as disclosed in Note 6(b) to the financial statements) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest.

Neither during, nor at the end of the financial year, was the Company a party to any arrangements where the 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.

INDEMNITY TO DIRECTORS AND OFFICERS

Every director, secretary or other officer of the Company shall be entitled to be indemnified by the Company against all costs, charges and losses, expenses and liabilities incurred by him in the execution and discharge of his duties or in relation thereto.

During the financial year, the total amount of indemnity coverage and insurance premium paid for the directors and officers of the Company were RM15,000,000 and RM20,000 respectively.

SUBSIDIARIES

The details of the Company’s subsidiaries are disclosed in Note 12 to the financial statements.

AUDITORS’ REMUNERATION

The details of the auditors’ remuneration are disclosed in Note 6 to the financial statements.

INDEMNITY TO AUDITORS

The Company has agreed to indemnify the auditors of the Company as permitted under Section 289 of the Companies Act 2016 in Malaysia.

AUDITORS

The auditors, Messrs Baker Tilly Monteiro Heng, have expressed their willingness to continue in office.

This report was approved and signed on behalf of the Board of Directors in accordance with a resolution of the directors:

LEE CHIN YEN TAN HONG CHENGDirector Director

Date: 6 April 2018

DIRECTORS'REPORT(Cont’d)



4544

Group Company2017 2016 2017 2016

Note RM RM RM RM

EQUITY AND LIABILITIES

Equity attributable to owners of the Company

Share capital 18 54,378,474 49,200,000 54,378,474 49,200,000 Share premium 19 - 5,178,474 - 5,178,474 Treasury shares 20 (1,381,799) (1,381,799) (1,381,799) (1,381,799)Retained earnings 54,899,124 48,825,876 31,124,537 21,138,810

TOTAL EQUITY 107,895,799 101,822,551 84,121,212 74,135,485

Liabilities

Non-current liabilities

Loans and borrowings 21 25,158,215 22,612,716 - - Deferred tax liabilities 13 6,256,346 3,536,252 - -

31,414,561 26,148,968 - -

Current liabilities

Trade payables 22 8,767,266 9,141,085 - - Other payables, deposits and accruals 23 5,106,408 4,890,350 752,554 19,059,774 Tax liabilities 31,615 - - - Loans and borrowings 21 25,332,268 21,232,723 - -

39,237,557 35,264,158 752,554 19,059,774

TOTAL LIABILITIES 70,652,118 61,413,126 752,554 19,059,774

TOTAL EQUITY AND LIABILITIES 178,547,917 163,235,677 84,873,766 93,195,259

STATEMENTS OF FINANCIAL POSITION

(Cont’d)


Group Company2017 2016 2017 2016

Note RM RM RM RM

ASSETS

Non-current assets

Property, plant and equipment 9 94,116,196 93,001,570 - - Intangible assets 10 45,617 45,617 - - Goodwill on consolidation 11 6,078,933 6,078,933 - - Investment in subsidiaries 12 - - 84,729,262 77,353,262 Deferred tax assets 13 109,720 271,710 - -

100,350,466 99,397,830 84,729,262 77,353,262

Current assets

Inventories 14 36,713,949 34,275,029 - - Trade receivables 15 18,401,233 19,792,729 - - Other receivables, deposits and prepayments 16 2,332,617 2,163,239 13,598 15,679,861 Tax assets 1,085,954 1,142,560 6,434 6,171 Deposits, cash and bank balances 17 19,663,698 6,464,290 124,472 155,965

78,197,451 63,837,847 144,504 15,841,997

TOTAL ASSETS 178,547,917 163,235,677 84,873,766 93,195,259

STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2017



4746

Attributable to owners of the Company Share capital

Share premium

Treasury shares

Retained earnings

Total equity

Company Note RM RM RM RM RM

At 1 January 2016 49,200,000 5,178,474 (822,836) 21,622,655 75,178,293

Total comprehensive income for the financial year

Profit for the financial year, representing total comprehensive income - - - 1,435,185 1,435,185

Transactions with owners

Purchase of treasury shares 20 - - (558,963) - (558,963)Dividend paid on shares 24 - - - (1,919,030) (1,919,030)

Total transactions with owners - - (558,963) (1,919,030) (2,477,993)

At 31 December 2016 49,200,000 5,178,474 (1,381,799) 21,138,810 74,135,485



Transition to no-par value regime 18 5,178,474 (5,178,474) - - -

At 31 December 2017 54,378,474 - (1,381,799) 31,124,537 84,121,212

STATEMENTS OF CHANGES IN EQUITY

(Cont’d)


Attributable to owners of the Company Share capital

Share premium

Treasury shares

Retained earnings

Total equity

Group Note RM RM RM RM RM

At 1 January 2016 49,200,000 5,178,474 (822,836) 48,551,758 102,107,396



Transactions with owners

Purchase of treasury shares 20 - - (558,963) - (558,963)Dividend paid on shares 24 - - - (1,919,030) (1,919,030)

Total transactions with owners - - (558,963) (1,919,030) (2,477,993)

At 31 December 2016 49,200,000 5,178,474 (1,381,799) 48,825,876 101,822,551



Transition to no-par value regime 18 5,178,474 (5,178,474) - - -

At 31 December 2017 54,378,474 - (1,381,799) 54,899,124 107,895,799

STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017



4948

Group Company2017 2016 2017 2016

Note RM RM RM RM

Net cash from/(used in) operating activities, brought forward 16,159,999 16,407,817 (446,170) (545,154)

Cash flows from investing activities

Acquisition of subsidiaries, net of cash acquired 12 - - (130,002) (2)Acquisition of intangible asset 10 (130,000) - - - Acquisition of additional interests in subsidiaries 12 - - (7,245,998) (49,998)Repayments from/(Advances to) subsidiaries - - 15,665,677 (10,309,568)Capital work-in-progress incurred 9 (6,208,355) (6,585,339) - - Dividend income received from subsidiaries - - 10,430,100 2,000,000 Withdrawal of a pledged deposit - 1,128,776 - - Interest received 61,534 58,413 - - Proceeds from disposal of property, plant and

equipment 165,190 185,378 - - Purchase of property, plant and equipment 9 (810,322) (456,835) - -

Net cash (used in)/from investing activities (6,921,953) (5,669,607) 18,719,777 (8,359,568)

Cash flows from financing activities (a)

Purchase of treasury shares 20 - (558,963) - (558,963)(Repayments to)/Advances from subsidiaries - - (18,305,100) 11,527,690 Dividend paid 24 - (1,919,030) - (1,919,030)Interest paid (2,476,748) (2,575,682) - - Drawdown/(Repayments) of bankers’

acceptances 1,992,805 (3,148,671) - - Repayments of revolving credits - (600,000) - - Repayments of finance lease liabilities (236,064) (276,889) - - Drawdown/(Repayments) of term loans 2,871,825 (2,703,092) - -

Net cash from/(used in) financing activities 2,151,818 (11,782,327) (18,305,100) 9,049,697

Net increase/(decrease) in cash and cash equivalents 11,389,864 (1,044,117) (31,493) 144,975

Cash and cash equivalents at the beginning of the financial year 205,396 839,917 155,965 10,990

Effects of exchange rate changes on cash and cash equivalents (91,934) 409,596 - -

Cash and cash equivalents at the end of the financial year 17 11,503,326 205,396 124,472 155,965

STATEMENTS OF CASH FLOWS

(Cont’d)

Group Company2017 2016 2017 2016

Note RM RM RM RM

Cash flows from operating activities

Profit before tax 9,441,312 4,587,916 9,985,727 1,435,185

Adjustments for:

Deposits written off 15,251 - 1,150 - Depreciation of property, plant and equipment 9 5,463,203 5,624,732 - - Dividend income from subsidiaries 5 - - (10,430,100) (2,000,000)Gain on disposal of property, plant and

equipment (19,482) (30,730) - - Interest expense 2,476,748 2,575,682 - - Interest income (61,534) (58,413) - - Impairment loss on:- intangible asset 10 130,000 - - - - trade receivables 15 66,010 40,582 - - Net provision for employee benefits 23 (42,424) (18,944) - - Net unrealised loss/(gain) on foreign exchange 45,114 (46,660) - - Property, plant and equipment written off 9 410,140 56,624 - - Reversal of impairment loss on trade

receivables 15 (12,548) (23,196) - -

Operating profit/(loss) before working capital changes 17,911,790 12,707,593 (443,223) (564,815)

Changes in working capital:Inventories (2,438,920) (773,575) - - Receivables 1,188,553 4,012,252 (564) 5,657 Payables (103,665) 1,368,014 (2,120) 14,060

Net cash generated from/(used in) operations 16,557,758 17,314,284 (445,907) (545,098)Tax paid (397,759) (906,467) (263) (56)

Net cash from/(used in) operating activities, carried forward 16,159,999 16,407,817 (446,170) (545,154)

STATEMENTS OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017



5150

1. CORPORATE INFORMATION

CAM Resources Berhad (“the Company”) is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad.

The registered office of the Company is located at 10th Floor, Menara Hap Seng, No. 1 & 3, Jalan P. Ramlee, 50250 Kuala Lumpur.

The principal place of business of the Company is located at Batu 12, Jalan Hutan Melintang, 36400 Hutan Melintang, Perak Darul Ridzuan.

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are disclosed in Note 12. There have been no significant changes in the nature of these activities during the financial year.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 6 April 2018.

2. BASIS OF PREPARATION

2.1 Statement of compliance

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

2.2 Adoption of amendments/improvements to MFRSs

The Group and the Company have adopted the following amendments/improvements to MFRSs that are mandatory for the current financial year:

Amendments/Improvements to MFRSsMFRS 12 Disclosure of Interests in Other EntitiesMFRS 107 Statement of Cash FlowsMFRS 112 Income Taxes

The adoption of the above amendments/improvements to MFRSs did not have any significant effect on

the financial statements of the Group and of the Company, and did not result in significant changes to the Group’s and the Company’s existing accounting policies, except for those as discussed below.

Amendments to MFRS 107 Statement of Cash Flows

Amendments to MFRS 107 require entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including changes from cash flows and non-cash changes. The disclosure requirement could be satisfied in various ways, and one method is by providing reconciliation between the opening and closing balances in the statements of financial position for liabilities arising from financing activities.

The Group and the Company have applied the amendments prospectively and accordingly, have disclosed the reconciliation in Note (a) of the statements of cash flows.

NOTES TO THE FINANCIAL STATEMENTS

(a) Reconciliation of liabilities arising from financing activities:

At 1 January

2017 Cash flows Acquisition

At 31 December

2017 RM RM RM RM

Group

Bankers’ acceptances 8,828,718 1,992,805 - 10,821,523 Revolving credits 3,000,000 - - 3,000,000 Finance lease liabilities 467,920 (236,064) 115,000 346,856 Term loans 25,289,907 2,871,825 - 28,161,732

37,586,545 4,628,566 115,000 42,215,111

Company

Amounts owing to subsidiaries 18,896,224 (18,305,100) - 591,124

STATEMENTS OF CASH FLOWS(Cont’d)




5352


(Cont’d)

NOTES TO THE FINANCIAL STATEMENTS(Cont’d)

2. BASIS OF PREPARATION (cont’d)

2.3 New MFRSs, amendments/improvements to MFRSs and new IC Interpretation (“IC Int”) that have been issued, but yet to be effective (cont’d)

2.3.1 The Group and the Company plan to adopt the above applicable new MFRSs, amendments/improvements to MFRSs and new IC Int when they become effective. A brief discussion on the above significant new MFRSs, amendments/improvements to MFRSs and new IC Int are summarised below.

MFRS 9 Financial Instruments

Key requirements of MFRS 9:

• MFRS 9 introduces an approach for classification of financial assets which is driven by cash flow characteristics and the business model in which an asset is held. The new model also results in a single impairment model being applied to all financial instruments.

In essence, if a financial asset is a simple debt instrument and the objective of the entity’s business model within which it is held is to collect its contractual cash flows, the financial asset is measured at amortised cost. In contrast, if that asset is held in a business model the objective of which is achieved by both collecting contractual cash flows and selling financial assets, then the financial asset is measured at fair value in the statements of financial position, and amortised cost information is provided through profit or loss. If the business model is neither of these, then fair value information is increasingly important, so it is provided both in the profit or loss and in the statements of financial position.

