GOLDEN PHAROS BERHAD (198601003051) (152205-W)
GROWING A LEGACY OF STRENGTH
ANNUAL REPORT 2020 LAPORAN TAHUNAN 2020 was an exceptional year when the world experienced a crisis like no other. We have achieved commendable performance and undergone GROWING A challenging periods in the past, yet never before have we faced a situation LEGACY OF that undermined global financial stability, ground economies worldwide to a standstill and humanity suffered through the tragic loss of life, STRENGTH retrenchments and loss of income.
As a Terengganu state-owned Government-Linked Company, Golden Pharos Berhad (GPB or the Group) we had to act swiftly and take quick action to help our employees and the communities where we operate through enforcing strict health and safety protocols and income security. Governance and accountability were at the forefront throughout the year, and we had to urgently address risk issues in business continuity and operational and financial performance.
In response to the crisis, we shifted work priorities to focus on the most critical aspects, streamlined procedures to speed up decision making, and continued active engagement with all our employees and multi-stakeholder groups. While the Group’s financial performance was negatively impacted, we remained resilient and steadfast in mitigating the risks by establishing several initiatives to ensure the Group’s business and operational sustainability.
With continuous collaboration and support of our people and valued stakeholders, we can move forward with cautious optimism to overcome business disruptions. Armed with determination, grit and genuine concern to revitalise and stabilise GPB, we aspire to generate shareholder value continuously in Growing a Legacy of Strength.
th 34 Gamelan 3, Primula Beach Hotel, Tuesday, 29 June 2021 Annual General Meeting Jalan Persinggahan, 20400 Kuala Terengganu, GOLDEN PHAROS BERHAD 10.30 a.m. Terengganu Darul Iman. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 1
VISION
To become a premier natural resources organisation
GP Glass supplied its high quality laminated glass for building construction throughout Malaysia. MISSION
• To improve our results
• To meet our customer expectations
• To maximise return to our shareholders
• To promote green and eco-friendly environment
• To provide workforce with rewarding employment
• To use our position as an integrated timber producer
Woodchips are one of the main contributors of the Group’s annual revenue. CORE VALUES
G O L D E N E P E E F E M T S D E K I I T I K A L M A K T D A I R A I N S I S F G I
Woodchips processing at the Pesaka factory supervised thoroughly to ensure good product quality and condition before being delivered to customers. 2 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
What’s Inside
OVERVIEW LEADERSHIP
1 Vision, Mission and Core Values 35 Board of Directors 4 At a Glance 36 Chairman’s Profile 5 Key Highlights 37 Board of Directors’ Profile 6 Who We Are 40 Chief Executive Officer’s Profile 8 Milestones and Achievements 41 Group Senior Management 10 Corporate Information 42 Group Senior Management’s Profile 11 Group Structure
OUR STRATEGIC PERFORMANCE OUR ACHIEVEMENTS
12 Chairman’s Message O 48 Corporate Highlights 16 Management Discussion and 52 Media Highlights Analysis 54 Environmental Statement 30 Financial Highlights 31 Financial Highlights SUSTAINABILITY - Segmental Information 32 Financial Highlights 58 Sustainability Report - Sales by Region 33 Investor Relations 35 Financial Calendar
The logs are assembled and checked at the log yard before they are Chemerong waterfalls is a tourist attraction, located at Pasir processed at the factory. Raja, Dungun. It is a favourite destination for hikers to Gunung Berembun. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 3
GOVERNANCE GOLDEN PHAROS BERHAD 150 Policies ANNUAL REPORT 2020 DIGITAL VERSION 154 Corporate Governance Overview Statement 177 Statement on Risk Management and Follow the steps below to scan the Internal Control QR Code reader in 3 easy steps 180 Audit Committee Report
PROPERTIES
186 List of Properties Download the “QR Code Reader” on App store or Google Play.
FINANCIAL REVIEW
188 Financial Statements
ADDITIONAL INFORMATION Run the QR Code Reader 296 Analysis of Shareholdings app and point your camera to the QR Code. 297 List of Top 30 Shareholders 299 Notice of Annual General Meeting 302 Statement Accompanying Notice of Annual General Meeting • Proxy Form
Get access to the softcopy of the Annual Report.
The softcopy version of Golden Pharos Berhad’s Annual Report 2020 is available from our website. We also welcome your feedback. Please email: [email protected]
Go to http://www.goldenpharos.com or scan the code Exterior glass facade at Southern Airline Corporation, Vietnam with your smartphone. supplied by GP Glass. 4 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
At a Glance
GOLDEN PHAROS BERHAD WAS INCORPORATED IN 1986 SETTLEMENT OF RM12 MILLION AMOUNT OWING TO TERENGGANU INCORPORATED SDN BHD (TERENGGANU INC) VIA THE ISSUANCE OF 12 MILLION ISO 14001:2004 REDEEMABLE PREFERENCE SHARES CERTIFIED FOR GOLDEN PHAROS GLASS SDN BHD
GOLDEN PHAROS BERHAD LISTED ON THE MAIN MARKET OF WAS FINALIST IN BURSA MALAYSIA 2019 ASIA SUSTAINABILITY SECURITIES BERHAD REPORTING AWARDS SINCE 1993 GPB AWARDED COMPANY OF THE YEAR (LOGGING & SAWMILL) BY CSR MALAYSIA.
SEGMENT REVENUE FOR OPERATING UNIT
HARVESTING & SAWMILLING MANUFACTURING OTHERS 65.1% 34.7% 0.2% GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 5
Key Highlights
REVENUE RM47.20million (FY2019: RM57.47 million)
LOSS PER SHARE (4.93sen) (FY2019: (6.79 sen))
SHAREHOLDERS’ EQUITY RM68.40million (FY2019: RM62.90 million)
LOSS BEFORE TAX (RM6.37million) (FY2019: (RM8.98 million)) 6 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Who We Are
Morning view at Langsir Waterfall in the Group’s concession area. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 7
Golden Pharos Berhad (GPB) has been listed on the Main Board of Bursa Securities Malaysia Berhad (Bursa Securities) since 1993. GPB is also a Terengganu state Government Link Corporation (GLC) by virtue of 70.97% shareholding via the State’s investment arms, Terengganu Incorporated Sdn Bhd and Lembaga Tabung Amanah Warisan Negeri Terengganu which hold 62.65% and 8.32% respectively.
Its principal activities cover forest concession management, harvesting and distribution, sawmilling and value-added processing of wood-based products, as well as manufacturing and sales of architectural panel glass.
1997onwards GPB became a fully integrated timber corporation. 1996 GPB acquired Permint Timber Corporation Sdn Bhd. 1993 GPB was listed on the Main Board of the Kuala Lumpur Stock Exchange. 1992 Converted into a public company. Production of tempered glass started. 1986 GPB was incorporated. 8 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Milestones and Achievements
1980 1992 1996 l GPB took over the l May - Tempered glass plant was l March - GPB became a fully manufacturing of timber doors set up at Telok Panglima Garang integrated timber corporation from Golden Pharos Wood Industrial Site, producing 20,000 with the acquisition of Permint Industries Sdn Bhd. square metres of tempered glass Timber Corporation Sdn Bhd. per month.
l November - The second phase of glass production was implemented to supply architectural glass and shower screens for domestic buildings and the construction industry. 2006 l GPB was ranked 1st place in the consumer product 2012 industry sector and 2nd place 2007 overall under the Corporate st l Golden Pharos Glass Sdn l GPB was ranked 1 place Governance Survey Report for Bhd (GP Glass) certified with in the consumer product the small capital public listed st ISO 14001:2004 International industry sector and 1 place companies, conducted by the Standards. overall under the Corporate Minority Shareholder Watchdog Governance Survey Report for Group (MSWG) in collaboration l GP Glass awarded the small capital public listed with the Nottingham University ISO 9001:2006 certification. companies, conducted by the Business School. MSWG in collaboration with l Pesama Timber Corporation the Nottingham University Sdn Bhd (Pesama) obtained Business School. FSC® endorsed certification for Cherul Forest Concession. 2015 l GPB entered into a Memorandum of Understanding with Dongwha Malaysia Sdn Bhd.
2014 l Permint Plywood Sdn Bhd (PPSB) l GPB entered into a Memorandum of Understanding entered into a Joint Venture with Malaysian Timber Industry Board (MITB) and Agreement with Cymao Plywood Sdn Pengusaha Kayu Kayan & Perabot Bumiputera Malaysia (PEKA). Bhd (CPSB) to revive PPSB’s facility by establishing a JV company, GP Dynamic Venture Sdn Bhd (GPDV). GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 9
Milestones and Achievements (Continued)
2016 2017 2018 l PPSB entered into a l GP Glass was awarded l PPSB re-started operations after closing Shareholders’ Agreement with Company of The Year (Small down its business in 2005. CPSB. Medium Enterprise) at Terengganu Inc Excellence l PPSB was certified with Programme for l PPSB subscribed to RM0.96 Award 2017. the Endorsement of Forest Certification million (60%) of GPDV’s paid (PEFC) for veneer production. up capital. GPDV’s intended l Pesama and Pesaka activities were to manufacture Trengganu Berhad l PPSB signed an agreement with BioBenua and sell veneer, plywood and (Pesaka) were awarded Teknologi to process agar wood oil. decorative plywood. the Performance Award for Sawmill Category (Air l Kumpulan Pengurusan Kayu Kayan l In June 2016, PPSB Pollution Control) by the Trengganu Sdn Bhd (KPKKT) initiated commenced the production Department of Environment commercial Forest Plantation for long- of woodchips to maximise the Terengganu. term timber supply. value of the Group’s wood waste. l PPSB was awarded the PEFC 'Chain of Custody of Forest Based Products' certification at Majlis SIRIM Industri 2018 'Best Partner For Innovation'. 2019 l First dividend payment of 1.27 sen per share was declared and paid after 11 years.
l GP Glass was awarded Brand Leadership Award at the BrandLaureate BestBrands Awards 2018/2019.
l The then Minister of Human Resource, 2020 YB M Kulasegaran appointed Chief Executive l April 2020 - GPB was finalist in 2019 Asia Officer, Dato’ Nadza Abdul as Director of Sustainability Reporting Award in Singapore. SOCSO.
l l August 2020 - GPB settled RM12 million CEO Dato’ Nadza Abdul received the Malaysia Business Awards (MEBA)- of Terengganu Inc debt via issuance of Masterclass Bumiputera CEO of The Year redeemable preference shares. Award.
