xin hwa holdings berhad

ANNUAL REPORT

2 0 2 1

XIN HWA HOLDINGS BERHADRegistration No. 201301002265 (1032102-P)


No. 2, Jalan Permatang 2, Kempas Baru,81200 Johor Bahru, Johor Darul Takzim

Tel : (607) 231 6999Fax : (607) 232 5843

www.xinhwa.com.my

XIN

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T 2021

2 Corporate Information

3 Corporate Structure

4 Financial Highlights

5 Business Segments

6 Profile of the Board of Directors’

10 Profile of the Key Senior Management

12 Chairman’s Statement

15 Management Discussion and Analysis

24 Corporate Sustainability Statement

35 Corporate Governance Overview Statement

45 Additional Compliance Information

46 Audit and Risk Management Committee Report

49 Nominating Committee Report

51 Statement on Risk Management & Internal Control

57 Directors’ Report

63 Statement by Directors

63 Statutory Declaration

64 Independent Auditors’ Report

68 Statements of Financial Position

70 Statements of Profit or Loss and Other Comprehensive Income

72 Statements of Changes in Equity

75 Statements of Cash Flows

78 Notes to the Financial Statements

145 List of Properties

146 Analysis of Shareholdings

150 Analysis of Warrant Holdings

153 Notice of the Eighth Annual General Meeting

156 Administrative Guide

Form of Proxy

TABLE OFCONTENTS

8thANNUAL GENERAL MEETINGOnline meeting platform provided by Tricor Investor & Issuing House Services Sdn. Bhd. at https://tiih.online

Thursday, 30 September 2021

11.00 a.m.

2

XIN HWA HOLDINGS BERHAD

CORPORATE OFFICE

SHARE REGISTRAR

AUDITORS

PRINCIPAL BANKERS

STOCK EXCHANGE LISTING

WEBSITE

CORPORATE INFORMATION

BOARD OF DIRECTORS

TAN SRI DR. SULEIMAN BIN MOHAMEDIndependent Non-Executive Chairman

NG YAM PINExecutive Director

DATUK JORY LEONG KAM WENGIndependent Non-Executive Director

KOK POH FUIExecutive Director

LIEW CHEK LEONGIndependent Non-Executive Director

AUDIT & RISK MANAGEMENT COMMITTEE

Chairman

Datuk Jory Leong Kam Weng

Member

Tan Sri Dr. Suleiman Bin Mohamed

Liew Chek Leong

NOMINATING COMMITTEE

Chairman


Member


REMUNERATION COMMITTEE

Chairman


Member

Liew Chek Leong


COMPANY SECRETARIES

Seow Fei San (MAICSA 7009732)

Mok Mee Kee (MAICSA 7029343)

REGISTERED OFFICE

802, 8th Floor, Block CKelana Square, 17 Jalan SS7/2647301 Petaling JayaSelangor Darul EhsanTel No. : (603) 7803 1126Fax No. : (603) 7806 1387

No. 2, Jalan Permatang 2Kempas Baru81200 Johor BahruJohorTel No. : (607) 232 5930Fax No. : (607) 232 5518

Tricor Investor & Issuing House Services Sdn. Bhd.Unit 32-01, Level 32Tower A, Vertical Business SuiteAvenue 3, Bangsar SouthNo. 8, Jalan Kerinchi59200 Kuala LumpurTel No. : (603) 2783 9299Fax No. : (603) 2783 9222

Crowe Malaysia PLT (AF 1018)E-2-3 Pusat Komersial Bayu TasekPersiaran Southkey 1Kota Southkey80150 Johor BahruJohor Darul TakzimTel No. : (607) 288 6627Fax No. : (607) 338 4627

Public Bank BerhadCIMB Islamic Bank BerhadUnited Overseas Bank (Malaysia) BerhadMalayan Banking Berhad

Main Market of Bursa Malaysia Securities BerhadStock Name : XINHWAStock Code : 5267Sector : Trading / Services

www.xinhwa.com.my

NG AIK CHUANManaging Director

3

ANNUAL REPORT 2021

CORPORATE STRUCTURE

XIN HWA HOLDINGS BERHADRegistration No. 201301002265

(1032102-P)

XIN HWA TRADING & TRANSPORT

SDN BHD

CANGGIH LOGISTIKSDN BHD

XIN HWA AUTO ENGINEERING

SDN BHD

100%

100%

100%

XH UNIVERSALFORWARDING

SDN BHD

XIN HWA INTEGRATED

LOGISTIC PTE LTD

PT XTRA HEAVY LOGISTIK

XH NUSANTARA ENERGYSDN BHD

YIWUGOU ECOMMERCE

SDN BHD

50.01%

30%

49%

51%

100%

PT XIN HWA SITU67%

4


Financial year/ period ended 1.4.2020to

31.3.2021(RM’000)

1.4.2019to

31.3.2020(RM’000)

1.4.2018to

31.3.2019(RM’000)

1.4.2017to

31.3.2018(RM’000)

1.1.2016to

31.3.2017(RM’000)

Income Statements

Revenue 97,756 117,270 116,228 109,019 128,672

Gross profit 35,247 43,429 37,959 37,398 48,163

Profit/(Loss) before tax 4,609 2,412 (483) 9,906 16,139

Profit after tax attributable to owner of the company

2,996 1,073 1,643 10,399 12,705

Balance Sheets

Total assets 369,056 342,082 297,663 247,515 232,049

Total liabilities 181,607 159,308 114,306 101,994 94,772

Share capital 109,458 108,000 108,000 108,000 108,000

Equity attributable to owners of the Company

184,841 180,287 182,142 145,360 136,760

Share Information

Earnings per share (sen) 1.37 0.50 0.76 4.81 5.88

Net assets per share (RM) 0.83 0.83 0.84 0.67 0.63

Financial Ratios

Return of equity (%) 1.63 0.60 0.90 7.15 9.29

Current ratio (times) 0.63 0.69 1.03 1.57 1.66

Gearing ratio (times) 0.74 0.66 0.45 0.55 0.54

FINANCIALHIGHLIGHTS

5

ANNUAL REPORT 2021

Financial year/ period ended

1.4.2020to

31.3.2021(RM’000)

1.4.2019to

31.3.2020(RM’000)

1.4.2018to

31.3.2019(RM’000)

1.4.2017to

31.3.2018(RM’000)

1.1.2016to

31.3.2017(RM’000)

RM’000 % RM’000 % RM’000 % RM’000 % RM’000 %

Revenue By Business segment

Land transport 86,984 88.98 105,385 89.86 105,258 90.56 99,929 91.66 121,231 94.22

Warehousing and distribution

10,638 10.88 11,674 9.95 10,646 9.16 8,411 7.72 7,208 5.60

Other 134 0.14 211 0.19 324 0.28 679 0.62 233 0.18

Total 97,756 100.00 117,270 100.00 116,228 100.00 109,019 100.00 128,672 100.00

Segmental profit/(loss) before interest and tax

Land transport 7,755 82.93 7,028 88.56 6,143 97.91 12,415 87.17 18,715 93.43

Warehousing and distribution

1,593 17.03 1,057 13.32 571 9.10 2,066 14.51 1,385 6.91

Other 4 0.04 (148) (1.88) (440) (7.01) (239) (1.68) (70) (0.34)

Total 9,352 100.00 7,937 100.00 6,274 100.00 14,242 100.00 20,030 100.00

BUSINESSSEGMENT

REVENUERM’000

SEGMENTAL PROFIT/(LOSS) BEFORE INTEREST AND TAXRM’000

Land transport

Land transport

Warehousing and Distribution

Warehousing and Distribution

Other

Other

86,984 (88.98%)

7,755 (82.93%)

10,638 (10.88%)

1,593 (17.03%)

134 (0.14%)

4 (0.04%)

105,385 (89.86%)

7,028 (88.56%)

11,674 (9.95%)

1,057 (13.32%)

211 (0.19%)

(148) (1.88%)

105,258 (90.56%)

6,143 (97.91%)

10,646 (9.16%)

571 (9.10%)

324 (0.28%)

(440) (7.01%)

99,929 (91.66%)

12,415 (87.17%)

8,411 (7.72%)

2,066 (14.51%)

679 (0.62%)

(239) (1.68%)

121,231 (94.22%)

18,715 (93.43%)

7,208 (5.60%)

1,385 (6.91%)

233 (0.18%)

(70) (0.34%)

6


Tan Sri Dr. Suleiman Bin Mohamed (“Tan Sri Dr. Suleiman”) is our Independent Non-Executive Chairman. He was appointed to the Board on 1 January 2015. He is the Chairman of both Nominating and Remuneration Committees and a member of the Audit and Risk Management Committee.

He graduated with a Bachelor’s Degree in Communication Science from Universitas Negeri Padjadjaran Bandung, Indonesia in 1972 and he obtained a Doctorandus Degree in Journalism from the same university in 1974. Subsequently in 1999, he obtained a Doctor of Philosophy in Malay Literature Studies from University Kebangsaan Malaysia.

He started his career in 1974 when he joined Utusan Melayu as a journalist. In 1977, he joined Dewan Bahasa dan Pustaka as a publicity officer. He then joined Ministry of Culture, Youth and Sports, Malaysia as a press secretary where he was involved in handling requests from newspapers reporters, drafting press releases and speeches for ministers and organising events from 1978 to 1980. In 1980, he joined

Mr. Ng Aik Chuan (“Mr. AC Ng”) is our co-founder and Managing Director. He was appointed to the Board on 18 January 2013.

He obtained the Malaysian Higher School Certificate in 1988 and began his career in Tiong Nam Trading & Transport (M) Sdn. Bhd., where he joined as a warehouse supervisor and left the company as a forwarding executive in 1995. In 1996, he joined Sinwah Trading & Transport Agency, a family-owned partnership which was then led by his father, Eng Peng Lam @ Ng Peng Lam, where Mr. AC Ng was involved in the management and business functions of the company.

In 2002, the entire business operations of Sinwah Trading & Transport Agency were transferred to Xin Hwa Trading & Transport Sdn. Bhd. which was incorporated in 1997

TAN SRI DR. SULEIMAN BIN MOHAMEDIndependent Non-Executive Chairman

NG AIK CHUANManaging Director

the Ministry of Information, Malaysia as a senior press liaison officer where he acted as an adviser and spokesperson for the Minister of Ministry of Information, Malaysia.

Tan Sri Dr. Suleiman was an elected Member of the Parliament of Malaysia for four (4) consecutive terms between 1986 and 2004. He also held the posts of Deputy Minister of Prime Minister’s Department, Malaysia from 1987 to 1995, Deputy Minister of Ministry of Information, Malaysia from 1995 to 1999 and Deputy Minister of Ministry of Health, Malaysia from 1999 to 2004.

Tan Sri Dr. Suleiman was the former Chairman of UNITAR International University, a position he held from 2012 to 2016.

Tan Sri is also the founder and Chairman of Koperasi Khazanah Suria (KL) Berhad since 2009, a Company that provides business consulting and promotes financial literacy, education and planning for its members.

Tan Sri Dr. Suleiman attended all six (6) Board Meetings held in the financial year ended 31 March 2021.

PROFILE OF THE BOARD OF DIRECTORS’

by his father, Eng Peng Lam @ Ng Peng Lam together with Mr. AC Ng and his brother, Ng Yam Pin. Since then, Mr. AC Ng has been actively involved in the management and day-to-day business operations of the Group. He has extensive experience and in-depth knowledge of the logistics industry in Malaysia and this has enabled our Group to broaden our range of logistics services towards becoming an integrated logistics service provider.

He is the son of Eng Peng Lam @ Ng Peng Lam, a substantial shareholder of the Company and the brother of Ng Yam Pin, a substantial shareholder as well as the Executive Director of the Company.

Mr. AC Ng attended all six (6) Board Meetings held in the financial year ended 31 March 2021.

Nationality

73

AgeGender

Nationality

53

AgeGender

7

ANNUAL REPORT 2021

Mr. Ng Yam Pin (“Mr YP Ng”) is our co-founder and Executive Director. He was appointed to the Board on 18 January 2013.

He obtained his Malaysian Skills Certificate as Automotive Panel Supervisor (Level 3), Commercial Vehicle Technician (Level 3), Motor Vehicle Technician (Level 3), Automotive Spray Painting Technician (Level 3) and Tyre Service Supervisor (Level 3) in 2002. In the same year, he also received certification for achieving supervisory level 3 based on the National Occupational Skills Standards from the National Vocational Training Council.

He worked as a contract driver for several transportation companies from 1988 to 1991. In 1992, he joined Sinwah Trading & Transport Agency, a family-owned partnership which was then led by his father, Eng Peng Lam

Mr. Kok Poh Fui (“Mr. PF Kok”) is our Executive Director. He was appointed to the Board on 2 January 2020. He was previously the Chief Financial Officer of our Group.

He is a member of the Association of Chartered Certified Accountants (“ACCA”) since 1998 and a member of the Malaysian Institute of Accountants since 1999. He was admitted as a Fellow of ACCA in 2003.

Upon obtaining his London Chamber of Commerce and Industry (“LCCI”) Diploma in Accounting in 1991, he began his career as a Lecturer for LCCI International Qualifications at Cambridge College in Johor Bahru, Johor Darul Takzim (currently known as I-Systems College Johor Bahru) in the same year. He then joined SQ Associates as a Senior Audit

@ Ng Peng Lam, where Mr. YP Ng was involved in the day-to-day operations of the company and was primarily responsible for overseeing the delivery process and the charting of routes for drivers. In 2002, the entire business operations of Sinwah Trading & Transport Agency were transferred to Xin Hwa Trading & Transport Sdn. Bhd. which was incorporated in 1997 by his father, Eng Peng Lam @ Ng Peng Lam together with Mr. YP Ng and his brother, Ng Aik Chuan.

He is the son of Eng Peng Lam @ Ng Peng Lam, a substantial shareholder of the Company and the brother of Ng Aik Chuan, a substantial shareholder as well as the Managing Director of the Company.

Mr. YP Ng attended all six (6) Board Meetings held in the financial year ended 31 March 2021.

Assistant in 1995 and left SQ Associates in 1997 to join Singamip Enterprise Pte Ltd in Singapore as an Accountant. He then joined Chye Hup Heng Sdn. Bhd. as the Group Financial Controller in 1998. In 2010, he joined SMC Consulting Sdn. Bhd., a company that was established by himself and three (3) other parties in 2000 as a Business Consultant, advising on accounting, tax and internal control matters. He left SMC Consulting Sdn. Bhd. and joined our Group as Chief Financial Officer in 2013 and was subsequently promoted as Executive Director of our Group.

Mr. PF Kok attended six (6) Board Meeting held in the financial year ended 31 March 2021.

KOK POH FUIExecutive Director

Nationality

51

AgeGender

NG YAM PINExecutive Director

Nationality

52

AgeGender

PROFILE OF THE BOARD OF DIRECTORS’(CONT’D)

8


Datuk Jory Leong Kam Weng (“Datuk Jory”) is our Independent Non-Executive Director. He was appointed to our Board on 1 December 2013. He is the Chairman of Audit and Risk Management Committee and a member of both Nominating and Remuneration Committees.

He graduated with a Bachelor of Economics Degree and a Bachelor of Laws Degree from Monash University, Australia. He is a Fellow of CPA Australia and a Chartered Accountant of the Malaysian Institute of Accountants. He is also a certified mediator on the panel of the Malaysian Mediation Centre.

He was called to the Malaysian Bar in 1989. In February 1992, he joined TA Enterprise Berhad as the Group Legal Manager until July 1995. He was the Vice President of International Division of TA Enterprise Berhad from November 1993 to October 1995.

DATUK JORY LEONG KAM WENGIndependent Non-Executive Director

In between November 1995 to February 1997, he held the position of Executive Director of Credit Leasing Corporation Sdn. Bhd. He also held the post of Executive Director of TA Bank of Philippines, Inc from March 1997 to June 1998. From June 1998 to July 1999, he was the Chief Executive Officer of TA Securities Berhad. Since July 1999, he has been a Partner of Messrs Iza Ng, Yeoh & Kit as a practising Advocate and Solicitor.

He is an Independent Non-Executive Director of Pecca Group Berhad, listed on Bursa Malaysia Securities Berhad, and an Independent Non-Executive Director of Tokio Marine Life Insurance Berhad. He also sits on the Board of several public limited companies namely, Asian Outreach (M) Berhad and Pusat Penyayang KSKA and several private limited companies.

Datuk Jory attended all six (6) Board Meetings held in the financial year ended 31 March 2021.

Nationality

56

AgeGender


9

ANNUAL REPORT 2021

Mr. Liew Chek Leong (“Mr. Liew”) is our Independent Non-Executive Director. He was appointed to our Board on 1 December 2013. He is a member of both Audit and Risk Management and Remuneration Committees.

He has been a member of the Association of Chartered Certified Accountants (“ACCA”) since 2001 and was admitted as a fellow member of ACCA in 2006. He was admitted as a member of the Malaysian Institute of Accountants (“MIA”) in 2002.

He started his career in 1996 when he joined Tan Huai Leong & Co as an Audit Assistant. In 1997, he was attached to the southern branch of the MIA as a Trainee Accountant. Subsequently in 1999, he joined Beltontech Sdn. Bhd. as an Accounts and Administrative Manager where he was in charge of the accounts, finance, taxation, human resource and administrative matters.

From 2004 to 2005, he was attached to Sestec Berhad as a Financial Controller and was actively involved in the company’s corporate exercises, handling matters relating to corporate finance, accounts and taxation. He left Sestec Berhad to join Solid Corporation Sdn. Bhd. in 2005 as its Group Accountant.

LIEW CHEK LEONGIndependent Non-Executive Director

Subsequently, he joined Equator Biotech Berhad as an Accountant in 2006 before joining Tomypak Berhad, a wholly-owned subsidiary of Tomypak Holdings Berhad, a company listed on the Main Market as the Finance Manager in 2007. His experiences include overseeing the overall financial functions of the companies and advising on corporate matters. Mr. Liew promoted as the Finance Director of Tomypak Flexible Packaging Sdn. Bhd. (previously known as Tomypak Berhad) in year 2009 and was responsible for the accounting and finance functions as well as assisting on matters relating to information technology, human resource and administration of the company. He was also a member of the Risk Management Committee, ESOS committee, and Investment and Development Committee of Tomypak Holdings Berhad. Mr. Liew left Tomypak Flexible Packaging Sdn. Bhd. in February 2018.

Currently, Mr. Liew is the Operation Director of Hi-Q Global Sdn Bhd, one of the subsidiaries of Neo Group Ltd, a company listed on the Singapore Stock Exchange.

Mr. Liew attended all six (6) Board Meetings held in the financial year ended 31 March 2021.


Notes:

• Saveasdisclosedabove,noneoftheDirectorshaveanyfamilyrelationshipwithanyDirectorand/orsubstantialshareholderoftheCompany.

• Saveasdisclosedabove,noneoftheDirectorsholdanydirectorshipsinanyotherpubliccompaniesandlistedissuers.

• NoneoftheDirectorshaveanyconflictofinterestwiththeCompany.

• MrACNgandMrYPNghadbeenpubliclyreprimandedandfinedRM100,000andRM50,000respectivelybyBursaMalaysiaSecuritiesBerhadfor the breach of certain provisions of the Main Market Listing Requirements.

• SaveforMrACNgandMrYPNg,noneoftheotherdirectorshasanyconvictionforoffencesotherthantrafficoffenceswithinthepast5yearsand none of them has any public sanction or penalty imposed by the relevant regulatory bodies during the financial year.

Nationality

49

AgeGender

10


Mr. Tan Teck Hock is appointed as our Chief Financial Officer for the Group on 2 January 2020. He graduated with a Bachelor of Arts (Honours) in Accounting and Finance from UCSI University, Kuala Lumpur. He is also a member of the Malaysian Institute of Accountants and Association of Chartered Certified Accountants (“ACCA”), United Kingdom.

He started his career as an audit trainee in a local accounting firm in Kuching, Sarawak with his work in assisting audit seniors for various Small and Medium Enterprises (SMEs) statutory audits in June 2010. He left the firm after his training by end of December 2010.

In April 2011, he joined a major international public audit firm in Malaysia, situated in Johor Bahru as an Audit Assistant and was promoted to Assistant Manager for the Audit Division in October 2016. In between, he left the firm temporarily in October 2015 to further his studies and re-joined in July 2016. During his tenure, he was in charge of statutory audits of SMEs and public listed entities from various industries such as manufacturing, trading, property development, services, engineering and etc.

Mr. Ting Pik Hou is our General Manager. He graduated with a Bachelor of Arts (Honours) in Finance from the University of Hertfordshire, United Kingdom in 2000.

He has accumulated approximately nineteen (19) years of experience in the logistics industry. He began his career in 2001 as an Operations Executive with Tiong Nam Logistics Solution Sdn. Bhd. In 2005, he was then promoted to Operations Deputy Manager. During his tenure with the company, he was involved in handling logistics operations of the branch offices in Johor Bahru, Johor Darul Takzim and

TAN TECK HOCKChief Financial Officer

TING PIK HOUGeneral Manager

His other job scopes included perform due diligence audits, corporate exercise cases (Eg: Initial Public Offerings, Rights Issues) and etc.

In August 2017, Mr. Tan left the firm and joined Solid Automotive Berhad and Group of Companies (“Solid”), listed on the Main Market of Bursa Malaysia Securities Berhad, as their Financial Controller. His main responsibility was to oversee the Accounts and Finance Department, while liaising with bankers, auditors, corporate secretaries and etc. His other job scopes included assisting the Group Chief Financial Officer in corporate exercises (Share Split/Bonus Issue, Mergers and Acquisitions and Employee Share Options Scheme), preparation of board papers, quarterly announcement and financial statements, treasury, financing, taxation and accounting system implementation matters. He left Solid in October 2019 to join our Group subsequently as Chief Financial Officer.

Currently, he oversees the Accounts and Finance Department and is in charge of the financing, taxation, accounting and reporting matters of the Group.

PROFILE OF THE KEY SENIOR MANAGEMENT

Singapore. He left Tiong Nam Logistics Solution Sdn. Bhd. to join our Group in 2006 as the Operations Manager. He was subsequently promoted as the General Manager of our Group in 2010.

Currently, he is responsible for overseeing our Group’s business operations which include monitoring, evaluating and improving the business processes of our Group. In addition, he is also the registered person for matters in relation to the compliance of the ISO 9001:2015 Quality Management System and ISO 45001:2018 Occupational Health and Safety Management System.

Nationality

33

AgeGender

Nationality

42

AgeGender

11

ANNUAL REPORT 2021

Mr. Mohd Yusoff Bin Rahmat is our Operations Manager. He has accumulated more than twenty (20) years of experience in the logistics industry.

After completing his secondary education in 1975, he has spent approximately ten (10) years working in the agriculture sector, including establishing a sole proprietorship involved in the trading of agricultural products. He joined Tiong Nam Trading & Transport (M) Sdn. Bhd. as a Goods Vehicle Driver in 1988 and was subsequently promoted to Administration Assistant in 1991. He left the company in 1995 to oversee

his family business. In 2001, he joined Sinwah Trading & Transport Agency as a Goods Vehicle Driver and was subsequently transferred to Xin Hwa Trading & Transport Sdn. Bhd. in 2002. He was promoted as Branch Manager in 2005. In 2008, he was promoted as the Operations Manager of our Group.

He is currently responsible for the overall management of our land transport operations which, amongst others, include planning of vehicles schedule and arrangement of drivers.

PROFILE OF THE KEY SENIOR MANAGEMENT(CONT’D)

MOHD YUSOFF BIN RAHMATOperations Manager

Nationality

61

AgeGender

Notes:

• NoneofthekeyseniormanagementhasanyfamilyrelationshipwithanyDirectorand/orsubstantialshareholderoftheCompany.

• Noneofthekeyseniormanagementholdsanydirectorshipsinanyotherpubliccompaniesandlistedissuers.

• NoneofthekeyseniormanagementhasanyconflictofinterestwiththeCompany.

• Noneofthekeyseniormanagementhasanyconvictionforoffencesotherthantrafficoffenceswithinthepast5yearsandnoneofthemhasanypublic sanction or penalty imposed by the relevant regulatory bodies during the financial year.

12


Dear Valued Shareholders,

On behalf of the Board of Directors of Xin Hwa Holdings Berhad (“Xin

Hwa” or the “Group”), it is an honour to present to you the Annual Report

and Audited Financial Statements of Xin Hwa for the financial year ended

31 March 2021 (“FY2021”).

“

“ECONOMIC LANDSCAPE

The business operating landscape for FY2021 was indeed challenging for the Group, owing to the economic upheaval and health crisis attributable to the outbreak of Coronavirus disease 2019 (“Covid-19”) pandemic globally, which resulted in the imposition of lockdown or movement control restrictions in various countries, including Malaysia. While these measures were critical in bringing the situation under control, it had a detrimental impact on the global economy.

This further exacerbated global uncertainties in addition to the ongoing concerns that included the United States-China trade war and prolonged Brexit-related issues, amongst others. The volatilities in the commodity and financial markets worldwide were heightened, placing further pressure on the existing strenuous business operating conditions. Businesses worldwide suffered further with many experiencing dire consequences. According to the International Monetary Fund (“IMF”), the global economy contracted 3.5% in 2020 as compared to a growth of 2.9% in 2019.

Back home, Malaysia grappled with the pandemic and was not spared from the economic turbulence. Various versions of movement control orders (“MCOs”) were implemented as necessary measures to halt the spread of the virus. Consequently, Malaysia’s gross domestic product (“GDP”) contracted 5.6% in 2020 as compared to a growth of 4.3% in 2019 according to Bank Negara Malaysia (“BNM”). This was the sharpest contraction since the 1997 Asian financial crisis.

BUSINESS & FINANCIAL OVERVIEW

Like many other businesses, we were affected by the Covid-19 pandemic and the resultant various versions of the MCOs. We had to dig deep during this testing time and notwithstanding the odds, we prevailed by leveraging on our in-depth experience, capable team and proven track record as an integrated logistics service provider.

Despite the imposition of movement restriction orders, we managed to maintain certain level of our operations during this period as logistics services are classified under essential services. The Group has been fully complying with the stringent Standard Operating Procedures (“SOPs”) enforced by the authorities.

CHAIRMAN’SSTATEMENT

13

ANNUAL REPORT 2021

CHAIRMAN’S STATEMENT(CONT’D)

We continued to deliver cargo transportation services to our customers albeit at a slower pace due to the pandemic. The Group has been carrying out the transportation of precast structures contracts secured previously. Additionally, Xin Hwa was appointed as a panel subcontractor of logistics services for Malaysia Marine and Heavy Engineering Sdn. Bhd. for a period 3 years.

Meanwhile, the Group continued to operate in 3 majors ports during FY2021 in Peninsular Malaysia – Port Tanjung Pelepas, Johor; Penang Port, Pulau Pinang; and Port Klang, Selangor, for our container haulage services, which complement our cargo transportation business.

Our warehousing and distribution business remained robust despite the pandemic. We have a total warehousing space of 654,000 square feet (“sf.”) in Johor with an average utilization rate of more than 90% currently.

For the financial year under review, the Group recorded a set of commendable results despite facing a taxing environment. Xin Hwa registered a revenue of RM97.8 million, which was primarily contributed by our land transport segment followed by our warehousing and distribution business. The Group’s FY2021 profit after tax attributable to owners of the Company (“PATOC” or “net profit”) jumped 179.3% year-on-year to RM3.0 million from RM1.1 million a year ago.

PROSPECTS FOR FY2022

As we move into FY2022, we anticipate the operating landscape to remain challenging, underpinned by the prolonged Covid-19 pandemic. Nevertheless, the Group is confident to manoeuvre through these challenges and look forward to brighter years ahead.

We expect the global and local economic environment to gradually improve following the mass Covid-19 vaccine deployment worldwide, including Malaysia. Consumer sentiments should improve as well in tandem with the vaccination exercise. The global economy is projected to expand by 5.5% in 2021 by IMF. On the other hand, World Bank has forecasted Malaysia’s GDP to grow by 4.5% in the current year, which is backed by the implementation of various government measures and economic stimulus packages. Zooming into the transportation and storage sector in Malaysia, the Ministry of Finance (“MOF”) predicts the sector to rebound healthily by 7.5% in 2021 from a forecasted contraction of 11.9% in 2020.

14


PROSPECTS FOR FY2022 (CONT'D)

Xin Hwa’s focus remains on the execution and delivery of our existing projects as well as our future plans. Meanwhile, the construction of our E-Fulfilment Centre in Shah Alam, Selangor is estimated to be completed before end of September 2021. It comprises a 7-storey office and a 3-storey warehouse, which would add approximately 300,000 sf. of warehousing space to the Group, boosting our total warehousing space by around 45.8% to 954,000 sf.

Meanwhile, Xin Hwa had in June 2021, obtained approval from our valued shareholders to dispose 2 pieces of adjoining leasehold industrial land together with the warehouses erected thereon in Pasir Gudang Industrial Area, Johor to Axis Real Estate Investment Trust (“Axis-REIT”) for a total consideration of RM75.0 million and simultaneously entered into a leaseback agreement with Axis-REIT for the abovementioned properties.

ThiswillenableustounlockthevalueofourPasirGudangwarehouseswiththeeffectofenhancingourfinancialflexibility,strengthening our balance sheet and more importantly, providing us with a war chest for future investments. These may include diversification, horizontal and vertical integration via mergers and acquisitions. Given the current market condition, we are seeing value emerging and are exploring interesting opportunities that we believe could add value to the Group.

On balance, we are positive on the outlook of the Group premised upon the gradual recovery of the economy and our future plans as we continue to work tirelessly to deliver exceptional value to our shareholders.

APPRECIATION

On behalf of the Board, I would like to extend my deepest appreciation to our management and staff at Xin Hwa for their unrelenting efforts and commitment, especially during these challenging times.

In addition, my profound gratitude goes to all our distinguished customers, shareholders, business partners, associates, suppliers and the respective regulatory authorities for their continuous support.

I would like to thank Datin Rahmah Binti Mahmood who has relinquished her role as our Independent Non-Executive Director in October 2020, for her years of service and contribution to the Group.

Last but not least, my sincere acknowledgement goes to my fellow Board members for their unwavering support and precious advice. I believe that the stewardship of our Board will take Xin Hwa to greater heights in the coming years.

Tan Sri Dr. Suleiman bin MohamedIndependent Non-Executive Chairman

CHAIRMAN’S STATEMENT(CONT’D)

15

ANNUAL REPORT 2021

MANAGEMENT DISCUSSIONAND ANALYSIS

This put further damper on the existing challenging operating landscape stemming from the ongoing global and local macroeconomic uncertainties. Inevitably, this affected our operations and performance. Nevertheless, we perceived this as temporary headwinds and we are optimistic that we shall emerge stronger than before when the dust settles. Against the backdrop of a taxing environment, Xin Hwa posted

BUSINESS & OPERATIONAL REVIEW

Established in 1965 and having been in operations for more than five decades, Xin Hwa has since morphed into an integrated logistics services provider, offering a wide array of logistics solutions to fulfil our clients’ requirements. The Group was listed on the Main Market of Bursa Malaysia Securities Berhad (“Bursa Malaysia”) in June 2015. Xin Hwa’s business activities can be classified into the following key segments:

Xin Hwa Holdings BerhadRegistration No. 201301002265 (1032102-P)

Warehouse & Distribution Services

Land TransportServices

CargoTransportation

ContainerHaulage

Manufacturing &Fabrication of

Trailers

Others

Dear Valued Shareholders,

The financial year under review was arduous and demanding for us at Xin Hwa (“Xin Hwa”

or the “Group”) as the world grappled with the unprecedented challenges and chaos brought

upon by the Coronavirus disease 2019 (“Covid-19”) pandemic. a commendable set of results

for the financial year ended 31 March 2021 (“FY2021”). The Group recorded revenue and profit

attributable to the owners of the Company (“net profit”) of RM97.8 million and RM3.0 million

respectively.

16


MANAGEMENT DISCUSSION AND ANALYSIS(CONT’D)

FY2017

1,422 units

FY2018

1,517 units

FY2019

1,570 units

FY2020

1,652 units

FY2021

1,738 units

I. Land Transport Services

Xin Hwa’s land transport divisions include the provision of cargo transportation and container haulage services.

Cargo Transportation

The Group provides one-stop cargo transportation services across the Peninsular Malaysia as well as cross-border between Peninsular Malaysia and Singapore. In addition, we have established our presence in Indonesia since FY2019.XinHwahasbeencontinuouslyexpandingitsfleeteveryyeartocapturethegrowingdemand.Wehaveincreasedourfleetsizeto1,738vehiclesinMay2021from1,652ayearago,whichconsistsofprimemovers,trailersand trucks.

Operationally, it was a tough year for our cargo transportation division. As a result of the Covid-19 pandemic, the Group had to adhere to the various versions of the movement control orders at different operating capacity while in full compliance of the stringent standard operating procedures (“SOPs”) imposed. Despite this, we were pleased that the Group continued to operate during these periods as well as the latest full movement control order (“FMCO”) implemented since June 2021 though at a reduced capacity.

During the year, Xin Hwa was kept busy fulfilling the sizeable transportation contracts secured in the previous years. These projects involved the transportation of over-dimensional and oversized heavy cargo, also known as project cargo.

17

ANNUAL REPORT 2021




Mass Rapid Transit Line II (“MRT Line 2”) Project

The Group secured several land transportation contracts previously with an aggregate contract value of RM13.7 million for the MRT Line 2 project, which serves the Sungai Buloh – Serdang – Putrajaya route. Xin Hwa was tasked with the transportation of precast segmental box girders and crossbeams for the construction and completion of viaduct guideways and other associated works at various project sites of the rail line. Notwithstanding some delays due to the movement restrictions orders, project delivery has been charting good progress with expected completion slated to be in July 2021.



Other projects

Xin Hwa had also been appointed as a panel subcontractor of logistics services for Malaysia Marine and Heavy Engineering Sdn. Bhd., a wholly-owned subsidiary of Malaysia Marine Heavy Engineering Holdings Berhad, in March 2020 for 3 years. The contract value would depend on the agreed unit rates and work orders during the period. The project is currently on-going.