• MFRS 9 introduces a new, expected-loss impairment model that will require more timely recognition of expected credit losses. Specifically, this Standard requires entities to account for expected credit losses from when financial instruments are first recognised and to recognise full lifetime expected losses on a more timely basis. The model requires an entity to recognise expected credit losses at all times and to update the amount of expected credit losses recognised at each reporting date to reflect changes in the credit risk of financial instruments. This model eliminates the threshold for the recognition of expected credit losses, so that it is no longer necessary for a trigger event to have occurred before credit losses are recognised.

• MFRS 9 introduces a substantially-reformed model for hedge accounting, with enhanced disclosures about risk management activity. The new model represents a significant overhaul of hedge accounting that aligns the accounting treatment with risk management activities, enabling entities to better reflect these activities in their financial statements. In addition, as a result of these changes, users of the financial statements will be provided with better information about risk management and the effect of hedge accounting on the financial statements.

MFRS 15 Revenue from Contracts with Customers

The core principle of MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in accordance with the core principle by applying the following steps:

(i) identify the contracts with a customer; (ii) identify the performance obligation in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognise revenue when (or as) the entity satisfies a performance obligation.

MFRS 15 also includes new disclosures that would result in an entity providing users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows from contracts with customers.


2.3 New MFRSs, amendments/improvements to MFRSs and new IC Interpretation (“IC Int”) that have been issued, but yet to be effective

The Group and the Company have not adopted the following new MFRSs, amendments/ improvements to MFRSs and new IC Int that have been issued, but yet to be effective:

Effective for financial periods

beginning on or after

New MFRSs MFRS 9 Financial Instruments 1 January 2018MFRS 15 Revenue from Contracts with Customers 1 January 2018MFRS 16 Leases 1 January 2019MFRS 17 Insurance Contracts 1 January 2021

Amendments/Improvements to MFRSsMFRS 1 First-time Adoption of MFRSs 1 January 2018MFRS 2 Share-based Payment 1 January 2018MFRS 3 Business Combinations 1 January 2019MFRS 4 Insurance Contracts 1 January 2018MFRS 9 Financial Instruments 1 January 2019MFRS 10 Consolidated Financial Statements DeferredMFRS 11 Joint Arrangements 1 January 2019MFRS 112 Income Taxes 1 January 2019MFRS 119 Employee Benefits 1 January 2019MFRS 123 Borrowing Costs 1 January 2019MFRS 128 Investments in Associates and Joint Ventures 1 January 2018/

1 January 2019/Deferred

MFRS 140 Investment Property 1 January 2018

New IC IntIC Int 22 Foreign Currency Transactions and Advance Consideration 1 January 2018IC Int 23 Uncertainty Over Income Tax Treatments 1 January 2019



5554


(Cont’d)




2.3.1 The Group and the Company plan to adopt the above applicable new MFRSs, amendments/improvements to MFRSs and new IC Int when they become effective. A brief discussion on the above significant new MFRSs, amendments/improvements to MFRSs and new IC Int are summarised below. (cont’d)

Amendments to MFRS 112 Income Taxes

Amendments to MFRS 112 clarify that an entity recognises the income tax consequences of dividends in profit or loss because income tax consequences of dividends are linked more directly to past transactions than to distributions to owners, except if the tax arises from a transaction which is a business combination or is recognised in other comprehensive income or directly in equity.

Amendments to MFRS 123 Borrowing Costs

Amendments to MFRS 123 clarify that when a qualifying asset is ready for its intended use or sale, an entity treats any outstanding borrowing made specifically to obtain that qualifying asset as part of general borrowings.

IC Int 22 Foreign Currency Transactions and Advance Consideration

IC Int 22 clarifies that the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income (or part of it) is the date on which an entity initially recognises the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration.

IC Int 23 Uncertainty over Income Tax Treatments

IC Int clarifies that where there is uncertainty over income tax treatments, an entity shall:

(i) assume that a taxation authority will examine amounts it has a right to examine and have full knowledge of all related information when making those examinations.

(ii) reflect the effect of uncertainty in determining the related tax position (using either the most likely amount or the expected value method) if it concludes it is not probable that the taxation authority will accept an uncertain tax treatment.

2.3.2 Other than the estimated financial impact arising from the adoption of MFRS 9 and MFRS 15, the detailed analysis on the financial effects of the adoption of other new MFRSs, amendments/improvements to MFRSs and new IC Int are currently still being assessed by the Group and the Company.

Estimated impact of the adoption of MFRS 9 and MFRS 15

The Group and the Company are required to adopt MFRS 9 and MFRS 15 from 1 January 2018. The Group and the Company expect that there is no material impact of the adoption of these standards on the Group’s and the Company’s equity as at 1 January 2018.

The actual impact of adopting the above standards at 1 January 2018 may change because the Group and the Company have not finalised the assessment of the impacts and the new accounting policies are subject to change until the Group and the Company present their first financial statements that include the date of initial application.

2.4 Functional and presentation currency

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



2.3.1 The Group and the Company plan to adopt the above applicable new MFRSs, amendments/improvements to MFRSs and new IC Int when they become effective. A brief discussion on the above significant new MFRSs, amendments/improvements to MFRSs and new IC Int are summarised below. (cont’d)

MFRS 15 Revenue from Contracts with Customers (cont’d)

The following MFRSs and IC Interpretations will be withdrawn on the application of MFRS 15:

MFRS 111 Construction ContractsMFRS 118 RevenueIC Interpretation 13 Customer Loyalty ProgrammesIC Interpretation 15 Agreements for the Construction of Real EstateIC Interpretation 18 Transfers of Assets from CustomersIC Interpretation 131 Revenue – Barter Transactions Involving Advertising Services

MFRS 16 Leases

Currently under MFRS 117 Leases, leases are classified either as finance leases or operating leases. A lessee recognises on its statement of financial position assets and liabilities arising from the finance leases.

MFRS 16 eliminates the distinction between finance and operating leases for lessees. All leases will be brought onto its statement of financial position except for short-term and low value asset leases.

MFRS 17 Insurance Contracts

MFRS 17 introduces consistent accounting for all insurance contracts. MFRS 17 requires entities that issue insurance contracts to recognise and measure a group of insurance contracts at: (i) a risk-adjusted present value of future cash flows that incorporates information that is consistent with observable market information; plus (ii) an amount representing the unearned profit in the group of contracts. Profits from the group of insurance contracts are recognised over the insurance coverage period. In addition, insurance revenue is presented separately from insurance finance income or expenses.

For insurance contracts with coverage period of one year or less, MFRS 17 allows an entity to measure the amount relating to remaining service by allocating the premium over the coverage period.

Amendments to MFRS 4 Insurance Contracts

Amendments to MFRS 4 introduce two additional voluntary options, namely an overlay approach and a deferral approach to be applied subject to certain criteria being met, which help to address temporary volatility in reported results of entities dealing with insurance contracts. The overlay approach involves option to recognise the possible volatility in other comprehensive income, instead of profit or loss, whilst the deferral approach provides temporary exemption from applying the Standard on Financial Instruments for entities whose activities are predominantly connected with insurance.

Amendments to MFRS 9 Financial Instruments

Amendments to MFRS 9 allow companies to measure prepayable financial assets with negative compensation at amortised cost or at fair value through other comprehensive income if certain conditions are met.

The Amendments also clarify that when a financial liability measured at amortised cost is modified without this resulting in derecognition, a gain or loss should be recognised in profit or loss.



5756


(Cont’d)


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

3.1 Basis of consolidation (cont’d)

(a) Subsidiaries and business combination (cont’d)

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss at the acquisition date.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

If the business combination is achieved in stages, the Group remeasures the previously held equity interest in the acquiree to its acquisition-date fair value, and recognises the resulting gain or loss, if any, in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss or transferred directly to retained earnings on the same basis as would be required if the acquirer had disposed directly of the previously held equity interest.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the business combination occurs, the Group uses provisional fair value amounts for the items for which the accounting is incomplete. The provisional amounts are adjusted to reflect new information obtained about facts and circumstances that existed as of the acquisition date, including additional assets or liabilities identified in the measurement period. The measurement period for completion of the initial accounting ends as soon as the Group receives the information it was seeking about facts and circumstances or learns that more information is not obtainable, subject to the measurement period not exceeding one year from the acquisition date.

Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the former subsidiary, any non-controlling interests and the other components of equity related to the former subsidiary from the consolidated statement of financial position. Any gain or loss arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the former subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an associate, a joint venture, an available-for-sale financial asset or a held for trading financial asset.

Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The difference between the Group’s share of net assets before and after the change, and the fair value of the consideration received or paid, is recognised directly in equity.

(b) Non-controlling interests

Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company and are presented separately in the consolidated statement of financial position within equity.

Losses attributable to the non-controlling interests are allocated to the non-controlling interests even if the losses exceed the non-controlling interests.

(c) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements.

Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.


2.5 Basis of measurement

The financial statements of the Group and of the Company have been prepared on the historical cost basis, except as otherwise disclosed in Note 3.

2.6 Use of estimates and judgement

The preparation of financial statements in conformity with MFRSs requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of the revenue and expenses during the reporting period. It also requires directors to exercise their judgement in the process of applying the Group’s and the Company’s accounting policies. Although these estimates and judgement are based on the directors’ best knowledge of current events and actions, actual results may differ.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates that are significant to the financial statements are disclosed in Note 4.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unless otherwise stated, the following accounting policies have been applied consistently to all the financial years presented in the financial statements of the Group and of the Company.

3.1 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.

(a) Subsidiaries and business combination

Subsidiaries are entities (including structured entities) over which the Group is exposed, or has rights, to variable returns from its involvement with the acquirees and has the ability to affect those returns through its power over the acquirees.

The financial statements of subsidiaries are included in the consolidated financial statements from the date the Group obtains control of the acquirees until the date the Group loses control of the acquirees.

The Group applies the acquisition method to account for business combinations from the acquisition date.

For a new acquisition, goodwill is initially measured at cost, being the excess of the following:

• the fair value of the consideration transferred, calculated as the sum of the acquisition-date fair value of assets transferred (including contingent consideration), the liabilities incurred to former owners of the acquiree and the equity instruments issued by the Group. Any amounts that relate to pre-existing relationships or other arrangements before or during the negotiations for the business combination, that are not part of the exchange for the acquiree, will be excluded from the business combination accounting and be accounted for separately; plus

• the recognised amount of any non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date (the choice of measurement basis is made on an acquisition-by-acquisition basis); plus

• if the business combination is achieved in stages, the acquisition-date fair value of the previously held equity interest in the acquiree; less

• the net fair value of the identifiable assets acquired and the liabilities (including contingent liabilities) assumed at the acquisition date.

The accounting policy for goodwill is set out in Note 3.13.



5958


(Cont’d)



3.5 Employee benefits (cont’d)

(b) Definedcontributionplan

As required by law, the Group and the Company contribute to the Employees Provident Fund (“EPF”), the national defined contribution plan. Such contribution is recognised as an expense in the profit or loss in the period in which the employees render their services.

3.6 Borrowing costs

Borrowing costs are interests and other costs that the Group incurs in connection with borrowing of funds.

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

The Group begins capitalising borrowing costs when the Group has incurred the expenditures for the asset, incurred related borrowing costs and undertaken activities that are necessary to prepare the asset for its intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

3.7 Taxes

(a) Income tax

Income tax expense in profit or loss comprises current and deferred tax. Current and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

(i) Current tax

Current tax is the expected taxes payable or recoverable on the taxable income or loss for the financial year, using the tax rates that have been enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial years.

(ii) Deferred tax

Deferred tax is recognised using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts in the statements of financial position. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences, unutilised tax losses and unused tax credits, to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.

Deferred tax is not recognised if the temporary differences arise from the initial recognition of assets and liabilities in a transaction which is not a business combination and that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.


3.2 Separate financial statements

In the Company’s statement of financial position, investment in subsidiaries are measured at cost less any accumulated impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs. The policy for the recognition and measurement of impairment losses shall be applied on the same basis as would be required for impairment of non-financial assets as disclosed in Note 3.16(b).

3.3 Foreign currency transactions

Translation of foreign currency transactions

Foreign currency transactions are translated to the respective functional currencies of the Group entities at the exchange rates prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the exchange rates prevailing at the reporting date.

Non-monetary items denominated in foreign currencies that are measured at fair value are retranslated at the rates prevailing at the dates the fair values were determined. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated at the historical rates as at the dates of the initial transactions.