l October 2020 - GPB awarded Company of the l GPB paid RM3.17 million as partial Year (Logging & Sawmill) by CSR Malaysia. repayment of advances to Terengganu Inc after 10 years of debt. 10 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Corporate Information
BOARD OF DIRECTORS
YBM DATO’ HAJI TENGKU HASSAN BIN TENGKU OMAR Non-Independent Non-Executive Chairman
DATO’ BENTARA DALAM DATO’ HAJI A. RAHMAN BIN YAHYA Non-Independent Non-Executive Director
HAJI BURHANUDDIN HILMI BIN MOHAMED @ HARUN Non-Independent Non-Executive Director
MUHAMMAD RAMIZU BIN MUSTAFFA Non-Independent Non-Executive Director
ASSOCIATE PROFESSOR DR MOHD ZAKI BIN HAMZAH Independent Non-Executive Director
MOHD BADARUDDIN BIN ISMAIL Independent Non-Executive Director
HAJI SAIFFUDDIN BIN OTHMAN Independent Non-Executive Director
CHIEF EXECUTIVE OFFICER AUDITORS
DATO’ AHMAD NADZARUDIN BIN ABDUL RAZAK Ernst & Young PLT Level 23A, Menara Milenium Jalan Damanlela, Pusat Bandar Damansara COMPANY SECRETARY 50490 Kuala Lumpur SURAYA BINTI MOHD HAIRON (LS 0007314) Tel : +603 2087 7000 (SSM PC No. 202008000100) Fax : +603 2095 533
REGISTERED OFFICE PRINCIPAL BANKERS 66-2, Taman Seri Intan Jalan Sultan Omar Maybank Islamic Berhad 20300 Kuala Terengganu Bank Islam Malaysia Berhad Terengganu Darul Iman Tel : +609 630 1330 Fax : +609 631 0617 STOCK EXCHANGE LISTING
Main Market SHARE REGISTRAR Bursa Malaysia Securities Berhad
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 Tel : +603 2783 9299 Fax : +603 2783 9222 GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 11
Group Structure
GOLDEN PHAROS BERHAD (198601003051) (152205-W)
100% 100% 100% 100% 100% 100% Permint Timber Golden Pharos GP Forest Golden Pharos Golden Pharos Golden Pharos Corporation Glass Plantation Overseas Biomass Fiber Sdn Bhd Sdn Bhd Sdn Bhd Sdn Bhd Sdn Bhd Sdn Bhd
100% 100% 100% 100%
Permint Plywood Pesaka Kumpulan Pengurusan Pesama Timber Sdn Bhd Trengganu Kayu Kayan Corporation Berhad Trengganu Sdn Bhd Sdn Bhd
GP Tropical 100% 19.54% Furniture Sdn Bhd 30.85% GP Dynamic Venture Sdn Bhd Kemaman 14.10% Furniture Industries 29.49% Sdn Bhd
Konsortium 35% Perumahan Rakyat Terengganu Sdn Bhd
Wholly owned by Golden Pharos Berhad Pesama Renors (M) Wholly owned by Golden Pharos Berhad via 25% Sdn Bhd Permint Timber Corporation Sdn Bhd
Subsidiary
Minority interest 12 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
YBM DATO’ HAJI TENGKU HASSAN BIN TENGKU OMAR Chairman GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 13
Chairman’s Message
Assalamualaikum Warahmatullahi Wabarakatuh dan Salam Sejahtera
Dear Valued Shareholders,
In 2020, the absolutely unexpected COVID-19 pandemic changed everything. Globally, regionally and locally. Its serious implications have significantly impacted businesses and economies on an unprecedented scale, bringing about rapid and unexpected variables, some of which our existing crisis plans were unprepared for.
On behalf of the Board of Directors of Golden Pharos Berhad (GPB or the Group), it is my privilege to present you with the Annual Report and audited Group Financial Statements for the Financial Year ended 31 December 2020 (FY2020). Details of GPB’s financial performance is featured in the Management Discussion and Analysis on pages 16 to 29 of this report.
GPB started 2020 on course to successfully execute our Business Recovery Plan (BRP), which would have brought the Group back to profitability. In March 2020, the COVID-19 pandemic hit usand everybody else, severely disrupting our business recovery progress. The Group had to completely re- do our original BRP strategies. 2020 then became a year of relentless effort to mitigate the various negative effects of the pandemic.
Fortunately, our mitigation efforts proved successful. At the start of the pandemic, the Group had internal estimates that suggested the pandemic and the subsequent economic fallout would result in losses even larger than the Loss After Tax that we experienced in 2019. In the end, despite the fantastic negative impacts of the pandemic, we were able to close 2020 with a much better performance, reducing our Loss After Tax from RM9.2 million in 2019 to only RM6.7 million in 2020.
We are currently still operating in an uncertain environment as the pandemic is still continuing to rage, with movement restrictions imposed in Q1 and Q2 2021 due to the surge of infection rates throughout the country. As such, managing the business in this new normal will need a Group-wide change of mindset. Building GPB’s resiliency against the adverse effects of the global economic fallout required immediate action on our part to protect the jobs of our employees and their families, stakeholder businesses and livelihoods of the communities we operate in. 14 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Chairman’s Message (Continued)
This is the 20,243 hectares Cherul Forest Reserve, the concession area under Pesama Timber Corporation Sdn Bhd and sustainably-managed managed by Kumpulan Pengurusan Kayu Kayan Trengganu Sdn Bhd, two of the timber subsidiaries in the Group.
While the Group adopted many of the lessons learnt from the In October 2020, GPB was awarded the Company of the Year BRP, our new five-year Strategic Plan (FY2021-FY2025) represents (Logging & Sawmill) Award by CSR Malaysia. These achievements a holistic and comprehensive blueprint to address existing have further built our confidence to remain steadfast throughout weaknesses and prioritise logical business strategies and plans this period of uncertainty to shift our focus on rebuilding our for a quick turnaround. strength and revitalising the Group’s operations to stimulate growth momentum. We expect the current challenges to be considerably more formidable. Therefore, let me assure our stakeholders that the APPRECIATIONS Board and Management Team will continue to rein in efforts to optimise timber and glass manufacturing operations by Let me take this opportunity to express the Board’s gratitude to implementing identified strategic cost rationalisation measures you, our valued shareholders, for your support and trust as we as outlined in the new Strategic Plan FY2021-FY2025. overcome the current difficult period. Your continued confidence in GPB inspires us to face any and every challenge that lies ahead. Despite the downturn in the Group’s results, we achieved several The Board would also like to pay tribute to our employees inspirational achievements and milestones during the financial who had endured this crisis with resilience. They effectively year in review. In April 2020, GPB was nominated a finalist at performed their duties whether from home or onsite to keep the the Asia Sustainability Reporting Awards (ASRA) 2019 in two company running. categories: Asia’s Best Sustainability Report within the Annual Report and Public Sector. The ASRA is one of the most prestigious international recognition for sustainability reporting. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 15
Chairman’s Message (Continued)
Logs are assembled in a log yard before being distributed to factories.
Let me also express the Board’s confidence in the leadership of our Chief Executive Officer, Dato’ Nadza Abdul and his management team, who in 2020 put in the comprehensive mitigation plan that allowed the Group to substantially reduce our losses despite the negative impacts of COVID-19.
A big ‘Thank You’ to all our partners, associates, authorities and suppliers for their trust, contributions and cooperation they have extended to the Group throughout the years.
Let me also record my appreciation for my fellow Board members, who lent their total support and guided me with their wise counsel.
Thank you and wassalam.
YBM DATO’ HAJI TENGKU HASSAN BIN TENGKU OMAR Chairman 16 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Management Discussion and Analysis
18 BUSINESS OBJECTIVE
18 BUSINESS STRATEGIES
20 FINANCIAL RESULTS
O REVENUE
O PROFIT/LOSS
O SHAREHOLDERS’ EQUITY AND ASSETS
O OTHER FINANCIAL INDICATORS
23 OVERVIEW OF OPERATING ACTIVITIES
O KNOWN TRENDS IMPACTING GROUP OPERATIONS
O MAIN FACTORS AFFECTING OPERATING ACTIVITIES
24 REVIEW OF BUSINESS SEGMENTS
O LOGGING & SAWMILLING
O MANUFACTURING
26 MANAGING RISKS
27 OUTLOOK & PROSPECTS O OUTLOOK O PROSPECTS
The over 1,300 year old chengal tree in our 29 MOVING AHEAD concession area in the Pasir Raja Forest Reserve in Hulu Dungun, Terengganu is a state treasure. Reaching a height of 65 meters with a 16.75 metre circumferance the giant tree is listed in the Malaysia Book of Records. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 17
Management Discussion and Analysis (Continued)
The following Management Discussion and Analysis (MD&A) is intended to convey the Management’s perspective on the operating performance and financial review of Golden Pharos Berhad (GPB or the Group) for the year ended 31 December 2020. We recommend that you read the MD&A in conjunction with the Financial Statements, notes thereto and other information included elsewhere in the Annual Report.
The MD&A is presented in accordance with the Main Market Listing Requirements (MMLR) of Bursa Malaysia Securities Berhad (Bursa Securities) and the Malaysian Financial Reporting Standards (MFRS), and in relation to the disclosure requirements as per the Malaysian Code on Corporate Governance. Significant details on the Group’s business operations, performance and strategy, as well as financial review and position, governance, risks and capital management, are covered in the MD&A. Your attention is also drawn to sections on our human capital management and sustainability efforts.
This MD&A contains forward-looking statements that are provided to enable investors to gauge GPB’s business prospects and make informed investment decisions. However, they involve inherent risks and uncertainties and other factors that are in many cases beyond our control. The forward-looking statements include, but are not limited to, for instance, our 2020 business prospects and outlook, as well as our expectations with regards to the macro-economic and socio-geographic conditions, and their anticipated impact on the Group’s business operations.
We have tried, wherever possible, to identify such statements by using words such as ‘anticipate’, ‘expect’, ‘intend’, ‘plan’, ‘believe’, and words of similar substance in connection with any discussion of future performance. Although GPB believes that the expectations of its Management as reflected by such forward-looking statements are reasonable based on current information, no assurance can be given that such expectations will prove to have been correct. Should one or more of the risks and uncertainties materialise, actual results may vary materially from those anticipated or projected. 18 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Management Discussion and Analysis (Continued)
BUSINESS OBJECTIVE BUSINESS STRATEGIES
For Golden Pharos Berhad (GPB or the Group), 2020 was a In early 2017, GPB introduced the Business year in which our plans and programmes to boost recovery Recovery Plan (BRP) to mitigate two were disrupted by the COVID-19 pandemic, which started as a consecutive years of losses (FY2015 and health crisis and quickly evolved into a global economic crisis FY2016). The BRP had an immediate impact at a speed and magnitude we have not seen in our lifetime. The and turned the Group around to register socio-economic effects are still unfolding globally, and there is modest profit gains over the next two years uncertainty about the true impact of this pandemic despite the roll-out of vaccinations to the public. (FY2017 and FY2018).