Container Haulage

Xin Hwa’s container haulage division complements our cargo transportation services. We offer both internal and external haulage services. Internal haulage services involve transfer of containers within ports while for external haulage, we provide inter-state haulage transportation services across Peninsular Malaysia.

The Group continues to operate at three major ports in Peninsular Malaysia - Port of Tanjung Pelepas (“PTP”), Johor, Penang Port, Pulau Pinang, and Port Klang (including Westport), Selangor as at FY2021.

Singapore Transportation Project

The transportation of precast element for construction of rail and bus depot and reception tunnels in Singapore with a contract value of SGD6.9 million or approximately RM21.5 million, that commenced in November 2017. However, the project was slightly deferred due to the border closure between Malaysia and Singapore. On a brighter note, deliveries had gradually resumed since end September 2020 and is scheduled to be completed in December2021.

Light Rapid Transit Line 3 (“LRT 3”) Project

The Group had in December 2017 secured a transportation of precast structures and other related products for the construction of LRT 3 contract with a total value RM16.8 million. We have been working on this project over the past few years and expect to complete it by January 2022.

18


• Preparation and submission of customersclearance documents;

• Arrangementoftransportationforthemovementof cargo;

• Port coordination to ensure smooth and timelydelivery; and

• Advisory services onmatters relating to freightforwarding.

Our systems are linked to Dagang Net, the national electronic trade facilitation system. With this, we are able to submit applications electronically, thus improving processing time of requests. Furthermore, this also allows us to serve our customers more efficiently with real-time information such as customs exchange rates, shipping schedules and customs declaration.

Manufacturing and Fabrication of Trailers

One of Xin Hwa’s competitive advantages is having our in-house manufacturing, fabrication and maintenance centre. The Group has a team of highly-skilled talents who are able to fabricate trailers according to our customers’ logistics requirements. We are proud that majority of our trailers have been fabricated in-house.

II. Warehousing and Distribution Services

Xin Hwa offers full-service solutions that combine our land transport operations with our warehousing and distribution services. We aim to enable our customers to attain operational and cost efficiency in their supply chain. The Group’s warehousing and distribution services include:

• Generalstorage; • Cargoconsolidationfordistributionpurpose; • Inventorymanagementservices;and • Value-addedservicessuchaspicking,packing,

labelling and palletizing.

We provide both bonded and non-bonded warehousing options to suit our customers’ needs. Bonded warehouse is a secured storage facility for goods pending clearance of custom-related taxes, while non-bonded warehouse stores goods after settlement of taxes.

Currently, the Group operates 3 warehouses in Johor with a total warehousing space of 654,000 square feet (“sf.”). Despite the pandemic, the average utilization rate remained stable at around 90%, which provides us with a stable revenue stream.

III. Other Logistics-Related Services

Freight Forwarding and Customs Brokerage

As part of our integrated logistics solutions, we provide complementary value-added logistics related services such as freight forwarding and customs brokerage.

Xin Hwa is licensed under the Customs Act 1967 to provide customs brokerage activities in Malaysia, which involve:

Besides, this enables us to undertake maintenance services in-house as well. The Group is able to achieve higher efficiency from faster servicing turnaround time and minimizes downtime without having to rely on external maintenance service providers. This is crucial for us as any downtime would affect our efficiency and profitability. Our in-house manufacturing, fabrication, and maintenance centre is located in Senai, Johor.


19

ANNUAL REPORT 2021

CORPORATE DEVELOPMENTS

The Group, had in June 2021, sought approval from our shareholders via an Extraordinary General Meeting (“EGM”) on the disposal of 2 pieces of adjoining leasehold industrial land measuring an aggregate of 6.56 hectares (“ha.”) together with all the buildings erected thereon (collectively, the “Properties”) in Pasir Gudang Industrial Area, Johor Bahru to RHB Trustees Berhad acting as the trustee for Axis Real Estate Investment Trust (“Axis-REIT”), for a total consideration of RM75.0 million (“Disposal”) along with the leaseback arrangement of the Properties to Xin Hwa. The leaseback of the Properties by Axis-REIT to Xin Hwa is fixed for a period of 10 years with an option to renew for a further 5 years, commencing immediately following the completion of the Disposal.

The exercise enabled us to unlock the value of our Pasir Gudang, Johor warehouses at an opportune time. The proceeds enhancedourfinancialflexibility,strengthenedourbalancesheetandmoreimportantly,provideduswithawarchestforfuture investments. We have allocated RM35.0 million of the RM75.0 million proceeds for any future viable investments.

In addition, Xin Hwa had also sought approval from our shareholders via an EGM in June 2021 to implement an employees’ share option scheme (“ESOS”) of up to 15% of the total number of issued shares of the Group (excluding treasury shares, if any) at any point in time over a 5-year period. The ESOS involves granting options to eligible Directors and employees of the Group who meet the criteria of eligibility to subscribe for Xin Hwa shares.

The main objectives of the ESOS are to recognise and reward our employees’ contributions and services to the Group as well as to retain and motivate our workforce to create sustainable growth and profitability. The scheme enables them to participate in the Group’s profitability and eventually realise any potential capital gains arising from the potential appreciation in Xin Hwa’s shares, upon exercising options granted under the ESOS.

On the other hand, we also have an ongoing private placement exercise, which was approved by Bursa Malaysia in April 2021. The objective of this exercise is primarily to raise funds for future viable investment and working capital.

Earlier in January 2021, the Group had also completed the issuance of free warrants on the basis of 1 warrant for every 2 existing Xin Hwa shares (“Free Warrants Issue”). This was an expression of our appreciation towards our shareholders’ support and patience all this while. The Free Warrants Issue, which was issued at no cost to our shareholders, provided them the option to further increase their equity participation in the Group by converting the warrants into Xin Hwa shares over the 3-year tenure. From Xin Hwa’s perspective, this would potentially provide additional funds to the Group for working capital needs as and when the warrants are exercised, without the need to incur interest costs as in the case of bank borrowings.

FINANCIAL REVIEW

Revenue

For the financial year under review, the Group recorded a revenue of RM97.8 million. This was lower than the RM117.3 million achieved in FY2020, primarily attributed to the impact arising from the Covid-19 pandemic and the resultant movement control orders.


20


Revenue Breakdown by Business Segment

FY2020Revenue

RM117.3 mln

Warehousing &Distribution,RM11.7 mln,

10%

Other Services,RM0.2 mln, 0%

Other Services,RM0.1 mln, 0%

Warehousing &Distribution,RM10.6 mln,

11%

Land Transport, RM105.4 mln,

90%

Land Transport, RM87.0 mln,

89%

FY2021Revenue

RM97.8 mln

Singapore,RM11.5 mln,

10%

Singapore,RM11.7 mln,

12%

Malaysia, RM104.9 mln,

89%

Malaysia, RM83.7 mln,

86%

FY2020Revenue

RM117.3 mln

FY2021Revenue

RM97.8 mln

Indonesia,RM2.3 mln, 2%

Indonesia,RM0.9 mln, 1%

In terms of revenue breakdown by business segment, the composition and contribution were relatively similar for both FY2021 and FY2020. Land transport operations remained the Group’s largest revenue contributor in FY2021, accounting RM87.0 million or 89% to total turnover, while warehousing and distribution business contributed RM10.6 million or 11%, with the remainder from other services.

Revenue Breakdown by Geographical Segment

Malaysia continued to be Xin Hwa’s core geographical market with a revenue of RM83.7 million, commanding a share of 86% of the Group’s total sales in FY2021. Meanwhile, contribution from our customers in Singapore stood at RM11.7 million, or 12% of our turnover in FY2021. We are pleased to share that the Group made good progress over in Indonesia as we managed to grow our sales to RM2.3 million for the financial year under review versus RM0.9 million a year ago following the completion of several land transport heavylift jobs there.

Profitability and Margins

The Group achieved a gross profit (“GP”) of RM35.2 million for FY2021 as compared to RM43.4 million a year ago. Despite a decline, Xin Hwa’s GP margin remained healthy at 36.1% for the current financial year under review versus 37.0% a year ago.

Zooming into the profit before interest and tax (“PBIT”), we achieved margin improvements across all 3 key segments, which stemmed from higher cost efficiency attained in FY2021. This was chiefly attributed to lower administrativeoperating costs and lower provision of depreciation expenses in the financial year under review.


21

ANNUAL REPORT 2021

FINANCIAL REVIEW

Profitability and Margins

PBIT margin from the land transport business rose to 8.9% in FY2021 from 6.7% a year ago while PBIT from the warehousing and distribution segment leaped to 15.0% from 9.1%. This led to an overall improvement in our PBIT at the Group level to 9.6% from 6.8% in FY2020. PBIT rose 17.8% year-on-year (“YoY”) to RM9.4 million in FY2021 from RM7.9 million in FY2020.

Segments(RM million)

FY2020 FY2021

P/(L)BIT PBIT Margin P/(L)BIT PBIT Margin

Land Transport 7.0 6.7% 7.8 8.9%

Warehousing and Distribution 1.0 9.1% 1.6 15.0%

Other Services (0.1) n.m. * 2.8%

Total 7.9 6.8% 9.4 9.6%

Note:

* Amount less than RM100,000

TheimprovementwasalsoreflectedinXinHwa’sprofitattributabletotheownersoftheCompany(“netprofit”).FY2021net profit soared 179.3% YoY to RM3.0 million from RM1.1 million a year ago. The larger-than-proportionate increase was due to lower interest and tax expense incurred. Net profit margin stood at 3.1% for the financial year under review versus 0.9% a year ago.

Capital Structure and Capital Resources

Xin Hwa’s total assets amounted to RM369.1 million as at 31 March 2021, which was an increase of RM27.0 million from RM342.1 million a year ago. This was principally owing to increase in assets under construction, mainly our new E-Fulfilment Centre in Shah Alam. The Group’s cash and bank balances stood at RM5.6 million as at end-March 2021, up from RM3.4 million a year ago.

On the other hand, our liabilities stood at RM181.6 million at the close of the financial year end as compared to RM159.3 million a year ago. The rise was due to higher borrowings to fuel our expansion as well as increase in other payables.

Net Operating Cash Flow (“NOCF”)

We are delighted to note that the Group continued to generate positive NOCF of RM16.4 million in FY2021. Xin Hwa has consistently generated positive NOCF every year since its listing in 2015.

Financial Position Highlights As At 31 March 2021


Total Assets

RM369.1million

Net Assets

RM184.8million

$ $$

Net Assets Per Share

RM0.83

22


ANTICIPATED OR KNOWN RISKS

Availability of Drivers

We are dependent on the availability of drivers as a land transportation services provider. Any shortages of drivers would disrupt our delivery schedules and impact our performance. In mitigation, Xin Hwa has been proactively developing initiatives and taking measures to attract and retain our drivers. The Group offers a financially rewarding and attractive career path with opportunities for professional growth. In order to ensure our drivers have the required skills, we also provide on-the-job training programmes. Besides, we have an open management, whom the drivers can easily access to and engage with, should they have any concerns.

Intense Competition

The logistics industry is fragmented and highly competitive with many players offering different range of services and pricing. We face competition from both local and international logistics service providers. A price war would negatively impact our profitability and may result in a loss of market share. To this end, apart from competitive pricing, Xin Hwa also continues to place emphasis on delivering exceptional value and quality services to our customers in order to enhance our value proposition. We will leverage on our experience, deep technical knowledge, and proven track record to maintain our competitive advantages and also to increase our market share.

Fluctuations in Fuel Prices

As a result of the nature of our business, fuel prices constitute a major portion of our cost, which exposes the Group to price fluctuations. Fuel prices are subjectto various factors which are beyond our control such as

the changes in the global demand and supply conditions, government trade policies and global economic activities. As part of our risk management plan, we monitor the daily movement of the fuel price closely, plan procurement carefully and optimize the driving routes in order to manage our fuel sales efficiently. Lastly, the Group also factors in the cost of fuel in pricing our services to ensure we are not materiallyaffectedfrompotentialvolatilefluctuationinfuelprices.

Political, Economic and Regulatory Risks

Any adverse developments or uncertainties in political, economic or regulatory environment in Malaysia would affect all businesses, including Xin Hwa. Furthermore, the lack of public and private investments as well as the absence of or reduction in Government’s initiatives and budget allocation may lead to a downturn in the sector. In mitigation, we continuously exercise caution and prudence in deploying our assets during any economic cycle. Moreover, the Group also actively engages with authorities and relevant business associations to provide feedback and to gain understanding on any changes in regulations and policies.

Operational Disruptions

We are dependent on the smooth delivery to all our customers as any disruptions would have an adverse impact on our operations and financial performance. External risks such as natural disasters, pandemics, riots, and general strikes are beyond our control, which may materially and negatively affect our operations as well. In terms of operational risk relating to Covid-19, we are fully compliant to the strict SOPs imposed by the authorities and are taking extra precautionary measures to ensure the welfare of our employees, which in turn, would minimise disruptions to daily operations.


23

ANNUAL REPORT 2021

MOVING FORWARD

In the coming new financial year, while we expect the business operating conditions to remain demanding, the Group is keeping a positive view on our prospects. This is underpinned by the gradual economic recovery in tandem with the nationwide mass Covid-19 immunisation programme rollout. In light of this, we expect activities in the logistics and warehousing sectors to pick up meaningfully.

At the same time, the Group remains busy tendering for new land transportation contracts in Malaysia, Singapore as well as Indonesia to boost our order book. Following our foray into Indonesia in FY2019, we continue to seek for more public and private jobs to further establish our position as we see huge market potential.

Meanwhile, the construction of our E-Fulfilment Centre in Shah Alam, Selangor will be completed by end September 2021. This is part of our expansion plans to strengthen our presence in Peninsular Malaysia. The centre houses a 7-storey office and a 3-storey warehouse. We are expecting our centre to commence in October 2021. Currently, we are in finalising the discussion with potential customers and expect to utilization to pick up strongly in the next 12 months.

The new warehouse increases our total capacity by 45.8% or 300,000 sf. to close to 1 million sf. This newly added capacity would enable us to capture the growing demand for warehousing needs given that our existing capacity is

almost fully utilized with an average utilization rate of more than 90%. Xin Hwa has secured a few customers and remains in negotiations with more prospective customers.

Not resting on our laurel, Xin Hwa is in the planning stage for the construction of an Integrated Logistics Solutions Hub in Pasir Gudang, Johor. This would sit on a 44.0-acre land that is strategically located adjacent to our existing warehouses. Upon completion of the land rezoning application, we shall submit the application for the development order plan. Barring any unforeseen circumstances and subject to the approvals from the relevant authorities, the construction of the Integrated Logistics Solutions Hub is expected to commence in 2022 with completion slated for 2024. This is part of our future plans to ensure Xin Hwa has ready capacity and space to grow continuously and deliver exceptional value to our shareholders.

On the other hand, we are actively looking for viable strategic investments to create a sustainable growth and create value to our valued shareholders. The strategies include diversification to a different sector of the economy and vertical or horizontal expansion within the logistics and transportations industry.

All in all, our existing logistics and warehousing activities are showing gradual recovery in performance. With the expansion plans and vaccination plans to tackle the global pandemic, we are anticipating exciting times ahead for the Group.


Note: E-Fulfilmen Centre located at Shah Alam, Selangor under construction & renovation that is nearing completion.

24


As an integrated logistics player, we cater to a diversified pool of customers with different logistical needs along the supply chain. We aim to serve them and achieve our goals by adopting the best practices in our activities as well as ensuring business is conducted in a safe, timely and efficient manner, whilst keeping in mind of the surroundings in which we operate.

We are pleased to present our Sustainability Statement (“Statement”), whichreflectsontheeffortsundertakenbytheGroupintheareaofsustainability management. Our initiatives are in line with our Vision and Mission as we aspire to achieve excellence in sustainability in our business operations, workplace and communities.

As we move forward, we will continue to report annually on our sustainability developments to effectively engage our stakeholders. We intend to continually review and make improvements to our sustainability approach and reporting to better meet our stakeholders’ expectations.

Scope of Reporting Framework

The scope of this Statement covers Xin Hwa’s business operations and our subsidiaries, which consist of our land transport services in Malaysia, Singapore and Indonesia, warehousing and distribution services in the states of Johor, Kuala Lumpur and Selangor, as well as other logistics-related services, including business-to-business (“B2B”) e-commerce activities.

The reporting period for this Statement aligns with Xin Hwa’s financial year from 1 April 2020 to 31 March 2021 (“FY2021”).

This Statement was prepared in accordance to Main Market Listing Requirements of Bursa Malaysia Securities Berhad’s Sustainability Reporting Guideline.

CORPORATE SUSTAINABILITY STATEMENT

VISIONTo be renowned integrated logistics service provider that provides reliable services, supported by a committed team and up-to-date technological systems.

MISSIONReliable Services

To maintain a high level of quality in the provision of services that are efficient, timely and cost effective.

Up-to-date Technological Systems

To constantly upgrade in order to provide personalised services to the customers and to maintain the company’s competitiveness.

Committed Team

To ensure and encourage a conducive and rewarding work environment that promotes commitment and dedication, strong teamwork and camaraderie amongst employees.

Sustainability for Xin Hwa Holdings Berhad (“Xin Hwa” or “the Group”) is embedded into our fundamental value chain and corporate culture as we focus on creating a positive impact on the environment, our workforce and the society at large.

About this report

25

ANNUAL REPORT 2021

Sustainability Governance

The Group’s sustainability direction and strategy are overseen by the Board of Directors of Xin Hwa, which includes setting of policies to drive sustainable practices within the Group. They are supported by Xin Hwa’s Senior Management team, led by the Managing Director, Mr Ng Aik Chuan, which is responsible for the development, implementation and monitoring of the sustainability initiatives.

FY2021 Performance Highlights

CORPORATE SUSTAINABILITY STATEMENT (CONT’D)

1,738 unitsvehicles andtrailers

- Fatalities

676no. of employees & contract drivers

18%of women employees

RM 34,300Investment in training programmes

RM 38,000contribution to local communities

83%of corporate workforce are locals

17,000 palletsaverage dailydelivery quantity

654,000 sq ftof warehousing space

MATERIALITY ASSESSMENT

We believe that the proper management of our sustainability matters is key to the Group’s success. During the year, we conducted a materiality study by reviewing the interest of internal and external stakeholders in the aspect of sustainable management matters and impact to business. The assessment involved a structured process, where we collected input from our key internal stakeholders on the identification of material issues. The matrix below illustrates the results of our assessment.

Meanwhile, we continue to refine our assessment process by enhancing participation in the stakeholder’s assessment of materiality matters and listening to feedback from stakeholders.

Our Materiality Matrix

No. Material topic

1 Economic conditions

2 Expansion of logistics infrastructure

3 Sustainable and fair procurement practices

4 Corporate governance and ethical behaviour

5 Fluctuation in fuel price

6 Reduction of environmental impact of operations

7 Compliance of environmental laws

8 Occupational safety and health

9 Employees’ welfare

10 Training and development

11 Diversity in workplace

12 Community engagement and development

13 Human rights

14 Shareholders’ relations

15 COVID-19 impact

Imp

orta

nce

to S

take

hold

ers

Importance to BusinessModerate High

7 4

3

151

69

2 5 8

10

12

13

11

14

26


STAKEHOLDER ENGAGEMENT

We define stakeholders as entities that have an impact on our business operations or whom may be impacted by our activities. At Xin Hwa, we continuously engage with our key stakeholders in an open and transparent manner with the aim of gaining better understanding on issues which are important to them. Embedding stakeholder engagement in our operations enables us to develop business solutions together.

Major stakeholders Communication channels Key concerns

Customers • Customersatisfactionsurvey• Regularupdatesandmeetings• Businessengagementprogrammes

• Customersatisfaction• Businesscontinuity

Shareholders • AnnualandExtraordinaryGeneralMeetings

• Bursaannouncements,annualreport, circulars

• Meetingsandbriefings• Corporatewebsite

• Businesscontinuity• Shareholders’return• Corporategovernance

Employees • Regularmanagementmeetings• Annualperformancereview• Officeevents• Electronicmessages(Eg:Emails,

messaging applications and etc.)

• FairHRpoliciesandpractices• Talentacquisitionandretention• Healthandsafety• Workplacesatisfaction• COVID-19impactsandvaccinations

Local communities • CommunityCSRevents • Contributiontowardscommunity• COVID-19impactsandvaccinations

Suppliers • Businessreviews• Purchasingpoliciesandprocedures• Meetings

• Supplychainmanagement• Complianceandanti-corruption

standards• Transparentprocurementpolicies

Government / Regulators • Regulatorqueries• Annualserviceaudits

• Adherencetoregulations• COVID-19impacts

In FY2021, Xin Hwa continued to expand communication channels with stakeholders, as highlighted below, together with their key concerns:


27

ANNUAL REPORT 2021

ECONOMIC

We endeavour to become a responsible corporate citizen as we grow alongside the Malaysian economy by upholding the highest standards of governance, delivering value to our customers, creating job opportunities and adopting sound procurement practices. It is in our interest to conduct our business activities in line with societal needs while minimising our environmental impacts.


Corporate Governance

We remain committed to conducting business in full compliance with legal and regulatory requirements while observing the highest ethical standards. We are guided by the Malaysian Code on Corporate Governance in ensuring the principles of best practices and good corporate governance is applied Group-wide. We have established standard operating policies and procedures and remain compliant to the requirements of the law. We adhere to various regulations which are relevant to our business operations to efficiently govern the Group:

√ Companies Act 2016√ Main Market Listing Requirements of Bursa Malaysia

Securities Berhad√ Income Tax Act 1967√ Environmental Quality Act 1974√ Occupational Safety and Health Act 1994√ Employment Act 1955

Details of our corporate governance framework and practices can be found in the Corporate Governance Overview Statement on pages 35 to 44 of the Annual Report.

Integrated Logistics Provider

We are an integrated logistics player, with the ability to provide multiple services across the logistics industry value chain with the aim of assisting our customers to achieve operational and cost efficiencies.

Our services include cargo transportation services, container haulage services, warehousing and distribution services as well as other logistics-related services such as freight forwarding and customs brokerage, manufacturing and fabrication of trailers and B2B e-commerce.

FY2021REVENUE:

FY2021 TOTAL OPERATING COSTS:

FY2021 TAX PAYMENTS:

FY2021 STAFF WAGES AND BENIFITS:

(FY2020: RM117.3 MILLION) (FY2020: RM111.2 MILLION)

(FY2020: RM1.2 MILLION) (FY2020: RM33.2 MILLION)

RM 97.8MILLION

RM 90.7MILLION

RM 0.8MILLION

RM 26.5MILLION

28


ECONOMIC (CONT'D)

Integrated Logistics Provider (Cont'd)

One of our competitive advantages by having integrated operations, is that it allows us to meet our customers’ requirements while improving cost effectiveness.

We provide full-service solutions which combine our land transport operations with warehousing and customs brokerage services. Furthermore, we have the capability to undertake repair and maintenance work of our vehicles in-house, which enablesusrespondtoourcustomersinashorterperiodoftime.Thiscompetencyalsogivesustheflexibilitytocustomiseour logistics services for specialised cargo and large-scale projects according to customers’ preferences.

With these capabilities, we are able to enhance our service delivery by ensuring faster servicing turnaround time and minimising our reliance on outsourcing services. Our aim is to ultimately serve our customers with our highest performance while warranting the Group’s sustainable business growth.


Delivering Quality Service

In our mission to become a leading integrated logistics service provider, we strive to deliver the best service to our customers with a focus on business quality and customer satisfaction. To this end, we have a Quality Policy in place representing our steadfastness to:

√ Provide quality service at all times√ Comply with customers, statutory and regulatory

requirements applicable to our services√ Achieve customers’ satisfaction through service

excellence√ Continually improve the Quality Management System

We are pleased to state that our business processes continue to comply with globally recognised standards, namely the ISO 9001:2015 Quality Management System, which stands as a testament to our commitment to quality.

Sustainable Procurement Practices

Our supplier and business partners play a key role in our operations. We place high importance on our supply chain management to ensure operational excellence.

We have adopted international standards relevant to our business, namely the ISO 9001:2015 Quality Management System and the ISO 45001:2018 Occupational Health and Safety Management Systems.

29

ANNUAL REPORT 2021

ECONOMIC (CONT'D)

Sustainable Procurement Practices (Cont'd)

In addition, we enforce strict requirements in the evaluation and selection of our goods and services providers and encourage their greater participation in best practices. Looking ahead, we will incorporate more comprehensive criteria in our selection process related to these areas: quality assurance, labour and human rights, safety and health as well as environmental management.

We also fully realise the value of establishing trusting relationships with our valued partners. As such, we engage with our goods and services providers regularly in order to maintain a long-term business relationship for the mutual benefit of all parties.


ENVIRONMENTAL IMPACT We are aware of how our operations as an integrated logistics company may affect our surroundings. After all, the logistics and transport industry do generate a considerable amount of global greenhouse gas (“GHG”) emission. Keeping this in mind, we have taken extensive measures to protect the environment and natural resources. At all levels of our business operations, we strive to minimise our carbon footprint through the efficient use of resources.

Energy Management

As an industrial and commercial transportprovider,weoperateafleetof vehicles for our operational needs. As such, fuel consumption accounts for a major portion of our energy expended. In an effort to minimise our logistics footprint, Xin Hwa is continuously reviewing and improving the efficiency of our transportation network. This includes planning the logistics course and schedule for our deliveries to achieve route optimisation, hence improving fuel efficiency and service delivery.

We also install GPS systems for our fleet, providing drivers with data onreal-time events such as condition of traffic, to assist them in making informed decisions while on the road. Drivers are also encouraged to enhance driving performance to maximise fuel efficiency, such as accelerating gently, maintaining a steady speed and switching off engines when idling, to name a few.

Moreover, our vehicles undergo scheduled periodic maintenance and service intervals, performed by our in-house team, to ensure optimal performance and safety on the road at all times.

In addition to fuel consumption, use of electricity to power our buildings is another significant source of energy at Xin Hwa. At the Group’s premises, we conduct educational activities to raise awareness on environmental conservation.

We create awareness through communication and displaying energy-saving signages at our grounds. For example, our employees are reminded to switch off the lights

and all electrical appliances when not in use. These efforts go a long way in building a workplace culture that is environmentally conscious while growing together as a Group.

In FY2021, the total electricity consumption of Xin Hwa was approximately 1.6 million kilowatt-hours (“kWh”).

Looking ahead, we endeavour to enhance our green initiatives as we explore more energy saving measures to be implemented. We have started installing some LED lighting equipment at the locations where we operate to reduce GHG emission.

30


ENVIRONMENTAL IMPACT (CONT'D)

Waste Management

Environmental sustainability is closely linked to effective waste management. At Xin Hwa, we promote the reduction of waste across all our operating units by adopting proper waste disposal practices.

There are two types of waste materials generated from our operations, which are solid waste and scheduled waste. Solid waste management involves the controlling of generation, storage, collection, transfer and transport, processing and disposal of everyday waste. The types of solid waste materials we produce fall under the categories of domestic waste, boxes, plastics and metal, among others. We manage the disposal of these solid waste in accordance with waste-related internal standards.

Xin Hwa provides road transport services with the capability to manufacture, fabricate and maintain our own trailers. As such,wegenerateaconsiderableamountofscheduledwasteintermsofusedconsumablesandpartsofourfleetofvehicles, including used engine oil and batteries. At our maintenance facilities, we have allocated a designated zone to dispose these waste materials. They are then collected by a Department of Environment (“DOE”)’s licensed scheduled waste contractor, in accordance with the Environmental Quality (Scheduled Wastes) Regulations 2005 of the Environmental Quality Act (EQA) 1974. To date, Xin Hwa has successfully complied with the regulations and procedures as prescribed in the law.

During the year, we continued to adopt the 3R (Reduce, Reuse and Recycle) concept Group-wide, as part of our efforts to reduce waste. Some of our implemented initiatives include:

√ Paper recycling at corporate headquarters√ Double-sided printing to save on paper usage√ Working with electronic documents and files, when possible√ Segregating recyclable materials such as paper, plastic and metal content before disposing

SOCIAL IMPACT

Our People

We remain committed to human capital development as we believe our employees play a vital role in Xin Hwa’s growth and success.

As at 31 March 2021, we provide employment to 804 people from diverse backgrounds, supporting a wide range of initiatives designed to improve the livelihoods of our employees and the broader local community.

OUR PEOPLE IN NUMBERS

Female18%

BY GENDER: BY DESIGNATION: Director/Manager5% Executive

5%

Non-executive90%

Male82%


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ANNUAL REPORT 2021

OUR PEOPLE IN NUMBERS

Bumiputera71%

20 - 30 years40%

41 - 50 years17%

31 - 40 years33%

>51 years10%

Chinese8%

Indian4%

Foreigners17%

BY RACE: AGE DISTRIBUTION BY GROUP:

At Xin Hwa, we promote a culture of diversity and inclusion. Although logistics is traditionally a male-dominated field due to the nature of the industry that requires heavy labour, we are proud to state that over 18% of our workforce consists of women. We also work towards hiring employees from different age groups with approximately 73% of our workforce below 40 years old.

Moving forward, we will continue our efforts to provide equal opportunities as we aspire to be a reputable employer of choice.

Attracting talent

We are dedicated to attracting top talent and providing them opportunities to achieve their work and life goals at Xin Hwa. To this end, we utilise various means to acquire best talents including the career portal on our corporate website, media advertisements, recruitment agencies, and employee referrals to name a few. Talent acquisitions are conducted based on merit, work experience, industry exposure and achievements.


As part of our strategy to attract and retain top talent, we offer competitive remuneration package based on performance. All employees are given an annual performance review, where employees and heads of respective divisions can engage and exchange feedback. In addition, full-time employees can enjoy on-the-job benefits such as health and medical coverage, annual leaves and further training prospects.

We also have an internship programme, where we accept industrial training students from higher educational institutes. Through this programme, students are exposed to real work situations where they will gain hands-on experience and skills to better prepare them for the working world. This also serves as a platform for us to hire new talent upon completion of their studies.

Nurturing talent

We recognise that having a motivated and skilled workforce is key to accomplishing our goals. It is our responsibility to provide a productive work environment for our employees

toflourishandperformtothebestoftheir abilities. At Xin Hwa, we promote a culture of continuous learning to develop our people to reach their full potential in order to deliver sustainable results.

In FY2021, we invested approximately 34,300 on our employees’ training and development programmes, where approximately 1,100 hours were spent in training. These programmes include both external trainings and internal on-the-job trainings that are centred on expanding their technical knowledge and competencies in addition to preparing them for critical and leadership roles within the Group.

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SOCIAL IMPACT (CONT'D)

Nurturing talent (Cont'd)

Our employees’ well-being is of major importance to the Group. To create a sense of recognition and community among our employees, we organise various programmes such as Long Service Awards, festive celebrations, Annual Dinners and Employee Birthday Celebration. These initiatives further help in strengthening relationships and facilitate bonding in the workforce.

SAFETY AND HEALTH

Occupational Safety and Health (“OSH”) impacts people’s lives as well as the productivity of the Group. We recognise the safety risks in our business and assign great importance to the safety and well-being of our workforce.

We strive to provide a safe and secure work environment in compliance with the Occupational Safety and Health Act 1994. Throughout our operations, we have taken the necessary measures to ensure the safety of our people, including certifying our operations to the globally recognised ISO 45001:2018 standards. Adherence to OSH standards is a major element in ensuring sustainable operations.

We aim to foster a risk-averse working environment and minimise safety hazards within our operations. This led us to establish the Safety Policy which governs the Group on safety-related matters. The standards in our Safety Policy serve as a benchmark for all Xin Hwa’s operations and sites.

We have a dedicated in-house Health and Safety Committee consisting of 20 employees. The committee is responsible for effectively implementing the Group’s Safety Policy including monitoring and managing safety and accident matters. Monthly meetings are conducted to discuss on various safety and health-related issues concerning our workforce.

At Xin Hwa, we remain focused on improving our safety performance within the Group by monitoring various processes in our value chain to anticipate potential hazards and strengthen mitigation measures. We are pleased to report we have successfully achieved our target of zero fatalities during the year.

However, at the same time, COVID-19 pandemic has compromised the health and safety of our working environment. The unfortunate event poses critical health risks and mentally stressful to our staff and stakeholders. This is a challenging period for everyone.


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ANNUAL REPORT 2021

SAFETY AND HEALTH (CONT'D)

The Group has put in place several security and health measures to protect and raise awareness of our staff and stakeholders, including:

√ Awareness campaigns such as COVID-19 dos and don’ts√ Ascertain adherence of Standard Operating Procedures prescribed by the health authorities (Such as work from

home arrangements, temperature screening and scanning of MySejahtera)√ Quarantine measures and procedures to avoid COVID-19 clusters√ Periodic sanitisation of the working premises√ Arrangement and cooperation of vaccination programmes with other stakeholders√ Requirement for medical check-ups for drivers to ascertain fitness to work√ Adoption of safety and tracking technology such as GPS systems, which enables us to track real-time location of our

fleetanddrivers

We believe these measures can assist in the prevention of COVID-19 and it is also the responsibility of each party to take ownership in upholding the highest standards of health safety at our workplace.

SUPPORTING COMMUNITY GROWTH

We remain steadfast in conducting our business in a socially responsible manner as we believe businesses play an important role in the development of the surrounding communities, especially these difficult times during the COVID-19 pandemic. During the year, we continued to reach out to our communities by participating and contributing in various initiatives focused on community outreach and job creation.

We support the local economies by creating employment opportunities for the members of the nearby communities of where we operate. As at FY2021, 83% of our corporate workforce are hired from the local vicinity.

We also endeavour to strengthen our Corporate Social Responsibility (“CSR”) initiatives by making charitable donations to welfare establishments and conducting CSR activities.

During the financial year, as part of our CSR programme, we organised donations and encouraged staff participations to make monetary contributions and donate daily necessities (such as food and amenities) to the welfare establishments. Our CSR teams pulled in resources and collaborated together to support our local community that is in need. A total value worth of monetary and daily amenities amounting to approximately RM26,000 were collected. They were donated to the following four welfare establishments:-

a) Persatuan Kebajikan Yu Shan located at Taman Seri Tebrau, Johor Bahru


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b) Persatuan Kebajikan Masyarakat OKU located at Bukit Indah, Johor Bahru

c) Noble Care Malaysia (Old Folks Home) located at Tampoi, Johor Bahru

d) Persatuan Penjagaan Kanak-Kanak Terencat Akal located at Saleng, Kulai

Other than the above, the Group also made monthly monetary contributions to other charitable organisations. Being a responsible corporate citizen, we will continuously participate in similar sustainability efforts which act as a platform for us and our employees to give back to society.