The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e. translation differences on items whose fair value gain or loss is recognised in other comprehensive income or profit or loss are also recognised in other comprehensive income or profit or loss, respectively).

3.4 Revenue recognition

(a) Sales of goods

Revenue from the sale of goods is measured at fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised upon delivery of goods when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods.

(b) Interest income

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

(c) Dividend income

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

(d) Rental income

Rental income is recognised in profit or loss on the straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of lease.

3.5 Employee benefits

(a) Short-termemployeebenefits

Short-term employee benefit obligations in respect of wages, salaries, social security contributions, annual bonuses, paid annual leave, sick leave and non-monetary benefits are recognised as an expense in the financial year where the employees have rendered their services to the Group and the Company.



6160


(Cont’d)



3.9 Financial instruments

Financial instruments are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contract provisions of the financial instrument.

Financial instruments are recognised initially at fair value, except for financial instruments not measured at fair value through profit or loss, they are measured at fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial instruments.

An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised as fair value through profit or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with the policy applicable to the nature of the host contract.

(a) Subsequent measurement

The Group and the Company categorise the financial instruments as follows:

(i) Financial assets

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method less accumulated impairment losses, if any. The policy for the recognition and measurement of impairment losses is in accordance with Note 3.16(a). Gains and losses are recognised in profit or loss through the amortisation process.

(ii) Financial liabilities

Subsequent to initial recognition, other financial liabilities are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss through the amortisation process.

(b) Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

The Group designates financial guarantee contracts given to banks for credit facilities granted to subsidiaries in MFRS 4 Insurance Contracts. The Group recognises these as liabilities when there is a present obligation, legal or constructive, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits would be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

(c) Regularwaypurchaseorsaleoffinancialassets

A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned.

A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade date accounting (i.e. the date the Group and the Company themselves purchase or sell an asset). Trade date accounting refers to:

(i) the recognition of an asset to be received and the liability to pay for it on the trade date; and (ii) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the

recognition of a receivable from the buyer for payment on the trade date.


3.7 Taxes (cont’d)

(a) Income tax (cont’d)

(ii) Deferred tax (cont’d)

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries, branches, associates and interests in joint ventures, except where the Group is able to control the reversal timing of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.

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

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if there is legally enforceable right to offset current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority on the same taxable entity, or on different tax entities, but they intend to settle their income tax recoverable and income tax payable on a net basis or their tax assets and liabilities will be realised simultaneously.

(b) Goods and services tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (“GST”) except:

• where the GST incurred in a purchase of assets or services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• receivables and payables that are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statements of financial position.

3.8 Earnings per share

The Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.

Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares.



6362


(Cont’d)


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 3.10 Property, plant and equipment (cont’d)

(c) Depreciation

Freehold land has an unlimited useful life and therefore is not depreciated. Capital work-in-progress included in property, plant and equipment are not depreciated as these assets are not yet available for use.

All other property, plant and equipment are depreciated on straight-line basis by allocating their depreciable amounts over their remaining useful lives. The principal useful lives and depreciation rates are as follows:

Leasehold land 43 to 95 yearsBuildings and warehouse 2% - 20%Plant, machinery and tools 5% - 20%Furniture, fittings and renovation 5% - 10%Office equipment and computers 5% - 20%Motor vehicles 20%

The residual values, useful lives and depreciation methods are reviewed at the end of each reporting period and adjusted as appropriate.

(d) Derecognition

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognised in profit or loss.

3.11 Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets.

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. All other leases that do not meet this criterion are classified as operating leases.

(a) Lessee accounting

If an entity in the Group is a lessee in a finance lease, it capitalises the leased asset and recognises the related liability. The amount recognised at the inception date is the fair value of the underlying leased asset or, if lower, 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 assets.

Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are charged as expenses in the periods in which they are incurred.

The capitalised leased asset is classified by nature as property, plant and equipment or investment property.

For operating leases, the Group does not capitalise the leased asset or recognise the related liability. Instead lease payments under an operating lease are recognised as an expense on the straight-line basis over the lease term unless another systematic basis is more representative of the time pattern of the user’s benefit.


3.9 Financial instruments (cont’d)

(d) Derecognition

A financial asset or a part of it is derecognised when, and only when, the contractual rights to receive the cash flows from the financial asset expire or control of the asset is not retained or substantially all of the risks and rewards of ownership of the financial asset are transferred to another party. 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 other comprehensive income 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, cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

(e) Offsettingoffinancialinstruments

Financial assets and financial liabilities are offset and the net amount is presented in the statements of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

3.10 Property, plant and equipment

(a) Recognition and measurement

Property, plant and equipment (except for freehold land and capital work-in-progress) are measured at cost less accumulated depreciation and any accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 3.16(b).

Freehold land is stated at cost less accumulated impairment losses, if any.

Capital work-in-progress consists of expenditure incurred on construction of property, plant and equipment which take a substantial period of time to be ready for their intended use. This expenditure is stated at cost less accumulated impairment losses, if any. Upon completion of construction, the cost will be reclassified to the respective property, plant and equipment and depreciated according to the depreciation policy of the Group.

Cost of assets includes expenditures that are directly attributable to the acquisition of the asset and any other costs that are directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of self-constructed assets also includes cost of materials, direct labour, and any other direct attributable costs but excludes internal profits. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs in Note 3.6.

When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as a separate item of property, plant and equipment.

(b) Subsequent costs

The cost of replacing a part of an item of property, plant and equipment is included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the part will flow to the Group or the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss as incurred.



6564


(Cont’d)



3.15 Cash and cash equivalents

For the purpose of the statements of cash flows, cash and cash equivalents comprise cash on hand, bank balances and deposits and other short-term, highly liquid investments with a maturity of three months or less, that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. Cash and cash equivalents are presented net of bank overdrafts.

3.16 Impairment of assets

(a) Impairmentanduncollectibilityoffinancialassets

At each reporting date, all financial assets are assessed 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 financial asset that can be reliably estimated. Losses expected as a result of future events, no matter how likely, are not recognised.

Evidence of impairment may include indications that the debtors or a group of debtors are experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicates that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

The Group and the Company first assess whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If there is no objective evidence for impairment exists for an individually assessed financial asset, whether significant or not, the Group and the Company include the financial asset in a group of financial assets with similar credit risk characteristics and collectively assess them for impairment. Financial assets that are individually assessed for impairment for which an impairment loss is or continues to be recognised are not included in the collective assessment of impairment.

The amount of impairment loss is measured as the difference between the financial asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The carrying amount of the financial asset is reduced through the use of an allowance account and the loss is recognised in profit or loss.

If, in a subsequent period, the amount of the impairment loss decreases due to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed by adjusting an allowance account to the extent that the carrying amount of the financial asset does not exceed what the amortised cost would have been had the impairment not been recognised.

Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Group and the Company. If a write-off is later recovered, the recovery is credited to profit or loss.

(b) Impairmentofnon-financialassets

The carrying amounts of non-financial assets (except for inventories and deferred tax assets) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, the Group and the Company make an estimate of the asset’s recoverable amount. For goodwill and intangible assets that have indefinite useful life and are not yet available for use, the recoverable amount is estimated at each reporting date.


3.11 Leases (cont’d)

(b) Lessor accounting

If an entity in the Group is a lessor in a finance lease, it derecognises the underlying asset and recognises a lease receivables at the amount equal to the net investment in the lease. Finance income is recognised in profit or loss based on a pattern reflecting as constant periodic rate of return on the lessor’s net investment in the finance lease.

If an entity in the Group is a lessor in an operating lease, the underlying asset is not derecognised but is presented in the statement of financial position according to the nature of the asset. Lease income from operating leases is recognised in profit or loss on a straight-line basis over the lease term, unless another systematic basis is more representative of the time pattern in which use benefit derived from the leased asset is diminished.

3.12 Intangible assets

(a) Trademarks

Trademarks acquired are measured on initial recognition at cost. The useful lives of the trademarks are assessed to be indefinite and are not amortised but tested for impairment annually or more frequently if the events or changes in circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. The useful lives of trademarks are reviewed annually to determine whether the useful lives assessment continues to be supportable.

(b) License

License acquired in a business combination is recognised at fair value at the acquisition date.

Subsequent to recognition, license is stated at cost less accumulated amortisation and any accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 3.16(b).

3.13 Goodwill on consolidation

Goodwill arising from business combinations is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. After initially recognition, goodwill is measured at cost less any accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 3.16(b).

In respect of equity-accounted associates and joint venture, goodwill is included in the carrying amount of the investment and is not tested for impairment individually. Instead, the entire carrying amount of the investment is tested for impairment as a single asset when there is objective evidence of impairment.

3.14 Inventories

Inventories are measured at the lower of cost and net realisable value.

Costs incurred in bringing the inventories to their present location and condition are accounted for as follows:

• raw materials: purchase costs on a weighted average cost basis. • finished goods and work-in-progress: costs of direct materials and labour and a proportion of

manufacturing overheads based on normal operating capacity. These costs are assigned on a weighted average cost basis.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.



6766


(Cont’d)



3.18 Provisions (cont’d)

If the effect of the time value of money is material, provisions that are determined based on the expected future cash flows to settle the obligation are discounted using a current pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in the provisions due to passage of time is recognised as finance costs.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed.

3.19 Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The Executive Chairman of the Group, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the chief operating decision maker that makes strategic decisions.

3.20 Fair value measurement

Fair value of an asset or a liability, except for lease transactions, is determined as 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. The measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market.

For a 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.

When measuring the fair value of an asset or a liability, the Group and the Company use observable market data as far as possible. Fair value is categorised into different levels in a fair value hierarchy based on the input used in the valuation technique as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group and the Company can access at the measurement date.

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

Level 3: Unobservable inputs for the asset or liability.

The Group and the Company recognise transfers between levels of the fair value hierarchy as of the date of the event or change in circumstances that caused the transfers.

3.21 Contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group and of the Company.

Contingent liability is also referred as a present obligation that arises from past events but is not recognised because:

(a) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(b) the amount of the obligation cannot be measured with sufficient reliability.

Contingent liabilities and assets are not recognised in the statements of financial position.


3.16 Impairment of assets (cont’d)

(b) Impairmentofnon-financialassets(cont’d)

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of non-financial assets or cash-generating units (“CGUs”). Subject to an operating segment ceiling test, for the purpose of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to a CGU or a group of CGUs that are expected to benefit from the synergies of business combination.

The recoverable amount of an asset or a CGU is the higher of its fair value less costs of disposal and its value-in-use. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. In determining the fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.

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

Impairment losses in respect of goodwill are not reversed. For other assets, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. An impairment loss is reversed only if there has been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase.

3.17 Share capital

(a) Ordinary shares

Ordinary shares are equity instruments. An equity instrument is a contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

(b) Treasury shares

When share capital recognised as equity is repurchased, the amount of consideration paid is recognised directly in equity. Repurchased shares that have not been cancelled including any attributable transaction costs are classified as treasury shares and presented as a deduction from total equity.

When treasury shares are sold or reissued subsequently, the difference between the sales consideration and the carrying amount is presented as a movement in equity.

3.18 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably.



6968


(Cont’d)


6. PROFIT BEFORE TAX

Other than disclosed elsewhere in the financial statements, the following items have been charged/(credited) in arriving at profit before tax:

Group Company2017 2016 2017 2016

Note RM RM RM RM

Auditors’ remuneration:- audit services:

- current financial year 147,500 132,000 41,000 38,000 - under provision in prior

financial year - 1,000 - - - other services 8,000 13,000 8,000 13,000 Deposits written off 15,251 - 1,150 - Depreciation of property, plant and

equipment 9 5,463,203 5,624,732 - - Dividend income from subsidiaries 5 - - (10,430,100) (2,000,000)Employee benefits expense 6(a) 21,764,934 21,673,694 132,500 132,500 Impairment loss on:- intangible asset 10 130,000 - - - - trade receivables 15 66,010 40,582 - - Interest expense:- bank overdrafts 295,026 221,626 - - - bankers’ acceptances 469,110 569,517 - - - finance lease 23,644 25,113 - - - term loans 1,529,081 1,601,775 - - - revolving credits 159,887 157,651 - - Interest income (61,534) (58,413) - - Net gain on disposal of property,

plant and equipment (19,482) (30,730) - - Net loss/(gain) on foreign

exchange:- realised 1,034 (56,377) - - - unrealised 45,114 (46,660) - - Property, plant and equipment

written off 9 410,140 56,624 - - Rental expense on:- equipment 171,660 59,210 - - - premises 260,800 260,630 - - Rental income on land and

buildings (65,840) (148,940) - - Reversal of impairment loss on

trade receivables 15 (12,548) (23,196) - -

4. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

Significant areas of estimation, uncertainty and critical judgements used in applying accounting principles that have significant effect in determining the amount recognised in the financial years include the following:

(a) Impairment of goodwill

For the purpose of assessing impairment, assets (including goodwill) are grouped at the lowest level where there are separately identifiable cash flows (cash-generating units). In determining the value-in-use of a cash-generating unit, management estimates the discounted cash flows using reasonable and supportable inputs about sales, gross margins and operating expenses based on past experience, current events and reasonably possible future developments. Cash flows that are projected based on those inputs or assumptions and the discount rate applied in the measurement of value-in-use may have a significant effect on the Group’s financial position and results if the actual cash flows are less than the expected.