From being on course to drive positive growth, GPB instead spent The subsequent loss incurred in FY2019 valuable time, effort and resources to mitigate the unprecedented was due to issues primarily unrelated and impact of COVID-19 on our business. Among the actions taken outside the scope of the BRP strategies, were cost-cutting measures in operational and manpower areas which were conditions imposed on revenue which were deemed as non-essential. restrictions under the Malaysian Financial Reporting Standards (MFRS) that came into The Group was compelled to delay business objectives, financial effect that financial year. targets, sustainable initiatives and operational milestones since our core activities in timber harvesting and processing, and glass manufacturing, faced temporary shutdowns and limited As such, the Group extended the original operating hours for much of FY2020. three-year BRP to a new five-year Strategic Plan (FY2021-FY2025), which Nevertheless, we remain steadfast in achieving our business covers FY2020 and FY2021 with the aim goals and corporate aspirations towards being a sustainable of addressing issues with operations, company that provides healthy returns to our stakeholders while cash flow and management culture whilst generating opportunities for the community by abiding by our also strengthening existing businesses, Golden Values of: optimising resources, monetising assets and capitalising on new opportunities.
Gemilang (Glorious)
Optimis (Optimistic)
Lestari (Sustainable)
Dedikasi (Dedication)
Efektif (Effective)
Nekad (Determined) GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 19
Management Discussion and Analysis (Continued)
For Golden Pharos Berhad,
2020 was a year in which our plans
and programmes to boost recovery
were disrupted by the COVID-19
pandemic, which started as a
health crisis and quickly evolved
into a global economic crisis at a
speed and magnitude we have not
seen in our lifetime.
DATO’ AHMAD NADZARUDIN BIN ABDUL RAZAK Chief Executive Officer 20 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Management Discussion and Analysis (Continued)
Broadly, the original three-year BRP outlined the following measures:
● Enhance the Core Business of timber harvesting and processing by improving the value chain from forest management to the production of wood-based products. This would involve the remodelling of two sawmills into a single operation to lower costs, specialising in focussed products for better efficiency and performance, and ensuring a sustainable log supply while optimising the utilisation of wood residues.
● Unleash Dormant Assets such as our unutilised vacant land in Terengganu and Selangor for development, re-development or agricultural use to boost profits.
● Pursue New Revenue Streams by looking into downstream activities in timber production and distribution to add value to our core businesses and operations. The plan is to implement cost-saving measures by generating electricity onsite with mini-hydroelectric plants within our concessionary areas in line with new revenue streams. In addition, there are also plans for the production of biomass from wood waste and the installation of photovoltaic solar panels to supplement the electricity supply.
● Strengthen Human Capital by sourcing and hiring talents who are well-versed with innovative and digital business resources resourcefulness and solutions.
However, we were unable to fully implement these strategies following the outbreak of COVID-19 and the subsequent economic fallout. Regardless, we focussed our attention on sustaining operations amidst the many challenges faced during 2020.
Given the circumstances and uncertain outlook, we revised the BRP into a new five-year Strategic Plan (FY2021-FY2025), which prioritises the Group’s post pandemic recovery plans to enhance the Group’s performance for the years to come.
The new Strategic Plan is to ‘MOVE’ the Group to adopt and implement new solutions, and is best illustrated and described using the following 4 MOVE pillars: M O V E
MONETISE OPTIMISE VENTURE ELIMINATE Dormant Existing Into Performance Asset Business Downstream Constraints Business
FINANCIAL RESULTS
The COVID-19 pandemic had a significant bearing on the Group’s financial performance with the almost seven-week shutdown of operations followed by reduced operational capacity for an additional five-plus weeks. These setbacks have impacted both our revenue, cost and profitability figures.
Revenue for the year in review was considerably lower on account of production restrictions. We incurred another year of losses although this was mitigated by cost-cutting measures introduced Group-wide. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 21
Management Discussion and Analysis (Continued)
2020 FINANCIAL RESULTS AT A GLANCE
INCOME STATEMENT FINANCIAL POSITION
REVENUE (RM’000) SHAREHOLDERS’ EQUITY (RM’000) 2020 47,200 2020 68,392 2019 57,472 2019 62,896
LOSS BEFORE TAX (RM’000) 2020 (6,374) 2019 (8,977) TOTAL ASSETS (RM’000) 2020 101,545 LOSS AFTER TAX (RM’000) 2019 113,697 2020 (6,693) 2019 (9,206)
NET ASSETS PER SHARE (RM) EARNINGS PER SHARE (SEN) 2020 0.50 2020 (4.93) 2019 0.46 2019 (6.79)
FINANCIAL INDICATORS
CURRENT RATIO (TIMES) QUICK OR ACID TEST (TIMES) TOTAL ASSETS TURNOVER GEARING RATIO (TIMES) 2020 2.29 2020 1.86 2020 0.18 2019 1.29 2019 1.10 2020 0.46 2019 0.20 2019 0.51
NET LOSS MARGIN RETURN ON TOTAL ASSETS RETURN ON EQUITY
(14%) (7%) (10%) 2019: (16%) 2019: (8%) 2019: (15%) 22 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Management Discussion and Analysis (Continued)
REVENUE Dividend The Group recorded a lower Revenue of RM47.2 million, a As a result of back-to-back losses in the past two years, the Board decrease of 17.9% from the RM57.5 million posted in the previous of Directors decided against any dividends for FY2020. GPB issued financial year. Revenue from both business segments were down, a single-tier dividend of 1.27 sen per share, totalling a dividend with timber harvesting, sawmilling and kiln drying dropping payout of RM1.74 million in the previous financial year. by 17.9% to RM30.7 million (FY2019: RM37.4 million) while the manufacturing segment dropped by 18% to RM16.4 million SHAREHOLDERS EQUITY & ASSETS (FY2019: RM20.0 million). At the close of the financial year, Shareholders Equity amounted The timber business was directly affected by the pandemic to RM68.4 million as compared with RM62.9 million in FY2019. constraints, resulting in 21.0% less sawn timber sold year-on- Total Assets stood at RM101.5 million (FY2019: RM113.7 million) year due to lower log extraction during the reporting period. In with Net Assets Per Share at a higher RM0.50 against RM0.46 addition, owing to a delay in licence issuance by the Terengganu previously. Forestry Department (JPNT), this division was unable to recognise revenue amounting to RM5.2 million from two compartments in OTHER FINANCIAL INDICATORS Ladang Hutan. Return on Equity (ROE) and Return on Total Assets (RTA) Meanwhile, the glass manufacturing business was faced with delays and a weak construction sector following the imposition Despite the loss, our better bottom line performance resulted in of the Movement Control Order (MCO) which led to the ROE of -10% during the reporting period compared against -15% postponement of glass orders. The division underachieved in FY2019 and an RTA of -7% against -8% previously. revenue by RM3.0 million in FY2020.
The timber division remained GPB’s largest business earner Tax during the reporting period, accounting for 65.1% of Group The Group incurred higher taxes for the year posting RM319,000 Revenue against 34.6% for glass manufacturing (Split in FY2019 from RM229,000 the year before. 65.02% : 34.8%).
PROFITS/LOSS Gearing GPB maintained a comparatively low gearing of 0.18x in FY2020, The Group achieved a lower Gross Profit (GP) posting lower than the previous period as we reduced our total borrowings RM7.0 million from RM7.8 million the year before. As a result, marginally to RM12.1 million from RM12.5 million. we sustained a Loss Before Tax (LBT) of -RM6.4 million, which nevertheless was an improvement from the LBT of -RM9.0 million in FY2019. Loss After Tax (LAT) was RM6.7 million against a LAT Finance Costs of RM9.2 million previously. Loss Per Share for the year was The Group incurred higher finance costs amounting to RM673,000 4.93 sen against 6.79 sen in FY2019. in FY2020 as compared with RM350,000 the year before. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 23
Management Discussion and Analysis (Continued)
MAIN FACTORS AFFECTING OPERATING ACTIVITIES Cash and Capital Management The COVID-19 pandemic severely restricted business activity at both our The constraints resulting from pandemic-related business divisions. In line with the requirements of the first MCO, which restrictions resulted in a negative cash flow of -RM6.8 lasted from 18 March to 3 May 2020, saw us shut down all operations at million from operating activities (FY2019: -RM858,000). This our logging, processing and production sites in Terengganu and Selangor led to the decline in our cash reserves and cash equivalent for a total of 47 days. to RM12.0 million from RM19.6 million previously.
With the onset of the CMCO on 4 May 2020, we were permitted to operate The uncertainty throughout FY2020 required us to be at 50% capacity before returning to normal operations, albeit subject to prudent in the case of capital and operational expenditure standard operating procedures (SOP) from 9 June 2020 onwards when (CAPEX and OPEX). In order to preserve cash and protect the Recovery MCO (RMCO) was issued. cash flow, we reduced the CAPEX to RM1.3 million (FY2019: RM1.7 million) for essential plant upgrades, critical Beyond the temporary shutdowns and limited operations, the enforced machinery and motor vehicles. restrictions on movement and the issuance of new SOPs, such as physical distancing, work from home (WFH) and the prohibition of face-to-face meetings hampered many aspects of our business activities. OVERVIEW OF OPERATING ACTIVITIES
Ultimately, plans were brought forward, initiatives were interrupted, KNOWN TRENDS IMPACTING GROUP OPERATIONS supply was disrupted and work was delayed at every level in the Group. Apart from lower production outputs, other components of our business • Weather such as business development, sales and marketing, research and The monsoon season in the north-eastern region of development, were similarly affected. Peninsular Malaysia starts in November and lasts until March. The months of December and January are • Logging & Sawmilling usually the peak period of the monsoon season and As a consequence of the MCOs our forest management subsidiaries, are considered downtime for logging operations as Kumpulan Pengurusan Kayu Kayan Terengganu Sdn Bhd (KPKKT) access roads are often waterlogged. This limits timber and GP Forest Plantation Sdn Bhd (GP Forest), faced delays in harvesting activities, where logging activities generally the issuance of new licences. This issue further compounded the peak between April and October. enforced limitations to logging activities, resulting in lower log extraction, which in turn, reduced sawn timber production and However, GPB could not capitalise on this seven- pushed down sales. month window period in FY2020 as the MCO required us to halt operations throughout April and into • Manufacturing early May. Following which, we were only allowed to Over and above the restrictions on manufacturing activities during operate at 50% capacity during the Conditional MCO the MCO and CMCO periods, our subsidiary, GP Glass Sdn Bhd (CMCO) period which lasted until early June 2020. (GP Glass) was adversely affected by a weak construction sector.