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The Board of Directors of Xin Hwa Holdings Berhad (“Board”) recognises the importance of good corporate governance in conducting the affairs of the Company and its subsidiaries (collectively referred to as “Group”) and is committed to apply good corporate governance practices throughout the Group.

The Board fully supports the Principles and Practices of good corporate governance practices (including the Intended Outcomes) as promulgated by the Malaysian Code of Corporate Governance (“MCCG”) in directing and managing the business and affairs of the Group towards promoting business prosperity and corporate accountability as a fundamental objective of discharging its responsibilities to protect and enhance the interest of all stakeholders and financial performance of the Group with the ultimate objective of realizing long-term shareholder value.

This statement provides a brief overview on application of the three (3) main principles of the Malaysian Code on Corporate Governance (“Code”) at its best abilities. This statement is to be read together with the Corporate Governance Report 2021 (“CG Report”) of the Company which is available on the Company’s website at www.xinhwa.com.my. The CG Report provides the details on how the Company has applied each practice as set out in the Code. For departure practices, explanations are disclosed in the CG Report.

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS

I. Board Responsibilities

The Board is responsible in providing oversight of the Group’s strategic direction, overseeing the Group’s business operations, as well as identifying key risk factors that may have significant impact on the Group’s operations and performance. In achieving these goals, the Board performs regular reviews over the risk management and internal control systems to ensure its integrity and adequacy in providing reasonable assurance of risk mitigation.

Principle Functions and Responsibilities of the Board

The principal functions and responsibilities of the Board include the following:

• Reviewandapprovestrategicdirection,implementationandmonitoringofthestrategicbusinessplansfortheGroup.

• OverseetheconductandperformanceoftheGroup’sbusiness.• Establishkeyperformanceindicatorsandsuccessionplan.• IdentifykeyrisksfactorsthathavesignificantimpactontheGroup’soperationsandperformanceandformulate

appropriate risk management and internal control systems to mitigate negative impact of the risks.• Developandimplementinvestorrelationsprogrammeorshareholdercommunicationspolicy.• ReviewtheadequacyandtheintegrityoftheGroup’sinternalcontrolandmanagementinformationsystems.

Board Committees

In order to ensure orderly and effective discharge of the functions and responsibilities of the Board, the Board has established the following committees (“Board Committees”) and delegated specific responsibilities to each of them:

• Audit&RiskManagementCommittee• NominatingCommittee• RemunerationCommittee

The Board Committees shall deal with matters within their respective terms of reference and authority delegated by the Board.

CORPORATE GOVERNANCE OVERVIEW STATEMENT


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

I. Board Responsibilities (Cont’d)

Board Meetings

The Board meets regularly, at least once in every quarter, to review the Group’s operations and to approve the quarterly reportsandannualfinancialstatements.Additionalmeetingwouldbeconvenedasandwhenurgentissueswarrantmatters to be attended to. Six (6) Board meetings were held during the financial year ended 31 March 2021.

The details of Directors’ attendance at the Board meetings are set out below:

Name of Directors Number of meetings attended

Tan Sri Dr. Suleiman Bin Mohamed 6/6

NgAikChuan 6/6

NgYamPin 6/6

Datuk Jory Leong Kam Weng 6/6

Liew Chek Leong 6/6

Kok Poh Fui 6/6

Datin Rahmah Binti Mahmood (Resigned on 9 October 2020) 3/3 BoardIndependenceandEffectiveness

In fostering independence, the positions of the Chairman and Managing Director are held by different individuals with clear and distinct roles which are formally documented in the Board Charter of the Company.

Currently,theManagingDirector,togetherwiththeExecutiveDirectors,haveextensiveyearsofexperienceandin-depth knowledge of the logistics industry in Malaysia spearhead the overall strategic direction of the Group. They report and communicate key strategic plans and proposals to the Board and implement decisions made by the Board.

Presence of the Independent Directors complements the Board by ensuring there is an effective check and balance in the functioning of the Board. The Independent Directors fulfill the criteria of independence as set out in the Listing Requirements.

TheIndependentNon-ExecutiveChairmanandDirectorsareresponsivetotheCompany’saffairsandarecommittedinensuring that highest corporate governance standards are adhered to. In the course of discharging their responsibilities with regard to corporate governance, the Independent Directors engage with the Management, internal auditors as well as external auditors.

CORPORATE GOVERNANCE OVERVIEW STATEMENT(CONT’D)

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I. Board Responsibilities (Cont’d)

Policies

The Board has adopted a Board Charter which serves as a source of reference for the Board and Management. The Board also adopted a Code of Conduct that provides guidance for Directors, Management and employees regarding ethical and behavioural considerations and/or actions as they address their duties and obligations during their appointment.

BoththeBoardCharterandCodeofConductweretabledforreviewattheBoardMeetingheldon25August2021and the latest updated version have been uploaded to the Company’s website at www.xinhwa.com.my.

Additionally, theCompanyhasalso inplaceaWhistleblowingPolicyandProcedurewhichclearlyspeltout theprocedures for reporting of any wrongful activities and wrongdoings within the Group.

Further details pertaining to the Board Charter, Code of Conduct and Whistleblowing Policy and Procedure are set out in the CG Report.

Company Secretary

The Board is supported by two (2) suitably qualified, experienced and competent Company Secretaries. The Company Secretaries advise the Board and Board Committees on issues relating to compliance with laws, rules, procedures and regulations affecting the Company and the Group, as well as best practices of governance.

Independent Investigative Review (“IIR”) and Public Reprimand

During the financial year, the Company received some inquiries from Bursa Malaysia Securities Berhad (“Bursa Securities”) in respect of the IIR conducted in the previous financial year. The management of the Company responded to those inquiries and provided the relevant supporting documents to Bursa Securities in a prompt manner.

On24June2021,BursaSecuritiespubliclyreprimandedand/orfinedtheCompanyandtwo(2)ExecutiveDirectorsforthebreachofcertainprovisionsoftheMainMarketListingRequirementsarisingfromtheIIR.ThesaidExecutiveDirectors also imposed with fines apart from the public reprimand.

II. Board Composition

The Group is led by an experienced Board comprising high calibre members from diverse professional backgrounds withtherequiredskills,expertiseandexperience.Duringthefinancialyear,oneoftheIndependentNon-ExecutiveDirectorsresignedandtheBoardpresentlycomprisesthree(3)ExecutiveDirectorsandthree(3)IndependentNon-ExecutiveDirectorswithamixofskillsetsintheareasofcorporatestrategy,finance,businessmanagementandcorporate law.

TheBoardaswellastheNominatingCommitteeareoftheopinionthatthecurrentsizeandcompositionoftheBoardis well-balanced after taking into consideration the Board members’ experience and exposure in various areas as well as their diverse background and skills, reflecting the Group’s commitment to ensure effective leadership of the Group.



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II. Board Composition (Cont’d)

AnnualAssessmentofBoardMembers

TheBoardthroughtheNominatingCommittee,conductsannualassessmentoneffectivenessoftheBoard,theBoard Committees and the individual Directors of the Company.

The effectiveness of the Board and Board Committees are assessed in the areas of board structure/mix, decision making and boardroom participation and activities, meeting administration and conducts, skill and competencies and role and responsibilities whilst the performance of the individual Directors are assessed in the areas of contribution and interaction with peer, quality of the input of the Director, understanding of role, etc.

Outcome of the assessment and recommendation would be reported to the Board for information and decision on areas for improvement. The results of the annual assessment on Board, the Board Committees and individual Directors were satisfactory.

Details of the assessment process are set out in the CG Report.

Directors’AppointmentandRe-election

InaccordancewiththeCompany’sConstitution,ateveryAnnualGeneralMeeting(“AGM”)one-third(1/3)oftheDirectors for the time being, or if their number is not three (3) or a multiple of three (3), then the number nearest to one-third (1/3) shall retire from office provided always that all Directors shall retire from office once at least in each three(3)years.AllDirectorswhoretirefromofficeshallbeeligibleforre-election.

TheDirectorwho is subject to re-election and/or re-appointment at the nextAGMshall be assessedby theNominatingCommitteebeforerecommendationismadetotheBoardandshareholdersforthere-electionand/orre-appointment.AppropriateassessmentandrecommendationbytheNominatingCommitteewouldbebasedonthe yearly assessment conducted.

AllappointmentsofnewdirectortotheBoardareproperlymadewithanestablishedandtransparentprocedureandincompliancewiththerelevantrulesoftherelevantauthorities.Anyappointmentofadditionaldirectorwillbemade as and when it is deemed necessary by the existing Board with due consideration given to the individual’s educational and professional background, employment record, whether the individual has any special experience in a relevant area, possession of the required skill and qualification, personal accomplishments, the mix and range of expertise and experience required for an effective Board.

TheBoard, basedon the recommendation of theNominatingCommittee,would evaluate anddecide on theappointment of the proposed candidate(s).

Criteria have been set to assess the independence of candidate for directors and existing Directors based on the guidelines set out in the Listing Requirements. On an annual basis, the Independent Directors will be requested to confirm their independence by completing the independence checklist.

Directors’ Training

The Board recognises the needs to attend training to enable them to discharge their duties effectively. The training needs of each Director would be assessed and proposed by the individual directors. The Directors will continue to undergo relevant training programmes to further enhance their knowledge on a continuous basis in compliance with paragraph 15.08 of the Listing Requirements on Directors’ Training.

The Board is also regularly updated by the Company Secretary on the latest updates and major amendments made totheListingRequirements,CompaniesAct2016andotherregulatoryrequirementsrelatingtothedischargeoftheDirectors’ duties and responsibilities.


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Directors’ Training (Cont’d)

The Directors have attended the following conferences, seminars and training programmes during the financial year under review:

Name of Directors Name of Seminars/Training programmes attended

Ng Aik Chuan • FraudRiskManagementWorkshop

Ng Yam Pin • FraudRiskManagementWorkshop

Kok Poh Fui • Halfyeartaxupdate• 2021BudgetSeminar

Datuk Jory Leong Kam Weng • Covid-19&CurrentEconomicReality:ImplicationsforFinancialStability

• Audit Committee Institute Virtual Roundtable 2020: StayingResilient during an economic downturn

• Returntowork,reimagined–insightsfromacrossAsia-Pacific• 3rdDistinguishedBoardLeadershipSeries-ChallengingTimes:

What Role Must the Board Play• Preservationofcashandcreationofliquidity• ImpactofCOVID-19onFinancialReporting• AsiaPacificafterCOVID-19:newforces,newdynamics,newera• Section17AMACCAct:ANewHorizoninMalaysianCorporate

Accountability• Anti-CorruptionLawsofMalaysia(participatedasspeaker)• DigitalBanking:Malaysia’sGameChanger• Equity-basedincome:Aformulathatdrivesbusinessperformance

(participated as panel speaker)• TechnologyRiskManagement• BNM-FIDEFORUMAnnualDialoguewiththeGovernorofBNM• Manufacturing-Beingunstoppableinchallengingtimes• CorporateSecurities&Investment-LAWASIA2020Conference• BattleagainstCorruptionandMACCAct2009• FraudRiskManagementWorkshop• 2021BudgetHighlights• Budget2021TaxHighlights• Theriseofmarketdisruptionthroughshort-sellingattacksand

how to respond

Liew Chek Leong • CorporateLiability:TheInsandOutsofSection17AofMACCAct2009–ADirectors’Cut

• ComprehensiveTaxUpdates• NewPublicRulingsin2019and2020• HowBusinessBenefitFromHRAutomation

During the financial year, Tan Sri Dr. Suleiman Bin Mohamed did not attend any training due to personal commitments

and the COVID-19 pandemic.



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GenderDiversityPolicy&Target

The Board has established a gender diversity policy whereby the Company would endeavour to have woman participation on the Board.

FurtherdetailspertainingtotheGenderDiversityPolicy&TargetaresetoutintheCGReport.

III. Remuneration

DirectorsRemunerationPolicy&Procedure

The Board believes in a remuneration policy that fairly supports the Directors’ responsibilities and fiduciary duties in steering the Group to achieve its long term objectives and enhance shareholders’ value. The Remuneration Committee (“RC”) is primarily responsible for recommending the remuneration policy and reward framework for ExecutiveDirectorswhicharealignedwiththebusinessstrategyandlongtermobjectivesoftheCompanyandalsofairly guided by market norms and industry practices, to the Board for approval. The RC carries out annual review oftheExecutiveDirectors’remunerationpackageswhereupontherecommendationwillbesubmittedtotheBoardforapproval.SuchannualreviewshallensurethattheremunerationpackagesfortheExecutiveDirectorsremainsufficiently attractive to attract and retain them.

The RC comprised of the following members:

Name & Designation Directorship in the Board

Chairman Tan Sri Dr. Suleiman Bin Mohamed IndependentNon-ExecutiveChairman

MembersDatuk Jory Leong Kam WengLiew Chek Leong

IndependentNon-ExecutiveDirectorIndependentNon-ExecutiveDirector

TheBoardhasinplaceaDirectorsRemunerationPolicy&ProceduretofacilitatetheRCinreviewing,considering

andrecommendingtotheBoardontheremunerationpackagesfortheExecutiveDirectors,seniormanagementand directors of the Company’s subsidiaries.

TheDirectorsRemunerationPolicy&Procedureistobereviewedfromtimetotimetoensureitscompetitivenessinorder to attract, develop and retain directors to provide the necessary skills and experience to commensurate with the responsibilities of an effective Board.

TheremunerationofNon-ExecutiveDirectors,whichmadeupofdirectors’fee,meetingallowanceandotherbenefits,if any, is to be determined by the Board and to be tabled for approval by shareholders.

The RC met during the financial year ended 31 March 2021 to review the proposed remuneration package of ExecutiveDirectorswithsuchrecommendedremunerationpackagessubmittedtotheBoardforreview,approvaland recommendation to shareholders for approval, as applicable. The RC also reviewed the salary increment and bonusforExecutiveDirectors,seniormanagementanddirectorsoftheCompany’ssubsidiaries.


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III. Remuneration (Cont’d)

Directors’ Remuneration

Details of the Directors’ remuneration for the financial year ended 31 March 2021 are as follows:

(a) Received from the Company

Directors Fees Allowances Total

Tan Sri Dr. Suleiman Bin Mohamed 120,000 13,000 133,000

Datuk Jory Leong Kam Weng 102,000 11,000 113,000

Liew Chek Leong 78,000 9,000 87,000

NgAikChuan 60,000 – 60,000

NgYamPin 60,000 – 60,000

Kok Poh Fui 60,000 – 60,000

Datin Rahmah Binti Mahmood (Resigned on 9.10.2020)

56,769 4,500 61,269

(b) Received from the Group

Directors Fees

Salaries and other

emoluments Allowances

Defined contribution

benefitsBenefits-

in-kind Total

Tan Sri Dr. Suleiman Bin Mohamed 120,000 – 13,000 – – 133,000

Datuk Jory Leong Kam Weng 102,000 – 11,000 – – 113,000

Liew Chek Leong 78,000 – 9,000 – – 87,000

NgAikChuan 60,000 650,523 – 77,952 21,250 809,725

NgYamPin 60,000 649,600 – 77,952 31,875 819,427

Kok Poh Fui 60,000 58,924 – 11,020 – 129,944

Datin Rahmah Binti Mahmood (Resigned on 9.10.2020)

56,769 – 4,500 – – 61,269

Top Senior Management’s remuneration for the financial year ended 31 March 2021 (in the band of RM50,000) are as follows:

Senior Management Remuneration in the band of RM50,000

Ting Pik Hou 200,001–250,000

Tan Teck Hock 150,001–200,000

MohdYusoffBinRahmat 100,001–150,000



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PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT

I. Audit & Risk Management Committee

TheGroup’sfinancialreporting,audit,riskmanagementandinternalcontrolsystemarereviewedbytheAudit&RiskManagementCommittee(“ARMC”)whichcomprises3members,whoareallIndependentNon-ExecutiveDirectors.TheARMCischairedbyDatukJoryLeongKamWengandthemembersareTanSriDr.SuleimanBinMohamedandMr. Liew Chek Leong.

Thedetailedroles,functions,responsibilitiesandsummaryofworkdonebytheARMCareassetoutintheAudit&RiskManagementCommitteeReportofthisAnnualReport.

II. Risk Management and Internal Control Framework

The Board acknowledges that it is crucial for the Group to maintain a sound system of risk management and internal control (“RMIC”), to provide reasonable assurance that the Group’s assets and shareholders’ investments in the Group aresafeguarded.Nonetheless,duetoitsinherentnature,theGroup’sRMICsystemcanonlyprovidereasonablebutnot absolute assurance against material misstatements, fraud or wilful circumvention of rules and procedures.

AriskmanagementandinternalcontrolframeworkhasbeenestablishedtosetoutprinciplesoftheCompany’sriskidentificationandmanagementculture,whichprovidesinputofitsinternalcontrolsystem.AComprehensiveEnterprise-wideRiskAssessmentprocessandanExecutiveRiskManagementCommitteewasformedtoidentifykeyrisksandmonitortheRiskRegister.TheRiskRegisterisalsosubjecttoreviewbytheARMConyearlybasis.

Anothercheck-and-balancemeasureintheCompany’sinternalcontrolsystemisthroughtheconductofinternalaudit.TheinternalauditfunctionanditssummaryofworkdoneduringthefinancialyearareassetoutintheAudit&RiskManagementCommitteeReportofthisAnnualReport.

During the course of the Independent Investigative Review, observations were made by the independent investigative auditors on certain internal control system weaknesses / deficiencies which required improvement and enhancement which steps had been / would be taken to mitigate the weaknesses / deficiencies highlighted.

The details of the risk management and internal control framework are set out in the Statement on Risk Management andInternalControlofthisAnnualReport.

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

I. Communication with Stakeholders

Communication with Shareholders

The Board values dialogue with investors and encourage investors to raise queries by contacting the Company at any time. The Company recognises the importance of effective communication between investors and the Board regarding matters ranging from strategic directions, financial performance to various policies that assist investors in making informed decisions.

The Board keeps shareholders informed via various announcements and the release of quarterly financial results, press releases, annual reports, circulars to shareholders, policies and Board Charter on the Company’s website.

The Company has outlined a policy on shareholders communication with regard to matters relating to the communication between the Company and its valued shareholders. In addition, the Company has also established a Statement on Shareholders’ Rights which clearly spelt out the de-facto rights of shareholders. Both the Shareholders Communication Policy and Statement on Shareholders’ Rights relating to General Meeting are made available for review at the Company’s website at www.xinhwa.com.my.


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PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS (CONT’D)

I. Communication with Stakeholders (Cont’d)

Corporate Disclosure Policy

The Group recognises the value of transparent, timely and coherent disclosures of the information. Communication with the investing public and various stakeholders are always on the agenda of the Board for enhancement. The Group adheres to and has formulated a corporate disclosure policy based on disclosure requirements imposed by relevant regulatory bodies, guidelines under the Listing Requirements and the principles and recommendations stipulated in the Code. The disclosures made by the Group to the general public through Bursa and the Company’s website are with due consultation with our appointed Company Secretaries and/or other external professionals.

The Corporate Disclosure Policy will be tabled for review at the Board Meeting as and when is necessary.

II. Conduct of General Meetings

AnnualGeneralMeeting(“AGM”)istheprincipalforumfordialogueandinteractionwiththeshareholdersoftheCompany.TheCompanyencouragesshareholderstoattendtheAGM,whichisagoodavenueforthemtomeettheBoard and the Management team. The Board values feedback from its shareholders and encourages shareholders toactivelyparticipateinquestionandanswersessionopentoallshareholderspresentattheAGM.TheBoardwillensure that each item of special business included in the notice of the general meetings is accompanied by a full explanation of the effects of any proposed resolution.

TheBoardshallpresentattheAGMandarepreparedtorespondtoquestionsofconcernfromourvaluedshareholderswho seek to understand the developments within the Group. The Board will provide clarifications on issues and concerns raised by the shareholders. The external auditors are also present to provide clarifications particularly relating to the financial statements.

The Company has uploaded a policy on “Shareholders’ Rights Relating to General Meeting” in its website at www.xinhwa.com.my for the information of the shareholders.

ACCOUNTABILITY AND AUDIT

The Board has a general responsibility for taking the necessary steps to safeguard and enhance the value of shareholders in the Company. The Company maintains an appropriate and transparent relationship with the external auditors.

The Board is responsible to present a balanced, clear and comprehensive assessment of the Group’s financial performance throughthequarterlyreportsandannualfinancialstatementstoshareholders.TheBoardandtheARMChavetoensurethatthe financial statements are drawn up in accordance with the applicable regulations and approved accounting standards in Malaysia.

In presenting the financial statements, the Board has reviewed and ensured that appropriate accounting policies have been used, consistently applied and supported by reasonable judgements and estimates.

Indischargingitsresponsibilities,theBoardisassistedbytheARMCtoensureaccuracyandadequacyofinformationtobe disclosed.



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RESPONSIBILITY STATEMENT BY DIRECTORS

The Directors of the Company are responsible for ensuring the financial statements of the Group and the Company are properly drawn up in accordance with the applicable regulations and approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs of the Group and the Company as at the end of the financial period and of the results and cash flows of the Group and the Company for that period.

The Board is responsible for keeping proper accounting records of the Group and Company, which disclose with reasonable accuracy the financial position of the Group and the Company, and which will enable them to ensure the financial statements have complied with the applicable regulations and approved accounting standards in Malaysia.

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

TheBoard,withtherecommendationsbytheARMC,willensurethatallquarterlyannouncementsandannualreportspresent a balanced and understandable assessment of the Group’s financial position and prospects.

TheStatementbyDirectorspursuanttoSection251(2)oftheCompaniesAct2016issetoutinpage63ofthisAnnualReport.


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In compliance with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the following information is provided:

(1) Audit Fees

The amount of audit fees payable to the external auditors by the Company and by the Group for the financial year ended31March2021areRM36,000andRM161,794respectively.

(2) Non-Audit Fees

The amount of non-audit fees payable to the external auditors by the Company and by the Group for the financial year ended 31 March 2021 are RM15,000.

(3) Material Contracts involving Directors and Major Shareholders’ Interest

There were no material contracts entered into by the Company and its subsidiaries involving Directors’ or major shareholders’ interests that were still subsisting at the end of the financial year ended 31 March 2021.

(4) Private Placement

On 17August 2020, theCompany issued 5,400,000 newordinary shares atRM0.27 per share amounted toapproximately RM1,458,000 via its Private Placement exercise. The amount has been fully utilised for payments made to payables in relation to the construction of a new warehouse.

(5) Free Warrants

On9November2020, theCompanyhadannouncedaproposal toundertakean issuanceof110,699,999 freewarrants in XHH (“Warrants”) on the basis of 1 Warrant for every 2 ordinary shares in XHH (“XHH Share” or “Shares”) (“Proposed Free Warrants Issue”). The shareholders have approved the Proposed Free Warrants Issue during the extraordinary general meeting held on 23 December 2020

The Proposed Free Warrants Issue has been completed on 25 January 2021 with an exercise price of RM0.33 following the admission of the Warrants to the Official List of Bursa Securities and the listing and quotation of 110,699,996 Warrants on the Main Market of Bursa Securities on 25 January 2021

There are no warrants exercised during the financial year.

(6) Public Reprimand

On 24 June 2021, Bursa Malaysia Securities Berhad (“Bursa Securities”) had publicly reprimanded the Company for the breach of certain provisions of the Main Market Listing Requirements (“MMLR”). Bursa Securities had also publiclyreprimandedandfinedtheExecutiveDirectors,Mr.NgAikChuanandMr.NgYamPin,ofRM100,000andRM50,000 respectively for the breach of certain provisions of the MMLR.

ADDITIONAL COMPLIANCE INFORMATION


46

TheBoardofDirectorsofXinHwaHoldingsBerhad (“Board”) ispleased topresent theAuditandRiskManagementCommitteeReportforthefinancialyearended(“FYE”)31March2021.

COMPOSITION

TheAuditandRiskManagementCommittee(“ARMC”or“Committee”)comprisedthefollowingmembers:


Chairman Datuk Jory Leong Kam Weng* IndependentNon-ExecutiveDirector

MembersTan Sri Dr. Suleiman Bin MohamedLiew Chek Leong*

IndependentNon-ExecutiveChairmanIndependentNon-ExecutiveDirector

* A member of the Malaysian Institute of Accountants

MEETINGS

Four(4)ARMCMeetingswereheldduringtheFYE31March2021andthesummaryofattendanceofeachmemberisas follows:

Name of Committee’s members Number of meetings attended

Datuk Jory Leong Kam Weng 4/4

Tan Sri Dr. Suleiman Bin Mohamed 4/4

Liew Chek Leong 4/4 TheManagingDirector,ExecutiveDirectors,ChiefFinancialOfficer,internalaswellasexternalauditorsoftheCompanyattended some of the meetings held during the aforesaid financial year by invitation of the Committee.

Theexternalauditorswerepresentatthree(3)ARMCMeetingswhereastheinternalauditorswerepresentatfour(4)ARMCMeetings held during the financial year.

MinutesofeachARMCMeetingwererecordedandtabledforconfirmationatthenextmeetingandsubsequentlypresentto the Board of Directors (“Board”) at Board Meeting for information.

AUDIT AND RISK MANAGEMENT COMMITTEE REPORT

ANNUAL REPORT 2021

47

SUMMARY OF WORK OF THE COMMITTEE

ThefollowingworkswerecarriedoutbytheCommitteeduringtheFYE31March2021indischargingitsfunctionsandduties in accordance with its Terms of Reference:

(1) Reviewed the Company’s quarterly financial report through discussions with Management before recommending to the Board for consideration and approval, focusing particularly on financial reporting issues, significant judgement made by management and unusual events and compliance with accounting standards and other legal requirements.

(2) Reviewed / discussed with the internal auditors:

• theinternalauditplanforadequacyofscope,frequencyoftheinternalauditcycleforthefinancialyearandcoverageontheactivitiesoftheGroup.Auditareaswerediscussedandinternalauditplanwasapprovedforadoption; and

• theinternalauditreportspresentedbytheinternalauditorsontheirfindingsandrecommendationswithrespectto system and control weaknesses and management’s responses to these recommendations and actions taken to improve the system of internal control and procedures.

(3) Reviewed / discussed with the external auditors:

• theauditplanningmemorandum,auditstrategy,theirscopeofworkandauditfees;

• theresultsoftheannualauditandaccountingissuesarisingfromtheaudit,theirauditreportandmanagementletter together with management’s responses to the findings of the external auditors; and

• theimpactofanychangestotheaccountingstandards,theimpactandadoptionofnewaccountingstandardson the Company’s financial statements.

(4) Conducteddiscussionsessionswith theexternalauditors,without thepresenceofExecutiveDirectorsandtheManagement.

(5) Reviewed the performance of the external auditors and evaluated their suitability and independence before making recommendations to the Board on their re-appointment.

(6) Reviewed the annual audited financial statements of the Company prior to submission to the Board for consideration and approval. The review focused particularly on changes in accounting policy, significant matters highlighted including key audit matters, financial reporting issues, significant and unusual events/transactions and how these matters are addressed and compliance with applicable approved accounting standards in Malaysia.

(7) Reviewedonquarterlybasisontherelatedpartytransactions/recurrentrelatedpartytransactionsundertakenbythe Group.

(8) Reviewed the Risk Register, on annual basis.

(9) ReviewedtheAuditandRiskManagementCommitteeReportandStatementonRiskManagementandInternalControlpriortosubmissiontotheBoardforconsiderationandapprovalforinclusionintheAnnualReportoftheCompany.

(10) Reviewed and deliberated on the inquiries and responses to Bursa Malaysia Securities Berhad’s Investigation Department on the Independent Investigative Review conducted in 2019 on some alleged irregularities on transactions and payments of the Company.

(11) Reported to the Board on matters discussed and addressed at the meetings of the Committee.

AUDIT AND RISK MANAGEMENT COMMITTEE REPORT(CONT’D)


48

SUMMARY OF WORK OF THE INTERNAL AUDIT FUNCTION

The internal audit function, which is outsourced to a professional services firm is an integral part of the assurance mechanism in ensuring the Group’s system of internal control are adequate and effective. The internal auditors report directly to the Committee and assist the Committee in discharging its duties and responsibilities.

The internal auditors prepare and table the internal audit plan for the consideration and approval of the Committee. They conduct independent reviews of the key activities with the Group’s operations based on the audit plan approved by the Committee.DuringtheFYE31March2021,theinternalauditorsattendedfour(4)ARMCMeetingstopresenttheirauditplan as well as report to the Committee the internal audit reports and provide their independent views on the adequacy, integrity and effectiveness of the system of internal control after their review and recommendations to improve it.

Prior to the presentation of reports to the Committee, comments from the Management are obtained and incorporated into the internal audit findings and reports.

The internal auditors also followed-up on the implementation of the recommendations and management action plans and reported to the Committee on status of implementation.

The reviews conducted by the internal auditors during the financial year are on the following areas:

Audit Entity Audited Areas

XinHwaTrading&TransportSdn.Bhd.

• HumanResourcesManagement

• FinanceandAccountsManagement

• BusinessContinuityManagement

ThecostsincurredinmaintainingtheoutsourcedinternalauditfunctionfortheFYE31March2021isRM50,000.

OTHER INFORMATION

TheNominatingCommitteehadatitsmeetingheldon25August2021reviewedthetermofofficeoftheARMCmembersand assessed the performance the Committee as a whole and each of its members through an annual Board Committees effectiveness assessment. TheNominatingCommittee is satisfied that theARMCand itsmembersdischarged theirfunctions,dutiesandresponsibilitiesinaccordancewiththeTermsofReferenceoftheARMC.TheassessmentresultwasreportedtotheBoardandtheBoardisinconcurrencewiththeNominatingCommitteeontheperformanceoftheARMCanditsmembers.

AUDIT AND RISK MANAGEMENT COMMITTEE REPORT(CONT’D)

ANNUAL REPORT 2021

49

TheBoardofDirectorsofXinHwaHoldingsBerhad(“Board”)ispleasedtopresenttheNominatingCommitteeReportcomprisinginformationoncompositionandactivitiesoftheNominatingCommittee(“NC”or“Committee”)indischargingits duties for the financial year ended 31 March 2021.

COMPOSITION

TheNCcomprisedthefollowingmembers:


Chairman Tan Sri Dr. Suleiman Bin Mohamed IndependentNon-ExecutiveChairman

MembersDatuk Jory Leong Kam Weng IndependentNon-ExecutiveDirector

ACTIVITIES OF THE COMMITTEE

ThesummaryofactivitiesoftheNCindischargingitsdutiesforthefinancialyearended31March2021isasfollows:

(1) Review of the Performance and Effectiveness of the Board, Board Committees and Individual Director

Directors’SelfEvaluation

The evaluation forms were circulated to each and every Director for completion. The Directors are required to assess his/her own performance by scoring in between 1 point to 5 points based on the questionnaire provided. TheevaluationresultsweretabledattheNCMeetingforreviewbytheNC.Basedontheoutcomeoftheevaluationconducted,theNCissatisfiedwiththeperformanceoftheindividualDirectors.

EvaluationontheeffectivenessoftheBoardandBoardCommittees

The evaluation forms were completed by the members of the Board and the respective Board Committees. They are required to assess the performance of the Board / Committee as a whole based on the questionnaire provided. TheevaluationresultsweretabledattheNCMeetingforreviewbytheNC.Basedontheoutcomeoftheevaluationconducted(excludingevaluationofNCwhichwascarriedoutbytheBoardasawhole),theNCisoftheviewthatthe Company had an effective Board and its current composition was well-balanced after taking into account the Board members’ experience and exposure in various areas as well as their diverse skill and qualities.

TermofofficeandperformanceoftheAudit&RiskManagementCommittee

TheperformanceoftheAudit&RiskManagementCommittee(“ARMC”)anditsmembersasassessedbyeachNCmember(withtheNCmemberwhowasalsoamemberoftheARMCabstainedfromdecisionontheirownself-evaluation), displayed commendable efforts and satisfactory and term of office of its members would remain status quo.

NOMINATING COMMITTEE REPORT


50

ACTIVITIES OF THE COMMITTEE (CONT’D)

(2) Annual Assessment on Board Independence

TheNChadcarriedoutanannualassessmentoftheindependenceoftheindependentdirectorsduringthefinancialyear ended 31 March 2021. The criteria used in assessing the independence of the independent directors are based on the definition in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Listing Requirements”) and whether they are able to provide objective and independent views on various issues dealt with at Board and Board Committee level.

TheNChasreviewedconfirmationlettersfromtheCompany’sindependentdirectorsconfirmingtheirindependencewith the exercise of their independent judgement and ability to act in the best interest of the Company.

Basedon the followingassessment, theNChas reported to theBoard that to thebest of its knowledge, theindependent directors were free from influence that could interfere with their ability to exercise impartial judgment on key deliberations and decisions:

• Allindependentdirectorsfulfilledthedefinitionof‘independentdirector’assetoutintheListingRequirements;• AllindependentdirectorshadconfirmedtheirindependencebygivingtheBoardawrittenconfirmationoftheir

independence; and• All independent directors hadacted independently onmanagement and free fromanybusinessor other

relationship.

(3) Evaluation of Directors Standing for Re-election

TheNCisresponsibleformakingrecommendationtotheBoardontheeligibilityoftheDirectorstostandforre-electionattheAnnualGeneralMeeting(“AGM”).

TheNChasreviewedthedirectorswhoweresubjecttoretirementbyrotationunderArticle107oftheConstitutionoftheCompanyandrecommendedthemforre-electionasDirectorsoftheCompanyattheforthcomingAGMuponassessment of their skill, experience and qualities required by the Company.

NOMINATING COMMITTEE REPORT(CONT’D)

ANNUAL REPORT 2021

51

INTRODUCTION

The Board of Directors is pleased to present the Statement on Risk Management and Internal Control for the financial year ended 31 March 2021, issued in compliance with Paragraph 15.26(b) of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”), Principle B of the Malaysian Code on Corporate Governance, with guidance from the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers.