The carrying amount of the Group’s goodwill and key assumptions used to determine the recoverable amount for different cash-generating units are disclosed in Note 11.

(b) Write-down of obsolete or slow moving inventories

The Group evaluates the adequacy of write-down of its obsolete or slow moving inventories based on the assessment of their estimated net selling price. Inventories are written down when events or changes in circumstances indicate that the carrying amounts may not be recoverable. The management specifically analyses sales trend and current economic trends when making a judgement to evaluate the adequacy of the write-down of obsolete or slow moving inventories. Where expectations differ from the original estimates, the differences will impact the carrying amount of inventories. The carrying amounts of the Group’s inventories are disclosed in Note 14.

5. REVENUE

Group Company2017 2016 2017 2016 RM RM RM RM

Dividend income from subsidiaries - - 10,430,100 2,000,000 Sales of goods 259,451,486 202,578,237 - -

259,451,486 202,578,237 10,430,100 2,000,000



7170


(Cont’d)


7. TAX EXPENSE (cont’d)

Domestic income tax is calculated at the Malaysian statutory income tax rate of 24% (2016: 24%) of the estimated assessable profit for the financial year.

The reconciliations from the tax amount at the statutory income tax rate to the Group’s and the Company’s tax expense are as follows:


Profit before tax 9,441,312 4,587,916 9,985,727 1,435,185

Tax at Malaysian statutory income tax rate of 24% (2016: 24%) 2,265,915 1,101,100 2,396,600 344,400

Tax effect arising from:- non-deductible expenses 619,815 464,575 106,700 135,600 - non-taxable income (76,019) - (2,503,300) (480,000)- double deduction incentives (47,720) (24,280) - - Deferred tax assets not recognised during the

financial year 111,730 83,294 - - (Over)/Under provision in prior financial years:- current tax (17,948) 100,038 - - - deferred tax 512,291 670,041 - -

Tax expense 3,368,064 2,394,768 - -

8. EARNINGS PER SHARE

(a) Basic earnings per ordinary share

Basic earnings per share are based on the profit for the financial year attributable to owners of the Company and the weighted average number of ordinary shares outstanding during the financial year, calculated as follows:

Group2017 2016 RM RM

Profit for the financial year attributable to owners of the Company 6,073,248 2,193,148

Weighted average number of ordinary shares outstanding during the financial year (adjusted for treasury shares) 191,903,044 193,161,729

Basic earnings per ordinary share (sen) 3.16 1.14

(b) Diluted earnings per ordinary share

The diluted earnings per ordinary share of the Group for the financial years ended 31 December 2017 and 31 December 2016 are same as the basic earnings per ordinary share of the Group as the Company has no dilutive potential ordinary shares.

6. PROFIT BEFORE TAX (cont’d)

(a) Employee benefits expense:


Salaries, wages, bonuses and others 20,222,732 20,116,269 132,500 132,500 Defined contribution plan 1,584,626 1,576,369 - - Net provision for employee benefits (Note 23) (42,424) (18,944) - -

21,764,934 21,673,694 132,500 132,500

(b) Included in employee benefits expense are:


Executive Directors:- fees 72,500 72,500 72,500 72,500 - other emoluments 1,832,754 1,949,574 - -

1,905,254 2,022,074 72,500 72,500

Non-executive Directors:- fees 60,000 60,000 60,000 60,000

Total directors' remuneration 1,965,254 2,082,074 132,500 132,500

The estimated monetary value of benefits-in-kind (which were not included in the above directors’ remunerations) received by the directors otherwise than in cash from the Group amounted to RM57,138 (2016: RM60,275).

7. TAX EXPENSE


Current tax:Malaysian income tax

- Current financial year 503,928 732,140 - - - (Over)/Under provision in prior financial years (17,948) 100,038 - -

485,980 832,178 - -

Deferred tax (Note 13):

Origination of temporary differences 2,369,793 892,549 - - Under provision in prior financial years 512,291 670,041 - -

2,882,084 1,562,590 - -

Tax expense 3,368,064 2,394,768 - -



7372


(Cont’d)


9.

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7574


(Cont’d)


9. PROPERTY, PLANT AND EQUIPMENT (cont’d)

(d) The capital work-in-progress is in respect of cost incurred on construction and restoration of factory, office building, renovation of shoplot, extension of factory building and restoration, upgrading and fabrication of plant and machinery of the subsidiaries.

(e) Included in buildings and warehouse of the Group are factory buildings and warehouse of a subsidiary with carrying amount of RM7 (2016: RM7) which are erected on a land leased from a third party landlord which are renewed every three years upon expiry.

(f) Included in the total carrying amount of leasehold land are:


Leasehold land with unexpired lease period of more than 50 years 7,503,406 7,604,848 Leasehold land with unexpired lease period of less than 50 years 819,412 839,897

8,322,818 8,444,745

10. INTANGIBLE ASSETS

Trademarks License Total RM RM RM

GroupAt cost:At 1 January 2017 45,617 - 45,617 Acquisition of a subsidiary (Note 12) - 130,000 130,000

At 31 December 2017 45,617 130,000 175,617

Accumulated impairmentAt 1 January 2017 - - - Impairment loss - (130,000) (130,000)

At 31 December 2017 - (130,000) (130,000)

Carrying amountAt 31 December 2016 45,617 - 45,617

At 31 December 2017 45,617 - 45,617

(a) Trademarks relate to “Kiwi”, “Kiwiware”, “Goldenware” and “Ji Seng Hong Goldenware” brand names with logo for the Group. As disclosed in Note 3.12, the useful lives of these brands are estimated to be indefinite.

(b) License relates to license of Oil Palm Fruit Dealer, which is acquired in relation to acquisition of a subsidiary during the financial year.

(c) During the financial year, an impairment loss of RM130,000 was recognised in profit or loss of the Group as other expenses as the newly acquired subsidiary is dormant.

9. PROPERTY, PLANT AND EQUIPMENT (cont’d)

Company2017 2016 RM RM

Office equipmentCostAt 1 January/31 December 4,000 4,000

Accumulated depreciation At 1 January/31 December 4,000 4,000

Carrying amountAt 31 December - -

(a) Property, plant and equipment pledged to licensed banks for banking facilities granted to the Group as

disclosed in Note 21 are as follows:


Carrying amount

Freehold land 20,001,538 20,001,538 Leasehold land 8,322,818 8,444,745 Buildings and warehouse 17,286,829 15,928,538

45,611,185 44,374,821

(b) During the financial year, the Group acquired property, plant and equipment with an aggregate cost of RM7,133,677 (2016: RM7,241,174) which are satisfied by the following:

Group

2017 2016 RM RM

Cash payments 810,322 456,835 Capital work-in-progress 6,208,355 6,585,339 Finance lease arrangement 115,000 199,000

7,133,677 7,241,174

(c) The carrying amount of property, plant and equipment of the Group held under finance lease arrangements as at end of the financial year are as follows:


Motor vehicles 532,960 735,383



7776


(Cont’d)


12. INVESTMENT IN SUBSIDIARIES (cont’d)

Details of the subsidiaries which are all incorporated in Malaysia, are as follows: (cont’d)

Name of company Principal activities

Effective equity interest/

Voting rights 2017 2016

Kitchenally Sdn. Bhd. Inactive 100% 100%

Prestile Industries Sdn. Bhd. Manufacturing and trading of palm fibre 100% 100%

Saluran Suriamas Sdn. Bhd. Dormant 100% 100%

Future Atlas Sdn. Bhd. Dormant 100% -

Naprogen Sdn. Bhd. * Dormant 100% -

* Consolidatedbyusingmanagementfinancialstatements,auditors’reportisnotavailable.

Acquisition of subsidiaries

(i) 2017

(a) On 22 February 2017, the Company acquired 2 ordinary shares of RM1 each in Future Atlas Sdn. Bhd. (“FASB”), representing 100% of the equity interest in FASB for a total cash consideration of RM2.

The effect of the acquisition on cash flows is as follows:

RM

Cash and cash equivalents acquired 2 Less: Consideration paid in cash (2)

Net cash on acquisition -

The acquisition has no material impact on the Group’s revenue and profit to the financial year ended 31 December 2017.

On 17 March 2017, the Company further subscribed for additional 49,998 ordinary shares of FASB for a total cash consideration of RM49,998.

On 31 December 2017, the Company further subscribed for additional 30,800 ordinary shares of FASB for a total cash consideration of RM30,800.

(b) On 5 September 2017, the Company acquired 50,000 ordinary shares, representing 100% of the equity interest in Naprogen Sdn. Bhd. (“Naprogen”) for a total cash consideration of RM130,000.


The fair value of the assets acquired and the liabilities assumed are as follows:

RM

AssetIntangible asset, representing total identifiable net assets acquired (Note 10) 130,000 Fair value of consideration transferred (130,000)

Goodwill arising from acquisition -

11. GOODWILL ON CONSOLIDATION


At cost:At 1 January/31 December 6,078,933 6,078,933

Goodwill on consolidation arise from the acquisition of Central Palm Oil Mill Sdn. Bhd. (“CPOM”). CPOM is identified as a single CGU, which represent the lowest level within the Group at which goodwill is monitored for internal management purposes. Goodwill is tested for impairment on 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 key assumptions:

(i) Cash flows are projected based on the management’s three-year business plan for CPOM. (ii) Discount rate of 13% used for cash flows discounting purpose is the average industry’s weighted average

cost of capital. (iii) Sales are determined based on the management’s past experience and estimate of industry trend for the

next three financial years and assuming no growth for the subsequent years. (iv) Gross margins are projected based on historical profit margin.

Based on the sensitivity analysis performed, the management does not foresee any reasonably possible change in the above key assumptions that would cause the carrying amount of the CGU to materially exceed its recoverable amount.

12. INVESTMENT IN SUBSIDIARIES


Unquoted shares, at costAt 1 January 77,353,262 77,303,262 Additions 7,376,000 50,000

At 31 December 84,729,262 77,353,262

Details of the subsidiaries which are all incorporated in Malaysia, are as follows:

Name of company Principal activities

Effective equity interest/

Voting rights 2017 2016

Advance Eagle Marketing Sdn. Bhd.

Trading of household products 100% 100%

CAM Plastic Industry Sdn. Bhd. Manufacturing and trading in plastic 100% 100%

Central Aluminium Manufactory Sdn. Bhd.