• Second Rotation Many public and private sector projects were delayed, resulting Currently, yields average 25% less in the second in cancellations or deferments of orders. The sector was unable rotation of logging at the Dungun Timber Complex to recover and will remain cautious for the rest of the year (DTC) and Cherul Forest Concession (CFC). Output as construction companies are facing an uncertain operating from these areas are estimated at 15 hoppus tonnes environment. per hectare (hpt/ha) versus 20 hpt/ha in the first cycle. 24 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Management Discussion and Analysis (Continued)
REVIEW OF BUSINESS SEGMENTS The decline in segmental revenue was reflected by lower production figures with logs harvested dipping to 22,774 hoppus Impacted by the pandemic, segmental revenue was down for tonnes (ht), as compared with 23,522 ht the year before. A lower both businesses in Logging & Sawmilling, and Manufacturing. harvest led to a drop in sawn timber and woodchip sales at Nevertheless, these business segments improved on their 13,899 tonnes (FY2019: 18,286 tonnes) and 9,465 metric tonnes respective bottom lines by reducing their losses through cost- (FY2019: 10,439 metric tonnes) respectively. saving measures and higher operating incomes. MANUFACTURING LOGGING & SAWMILLING Similarly, segmental revenue for Manufacturing fell to RM16.4 This segment registered a segmental revenue of RM51.96 million million (FY2019: RM20 million) while LBT for the business was against RM56.95 million previously. However, the business -RM4.4 million against -RM5.6 million recorded in the previous successfully reduced its LBT to -RM111,000 from -RM2.4 million reporting period. in FY2019. The weaker market for glass saw sales slide to 372,348 square metres (m2), from 406,976 m2 the previous year, while veneer was affected by the lower logs supply and operation restrictions of the MCO which resulted in a steep drop in production to 1,471 cubic metres (m3) from 3,539 m3 in FY2019.
PRODUCTION (HARVESTING & SAWMILLING)
LOGS SAWN TIMBER WOODCHIPS
9,465 metric tonnes (mt) 22,774 13,899 hoppus tonnes (ht) tonnes 2019: 10,439 metric tonnes (mt) 2019: 23,522 hoppus tonnes (ht) 2019: 18,286 tonnes
PRODUCTION (MANUFACTURING)
GLASS VENEER 372,348 1,471 2 3 square metres (m ) cubic metres (m ) 2 2019: 406,976 square metres (m ) 2019: 3,539 cubic metres (m3) GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 25
Management Discussion and Analysis (Continued)
PERFORMANCE OF BUSINESS SEGMENTS
LOGGING & SAWMILLING 2020
SEGMENTAL ASSETS REVENUE (RM’000) (RM’000) 2020 51,962 2019 56,951 86,409 41,350 120,310
LOSS BEFORE TAX (RM’000)
2020 (111) SEGMENTAL LIABILITIES (RM’000) 2019 (2,386)
105,511 23,830 MANUFACTURING 63,339
REVENUE (RM’000)
2020 16,355 2019 2019 20,005
SEGMENTAL ASSETS (RM’000) LOSS BEFORE TAX (RM’000)
2020 (4,414) 96,396 2019 (5,624) 45,049 120,456
SEGMENTAL LIABILITIES OTHERS (RENTAL & INVESTMENT INCOME) (RM’000)
REVENUE (RM’000) 41,702
2020 22,354 23,214 2019 8,437 149,688
PROFIT BEFORE TAX (RM’000)
2020 19,341 Legend 2019 8,040 Logging & Sawmilling Manufacturing Others (Rental & Investment Income) 26 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Management Discussion and Analysis (Continued)
MANAGING RISKS
Risk management has always been an essential process at GPB. The nature of our business, particularly in the case of timber logging, is vulnerable to external factors, such as the timeliness of licence issuance and an Allowable Annual Cut (AAC) is often subject to changes by JPNT.
With its unprecedented and fragile frame of reference, the pandemic has served to broaden and heighten our risk landscape beyond these perennial issues. Accordingly, our risk assessment framework currently classifies two specific factors as high risk, disruption in log supply and business sustainability.
Our Enterprise Risk Management (ERM) framework outlines how we manage such risks across various departments, divisions and subsidiaries. Through the ERM, we have made the following analyses and prescribed the respective mitigation measures:
• Disruption in Log Supply This risk is considered a near certainty with the fallout expected to have a major impact on our business. We have identified seven root causes, and among them are the reduction in the AAC and weather, logistics and operational issues. We intend to mitigate these risks by expediting the Remodelling of Sawmill Operations (ROSO), implementing forest plantation, engaging in sawn timber trade and export, building closer relations with JPNT, defer CAPEX and carry out cost-cutting measures.
• Business Sustainability Adjudged to be a likely possibility, our business sustainability has been further threatened by the current COVID-19 crisis along with issues such as a dependency on timber-related revenue, the reduction of logging quotas and mills operating below capacity. Our strategies here include the ROSO and an extension into downstream operations, including an expansion of income streams.
For further information, please refer to the Sustainability Report on pages 58 to 148 and the Statement on Risk Management and Internal Control on pages 177 to 179.
Stacking of logs at Pesama’s logyard. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 27
Management Discussion and Analysis (Continued)
View of Gunung Padang of compartment 102 in Pasir Raja Barat located in Jerangau, Bukit Besi, Dungun, Terengganu.
OUTLOOK & PROSPECTS
OUTLOOK New cases are on the rise in Malaysia despite the re-imposition of MCOs on two separate occasions in selected States and While 2021 has been earmarked as a year of recovery, the future Territories across the nation. Unlike the first MCO in 2020, remains uncertain with the ongoing issues surrounding the MCO2.0 and 3.0 permitted almost all economic sectors to supply of vaccines to the developing world, and the emergence of operate. At the point of reporting (May 2021), fewer than 1 million more contagious and deadlier variants of COVID-19. Malaysians have been fully vaccinated and the perilous scenario in India could mean we will not reach the required ‘80% vaccinated At the time of reporting, India, as the global centre for vaccine population’ to achieve herd immunity in 2021. production, has become the epicentre for the spread of the virus in Asia, and the world. This development threatens vaccine supply The uncertainty notwithstanding, the International Monetary at a time when many emerging economies, including Malaysia, Fund (IMF) in its April 2021 World Economic Outlook report are facing delays in vaccine shipments. revised its projection for global growth upwards to 6.0% for the year. Meanwhile, Bank Negara Malaysia (BNM) has maintained its forecast that the domestic economy will grow by 6.0% to 7.5% in 2021, after having contracted by *5.6% the year before.
(Reference: Department of Statistics Malaysia (DOSM)) 28 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Management Discussion and Analysis (Continued)
PROSPECTS 2021: MOVING AHEAD WITH CAUTIOUS OPTIMISM
Prospects for 2021 will hinge on whether our respective sectors will be allowed to continue operating at normal capacity if future lockdowns are declared in response to rising COVID-19 infections. This is particularly relevant in the remaining months before the monsoon season is slated to start in November 2021.
LOGGING & SAWMILLING
The division will focus on securing a potentially major revenue source in commercial forest plantation as this can ensure a sustainable log supply for the long term. This effort will be complemented by the development and introduction of downstream products and augmented by the maximisation of forest and factory residue.
In addition, the Group will actively seek participation in projects The construction of Thilawa Multipurpose International Terminal 3, commissioned by the Federal and State governments, while Myanmar used glass products supplied by GP Glass. continuing to generate cost-savings through the ROSO and installation of solar panels on factory rooftops to supplement, and save cost on electricity usage.
MANUFACTURING
In comparison to the timber business, our glass manufacturing segment may take longer to recover on account of the soft economic outlook for the construction sector which contracted by 19.0% in 2020.
This weak sentiment is expected to continue throughout 2021, with the National Property Information Centre (NAPIC) reporting that the property market will remain flat for at least another 36 months. GP Glass supplied glass products for the award-winning purpose-built (Source: NAPIC 2020 market report released in April 2021) KL Convention Centre, Kuala Lumpur.
However, in the long run, progress in mega projects like the Mass Rapid Transit 3 Circle Line (MRT3), East Coast Rail Link (ECRL), Light Rail Transit Line 3 (LRT3) and Bandar Malaysia will give the construction industry a much needed boost and indirectly stimulate demand for glass products. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 29
Management Discussion and Analysis (Continued)
Sawntimber for export.
MOVING AHEAD
Although recovery in 2021 is dependent on factors beyond our direct control, the Group has a clear and concrete plan to rebound and build momentum for future growth in a post-pandemic environment.
Our five-year Strategic Plan is a comprehensive blueprint designed to address current challenges, redress prevailing weaknesses, build on existing strengths and capitalise on new opportunities as was highlighted earlier.
Our advantage lies in the experience of having turned around the business in recent years. We can now tap on lessons learnt to reverse a regressive 2020 into a progressive 2021 and strive Kiln drying facility. to achieve better operational and financial performance to further stabilise and strengthen GPB.
DATO’ AHMAD NADZARUDIN BIN ABDUL RAZAK Chief Executive Officer 30 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Financial Highlights
2016 2017 2018 2019 2020 RM’000 RM’000 RM’000 RM’000 RM’000
Revenue 57,598 65,643 70,399 57,472 47,200
(Loss)/Profit Before Tax (6,356) 499 (2,299) (8,977) (6,374)
Shareholders’ Equity 74,450 74,945 72,515 62,896 68,392
(Loss)/Earnings per Share (sen) (4.13) 0.38 (2.14) (6.79) (4.93)
Net Tangible Assets per Share (RM) 0.55 0.54 0.51 0.43 0.49
REVENUE (RM’000) (LOSS)/PROFIT BEFORE TAX (RM’000)
57,598 (6,356) 65,643 499 70,399 (2,299) 57,472 (8,977) 47,200 (6,374) 2016 2017 2018 2019 2020
SHAREHOLDERS’ EQUITY (RM’000)
2016 2017 2018 2019 2020 74,450 74,945 EARNINGS/(LOSS) PER SHARE (SEN) 72,515 62,896 68,392 (4.13) 2016 2017 2018 2019 2020 0.38 (2.14) (6.79) NET TANGIBLE ASSETS PER SHARE (RM) (4.93)
0.55 0.54 0.51 0.43 2016 2017 2018 2019 2020 0.49 2016 2017 2018 2019 2020 GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 31
Financial Highlights - Segmental Information
2016 2017 2018 2019 2020 RM’000 RM’000 RM’000 RM’000 RM’000
HARVESTING & SAWMILLING
Revenue 40,326 55,238 74,744 56,951 51,962
(Loss)/Profit Before Tax (5,764) 7,509 2,862 (2,386) (111)
Segment Assets 101,996 101,101 100,272 96,396 86,409
MANUFACTURING
Revenue 30,588 27,236 24,219 20,005 16,355
(Loss)/ProfitBefore Tax 989 77 1,028 (5,624) (4,414)
Segment assets 20,910 20,397 47,979 45,049 41,350
OTHERS
Revenue 4,414 4,203 5,311 8,437 22,354
Profit/(Loss) Before Tax (877) (2,586) 4,884 8,040 19,341
Segment Assets 113,488 112,623 109,182 120,456 120,310
MANUFACTURING (RM’000)
30,588 27,236 Revenue 24,219 20,005 16,355 2016 2017 2018 2019 2020
HARVESTING & SAWMILLING (RM’000) OTHERS (RM’000)
40,326 4,414 55,238 4,203 74,744 5,311 56,951 8,437 51,962 22,354 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 32 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Financial Highlights – Sales by Region
REGION 2020 2019
MALAYSIA 98.70% 97.14%
UNITED KINGDOM 0.79% 0.67%
OTHER REGIONS 0.51% 2.19%
100% 100%
United Kingdom United Kingdom 0.79% 0.67%
Other Other Regions Regions 0.51% 2.19%
2020 2019
Malaysia Malaysia 98.70% 97.14% GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 33
Investor Relations
GPB’s wholly owned subsidiary, Kumpulan Pengurusan Kayu Kayan Trengganu Sdn Bhd’s (KPKKT) tropical forest of 108,900 hectares (ha) in Dungun Timber Complex (DTC) is the largest forest concession in the East Coast of Peninsular Malaysia. The DTC concession was FSC® certified in 2008, and is the second natural forest in Malaysia to achieve this distinction. The certification is valid till 27 February 2024.