The risk management and internal control system have been in place for the financial year under review and up to the date of approval of this statement.

RESPONSIBILITY

The Board acknowledges its overall responsibility in establishing a sound risk management framework and internal control system as well as reviewing its adequacy and effectiveness. The Board is of the view that the risk management framework and internal control system are designed to manage the Group’s risks within the acceptable risk appetite, rather than to eliminate the risk of failure to achieve the business goals and objectives. It can therefore only provide reasonable, rather than absolute assurance against material misstatement, fraud or loss.

The Board has established appropriate control structure and process for identifying, evaluating, monitoring, managing and responding to significant risks faced by the Group in its achievement of the business goals and objectives. The control structure and process which have been instituted throughout the Group are reviewed and updated from time to time in response to the changes in the business environment, and this on-going process has been in place for the whole financial yearunderreviewanduptothedateofapprovaloftheStatementonRiskManagement&InternalControlforinclusionintheAnnualReport.

Management is responsible for implementing the Group’s policies and procedures on risk management and internal controls by identifying and evaluating risks faced and monitoring the achievement of business goals and objectives within the risk appetite parameters. Its roles include:

• Identifyingandevaluatingtherisksfaced,andtheachievementofbusinessobjectivesandstrategies;• Formulatingrelevantpoliciesandprocedurestomanagetheserisks;• Designing,implementingandmonitoringtheeffectiveimplementationofriskmanagementframeworkandinternal

control system; • ImplementingthepoliciesapprovedbytheBoard;and• ReportinginatimelymannertotheBoardanychangestotherisksandthecorrectiveactionstaken.

RISK MANAGEMENT

Risk Management Framework

The Group has put in place Risk Management Framework which outlines the Group’s risks and the on-going process for identifying, evaluating, managing, monitoring and communicating the risks faced by the Group throughout the financial year under review up to date of approval of the Statement of Risk Management and Internal Control. The framework also categories the risks in relation to strategic, operational, financial and compliance matters based on the Group business objectives.

STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL


52

RISK MANAGEMENT (CONT’D)

Risk Management Oversight

The Board regards risk management as an integral part of the Group’s business operations and has oversight over this critical areathroughAuditandRiskManagementCommittee(“ARMC”).ARMChasdelegatedtheoversightriskmanagementtotheExecutiveDirectorsandSeniorManagementoftheGroup.TheysupporttheBoardinmonitoringourriskexposures,thedesignandoperatingeffectivenessoftheunderlyingriskmanagementandinternalcontrolsystems.TheExecutiveDirectors and Senior Management of the Group assist the Board, to oversee the following processes:

(i) periodic reviews of the principal business risk, and control measures to mitigate or reduce such risks, the strengths and weaknesses of the overall internal controls system and action plans to address the weaknesses or to improve the assessment process;

(ii) periodic reviews of the business process and operations reported by the internal audit, including action plans to address the identified control weaknesses and status update and monitor in implementing its recommendations; and

(iii) reports by the external auditors of any control issues identified in the course of their audit related and non-audit related work and the discussion with the external auditors of the scope of their respective review and findings.

TheARMCwillthenupdatetheBoardwiththeissuesraisedduringtheARMCmeetings.

TheBoardconsiderstheworksandfindingsoftheARMCinformingitsownviewontheeffectivenessofthesystem.

With the increasingly dynamic and complex business environment, it is crucial that we understand the link between risk, internal controls, strategy and value. This link is formalized through an alignment of our strategy, risk and internal processes, which support fulfillment of our strategic priorities, thereby delivering value for all shareholders. The Group’s risk and opportunities strategy was part of the assessment requirement for ISO 9001:2015 certification.

SIGNIFICANT OR PRINCIPAL RISKS

The Group has identified the following risks that are significant to the business operations.

Market Risks

• Lossofkeycustomers

Loss of key customers is due to macroeconomic downturn, other market conditions and stiff competition. The Group has various measures in place, amongst others, allocating key personnel to manage and maintain good relationship with key customers.

• Escalatingcostofservicesincludingcrudeoilpricesfluctuation

The price of diesel is subject to market volatility which in turn affects the Group’s profitability. In addition, other related cost of services may also be indirectly affected by the fluctuation in crude oil prices. We model our business plans across a broad range of market and economic scenarios and take account of alternative economic outlooks within our overall business strategy.

Operational Risks

• Warehousesandassetsmanagement

The Group has a number of material sized business premises and warehouses which are vital to the business operations. The risk of fire, natural disasters such as flood and civil or labour unrest may result in significant losses to the Group. The Group addresses the risk by periodic review on the adequacy of the fire insurance coverage, including business interruption cover. On-going safety trainings and audits are conducted from time to time.

STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL(CONT’D)

ANNUAL REPORT 2021

53

SIGNIFICANT OR PRINCIPAL RISKS (CONT’D)

Financial Risks

• Creditrisk

The Group is exposed to financial risk arising from the inability to recover debts which may affect the Group’s profitability, cash flow and funding.

Whistleblowing Policy

• TheGrouphasputinplaceawhistleblowingpolicywhichallowssupportsandencouragesitsemployeesandthirdparties to report and disclose any improper or illegal activities within the Group.

INTERNAL AUDIT FUNCTION

TheGrouphasoutsourcedtheInternalAuditFunctiontoanindependentprofessionalfirm,CGRMInfocommSdnBhd(“CGRM”)whichreportsdirectlytotheARMContheadequacyandeffectivenessoftheGroup’sriskmanagementandinternalcontrols.TheARMCreviewsannuallyontheadequacyof thescope, function,competencyandresourcesofinternal auditors to ensure that they are able to fully discharge their responsibilities. The internal auditors declared their independencetotheARMCandarefreefromconflictofinterestandanymatterswhichcouldimpairtheirobjectivityandindependence.

The internal auditors conduct its internal audit duties in accordance with an annual internal audit plan developed based on a risk-based approach. The internal audit work is based on the standards and best practices set out by professional bodies, primarilyconsistentwiththeInternationalProfessionalPracticesFrameworkissuedbytheInstituteofInternalAuditorsand where applicable, reference is made to the standards and statements issued by international accounting bodies. The internalauditplanandanysubsequentamendmentsarereviewedandapprovedbytheARMCpriortotheirexecution.

The internal auditors review the Group’s operations and business processes according to the approved annual internal audit plan, examine and evaluate the adequacy and effectiveness of financial and operating controls. The internal auditors highlight thesignificantrisksandnon-compliancesthatmayimpacttheGrouptotheARMCandManagement.Recommendationson improvements were given on the overall effectiveness of risk management, control and governance processes.

Amatrixwhichcoverstheoverallauditratings,natureofworkandscope,andauditissuesanditsprioritieshavebeendeveloped as a template to guide the conduct of the follow up audit. For the financial year under review, the internal auditors conducted four internal audits, the areas covered for this audits relating to:

• HumanResourceManagement;• FinanceandAccountsManagement;and• BusinessContinuityManagement;

AndfollowuponthestatusoftheManagement’simplementationofrecommendationraisedinthepreviousreports.Includedin the reports are recommended corrective measures on risks identified, if any, for implementation by Management. The internal auditor also conducts subsequent follow-up work to check that Management has dealt with the recommendations satisfactorily.Theseinternalauditreportstogetherwithfollow-upreportsweretabledatthequarterlyARMCmeetingsfordeliberation.

The internal audit reviews during the financial year had identified some weaknesses in internal control. These weaknesses have neither materially impacted the business or operations of the Group nor caused any material losses to the Group. Management has either taken the necessary measures to address these weaknesses or is in the process of addressing them.



54

INTERNAL AUDIT FUNCTION (CONT’D)

The other key elements of the procedures established by the Board that provides effective internal control include:

• QuarterlyreviewofthefinancialperformanceoftheGroupbytheBoardandtheARMC;• AnISO9001QualityManagementSystemCommitteereviewsprocessesanddocumentation.Surveillanceaudits

are conducted by assessors of the ISO certification bodies on a yearly basis to ensure that the system is adequately implemented.Areasforimprovementarehighlightedandtheimplementationofitsrecommendationsismonitored;

• TheGrouphasanorganizationalstructurethatisalignedwiththebusinessandoperationalrequirement,withclearlydefined lines of responsibility and authority levels;

• TheGrouphasinplaceaManagementInformationSystemthatcaptures,compiles,analysesandreportsrelevantdata, which enables management to make business decisions in an accurate and timely manner. Management and financial reports are generated regularly to facilitate the Board and the management in performing financial and operating reviews of the various operating units;

• Policies,ProceduresandStandardOperatingProcedureswhicharesystematicallydocumented,revisedandmadeavailable to guide staff in performing their daily operations;

• Operationsreviewmeetingsareheldbytherespectivebusinessunitstomonitortheprogressofbusinessoperations,deliberate significant issues and formulate corrective measures;

• Astructuredrecruitmentprocess,aperformanceappraisalsystemandawidevarietyoftraininganddevelopmentprograms are in place to maintain staff competency;

• PeriodicinternalqualityinspectiontomonitorcompliancewithISOrequirements;• Annualbudgetingprocessisinplaceandperformanceismonitoredonanongoingbasis;• Monthlymanagementmeetingtoaddressbudgets,operationalandfinancialperformance,businessplanning,control

environment and other key issues;• CloseandactiveinvolvementoftheExecutiveDirectorsontheday-to-daybusinessoperationsoftheGroup;• Health,SafetyandEnvironmentalCommitteehasbeenestablishedinordertoreviewandensurecompliancewith

occupational safety and health policies and procedures on a continual basis.

CONCLUSION

The Board believes that the Group’s risk management and internal control systems provide reasonable, but not absolute, assurance that weaknesses or deficiencies are identified on a timely basis and dealt with appropriately. Further, The Board has received reasonable assurance from the Managing Director that the Group’s risk management and internal control system are operating adequately and effectively, in all material aspects, during the financial year under review and up to thedateofapprovalofthisStatementforinclusionintheAnnualReport.

The Board is of the view that the risk management and internal control system are adequate to safeguard shareholders’ investmentsandtheGroup’sassetsandhavenotresultedinanymateriallossesthatwouldrequiredisclosureintheAnnualReport for the year ended 31 March 2021.

The Board is committed towards maintaining a sound system of internal control and effective risk management throughout the Group and reaffirms its commitment to take measures to preserve, protect and strengthen the risk management and internal control environment.


ANNUAL REPORT 2021

55

THE REVIEW OF THE STATEMENT BY THE ExTERNAL AUDITORS

The external auditors have reviewed this Statement of Risk Management and Internal Control as required by Paragraph 15.23 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad for the financial year ended 31 March2021.TheirreviewwasperformedunderalimitedassuranceengagementinaccordancewithAuditandAssurancePracticeGuide(“AAPG”)3:GuidanceforAuditorsonEngagementstoReportontheStatementofRiskManagementandInternalControlincludedintheAnnualReport,issuedbytheMalaysianInstituteofAccountants.AAPG3doesnotrequirethe external auditors to form an opinion on the adequacy and effectiveness of the risk management and internal control systems of the Group.

Based on the engagement performed, the external auditors have reported to the Board that nothing had come to their attention that had caused them to believe that this Statement on Risk Management and Internal Control is inconsistent with their understanding of the processes the Board has adopted in the review of the adequacy and integrity of the risk management and internal control systems of the Group.


FINANCIALSTATEMENTSFortheFinancialYearEnded31March2021

57 Directors’Report

63 Statement by Directors

63 Statutory Declaration

64 IndependentAuditors’Report

68 Statements of Financial Position

70 StatementsofProfitorLossandOther Comprehensive Income

72 StatementsofChangesinEquity

75 StatementsofCashFlows

78 NotestotheFinancialStatements

ANNUAL REPORT 2021

57

The directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 March 2021.

PRINCIPAL ACTIVITIES

The Company is principally engaged in the business of investment holding and the provision of management services. TheprincipalactivitiesofthesubsidiariesaresetoutinNote6tothefinancialstatements.Therehavebeennosignificantchanges in the nature of these activities during the financial year.

RESULTS The Group The Company RM RM Profit/(Loss)aftertaxforthefinancialyear 3,055,796 (356,467)

Attributableto:-OwnersoftheCompany 2,996,413 (356,467)Non-controllinginterests 59,383 – 3,055,796 (356,467)

DIVIDENDS

Nodividendwasrecommendedbythedirectorsforthefinancialyear.

RESERVES AND PROVISIONS

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

ISSUES OF SHARES AND DEBENTURES

During the financial year:-

(a) theCompanyincreaseditsissuedandpaid-upsharecapitalfromRM107,999,999toRM109,457,999bywayofissuanceof 5,400,000newordinary shares for a cashconsiderationofRM0.27each viaprivateplacement asdisclosedinNote15tothefinancialstatements.

The new ordinary shares issued rank pari passu in all respects with the existing ordinary shares of the Company.

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

Subsequenttothefinancialyear,theCompanyissued6,750,000newordinarysharesatRM0.3717pershareforacashconsiderationofRM2,508,975viaprivateplacement.

DIRECTORS’ REPORT


58

WARRANTS

Asattheendofthefinancialyear,theCompanyhasthefollowingoutstandingwarrants:

WarrantsExercise price per ordinary share Expiry date

Number of warrants outstanding as at 31.3.2021

Warrants 2021/2024 RM0.33 12 January 2024 110,699,999

Warrants 2021/2024 were issued on 15 January 2021 pursuant to the bonus issue of 110,699,999 free warrants in the Company on the basis of one free warrant for every two existing ordinary shares in the Company. The warrants entitle the holders to subscribe for new ordinary shares in the Company on the basis of one new ordinary share for every warrant held at an exercise price of RM0.33 per ordinary share within 3 years from the date of the issue of the warrants. The exercise price of the warrants is subject to adjustment from time to time in accordance with the conditions stipulated in the Deed Poll created on 29 December 2020.

OPTIONS GRANTED OVER UNISSUED SHARES

During the financial year, no options were granted by the Company to any person to take up any unissued shares in the Company other than issuance of warrants as disclosed above.

BAD AND DOUBTFUL DEBTS

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for impairment losses on receivables and satisfied themselves that there are no known bad debts and that adequate allowance had been made for impairment losses on receivables.

Atthedateofthisreport,thedirectorsarenotawareofanycircumstancesthatwouldrequirethewritingoffofbaddebts,orthe additional allowance for impairment losses on receivables in the financial statements of the Group and of the Company.

CURRENT ASSETS

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

Atthedateofthisreport,thedirectorsarenotawareofanycircumstanceswhichwouldrenderthevaluesattributedtothe current assets in the financial statements misleading.

VALUATION METHODS

Atthedateofthisreport,thedirectorsarenotawareofanycircumstanceswhichhavearisenwhichrenderadherenceto the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

DIRECTORS’ REPORT(CONT’D)

ANNUAL REPORT 2021

59

CONTINGENT AND OTHER LIABILITIES

Atthedateofthisreport,theredoesnotexist:-

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

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

NocontingentorotherliabilityoftheGroupandoftheCompanyhasbecomeenforceableorislikelytobecomeenforceablewithin the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations when they fall due.

CHANGE OF CIRCUMSTANCES

Atthedateofthisreport,thedirectorsarenotawareofanycircumstancesnototherwisedealtwithinthisreportorthefinancial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.

ITEMS OF AN UNUSUAL NATURE

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

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

DIRECTORS

The names of directors of the Company who served during the financial year and up to the date of this report are as follows:-

NgAikChuanNgYamPinKok Poh Fui Tan Sri Dr. Suleiman Bin MohamedDatin Rahmah Binti Mahmood (Resigned on 09.10.2020)Datuk Leong Kam Weng Liew Chek Leong

The names of directors of the Company’s subsidiaries who served during the financial year and up to the date of this report, not including those directors mentioned above, are as follows:-

EngPengLam@NgPengLamMdZaliszanBinAhmadKusainiMohdAzarBinRahmatMohd Johari Bin Mohamed Ripin NgYunTingSoo Boon Meng Soo Kok HwaKosiin DidikUtomoWahyudin SamsulraziBinHassan(Appointedon1.6.2020)



60

DIRECTORS’ INTERESTS

Accordingtotheregisterofdirectors’shareholdings,theinterestsofdirectorsholdingofficeattheendofthefinancialyearin shares of the Company and its related corporations during the financial year are as follows:-

Number of Ordinary Shares At At 1.4.2020 Bought Sold 31.3.2021

The Company Direct Interests KokPohFui 182,400 – – 182,400TanSriDr.SuleimanBinMohamed 120,000 – – 120,000DatukLeongKamWeng 120,000 – – 120,000LiewChekLeong 120,000 – – 120,000NgAikChuan – 4,647,600 – 4,647,600 Indirect Interests KokPohFui* 370,080 – (100,000) 270,080NgAikChuan*# 137,172,537 – – 137,172,537NgYamPin# 137,052,537 – – 137,052,537

Holding Company NFCapitalManagementSdn.Bhd. Direct Interests NgAikChuan 31 152,969 – 153,000NgYamPin 30 152,970 – 153,000

Indirect Interests NgAikChuan^ 40 203,960 – 204,000NgYamPin^ 40 203,960 – 204,000


ANNUAL REPORT 2021

61

DIRECTORS’ INTERESTS (CONT’D)

Accordingtotheregisterofdirectors’shareholdings,theinterestsofdirectorsholdingofficeattheendofthefinancialyearin shares of the Company and its related corporations during the financial year are as follows (Cont’d):-

Number of Warrant 2021/2024 At At 1.4.2020 Allotment Sold 31.3.2021

The Company Direct Interests KokPohFui – 91,200 – 91,200TanSriDr.SuleimanBinMohamed – 60,000 – 60,000DatukLeongKamWeng – 60,000 – 60,000LiewChekLeong – 60,000 – 60,000NgAikChuan – 2,323,800 (2,323,800) – Indirect Interests KokPohFui* – 135,040 – 135,040NgAikChuan*# – 68,586,268 (68,526,268) 60,000NgYamPin# – 68,526,268 (68,526,268) – * Deemed interested through spouse’s shareholding in the Company.^ Deemedinterestedthroughparent’sshareholdinginNFCapitalManagementSdn.Bhd.# DeemedinterestedbyvirtueofhisdirectsubstantialshareholdinginNFCapitalManagementSdn.Bhd.

Byvirtueoftheirshareholdingsintheholdingcompany,NgAikChuanandNgYamPinaredeemedtohaveinterestsin shares in the Company and its related corporations during the financial year to the extent of the holding company’s interests,inaccordancewithSection8oftheCompaniesAct2016.

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of remuneration received or due and receivable by directors shown in the financial statements, or the fixed salary of a full-time employee of the Company or related corporations) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except for any benefits which may be deemed to arise from transactions entered into in the ordinary course of business with companies in which certain directors have substantialfinancialinterestsasdisclosedinNote33(b)tothefinancialstatements.

NeitherduringnorattheendofthefinancialyearwastheGrouportheCompanyapartytoanyarrangementswhoseobject is to enable the directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

DIRECTORS’ REMUNERATION

The details of the directors’ remuneration paid or payable to the directors of the Group and of the Company during the financialyeararedisclosedinNote32(a)tothefinancialstatements.



62

INDEMNITY AND INSURANCE COST

The Company maintains a Directors’ and Officers’ Liability Insurance Policy on a group basis. During the financial year, the amount of indemnity coverage and insurance premium paid for the directors and certain officers of the Group were RM3,000,000 and RM4,800 respectively.

There was no indemnity given to or professional indemnity insurance effected for the auditors of the Company.

SUBSIDIARIES

ThedetailsoftheCompany’ssubsidiariesaredisclosedinNote6tothefinancialstatements.

HOLDING COMPANY

TheholdingcompanyisNFCapitalManagementSdn.Bhd.,aprivatelimitedliabilitycompanyincorporatedinMalaysia.

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

ThesignificanteventsduringthefinancialyeararedisclosedinNote37tothefinancialstatements.

SIGNIFICANT EVENTS OCCURRING AFTER THE REPORTING PERIOD

ThesignificanteventsoccurringafterthereportingperiodaredisclosedinNote38tothefinancialstatements.

AUDITORS

The auditors, Crowe Malaysia PLT, have expressed their willingness to continue in office.

Thedetailsoftheauditors’remunerationaredisclosedinNote26tothefinancialstatements.

Signed in accordance with a resolution of the directors dated 6 July 2021.

Ng Aik Chuan

Ng Yam Pin


ANNUAL REPORT 2021

63

We,NgAikChuanandNgYamPin,beingtwoofthedirectorsofXinHwaHoldingsBerhad,statethat,intheopinionofthe directors, the financial statements set out on pages 68 to 144 are drawn up in accordance with Malaysian Financial ReportingStandards,InternationalFinancialReportingStandardsandtherequirementsoftheCompaniesAct2016inMalaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 March 2021 and of their financial performance and cash flows for the financial year ended on that date.

Signed in accordance with a resolution of the directors dated 6 July 2021.

Ng Aik Chuan Ng Yam Pin

STATEMENT BY DIRECTORSPURSUANTTOSECTION251(2)OFTHECOMPANIESACT2016

STATUTORY DECLARATIONPURSUANTTOSECTION251(1)(b)OFTHECOMPANIESACT2016

I,TanTeckHock,MIAMembershipNumber:45332,beingtheofficerprimarilyresponsibleforthefinancialmanagementof Xin Hwa Holdings Berhad, do solemnly and sincerely declare that the financial statements set out on pages 68 to 144 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the declarationtobetrue,andbyvirtueoftheStatutoryDeclarationsAct1960.

Subscribed and solemnly declared by the abovementionedTan Teck Hock at Johor Bahru in the State of Johoron this 6 July 2021.

Before me Tan Teck Hock

Nur Amreeta Kaur Gubachen Singh(No.J276)Commissioner for Oaths


64

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

We have audited the financial statements of Xin Hwa Holdings Berhad, which comprise the statements of financial position as at 31 March 2021 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 68 to 144.

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 March 2021, and of their financial performance and their cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirementsoftheCompaniesAct2016inMalaysia.

Basis for Opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing.OurresponsibilitiesunderthosestandardsarefurtherdescribedintheAuditors’ResponsibilitiesfortheAuditof the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence and Other Ethical Responsibilities

WeareindependentoftheGroupandoftheCompanyinaccordancewiththeBy-Laws(onProfessionalEthics,ConductandPractice)of theMalaysian InstituteofAccountants (“By-Laws”)and the InternationalEthicsStandardsBoard forAccountants’InternationalCodeofEthicsforProfessionalAccountants(includingInternationalIndependenceStandards)(“IESBACode”),andwehavefulfilledourotherethicalresponsibilitiesinaccordancewiththeBy-LawsandtheIESBACode.

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.

INDEPENDENT AUDITORS’ REPORT TOTHEMEMBERSOFXINHWAHOLDINGSBERHAD

ANNUAL REPORT 2021

65

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONT’D)

Key Audit Matters (Cont’d)

Existence of Property, Plant and EquipmentRefertoNote7tothefinancialstatements

Key Audit Matter How our audit addressed the Key Audit Matter

The Group carries significant property, plant and equipment andright-of-useassetswithcarryingamountofRM275.3million in the financial statements of the Group.

During the financial year, there are new additions of RM35.2 million in property, plant and equipment.

Included in the property, plant and equipment are trucks, prime movers and trailers with carrying amount of RM41.8 million in the financial statements of the Group which are moveable among multiple locations on daily basis.

Our audit procedures included, amongst others: • Examinedthesupportingdocumentsforthecostof

additions.• Ascertainedbusiness rationales inconnectionwith

the additions of property, plant and equipment.• Performedphysicalsightingfortheproperty,plantand

equipment to ensure good working condition; and• Inspected the original documents to support

ownership of the Group’s prime movers and trailers and properties.

Recoverability of Trade ReceivablesRefertoNote13tothefinancialstatements

Key Audit Matter How our audit addressed the Key Audit Matter

The Group has material credit exposures in its trade receivables. The assessment of impairment involves significant estimation uncertainty, subjective assumptions and the application of significant judgements.

Attheendofthefinancialyear,thecarryingamountofthetrade receivables of the Group is RM28.3 million which is netoftheaccumulatedimpairmentlossofRM7.3million.

Our audit procedures included, amongst others: • ReviewedtheGroupcreditriskpoliciesonimpairment

losses for trade receivables;• Testedthereliabilityandaccuracyofageingreport;• Performedrecoverabilityreviewontradereceivables;• Evaluated the reasonableness on the impairment

losses provided or reversed in accordance with the Group credit risk policies and taking into consideration the impactofCOVID-19pandemicandMovementControl Order; and

• Assessedtheadequacyofdisclosuresinthenotesto the financial statements.

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 Directors’ Report, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon, which we obtained prior to the date of this auditors’ report, and the annual report, which is expected to be made available to us after the date of this auditors’ report.

Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not express and will 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 identified above 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.

INDEPENDENT AUDITORS’ REPORT (CONT’D)


66


Information Other than the Financial Statements and Auditors’ Report Thereon (Cont’d)

If, based on the work we have performed on the other information that we obtained prior to the date of this auditors’ report, 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.

When we read the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors of the Company and take appropriate action.

Responsibilities of the Directors for the Financial Statements

The directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting StandardsandtherequirementsoftheCompaniesAct2016inMalaysia.Thedirectorsarealsoresponsibleforsuchinternalcontrol as the directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements of the Group and of the Company, the directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance withapprovedstandardsonauditinginMalaysiaandInternationalStandardsonAuditingwillalwaysdetectamaterialmisstatement 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. AspartofanauditinaccordancewithapprovedstandardsonauditinginMalaysiaandInternationalStandardsonAuditing,we exercise professional judgement and maintain professional scepticism throughout the audit. We also:-

• IdentifyandassesstherisksofmaterialmisstatementofthefinancialstatementsoftheGroupandoftheCompany,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.

• Obtainanunderstandingofinternalcontrolrelevanttotheauditinordertodesignauditproceduresthatareappropriatein 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 theappropriatenessofaccountingpoliciesusedand the reasonablenessofaccountingestimatesandrelated disclosures made by the directors.

• Concludeontheappropriatenessofthedirectors’useofthegoingconcernbasisofaccountingand,basedonthe 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.


ANNUAL REPORT 2021

67


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

• Evaluatetheoverallpresentation,structureandcontentofthefinancialstatementsoftheGroupandoftheCompany,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.

• Obtainsufficientappropriateauditevidenceregardingthefinancialinformationoftheentitiesorbusinessactivitieswithin 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, actions taken to eliminate threats or safeguards applied.

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.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

InaccordancewiththerequirementsoftheCompaniesAct2016inMalaysia,wereportthatthesubsidiariesofwhichwehavenotactedasauditors,aredisclosedinNote6tothefinancialstatements.

OTHER MATTERS

This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act2016inMalaysiaandfornootherpurpose.Wedonotassumeresponsibilitytoanyotherpersonforthecontentofthis report.

Crowe Malaysia PLT Piong Yew Peng201906000005(LLP0018817-LCA)&AF1018 03070/06/2023JCharteredAccountants CharteredAccountant

Johor Bahru

6 July 2021



68

The Group The Company 2021 2020 2021 2020 Note RM RM RM RM (Restated) ASSETS NON-CURRENTASSETS Investmentsinsubsidiaries 6 – – 72,374,053 72,374,053Property,plantandequipment 7 275,331,195 250,276,937 – –Right-of-useassets 8 25,656,723 26,820,712 – –Amountowingbysubsidiaries 9 – – 37,260,055 35,993,493Goodwill 10 345,405 345,405 – –Prepayments 13 27,065,017 27,065,017 – – 328,398,340 304,508,071 109,634,108 108,367,546 CURRENTASSETSInventories 11 1,514,362 1,966,415 – –Tradereceivables 12 28,175,838 26,577,514 – –Other receivables, depositsandprepayments 13 3,668,268 3,769,577 2,500 2,500Currenttaxassets 1,740,425 1,832,025 – 93,398Fixed deposits with licensedbanks 14 157,901 26,408 – –Cash and bank balances 5,400,509 3,402,249 54,309 9,030 40,657,303 37,574,188 56,809 104,928 TOTALASSETS 369,055,643 342,082,259 109,690,917 108,472,474

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

STATEMENTS OF FINANCIAL POSITION FORTHEFINANCIALYEARENDED31MARCH2021

ANNUAL REPORT 2021

69

The Group The Company 2021 2020 2021 2020 Note RM RM RM RM EQUITY AND LIABILITIES EQUITYSharecapital 15 109,457,999 107,999,999 109,457,999 107,999,999Reserves 16 75,383,389 72,287,247 (1,190,100) (833,633) Equityattributableto ownersoftheCompany 184,841,388 180,287,246 108,267,899 107,166,366Non-controllinginterests 2,607,667 2,486,755 – – TOTALEQUITY 187,449,055 182,774,001 108,267,899 107,166,366 NON-CURRENTLIABILITIESLeaseliabilities 17 950,493 1,391,844 – –Termloans 18 102,222,120 90,130,421 – –Deferredtaxliabilities 19 13,764,000 13,246,900 – – 116,936,613 104,769,165 – – CURRENTLIABILITIESTradepayables 20 7,340,294 8,532,476 – –Otherpayablesandaccruals 21 21,604,572 16,029,039 263,705 179,553Amountowingtosubsidiaries 9 – – 1,002,522 1,126,555Leaseliabilities 17 789,575 1,200,662 – –Termloans 18 17,350,052 13,962,829 – –Bankers’acceptances 22 4,150,000 5,200,000 – –Bankoverdrafts 23 13,191,717 9,574,108 – –Currenttaxliabilities 243,765 39,979 156,791 – 64,669,975 54,539,093 1,423,018 1,306,108 TOTALLIABILITIES 181,606,588 159,308,258 1,423,018 1,306,108 TOTALEQUITYANDLIABILITIES 369,055,643 342,082,259 109,690,917 108,472,474


STATEMENTS OF FINANCIAL POSITION (CONT’D)


70

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FORTHEFINANCIALYEARENDED31MARCH2021

The Group The Company 2021 2020 2021 2020 Note RM RM RM RM REVENUE 24 97,755,953 117,270,466 – 2,620,000 COSTOFSALES (62,508,634) (73,841,504) – – GROSSPROFIT 35,247,319 43,428,962 – 2,620,000 OTHERINCOME 379,643 517,980 1,305,191 1 35,626,962 43,946,942 1,305,191 2,620,001 ADMINISTRATIVEEXPENSES (27,377,486) (32,050,020) (1,312,713) (1,331,418) SELLINGANDDISTRIBUTION EXPENSES (771,384) (1,055,359) – – FINANCECOSTS (3,430,058) (4,192,526) (35,707) – NETIMPAIRMENTON FINANCIALASSET 25 561,120 (4,237,018) – – PROFIT/(LOSS)BEFORETAX 26 4,609,154 2,412,019 (43,229) 1,288,583 TAX(EXPENSE)/INCOME 27 (1,553,358) (1,292,250) (313,238) 8,800 PROFIT/(LOSS)AFTERTAX 3,055,796 1,119,769 (356,467) 1,297,383 OTHERCOMPREHENSIVE (EXPENSE)/INCOME 28ItemsthatWillNotbeReclassified Subsequently to Profit or Loss Remeasurement of deferred tax on revalued property, plant and equipment arising from change inrealpropertygainstax – (1,793,800) – – Items that Will be Reclassified Subsequently to Profit or Loss Foreign currency translation differences 161,258 (119,011) – – TOTALOTHERCOMPREHENSIVE INCOME/(EXPENSE) 161,258 (1,912,811) – – TOTALCOMPREHENSIVE INCOME/(EXPENSES)FOR THEFINANCIALYEAR 3,217,054 (793,042) (356,467) 1,297,383


ANNUAL REPORT 2021

71

The Group The Company 2021 2020 2021 2020 Note RM RM RM RM PROFIT/(LOSS) AFTER TAx ATTRIBUTABLE TO:- OwnersoftheCompany 2,996,413 1,072,892 (356,467) 1,297,383Non-controllinginterests 59,383 46,877 – – 3,055,796 1,119,769 (356,467) 1,297,383

TOTAL COMPREHENSIVE INCOME/(ExPENSES) ATTRIBUTABLE TO:- OwnersoftheCompany 3,096,142 (775,066) (356,467) 1,297,383Non-controllinginterests 120,912 (17,976) – – 3,217,054 (793,042) (356,467) 1,297,383

EARNINGS PER SHARE (SEN) 29 Basic 1.37 0.50Diluted 1.35 0.50


STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (CONT’D)


72

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STATEMENTS OF CHANGES IN EQUITYFORTHEFINANCIALYEARENDED31MARCH2021

ANNUAL REPORT 2021

73

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74

Share Accumulated Total Capital Losses Equity Note RM RM RM The Company Balanceat1.4.2019 107,999,999 (1,051,016) 106,948,983 Profit after tax/Total comprehensive incomeforfinancialyear – 1,297,383 1,297,383Dividends 30 – (1,080,000) (1,080,000) Balanceat31.3.2020/1.4.2020 107,999,999 (833,633) 107,166,366 Loss after tax/Total comprehensive expenseforfinancialyear – (356,467) (356,467)Issuanceofordinaryshares 15 1,458,000 – 1,458,000 Balanceat31.3.2021 109,457,999 (1,190,100) 108,267,899


STATEMENTS OF CHANGES IN EQUITY(CONT’D)

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The Group The Company 2021 2020 2021 2020 Note RM RM RM RM CASHFLOWSFROM/(FOR) OPERATINGACTIVITIESProfit/(Loss) before tax 4,609,154 2,412,019 (43,229) 1,288,583 Adjustmentsfor:-Allowancesforimpairmentloss ontradereceivables 219,606 4,425,823 – –Depreciation of property, plant and equipment 10,360,940 10,247,332 – –Depreciationofright-of-useassets 1,573,487 1,808,190 – –Dividendincome – – – (2,620,000)Gainonleasemodification (1,416) – – –Rentconcession (13,176) – – –Interestexpenseonleaseliabilities 69,816 84,318 – –Otherinterestexpenses 3,265,569 4,000,057 35,707 –Interestincome (11,872) (12,389) (1,305,191) (1)Gain on disposal of property, plantandequipment (9,406) – – –Property, plant and equipment writtenoff 20,622 14,045 – –Reversal of impairment losses on tradereceivables (780,726) (188,805) – – Operating profit/(loss) before workingcapitalchanges 19,302,598 22,790,590 (1,312,713) (1,331,418)Decreaseininventories 452,053 742,302 – –Increase in trade and other receivables (935,895) (4,731,439) – –(Decrease)/Increase in trade and otherpayables (1,716,684) 808,838 84,152 71,601 CASHFROM/(FOR)OPERATIONS 17,102,072 19,610,291 (1,228,561) (1,259,817)Income tax paid (828,130) (1,161,331) (63,049) (40,898)Incometaxrefunded 87,258 4,209,677 – –Dividendreceived – – – 2,950,000 NETCASHFROM/(FOR) OPERATINGACTIVITIES 16,361,200 22,658,637 (1,291,610) 1,649,285

STATEMENTS OF CASH FLOWS FORTHEFINANCIALYEARENDED31MARCH2021



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The Group The Company 2021 2020 2021 2020 Note RM RM RM RM CASHFLOWS(FOR)/FROM INVESTINGACTIVITIESAdditiontoright-of-useassets 31(a) (101,157) (3,102,340) – –Additionalinvestmentsinan existingsubsidiary – – – (390,000)Interestincomereceived 11,872 12,389 201 1Investmentinsubsidiaries – – – (365,050)Placement of fixed deposits with tenuremorethan3months (131,493) (569) – –Proceeds from disposal of property,plantandequipment 18,000 – – –Purchase of property, plant and equipment 31(a) (15,558,349) (13,751,589) – –Repaymentfrom/(Advancesto) subsidiaries – – 38,428 (131,412) NETCASH(FOR)/FROM INVESTINGACTIVITIES (15,761,127) (16,842,109) 38,629 (886,461) CASHFLOWS(FOR)/FROM FINANCINGACTIVITIES(Repaymentto)/Advancesfrom asubsidiary 31(d) – – (159,740) 143,240Dividendpaid 30 – (1,080,000) – (1,080,000)Drawdown of bankers’ acceptances 31(d) 19,350,000 22,328,133 – –Drawdownoftermloans 31(d) 10,533,541 6,700,000 – –Interestpaid 31(d) (4,991,023) (4,304,115) – –Proceeds from issuance of ordinaryshares 1,458,000 – 1,458,000 –Proceed from issuance of shares by subsidiaries to non-controllinginterests – 1,289,950 – –Repayment of bankers’ acceptances 31(d) (20,400,000) (21,575,988) – –Repaymentofleaseliabilities 31(d) (1,168,517) (1,127,633) – –Repaymentoftermloans 31(d) (6,911,604) (11,801,071) – – NETCASH(FOR)/FROM FINANCINGACTIVITIES (2,129,603) (9,570,724) 1,298,260 (936,760)

STATEMENTS OF CASH FLOWS (CONT’D)


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The Group The Company 2021 2020 2021 2020 Note RM RM RM RM

NET(DECREASE)/INCREASEINCASHANDCASHEQUIVALENTS (1,529,530) (3,754,196) 45,279 (173,936) EFFECTOFFOREIGNEXCHANGETRANSLATION (89,819) 87,012 – – CASHANDCASHEQUIVALENTSATBEGINNINGOFTHEFINANCIALYEAR (6,163,010) (2,495,826) 9,030 182,966 CASHANDCASHEQUIVALENTSATENDOFTHEFINANCIALYEAR 31(c) (7,782,359) (6,163,010) 54,309 9,030

STATEMENTS OF CASH FLOWS (CONT’D)



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1. GENERAL INFORMATION

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

Registered office : 802, 8th floor, Block C Kelana Square 17,JalanSS7/26 47301PetalingJaya SelangorDarulEhsan

Principal place of business : 2, Jalan Permatang 2 Kempas Baru 81200 Johor Bahru Johor Darul Takzim

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors dated 6 July 2021.