Manufacturing and trading in aluminium and stainless steel household products

100% 100%

Central Melamineware Sdn. Bhd. Manufacturing and trading in melamineware products 100% 100%

Central Palm Oil Mill Sdn. Bhd. Processing and sale of crude palm oil, palm kernel, palm fibre and related products

100% 100%



7978


(Cont’d)


13. DEFERRED TAX (cont’d)


Presented after appropriate offsetting as follows:Deferred tax assets 109,720 271,710 Deferred tax liabilities (6,256,346) (3,536,252)

(6,146,626) (3,264,542)

This is in respect of deferred tax assets/(liabilities) arising from the following temporary differences:


Deferred tax assetsDeductible temporary differences in respect of expenses 153,936 149,059 Unabsorbed capital allowances 101,517 881,641 Unutilised tax losses 15,500 1,200,415 Unrealised profit on inventories 12,122 19,244

283,075 2,250,359

Deferred tax liabilitiesDifferences between the carrying amounts of property, plant and equipment and

their tax base (4,410,334) (3,402,613)Fair value adjustment in respect of subsidiaries acquired (2,019,367) (2,101,231)Taxable temporary differences in respect of income - (11,057)

(6,429,701) (5,514,901)

(6,146,626) (3,264,542)

The estimated amount of temporary differences for which no deferred tax assets are recognised in the financial statements are as follows:


Unabsorbed capital allowances 19,742 3,802 Unutilised tax losses 1,750,496 1,300,893

1,770,238 1,304,695

12. INVESTMENT IN SUBSIDIARIES (cont’d) Acquisition of subsidiaries (cont’d)

(i) 2017 (cont’d)

Effects of the acquisition on cash flows:

RM

Fair value of consideration transferred 130,000 Less: Non-cash consideration -

Consideration paid in cash 130,000 Less: Cash and cash equivalents of a subsidiary acquired -

Net cash outflows on acquisition 130,000

(c) On 31 December 2017, the Company further subscribed for additional 180,200 ordinary shares of Saluran Suriamas Sdn. Bhd. for a total cash consideration of RM180,200.

(ii) 2016

On 4 January 2016, the Company acquired 2 ordinary shares of RM1 each, representing the entire equity interest in Saluran Suriamas Sdn. Bhd. (“SSSB”) for a total cash consideration of RM2.

The effect of the acquisition on cash flows is as follows:

RM

Cash and cash equivalents acquired 2 Less: Consideration paid in cash (2)

Net cash on acquisition -


On 3 August 2016, the Company further subscribed for additional 49,998 ordinary shares of SSSB for a total

cash consideration of RM49,998.

13. DEFERRED TAX


Deferred tax liabilitiesAt 1 January (3,264,542) (1,701,952) - - Recognised in profit or loss (Note 7) (2,882,084) (1,562,590) - -

At 31 December (6,146,626) (3,264,542) - -



8180


(Cont’d)


15. TRADE RECEIVABLES (cont’d)

(b) Ageing analysis of trade receivables

The Group maintains an ageing analysis in respect of trade receivables only. The ageing analysis of the Group’s trade receivables are as follows:


Neither past due nor impaired 15,506,938 17,593,132

1 to 90 days past due not impaired 2,239,716 1,323,819 91 to 120 days past due not impaired 198,792 89,183 More than 121 days past due not impaired 455,787 786,595

2,894,295 2,199,597 Impaired individually 672,629 619,167

19,073,862 20,411,896

Receivables that are neither past due nor impaired

Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group.

Receivables that are past due but not impaired

Trade receivables that are past due but not impaired are creditworthy debtors who, by past trade practices, have paid after the expiry of the trade credit terms and the Group is currently still in active trading with the debtors. The Group does not anticipate recovery problem in respect of these debtors.

Receivables that are impaired

The Group’s trade receivables that are impaired at the reporting date and the reconciliation of movement in the impairment of trade receivables are as follows:


At 1 January 619,167 718,651 Charge for the financial year:- individual impairment loss (Note 6) 66,010 40,582 Written off - (116,870)Reversal (Note 6) (12,548) (23,196)

At 31 December 672,629 619,167

Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

14. INVENTORIES


At cost:

Raw materials 11,431,963 12,911,257 Work-in-progress 5,789,181 3,643,294 Finished goods 19,492,805 17,720,478

36,713,949 34,275,029

During the financial year, inventories of the Group recognised as cost of sales amounted to RM234,974,596 (2016: RM182,804,215).

15. TRADE RECEIVABLES


Third parties 19,073,862 20,411,896 Less: Impairment loss (672,629) (619,167)

Trade receivables, net 18,401,233 19,792,729

The foreign currency exposure profile of trade receivables of the Group are as follows:


Brunei Dollar 106,613 124,048 Singapore Dollar 406,951 438,231 United States Dollar 260,954 522,103

774,518 1,084,382

(a) Credit term of trade receivables

The Group’s normal trade credit term extended to customers ranging from 30 to 120 days (2016: 30 to 120 days).



8382


(Cont’d)


18. SHARE CAPITAL

Group and Company Number of

ordinary shares Amount 2017 2016 2017 2016 Unit Unit RM RM

Issued and fully paid

At beginning of the financial year 196,800,000 196,800,000 49,200,000 49,200,000 Transition to no-par value regime - - 5,178,474 -

At end of the financial year 196,800,000 196,800,000 54,378,474 49,200,000

The Companies Act 2016 (the “Act”), which came into operation on 31 January 2017, abolished the concept of authorised share capital and par value of share capital. Consequently, the amount standing to the credit of the share premium account of RM5,178,474 becomes part of the Company’s share capital pursuant to the transitional provisions set out in Section 618(2) of the Act. Notwithstanding this provision, the Company may within 24 months from the commencement of the Act, use the amount standing to the credit of its share premium account of RM5,178,474 for purposes as set out in Section 618(3) of the Act. There is no impact on the number of ordinary shares in issue or the relative entitlement of any of the members as a result of this transition.

The holders of ordinary shares (except treasury shares) are entitled to receive dividends as declared from time to time 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.

19. SHARE PREMIUM

Share premium comprises the premium paid on subscription of shares in the Company over and above the par value of the shares. Pursuant to Section 618(2) of the Act, the sum of RM5,178,474 standing to the credit of the Company’s share premium account has been transferred and became part of the Company’s share capital as disclosed in Note 18.

20. TREASURY SHARES

Treasury shares relate to ordinary shares of the Company that are repurchased and held by the Company. The amount consists of the acquisition costs of treasury shares net of the proceeds received on their subsequent sale or issuance. The repurchase transactions were financed by internally generated funds.

The shareholders of the Company, by way of resolution passed at the Annual General Meeting held on 23 June 2017 renewed the authority given to the Company to repurchase up to 10% of the issued and paid-up ordinary share capital of the Company (“Share Buy-Back”). The directors of the Company are committed to enhancing the value of the Company to its shareholders and believe that the repurchase plan can be applied in the best interests of the Company and its shareholders.

In the previous financial year, the Company repurchased 1,774,300 ordinary shares of RM0.25 each of its issued share capital from the open market. The average price paid for the shares repurchased was approximately RM0.315 per ordinary share. The total consideration paid for the share repurchased including transaction costs was RM558,963.

As at 31 December 2017, the Company had a total of 4,896,956 (2016: 4,896,956) ordinary shares of its 196,800,000 (2016: 196,800,000) ordinary shares as treasury shares.

There was no repurchase of the Company’s issued ordinary shares, nor any resale, cancellation or distribution of treasury shares during the financial year.

16. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

Group Company2017 2016 2017 2016

Note RM RM RM RM

Other receivables 267,546 333,055 34 - Deposits (a) 747,260 323,986 530 1,150 Advances to suppliers (b) 483,301 1,037,119 - - Amounts owing by subsidiaries (c) - - 661 15,666,338 GST refundable 60,361 3,304 - - Prepayments 264,219 240,179 12,373 12,373 Staff advances 509,930 225,596 - -

2,332,617 2,163,239 13,598 15,679,861

(a) In the previous financial year, included in deposits of the Group was a deposit of RM20,735 for purchase of raw materials.

(b) Included in advances to suppliers of the Group is an amount of RM231,091 (2016: RM549,030) denominated in United States Dollar, being advances to a foreign supplier for the acquisition of plant and machinery.

(c) Amounts owing by subsidiaries are non-trade in nature, unsecured, interest-free and repayable on demand in cash.

17. DEPOSITS, CASH AND BANK BALANCES


Cash and bank balances 1,713,698 1,764,290 124,472 155,965 Cash deposits with licensed banks 17,950,000 4,700,000 - -

Cash and cash equivalents as reported in the statements of financial position 19,663,698 6,464,290 124,472 155,965

Less:Bank overdrafts (Note 21) (8,160,372) (6,258,894) - -

Cash and cash equivalents as reported in the statements of cash flows 11,503,326 205,396 124,472 155,965

The cash deposits placed with licensed banks are placement with period less than 3 months and bear interests at

rates ranging from 1.75% to 2.51% (2016: 1.75% to 2.76%) per annum and mature within 3 months.

The foreign currency exposure profile of cash and bank balances of the Group are as follows:


Singapore Dollar 46,332 48,859 United States Dollar 270,770 395,835

317,102 444,694



8584


(Cont’d)


21. LOANS AND BORROWINGS (cont’d) (b) Bank overdrafts (cont’d)

(b) corporate guarantee of the Company.

(c) Bankers’ acceptances

The bankers’ acceptances granted to subsidiaries bear interests at rates ranging from 3.53% to 4.46% (2016: 3.25% to 4.27%) per annum and are secured and supported as follows:

(a) fixed legal charge over certain freehold land and buildings of subsidiaries as mentioned in Note 9(a);

and (b) corporate guarantee of the Company.

(d) Finance lease liabilities


Minimum lease payments 370,900 502,119 Less: Future finance charges (24,044) (34,199)

Total present value of finance lease liabilities 346,856 467,920

Current:Payable within 1 year


Present value of finance lease liabilities 172,764 224,580

Non-current:Payable after 1 year but not later than 2 years



Payable after 2 years but not later than 5 years

Minimum lease payments 33,065 109,899 Less: Future finance charges (746) (2,924)


Total present value of finance lease liabilities 346,856 467,920

Analysed as:

Payable within 1 year 172,764 224,580 Payable after 1 year 174,092 243,340

346,856 467,920

The finance lease liabilities of the Group bear interests at rates ranging from 4.70% to 7.62% (2016: 4.46% to 7.60%) per annum.

21. LOANS AND BORROWINGS

Group2017 2016

Note RM RM

Non-current:SecuredTerm loans (a) 24,984,123 22,369,376 Finance lease liabilities (d) 174,092 243,340

25,158,215 22,612,716

Current:SecuredTerm loans (a) 3,177,609 2,920,531 Bank overdrafts (b) 2,408,236 2,740,162 Bankers’ acceptances (c) 2,930,523 2,780,718 Finance lease liabilities (d) 172,764 224,580

8,689,132 8,665,991

UnsecuredBank overdrafts (b) 5,752,136 3,518,732 Bankers’ acceptances (c) 7,891,000 6,048,000 Revolving credits (e) 3,000,000 3,000,000

16,643,136 12,566,732

25,332,268 21,232,723

50,490,483 43,845,439

Total loans and borrowings:Term loans (a) 28,161,732 25,289,907 Bank overdrafts (b) 8,160,372 6,258,894 Bankers’ acceptances (c) 10,821,523 8,828,718 Finance lease liabilities (d) 346,856 467,920 Revolving credits (e) 3,000,000 3,000,000

50,490,483 43,845,439

(a) Term loans

The term loans of the Group bear interests at rates ranging from 4.55% to 8.65% (2016: 4.75% to 8.35%) per annum and are secured and supported as follows:

(a) fixed legal charge over certain freehold and leasehold land, buildings and warehouse of subsidiaries as mentioned in Note 9(a); and

(b) corporate guarantee of the Company.

(b) Bank overdrafts

The bank overdraft facilities granted to subsidiaries bear interests at rates ranging from 6.15% to 7.90% (2016: 6.15% to 7.90%) per annum and are secured and supported as follows:

(a) fixed legal charge over certain freehold land, buildings and warehouse of subsidiaries as mentioned in Note 9(a); and



8786


(Cont’d)


23. OTHER PAYABLES, DEPOSITS AND ACCRUALS (cont’d)

(b) Amounts owing to subsidiaries are non-trade in nature, unsecured, interest-free and repayable on demand in cash.

(c) Included in the accruals and provision is an amount of provision in respect of provision for employee benefits on short term accumulating compensated absences for the employees of the Group. The provision is made based on the number of days of outstanding compensated absences of each employee multiplied by their respective salary/wages as at the financial year end.


At 1 January 491,031 509,975 Additions 448,607 491,031 Reversal (491,031) (509,975)

At 31 December 448,607 491,031

24. DIVIDEND

Group and Company

2016 RM

Recognised in previous financial year:Dividend on ordinary shares:- Single tier interim dividend for the financial year ended 31 December 2016: 1 sen per ordinary share, paid on 23 December 2016 1,919,030

25. CAPITAL COMMITMENTS


Approved and contracted for:- Extension of building 392,680 - - Plant and machinery 4,257,448 2,045,588 - Capital work-in-progress 22,687 56,200

4,672,815 2,101,788

26. OPERATING LEASE COMMITMENTS

The Group has entered into operating leases for its factories, warehouse, shop offices and hostels. These leases have tenure of one to three years with a renewal option included in the contract. There are no restrictions placed upon the Group by entering into these leases.