Pesama Timber Corporation Sdn Bhd (Pesama), another wholly Despite the challenges, our regular engagement channels owned subsidiary of the Group, is proud to have also successfully and communication with our multiple stakeholder groups obtained the FSC® endorsed certification for its 20,243 ha Cherul are well established. We continue to disseminate appropriate Forest Concession (CFC) in December 2012, which is valid until 6 updates on strategic direction, business recovery plans, December 2022. operational performance, progress of current projects and financial information, and growth and sustainability initiatives. Golden Pharos Glass Sdn Bhd (GP Glass), the Group’s wholly owned glass manufacturing arm for the production of tempered, This ensures stakeholders are apprised on time and enable double glazed, laminated and ceramic printed safety glass is investors and analysts to make informed investment decisions. registered against the provisions of ISO 14001: 2015 International Guided by the Group’s goals and priorities, the Head of Finance, Standard, which is valid until 29 July 2023. together with the Company Secretary, the Heads of Corporate Services and Downstream Business, Corporate Communications, Attaining these standards of excellence has augured well for the Human Resources and Administration are jointly responsible for Group in enhancing the proficient management of its businesses the Group’s IR-related activities. in timber and logging, and glass manufacturing as well as maintaining its competitive advantage and improving its business sustainability. SHAREHOLDER BASE AND VALUE AS SHARIAH-COMPLIANT COMPANY Therefore, continually providing pertinent financial and relevant information as part of our Investor Relations (IR) engagement As at 16 April 2021, the shareholder base initiatives is a key component of our commitment to upholding is 3,029 institutional and retail/private the highest standards of corporate governance and stakeholder shareholders. Terengganu Inc and Lembaga engagement. Tabung Amanah Warisan Negeri Terengganu are our major shareholders with equity GROWING A LEGACY OF STRENGTH holdings of 62.65% and 8.32% respectively of the total share capital. The COVID-19 global pandemic impacted the Group as it did all companies throughout the world. While GPB has always As a Shariah-Compliant company, GPB is been nimble, focussed and resilient, the pandemic compelled committed to responsible investments that us to dig even deeper. Drawing on technology and the united are free from usury, gambling and ambiguity in determination of our entire workforce, we have overcome the striving for sustainable profitability. disruptions to established workflow and processes, and we take pride in Growing a Legacy of Strength. 34 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Investor Relations (Continued)
GPB held its 33rd Annual General Meeting at Primula Hotel.
ENGAGING OUR SHAREHOLDERS AND THE INVESTMENT As required by the Main Market Listing Requirements of Bursa COMMUNITY Malaysia and in line with the guidelines of the Malaysian Code on Corporate Governance 2017, timely and comprehensive The 33rd Annual General Meeting (AGM) and Extraordinary General announcements on our quarterly and annual financial results Meeting was held on 28 July 2020 at Dewan Gamelan 3, Primula are submitted to Bursa Malaysia which are duly uploaded Beach Hotel, Jalan Persinggahan, 20400 Kuala Terengganu, on the website, www.bursamalaysia.com/market_information/ Terengganu Darul Iman. Due to restrictions imposed under the announcements/company_announcement. These announcements MCO during that period, the AGM was conducted following strict are also posted on our corporate website under our dedicated regulations and standard operating procedures in accordance IR portal http://goldenpharos.com/index.php/announcement/bursa- with the Ministry of Health and authorities guideliness. announcement
Prior to the AGM proceedings, CEO Dato’ Nadza Abdul presented We continuously update the website with the latest information the key highlights of the Group’s performance for Financial including annual reports, quarterly results, Bursa Malaysia Year 2019. The shareholders of the Company approved all the announcements, outcome of AGM and corporate information. resolutions as set out in the Notice of AGM dated 29 June 2020 For more specific investor-related clarification and feedback, by way of poll. a dedicated email address is provided: [email protected], whereby queries and comments from shareholders, investors, After the proceedings, shareholders who attended actively analysts, media and general public are addressed in a timely participated in the question and answer session. All proposed manner. For further information on our Stakeholder Engagement resolutions were duly passed, with the outcome from the AGM for FY2020, please refer to the Sustainability Report under the featured on our website, www.goldenpharos.com. Stakeholder Engagement segment in this Annual Report. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 35
Financial Calendar
ANNOUNCEMENT ON QUARTERLY RESULTS
24 June 2020 8 November 2020 1st Quarter Results 3rd Quarter Results FINANCIAL YEAR ANNUAL REPORT 1 January 2020 to Issued 25 May 2021 24 August 2020 18 March 2021 31 December 2020 2nd Quarter Results 4th Quarter Results
33RD AGM 34TH ANNUAL GENERAL MEETING held on 28 July 2020 at 10.30 am to be held on 29 June 2021 at Gamelan 3, Primula Beach Hotel, Jalan Persinggahan 20400 Kuala Terengganu, Terengganu Darul Iman
BOARD OF DIRECTORS
Sitting: YBM DATO’ HAJI TENGKU HASSAN BIN TENGKU OMAR Non-Independent Non-Executive Chairman
Standing left to right:
HAJI BURHANUDDIN HILMI BIN MOHAMED @ HARUN MUHAMMAD RAMIZU BIN MUSTAFFA Non-Independent Non-Executive Director Non-Independent Non-Executive Director
HAJI SAIFFUDDIN BIN OTHMAN DATO’ BENTARA DALAM DATO’ HAJI A. RAHMAN BIN YAHYA Independent Non-Executive Director Non-Independent Non-Executive Director
ASSOCIATE PROFESSOR DR MOHD ZAKI BIN HAMZAH MOHD BADARUDDIN BIN ISMAIL Independent Non-Executive Director Independent Non-Executive Director 36 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Chairman’s Profile
YBM Dato’ Haji Tengku Hassan bin Tengku Omar was appointed as the Chairman of Golden Pharos Berhad (GPB) following his appointment as a Director on 1 August 2018.
He graduated with a Bachelor of Economics from Universiti Malaya, after which he served in various positions in the Terengganu State Civil Service between 1981 to 2004, including as State Financial Officer, Director of Lands and Mines, and Chief Executive Officer of Majlis Agama Islam dan Adat Melayu Terengganu (MAIDAM). He was the former Chairman of A&W Malaysia, Singapore & Thailand from 2000 until 2004.
Dato’ Haji Tengku Hassan is currently the Ladang Assemblyman and State Exco for Trade, Industrial, Regional Development and Administrative Wellbeing. He is a Board Trustee Member of Yayasan Terengganu and also sits on the Board of Lembaga Tabung Amanah Warisan Negeri Terengganu (LTAWNT).