2. HOLDING COMPANY

TheholdingcompanyisNFCapitalManagementSdn.Bhd.,acompanyincorporatedinMalaysia.

3. PRINCIPAL ACTIVITIES

The Company is principally engaged in the business of investment holding and the provision of management services. Theprincipalactivitiesofthesubsidiariesaresetout inNote6tothefinancialstatements.Therehavebeennosignificant changes in the nature of these activities during the financial year.

4. BASIS OF PREPARATION

The financial statements of the Group are prepared under the historical cost convention and modified to include other bases of valuation as disclosed in other sections under significant accounting policies, and in compliance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards and the requirements oftheCompaniesAct2016inMalaysia.

4.1 During the current financial year, the Group has adopted the following new accounting standards (including the consequential amendments, if any):-

MFRSs (Including The Consequential Amendments)AmendmentstoMFRS3:DefinitionofaBusinessAmendmentstoMFRS4:ExtensionoftheTemporaryExemptionfromApplyingMFRS9AmendmentstoMFRS9,MFRS139andMFRS7:InterestRateBenchmarkReformAmendmentstoMFRS16:COVID-19RelatedRentConcessionsAmendmentstoMFRS16:COVID-19RelatedRentConcessionsbeyond30June2021AmendmentstoMFRS101andMFRS108:DefinitionofMaterialAmendmentstoReferencestotheConceptualFrameworkinMFRSStandards

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

NOTES TO THE FINANCIAL STATEMENTS FORTHEFINANCIALYEARENDED31MARCH2021

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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)

4. BASIS OF PREPARATION (CONT’D)

4.2 The Group has not applied in advance the following applicable accounting standards (including the consequential amendments,ifany)thathavebeenissuedbytheMalaysianAccountingStandardsBoard(MASB)butarenotyet effective for the current financial year:-

MFRSs (Including The Consequential Amendments) Effective DateAmendmentstoMFRS3:ReferencetotheConceptualFramework 1January2022AmendmentstoMFRS9,MFRS139,MFRS7,MFRS4and MFRS16:InterestRateBenchmarkReform–Phase2 1January2021AmendmentstoMFRS101:ClassificationofLiabilitiesasCurrentorNon-current 1January2023AmendmentstoMFRS101:DisclosureofAccountingPolicies 1January2023AmendmentstoMFRS108:DefinitionofAccountingEstimates 1January2023AmendmentstoMFRS116:Property,PlantandEquipment– ProceedsbeforeIntendedUse 1January2022AnnualImprovementstoMFRSStandards2018–2020 1January2022

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

5. SIGNIFICANT ACCOUNTING POLICIES

5.1 CRITICALACCOUNTINGESTIMATESANDJUDGEMENTS

TheoutbreakoftheCOVID-19hasbroughtunprecedentedchallengesandaddedeconomicuncertaintiesinMalaysia and markets in which the Group operates. While the Group has considered the potential financial impactoftheCOVID-19pandemicinthepreparationofthesefinancialstatements,thefullfinancialimpacttotheGroupremainsuncertain.Accordingly,thereisapossibilitythatfactorsnotcurrentlyanticipatedbymanagement could occur in the future and therefore affect the recognition and measurement of the Group’s assets and liabilities at the reporting date.

Key Sources of Estimation Uncertainty

Management believes that there are no key assumptions made concerning the future, and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year other than as disclosed below:-

(a) Depreciation of Property, Plant and Equipment and Right-of-Use Assets

The estimates for the residual values, useful lives and related depreciation charges for the property, plant and equipment and certain right-of-use assets are based on commercial factors which could change significantly as a result of technical innovations and competitors’ actions in response to the market conditions. The Group anticipates that the residual values of its property, plant and equipment andcertainright-of-useassetswillbeinsignificant.Asaresult,residualvaluesarenotbeingtakenintoconsideration for the computation of the depreciable amount. Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. The carrying amounts of property, plant andequipmentandright-of-useassetsasatthereportingdatearedisclosedinNotes7and8tothefinancial statements.


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5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

5.1 CRITICALACCOUNTINGESTIMATESANDJUDGEMENTS(CONT’D)

Key Sources of Estimation Uncertainty (Cont’d)

(b) Property, Plant and Equipment and Right-of-Use Assets under Revaluation

Freehold land, leasehold land, buildings and warehouses of the Group are reported at revalued amounts which are based on valuations performed by independent professional valuers based on market comparison approach and depreciated replacement cost approach for land components and building components respectively.

The value of land components was arrived at by reference to the selling prices of recent transactions and asking prices of similar properties of nearby location and where necessary, adjusting for tenure, location, size, market trends and others.

The value of buildings components was arrived at by reference to the building replacement cost and adjustment for economic, physical and functional obsolescence.

Other factors such as model assumptions, market dislocations and unexpected correlations can also materially affect these estimates and the resulting valuations. The carrying amounts of property, plant and equipment and right-of-use assets measured at revaluation as at the reporting date are disclosed inNotes7and8tothefinancialstatements.

(c) Impairment of Goodwill

The assessment of whether goodwill is impaired requires an estimation of the value in use of the cash-generatingunittowhichthegoodwillisallocated.Estimatingavalueinuseamountrequiresmanagementto make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount ofgoodwillasatthereportingdateisdisclosedinNote10tothefinancialstatements.

(d) Impairment of Property, Plant and Equipment and Right-of-Use Assets

The Group determines whether its property, plant and equipment and right-of-use assets are impaired by evaluating the extent to which the recoverable amount of the asset is less than its carrying amount. This evaluation is subject to changes such as market performance, economic and political situation ofthecountry.Avarietyofmethodsisusedtodeterminetherecoverableamount,suchasvaluationreports and discounted cash flows. For discounted cash flows, significant judgement is required in the estimation of the present value of future cash flows generated by the assets, which involve uncertainties and are significantly affected by assumptions used and judgements made regarding estimates of future cash flows and discount rates. The carrying amounts of property, plant and equipment and right-of-use assetsasatthereportingdatearedisclosedinNotes7and8tothefinancialstatements.

(e) Write-down of Inventories

Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories. The carrying amount of inventories as at the reporting date is disclosedinNote11tothefinancialstatements.

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Key Sources of Estimation Uncertainty (Cont’d)

(f) Impairment of Trade Receivables

The Group uses the simplified approach to estimate a lifetime expected credit loss allowance for all trade receivables. The Group develops the expected loss rates based on the payment profiles of past sales and the corresponding historical credit losses, and adjusts for qualitative and quantitative reasonable and supportable forward-looking information. If the expectation is different from the estimation, such difference will impact the carrying values of trade receivables. The carrying amount of trade receivables asatthereportingdateisdisclosedinNote12tothefinancialstatements.

(g) Income Taxes

There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimate. The Group recognises tax liabilities based on its understanding of the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax expense and deferred tax balances in the period in which such determination is made. The carrying amount of current tax assets and liabilities as at the reporting dateareRM1,740,425andRM243,765(2020:RM1,832,025andRM39,979)respectively.

Critical Judgements Made in Applying Accounting Policies

Management believes that there are no instances of application of critical judgement in applying the Group’s accounting policies which will have a significant effect on the amounts recognised in the financial statements other than as disclosed below:-

(a) Lease Terms

Some leases contain extension options exercisable by the Group before the end of the non-cancellable contract period. In determining the lease term, management considers all facts and circumstances including the past practice and any cost that will be incurred to change the asset if an option to extend isnottaken.Anextensionoptionisonlyincludedintheleasetermiftheleaseisreasonablycertaintobe extended (or not terminated).

In determining the incremental borrowing rate of the respective leases, the Group first determines the closest available borrowing rates before using significant judgement to determine the adjustments required to reflect the term, security, value or economic environment of the respective leases.

(b) Contingent Liabilities

The recognition and measurement for contingent liabilities are based on management’s view of the expected outcome on contingencies after consulting legal counsel for litigation cases and experts, for matters in the ordinary course of business.


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Critical Judgements Made in Applying Accounting Policies (Cont’d)

(c) Coronavirus Disease 2019 (COVID-19)

ThecurrentoutbreakofCOVID-19hasresultedintheoccurrenceofamultitudeofassociatedeventssuch as temporarily closing of businesses, travel restrictions and quarantine measures across the globe. These measures and policies affect supply chains and the production of goods and services and lower economic activity which is likely to result in reduced demand for the Group’s goods and services. The Group exercises judgement, in light of all facts and circumstances, to assess what event in this series of events provides additional evidence about the condition that existed at the reporting date and therefore affects the recognition and measurement of the Group’s assets and liabilities at 31 March 2021.

5.2 BASISOFCONSOLIDATION

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

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

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

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

(a) Business Combinations

Acquisitionsofbusinessesareaccountedforusingtheacquisitionmethod.Undertheacquisitionmethod,the consideration transferred for acquisition of a subsidiary is the fair value of the assets transferred, liabilities incurred and the equity interests issued by the Group at the acquisition date. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement.Acquisition-relatedcosts, other than the costs to issuedebt or equity securities, arerecognised in profit or loss when incurred.

In a business combination achieved in stages, previously held equity interests in the acquiree are

remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss.

Non-controlling interests intheacquireemaybe initiallymeasuredeitherat fairvalueorat thenon-controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets at the date of acquisition. The choice of measurement basis is made on a transaction-by-transaction basis.

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5.2 BASISOFCONSOLIDATION(CONT’D)

(b) Merger Accounting for Common Control Business Combinations

Abusinesscombinationinvolvingentitiesundercommoncontrolisabusinesscombinationinwhichall the combining entities or business are ultimately controlled by the same party or parties both before and after the business combinations, and that control is not transitory.

Subsidiaries acquired which have met the criteria for pooling of interest are accounted for using merger accountingprinciples.Under themergermethodof accounting, the results of the subsidiaries arepresented as if the merger had been effected throughout the previous financial year.

The assets and liabilities combined are accounted for based on the carrying amounts from the perspective ofthecommoncontrolshareholderatthedateoftransfer.Noamountisrecognisedinrespectofgoodwilland excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets and liabilities and contingent liabilities over cost at the time of the common control business combination to the extent of the continuation of the controlling party and parties’ interests.

When the merger method is used, the cost of investment in the Company’s books is recorded at the nominal value of shares issued. The difference between the carrying value of the investment and the nominal value of the shares of the subsidiaries is treated as a merger deficit or merger reserve as applicable. The results of the subsidiaries being merged are included for the full financial year.

(c) Non-controlling Interests

Non-controllinginterestsarepresentedwithinequityintheconsolidatedstatementoffinancialposition,separately from the equity attributable to owners of the Company. Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.

(d) Changes in Ownership Interests in Subsidiaries Without Change of Control

Allchangesintheparent’sownershipinterestinasubsidiarythatdonotresultinalossofcontrolareaccountedforasequitytransactions.Anydifferencebetweentheamountbywhichthenon-controllinginterest is adjusted and the fair value of consideration paid or received is recognised directly in equity of the Group.

(e) Loss of Control

Uponthelossofcontrolofasubsidiary,theGrouprecognisesanygainorlossondisposalinprofitorloss which is calculated as the difference between:-

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

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

Amountspreviously recognised in other comprehensive income in relation to the former subsidiaryare accounted for in the same manner as would be required if the relevant assets or liabilities were disposed of (i.e. reclassified to profit or loss or transferred directly to retained profits). The fair value of any investments retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under MFRS 9 or, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.


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5.3 GOODWILL

Goodwill is measured at cost less accumulated impairment losses, if any. The carrying value of goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying amount may be impaired. The impairment value of goodwill is recognised immediately in profit or loss.Animpairmentlossrecognisedforgoodwillisnotreversedinasubsequentperiod.

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

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

5.4 FUNCTIONALANDFOREIGNCURRENCIES

(a) Functional and Presentation Currency

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

The consolidated financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional and presentation currency.

(b) Foreign Currency Transactions and Balances

Transactions in foreign currencies are converted into the respective functional currencies on initial recognition, using the exchange rates at the transaction dates. Monetary assets and liabilities at the endofthereportingperiodaretranslatedattheexchangeratesrulingasofthatdate.Non-monetaryassets and liabilities are translated using exchange rates that existed when the values were determined. Allexchangedifferencesarerecognisedinprofitorloss.

(c) Foreign Operations

Assetsandliabilitiesofforeignoperations(includinganygoodwillandfairvalueadjustmentsarisingonacquisition) are translated to the Group’s presentation currency at the exchange rates at the end of the reporting period. Income, expenses and other comprehensive income of foreign operations are translated atexchangeratesatthedatesofthetransactions.Allexchangedifferencesarisingfromtranslationaretaken directly to other comprehensive income and accumulated in equity; attributed to the owners of the Company and non-controlling interests, as appropriate.

Goodwill and fair value adjustments arising from the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the end of the reporting period.

In the consolidated financial statements, when settlement of an intragroup loan is neither planned nor likely to occur in the foreseeable future, the exchange differences arising from translating such monetary item are considered to form part of a net investment in the foreign operations and are recognised in other comprehensive income.

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5.5 FINANCIALINSTRUMENTS

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

Financial instruments are classified as financial assets, financial liabilities or equity instruments in accordance with the substance of the contractual arrangement and their definitions in MFRS 132. Interest, dividends, gains and losses relating to a financial instrument classified as a liability are reported as an expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity.

Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.

Afinancialinstrumentisrecognisedinitiallyatitsfairvalue(otherthantradereceivableswithoutsignificantfinancingcomponentwhicharemeasuredattransactionpriceasdefinedinMFRS15–RevenuefromContractswith Customers at inception). Transaction costs that are directly attributable to the acquisition or issue of the financial instrument (other than a financial instrument at fair value through profit or loss) are added to/deducted from the fair value on initial recognition, as appropriate. Transaction costs on the financial instrument at fair value through profit or loss are recognised immediately in profit or loss.

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

(a) FinancialAssets

Allrecognisedfinancialassetsaremeasuredsubsequentlyintheirentiretyateitheramortisedcostorfair value (through profit or loss, or other comprehensive income), depending on the classification of the financial assets.

Debt Instruments

(i) Amortised Cost The financial asset is held for collection of contractual cash flows where those cash flows represent

solely payments of principal and interest. Interest income is recognised by applying the effective interest rate to the gross carrying amount of the financial asset. When the asset has subsequently become credit-impaired, the interest income is recognised by applying the effective interest rate to the amortised cost of the financial asset.

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

(ii) Fair Value through Other Comprehensive Income

The financial asset is held for both collecting contractual cash flows and selling the financial asset, where the asset’s cash flows represent solely payments of principal and interest. Movements in the carrying amount are taken through other comprehensive income and accumulated in the fair value reserve, except for the recognition of impairment, interest income and foreign exchange difference which are recognised directly in profit or loss. Interest income is calculated using the effective interest rate method.


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5.5 FINANCIALINSTRUMENTS(CONT’D)

(a) Financial Assets (Cont’d)

Debt Instruments (Cont’d)

(iii) Fair Value through Profit or Loss

Allotherfinancialassetsthatdonotmeetthecriteriaforamortisedcostorfairvaluethroughothercomprehensive income are measured at fair value through profit or loss.

The Group reclassifies debt instruments when and only when its business model for managing those assets change.

Equity Instruments

Allequityinvestmentsaresubsequentlymeasuredatfairvaluewithgainsandlossesrecognisedinprofitor loss except where the Group has elected to present the subsequent changes in fair value in other comprehensive income and accumulated in the fair value reserve at initial recognition.

The designation at fair value through other comprehensive income is not permitted if the equity investment is either held for trading or is designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise.

Dividend income from this category of financial assets is recognised in profit or loss when the Group’s right to receive payment is established unless the dividends clearly represent a recovery of part of the cost of the equity investments.

(b) Financial Liabilities

(i) Financial Liabilities at Fair Value through Profit or Loss

Fair value through profit or loss category comprises financial liabilities that are either held for trading or are designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise. The changes in fair value of these financial liabilities are recognised in profit or loss.

(ii) Other Financial Liabilities

Other financial liabilities are subsequently measured at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts), through the expected life of the financial liability or a shorter period (where appropriate).

(c) Equity Instruments

Equityinstrumentsclassifiedasequityaremeasuredinitiallyatcostandarenotremeasuredsubsequently.Ordinary shares are classified as equity and recorded at the proceeds received, net of directly attributable transaction costs. Dividends on ordinary shares are recognised as liabilities when approved for appropriation.

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5.5 FINANCIALINSTRUMENTS(CONT’D)

(d) Derecognition

Afinancialassetorpartofitisderecognisedwhen,andonlywhen,thecontractualrightstothecashflows from the financial asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. On derecognition of a financial asset measured at amortised cost, the difference between the carrying amount of the asset and the sum of the consideration received and receivable is recognised in profit or loss. In addition, on derecognition of a debt instrument classified as fair value through other comprehensive income, the cumulative gain or loss previously accumulated in the fair value reserve is reclassified from equity to profit or loss. In contrast, there is no subsequent reclassification of the fair value reserve to profit or loss following the derecognition of an equity investment.

Afinancialliabilityorapartofitisderecognisedwhen,andonlywhen,theobligationspecifiedinthecontract is discharged or cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

(e) Financial Guarantee Contracts

Afinancialguaranteecontract isacontract that requires the issuer tomakespecifiedpayments toreimburse the holder for a loss it incurs because a specific debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

Financial guarantee contracts are recognised initially as liabilities at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee or, when there is no specific contractual period, recognised in profit or loss upon discharge of the guarantee. If the debtor fails to make payment relating to a financial guarantee contract when it is due and the Company, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the amount of the credit loss determined in accordance with the expected credit loss model and the amount initially recognised less cumulative amortisation.

5.6 INVESTMENTSINSUBSIDIARIES

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

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


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5.7 PROPERTY,PLANTANDEQUIPMENT

Allitemsofproperty,plantandequipmentareinitiallymeasuredatcost.Costincludesexpenditurethataredirectly attributable to the acquisition of the asset and other costs directly attributable to bringing the asset to working condition for its intended use.

Subsequent to initial recognition, all property, plant and equipment, other than freehold land, buildings and warehouses, are stated at cost less accumulated depreciation and any impairment losses.

Freehold land is stated at valuation less impairment losses recognised after the date of the revaluation. Buildings and warehouses are stated at revalued amount less accumulated depreciation and impairment losses recognised after the date of the revaluation.

Freehold land, buildings and warehouses are revalued periodically, at least once in every five years. Surpluses arising from the revaluation are recognised in other comprehensive income and accumulated in equity under the revaluation reserve to the extent that it reverses a revaluation deficit of the same asset previously recognised in profit or loss. Deficits arising from the revaluation, to the extent that they are not supported by any previous revaluation surpluses, are recognised in profit or loss.

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

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

Buildings and warehouses 2%Furniture, fittings and equipment 10% - 20%Trucks, low loaders, prime movers, trailers and forklifts 10%Motor vehicles 20%Plant and machinery 10%Renovation 10%

Assetsunderconstructionincludedinproperty,plantandequipmentarenotdepreciatedastheseassetsarenot yet available for use.

The depreciation method, useful lives and residual values are reviewed, and adjusted if appropriate, at the end of each reporting period to ensure that the amounts, method and periods of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied intheitemsoftheproperty,plantandequipment.Anychangesareaccountedforasachangeinestimate.

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

Anitemofproperty,plantandequipmentisderecognisedupondisposalorwhennofutureeconomicbenefitsareexpectedfromitsuse.Anygainorlossarisingfromderecognitionoftheasset,beingthedifferencebetweenthe net disposal proceeds and the carrying amount, is recognised in profit or loss. The revaluation reserve included in equity is transferred directly to retained profits on retirement or disposal of the asset.

ANNUAL REPORT 2021

89



5.8 LEASES

The Group assesses whether a contract is or contains a lease, at the inception of the contract. The Group recognises a right-of-use asset and corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for low-value assets and short-term leases with 12 months or less. For these leases, the Group recognises the lease payments as an operating expense on a straight-line method over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use assets and the associated lease liabilities are presented as a separate line item in the statements of financial position.

The right-of-use asset is initially measured at cost. Cost includes the initial amount of the corresponding lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred, less any incentives received.

The right-of-use assets, other than leasehold land, are subsequently measured at cost less accumulated depreciation and any impairment losses and adjusted for any remeasurement of the lease liability.

Leasehold land is stated at revalued amount less accumulated depreciation and impairment losses recognised after the date of the revaluation.

Leasehold land is revalued periodically, at least once in every five years. Surpluses arising from the revaluation are recognised in other comprehensive income and accumulated in equity under the revaluation reserve to the extent that it reverses a revaluation deficit of the same asset previously recognised in profit or loss. Deficits arising from the revaluation, to the extent that they are not supported by any previous revaluation surpluses, are recognised in profit or loss.

The depreciation starts from the commencement date of the lease. If the lease transfers ownership of the underlying asset to the Group or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. Otherwise, the Group depreciates the right-of-use asset to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of the right-of-use assets are determined on the same basis as those property, plant and equipment.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate.

The lease liability is subsequently measured at amortised cost using the effective interest method. It is remeasured when there is a change in the future lease payments (other than lease modification that is not accounted for as a separate lease) with the corresponding adjustment is made to the carrying amount of the right-of-use asset or is recognised in profit or loss if the carrying amount has been reduced to zero.

5.9 INVENTORIES

Inventories are stated at the lower of cost and net realisable value. Cost is determined on the first-in, first-out method and comprises the purchase price, production or conversion costs and incidentals incurred in bringing the inventories to their present location and condition.

Netrealisablevaluerepresentstheestimatedsellingpricelesstheestimatedcostsofcompletionandtheestimated costs necessary to make the sale.


90



5.10 CASHANDCASHEQUIVALENTS

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

5.11 IMPAIRMENT

(a) Impairment of Financial Assets

The Group recognises a loss allowance for expected credit losses on financial assets that are measured at amortised cost.

The expected credit loss is estimated as the difference between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the Group expects to receive, discounted at the original effective interest rate.

The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument. The Group always recognises lifetime expected credit losses for trade receivables using the simplified approach. The expected credit losses on these financial assets are estimated using a provision matrix based on Malaysia’s average cumulative default rate and are adjusted for forward-looking information (including time value of money where appropriate).

For all other financial instruments, the Group recognises lifetime expected credit losses when there has been a significant increase in credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses.

The Group recognises an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments that are measured at fair value through other comprehensive income, for which the loss allowance is recognised in other comprehensive income and accumulated in the fair value reserve, and does not reduce the carrying amount of the financial asset in the statement of financial position.

(b) Impairment of Non-financial Assets

Thecarryingvaluesofassets,otherthanthosetowhichMFRS136-ImpairmentofAssetsdoesnotapply,are reviewed at the end of each reporting period for impairment when an annual impairment assessment is compulsory or there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. When the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount and an impairment loss shall be recognised. The recoverable amount of an asset is the higher of the asset’s fair value less costs to sell and its value in use, which is measured by reference to discounted future cash flows using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where it is not possible to estimate the recoverable amount of an individual asset, the Group determines the recoverable amount of the cash-generating unit to which the asset belongs.

ANNUAL REPORT 2021

91



5.11 IMPAIRMENT(CONT’D)

(b) Impairment of Non-financial Assets (Cont’d)

Animpairmentlossisrecognisedinprofitorlossimmediatelyunlesstheassetiscarriedatitsrevaluedamount.Anyimpairmentlossofarevaluedassetistreatedasarevaluationdecreasetotheextentofapreviouslyrecognisedrevaluationsurplusforthesameasset.Anyimpairmentlossrecognisedinrespectof a cash-generating unit is allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit and then to reduce the carrying amounts of the other assets in the cash-generating unit on a pro rata basis.

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

5.12 EMPLOYEEBENEFITS

(a) Short-term Benefits

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

(b) Defined Contribution Plans

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

5.13 INCOMETAXES

(a) Current Tax

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

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

(b) Deferred Tax

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

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


92



5.13 INCOMETAXES(CONT’D)

(b) Deferred Tax (Cont’d)

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

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

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

5.14 CONTINGENTLIABILITIES

Acontingentliabilityisapossibleobligationthatarisesfrompasteventsandwhoseexistencewillonlybeconfirmed by the occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that an outflow of economic resources will be required or the amount of obligation cannot be measured reliably.

Acontingentliabilityisnotrecognisedbutisdisclosedinthenotestothefinancialstatements,unlesstheprobability of outflow of economic benefits is remote. When a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision.

5.15 OPERATINGSEGMENTS

AnoperatingsegmentisacomponentoftheGroupthatengagesinbusinessactivitiesfromwhichitmayearn revenues and incur expenses, including revenues and expenses that relate to transactions with any of theGroup’sothercomponents.Anoperatingsegment’soperatingresultsarereviewedregularlybythechiefoperating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

5.16 EARNINGSPERORDINARYSHARE

Basic earnings per ordinary share is calculated by dividing the consolidated profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the reporting period, adjusted for own shares held.

Diluted earnings per ordinary share is determined by adjusting the consolidated profit or loss attributable to ordinary shareholders of the Company and the weighted average number of ordinary shares outstanding, adjusted for the effects of all dilutive potential ordinary shares.

ANNUAL REPORT 2021

93



5.17 BORROWINGCOSTS

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of those assets, until such time as the assets are ready for their intended use or sale. The capitalisation of borrowing costs is suspended during extended periods in which active development is interrupted.

Allotherborrowingcostsarerecognisedinprofitorlossasexpensesintheperiodinwhichtheyareincurred.

5.18 FAIRVALUEMEASUREMENTS

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

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

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

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

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

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

5.19 REVENUEFROMCONTRACTSWITHCUSTOMERS

Revenue is recognised by reference to each distinct performance obligation in the contract with customer and is measured at the consideration specified in the contract of which the Group expects to be entitled in exchange for transferring promised goods or services to a customer, net of sales and service tax, returns, rebates and discounts.

TheGrouprecognisesrevenuewhen(oras)ittransferscontroloveraproductorservicetocustomer.Anassetis transferred when (or as) the customer obtains control of that asset.

The Group transfers control of a good or service at a point in time unless one of the following overtime criteria is met:-

• ThecustomersimultaneouslyreceivesandconsumesthebenefitsprovidedastheGroupperforms.

• TheGroup’sperformancecreatesorenhancesanassetthatthecustomercontrolsastheassetiscreatedor enhanced.

• TheGroup’sperformancedoesnot create an assetwith an alternative use and theGrouphas anenforceable right to payment for performance completed to date.


94



5.19 REVENUEFROMCONTRACTSWITHCUSTOMERS(CONT’D)

(a) Rendering of Services

Revenue from providing transportation and warehousing services is recognised over time in the period in which the services are rendered. For fixed-price contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided becausethecustomerreceivesandusesthebenefitssimultaneously.Asapracticalexpedient,theGrouprecognises revenue on a straight-line method over the period of service.

(b) Sale of Goods

Revenue from sale of goods is recognised when the Group has transferred control of the goods to the customer, being when the goods have been delivered to the customer and upon its acceptance. Following delivery, the customer has full discretion over the manner of distribution and price to sell the goods, and bears the risks of obsolescence and loss in relation to the goods.

Areceivableisrecognisedwhenthegoodsaredeliveredasthisisthepointintimethattheconsiderationis unconditional because only the passage of time is required before the payment is due.

5.20 REVENUEFROMOTHERSOURCESANDOTHEROPERATINGINCOME

(a) Dividend Income

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

(b) Interest Income

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

(c) Rental Income

Rental income is accounted for on a straight-line method over the lease term.

6. INVESTMENTS IN SUBSIDIARIES

The Company 2021 2020 RM RM Unquotedshares,atcost:- At1April 73,984,177 73,229,127Add:investmentsinsubsidiaries – 755,050

At31March 73,984,177 73,984,177Accumulatedimpairmentlosses:-At1April/31March (1,610,124) (1,610,124)

72,374,053 72,374,053

ANNUAL REPORT 2021

95


6. INVESTMENTS IN SUBSIDIARIES (CONT’D)

The details of the subsidiaries are as follows:-

Name of Subsidiaries

Principal Place of

Business/Country of

Incorporation

Percentage of Issued Share

Capital Held by Parent Principal Activities

2021%

2020%

Subsidiaries of the Company

XinHwaTrading&TransportSdn. Bhd. (“XHTT”)

Malaysia 100 100 Provision of cargo transportation services, container haulage services as well as warehousing and distribution services

XinHwaAutoEngineeringSdn. Bhd. (“XHAE”)

Malaysia 100 100 Manufacturing and fabrication of trailers

Canggih Logistik Sdn. Bhd. (“Canggih”)

Malaysia 100 100 Provision of cargo transportation services and rental of prime movers, trailers and trucks

XHUniversalForwardingSdn. Bhd. (“XHUF”)(a) (b) (d) (e)

Malaysia 30 30 Provision of freight forwarding, custom brokerage services, cargo transportation services and rental of prime movers, trailers and trucks

Xin Hwa Integrated Logistics Pte. Ltd. (“XHIL”) (f)

Singapore 100 100 Provision of freight forwarding and customs brokerage services

YiwugouEcommerceSdn. Bhd. (“YESB”) (d) (e)

Malaysia 50.01 50.01 Provision of e-commercial and e-business transactions conducted electronically on the internet

XHNusantaraEnergySdn. Bhd. (“XHNE”) (d) (e)

Malaysia 51 51 Dormant

PT. Xtra Heavy Logistik (“PTXHL”) (a) (c) (d) (e) *

Indonesia 49 49 Provision of freight forwarding, customs brokerage services, cargo transportation services and rental of prime movers, trailers and trucks

Subsidiary of xin Hwa Trading & Transport Sdn. Bhd.

PT. Xin Hwa Situ(“PTXHS”) (d) (e) (f)

Indonesia 67 67 Provision of freight forwarding, customs brokerage services, cargo transportation services and rental of prime movers, trailers and trucks

* The subsidiary was audited by other firm of chartered accountants.


96


6. INVESTMENTS IN SUBSIDIARIES (CONT’D)

(a) AlthoughtheCompanyownslessthanhalfofthevotingpowerinXHUFandPTXHL,theCompanycontrolsthesesubsidiariesbyvirtueoftheShareholders’AgreementwiththeotherinvestorsofXHUFandPTXHL.Consequently, the Company consolidates its investment in these subsidiaries.

(b) In the previous financial year, the Company subscribed additional ordinary shares of 390,000 at RM1 each in XHUF.