21. LOANS AND BORROWINGS (cont’d)

(e) Revolving credits

The revolving credits of the Group bear interest at a rate of 4.81% (2016: 4.80%) per annum and are supported by the corporate guarantee of the Company.

22. TRADE PAYABLES


Third parties 8,742,409 8,845,705 Related party 24,857 295,380

8,767,266 9,141,085

The foreign currency exposure profile of trade payables of the Group is as follows:


United States Dollar 113,161 -

(a) The normal trade credit term granted by trade creditors to the Group ranging from 14 to 120 days (2016: 14 to 120 days).

(b) The related party is a company in which a director of the Company has substantial financial interest and is also a director.

23. OTHER PAYABLES, DEPOSITS AND ACCRUALS

Group Company2017 2016 2017 2016

Note RM RM RM RM

Advances from customers 4,585 181,403 - - Other payables (a) 1,577,258 1,173,264 - - Amounts owing to subsidiaries (b) - - 591,124 18,896,224 Deposits received 6,000 6,000 - - GST payable 417,839 129,707 - - Accruals and provision (c) 3,100,726 3,399,976 161,430 163,550

5,106,408 4,890,350 752,554 19,059,774

(a) The foreign currency exposure profile of other payables of the Group is as follows:


United States Dollar - 569,440



8988


(Cont’d)


27. RELATED PARTIES (cont’d)

(c) Compensation of directors and key management personnel


Fees 132,500 132,500 132,500 132,500 Other emoluments 1,795,500 1,947,200 - - Post-employment benefits 234,756 231,576 - - Estimated monetary value of benefits-in-kind 61,138 65,150 - -

2,223,894 2,376,426 132,500 132,500

28. SEGMENT INFORMATION

For management purposes, the Group is organised into business units based on its products and services, and has three reportable operating segments as follows:

Investment holding Investment holding.Manufacturing and trading Manufacturing and trading of aluminium, stainless steel, melamine and

plastic household products. Palm oil mill Processing and sale of crude palm oil, palm kernel, palm fibre and other

related products. Management monitors the operating results of its business units separately for the purpose of making decisions

about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. Inter-segment transactions are entered in the ordinary course of business based on terms mutually agreed upon by the parties concerned.

26. OPERATING LEASE COMMITMENTS (cont’d)

Future minimum rental payable under the non-cancellable operating lease at the reporting date is as follows:


Within one year 106,850 203,550 After one year but not more than five years 36,800 29,000

143,650 232,550

27. RELATED PARTIES

(a) Identity of related parties

Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operational decisions, or vice versa, or where the Group and the party are subject to common control. Related parties may be individuals or other entities.

Related parties of the Group include:

(i) Subsidiaries; (ii) Entities in which certain directors have substantial financial interest; and (iii) Key management personnel of the Group and the Company, comprise persons (including directors)

having the authority and responsibility for planning, directing and controlling the activities directly or indirectly.

(b) Significant related party transactions


Related partiesCompany in which the son and son-in-law of a director of the Company are

the owners- sales of goods (81,407) (89,624)

A company in which a director of the Company has substantial financial interest and is also a director- purchases of property, plant and equipment 103,050 604,370 - sales of goods - (75)- rendering of services 55,170 64,810


SubsidiariesDividend income (10,430,100) (2,000,000)



9190


(Cont’d)


28. SEGMENT INFORMATION (cont’d)

(i) Operating segment (cont’d)

Investment

holding Manufacturing

and trading Palm oil

mill

Adjustments and

eliminations

Consolidated Note RM RM RM RM RM

2016Revenue:

Revenue from external customers - 62,063,598

140,514,639 - 202,578,237

Inter-segment revenue a 2,000,000 30,053 - (2,030,053) -

Total revenue 2,000,000 62,093,651 140,514,639 (2,030,053) 202,578,237

Results:

Interest expense - 2,019,101 556,581 - 2,575,682 Interest income - (27,172) (31,241) - (58,413)Depreciation of

property, plant and equipment - 3,432,763 2,191,969 - 5,624,732

Other non-cash items b - (62,310) 39,986 - (22,324)Segment profit before

tax c 1,435,185 1,109,283 4,543,398 (2,499,950) 4,587,916

Assets:

Additions to non-current assets excluding deferred tax assets and financial assets d - 2,379,573 4,861,601 - 7,241,174

Segment assets e 93,195,259 136,712,002 45,014,382 (111,685,966) 163,235,677

Liabilities:

Segment liabilities f 19,059,774 51,969,429 26,779,015 (36,395,092) 61,413,126


(i) Operating segment

Investment

holding Manufacturing

and trading Palm oil

mill

Adjustments and

eliminations

Consolidated Note RM RM RM RM RM

2017Revenue:

Revenue from external customers - 58,269,036

201,182,450 - 259,451,486

Inter-segment revenue a 10,430,100 74,743 - (10,504,843) -

Total revenue 10,430,100 58,343,779 201,182,450 (10,504,843) 259,451,486

Results:

Interest expense - 1,820,364 656,384 - 2,476,748 Interest income - (10,064) (51,470) - (61,534)Depreciation of

property, plant and equipment - 3,117,104 2,346,099 - 5,463,203

Other non-cash items b 1,150 479,544 111,367 - 592,061 Segment profit before

tax c 9,985,727 1,173,959 9,540,132 (11,258,506) 9,441,312

Assets:

Additions to non-current assets excluding deferred tax assets and financial assets d - 2,124,891 5,008,786 - 7,133,677

Segment assets e 85,383,986 120,590,562 56,373,689 (83,800,320) 178,547,917

Liabilities:

Segment liabilities f 1,262,774 38,435,762 31,463,364 (509,782) 70,652,118



9392


(Cont’d)




(f) The following items are deducted from segment liabilities to arrive at total liabilities reported in the Group’s statement of financial position:

2017 2016 RM RM

Deferred tax liabilities 2,007,245 2,081,987 Inter-segment liabilities (2,517,027) (38,477,079)

(509,782) (36,395,092)

(ii) Geographical information

Segment revenue based on geographical location of the Group’s customers are as follows:

2017 2016 RM RM

Asia - Malaysia 255,650,280 197,059,870 Asia - Others 3,050,070 4,726,217 Middle East & Africa 330,069 295,255 North America 421,067 496,895

259,451,486 202,578,237

The Group operates predominantly in Malaysia and accordingly, the non-current assets of the Group are located in Malaysia.

(iii) Major customer information

Revenue from two (2016: two) major customers in palm oil mill segment contributes 53.03% (2016: 47.15%) of the Group revenue.

29. FINANCIAL INSTRUMENTS

(a) Categories of financial instruments


Financial assetsLoans and receivables- Trade and other receivables, net of

advances to suppliers, prepayments and GST refundable 19,925,969 20,675,366 1,225 15,667,488

- Deposits, cash and bank balances 19,663,698 6,464,290 124,472 155,965

39,589,667 27,139,656 125,697 15,823,453



(a) Inter-segment revenues are eliminated on consolidation.

(b) Other non-cash items consist of the following items as presented in the respective notes:

2017 2016 RM RM

Deposits written off 15,251 - Gain on disposal of property, plant and equipment (19,482) (30,730)Impairment loss on intangible asset 130,000 - Impairment loss on trade receivables 66,010 40,582 Net provision for employee benefits (42,424) (18,944)Net unrealised loss/(gain) on foreign exchange 45,114 (46,660)Property, plant and equipment written off 410,140 56,624 Reversal of impairment loss on trade receivables (12,548) (23,196)

592,061 (22,324)

(c) The following item is deducted from segment profit to arrive at profit before tax presented in the Group’s statement of comprehensive income:

2017 2016 RM RM

Profit from inter-segment revenue (11,258,506) (2,499,950)

(d) Addition to non-current assets (excluding deferred tax assets and financial assets) consist of:

2017 2016 Note RM RM

Property, plant and equipment 9 7,133,677 7,241,174

(e) The following items are deducted from segment assets to arrive at total assets reported in the Group’s statement of financial position:

2017 2016 RM RM

Investment in subsidiaries (84,729,262) (77,353,262)Inter-segment assets 928,942 (34,332,704)

(83,800,320) (111,685,966)



9594


(Cont’d)


30. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, foreign currency risk, interest rate risk and liquidity risk.

The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s businesses whilst managing its risks. The Group operates within clearly defined guidelines that are approved by the Board of Directors. It is, and has been throughout the current and previous financial years, the Group’s policy that no derivatives shall be undertaken. The Group and the Company do not apply hedge accounting.

The Group’s and the Company’s exposure to the financial risks and the objectives, policies and processes put in place to manage these risks are discussed below.

(i) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s exposure to credit risk arises primarily from trade and other receivables. The Company’s exposure to credit risk arises principally from the financial guarantees given. For other financial assets, the Group and the Company minimise credit risk by dealing with high credit rating counterparties.

The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivables balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.

Exposure to credit risk

At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statements of financial position and the financial guarantee provided by the Company for the credit facilities granted to its subsidiaries.

Credit risk concentration profile

The Group has no significant concentration of credit risk arising from exposure to a single or group of debtors as at the reporting date.

Financial guarantees

The Company provides unsecured corporate guarantees to banks in respect of credit and banking facilities granted to certain subsidiaries.

The Company monitors on an ongoing basis the repayments made by the subsidiaries and their financial performance.

The maximum exposure to credit risk amounted to RM50,143,627 (2016: RM43,377,519), representing the outstanding credit facilities of the subsidiaries at the reporting date. At the reporting date, there was no indication that any subsidiaries would default on their repayments.

The financial guarantees have not been recognised as the fair value on initial recognition was immaterial since the financial guarantees provided by the Company did not contribute towards credit enhancement of the subsidiaries’ borrowings in view of the securities pledged by the subsidiaries and it is unlikely the subsidiaries will default within the guarantee period.

29. FINANCIAL INSTRUMENTS (cont’d)

(a) Categories of financial instruments (cont’d)


Financial liabilitiesOther financial liabilities- Trade and other payables, deposits

and accruals, net of advances from customers and GST payable 13,451,250 13,720,325 752,554 19,059,774

- Loans and borrowings 50,490,483 43,845,439 - -

63,941,733 57,565,764 752,554 19,059,774

(b) Fair value measurement

The carrying amounts of deposits, cash and bank balances, short-term receivables and payables and short-term borrowings are reasonable approximate to their fair value due to the relatively short-term nature of these financial instruments.

The carrying amount of long-term floating rate term loan is reasonable approximate of fair values as the loans will be re-priced to market interest rate on or near reporting date.

There have been no transfers between levels during the current and previous financial years.

The following table provides the fair value measurement hierarchy of the Group’s financial instruments, other than those with carrying amounts which are reasonable approximate of their fair values:

Carrying amount

Fair value of financial instruments not carried at fair value

Level 1 Level 2 Level 3 Total RM RM RM RM RM

Group2017

Financial liabilities- finance lease liabilities 346,856 - 350,082 - 350,082

2016

Financial liabilities- finance lease liabilities 467,920 - 468,833 - 468,833

Level 2 fair value

Fair value of financial instruments carried at fair value

The fair value of finance lease liabilities is determined using the discounted cash flows method based on discount rates that reflects the market borrowing rate as at the end of the reporting period.



9796


(Cont’d)


30. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d)

(iv) Liquidity risk

Liquidity risk is the risk that the Group and the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility through use of stand-by credit facilities.

The Group and the Company actively manage their operating cash flows and the availability of funding so as to ensure that all repayment and funding needs are met. As part of its overall prudent liquidity management, the Group and the Company maintain sufficient levels of cash to meet their working capital requirements.