YBM DATO’ HAJI TENGKU HASSAN AGE BIN TENGKU OMAR Non-Independent Non-Executive Chairman 70 BOARD COMMITTEE None GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 37
Board of Directors’ Profile
BOARD COMMITTEE BOARD COMMITTEE • Chairman of SIC • Member of NRC • Member of LTIP • Member of SIC
YBHG DATO’ BENTARA DALAM HAJI BURHANUDDIN HILMI AGE AGE DATO’ HAJI A. RAHMAN BIN YAHYA BIN MOHAMED @ HARUN Non-Independent Non-Executive Director 63 Non-Independent Non-Executive Director 51
Dato’ Bentara Dalam Dato’ Haji A. Rahman bin Yahya was Haji Burhanuddin Hilmi bin Mohamed @ Harun was appointed appointed as a Director of GPB on 22 February 2017. as Non-Independent & Non-Executive Director of GPB on 3 January 2021. He holds a Bachelor of Economics (Honours) from Universiti Kebangsaan Malaysia and Advanced Diploma from the University He holds a Master of Business Administration (MBA) majoring in of Wales College Newport, United Kingdom. International Business from the University of Leeds in the United Kingdom and completed his Bachelor of Accounting (Hons.) at Dato’ Haji A. Rahman began his career with the Terengganu the International Islamic University of Malaysia. He is a Chartered Economic Planning Unit in 1983 and later moved on to hold various Accountant (CA) as well as a Certified Financial Planner (CFP) with significant positions in Terengganu government agencies. He has the Malaysian Institute of Accountants (MIA) and Financial Planning served, among others, as the President of Kemaman Municipal Association of Malaysia. Council, Deputy Director of Terengganu Economic Planning Unit and Comptroller of the Royal Household, Office of His Royal Haji Burhanuddin Hilmi started his career as the Audit Senior, Audit Highness the Sultan of Terengganu. and Business Advisory Services at Price Waterhouse (now known as Pricewaterhouse Coopers [PwC]) from 1993 to 1996. He became He has also held many positions in organisations such as the Manager of the Assurance Division of KPMG in 1998 before Tesdec Sdn Bhd as the Executive Director from 1998 to 2004 establishing BH Consulting Sdn Bhd in 2002. and Terengganu State Economic Development Corporation as the General Manager from January 2016 to September 2016. In 2006, he was appointed as the Group Chief Financial Officer He was appointed as the State Financial Officer in 2017 and of Composites Technology Research Malaysia Sdn Bhd, before was promoted to become the State Secretary of Terengganu on 22 joining Weststar Aviation Services Sdn Bhd from 2013 to to 2015 April 2018 before retiring on 21 August 2019. as the Chief Financial Officer. Thereafter, he was appointed as the Group Chief Financial Officer of Zetro Aerospace Corporation In recognition of his outstanding public service, Dato’ Haji A. group of companies and was formerly a Director of Chartridge Rahman was conferred the title of Dato’ Bentara Dalam on Conference Company Ltd (UK). 22 July 2019. Currently, Haji Burhanuddin Hilmi is the President & Executive Director of Terengganu Incorporated Sdn Bhd and is also a Director of the Malaysian Palm Oil Board. He also sits on the Board of TDM Berhad and EPIC Berhad. 38 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Board of Directors’ Profile (Continued)
BOARD COMMITTEE BOARD COMMITTEE • Chairman of LTIP • Chairman of NRC • Member of AC • Member of AC • Member of SIC • Member of LTIP
MUHAMMAD RAMIZU ASSOCIATE PROFESSOR AGE AGE BIN MUSTAFFA DR MOHD ZAKI BIN HAMZAH Non-Independent Non-Executive Director 44 Independent Non-Executive Director 58
Muhammad Ramizu bin Mustaffa was appointed to the Board of Dr Mohd Zaki bin Hamzah was appointed to the Board of GPB GPB on 1 August 2018 and was redesignated as Non-Independent on 1 August 2018. He holds a Bachelor’s Degree (in Biology) from Director following his appointment as Chief Financial Officer of Doane College, USA. He then completed his Master of Forestry Terengganu Incorporated Sdn Bhd on 8 January 2019. in Forest Resource Management from Duke University, USA and obtained his PhD in Forest Rehabilitation from Yokohama National He graduated from the University of Salford, Manchester, United University, Japan. Kingdom with a Bachelor of Science (Honours) in Finance and Accounting. He is a fellow of the Institute of Chartered Accountants He began his career as a Lecturer with Universiti Putra Malaysia in England and Wales (ICAEW) and a member of the Malaysian (UPM) at Bintulu Campus in 1988, and thereafter continued to Institute of Accountants (MIA). serve UPM, Serdang with the Department of Forest Production, and later (until present) with the Department of Forestry Science Muhammad Ramizu commenced his career as an auditor with and Biodiversity under the Faculty of Forestry and Environment. He Arthur Andersen (which later merged with Ernst & Young (EY), was appointed as Associate Professor in 2006 and has published Malaysia) in 2000. He later joined ECM Libra Berhad before leaving referenced articles from more than 15 research studies and for the United Kingdom in 2004 to join EY UK as an Executive, has been invited internationally as a guest lecturer on Forest National Audit. His last position in the UK was as Manager, Corporate Management and Silviculture. Finance in BDO UK before returning to Malaysia to join KLCC Group in 2010. In KLCC Group, he played key roles in various corporate Dr Mohd Zaki is being seconded to Terengganu State Government exercises including in the establishment of KLCCP Stapled REIT. Secretary’s Office (Terengganu Strategic and Integrity Institute -TSIS) as the Deputy CEO of TSIS and the Director of the Centre of Leaving KLCC Holdings as the Head of Corporate Finance in 2014, Excellence Pelan Induk Terengganu Sejahtera (CoE PITAS), for two he later joined Sapura Resources Berhad as the Chief Financial (2) years beginning June 15, 2020. Officer of the Aviation Business, and subsequently as the Group Head of Finance, Putrajaya Leisures & Services Group Sdn Bhd. Dr Mohd Zaki also served as a director of Kumpulan Pengurusan He was later appointed as the Group Chief Financial Officer of Kayu Kayan Trengganu Sdn Bhd, a subsidiary of GPB. He is a Terengganu Incorporated Sdn Bhd, the holding company of Golden member of the Society of American Foresters and in May, 2020 he Pharos Berhad before leaving the group on 31 January 2020. He was appointed as a member of Malaysia Timber Industry Board currently assumes advisory roles within the State of Terengganu (MTIB). and its GLCs. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 39
Board of Directors’ Profile (Continued)
BOARD COMMITTEE BOARD COMMITTEE • Chairman of AC • Member of AC • Member of NRC • Member of NRC
MOHD BADARUDDIN HAJI SAIFFUDDIN AGE AGE BIN ISMAIL BIN OTHMAN Independent Non-Executive Director 57 Independent Non-Executive Director 52
Mohd Badaruddin bin Ismail was appointed to the Board of GPB Saiffuddin bin Othman was appointed to the Board of GPB on on 1 August 2018. He attained his Diploma in Accountancy from 1 August 2018. He graduated with a Bachelor of Law (Hons) from Institut Teknologi MARA in 1985. He is a member of the Malaysian International Islamic University of Malaysia in 1993 and was Association of Accounting Administration. admitted as an advocate and solicitor of the High Court Malaya in 1994 and Syarie Counsel for Terengganu Syariah Court in 1995. He had served as Assistant Accounts Manager at Kumpulan Pengurusan Kayu Kayan Trengganu Sdn Bhd, a subsidiary of He started his career at Messrs Adnan & Wee from 1994 to 1999 GPB from 1987 to 1993. He had held various positions in several before joining Messrs Wan Abd Muttalib & Co in 2000 as a partner. organisations such as TR Granite Industries Sdn Bhd as the General Saiffuddin brings over more than 25 years of experience in the legal Manager of Corporate Finance in 1994, Sutra Beach Resort Sdn Bhd practice in civil, criminal, syariah consultancy, general litigation, as the Corporate & Business Development Manager from 2000 to estate planning and conveyancing. 2004 and Telepal Group of Companies as the Group Chief Executive Officer from 2008 to 2013.
He was the Principal of Adib Azhar & Co, a public accounting firm and currently, he is the Chief Executive Officer of Terengganu SIC – Strategy and Investment Committee Telecommunications Sdn Bhd. Since 1 April 2019, he also sits on AC – Audit Committee the Board of Permint Plywood Sdn Bhd, a wholly-owned subsidiary NRC – Nomination and Remuneration Committee of GPB. LTIP – Long-Term Incentive Plan Committee
Notes:
(i) None of the Directors have any family relationship with any Director and/or major shareholder of GPB.
(ii) None of the Directors have declared any conflict of interest with GPB group.
(iii) None of the Directors have any convictions for any offences within the past 5 years nor have been imposed with any public sanction or penalty by any relevant regulatory bodies during the financial year ended 31 December 2020. 40 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Chief Executive Officer’s Profile
An award-winning senior leader, he has clinched several note- worthy awards including the 2019 Masterclass Bumiputera CEO of the Year (by Malaysia Excellence Business Award), the 2010 Malaysian Business Leadership Award for logistics sector (by the Kuala Lumpur Malay Chamber of Commerce) and the 2009 Express Service Provider of the Year (by Frost & Sullivan).
From 2012 until 2017, he was the Group Managing Director at Panglima Group of Companies, a private investment group with business interests in natural resources extraction in Indonesia, minihydro power generation in Laos and facilities management in Kuala Lumpur.
In 2011, he was the Head of Services Division at DRB-Hicom Berhad, overseeing the business performance of 4 large subsidiaries operating in the services sector. He supervised the CEOs of Alam Flora Sdn Bhd, Puspakom Sdn Bhd, Hicom Power Sdn Bhd and KL Airport Services Sdn Bhd.
DATO’ AHMAD NADZARUDIN AGE From 2003 to 2010, he was with Pos Malaysia Berhad, holding BIN ABDUL RAZAK several senior management posts such as COO of Poslaju, GM of Chief Executive Officer 53 Corporate Planning & Strategic Business, GM of Procurement & Contracts, GM of the CEO’s Office.
Dato’ Nadza joined Golden Pharos Berhad as the CEO on From 1996 to 2003, he was with the UEM Berhad/Renong Berhad 13 September 2017. He is also a director of all the companies group of companies, where he was the Deputy GM of Corporate within the GPB Group, including subsidiaries in logging, sawmilling, Affairs & Business Development, and Manager in the Office of the veneer-making, forest plantation and biomass pellets. President. He handled corporate matters, financial performance, strategic planning and legal affairs for Renong’s 10 subsidiaries in A professional senior executive, Dato’ Nadza is highly experienced the property sector. in the management of Government-Linked Companies (GLCs) both at the national and state level. From 1993 to 1995, he was Assistant Manager in Corporate Finance with Asian International Merchant Bankers Berhad. His corporate Dato’ Nadza is also involved in several prominent Government finance work included listing of companies, issuance of bonds, and agencies. He is a board member of the Malaysian Employers acquisition of companies. Federation since 2018. In 2019, he was appointed to the Board of the Social Security Organisation (SOCSO) by the then Minister of Dato’ Nadza started his career in 1991 as a staff accountant with Human Resources. While in 2020, he was appointed to the Board Gulf States Asphalt Co. Inc, a manufacturing company in Houston, of Trustees of the Malaysian Timber Council by the Minister of Texas, USA immediately after his graduation. Plantation Industries and Commodity. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 41
GROUP SENIOR MANAGEMENT
11 3 10 9 6 1 12 8 7 2 4 5
1. DATO’ NADZA ABDUL 7. AZMAN BIN JUSOH Chief Executive Officer Head of Internal Audit Golden Pharos Berhad 2. ZULKIFLI BIN OMAR Head of Corporate Services 8. SUHAIRI BIN SULONG Golden Pharos Berhad Head of Subsidiary Kumpulan Pengurusan Kayu Kayan Trengganu Sdn Bhd 3. SYUKRI BIN ALI Head of Finance 9. MOHD SHAMSOL BIN MOHD SHAFIE Golden Pharos Berhad Head of Subsidiary Pesama Timber Corporation Sdn Bhd 4. WAN ZUHAIRIAH BINTI WAN ALI @ WAN DAMSEK 10. HILMI BIN AWANG Head of Human Resources and Head of Subsidiary Administration Pesaka Trengganu Berhad Golden Pharos Berhad 11. AHMAD BAZLI BIN RAZALI 5. SURAYA BINTI MOHD HAIRON Head of Subsidiary Head of Company Secretarial Permint Plywood Sdn Bhd Golden Pharos Berhad 12. ARNINA BINTI RAHMAD 6. FAUZAN BIN ABDUL Head of Subsidiary Head of Corporate Communication GP Forest Plantation Sdn Bhd Golden Pharos Berhad
Not in the picture:
Heads of Departments STANLEY LAU CHAN MING Head of Subsidiary Heads of Subsidiaries Golden Pharos Glass Sdn Bhd 42 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Group Senior Management’s Profile
ZULKIFLI BIN OMAR AGE Head of Corporate Services, Golden Pharos Berhad 52
WORKING EXPERIENCE:
• More than 23 years of professional experience in the areas of audit, accounting, finance and business advisory. Before joining GPB in 2004, he worked forArthur Andersen & Co as Assistant Manager for the Eastern Region and Head of Finance and Administration at PTB Land Sdn Bhd.