(c) On 30 October 2019, the Company incorporated a subsidiary in Indonesia under the name of “PT. Xtra Heavy Logistik” (“PTXHL”). The cost of investment is RM365,050 and PTXHL’s principal activity is the provision of freight forwarding service.

(d) The non-controlling interests at the end of the reporting period comprise the following:-

Effective Equity Interest The Group 2021 2020 2021 2020 % % RM RM XHUF 70.00 70.00 1,570,086 1,514,770YESB 49.99 49.99 (266,965) (264,908)XHNE 49.00 49.00 491,187 463,753PTXHS 33.00 33.00 472,675 467,574PTXHL 51.00 51.00 340,684 305,566

2,607,667 2,486,755

(e) Summarised financial information of non-controlling interests has not been presented as the non-controlling interests of the subsidiaries are not individually material to the Group.

(f) PTXHS and XHIL have been consolidated based on management account for the financial year ended 31 March 2021.

ANNUAL REPORT 2021

97


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98


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ANNUAL REPORT 2021

99


7. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

Accumulated At At Accumulated Impairment Carrying Cost Valuation Depreciation Losses Amount The Group RM RM RM RM RM 2021 Freeholdland – 82,700,000 – – 82,700,000Buildingsandwarehouses – 80,682,189 (3,618,344) – 77,063,845Furniture, fittings and equipment 8,161,762 – (5,796,693) (47,507) 2,317,562Trucks, low loaders, prime movers, trailers andforklifts 105,641,912 – (63,808,520) – 41,833,392Motorvehicles 3,980,119 – (3,751,700) – 228,419Plantandmachinery 212,049 – (199,045) – 13,004Renovation 959,850 – (581,993) (7,210) 370,647Assetsunderconstruction 70,804,326 – – – 70,804,326

189,760,018 163,382,189 (77,756,295) (54,717) 275,331,195

2020

Freeholdland – 82,700,000 – – 82,700,000Buildingsandwarehouses – 80,682,189 (1,850,238) – 78,831,951Furniture, fittings and equipment 7,984,626 – (5,238,203) (47,507) 2,698,916Trucks, low loaders, prime movers, trailers and forklifts 101,360,764 – (56,108,473) – 45,252,291Motorvehicles 3,702,686 – (3,483,366) – 219,320Plantandmachinery 212,049 – (183,368) – 28,681Renovation 959,850 – (491,267) (7,210) 461,373Assetsunderconstruction 40,084,405 – – – 40,084,405

154,304,380 163,382,189 (67,354,915) (54,717) 250,276,937


100



(a) The following assets of the Group have been pledged to licensed banks as security for banking facilities granted totheGroupasdisclosedinNotes18,22and23tothefinancialstatementsareasfollows:-

The Group 2021 2020 RM RM Net carrying amount Freeholdland 82,700,000 82,700,000Buildingsandwarehouses 77,063,845 78,831,951Trucks,lowloaders,primemovers,trailersandforklifts 11,430,257 13,312,028Assetsunderconstruction 68,845,539 38,385,295

240,039,641 213,229,274

(b) During the financial year ended 31 March 2019, the Group’s freehold land, buildings and warehouses were revalued by independent professional valuers. The surpluses arising from the revaluations, net of deferred taxation, have been accumulated in equity under the revaluation reserve.

(c) The details of the Group’s property, plant and equipment carried at fair value are analysed as follows:-

Level 1 Level 2 Level 3 Total The Group RM RM RM RM 2021 Freeholdland – 82,700,000 – 82,700,000Buildingsandwarehouses – 77,063,845 – 77,063,845

– 159,763,845 – 159,763,845

2020 Freeholdland – 82,700,000 – 82,700,000Buildingsandwarehouses – 78,831,951 – 78,831,951

– 161,531,951 – 161,531,951

ANNUAL REPORT 2021

101



(c) The level 2 fair values have been determined based on the market comparison approach and depreciated replacement cost approach for land components and buildings components respectively.

The market comparison approach reflects recent transaction prices for similar properties and the most significant input into this valuation approach is price per square foot of comparable properties. The depreciated replacement cost approach reflects the estimated replacement cost for the building and adjustment for economic, physical and functional obsolescence. The most significant input into depreciated replacement cost approach is the replacement cost for the properties based on the current condition. There has been no change to the valuation technique during the financial year.

There were no transfer between level 1, level 2 and level 3 during the financial year.

(d) If the freehold land, buildings and warehouses were measured using the cost model, the carrying amounts would be as follows:-

At Accumulated Carrying Cost Depreciation Amount The Group RM RM RM 2021 Freeholdland 46,630,851 – 46,630,851Buildingsandwarehouses 67,461,065 (8,647,938) 58,813,127

114,091,916 (8,647,938) 105,443,978

2020 Freeholdland 46,630,851 – 46,630,851Buildingsandwarehouses 67,461,065 (7,420,547) 60,040,518

114,091,916 (7,420,547) 106,671,369

(e) During the financial year, the Group capitalised borrowing cost for the construction of buildings and warehouses amountingtoRM1,655,638(2020:RM219,740).


102


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8. RIGHT-OF-USE ASSETS (CONT’D)

Depreciation At Additions Charges At 1.4.2019 (Note 31(a)) (Note 26) 31.3.2020 The Group RM RM RM RM 2020 (Restated) (Restated) (Restated) Carrying Amount Leaseholdland 24,700,000 – (587,503) 24,112,497Motorvehicles 855,729 – (268,744) 586,985Warehouse 1,014,089 589,175 (579,480) 1,023,784Parkingyards – 872,371 (124,500) 747,871Offices 229,495 106,474 (175,305) 160,664Hostels – 261,569 (72,658) 188,911

26,799,313 1,829,589 (1,808,190) 26,820,712

The Group 2021 2020 RM RM

(Restated)Analysedby:-Atcost 4,680,259 4,416,865Atvaluation 24,700,000 24,700,000Accumulateddepreciation (3,723,536) (2,296,153)

25,656,723 26,820,712

(a) The leasehold land have been pledged to licensed banks as securities for the banking facilities granted to the GroupasdisclosedinNotes18,22and23tothefinancialstatements.

(b) The Group leases certain pieces of leasehold land, motor vehicles, warehouse, parking yards, offices and hostels of which the leasing activities are summarised below:-

(i) Leasehold land The Group has entered into 2 (2020: 2) non-cancellable operating lease agreements for the use of land. The leases are for a period of 60 (2020: 60) years with no renewal or purchase option included in the agreements.

(ii) Motor vehicles The Group has leased its motor vehicles under hire purchase arrangements. The leases are secured by the leased assets.

(iii) Warehouse, parking yards, offices and hostels

The Group has leased certain warehouse, parking yards, offices and hostels that run between 1 and 3 (2020: 1 and 3) years, with an option to renew the lease after that date.

(c) During the financial year ended 31 March 2019, the Group’s leasehold land were revalued by independent professional valuers. The surpluses arising from the revaluations, net of deferred taxation, have been accumulated in equity under the revaluation reserve.


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8. RIGHT-OF-USE ASSETS (CONT’D)

(d) The details of the Group’s right-of-use assets carried at fair value are analysed as follows:-

Level 1 Level 2 Level 3 Total The Group RM RM RM RM 2021 Leaseholdland – 23,825,715 – 23,825,715

2020 Leaseholdland – 24,112,497 – 24,112,497

The level 2 fair values have been determined based on the market comparison approach that reflects recent transaction prices for similar properties. The most significant inputs into this valuation approach are price per square foot of comparable properties. There has been no change to the valuation technique during the financial year.

There were no transfers between level 1, level 2 and level 3 during the financial year.

(e) If the leasehold land were measured using the cost model, the carrying amounts would be as follows:-

At Accumulated Carrying Cost Depreciation Amount The Group RM RM RM 2021 Leaseholdland 22,722,924 (2,037,922) 20,685,002

2020 Leaseholdland 22,722,924 (1,660,066) 21,062,858

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9. AMOUNT OWING BY/(TO) SUBSIDIARIES

The Company 2021 2020 RM RM Amount Owing by Subsidiaries Non-Current Tradebalance – 721,825Non-tradebalances 37,260,055 35,271,668

37,260,055 35,993,493

Amount Owing to Subsidiaries Current Non-tradebalances (1,002,522) (1,126,555)

(a) The trade balance was unsecured, interest-free and was not expected to be repaid in the next 12 months. The amount owing has been settled during the financial year.

(b) The amount owing by/(to) subsidiaries (non-trade) represents unsecured advances. The amount owing is not expected to be repaid in the next 12 months and is to be settled in cash.

10. GOODWILL

The Group 2021 2020 RM RM Cost:- At1April/31March 1,332,582 1,332,582 Accumulatedimpairmentlosses:-At1April/31March (987,177) (987,177)

345,405 345,405

(a) The carrying amount of goodwill allocated to cash-generating unit is as follows:-

The Group 2021 2020 RM RM PT. Xin Hwa Situ 345,405 345,405


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10. GOODWILL (CONT’D)

(b) The Group has assessed the recoverable amounts of goodwill allocated. The recoverable amount of the cash-generating unit is determined using the value in use approach, and this is derived from the present value of the future cash flows from cash-generating unit computed based on the projections of financial budgets approved by management covering a period of 5 years. The key assumptions used in the determination of the recoverable amounts are as follows:-

Gross Margin Growth Rate Discount Rate 2021 2020 2021 2020 2021 2020

PT. Xin Hwa Situ 33% 33% 5% 5% 10% 10%

PT. xin Hwa Situ

(i) Budgeted gross margin Forecasted gross margin after considering local requirement and operating costs.

(ii) Growth rate Based on the expected projection of logistic industry. (iii) Discount rate (pre-tax) Reflects specific risks relating to the relevant cash-generating unit.

The values assigned to the key assumptions represent management’s assessment of future trends in the cash-generating units and are based on best estimation.

11. INVENTORIES

The Group 2021 2020 RM RM Consumable goods 169,809 183,588 Raw materials 1,089,525 1,451,200 Finishedgoods 255,028 331,627

1,514,362 1,966,415

Recognised in profit or loss:- Inventoriesrecognisedascostofsales 7,178,838 8,512,534

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12. TRADE RECEIVABLES

The Group 2021 2020 RM RM Tradereceivables 35,499,172 34,464,318Allowanceforimpairmentlosses (7,323,334) (7,886,804)

28,175,838 26,577,514

Allowanceforimpairmentlosses:-At1April 7,886,804 3,649,786 Additionduringthefinancialyear 219,606 4,425,823Reversalduringthefinancialyear (780,726) (188,805) Netimpactduringthefinancialyear(Note25) (561,120) 4,237,018Translationdifferences (2,350) –

At31March 7,323,334 7,886,804

The Group’s normal trade credit terms range from 30 to 120 (2020: 30 to 120) days.

13. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

The Group The Company 2021 2020 2021 2020 RM RM RM RM (Restated) Non-current Payment for purchase of leaseholdland 27,065,017 27,065,017 – –

Current Other receivables:- Thirdparties 977,201 1,397,471 – –Goods and services tax recoverable 122,305 159,392 – – 1,099,506 1,556,863 – –Deposits 1,876,561 1,596,439 2,500 2,500Prepayments 692,201 616,275 – –

3,668,268 3,769,577 2,500 2,500

During the financial year, the lease period for the leasehold land has not commenced. The comparative figures of theGrouphavebeenrestatedasdisclosedinNote40tothefinancialstatements.

TheGrouphassignedtheDeedofAssignmentwithafinancialinstitutionlendertopledgetheleaseholdlanduponthe receipt of land title to the financial institution lender as securities for the banking facilities granted to the Group asdisclosedinNote18tothefinancialstatements.


108


14. FIxED DEPOSITS WITH LICENSED BANKS

The fixed deposits with licensed banks of the Group at the end of the reporting period bore effective interest rates ranging from 1.45% to 2.69% (2020: 2.20% to 3.10%) per annum. The fixed deposits have maturity periods ranging from 30 to 365 (2020: 30 to 365) days.

Included in the fixed deposits with licensed banks of the Group at the end of the reporting period was an amount of RM131,493(2020:NIL)whichhasbeenpledgedtoalicensedbankassecurityforbankingfacilitiesgrantedtotheGroupasdisclosedinNotes18and23tothefinancialstatements.

15. SHARE CAPITAL

The Group/The Company 2021 2020 2021 2020 Number of Shares RM RM Issued and Fully Paid-Up Ordinary Shares At1April 215,999,998 215,999,998 107,999,999 107,999,999Issuranceofnewsharesforcash 5,400,000 – 1,458,000 –

At31March 221,399,998 215,999,998 109,457,999 107,999,999

(a) The holders of ordinary shares are entitled to receive dividends as and when declared by the Company and are entitled to one vote per ordinary share at meetings of the Company. The ordinary shares have no par value.

(b) Duringthefinancialyear,theCompanyincreaseditsissuedandpaidupsharecapitalfromRM107,999,999toRM109,457,999bywayofissuanceof5,400,000newordinarysharesatRM0.27eachforacashconsiderationof RM1,458,000 via private placement.

The new ordinary shares issued rank pari passu in all respects with the existing ordinary shares of the Company.

(c) Subsequenttothefinancialyear,theCompanyissued6,750,000newordinarysharesatRM0.3717pershareforacashconsiderationofRM2,508,975viaprivateplacement.

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16. RESERVES

The Group The Company 2021 2020 2021 2020 RM RM RM RM Distributable Retainedearnings 94,782,419 91,786,006 (1,190,100) (833,633) Non-distributable Mergerdeficit (68,978,997) (68,978,997) – –Revaluationreserve 49,538,618 49,538,618 – –Foreign exchange translation reserve 41,349 (58,380) – – (19,399,030) (19,498,759) – –

75,383,389 72,287,247 (1,190,100) (833,633)

(a) Merger Deficit

The merger deficit represents the difference between the carrying value of the investment in subsidiaries and the nominal value of shares of the Company’s subsidiaries upon consolidation under the merger accounting principle.

(b) Revaluation Reserve

The Group 2021 2020 RM RM At1April 49,538,618 51,332,418Less:Deferredtaxliabilities(Note19) – (1,793,800)

At31March 49,538,618 49,538,618

The revaluation reserve represents the increase in the fair value of freehold land, leasehold land, buildings and warehouses of the Group (net of deferred tax, where applicable) presented under property, plant and equipment and right-of-use assets.

(c) Foreign Exchange Translation Reserve

The foreign exchange translation reserve arose from the translation of the financial statements of foreign subsidiaries whose functional currencies are different from the Group’s presentation currency.


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17. LEASE LIABILITIES

The Group 2021 2020 RM RM At1April 2,592,506 1,890,550Additions(Note31(d)) 1,035,339 1,829,589Interestexpenserecognisedinprofitorloss(Note26) 69,816 84,318Changesduetoleasemodification (116,909) –Terminationoflease (589,175) –Rentconcession (13,176) –Repaymentofprincipal(Note31(b)) (1,168,517) (1,127,633)Repaymentofinterestexpense(Note31(b)) (69,816) (84,318)

At31March 1,740,068 2,592,506

Analysedby:-Currentliabilities 789,575 1,200,662Non-currentliabilities 950,493 1,391,844

1,740,068 2,592,506

Certain lease liabilities of the Group are secured by the Group’s motor vehicles under the hire purchase arrangements asdisclosedinNote8(b)(ii)tothefinancialstatements,withleasetermsexpiringfrom1to5(2020:2to4)yearsandbeareffectiveinterestratesrangingfrom3.37%to6.04%(2020:4.52%to4.68%).

18. TERM LOANS (SECURED)

The Group 2021 2020 RM RM Currentliabilities 17,350,052 13,962,829Non-currentliabilities 102,222,120 90,130,421

119,572,172 104,093,250

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18. TERM LOANS (SECURED) (CONT’D)

(a) The term loans at the end of the reporting period are secured by:-

(i) legalchargesoverthelandedpropertiesoftheGroupasdisclosedinNotes7(a),8(a)and13tothefinancial statements;

(ii) legal charge over a property owned by certain directors of the Group and a sibling of the directors of the Group;

(iii) legal charge over a property owned by a director of the Group and spouse of the director;

(iv) specificdebenturesovercertaintrailersasdisclosedinNote7(a)tothefinancialstatements;

(v) corporate guarantee executed by the Company and a subsidiary;

(vi) joint or several guarantees by certain directors of the Group; and

(vii) fixed deposits with a licensed bank.

(b) The interest rate profile of the term loans is summarised below:-

Effective The Group Interest rate 2021 2020 % RM RM Floatingratetermloans 3.00-5.60 119,572,172 104,093,250

(c) CertaintermloanstotallingtoRM54,860,867(2020:RM48,112,595)aresecuredbyanegativepledgethatimposes certain covenants on the subsidiary that have received those loans. The significant covenants of the term loans are as follows:-

(i) thetangiblenetworthofthesubsidiaryshallnotbelesserthanRM70million;

(ii) the gearing ratio of the subsidiary shall not exceed 1.25 times; and

(iii) the debt servicing ratio of the subsidiary shall not be lesser than 1.00 times at all times.


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19. DEFERRED TAx LIABILITIES

Recognised in At Profit or Loss At 1.4.2020 (Note 27(a)) 31.3.2021 The Group RM RM RM 2021 Deferred Tax Liabilities Property, plant and equipment 12,101,300 992,500 13,093,800Right-of-useassets 12,400 318,700 331,100Revaluationsurplus 9,055,200 – 9,055,200

21,168,900 1,311,200 22,480,100Deferred Tax Assets

Allowanceforimpairmentlosseson trade receivables (1,298,400) (400,600) (1,699,000)Leaseliabilities – (336,600) (336,600)Unabsorbedcapitalallowances (149,100) 35,700 (113,400)Unabsorbedinvestmenttaxallowances (6,464,300) (90,500) (6,554,800)Unusedtaxlosses (10,200) (2,100) (12,300)

(7,922,000) (794,100) (8,716,100)

13,246,900 517,100 13,764,000

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19. DEFERRED TAx LIABILITIES (CONT’D)

Recognised in Other Recognised in Comprehensive At Profit or Loss Income At 1.4.2019 (Note 27(a)) (Note 28) 31.3.2020 The Group RM RM RM

2020 Deferred Tax Liabilities Property,plantandequipment 11,263,500 837,800 – 12,101,300Right-of-useassets 15,600 (3,200) – 12,400Revaluationsurplus 7,261,400 – 1,793,800 9,055,200 18,540,500 834,600 1,793,800 21,168,900 Deferred Tax Assets

Allowanceforimpairmentlossesontradereceivables (869,100) (429,300) – (1,298,400)Lease liabilities Unabsorbedcapitalallowances (171,500) 22,400 – (149,100)Unabsorbedinvestmenttax allowances (6,692,500) 228,200 - (6,464,300)Unusedtaxlosses (12,900) 2,700 – (10,200) (7,746,000) (176,000) – (7,922,000)

10,794,500 658,600 1,793,800 13,246,900

The deferred tax assets on unabsorbed investment tax allowances have been recognised on the basis of the Group’s previous history of recording profits and to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised.

Theunusedtaxlossesareallowedtobeutilisedfor7consecutiveyearsofassessmentwhileunabsorbedcapitalallowances and unabsorbed investment tax allowances are allowed to be carried forward indefinitely.

20. TRADE PAYABLES

The normal trade credit terms granted to the Group range from 30 to 120 (2020: 30 to 120) days.


114


21. OTHER PAYABLES AND ACCRUALS

The Group The Company 2021 2020 2021 2020 RM RM RM RM Other payables:- Third parties: - Purchase of property, plant andequipment 16,717,111 10,617,076 – –-Others 1,306,008 1,590,999 182,705 89,553Salesandservicestaxpayables 14,617 214,344 – – 18,037,736 12,422,419 182,705 89,553Depositreceived 7,036 7,036 – –Accruals 582,147 727,442 81,000 90,000Payrollliabilities 2,977,653 2,872,142 – –

21,604,572 16,029,039 263,705 179,553

22. BANKERS’ ACCEPTANCES

(a) Thebankers’acceptancesoftheGroupattheendofthereportingperiodaredrawnforaperiodofupto67(2020:60)daysandboreeffectiveinterestratesrangingfrom3.31%to3.37%(2020:4.28%to4.35%)perannum.

(b) Thebankers’acceptancesoftheGrouparesecuredinthesamemannerasthetermloansdisclosedinNote18(a) to the financial statements.

23. BANK OVERDRAFTS (SECURED)

(a) The bank overdrafts of the Group at the end of the reporting period bore floating interest rates ranging from 4.97%to6.40%(2020:5.72%to7.15%)perannum.

(b) ThebankoverdraftsoftheGrouparesecuredinthesamemannerasthetermloansdisclosedinNote18(a)to the financial statements.

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24. REVENUE

The Group The Company 2021 2020 2021 2020 RM RM RM RM

Revenue from contracts with customers: Revenue recognised over time Sales of services -Landtransport 86,984,498 105,385,487 – –-Warehousinganddistribution 10,637,931 11,674,425 – –-Others 97,285 69,770 – – Revenue recognised at a point in time Sales of goods -Others 36,239 140,784 – –

97,755,953 117,270,466 – –Revenue from other sources: Dividendincome – – – 2,620,000

97,755,953 117,270,466 – 2,620,000

25. NET IMPAIRMENT ON FINANCIAL ASSET

The Group 2021 2020 RM RM Impairment losses: -tradereceivables(Note12) 219,606 4,425,823Reversal of impairment losses: -tradereceivables(Note12) (780,726) (188,805)

(561,120) 4,237,018


116


26. PROFIT/(LOSS) BEFORE TAx

The Group The Company 2021 2020 2021 2020 RM RM RM RM Profit/(Loss) before tax is arrived at after charging:- Auditors’remuneration:- statutory audit fees: -currentfinancialyear 161,794 160,322 36,000 36,000 - (over)/underprovision in the previousfinancialyear (3,000) 1,000 – 1,000 - non-statutory audit fees 15,000 5,000 15,000 5,000 Depreciation: -property,plantandequipment 10,360,940 10,247,332 – – (Note7)-right-of-useassets(Note8) 1,573,487 1,808,190 – –Directors’fees 536,769 428,000 536,769 428,000Directors’ non-fee emoluments: -salaries,bonusesandallowances 1,806,344 1,927,476 37,500 47,000-definedcontributionbenefits 182,028 197,374 – –Interest expense on financial liabilities measured at amortised costs 3,265,569 4,000,057 35,707 –Interest expense on lease liabilities(Note17) 69,816 84,318 – –Property, plant and equipment writtenoff(Note7) 20,622 14,045 – –Lease expenses on: -shorttermleases 651,623 752,322 – –-lowvalueassets 43,973 51,604 – –Staff costs (including other key management personnel asdisclosedinNote32):-short-termemployeebenefits 24,683,092 31,104,110 – –-definedcontributionbenefits 1,806,041 2,105,732 – –

and crediting:- Gain on disposal of property, plantandequipment 9,406 – – –Gain on foreign exchange - realised 7,765 84,977 – –Gainonleasemodification 1,416 – – –Interest income on financial assets measured at amortised costs 11,872 12,389 1,305,191 1Rentalincome 19,230 19,560 – –Rentconcession 13,176 – – –

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27. TAx ExPENSE/(INCOME)

(a) Income tax expense recognised in profit or loss

The Group The Company 2021 2020 2021 2020 RM RM RM RM Income tax: -currentfinancialyear 766,282 551,780 313,200 –- under/(over)provision in the previous financialyear 269,976 81,870 38 (8,800)

1,036,258 633,650 313,238 (8,800)

Deferred taxes (Notes19): - origination and reversal oftemporarydifferences 110,000 333,300 – –- under/(over)provision in the previous financialyear 407,100 325,300 – –

517,100 658,600 – –

1,553,358 1,292,250 313,238 (8,800)


118


27. TAx ExPENSE/(INCOME) (CONT’D)

(a) Income tax expense recognised in profit or loss (Cont’d)

Areconciliationoftaxexpense/(income)applicabletotheprofit/(loss)beforetaxatthestatutorytaxratetotax expense/(income) at the effective tax rate of the Group and of the Company is as follows:-

The Group The Company 2021 2020 2021 2020 RM RM RM RM Profit/(Loss) before tax 4,609,154 2,412,019 (43,229) 1,288,583

Tax at the statutory tax rateof24%(2020:24%) 1,106,197 578,885 (10,375) 309,260Tax effects of:- Non-taxableincome – – – (628,800)Non-deductibleexpenses 704,054 699,917 323,575 319,540Taxincentive (932,369) (414,422) – –Deferred tax assets not recognised during the financialyear – 20,700 – –Utilisationofdeferredtax assets previously not recognised (1,600) – – –Under/(Over)provisionof income tax in the previousfinancialyear 269,976 81,870 38 (8,800)Underprovisionof deferred tax in the previousfinancialyear 407,100 325,300 – –

Tax expense/(income) for the financial year 1,553,358 1,292,250 313,238 (8,800)

(i) Domestic income tax is calculated at the Malaysian statutory tax rate of 24% (2020: 24%) of the estimated assessable profit for the financial year. The taxation of other jurisdiction is calculated at the rates prevailing in the respective jurisdiction.

(ii) AsubsidiaryoftheGrouphasbeengrantedInvestmentTaxAllowance(“ITA”)tohaveanallowanceof60% on the qualifying capital expenditure incurred for a period of five years from 19 January 2018 until 18January2023.Thesubsidiarycanoffsettheallowanceagainst70%ofitsstatutoryincomeintheyearofassessment.AnyunutilisedITAcanbecarriedforwardtosubsequentyearsuntilfullyutilised.

ANNUAL REPORT 2021

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27. TAx ExPENSE/(INCOME) (CONT’D)

(b) Income tax expense recognised in other comprehensive income

The Group 2021 2020 RM RM Revaluation of property, plant and equipment: remeasurement on deferred tax of revalued property, plant and equipment arising from change in tax rates of realpropertygainstax(Note28) – 1,793,800

Inaccordancewith theprovision in theFinanceAct2018, the realpropertygains tax rateondisposalofproperties held for more than 5 years has been revised from 5% to 10% with effect from 1 January 2019.

28. OTHER COMPREHENSIVE INCOME

The Group 2021 2020 RM RM Items that Will Not be Reclassified Subsequently to Profit or Loss Remeasurement on deferred tax of revalued property, plant and equipment arising from change in tax rates ofrealpropertygainstax(Notes19&27(b)) – (1,793,800) Item that Will be Reclassified Subsequently to Profit or Loss Foreign currency translation: - changes during the financial year 161,258 (119,011)

161,258 (1,912,811)

29. EARNINGS PER SHARE

The Group 2021 2020 ProfitattributabletoownersoftheCompany(RM) 2,996,413 1,072,892

Weighted average number of ordinary shares in issue 219,343,560 215,999,998

Basicearningspershare(Sen) 1.37 0.50


120


29. EARNINGS PER SHARE (CONT’D)

The Group 2021 2020 RM RM Profit attributable to owners of the Company fordilutedearningspersharecomputation(RM) 2,996,413 1,072,892

Weighted average number of ordinary shares for basic earnings per share 219,343,560 215,999,998 Shares deemed to be issued for no consideration:- -warrants 3,294,092 –

Weighted average number of ordinary shares for dilutedearningspersharecomputation 222,637,652 215,999,998

Diluted earnings per share (sen) 1.35 0.50

30. DIVIDENDS

The Group/The Company 2021 2020 RM RM Interim single-tier dividends of 0.5 sen per ordinary share inrespectofthecurrentfinancialyear – 1,080,000

31. CASH FLOW INFORMATION

(a) The cash disbursed for the purchase of property, plant and equipment and the addition of right-of-use assets is as follows:-

The Group 2021 2020 RM RM Property, plant and equipment Costofproperty,plantandequipmentpurchased(Note7) 35,171,007 31,569,899Less:Amountfinancedthroughtermloans(Note(d)below) (11,856,985) (15,714,194)Less:Amountowingtootherpayables (14,406,811) (9,593,806)Less:Capitalisationofinterestexpenses(Note(d)below) (1,655,638) (219,740)Add:Paymentinrespectofpreviousfinancialyear’spurchase 8,306,776 7,709,430

Cashdisbursedforpurchaseofproperty,plantandequipment 15,558,349 13,751,589

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31. CASH FLOW INFORMATION (CONT’D)

(a) The cash disbursed for the purchase of property, plant and equipment and the addition of right-of-use assets is as follows:- (Cont’d) The Group 2021 2020 RM RM Right-of-use assets Costofright-of-useassetsacquired(Note8) 1,136,496 1,829,589Add:Prepaymentduringthefinancialyear – 24,376,340Less:Additionofnewleaseliabilities(Note(d)below) (1,035,339) (1,829,589)Less:Amountfinancedthroughtermloans(Note(d)below) – (21,274,000)

Cashdisbursedforacquisitionofright-of-useassets 101,157 3,102,340

(b) The total cash outflows for leases as a lessee are as follows:-

The Group 2021 2020 RM RM Paymentofshort-termleases 651,623 752,322Paymentoflowvalueassets 43,973 51,604Interestpaidonleaseliabilities(Note17) 69,816 84,318Paymentofleaseliabilities(Note17) 1,168,517 1,127,633

1,933,929 2,015,877

(c) The cash and cash equivalents comprise the following:-

The Group The Company 2021 2020 2021 2020 RM RM RM RM Cash and bank balances 5,400,509 3,402,249 54,309 9,030 Fixed deposits with licensedbanks 157,901 26,408 – –Bankoverdrafts (13,191,717) (9,574,108) – –

(7,633,307) (6,145,451) 54,309 9,030Less: Fixed deposits with tenure of morethan3months (149,052) (17,559) – –

(7,782,359) (6,163,010) 54,309 9,030


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(d) The reconciliations of liabilities arising from financing activities are as follows:-

Bank Bankers’ Term Lease Overdrafts Acceptances Loans Liabilities Total The Group RM RM RM RM RM 2021 At1April * 5,200,000 104,093,250 2,592,506 111,885,756 Changes in Financing Cash Flows Proceedsfromdrawdown * 19,350,000 10,533,541 – 29,883,541Repaymentofprincipal * (20,400,000) (6,911,604) (1,168,517) (28,480,121)Repaymentofinterests (582,940) (218,588) (4,119,679) (69,816) (4,991,023) (582,940) (1,268,588) (497,742) (1,238,333) (3,587,603)Non-cashChanges Acquisitionofnewleases (Note31(a)) – – – 1,035,339 1,035,339Acquisitionofproperty,plant andequipment(Note31(a)) – – 11,856,985 – 11,856,985Interest expense recognised in profit or loss 582,940 218,588 2,464,041 69,816 3,335,385 Interest expense capitalised in assets under construction(Note31(a)) – – 1,655,638 – 1,655,638Changes due to lease modification – – – (116,909) (116,909)Terminationoflease – – – (589,175) (589,175)Rentconcession – – – (13,176) (13,176) 582,940 218,588 15,976,664 385,895 17,164,087

At31March * 4,150,000 119,572,172 1,740,068 125,462,240

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(d) The reconciliations of liabilities arising from financing activities are as follows (Cont’d):-

Bank Bankers’ Term Lease Overdrafts Acceptances Loans Liabilities Total The Group RM RM RM RM RM 2020 At1April * 4,447,855 72,206,127 1,890,550 78,544,532 Changes in Financing Cash Flows Proceedsfromdrawdown * 22,328,133 6,700,000 – 29,028,133Repaymentofprincipal * (21,575,988) (11,801,071) (1,127,633) (34,504,692)Repaymentofinterests (360,720) (233,925) (3,625,152) (84,318) (4,304,115) (360,720) 518,220 (8,726,223) (1,211,951) (9,780,674)Non-cashChanges Acquisitionofnewlease (Notes17&31(a)) – – – 1,829,589 1,829,589Acquisitionofproperty,plant andequipment(Note31(a)) – – 15,714,194 – 15,714,194Acquisitionofright-of-use assets(Note31(a)) – – 21,274,000 – 21,274,000Interest expense recognised inprofitorloss 360,720 233,925 3,405,412 84,318 4,084,375Interest expense capitalised in assets under construction(Note31(a)) – – 219,740 – 219,740 360,720 233,925 40,613,346 1,913,907 43,121,898

At31March * 5,200,000 104,093,250 2,592,506 111,885,756

The Company 2021 2020 Amount owing to subsidiaries RM RM At1April 1,126,555 983,315 Changes in Financing Cash Flows (Repayment)/Advances (159,740) 143,240

966,815 1,126,555 Non-cashChanges Interestexpenserecognisedinprofitorloss 35,707 –

At31March 1,002,522 1,126,555

* Bank overdrafts form part of the cash and cash equivalents, therefore, no movement is presented.


124


32. KEY MANAGEMENT PERSONNEL COMPENSATION

The key management personnel of the Group and of the Company include executive directors and non-executive directors of the Company and certain members of senior management of the Group and of the Company.

The key management personnel compensation during the financial year are as follows:-

(a) Directors

The Group The Company 2021 2020 2021 2020 RM RM RM RM Directors of the Company Executive Directors Short-term employee benefits: - fees 180,000 45,000 180,000 45,000 - salaries, bonuses and otherbenefits 1,300,124 1,519,098 – – 1,480,124 1,564,098 180,000 45,000 Definedcontributionbenefits 155,904 186,423 – –

1,636,028 1,750,521 180,000 45,000

Non-Executive Directors Short-term employee benefits: - fees 356,769 383,000 356,769 383,000 -otherbenefits 37,500 47,000 37,500 47,000 394,269 430,000 394,269 430,000

2,030,297 2,180,521 574,269 475,000

Directors of the Subsidiaries Executive Directors Short-term employee benefits: - salaries, bonuses and otherbenefits 468,720 361,378 – – Definedcontributionbenefits 26,124 10,951 – –

494,844 372,329 – –

Total directors’ remuneration(Note26) 2,525,141 2,552,850 574,269 475,000

The estimated monetary value of benefits-in-kind provided by the Group to the directors of the Company were RM57,625(2020:RM57,625).