Maturity analysis

The maturity analysis of the Group’s and the Company’s financial liabilities by their relevant maturity at the reporting date are based on contractual undiscounted repayment obligations are as follows:

Contractual undiscounted cash flows

Carrying amount

On demand or within 1

year Between 1

and 5 years More than 5

years Total RM RM RM RM RM

2017GroupFinancial liabilities:

Trade and other payables, deposits and accruals, net of advances from customers and GST payable 13,451,250 13,451,250 - - 13,451,250

Finance lease liabilities 346,856 189,632 148,203 33,065 370,900 Term loans 28,161,732 4,784,717 17,473,759 14,427,367 36,685,843 Revolving credits 3,000,000 3,000,000 - - 3,000,000 Bankers’ acceptances 10,821,523 10,821,523 - - 10,821,523 Bank overdrafts 8,160,372 8,160,372 - - 8,160,372

63,941,733 40,407,494 17,621,962 14,460,432 72,489,888

CompanyFinancial liabilities:

Accruals 161,430 161,430 - - 161,430 Amounts owing to

subsidiaries 591,124 591,124 - - 591,124

752,554 752,554 - - 752,554

Financial guarantee contracts * - 50,143,627 - - 50,143,627


(ii) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group has transactional currency exposures arising from sales and purchases that are denominated in currencies other than the functional currency of the Group entities, primarily in United States Dollar (“USD”), Singapore Dollar (“SGD”) and Brunei Dollar (“BND”).

The Group also holds cash and bank balances denominated in foreign currencies for working capital purposes.

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the Group’s profit for the financial year to a reasonably possible change in the USD, SGD and BND exchange rates against the respective functional currency of the Group entities, with all other variables held constant.


USD/RM - strengthened 10% (2016: 10%) 49,374 68,212 - weakened 10% (2016: 10%) (49,374) (68,212)

SGD/RM - strengthened 7% (2016: 7%) 24,115 25,913 - weakened 7% (2016: 7%) (24,115) (25,913)

BND/RM - strengthened 7% (2016: 7%) 5,672 6,599 - weakened 7% (2016: 7%) (5,672) (6,599)

(iii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates.

The Group’s exposure to interest rate risk relates to interest bearing financial liabilities and financial asset. Interest bearing financial liabilities includes bankers’ acceptances, bank overdrafts, finance lease liabilities, revolving credits and term loans. Interest bearing financial asset includes cash deposits with licensed banks at fixed rate expose the Group to fair value interest rate risk.

The bank overdrafts, bankers’ acceptances, revolving credits and term loans totalling RM50,143,627 (2016: RM43,377,519) at floating rates expose the Group to cash flow interest rate risk whilst finance lease liabilities of RM346,856 (2016: RM467,920) at fixed rates expose the Group to fair value interest rate risk.

The Group adopts a strategy of mixing fixed and floating rate borrowing to minimise exposure to interest rate risk. The Group also reviews its debt portfolio to ensure favourable rates are obtained.

Sensitivity analysis for interest rate risk

If the interest rate had been 50 basis point higher/lower and all other variables held constant, the Group’s profit net of tax for the financial year ended 31 December 2017 would decrease/increase by RM190,546 (2016: RM164,835) as a result of exposure to floating rate borrowings.



9998


(Cont’d)


31. CAPITAL MANAGEMENT

The primary objective of the Group’s capital management is to ensure that it maintains a healthy capital ratio in order to support its business and maximise shareholders’ value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies and processes during the financial years ended 31 December 2017 and 31 December 2016.

The Group is not subject to any externally imposed capital requirements.

The Group monitors capital using gearing ratio, which is total external borrowings divided by total equity. The gearing ratio as at 31 December 2017 and 31 December 2016, which are within the Group’s objectives of capital management are as follows:

The gearing ratio is as follows:


Total external borrowings 50,490,483 43,845,439

Total equity 107,895,799 101,822,551

Gearing ratio 0.47 0.43


(iv) Liquidity risk (cont’d)

Maturity analysis (cont’d)

The maturity analysis of the Group’s and the Company’s financial liabilities by their relevant maturity at the reporting date are based on contractual undiscounted repayment obligations are as follows: (cont’d)

Contractual undiscounted cash flows

Carrying amount

On demand or within 1

year Between 1

and 5 years More than 5

years Total RM RM RM RM RM

2016GroupFinancial liabilities:

Trade and other payables, deposits and accruals,net of advances from customers and GST payable 13,720,325 13,720,325 - - 13,720,325

Finance lease liabilities 467,920 245,428 256,691 - 502,119 Term loans 25,289,907 4,311,264 16,828,537 10,453,569 31,593,370 Revolving credits 3,000,000 3,000,000 - - 3,000,000 Bankers’ acceptances 8,828,718 8,828,718 - - 8,828,718 Bank overdrafts 6,258,894 6,258,894 - - 6,258,894

57,565,764 36,364,629 17,085,228 10,453,569 63,903,426

CompanyFinancial liabilities:

Accruals 163,550 163,550 - - 163,550 Amounts owing to

subsidiaries 18,896,224 18,896,224 - - 18,896,224

19,059,774 19,059,774 - - 19,059,774

Financial guarantee contracts * - 43,377,519 - - 43,377,519

* TheCompanyhasgivencorporateguarantee tobanksonbehalfofcertainsubsidiaries forbanking facilities.The

potential exposure of the financial guarantee contract is equivalent to the amount of the banking facilities beingutilised by the said subsidiaries.



101100

We, LEE CHIN YEN and TAN HONG CHENG, being two of the directors of CAM Resources Berhad, do hereby state that in the opinion of the directors, the accompanying financial statements set out on pages 43 to 99 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2017 and of their financial performance and cash flows for the financial year then ended.

Signed on behalf of the Board of Directors in accordance with a resolution of the directors:

LEE CHIN YEN TAN HONG CHENGDirector Director

Kuala LumpurDate: 6 April 2018

I, LEE CHIN YEN, being the director primarily responsible for the financial management of CAM Resources Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 43 to 99 are correct, and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed )at Kuala Lumpur in the Federal Territory ) LEE CHIN YENon 6 April 2018 )

Before me,

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

We have audited the financial statements of CAM Resources Berhad, which comprise the statements of financial position as at 31 December 2017 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 43 to 99.

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 December 2017, and of their financial performance and cash flows for the financial year then ended in accordance with the 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 theAuditors’Responsibilities for theAuditof the Financial Statements section of our report. We are independent of the Group and of the Company in accordance with the By-Laws (onProfessionalEthics,ConductandPractice) 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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.

Group

Goodwill (Notes 4(a) and 11 to the financial statements)

As at 31 December 2017, the Group has significant goodwill of RM6,078,933 arising from the acquisition of Central Palm Oil Mill Sdn. Bhd. in year 2012 and allocated to the palm oil mill cash-generating unit. The goodwill is tested for impairment annually by reviewing the value-in-use of the cash-generating unit. In determining the value-in-use of a cash-generating unit, management estimates the discounted cash flows using reasonable and supportable inputs about sales, gross margins and operating expenses based on past experience, current events and reasonably possible future developments. Cash flows that are projected based on those inputs or assumptions and the discount rate applied in the measurement of value-in-use may have a significant effect on the Group’s financial position and results if the actual cash flows are less than the expected.

Our response:Our audit procedures focus on reviewing the cash flow projections and understanding the Group’s forecasting procedures which included, among others:

■ understanding the valuation methodology adopted by the Group in accordance with the requirements of MFRS 136 Impairment of Assets;

■ comparing the actual results with previous budget to assess the performance of the business and reliability of the forecasting process;

■ comparing the Group’s assumptions to our assessments in relation to key assumptions to assess their reasonableness and achievability of the projections;

■ testing the mathematical accuracy of the impairment assessment; and■ performing a sensitivity analysis around the key assumptions that are expected to be most sensitive to the

recoverable amount.

INDEPENDENT AUDITORS’ REPORT

TO THE MEMBERS OF CAM RESOURCES BERHAD (Incorporated in Malaysia)

STATEMENT BY DIRECTORSPURSUANT TO SECTION 251(2) OF THE COMPANIES ACT 2016

STATUTORY DECLARATIONPURSUANT TO SECTION 251(1) OF THE COMPANIES ACT 2016





103102

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.

■ 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.

INDEPENDENT AUDITORS’ REPORT

(Cont’d)

Key Audit Matters (cont’d)

Group (cont’d)

Inventories (Notes 4(b) and 14 to the financial statements)

The Group has significant inventories as at 31 December 2017. The valuation of the Group’s inventories is stated at the lower of cost or net realisable value. The Group evaluates the adequacy of write-down of its obsolete or slow moving inventories based on the assessment of their estimated net selling price. Inventories are written down when events or changes in circumstances indicate that the carrying amounts may not be recoverable. The management specifically analyses sales trend and current economic trends when making a judgement to evaluate the adequacy of the write-down of obsolete or slow moving inventories. Where expectations differ from the original estimates, the differences will impact the carrying amount of inventories.

We focused on the existence and valuation of inventories due to the significance of the value of inventories as part of the total assets and the multiple locations in which the inventories are located.

Our response:Our audit procedures included, among others:

■ observing year end physical inventory count to examine the physical existence and condition of the inventories;■ reviewing the Group’s standard costing calculations on selected inventory items;■ reviewing subsequent sales and evaluating the Group’s assessment on estimated net realisable values on

selected inventory items; and■ evaluating whether the inventories have been written down to their net realisable values for inventory items with

net realisable values lower than their costs.

Company

We have determined that there are no key audit matters to be communicated in our report which arose from the audit of the financial statements of the Company.

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 financial statements of the Group and of the Company that give a true and fair view in accordance with the 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.

The directors of the Company are responsible for overseeing the Group’s financial reporting process.

INDEPENDENT AUDITORS’ REPORT(Cont’d)



105104

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 contents of this report.

BAKER TILLY MONTEIRO HENG KENNY YEOH KHI KHENNo. AF 0117 No. 03229/09/2018 JChartered Accountants Chartered Accountant

Kuala LumpurDate: 6 April 2018

Issued Share Capital : RM49,200,000 comprising 196,800,000 Ordinary Shares (including 4,896,956 treasury shares)Class of Shares : Ordinary SharesVoting Rights : One (1) vote for each ordinary share

Size of ShareholdingsNo. of

Shareholders % No. of Shares %

1 - 99 52 4.601 2,428 0.001100 – 1,000 73 6.460 32,242 0.0161,001 – 10,000 391 34.601 1,996,147 1.04010,001 – 100,000 503 44.513 14,237,450 7.419100,001 – 9,595,151 108 9.557 137,362,102 71.5789,595,152 and above 3 0.265 38,272,675 19.943

TOTAL 1,130 100.0 191,903,044# 100.0

# Adjustedcapitalafternettingtreasurysharesof4,896,956ordinaryshares.

SUBSTANTIAL SHAREHOLDERS

Direct Interest Indirect InterestName of Shareholders No of Shares % No of Shares %

Lee Chin Yen 30,794,741 16.05 22,854,563* 11.91Tan Hong Cheng 22,167,350 11.52 1,950,355** 1.00Sunleap Industries Sdn Bhd 13,593,350 7.08 - -Lee Poh Choo 4,411,093 2.28 13,593,350^ 7.08Lee Poh Hong 4,085,260 2.13 13,593,350^ 7.08Lee Poh Nai 764,860 0.40 13,593,350^ 7.08Lee Teng Kok - - 13,593,350^ 7.08Lee Teng Huii - - 13,593,350^ 7.08Hia Wan Kiga 20,895,374 10.85 - -Goh Yok Tek 16,200,000 8.42 - -

* Deemed interestedbyvirtueofSharesheldbyhisdaughters, LeePohChoo,LeePohHongandLeePohNai, andSunleap Industries Sdn Bhd

** DeemedInterestthroughinterestheldbyhissonanddaughter(s)^ DeemedinterestedbyvirtueofsharesheldbySunleapIndustriesSdnBhd

DIRECTORS’ SHAREHOLDINGS

Direct Interest Indirect InterestName of Shareholders No of Shares % No of Shares %

Lee Chin Yen 30,794,741 16.05 22,854,563* 11.91Tan Hong Cheng 22,167,350 11.52 1,950,355** 1.00Hia Wan Kiga 20,895,374 10.85 - -Lee Poh Choo 4,411,093 2.28 13,593,350^ 7.08Tan Kim Hong 557,700 0.29 - -Chai Moi Kim - - - -Chia Kay Joo - - - -Azizul Mohd Othman - - - -

* Deemed interestedbyvirtueofSharesheldbyhisdaughters, LeePohChoo,LeePohHongandLeePohNai, andSunleapIndustries Sdn Bhd

** DeemedInterestthroughinterestheldbyhissonanddaughter(s)^ DeemedinterestedbyvirtueofsharesheldbySunleapIndustriesSdnBhd

ANALYSIS OF SHAREHOLDINGSAS AT 23 MARCH 2018

INDEPENDENT AUDITORS’ REPORT(Cont’d)



107106

Title Location

Description Existing use

Tenure Age of

building

Land area Built-up

area sq.ft.