• His current position is Senior Manager of Corporate Services and Downstream Business.
QUALIFICATIONS:
• Member of the Malaysian Institute of Accountants (MIA)
• Fellow of the Association of Chartered Certified Accountants (ACCA)
• ACCA, Emile Woolf College of Accountancy & University of Northumbria at Newcastle, United Kingdom
• Diploma in Accountancy, Universiti Teknologi MARA
AGE SYUKRI BIN ALI 46 Head of Finance, Golden Pharos Berhad
WORKING EXPERIENCE:
• Commenced his career in 1999 with Permint Plywood Sdn Bhd, where he held various positions within the GPB Group.
• Presently, he is the Group Finance Senior Manager of GPB, heading the finance department since 2015.
QUALIFICATIONS:
• Member of the Malaysian Institute of Accountants (MIA)
• Master of Business Administration, Universiti Kebangsaan Malaysia
• Bachelor of Accountancy (Hons), Universiti Teknologi MARA
• Diploma in Accountancy, Universiti Sultan Zainal Abidin GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 43
Group Senior Management’s Profile (Continued)
WAN ZUHAIRIAH BINTI WAN ALI @ WAN DAMSEK AGE Head of Human Resources and Administration, Golden Pharos Berhad 46
WORKING EXPERIENCE:
• Began her career with GPB in October 2006 as Senior Executive of Human Resources and Administration.
• Held the position of Assistant Manager, Human Resources and Administration in January 2009, before promotion to her current position as Human Resources and Administration Manager in January 2012.
• She has 17 years of experience in the field of human resource management.
QUALIFICATIONS:
• Panelist on the Industrial Court representing employers
• Pengapit Majikan Kawasan Timur, Jemaah Rayuan Keselamatan Sosial (JKRS)
• Member of the Malaysian Institute of Human Resource Management
• Bachelor of Human Resource Management (Hons) Degree, Universiti Utara Malaysia
• Diploma in Personnel Management, Universiti Sultan Zainal Abidin
AGE SURAYA BINTI MOHD HAIRON 46 Head of Company Secretarial, Golden Pharos Berhad
WORKING EXPERIENCE:
• Started her career with GPB in 2012 as Assistant Manager and Joint Company Secretary for dormant companies under GPB Group. Prior to joining GPB, she worked as Assistant Tax Manager in S.T. Toh & Co. and was also a company secretary to several private limited companies. She has over 16 years of professional experience in taxation and accounting.
• Her current position is Manager and Company Secretary of GPB and its Group of Companies after being promoted in 2017.
QUALIFICATIONS:
• Professional Stage of the Institute of Chartered Secretaries & Administrator, United Kingdom
• Bachelor of Business Administration (Hons) Finance, Open University Malaysia
• Licensed by the Companies Commission of Malaysia 44 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Group Senior Management’s Profile (Continued)
FAUZAN BIN ABDUL AGE Head of Corporate Communications, Golden Pharos Berhad 36
WORKING EXPERIENCE:
• Started his career with GPB in June 2018 as the Head of Corporate Communications Department. Before joining GPB, he worked as a Senior Economic Journalist at Malaysian National News Agency (BERNAMA) from 2012-2014.
• He joined the Terengganu State Secretariat as the Press Secretary to Menteri Besar Terengganu from June 2014 until December 2015 before being appointed as the Special Media Officer at Terengganu Inc Sdn Bhd from January 2016 until May 2018.
• He is a member of the Terengganu Media Club since 2015.
QUALIFICATIONS:
• Master of Psychology, International Islamic University Malaysia
• Bachelor of English with Communication (Hons), Universiti Sultan Zainal Abidin
• Diploma in Manufacturing Technology, Universiti Sultan Zainal Abidin
• Foundation in Mechanical Engineering, Universiti Tenaga Nasional
AGE AZMAN BIN JUSOH 49 Head of Internal Audit, Golden Pharos Berhad
WORKING EXPERIENCE:
• He joined GPB Group as Senior Manager, Internal Audit in February 2021.
• Previously, he was with Kumpulan Utusan as Internal Auditor for more than 20 years.
QUALIFICATIONS:
• Member of Malaysian Institute of Accountants (MIA)
• Bachelor of Accounting (Hons), University of Malaya GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 45
Group Senior Management’s Profile (Continued)
SUHAIRI BIN SULONG AGE Head of Subsidiary Kumpulan Pengurusan Kayu Kayan Trengganu Sdn Bhd 49
WORKING EXPERIENCE:
• Joined GPB Group as Finance Manager in Pesama Timber Corporation Sdn Bhd in September 2001 and has since held various key positions within the Group. Before joining GPB Group, he was attached to a Public Accounting Firm, Arthur Andersen & Co., specialising in audit, taxation and advisory works.
• He was appointed to the position of General Manager of Corporate & Finance in 2012 and was reassigned as General Manager of Pesama Timber Corporation Sdn Bhd in 2015. He was subsequently appointed as General Manager of KPKKT and was promoted to Senior General Manager in 2017.
QUALIFICATIONS:
• Member of the Malaysian Institute of Accountants (MIA)
• Bachelor of Accountancy (Hons), Universiti Utara Malaysia
AGE MOHD SHAMSOL BIN MOHD SHAFIE 49 Head of Subsidiary, Pesama Timber Corporation Sdn Bhd
WORKING EXPERIENCE:
• He has more than 23 years of working experience in the areas of marketing and sales in various private companies.
• He joined GPB in 2001 as Marketing and Sales Executive and held various posts within the Group. He was promoted to Assistant General Manager of Pesaka Trengganu Berhad in 2006.
• Currently, he is the General Manager of Pesama Timber Corporation Sdn Bhd.
QUALIFICATIONS: • Master of Business Administration, Universiti Teknologi MARA • Bachelor of Business Administration (Hons) Marketing, Universiti Teknologi MARA • Diploma in Planting Industry and Management, Universiti Teknologi MARA 46 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Group Senior Management’s Profile (Continued)
HILMI BIN AWANG AGE Head of Subsidiary, Pesaka Trengganu Berhad 53
WORKING EXPERIENCE: • Started his career with Pesama Timber Corporation Sdn Bhd in July 1992 and has since held several significant positions within the GPB Group. • He went on to be the Assistant General Manager of Pesama in 2010 before being appointed as Acting General Manager of Pesaka. • He was promoted to General Manager of Pesaka in June 2019. • He has more than 25 years of experience in Marketing and Operations as well as Sales. • He is also a Committee Member of Persatuan Kayu-kayan & Perabot Bumiputera (PEKA).
QUALIFICATIONS: • Diploma in Forestry, Universiti Putra Malaysia • Committee member of Capacity Building for Compliance Project with Timber Certification under Malaysian Timber Certification (MTCS) (cooperation with MTIB) • Committee member of Malaysian Timber Structure (MTIB) • Committee member of Malaysian Dressed Timber (MTIB) • Alternate Member of the MTIB Board
AGE STANLEY LAU CHAN MING 54 Head of Subsidiary, Golden Pharos Glass Sdn Bhd
WORKING EXPERIENCE:
• He joined Golden Pharos Glass Sdn Bhd in June 1993 as a marketing executive. Prior to joining Golden Pharos Glass, he was the Marketing Officer at Malaysian Sheet Glass Berhad for four years.
• He has held various positions in Golden Pharos Glass, as Assistant Operations Manager before being appointed as Sourcing and Marketing Manager from January 2001 till December 2010.
• He was promoted to Deputy General Manager of Golden Pharos Glass in January 2011 until March 2018, before being appointed as General Manager in June 2019.
QUALIFICATIONS:
• Vice President of Safety Glass Processors Association of Malaysia (SGPAM)
• Committee Member of SIRIM (working Group for Malaysia Standard on Safety Glass)
• Chartered Institute of Marketing (Part 2), Stamford College
• Chartered Institute of Marketing (Part 1), Stamford College
• LCCI, Rima College GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 47
Group Senior Management’s Profile (Continued)
AHMAD BAZLI BIN RAZALI AGE Head of Subsidiary, Permint Plywood Sdn Bhd 35
WORKING EXPERIENCE:
• Began his career with the Ministry of Health as Assistant Secretary (Management Services) in 2010 before joining GP Dynamic Venture Sdn Bhd as Assistant Manager of Human Resources & Administration in 2016.
• In January 2018, he was the Head of Production at Permint Plywood Sdn Bhd and was subsequently promoted to Group Downstream Business Manager at GPB in August 2019 until October 2019.
• He served Permint Plywood Sdn Bhd as Officer-in-Charge since November 2019 and was promoted to Senior Manager on 1 October 2020.
QUALIFICATIONS:
• Member of Malaysian Institute of Management (MIM)
• Master of Business Administration, Universiti Teknologi MARA
• Bachelor of Science (Human Development) Degree, Universiti Putra Malaysia
• Pre-University Programme KPM-MSN, Sekolah Sukan Bukit Jalil, Kuala Lumpur
AGE ARNINA BINTI RAHMAD 35 Head of Subsidiary, GP Forest Plantation Sdn Bhd
WORKING EXPERIENCE:
• Started her career with GPB group as Forest Stewardship Council (FSC®) and Compliance Executive in Kumpulan Pengurusan Kayu Kayan Trengganu Sdn Bhd in 2012.
• She took on the position of Assistant Lecturer at the Forestry Department of Penisular Malaysia in 2013 and assumed the position of Assistant Director (Industry and Harvesting) at the Pahang State Forestry Department from 2015-2018.
• She re-joined GPB Group as Assistant Manager in Kumpulan Pengurusan Kayu Kayan Trengganu Sdn. Bhd. in July 2018 and was transferred to GP Forest Plantation Sdn Bhd in November 2019 with the same post.
QUALIFICATIONS: • Member Institute of Foresters Malaysia (IRIM) • Bachelor of Science Forestry, Universiti Putra Malaysia • Diploma in Forestry, Universiti Putra Malaysia
Notes: (i) None of the Senior Management has any family relationship with any director and/or any major shareholder nor has any conflict of interest with GPB.
(ii) None of the Senior Management has any convictions for any offences within the past 5 years. 48 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Corporate Highlights
FSC® AUDIT VISIT AT DUNGUN TIMBER COMPLEX
9 Forest Stewardship Council (FSC®) auditors visited a logging concession in Bukit Besi together with officers from KPKKT. JANUARY 2020
SOLAT HAJAT DAN JASAMU DIKENANG GROUP EXERCISE TO RESTRUCTURE INTER COMPANY OLD DEBTS 12 The solat hajat programme was organised 16 JANUARY FEBRUARY Pesaka and Permint Plywood Sdn Bhd signed a 2020 by KPKKT in conjunction with the new 2020 year 2020 and to appreciate outstanding purchase agreement of a building as a part of the employees who retired in 2019 at Bukit Group Exercise to Restructure Inter Company Besi, Dungun. Old Debts at GPB’s office in Kuala Terengganu. The debts of subsidiaries can be practically minimised to maximise the company’s income. This event witnessed PPSB selling its property to Pesaka. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 49
Corporate Highlights (Continued)
SOLAT HAJAT AND YASIN RECITAL AT FACTORY PESAKA TERENGGANU BHD 22 FEBRUARY Pesaka organised a solat hajat and Yasin recital at its factory to 2020 receive the blessing from the Almighty at Bukit Besi. The event was also attended by its directors and Chief Executive Officer, Dato’ Nadza Abdul.