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32. KEY MANAGEMENT PERSONNEL COMPENSATION (CONT’D)

(b) Other key management personnel

The Group The Company 2021 2020 2021 2020 RM RM RM RM

Short-termemployeebenefits 550,431 450,194 – –Definedcontributionbenefits 59,680 42,851 – –

Total compensation for other key management personnel 610,111 493,045 – –

33. RELATED PARTY DISCLOSURES

(a) Identities of Related Parties

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

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

(b) Significant Related Party Transactions and Balances

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

The Group 2021 2020 RM RM Rental of vacant land paid/payable to certain directors 132,000 44,000

The Company 2021 2020 RM RM Dividendreceived/receivablefromsubsidiaries – 2,620,000Interestreceived/receivablefromsubsidiaries 1,304,990 –

The significant outstanding balances of the related parties together with their terms and conditions are disclosed in the respective notes to the financial statements.


126


34. OPERATING SEGMENTS

Operating segments are prepared in a manner consistent with the internal reporting provided to the Managing Director and Chief Financial Officer as its chief operating decision maker in order to allocate resources to segments and to assess their performance on a quarterly basis. For management purposes, the Group is organised into business units based on their products and services provided.

The Group is organised into the 3 main reportable segments as follows:-

• LandTransportSegment–involvedinthecargotransportationservicesandcontainerhaulageservices.

• WarehousingandDistributionSegment–involvedintheprovisionofwarehousingservicesanddistributionservices.

• Others–involvedinthemanufacturingandfabricationoftrailers,tradingofgoods,provisionofmanagementservices and provision of e-commercial and e-business transactions.

(a) The Managing Director and Chief Financial Officer assess the performance of the reportable segments based on their profit before interest expense and tax. The accounting policies of the reportable segments are the same as the Group’s accounting policies.

Borrowings and investment-related activities are managed on a group basis by the central treasury function and are not allocated to reportable segments.

(b) Eachreportablesegmentassetsismeasuredbasedonallassets(includinggoodwill)ofthesegmentotherthantax-relatedassets.Assetsusedjointlybyreportablesegmentsareallocatedonthebasisoftherevenueearned by individual reportable segments.

(c) Eachreportablesegmentliabilitiesismeasuredbasedonallliabilitiesofthesegmentotherthanborrowingsand tax-related liabilities. Liabilities for which reportable segments are jointly liable are allocated in proportion to segment assets.

(d) Assets,liabilitiesandexpenseswhicharecommonandcannotbemeaningfullyallocatedtothereportablesegmentsarepresentedunderunallocateditems.Unallocateditemscomprisemainlycorporateassets(primarilythe Company’s headquarters) and head office expenses.

Transfer prices between operating segments are at arm’s length basis in a manner similar to transactions with third parties. The effects of such inter-segment transactions are eliminated on consolidation.

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34. OPERATING SEGMENTS (CONT’D)

34.1 BUSINESSSEGMENTS

Warehousing Land and Transport Distribution The Segment Segment Others Group 2021 RM RM RM RM Revenue Externalrevenue 86,984,498 10,637,931 133,524 97,755,953Inter-segmentrevenue 1,399,987 – 2,777,520 4,177,507

88,384,485 10,637,931 2,911,044 101,933,460

Consolidationadjustments (4,177,507)

Consolidatedrevenue 97,755,953

Results Segments profit before interestandtax 7,755,024 1,593,207 3,694 9,351,925Finance costs (3,430,058)Unallocatedexpenses (1,312,713)

Consolidated profit before tax 4,609,154

Segment profit before tax includes the followings:- Depreciation of property, plant andequipment (9,159,933) (1,183,681) (17,326) (10,360,940)Depreciation of right-of-use assets (952,131) (621,003) (353) (1,573,487)Gain on disposal of property, plantandequipment 9,406 – – 9,406Gainonforeignexchange 7,765 – – 7,765Impairment loss of trade receivables (219,606) – – (219,606)Lease expenses on: -shorttermleases (651,623) – – (651,623)-lowvalueassets (43,973) – – (43,973)Property, plant and equipment writtenoff (20,622) – – (20,622)Reversal of impairment losses ontradereceivables 695,650 85,076 – 780,726


128



34.1 BUSINESSSEGMENTS(CONT’D)

Warehousing Land and Transport Distribution The Segment Segment Others Group RM RM RM RM 2021 Assets Segmentassets 227,361,933 147,320,048 115,319,793 490,001,774Unallocatedassets:-currenttaxassets 1,740,425Consolidation adjustments (122,686,556)

Consolidated total assets 369,055,643

Additionstonon-current assets other than financial instruments:- Property,plantandequipment 3,654,519 31,516,240 248 35,171,007Right-of-useassets 1,040,762 95,040 694 1,136,496

Liabilities Segmentliabilities 63,020,622 8,702,334 7,841,749 79,564,705Unallocatedliabilities:-currenttaxliabilities 243,765-deferredtaxliabilities 13,764,000-leaseliabilities 1,740,068-termloans 119,572,172- bankers’ acceptances 4,150,000 -bankoverdrafts 13,191,717Consolidation adjustments (50,619,839)

Consolidated total liabilities 181,606,588

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Warehousing Land and Transport Distribution The Segment Segment Others Group 2020 RM RM RM RM Revenue Externalrevenue 105,385,487 11,674,425 210,554 117,270,466Inter-segmentrevenue 1,377,670 – 7,204,601 8,582,271

106,763,157 11,674,425 7,415,155 125,852,737

Consolidationadjustments (8,582,271)

Consolidatedrevenue 117,270,466

Results Segments profit/(loss) before interestandtax 7,027,793 1,056,659 (148,489) 7,935,963Finance costs (4,192,526)Unallocatedexpenses (1,331,418)

Consolidated profit before tax 2,412,019

Segment profit/(loss) before tax includes the followings:- Depreciation of property, plantandequipment (9,044,233) (1,184,249) (18,850) (10,247,332)Depreciation of right-of-use assets (1,144,988) (662,757) (445) (1,808,190)Gainonforeignexchange 84,977 – – 84,977Impairment loss of trade receivables (3,960,024) (438,685) (27,114) (4,425,823)Lease expenses on: -shorttermleases (700,662) (42,000) (9,660) (752,322)-lowvalueassets (51,604) – – (51,604)Property, plant and equipment writtenoff (14,045) – – (14,045)Reversal of impairment losses ontradereceivables 169,975 18,830 – 188,805


130




Warehousing Land and Transport Distribution The Segment Segment Others Group RM RM RM RM 2020 Assets Segmentassets 205,518,818 140,517,603 114,733,643 460,770,064Unallocatedassets:- current tax assets 1,832,025 Consolidation adjustments (120,519,830)

Consolidated total assets 342,082,259

Additionstonon-current assets other than financial instruments:- Property,plantandequipment 4,845,251 26,723,608 1,040 31,569,899Right-of-use assets 1,203,114 625,814 661 1,829,589

Liabilities Segmentliabilities 58,142,141 7,490,342 7,635,713 73,268,196Unallocatedliabilities:-currenttaxliabilities 39,979- deferred tax liabilities 13,246,900 - lease liabilities 2,592,506 - term loans 104,093,250 - bankers’ acceptances 5,200,000 -bankoverdrafts 9,574,108Consolidationadjustments (48,706,681)

Consolidated total liabilities 159,308,258

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34.2 GEOGRAPHICALINFORMATION

Revenue is based on the country in which the customers are located.

Non-currentassetsaredeterminedaccordingtothecountrywheretheseassetsarelocated.Theamountsofnon-current assets do not include financial instruments.

Revenue Non-current Assets 2021 2020 2021 2020 RM RM RM RM Malaysia 83,697,078 104,893,569 326,995,938 303,285,484Singapore 11,722,518 11,506,782 – –Indonesia 2,336,357 870,115 1,402,402 1,222,587

97,755,953 117,270,466 328,398,340 304,508,071

34.3 MAJORCUSTOMERS

There is no single customer that contributed 10% or more to the Group’s revenue.

35. CAPITAL COMMITMENTS

The Group 2021 2020 RM RM Purchaseofproperty,plantandequipment 8,160,332 38,780,459

36. FINANCIAL INSTRUMENTS

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

36.1 FINANCIALRISKMANAGEMENTPOLICIES

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

(a) Market Risk

(i) Foreign Currency Risk

The Group is exposed to foreign currency risk on transactions and balances that are denominated in currencies other than the respective functional currencies of entities within the Group. The currenciesgivingrisetothisriskareprimarilyUnitedStatesDollar(“USD”)andSingaporeDollar(“SGD”). Foreign currency risk is monitored closely on an ongoing basis to ensure that the net exposure is at an acceptable level. The Group also holds cash and cash equivalents denominated in foreign currencies for working capital purposes.


132


36. FINANCIAL INSTRUMENTS (CONT’D)

36.1 FINANCIALRISKMANAGEMENTPOLICIES(CONT’D)

(a) Market Risk (Cont’d)

(i) Foreign Currency Risk (Cont’d)

The Group’s exposure to foreign currency risk (a currency which is other than the functional currencies of the entities within the Group) based on the carrying amounts of the financial instruments at the end of the reporting period is summarised below:-

Foreign Currency Exposure

USD SGD The Group RM RM 2021 FinancialAssets Tradereceivables – 2,118,666Cashandbankbalances 557,459 442,764

557,459 2,561,430

Financial Liability Trade payables (9,428) (35,642)

CurrencyExposure 548,031 2,525,788

USD SGD The Group RM RM 2020 FinancialAssets Tradereceivables 185,907 2,889,833Otherreceivables – 96,205Cashandbankbalances 96,913 947,880

282,820 3,933,918

Financial Liability Trade payables (9,428) (132,840)

CurrencyExposure 273,392 3,801,078

Foreign Currency Risk Sensitivity Analysis

Anyreasonablypossiblechangeintheforeigncurrencyexchangeratesattheendofthereportingperiod against the respective functional currencies of the entities within the Group does not have material impact on the profit/(loss) after tax and other comprehensive income of the Group and of the Company and hence, no sensitivity analysis is presented.

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(a) Market Risk (Cont’d)

(ii) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to interest rate risk arises mainly from long-term borrowings with variable rates. The Group’s policy is to obtain the most favourable interest rates available and by maintaining a balanced portfolio mix of fixed and floating rate borrowings.

The Group’s fixed deposits with licensed banks are carried at amortised cost. Therefore, they are notsubjecttointerestrateriskasdefinedinMFRS7sinceneithertheircarryingamountnorthefuture cash flows will fluctuate because of a change in market interest rates.

The Group’s exposure to interest rate risk that based on the carrying amounts of the financial instrumentsattheendofthereportingperiodisdisclosedinNotes18,22and23tothefinancialstatements.

Interest Rate Risk Sensitivity Analysis

The following table details the sensitivity analysis to a reasonably possible change in the interest rates at the end of the reporting period, with all other variables held constant:-

The Group 2021 2020 RM RM Effects On Profit After Tax Increaseof75(2020:100)basispoints (497,816) (704,982)Decreaseof75(2020:100)basispoints 497,816 704,982

(iii) EquityPriceRisk

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

(b) Credit Risk

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

The Company’s exposure to credit risk arises principally from financial guarantee given to financial institutions for credit facilities granted to a subsidiary. The Company monitors the results of this subsidiary regularly and repayments made by the subsidiary.

(i) Credit Risk Concentration Profile

TheCompany’smajorconcentrationofcreditriskrelatestotheamountowingby1(2020:NIL)customerwhichconstitutedapproximately15%(2020:NIL)ofitstradereceivablesattheendofthe reporting period.


134




(b) Credit Risk (Cont’d)

(ii) ExposuretoCreditRisk

Attheendofthereportingperiod,themaximumexposuretocreditrisk isrepresentedbythecarrying amount of each class of financial assets recognised in the statements of financial position of the Group after deducting any allowance for impairment losses (where applicable).

(iii) AssessmentofImpairmentLosses

Ateachreportingdate,theGroupassesseswhetheranyofthefinancialassetsatamortisedcostare credit impaired.

The gross carrying amounts of financial assets are written off when there is no reasonable expectation of recovery (i.e. the debtor does not have assets or sources of income to generate sufficient cash flows to repay the debt) despite the fact that they are still subject to enforcement activities.

Trade Receivables

The Group applies the simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables.

The Group considers any receivables having financial difficulty or with significant balances outstanding for more than 12 months are deemed credit impaired and assesses for their risk of loss individually.

The expected loss rates are based on Malaysia’s average cumulative default rate and are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle their debts.

The information about the exposure to credit risk and the loss allowances calculated under MFRS

9 for trade receivables is summarised below:-

Individual/ The Group Gross Collective Carrying Amount Impairment Amount 2021 RM RM RM Current(notpastdue) 10,817,167 (314,976) 10,502,1911to30dayspastdue 7,091,494 (116,338) 6,975,15631to60dayspastdue 3,039,009 (204,700) 2,834,30961to90dayspastdue 1,893,911 (185,929) 1,707,98291to180dayspastdue 3,059,692 (372,035) 2,687,657181to365dayspastdue 1,923,054 (191,506) 1,731,548Morethan365dayspastdue 7,674,845 (5,937,850) 1,736,995

35,499,172 (7,323,334) 28,175,838

ANNUAL REPORT 2021

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(iii) AssessmentofImpairmentLosses(Cont’d)

Trade Receivables (Cont’d)

Individual/ The Group Gross Collective Carrying Amount Impairment Amount 2020 RM RM RM Current(notpastdue) 9,107,154 – 9,107,1541to30dayspastdue 7,368,004 – 7,368,00431to60dayspastdue 4,657,189 – 4,657,18961to90dayspastdue 1,229,101 – 1,229,10191 to 180 days past due 2,481,302 (128,664) 2,352,638 181to365dayspastdue 2,444,486 (1,266,996) 1,177,490Morethan365dayspastdue 7,177,082 (6,491,144) 685,938

34,464,318 (7,886,804) 26,577,514

ThemovementinthelossallowancesinrespectoftradereceivablesisdisclosedinNote12tothe financial statements.

The Company

The Company believes that no impairment allowance is necessary in respect of its trade receivables because they are subsidiaries with positive financial position.

Other Receivables

The Group applies the 3-stage general approach to measuring expected credit losses for its other receivables.Underthisapproach,theGroupassesseswhetherthereisasignificantincreaseincredit risk on the receivables by comparing their risk of default as at the reporting date with the risk of default as at the date of initial recognition based on available reasonable and supportable forward-looking information. Regardless of the assessment, a significant increase in credit risk is presumed if a receivable is more than 30 days past due in making a contractual payment.

The Group considers a receivable is credit impaired when the receivable is in significant financial difficulty, for instances, the receivable is in breach of financial covenants or insolvent. Receivables that are credit impaired are assessed individually while other receivables are assessed on a collective basis.

Based on the assessment performed, the identified impairment loss was immaterial and hence, it is not provided for.


136





(iii) AssessmentofImpairmentLosses(Cont’d)

Fixed Deposits with Licensed Banks, Cash and Bank Balances

The Group considers these banks and financial institutions have low credit risks. In addition, some of the bank balances are insured by Government agencies. Therefore, the Group is of the view that the loss allowance is immaterial and hence, it is not provided for.

Amount Owing by Subsidiaries (Non-trade Balances)

The Company applies the 3-stage general approach to measuring expected credit losses for all inter-company balances. Generally, the Company considers loans and advances to subsidiaries have low credit risks. The Company assumes that there is a significant increase in credit risk when asubsidiary’sfinancialpositiondeterioratessignificantly.AstheCompanyisabletodeterminethetiming of payments of the subsidiaries’ loans and advances when they are payable, the Company considers the loans and advances to be in default when the subsidiaries are not able to pay when demanded. The Company considers a subsidiary’s loan or advance to be credit impaired when the subsidiary is unlikely to repay its loan or advance in full or the subsidiary is continuously loss making or the subsidiary is having a deficit in its total equity.

The Company determines the probability of default for these loans and advances individually using internal information available.

Based on the assessment performed, the Company is of the view that the loss allowance is immaterial and hence, it is not provided for.

Financial Guarantee Contracts

AllofthefinancialguaranteecontractsoftheCompanyareconsideredtobeperforming,havelow risks of default and historically there were no instances where these financial guarantee contracts were called upon by the parties of which the financial guarantee contracts were issued to.Accordingly,nolossallowanceswereidentifiedbasedon12-monthexpectedcreditlosses.

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36.

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138


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(c) Liquidity Risk (Cont’d)

Maturity Analysis (Cont’d)

The following table sets out the maturity profile of the financial liabilities at the end of the reporting period based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on the rates at the end of the reporting period) (Cont’d):-

Contractual Carrying Undiscounted Within Amount Cash Flows 1 Year The Company RM RM RM 2021 Non-derivativeFinancialLiabilities Otherpayablesandaccruals 263,705 263,705 263,705Amountowingtosubsidiaries 1,002,522 1,002,522 1,002,522Financial guarantee contracts in relation to corporate guarantee giventocertainsubsidiaries – 135,632,385 –

1,266,227 136,898,612 1,266,227

2020 Non-derivativeFinancialLiabilities Otherpayablesandaccruals 179,553 179,553 179,553Amountowingtosubsidiaries 1,126,555 1,126,555 1,126,555Financial guarantee contracts in relation to corporate guarantee giventocertainsubsidiaries – 117,010,679 –

1,306,108 118,316,787 1,306,108

The contractual undiscounted cash flows represent the outstanding credit facilities of the subsidiaries at the end of the reporting period. The financial guarantees have not been recognised in the financial statements since their fair value on initial recognition were not material.


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36.2 CAPITALRISKMANAGEMENT

The Group manages its capital to ensure that entities within the Group will be able to maintain an optimal capital structure so as to support its businesses and maximise shareholders value. To achieve this objective, the Group may make adjustments to the capital structure in view of changes in economic conditions, such as adjusting the amount of dividend payment, returning of capital to shareholders or issuing new shares.

The Group 2021 2020 RM RM Leaseliabilities(Note17) 1,740,068 2,592,506Termloans(Note18) 119,572,172 104,093,250Bankers’acceptances(Note22) 4,150,000 5,200,000Bankoverdrafts(Note23) 13,191,717 9,574,108

138,653,957 121,459,864Less:Fixeddepositswithlicensedbanks(Note14) (157,901) (26,408)Less: Cash and bank balances (5,400,509) (3,402,249)

Netdebt 133,095,547 118,031,207

Totalequity 187,449,055 182,774,001

Debt-to-equityratio 71.00% 64.58%

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

TheGroupisalsorequiredtocomplywithcertainloancovenantsasdisclosedinNote18(c)tothefinancialstatements, failing which, the banks may call an event of default.

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36.3 CLASSIFICATIONOFFINANCIALINSTRUMENTS

The Group 2021 2020 RM RM Financial Assets AmortisedCost Tradereceivables(Note12) 28,175,838 26,577,514Otherreceivables(Note13) 977,201 1,397,471Fixeddepositswithlicensedbanks(Note14) 157,901 26,408Cash and bank balances 5,400,509 3,402,249

34,711,449 31,403,642

Financial Liabilities AmortisedCost Leaseliabilities(Note17) 1,740,068 2,592,506Termloans(Note18) 119,572,172 104,093,250Tradepayables(Note20) 7,340,294 8,532,476Otherpayablesandaccruals(Note21) 21,582,919 15,807,659Bankers’acceptances(Note22) 4,150,000 5,200,000Bankoverdrafts(Note23) 13,191,717 9,574,108

167,577,170 145,799,999

The Company 2021 2020 RM RM Financial Assets AmortisedCost Amountowingbysubsidiaries(Note9) 37,260,055 35,993,493Cash and bank balances 54,309 9,030

37,314,364 36,002,523

Financial Liabilities AmortisedCost Otherpayablesandaccruals(Note21) 263,705 179,553Amountowingtosubsidiaries(Note9) 1,002,522 1,126,555

1,266,227 1,306,108


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36.4 GAINSORLOSSESARISINGFROMFINANCIALINSTRUMENTS

The Group 2021 2020 RM RM Financial Assets AmortisedCost Netgains/(losses)recognisedinprofitorloss 571,836 (4,257,645)

Financial Liabilities AmortisedCost Netlossesrecognisedinprofitorloss (3,341,994) (3,966,382)

The Company 2021 2020 RM RM Financial Assets AmortisedCost Netgainsrecognisedinprofitorloss 1,305,191 1

Financial Liabilities AmortisedCost Netlossesrecognisedinprofitorloss (35,707) –

36.5 FAIRVALUEINFORMATION

The fair values of the financial assets and financial liabilities of the Group which are maturing within the next 12 months approximated their carrying amounts due to the relatively short-term maturity of the financial instruments or repayable on demand terms.

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36.5 FAIRVALUEINFORMATION(CONT’D)

The following table sets out the fair value profile of financial instruments that are not carried at fair value at the end of the reporting period:-

Fair Value of Financial Instruments Total Fair Carrying Level 1 Level 2 Level 3 Value AmountThe Group RM RM RM RM RM 2021 Financial Liability Termloans – 119,572,172 – 119,572,172 119,572,172

2020 Financial Liability Termloans – 104,093,250 – 104,093,250 104,093,250

The fair values of the Group’s term loans that carry floating interest rates approximated their carrying amounts as they are repriced to market interest rates on or near the reporting date.

37. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

(a) Issuance of Free Warrants

On9November2020,theCompanyhadannouncedaproposaltoundertakeanissuanceof110,699,999freewarrants in XHH (“Free Warrants”) on the basis of 1 Warrant for every 2 ordinary shares in XHH (“XHH Share” or “Shares”) (“Proposed Free Warrants Issue”). The shareholders approved the Proposed Free Warrants Issue during the extraordinary general meeting held on 23 December 2020.

The Free Warrants were issued on 15 January 2021 with an exercise price of RM0.33 and completed on 25 January 2021 following the admission of the Warrants to the Official List of Bursa Securities and the listing and quotation of 110,699,996 Free Warrants on the Main Market of Bursa Securities on 25 January 2021.

(b) Sales and Leaseback of Leasehold Land and Buildings

On 15 March 2021, XHTT, a wholly owned subsidiary of the Company, entered into a conditional sale and purchaseagreement(“SPA”)withtheRHBTrustees(actingasthetrusteeforAxis-REIT)fortheproposeddisposalof 2 pieces of leasehold industrial land and the buildings erected thereon together with the fixtures and fittings attachedthereto(collectively,the“SubjectProperties”),foratotaldisposalconsiderationofRM75,000,000tobe satisfied entirely in cash (“Proposed Disposal”).

SimultaneouswiththeexecutionoftheSPA,XHTTandRHBTrustees(actingasthetrusteeforAxis-REIT)had on 15 March 2021 entered into a conditional lease agreement to leaseback the Subject Properties for a lease period of 10 years with an option to renew for a further term of 5 years which shall commence on the completion of the Proposed Disposal.

AsdisclosedinNote38tothefinancialstatements,theshareholdersoftheGrouphaveapprovedtheProposedDisposalandsubsequent leasebacktheSubjectPropertieson22June2021attheExtraordinaryGeneralMeeting.Atthedateofthisreport,theProposedDisposalhasnotbeencompleted.


144


38. SIGNIFICANT EVENTS OCCURRING AFTER THE REPORTING PERIOD

On22June2021,theshareholdersoftheGroupattheExtraordinaryGeneralMeetinghaveapprovedtheresolutionsfortheProposedDisposalandthesubsequentleasebackoftheabovementionedpropertydisclosedinNote37(b)tothefinancialstatementsandtheproposedestablishmentofanEmployee’sShareOptionScheme(“ESOS”)upto 15% of the total number of issued shares of the Company which shall be in force for a period of 5 years from the implementationdateoftheproposedESOS.

39. COVID-19 PANDEMIC

On11March2020,theWorldHealthOrganisationdeclaredtheCOVID-19outbreakasglobalpandemic.Followingthe declaration, the Government of Malaysia has on 18 March 2020 imposed the Movement Control Order (“MCO”) andsubsequentlyenteredintovariousphasesoftheMCOtocurbthespreadoftheCOVID-19pandemicinMalaysia.Further,subsequenttothereportingdate,thenumbersofnewCOVID-19casesincreasedsubstantiallyinMalaysia.

The Malaysian Government and corporations have taken different measures to prevent the spread of the virus such as travel bans, quarantines, closures of non-essential services, social distancing and home quarantine requirements which impacted consumers’ spending pattern and the Group’s operations directly or indirectly. By and large, businesses and corporations are negatively affected.

Since end-February 2021, the Malaysian Government has started administering mass vaccination programme to the Malaysianpublic.ThenumbersofnewCOVID-19casesisexpectedtodecreaseoncethevaccinationrateincreasesand a high proportion of the public is vaccinated.

AstheGroup’s logisticsoperationsrepresentessentialservicesandwewereabletooperatesubject tocertainconditions.AstheCOVID-19pandemicmayalsoaffecttherecoverabilityoftheGroup’stradereceivablesandotherfinancial assets, we have taken appropriate steps to reassess our customers’ credit risks and tighten credit controls inordertomitigateanyriskofnon-collectionarisingfromtheCOVID-19pandemic.Astheoutbreakisevolving,thefulleffectoftheCOVID-19pandemicissubjecttouncertaintyandcouldnotbeascertainedreliablyatthisjuncture.

The Group is cautious over the challenges posed by these events and the potential impact they have on the Group’s financial position, financial performance and cash flows subsequent to the reporting period. The Group is monitoring the situation closely and is conscientiously managing its cost by adopting an operating cost reduction strategy.

40. PRIOR YEAR ADJUSTMENT

The comparative financial statements have been restated in current financial year to correct prior year error due to the prepayments for purchase of leasehold land, which the lease period has not commenced, were erroneously reclassifiedasRight-of-useassets (“ROU”).TheROUcanonlybe recognisedupon thecommencementof thelease in accordance to MFRS 16. The lease period has not commenced due to delay in the rezoning process for the leasehold land which was caused by the Covid-19 pandemic and various phases of Movement Control Order. The vendoroftheleaseholdlandhasrequestedtheextensionoftimeuntil27September2021tocompletetheprocess.

The financial impacts on the prior year adjustments are as below:

As Previously Prior year As Reported adjustments Restated RM RM RM The Group ConsolidatedStatementofFinancialPosition(Extract):- Non-currentassets Right-of-useassets 53,885,729 (27,065,017) 26,820,712Prepayments 3,769,577 27,065,017 30,834,594

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145

No. Location Description Existing use Tenure

Land area / Gross

floor area sq. ft.

Net book value as at 31 March

2021 RM’000

Approximate age of

building

Date of last revaluation / *acquisition

1 No.2,JalanPermatang2,Kempas Baru, 81200 Johor Bahru, Johor Darul Takzim

Asingle-storeywarehouse with two-storey office and store and three-storey office annexes, a double-storey warehouse and other ancillary buildings

Head office and warehouse

Freehold 245,007/220,483

48,904 12 years 31-Mar-19

2 PTD107511,JalanSeelongJaya13, Kampung Seelong Jaya, 81400 Senai, Johor Darul Takzim

Asingle-storeydetached factory with a double-storey office annex, a single-storey open-sided detached factory and other ancillary buildings

Manufacturing and

fabrication yard

Freehold 348,480 / 50,494

18,480 7years 31-Mar-19

3 GM 586, Lot 1823, Mukim of Tebrau, District of Johor Bahru, State of Johor

Apieceofagricultural land

Vacant Freehold 137,780 7,200 – 31-Mar-19

4 PLO823,JalanNikel2,KawasanPerindustrian Pasir Gudang, 81700PasirGudang,Johor Darul Takzim

Asingle-storeywarehouse with three-storey office

Branch office and warehouse

Leasehold expiring on

30November2074

362,898 / 220,000

38,364 7years 31-Mar-19

5 GM 1694, Lot 1822, Mukim of Tebrau, District of Johor Bahru, State of Johor

Apieceofagricultural land

Vacant Freehold 134,764 7,000 – 31-Mar-19

6 PLO828,JalanNikel2,KawasanPerindustrian Pasir Gudang, 81700PasirGudang,Johor Darul Takzim

Asingle-storeywarehouse with three-storey office

Branch office and warehouse

Leasehold expiring on

20 December 2076

344,015 33,647 4 years 31-Mar-19

7 No.1,PersiaranJubliPerak,Taman Perindustrian Subang, Seksyen22,40000ShahAlam,SelangorDarulEhsan

Building under construction over vacant land

Building under

construction over vacant

land

Freehold 190,769/22,916

98,846 – 31-Mar-19

8 PLO859, Zone 12B, Phase 3, Kawasan Perindustrian Pasir Gudang,81700PasirGudang,Johor Darul Takzim

Apieceofindustrial land

Vacant Leasehold (60 years)

931,487 13,069 – 31-Dec-19

9 PLO860, Zone 12B, Phase 3, Kawasan Perindustrian Pasir Gudang,81700PasirGudang,Johor Darul Takzim

Apieceofindustrial land

Vacant Leasehold (60 years)

987,418 13,996 – 31-Dec-19

LIST OF PROPERTIESASAT3AUGUST2021


146

ANALYSIS OF SHAREHOLDINGSASAT3AUGUST2021

IssuedShareCapital : RM113,975,974representedby233,149,998sharesClass of shares : Ordinary Shares VotingRights : Onevotepershareholderonashowofhandsoronevoteperordinaryshareonapoll DISTRIBUTION OF SHAREHOLDINGS AS AT 3 AUGUST 2021

Size of HoldingsNo. of

Holders %No. of

Shares %

1 - 99 32 1.32 1,155 0.00

100 - 1,000 266 11.01 146,837 0.06

1,001 - 10,000 1,168 48.32 6,931,369 2.98

10,001 - 100,000 828 34.26 27,822,360 11.93

100,001-11,657,498 118 4.88 68,195,740 29.25

11,657,499andabove 5 0.21 130,052,537 55.78

Total 2,417 100.00 233,149,998 100.00

SUBSTANTIAL SHAREHOLDERS’ SHAREHOLDINGS AS PER THE REGISTER OF SUBSTANTIAL SHAREHOLDERS AS AT 3 AUGUST 2021

Direct Indirect

No. of Shares Held

% of Issued Share Capital

No. of Shares Held


NFCapitalManagementSdn.Bhd. 137,052,537 58.78 – –

EngPengLam@NgPengLam – – 137,052,537(1) 58.78

NgAikChuan 4,647,600 1.99 137,052,537(1) 58.78

NgYamPin – – 137,052,537(1) 58.78

Notes:

(1) Deemed interested by virtue of his shareholding in NF Capital Management Sdn. Bhd. pursuant to Section 8 of the Companies Act 2016.

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147

DIRECTORS’ SHAREHOLDINGS AS PER THE REGISTER OF DIRECTORS’ SHAREHOLDINGS AS AT 3 AUGUST 2021

Direct Indirect

No. of Shares Held


No. of Shares Held


Tan Sri Dr. Sulaiman Bin Mohamed 120,000 0.05 – –

NgAikChuan 4,647,600 1.99 137,172,537(1) 58.83

NgYamPin – – 137,052,537(2) 58.78

Datuk Jory Leong Kam Weng 120,000 0.05 – –

Liew Chek Leong 120,000 0.05 – –

Kok Poh Fui 182,400 0.78 270,080(3) 0.12

Notes:

(1) Deemed interested by virtue of his shareholding in NF Capital Management Sdn. Bhd. pursuant to Section 8 of the Companies Act 2016 and interest of his spouse, Teo Siok Kee, pursuant to Section 59 of the Companies Act 2016.

(2) Deemed interested by virtue of his shareholding in NF Capital Management Sdn. Bhd. pursuant to Section 8 of the Companies Act 2016.

(3) Deemed interested by virtue of interest of his spouse, Siau Chiew Peng, pursuant to Section 59 of the Companies Act 2016.

DIRECTORS’ SHAREHOLDING IN RELATED CORPORATION AS PER THE REGISTER OF DIRECTORS’ SHAREHOLDINGS AS AT 3 AUGUST 2021

Direct Indirect

No. of Ordinary Shares Held

in NF Capital Management

Sdn. Bhd. %

No. of Ordinary Shares Held

in NF Capital Management

Sdn. Bhd. %

NgAikChuan 153,000 30.00 204,000 (1) 40.00

NgYamPin 153,000 30.00 204,000 (1) 40.00

Notes:

(1) Deemed interested by virtue of their father’s shareholding pursuant to Section 59 of the Companies Act 2016.