Year of acquisition/ revaluation*/completion#

Net book value RM

Central Aluminium Manufactory Sdn Bhd

GM 612 Lot 48 Mukim Hutan Melintang (3/4 share)

Vacant land Freehold 143,748 2000* 198,000

GM 624 Lot 3516 Mukim Hutan Melintang (1/10 share)

Vacant landQuarter

Freehold22 years

281,506 11,664

2000*1996#

55,000 30,590

GM 550 Lot 889 Mukim Changkat Jong

Vacant land Freehold 72,658 2000* 70,000

GM 544 Lot 51Mukim Hutan Melintang

Factory landFactory

Freehold19 years

155,455 70,152

2000*2000*

643,000 2,691,691

GM 846 Lot 49GM 875 Lot 2486Mukim Hutan Melintang

Factory landFactoryOffice

Freehold33 years14 years

278,784 141,165

6,400

2000*2000*2003#

1,075,000 4,620,305

351,984

Geran 3843 Lot 5298Mukim Hutan Melintang

Factory land Freehold 224,062 2000* 547,025

Geran 3844 Lot 5299 Mukim Hutan Melintang

Factory landFactory

Freehold7 years

324,250 34,880

2000*2011

786,393 1,252,734

Geran 3843 Lot 5298 and Geran 3844 Lot 5299Mukim Hutan Melintang

FactoryQuarter

Factory cum warehouse

14 years14 years12 years

64,000 10,384 48,000

2003#

2003#

2005#

1,911,751 92,081

995,130

Geran 27879 Lot 12208Mukim Durian Sebatang

Factory landFactory

Freehold7 years

281,261 44,496

20102010

3,014,517 4,054,916

PN 104453 Lot 17094 Mukim Durian Sebatang

Factory land Leasehold expiring

12/5/2087

320,549 2010 2,500,840

PN 104454 Lot 17095 Mukim Durian Sebatang

Vacant land Leasehold expiring

12/5/2087

870,800 2010 2,888,795

Quarter 6 years 3,000 2011 20,205

Geran HS(D) 6152 Lot 3945Mukim Tebrau, Johor Bahru

Vacant landWarehouse

Freehold2 years

34,05716,355

20082015

858,976 2,057,333

Geran HS(D) 6153 Lot 3946Mukim Tebrau, Johor Bahru

Vacant land Freehold 36,317 2008 916,378

Geran 38304 Lot 13209S Bandar Ipoh (S)

3 Storey Shophouse

Freehold 1,938 2010 501,855

32,134,499

LIST OF PROPERTIES

AS AT 31 DEC 2017

THIRTY LARGEST SHAREHOLDERS AS AT 23 March 2018

Name of Shareholders No of Shares %

1. Goh Yok Tek 16,000,000 8.3372. Affin Hwang Nominees (Asing) Sdn. Bhd.

ExemptanforPhillipSecurities(HongKong)Ltd(Clients’Account)

9,752,340 5.081

3. Maybank Nominees (Tempatan) Sdn Bhd(PledgedsecuritiesaccountforSunleapIndustriesSdnBhd)

9,343,350 4.868

4. HLIB Nominees (Tempatan) Sdn. Bhd.EONBankBerhadforLeeChinYen(M)

9,000,000 4.689

5. HLIB Nominees (Tempatan) Sdn. Bhd.EONBankBerhadforLeeChinYen(KLG)

8,448,000 4.402

6. HLIB Nominees (Tempatan) Sdn. Bhd.EONBankBerhadforHiaWanKiga

8,273,839 4.311

7 Maybank Nominees (Tempatan) Sdn. Bhd.PledgedSecuritiesAccountforTanHongCheng

7,370,000 3.840

8. Maybank Nominees (Tempatan) Sdn. Bhd.PledgedSecuritiesAccountforLeeChinYen

7,370,000 3.840

9. Lee Chin Yen 5,976,741 3.11410. HLIB Nominees (Tempatan) Sdn. Bhd.

PledgedSecuritiesAccountforTanHongCheng(M)5,870,500 3.059

11. RHB Nominees (Tempatan) Sdn. Bhd.PledgedSecuritiesAccountforTanHongCheng

5,291,022 2.757

12. Sunleap Industries Sdn Bhd 4,250,000 2.21413. Hia Wan Kiga 3,984,208 2.07614. Hia Wan Kiga 3,826,680 1.99415. Chan Eng Thye 3,710,090 1.93316. Hia Wan Kiga 3,350,344 1.74517. CIMSEC Nominees (Tempatan) Sdn. Bhd.

CIMBBankforTanHongCheng(MM1103)3,133,504 1.632

18. Chew Pay Chiam 2,768,850 1.44219. Maybank Nominees (Tempatan) Sdn. Bhd.

Pledged Securities Account for Lee Poh Choo2,715,493 1.415

20. Maybank Nominees (Tempatan) Sdn. Bhd.PledgedSecuritiesAccountforLeePohHong

2,700,000 1.406

21. Loo Hooi Chen 2,640,000 1.37522. Koo Fong Ling 2,627,460 1.36923. RHB Nominees (Tempatan) Sdn. Bhd.

PledgedSecuritiesAccountforChiaGuanSeng2,053,410 1.070

24. Chew Beng Huat 1,861,200 0.96925. Chew Beng Huat 1,720,510 0.89626. Lee Poh Choo 1,695,600 0.88327. Kong Meng Phin 1,693,000 0.88228. Kong Foon Hay 1,684,000 0.87729. Lee Weng Kean 1,658,800 0.86430. Alliancegroup Nominees (Tempatan) Sdn. Bhd.

PledgedSecuritiesAccountforKongKokChoy1,545,000 0.805

Total 142,313,941 74.159

ANALYSIS OF SHAREHOLDINGSAS AT 23 MARCH 2018(Cont’d)



108

Title Location

Description Existing use

Tenure Age of

building

Land area Built-up

area sq.ft.

Year of acquisition/ revaluation*/completion#

Net book value RM

Central Melamineware Sdn Bhd

LP 15142 PT 20041Mukim Durien Sebatang

Vacant land Freehold 1,308,020 2000* 1,441,000

Railway Wharf Jalan Maharaja Lela Teluk Intan

Factory building cum warehouse

21 years 16,000 1996# 3

Factory building cum warehouse

8 years 7,670 2008 4

Geran HS(D) 17662 PT19518 Mukim Durian Sebatang

Vacant land Leasehold expiring

12/9/2104

99,943 2010 2,113,771

G.M. No.304 Lot 1078 Mukim Changkat Jong

Vacant land Freehold 155,721 2013 1,001,000

Geran Mukim 2641 Lot 6991 Mukim Durian Sebatang


6,085,778

Central Palm Oil Mill Sdn Bhd

Geran 48789 Lot 1108 Mukim Jebong Larut & Matang Perak


Geran Mukim 1445 Lot 1109 Mukim Jebong, Larut & Matang, Perak




GM721 Lot 1125 Mukim Jebong, Larut & Matang, Perak




GM720 Lot 1129 Mukim Jebong, Larut & Matang, Perak

Factory landFactory

Freehold4 Years

178,055101,923

20122012

1,780,0005,035,359

17,587,146

CAM Plastic Industry Sdn Bhd

PT 134916, HSD57885, Mukim Hulu Kinta, Kinta, Perak

Factory land Leasehold expiring 5/3/2057

131,069 2014 819,412

Factory 2 years 56,855 2015 2,637,613

3,457,025

LIST OF PROPERTIESAS AT 31 DEC 2017(Cont’d)

PROxY FORM

*I / We NRIC No./Co. No. (Full Name In Block Letters)

of (Full address)

Tel No. being a member(s) of CAM RESOURCES BERHAD, hereby appoint

Name Address NRIC/Passport No.Proportion of

Shareholdings (%)

*And/or (delete as appropriate)

OR failing him/her, the Chairman of the meeting as my/our proxy/proxies, to vote for me/us on my/our behalf at the Seventeenth Annual General Meeting of CAM RESOURCES BERHAD to be held at Function Room , Level 2, Hotel Sri Petaling, 30, Jalan Radin Anum, Bandar Baru Sri Petaling, 57000 Kuala Lumpur, on Friday, 22 June 2018 at 11.00 a.m., or at any adjournment thereof and to vote as indicated below:

NO. RESOLUTIONS FOR AGAINST1. To approve the increase and payment of Directors’ fees2. To re-elect Mr. Hia Wan Kiga as Director of the Company3. To re-elect Ms. Tan Kim Hong as Director of the Company4. To re-elect Mr. Chai Moi Kim as Director of the Company5. To appoint Messrs. Baker Tilly Monteiro Heng as Auditors

SPECIAL BUSINESS6. Authority to Issue Shares7. Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions8. Proposed Renewal of Share Buy-Back Authority9. To approve Mr. Chai Moi Kim to remain as Independent Director of the Company10. To approve Mr. Chia Kay Joo to remain as Independent Director of the Company11. To approve Encik Azizul Bin Mohd Othman to remain as Independent Director of the Company

Note:PleasenotethattheshortdescriptionsgivenaboveoftheResolutionstobepasseddonotinanywaywhatsoeverreflecttheintentandpurposeoftheResolutions.Theshortdescriptionshavebeeninsertedforconvenienceonly.ShareholdersareencouragedtorefertotheNoticeofAnnualGeneralMeetingforthefullpurposeandintentoftheResolutionstobepassed.

Pleaseindicatewith(X)howyouwishyourvotetobecast.Ifnospecificdirectionastovotingisgiven,theproxywillvoteorabstainathis/her discretion.

Dated this day of 2018 *Signature(s)/Common Seal of Shareholder(s)*Delete where inapplicable Notes:-(1) AproxymaybutneednotbeamemberoftheCompanyandamembermayappointanypersontobehisproxywithoutlimitation.Aproxyappointedtoattendandvote

attheMeetingshallhavethesamerightsastheshareholdertospeakattheMeeting.(2) Amembermayappointmorethanone(1)proxytoattendandvoteattheAGM,providedthatthememberspecifiestheproportionofthemember’sshareholdingstobe

represented by each proxy. (3) WhereamemberisanauthorisednomineeasdefinedundertheSecuritiesIndustry(CentralDepositories)Act,1991,itmayappointatleastone(1)proxyinrespectof

each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.(4) WhereamemberoftheCompanyisanexemptauthorisednomineewhichholdsordinarysharesintheCompanyformultiplebeneficialownersinonesecuritiesaccount

(“omnibusaccount”),thereisnolimittothenumberofproxieswhichtheexemptauthorisednomineemayappointinrespectofeachomnibusaccountitholds.(5) Theinstrumentappointingaproxyshallbeinwritingunderthehandoftheappointororofhisattorneydulyauthorisedinwritingor,iftheappointorisacorporation,

eitherundersealorunderthehandofanofficerorattorneydulyauthorised.(6) Tobevalid,thedulycompletedproxyformmustbedepositedattheCompany’sRegistrar,TricorInvestor&IssuingHouseServicesSdnBhd,Unit32-01,level32,

TowerA,VerticalBusinessSuite,Avenue3,BangsarSouth,No.8,JalanKerinchi,59200KualaLumpurnotlessthanforty-eight(48)hoursbeforethetimeforholdingthe meeting or at any adjournment thereof.

(7) PursuanttoParagraph8.29A(1)oftheMainMarketListingRequirementsofBursaMalaysiaSecuritiesBerhad,alltheresolutionssetoutinthisNoticeshallbeputtovotebypoll.

(8) Forpurposeofdeterminingwhoshallbeentitledtoattendthismeeting,theCompanyshallberequestingBursaMalaysiaDepositorySdn.Bhd.tomakeavailabletotheCompany,aRecordofDepositors(“ROD”)asat15June2018andonlyaDepositorwhosenameappearsonsuchRODshallbeentitledtoattendthismeetingorappointproxytoattendand/orvoteinhis/herbehalf.

AFFIXSTAMP

1stFoldHere

ThenFoldHere

The Share RegistrarTricor Investor & Issuing House Services Sdn Bhd (118401-V)

Unit 32-01, Level 32, Tower A, Vertical Business Suite,Avenue 3, Bangsar SouthNo. 8, Jalan Kerinchi59200 Kuala Lumpur.

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