ANALYSIS OF SHAREHOLDINGS(CONT’D)


148

THIRTY LARGEST SHAREHOLDERS AS AT 3 AUGUST 2021

No NameNumber of

shares held %

1 MIDFAMANAHINVESTMENTNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORNFCAPITALMANAGEMENTSDNBHD(MGN-NAC0004M)

55,000,000 23.59%

2 RHBNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORNFCAPITALMANAGEMENTSDNBHD

27,039,540 11.60%

3 CIMSECNOMINEES(TEMPATAN)SDNBHDCIMBBANKFORNFCAPITALMANAGEMENTSDNBHD(PB)

21,600,000 9.26%

4 NFCAPITALMANAGEMENTSDNBHD 13,612,997 5.84%

5 DB(MALAYSIA)NOMINEE(TEMPATAN)SENDIRIANBERHADEXEMPTANFORAFFINHWANGASSETMANAGEMENTBERHAD(TSTAC/CLNT-T)

12,800,000 5.49%

6 PUBLICNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORNFCAPITALMANAGEMENTSDNBHD(E-TSA)

7,000,000 3.00%

7 MIDFAMANAHINVESTMENTNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORNGAIKCHUAN(MGN-NAC0004M)

4,647,400 1.99%

8 SUNTHERA/LANNAMALAI 3,700,000 1.59%

9 AFFINHWANGNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORJASVINDERSINGHA/LPIARASINGH

3,000,000 1.29%

10 RHBNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORLOHYONGHUAT

2,851,400 1.22%

11 ALLIANCEGROUPNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORLIMPANGKIAM(8085241)

2,543,200 1.09%

12 RHBNOMINEES(TEMPATAN)SDNBHDTANCHOONPIEW

2,500,000 1.07%

13 OOIHUNGHOCK 2,260,000 0.97%

14 KENANGANOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORKOHBOONPOH(008)

2,200,000 0.94%

15 AFFINHWANGNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORLEONGKIMFONG

2,000,000 0.86%

16 RHBCAPITALNOMINEES(TEMPATAN)SDNBHDLAWKOKLIM

1,839,000 0.79%

17 HSBCNOMINEES(ASING)SDNBHDEXEMPTANFORCREDITSUISSE(SGBR-TST-ASING)

1,444,000 0.62%

18 LOWGEATHONG 1,200,000 0.51%

19 MAYBANKNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORLIMWEIYUEN

1,140,000 0.49%


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149

THIRTY LARGEST SHAREHOLDERS (CONT’D) AS AT 3 AUGUST 2021

No NameNumber of

shares held %

20 RHBNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORLIMPANGKIAM

1,112,000 0.48%

21 ALLIANCEGROUPNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORMOHDMAHATHIRBINYACOB(7002350)

1,100,000 0.47%

22 ALLIANCEGROUPNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORLOHTECKWAH(8090542)

1,040,000 0.45%

23 HOHDINGWEI 984,000 0.42%

24 LAUCHERLIANG 801,900 0.34%

25 PUBLICNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORMOHDMAHATHIRBINYACOB(E-TSA)

780,000 0.33%

26 CHEWJONGKWANG 710,000 0.30%

27 HLBNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORLOHTECKWAH

700,000 0.30%

28 YAPYEOKTHOU 617,000 0.26%

29 PUBLICNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORBALLANA/LKANNAN(E-TSA)

588,300 0.25%

30 PUBLICNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORCHEWJONGKWANG(E-TJJ)

570,000 0.24%



150

NumberofUnexercisedWarrants : 110,699,996ExercisePrice : RM0.33perwarrantWarrants Issue Date : 15 January 2021ExpiryDate : 12January2024NumberofWarrantHolders : 1,332

DISTRIBUTION OF WARRANT HOLDINGS AS AT 3 AUGUST 2021

Size of HoldingsNo. of

Holders %No. of

Shares %

1 - 99 141 10.59 6,319 0.01

100 - 1,000 154 11.56 81,307 0.07

1,001 - 10,000 546 40.99 2,706,370 2.44

10,001 - 100,000 389 29.20 15,211,530 13.74

100,001-10,799,998 98 7.36 43,328,870 39.14

10,7999,999andabove 4 0.30 49,360,600 44.60

Total 1,332 100.00 110,694,996 100.00

SUBSTANTIAL WARRANT HOLDINGS AS PER THE REGISTER OF SUBSTANTIAL WARRANT HOLDERS AS AT 3 AUGUST 2021

Direct Indirect

No. of Warrants Held

% of Issued Warrants

No. of Warrants Held

% of Issued Warrants

JFAPEXNOMINEES(TEMPATAN) SDNBHD-PLEDGEDSECURITIESACCOUNT FORRAJINDERKAURA/PPIARA SINGH(MARGIN)

24,915,600 22.51 – –

AFFINHWANGNOMINEES (TEMPATAN)SDNBHD-PLEDGEDSECURITIESACCOUNT FORLEONGKIMFONG

9,300,000 8.40 – –

AFFINHWANGNOMINEES (TEMPATAN)SDNBHD-PLEDGEDSECURITIESACCOUNT FORHONGKOKANN

9,300,000 8.40 – –

HLIBNOMINEES(TEMPATAN) SDNBHD-PLEDGEDSECURITIESACCOUNT FORRAJINDERKAURA/PPIARA SINGH(MI1280-003)

5,850,000 5.28 – –

ANALYSIS OF WARRANT HOLDINGSASAT3AUGUST2021

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DIRECTORS’ WARRANT HOLDINGS AS PER THE REGISTER OF DIRECTORS’ WARRANT HOLDINGS AS AT 3 AUGUST 2021

Direct Indirect

No. of Shares Held


No. of Shares Held


Tan Sri Dr. Sulaiman Bin Mohamed 60,000 0.05 – –

NgAikChuan – – 60,000 (1) 0.05

NgYamPin – – – –

Datuk Jory Leong Kam Weng 60,000 0.05 – –

Liew Chek Leong 60,000 0.05 – –

Kok Poh Fui 91,200 0.08 135,040 (2) 0.12

Notes:

(1) Deemed interested by virtue of interest of his spouse, Teo Siok Kee, pursuant to Section 59 of the Companies Act 2016.

(2) Deemed interested by virtue of interest of his spouse, Siau Chiew Peng, pursuant to Section 59 of the Companies Act 2016.

THIRTY LARGEST WARRANTHOLDERS AS AT 3 AUGUST 2021

No NameNumber of

shares held %

1 JFAPEXNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORRAJINDERKAURA/PPIARASINGH(MARGIN)

24,915,600 22.51%

2 AFFINHWANGNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORLEONGKIMFONG

9,300,000 8.40%

3 AFFINHWANGNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORHONGKOKANN

9,300,000 8.40%

4 HLIBNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORRAJINDERKAURA/PPIARASINGH(MI1280-003)

5,850,000 5.28%

5 SATVINDERSINGH 4,500,000 4.07%

6 OOIHUNGHOCK 2,000,000 1.81%

7 MAYBANKNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORLIMWEIYUEN

1,900,000 1.72%

8 SUNTHERA/LANNAMALAI 1,850,000 1.67%

9 KANWAIYEE 1,779,700 1.61%

10 GVASIAFUNDLIMITED 1,449,100 1.31%

ANALYSIS OF WARRANT HOLDINGS(CONT’D)


152

THIRTY LARGEST WARRANTHOLDERS (CONT’D)AS AT 3 AUGUST 2021

No NameNumber of

shares held %

11 RHBNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORLOHYONGHUAT

1,425,700 1.29%

12 ALLIANCEGROUPNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORLIMPANGKIAM(8085241)

1,271,600 1.15%

13 JFAPEXNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORGVASIAFUNDLIMITED(STA1)

1,117,600 1.01%

14 MAYBANKNOMINEES(TEMPATAN)SDNBHDUKASHAHBINMDZUBI

1,000,000 0.90%

15 RHBNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORLIMPANGKIAM

908,100 0.82%

16 MAYBANKNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORMOHDNADZRIBINMISNI

872,900 0.79%

17 ALLIANCEGROUPNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORMOHDMAHATHIRBINYACOB(7002350)

850,000 0.77%

18 KENANGANOMINEES(TEMPATAN)SDNBHDRAKUTENTRADESDNBHDFORLEEPEYSHYUAN

847,800 0.77%

19 ALLIANCEGROUPNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORPOHSENGHEE(8073193)

700,000 0.63%

20 LEEJONGWENG 552,900 0.50%

21 LEERUIYEOW 537,500 0.49%

22 ALLIANCEGROUPNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORSUNTHERA/LANNAMALAI(7002307)

512,450 0.46%

23 LOWCHEESIONG 508,000 0.46%

24 ANGYOOKCHU@ANGYOKEFONG 502,200 0.45%

25 LEEWAILEONG 500,000 0.45%

26 PHANGCHENDE 500,000 0.45%

27 PUBLICNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORCHANKAMCHOON(E-JBU)

500,000 0.45%

28 PUBLICNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORLOOKIANKWONG(E-BPJ)

500,000 0.45%

29 PUBLICNOMINEES(TEMPATAN)SDNBHDPLEDGEDSECURITIESACCOUNTFORCHEWJONGKWANG(E-TJJ)

455,000 0.41%

30 TANLIANHOCK 400,100 0.36%

ANALYSIS OF WARRANT HOLDINGS(CONT’D)

ANNUAL REPORT 2021

153

NOTICE IS HEREBY GIVEN THAT theEighthAnnualGeneralMeetingoftheCompanywillbeheldonafullyvirtualbasisatavenueinMalaysiawheretheChairmanispresentviaonlinemeetingplatformprovidedbyTricorInvestor&IssuingHouse Services Sdn. Bhd. at https://tiih.online on Thursday, 30 September 2021 at 11.00 a.m. and at any adjournment thereof to transact the following businesses:

AGENDA

As Ordinary Business:

1. ToreceivetheAuditedFinancialStatementsforthefinancialyearended31March2021togetherwiththeReportsofDirectorsandAuditorsthereon.

(Please refer to Note 1)

2. To approve the payment of Directors’ fees up to an amount of RM400,000 from 1 October 2021 until the next annual general meeting of the Company.

Ordinary Resolution 1

3. ToapprovethepaymentofDirectors’benefitstoNon-ExecutiveDirectorsuptoanamountof RM60,000 from 1 October 2021 until the next annual general meeting of the Company.


4. Tore-electthefollowingDirectorswhoretireinaccordancewithArticle107(1)(b)oftheCompany’s Constitution:(a) Tan Sri Dr. Suleiman Bin Mohamed(b) Mr.NgYamPin

Ordinary Resolution 3Ordinary Resolution 4

5. Tore-appointCroweMalaysiaPLTasAuditorsoftheCompanyfortheensuingyearandto authorise the Directors to fix their remuneration.


As Special Business:

6. To consider and if thought fit, to pass the following Ordinary Resolution, with or without modifications:

AUTHORITY TO ALLOT SHARES PURSUANT TO SECTION 75 OF THE COMPANIES ACT 2016

“THATsubjectalwaystotheCompaniesAct2016(“Act”) and the approvals of the relevant authorities,theDirectorsbeandareherebyauthorisedpursuanttoSection75oftheAct,toallotsharesintheCompanyatanytimeuntiltheconclusionofthenextAnnualGeneralMeeting 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 pursuant to this Resolution does not exceed 20% of the total number of issued shares of the Company for the time being.”


7. Totransactanyotherbusinessforwhichduenoticeshallhavebeengiven.

BYORDEROFTHEBOARD

SEOW FEI SAN (SSM PC No. 201908002299)MOK MEE KEE (SSM PC No. 201908002288)Secretaries

Petaling Jaya

30thAugust2021

NOTICE OF THE EIGHTH ANNUAL GENERAL MEETING


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NOTES TO THE NOTICE OF THE EIGHTH ANNUAL GENERAL MEETING:

1. Themembers’approvalontheAuditedFinancialStatementsisnotrequiredpursuanttotheprovisionofSection340(1)oftheCompaniesAct2016(“Act”) and hence, the matter will not be put for voting.

2. Only depositors whose names appear in the Record of Depositors as at 23rd September 2021 shall be regarded as members and entitled to attend, speak and vote at the Meeting.

3. AmemberentitledtoattendandvoteattheMeetingisentitledtoappointaproxyorproxiestoattend,speakandvoteonhis/herbehalf.AproxymaybutneednotbeamemberoftheCompany.

4. Amembermayappointuptotwo(2)proxiestoattendtheMeeting.Whereamemberappointstwo(2)proxies,he/ she shall specifies the proportions of his / her holdings to be represented by each proxy.

5. Whereamemberof theCompany is anAuthorisedNomineeasdefinedunder theSecurities Industry (CentralDepositories)Act,1991,itmayappointatleastone(1)proxybutnotmorethantwo(2)proxiesinrespectofeachsecurities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

6. WhereamemberoftheCompanyisanExemptAuthorisedNomineewhichholdsordinarysharesintheCompanyformultiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies whichtheExemptAuthorisedNomineemayappointinrespectofeachomnibusaccountitholds.

7. The instrumentappointingaproxyshallbe inwritingunderthehandoftheappointerorhis/herattorneydulyauthorised in writing, or if the appointer is a corporation, either under its Common Seal or under the hand of its officer or attorney duly authorised or in some other manner approved by directors.

8. The instrument appointing a proxy must be deposited physically at the Company’s Share Registrar’s office at Tricor Investor&IssuingHouseServicesSdn.Bhd.,Unit32-01,Level32,TowerA,VerticalBusinessSuite,Avenue3,BangsarSouth,No.8,JalanKerinchi,59200KualaLumpuroralternatively,theCustomerServiceCentreatUnitG3,GroundFloor,VerticalPodium,Avenue3,BangsarSouth,No.8,JalanKerinchi,59200KualaLumpur,orbyelectronic means via TIIH Online website at https://tiih.online, not less than 48 hours before the time appointed for holding the Meeting or any adjournment thereof.

9. ExplanatoryNotes:

Ordinary Resolutions 1 and 2Directors’ fees and benefits payable to Non-Executive Directors

PursuanttoSection230(1)oftheAct,thefeesofthedirectorsandanybenefitspayabletothedirectorsofalistedcompany and its subsidiaries shall be approved at a general meeting. In this respect, the Board of Directors (“Board”) agreedthatthemembers’approvalshallbesoughtattheEighthAnnualGeneralMeeting(“AGM”) on the Directors’ fees and benefits in two (2) resolutions as follows:

• OrdinaryResolution1onpaymentofDirectors’feesfrom1October2021untilthenextAGM

ThetotalamountofDirectors’feespayabletotheNon-ExecutiveDirectorsfrom1October2021untilthenextAGMtabledforthemembers’approvalisRM400,000.Thefigureiscalculatedwiththeassumptionthatthereis no adjustment to the Directors’ fees and no change in the Board size during the aforesaid period.

• OrdinaryResolution2onpaymentofDirectors’benefitsfrom1October2021untilthenextAGM

TheDirectors’benefits(excludingDirectors’fees)payabletotheNon-ExecutiveDirectorsareessentiallythemeeting allowance for attendance of meetings of the Board, Board Committees and general meetings. The Directors’benefitsfrom1October2021untiltheconclusionofnextAGMisestimatednottoexceedRM60,000.

NOTICE OF THE EIGHTH ANNUAL GENERAL MEETING(CONT’D)

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155

9. ExplanatoryNotes:(Cont’d)

TheproposedamountsarelowerthanlastyearduetoreducedBoardsize.Nevertheless,intheeventtheamountof Directors’ fees and benefits is insufficient due to an increase in Board size and/or number of meetings during the aforesaidperiod,theBoardwillseekshareholders’approvalatthenextAGM.

Ordinary Resolution 6Authority to Allot Shares Pursuant to Section 75 of the Companies Act 2016

AttheExtraordinaryGeneralMeetingheldon23December2020,mandatewasgiventoDirectorstoissueatnomore than 20% of the total number of issued shares of the Company (“Mandate”)pursuanttotheCompaniesAct2016 and higher general mandate (instead of 10%) granted by Bursa Malaysia Berhad as an interim measure for listed issuers to raise funds quickly and efficiently during the challenging time due to Covid-19 pandemic via its letter dated16April2020(“20% General Mandate”).

AsatthedateofthisNotice,thefollowingnewshareshadbeenissuedpursuanttotheMandateandlistedontheMain Market of Bursa Malaysia Securities Berhad (“Bursa Securities”):

Date Issued No. of Ordinary Shares

Issue Price (RM)

Proceeds Raised (RM)

Actual Utilisation at the Date of this

Notice (RM)

Balance Unutilised

30April2021 6,750,000 0.3717 2,508,975 (53,190) 2,455,785

26 July 2021 5,000,000 0.4018 2,009,000 (942,591) 1,066,409

TheMandatewillexpireattheconclusionoftheforthcomingEighthAGM.Assuch,theBoardwouldliketoseekforanewmandate.Asthe20%GeneralMandateisalloweduntil31December2021,theBoardwillliketoprocuretheshareholders’approvalforthe20%GeneralMandate.After31December2021,the10%limitunderparagraph6.03(1) of the Main Market Listing Requirements of Bursa Securities will be reinstated.

The Proposed Ordinary Resolution 6, if passed, will empower the Directors of the Company to allot not more than 20% of the total number of issued shares of the Company subject to approvals of all the relevant governmental and/or other regulatory bodies and for such purposes as the Directors consider would be in the interest of the Company.

The Board is of the view that the 20% General Mandate is in the best interest of the Company and its shareholders due to the rising risk from the uncertain global and domestic economic environment, coupled with weak Ringgit performance and this measure could give access to fundraising flexibility in a quick and efficient manner especially during this challenging time as to ensure the long term sustainability of the Company for the purpose of funding future investment projects, working capital and/or acquisition, or strategic opportunities involving equity deals, which may require the allotment of new shares. In addition, any delay arising from and cost involved in convening an extraordinary general meeting to approve such issuance of shares should be eliminated.

Thisauthorisationwill,unlessrevokedorvariedbytheCompanyingeneralmeeting,expireatthenextAGMoftheCompany.

NOTICE OF THE EIGHTH ANNUAL GENERAL MEETING(CONT’D)


156

Date : Thursday, 30th September 2021Time : 11.00 a.m.Meeting venue : the meeting is to be held fully virtual at a venue in Malaysia where the Chairman is present via

online meeting platform at https://tiih.online MODE OF MEETING

InlightoftheCoronavirus(COVID-19)pandemicandinlinewiththeGuidanceandFrequentlyAskedQuestions(FAQs)on the Conduct of General Meetings for Listed Issuers issued by the Securities Commission Malaysia (including any amendment(s) that may be made from time to time) (SC Guidance), the 8thAGMoftheCompanywillbeconductedonafullyvirtualbasisthroughlivestreamingandonlineremotevotingviaRPVfacilities.PursuanttotheSCGuidanceandSection327(2)oftheCompaniesAct,2016,theChairmanshallbepresentatthemainvenueofthe8thAGMtochairthemeeting.

REMOTE PARTICIPATION AND VOTING FACILITIES (“RPV”)

Shareholders are to attend, speak (in the form of real time submission of typed texts) and vote (collectively, “participate”) remotelyatthe8thAGMusingRPVprovidedbyTricorInvestor&IssuingHouseServicesSdn.Bhd.(“Tricor”)viaitsTIIH Online website at https://tiih.online.PleaserefertoProceduresforRPV.

Ashareholderwhohasappointedaproxy(ies)orattorney(s)orauthorisedrepresentative(s)toparticipateatthis8thAGMviaRPVmustrequesthis/herproxy(ies)orattorneyorauthorisedrepresentativetoregisterhimself/herselfforRPVatTIIHOnline website at https://tiih.online.PleaserefertoProceduresforRPV.

Asthe8thAGMisafullyvirtualAGM,shareholderswhoareunabletoparticipateinthis8thAGMmayappointtheChairmanof the meeting as his/her proxy and indicate the voting instructions in the proxy form.

PROCEDURES FOR RPV

Shareholder(s) or proxy(ies) or corporate representative(s) or attorney(s) who wish to participate the 8thAGMremotelyusingtheRPVaretofollowtherequirementsandproceduresassummarizedbelow:

Procedure Action

BEFORE THE 8th AGM DAY

(a) Register as a user with TIIH Online • Usingyourcomputer,accessthewebsiteathttps://tiih.online. Register as a user under the “e-Services” by selecting “Create Account by Individual Holder”. Refer to the tutorial guide posted on the homepage for assistance.

• Registrationasauserwillbeapprovedwithinoneworkingdayandyouwill be notified via email.

• If you are already a userwith TIIHOnline, you are not required toregisteragain.Youwillreceiveane-mailtonotifyyouthattheremoteparticipation is available for registration at TIIH Online.

ADMINISTRATIVE GUIDE FORTHEEIGHTHANNUALGENERALMEETINGOFXINHWAHOLDINGSBERHAD(“8THAGM”)

ANNUAL REPORT 2021

157

(b) SubmityourregistrationforRPV • RegistrationisopenfromMonday,30thAugust2021untilthedayof8thAGMonThursday,30thSeptember2021.Shareholder(s)orproxy(ies)or corporate representative(s) or attorney(s) are required to pre-register theirattendanceforthe8thAGMtoascertaintheireligibilitytoparticipatethe8thAGMusingtheRPV.

• LoginwithyouruserIDandpasswordandselectthecorporateevent:“(REGISTRATION) xINHWA 8th AGM”

• ReadandagreetotheTerms&ConditionsandconfirmtheDeclaration.• Select“RegisterforRemoteParticipationandVoting”.• Reviewyourregistrationandproceedtoregister.• Systemwillsendane-mailtonotifythatyourregistrationforremote

participation is received and will be verified.• AfterverificationofyourregistrationagainsttheGeneralMeetingRecord

of Depositors dated 23rd September 2021, the system will send you an e-mail after 28th September 2021 to approve your registration for remoteparticipationandtheprocedurestousetheRPVaredetailedtherein. In the event your registration is not approved, you will also be notified via email.

(Note: Please ensure to allow sufficient time required for the approval as a new user of TIIH Online as well as the registration for RPV in order that you can login to TIIH Online and participate the 8th AGM remotely).

ON THE DAY OF THE 8th AGM

(c) Login to TIIH Online • LoginwithyouruserIDandpasswordforremoteparticipationatthe8thAGMatanytimefrom10.00a.m.i.e.1hourbeforethecommencementofthe8thAGMonThursday,30thSeptember2021at11.00a.m.

(d) Participate through Live Streaming • Selectthecorporateevent:“(LIVE STREAM MEETING) xINHWA 8th

AGM”toengageintheproceedingsofthe8thAGMremotely.• IfyouhaveanyquestionfortheChairman/Board,youmayusethequery

box to transmit your question. The Chairman/ Board will endeavor to respondtoquestionssubmittedbyyouduringthe8thAGM.Ifthereis time constraint, the responses will be e-mailed to you at the earliest possible, after the meeting.

(e) OnlineRemoteVoting • Voting session commences from 11.00 a.m. on Thursday, 30thSeptember 2021 until a time when the Chairman announces the end of the session. Select the corporate event: “(REMOTE VOTING) xINHWA 8th AGM” or if you are on the live stream meeting page, you can select “GO TO REMOTE VOTING PAGE”buttonbelowtheQueryBox.

• ReadandagreetotheTerms&ConditionsandconfirmtheDeclaration.• SelecttheCDSaccountthatrepresentsyourshareholdings.• Indicateyourvotesfortheresolutionsthataretabledforvoting.• Confirmandsubmityourvotes.

(f) Endofremoteparticipation • Upontheannouncementby theChairmanon theclosureof the8thAGM,thelivestreamingwillend.

ADMINISTRATIVE GUIDE (CONT’D)


158

Note to users of the RPV facilities:

1. ShouldyourregistrationforRPVbeapprovedwewillmakeavailabletoyoutherightsto jointhe livestreamedmeetingandtovoteremotely.YourlogintoTIIHOnlineonthedayofmeetingwill indicateyourpresenceatthevirtual meeting.

2. The quality of your connection to the live broadcast is dependent on the bandwidth and stability of the internet at your location and the device you use.

3. In the event you encounter any issues with logging-in, connection to the live streamed meeting or online voting on themeetingday,kindlycallTricorHelpLineat011-40805616/011-40803168/011-40803169/011-40803170forassistance or e-mail to [email protected] for assistance.

APPOINTMENT OF PROxY OR ATTORNEY OR CORPORATE REPRESENTATIVE

Shareholderswhoappointproxy(ies)toparticipateviaRPVat8thAGMmustensurethatthedulyexecutedproxyformsaredeposited in a hard copy form or by electronic means to Tricor no later than Tuesday, 28th September 2021 at 11.00 a.m.

The appointment of a proxy may be made in a hard copy form or by electronic means in the following manner:

(i) In hard copy form

In the case of an appointment made in hard copy form, the proxy form must be deposited with the Company’s Share RegistraratUnit32-01,Level32,TowerA,VerticalBusinessSuite,Avenue3,BangsarSouth,No.8,JalanKerinchi,59200KualaLumpur,Malaysiaoralternatively, theCustomerServiceCentreatUnitG-3,GroundFloor,VerticalPodium,Avenue3,BangsarSouth,No.8,JalanKerinchi,59200KualaLumpur,Malaysia.

(ii) By electronic form

The proxy form can be electronically lodged with the Share Registrar of the Company via TIIH Online at https://tiih.online.KindlyrefertotheProceduresforElectronicSubmissionofProxyForm.

PleaseensureALLtheparticularsasrequiredintheproxyformarecompleted,signedanddatedaccordingly.

AnyauthoritypursuanttowhichsuchanappointmentismadebyapowerofattorneymustbedepositedwiththeShareRegistraroftheCompanyatTricorInvestor&IssuingHouseServicesSdn.Bhd.,Unit32-01,Level32,TowerA,VerticalBusinessSuite,Avenue3,BangsarSouth,No.8,JalanKerinchi,59200KualaLumpur,MalaysiaortheCustomerServiceCentreatUnitG-3,GroundFloor,VerticalPodium,Avenue3,BangsarSouth,No.8,JalanKerinchi,59200KualaLumpur,Malaysia not later than Tuesday, 28th September 2021 at 11.00 a.m.toparticipateviaRPVinthe8thAGM.Acopyofthepower of attorney may be accepted provided that it is certified notarially and/or in accordance with the applicable legal requirements in the relevant jurisdiction in which it is executed.

For a corporate member who has appointed a representative, please deposit the ORIGINAL certificate of appointment withShareRegistraroftheCompanyatTricorInvestor&IssuingHouseServicesSdn.Bhd.,Unit32-01,Level32,TowerA,VerticalBusinessSuite,Avenue3,BangsarSouth,No.8,JalanKerinchi,59200KualaLumpur,MalaysiaortheCustomerServiceCentreatUnitG-3,GroundFloor,VerticalPodium,Avenue3,BangsarSouth,No.8,JalanKerinchi,59200KualaLumpur, Malaysia not later than Tuesday, 28th September 2021 at 11.00 a.m.toparticipateviaRPVin8thAGM.Thecertificate of appointment should be executed in the following manner:

(i) If the corporate member has a common seal, the certificate of appointment should be executed under seal in accordance with the constitution of the corporate member.

(ii) If the corporate member does not have a common seal, the certificate of appointment should be affixed with the rubber stamp of the corporate member (if any) and executed by:

(a) at least two (2) authorised officers, of whom one shall be a director; or

(b) any director and/or authorised officers in accordance with the laws of the country under which the corporate member is incorporated.


ANNUAL REPORT 2021

159

PROCEDURES FOR ELECTRONIC SUBMISSION OF PROxY FORM

The procedures to submit your proxy form electronically via Tricor’s TIIH Online website are summarised below:-

Procedure Action

i. Steps for Individual Shareholders

(a) RegisterasaUserwithTIIHOnline • Usingyourcomputer,pleaseaccessthewebsiteathttps://tiih.online. Register as a user under the “e-Services” by selecting “Create Account by Individual Holder”. Please do refer to the tutorial guide posted on the homepage for assistance.

• IfyouarealreadyauserwithTIIHOnline,youarenotrequiredtoregisteragain.

(b) Proceed with submission of Proxy Form

• AfterthereleaseoftheNoticeofMeetingbytheCompany,loginwithyour user name (i.e. email address) and password.

• Select thecorporateevent: “xINHWA 8th AGM - SUBMISSION OF PROxY FORM”.

• ReadandagreetotheTerms&ConditionsandconfirmtheDeclaration.• InsertyourCDSaccountnumberandindicatethenumberofsharesfor

your proxy(ies) to vote on your behalf.• Appointyourproxy(ies)andinserttherequireddetailsofyourproxy(ies)

or appoint Chairman as your proxy.• Indicateyourvoting instructions–FORorAGAINST,otherwiseyour

proxy(ies) will decide your vote.• Reviewandconfirmyourproxy(ies)appointment.• Printproxyformforyourrecord.

ii. Steps for Corporation or Institutional Shareholders

(a) RegisterasaUserwithTIIHOnline • AccessTIIHOnlineathttps://tiih.online.• Undere-Services,theauthorisedornominatedrepresentativeofthe

corporation or institutional shareholder selects “Create Account by Representative of Corporate Holder”.

• Completetheregistrationformanduploadtherequireddocuments.• Registrationwillbeverified,andyouwillbenotifiedbyemailwithinone

(1) to two (2) working days.• Proceedtoactivateyouraccountwiththetemporarypasswordgiven

in the email and re-set your own password.

Note:Therepresentativeofacorporationor institutionalshareholdermustregister as a user in accordance with the above steps before he/she can subscribe to this corporate holder electronic proxy submission. Please contact the persons stated under “ENQUIRY” section below if you need clarifications on the user registration.



160

(b) Proceed with submission of Proxy Form

• LogintoTIIHOnlineathttps://tiih.online.• Select the corporate event: “xINHWA 8th AGM- SUBMISSION OF

PROxY FORM”• ReadandagreetotheTerms&ConditionsandconfirmtheDeclaration.• Proceed todownload thefile format for “SUBMISSION OF PROxY

FORM”inaccordancewiththeGuidanceNotesettherein.• Preparethefilefortheappointmentofproxy(ies)byinsertingtherequired

data.• Submittheproxyappointmentfile.• Login toTIIHOnline, select corporate event: “xINHWA 8th AGM –

SUBMISSION OF PROxY FORM”.• Proceedtouploadthedulycompletedproxyappointmentfile.• Select“Submit” to complete your submission.• Printtheconfirmationreportofyoursubmissionforyourrecord.

POLL VOTING

Thevotingatthe8thAGMwillbeconductedbypollinaccordancewithParagraph8.29AofMainMarketListingRequirementsofBursaMalaysiaSecuritiesBerhad.TheCompanyhasappointedTricorasPollAdministratortoconductthepollbywayof electronic voting (e-voting).

Shareholders or proxy(ies) or corporate representative(s) or attorney(s) can proceed to vote on the resolutions at any time from Thursday, 30th September 2021 at 11.00 a.m. but before the end of the voting session which will be announced by theChairmanofthemeeting.Kindlyrefertoitem(e)oftheaboveProceduresforRPVforguidanceonhowtovoteremotelyfrom TIIH Online website at https://tiih.online.

Uponcompletionofthevotingsessionforthe8thAGM,theScrutineerswillverifythepollresultsfollowedbytheChairman’sdeclaration whether the resolutions are duly passed.

PRE-MEETING SUBMISSION OF QUESTION TO THE BOARD OF DIRECTORS

Shareholders may submit questions for the Board in advance of the 8thAGMviaTricor’sTIIHOnlinewebsiteathttps://tiih.online by selecting “e-Services” to login, pose questions and submit electronically no later than Tuesday, 28th September 2021 at 11.00 a.m.TheBoardwillendeavortoanswerthequestionsreceivedatthe8thAGM.

DOOR GIFT/FOOD VOUCHER

There will be no door gifts or food vouchers for attending the 8thAGM.

NO RECORDING OR PHOTOGRAPHYUnauthorizedrecordingandphotographyarestrictlyprohibitedatthe8thAGM

ENQUIRY

If you have any enquiries on the above, please contact the following persons during office hours on Mondays to Fridays from 9.00 a.m. to 5.30 p.m. (except on public holidays):

Tricor Investor & Issuing House Services Sdn. Bhd.GeneralLine : +603-27839299FaxNumber : +603-27839222Email : [email protected] : EncikAhmadSyafiqbinShaharuddin EncikZulhafribinAbdulRahman


✄

FORM OF PROxY

CDSAccountNo. No.ofSharesHeld

I/We ........................................................................................................................................................(BLOCKLETTERS)

NRICNo./CompanyNo. ....................................................................................................................................................of ...............................................................................................................................................................................................being (a) Member(s) of xIN HWA HOLDINGS BERHAD (Registration No. 201301002265 (1032102-P)) hereby appoint the following person(s):

Name&NRICNo.ofproxy No.ofsharestoberepresentedbyproxy

1 . ........................................................................ ................................................................................

2. ......................................................................... ................................................................................

and him/her,

1. ......................................................................... ................................................................................

2. ......................................................................... ................................................................................

orfailinghim/her,THECHAIRMANOFTHEMEETINGasmy/ourproxytovoteforme/usonmy/ourbehalfattheEighthAnnualGeneralMeetingoftheCompanytobeheldonafullyvirtualbasisatavenueinMalaysiawheretheChairmanispresentviaonlinemeetingplatformprovidedbyTricorInvestor&IssuingHouseServicesSdn.Bhd.athttps://tiih.onlineon Thursday, 30 September 2021 at 11.00 a.m. to and at any adjournment thereof and to vote as indicated below:-

ORDINARYRESOLUTIONNO. FOR AGAINST

1 Payment of Directors’ Fees

2 Payment of Directors’ Benefits

3 Re-election of Tan Sri Dr. Suleiman Bin Mohamed

4 Re-electionofMr.NgYamPin

5 Re-appointmentofCroweMalaysiaPLTasAuditors

6 AuthoritytoAllotShares

Please indicate with an “X” in the space above on how you wish to cast your vote. In the absence of specific directions, your proxy will vote or abstain as he/she thinks fit.

Signed this .............. day of .............……..., 2021

................................................... Signature / Seal of Member

Notes:1. The members’ approval on the Audited Financial Statements is not required pursuant to the provision of Section 340(1) of the Companies

Act 2016 (“Act”) and hence, the matter will not be put for voting.2. Only depositors whose names appear in the Record of Depositors as at 23rd September 2021 shall be regarded as members and entitled

to attend, speak and vote at the Meeting.3. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy or proxies to attend, speak and vote on his / her behalf.

A proxy may but need not be a member of the Company.4. A member may appoint up to two (2) proxies to attend the Meeting. Where a member appoints two (2) proxies, he / she shall specifies the

proportions of his / her holdings to be represented by each proxy.5. Where a member of the Company is an Authorised Nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it

may appoint at least one (1) proxy but not more than two (2) proxies in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

6. Where a member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds.

7. The instrument appointing a proxy shall be in writing under the hand of the appointer or his / her attorney duly authorised in writing, or if the appointer is a corporation, either under its Common Seal or under the hand of its officer or attorney duly authorised or in some other manner approved by directors.

8. The instrument appointing a proxy must be deposited physically at the Company’s Share Registrar’s office at Tricor Investor & Issuing House Services Sdn. Bhd., Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur or alternatively, the Customer Service Centre at Unit G3, Ground Floor, Vertical Podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, or by electronic means via TIIH Online website at https://tiih.online, not less than 48 hours before the time appointed for holding the Meeting or any adjournment thereof.

xIN HWA HOLDINGS BERHADRegistrationNo.201301002265(1032102-P)

AFFIXSTAMP

Fold this flap for sealing

Then fold here

1st fold here

xin Hwa Holdings Berhadc/oTricorInvestor&IssuingHouseServicesSdn.Bhd.

Unit32-01,Level32,TowerA,VerticalBusinessSuite,Avenue3,

BangsarSouth,No.8,JalanKerinchi,59200 Kuala Lumpur

Malaysia

ANNUAL REPORT

2 0 2 1



No. 2, Jalan Permatang 2, Kempas Baru,81200 Johor Bahru, Johor Darul Takzim

Tel : (607) 231 6999Fax : (607) 232 5843

www.xinhwa.com.my

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