RM 12 MILLION DEBT SETTLEMENT TO TERENGGANU INC 10 JUNE 2020 Amidst the MCO by the Government, GPB still managed to successfully settle the full payment of RM12 million to Terengganu Inc through redeemable preference shares. The agreement signing ceremony was held at Dewan Besar, Wisma Terengganu Inc, Kuala Terengganu.
33RD GPB ANNUAL GENERAL MEETING & EXTRAORDINARY GENERAL MEETING
28 An annual event of Golden Pharos Bhd, the company organised its 33rd Annual General Meeting and Extraordinary JULY 2020 General Meeting at Primula Hotel, Kuala Terengganu. During the meeting, the company’s three-year Business Recovery Plan to overcome the issues regarding the performance of the company was presented. 50 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Corporate Highlights (Continued)
MEMORANDUM OF AGREEMENT (MOA) WITH THE MALAYSIAN TIMBER INDUSTRY 1 BOARD (MTIB) AND BAMBOO JUNGLE SEPTEMBER ADVENTURES 2020
GBP signed a Memorandum of Agreement (MoA) with the Malaysian Timber Industry Board (MTIB) and Bamboo Jungle Adventures to build an iconic bamboo-based surau in Kuala Nerus. The event was witnessed by YAB Menteri Besar Terengganu, Dato’ Seri Dr Ahmad Samsuri Mokhtar and Minister of Plantation Industries and Commodities, YB Dato’ Dr Mohd Khairuddin Aman Razali.
GROUP’S VISIT TO PERAK
10 In collaboration with the Perak State Forestry Department, GPB visited a concession area in Perak to learn the method of SEPTEMBER 2020 logging in blocks. While the process may be slower it contributes to better preservation of the forest. The visit was led by Chief Executive Officer, Dato’ Nadza Abdul. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 51
Corporate Highlights (Continued)
BRIEFING CODE OF BUSINESS ETHICS STATE GOVERNMENT’S VISIT TO GOLDEN PHAROS GLASS SDN BHD 22 A briefing session on the Code of Business 25 SEPTEMBER SEPTEMBER Representatives from Terengganu State 2020 Ethics was organised by the Integrity and 2020 Governance Unit of GPB at KPKKT, Bukit Besi. Government visited GP Glass at Teluk Panglima The talk was conducted by Encik Amirul Syafiq Garang, Klang, Selangor to view the company’s Che Ajizi. glass processing. The products of GP Glass obtained the Brand Leadership Award at the prestigious BrandLaureate BestBrands Awards in 2019. The visit was led by YB Haji Muhd Nurkhuzaini Abdul Rahman, the Ex-Officio of State Government who is also the Chairman of GP Glass.
GOLDEN PHAROS BERHAD GROUP BUSINESS RECOVERY PLAN 2021
3 The Group Business Recovery Plan 2021 was organised to discuss GPB’s performance and 2021 budgets. The annually OCTOBER 2020 organised programme was held at Pasir Raja Rest House, Bukit Besi in Terengganu. The event was attended by all Heads of Subsidiaries and selected senior management of the Group. 52 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Media Highlights GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 53
Media Highlights (Continued) 54 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Environmental Statement
ENVIRONMENTAL POLICY
TIMBER ENVIRONMENT POLICY
Golden Pharos Group will collaborate with all relevant parties and organisations to ensure compliance towards the promotion of good forest management as stipulated under the Forest Stewardship Council (FSC®) and the Malaysian Criteria and Indicators (MC&I) for Forest Management Certification (Natural Forest).
TIMBER SOURCING POLICY
The sourcing of timber is mainly acquired from the Group’s own certified forests. In circumstances where we had to obtain products from an alternative source, the Group uncompromisingly insists that supplies have, where applicable, the FSC forest management certification.
Timber supply is a very critical factor to the Group’s expansion programmes and secure sources of supply and the ability to process logs into top-quality finished products inexpensively is critical to preserving the biological diversity of our forests, and at the same time, making it beneficial to the lives of local people and workers, while ensuring it also sustains economic viability. ISO 9001: 2015 Quality Management System (QMS) The Group has also undertaken the Species Segregation Initiative that promotes lesser known species for commercialisation, which • Requirements for a QMS, including is an initiative encouraged by the Malaysian Government. documented information, planning and determining process interactions.
ENVIRONMENTAL MANAGEMENT
• Responsibilities of management. Kumpulan Pengurusan Kayu Kayan Trengganu Sdn Bhd (KPKKT), the Group’s timber management subsidiary, adopts the Selective Management System (SMS) to manage the timber concessionary • Management of resources, including areas in its role as logs’ supplier for the consumption of the Group. human resources and the organisation’s work environment. KPKKT is also responsible for the sustainable development and management of its concession in accordance with the Sustainable • Product realisation, including the steps Forest Management (SFM) standards to ensure that it addresses from design to delivery. the loss of forest cover and forest degradation, forest-based economic, social and environmental benefits, and ecologically protecting forests while mobilising financial resources for the • Measurement, analysis, and improvement implementation of sustainable forest management planning, of the QMS through activities like internal harvesting, monitoring and the marketing of products. audits and corrective and preventive action. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 55
Enviromental Statement (Continued)
In this context, KPKKT as a Forest Management Unit (FMU), subscribes fully to In addition, another subsidiary, Pesama, has the MCI of which the above SMS was based on. KPKKT also co-operates with the successfully obtained the FSC® certification State Forestry Department to ensure that best management practices in logging from SCS Global Services for its 20,243 hectares are observed and maintained to meet the requirements of the Malaysian Timber at the Cherul Forest Concession (CFC) on 10 Certification Scheme (MTCS). December 2012. The certification is valid until 6 December 2022. KPKKT was awarded the FSC® certification and has been accredited since 21 April 2008 by the Scientific Certification Systems (SCS), a world leader and With the FSC® certification, the Group will be pioneer in third-party auditing and certification of forest management operations able to gain access to markets and customers and are the custodians of the SCS-FSC Interim Standard for Forest Management that demand environmentally friendly certified Certification in Malaysia (Version 5.0 2014) for well-managed forests. products for both domestic and export consumption. This certification verifies KPKKT’s 108,900 ha tropical forest at the Dungun Timber Complex (DTC) which is managed according to the rigorous international standards GP Glass, a subsidiary of GPB, has been assessed of the FSC® under a selective cutting approach that maintains continuous forest and registered against the provisions of ISO cover and species diversity. This FSC® certification is valid until 27 February 2024. 9001:2015 QMS which is based on the plan- do-check-act methodology which provides a KPKKT’s DTC concession area is the largest in Peninsular Malaysia to have the process-oriented approach to documenting and FSC® certification, and only the second natural forest in Malaysia to achieve this reviewing the structure, responsibilities, and distinction. KPKKT is committed to adopt the National and International Convention procedures required to achieve effective quality on Biological Diversity in order to sustain the richness of flora and fauna in the management of its current product range concessionary areas. of tempered, double glazed, laminated and ceramic printed safety glass. This certification is valid until 29 July 2023.
CHAIN-OF-CUSTODY CERTIFICATION
In July 2008, both Pesaka and Pesama, successfully obtained the Chain-of-Custody (CoC) certification for its sawmills from a third- party certifier accredited by FSC®. With this certification, both subsidiaries are fully certified to be using wood from well-managed forests, independently certified in accordance with the criteria and principles set by theFSC ®.
This would also mean that Pesaka and Pesama are well placed to market their sawn timber and other wood based products in markets that insist on wood products to be sourced from sustainable and well managed forests.
Chain of Custody (CoC) certification
Forest Sawmill Factory Processor Retailer 56 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Enviromental Statement (Continued)
HIGH CONSERVATION VALUE (HCV) & HIGH CONSERVATION VALUE FOREST (HCVF)
KPKKT has identified HCV forest with a total of 4,588 hectares Definition of HCV areas reserved as HCVF. Some of the more unique features in these The HCV areas are defined as follows: HCVFs are:
• KPKKT’s HCVFs have various invaluable and unique tree areas containing globally, regionally or nationally significant concentrations of biodiversity values species. A Chengal tree located within KPKKT’s concession HCV1 (e.g. endemism, endangered species) area is now listed in the Malaysia Book of Records as the largest Chengal tree in the world. The tree is estimated to areas containing globally, regionally or nationally be more than 1,300 years old, with a height of 65 metres significant large landscape natural habitats, and circumference of 16.75 metres (Rainforest Journal.com, contained within, or containing, the management 2013). HCV2 unit, where viable populations of most if not all naturally occurring species exist in natural • Chemerong Waterfalls which is situated in KPKKT’s HCVF is patterns of distribution and abundance. the highest waterfall in Malaysia. It thunders magnificently down a 305 metre slope and has the potential to become a areas that are in or contain rare, threatened or major tourist destination and eco-recreational destination. HCV3 endangered ecosystems.
• The Keruing Sarawak (Dipterocarpus sarawakensis), which is also a rare and endangered species by Malaysia Planet Red List (2010), has been found in KPKKT’s Forest Reserve areas that provide basic services of nature in critical situations (e.g. watershed protection, and has been designated as a protected area. The species HCV4 erosion control). is also classified as endemic to Sarawak and Terengganu (Peninsular Malaysia Plant Red List, 2010).
• KPKKT has also delineated some areas exceeding 1,000 areas fundamental to meeting basic needs of local HCV5 metres above sea level as a Totally Protected Area which communities (e.g. subsistence, health). is prohibited from being harvested. These are designated as important natural habitats and reserved as a wildlife sanctuaries. areas critical to local communities’ traditional HCV5 cultural identity (areas of cultural, ecological, KPKKT has identified HCV 1.3: Endemism and HCV 4.1: Watershed economic or religious significance identified in co-operation with such local communities). Protection of the HCVF Toolkit for Malaysia by the World Wide Fund for Nature (WWF) as applicable to its concession area.
SOCIAL IMPACT ASSESSMENT (SIA)
Social Impact Assessment (SIA) is the process of identifying and managing the current and eventual social impacts of projects. As such, SIA is used to predict and mitigate negative impacts and identify opportunities to enhance benefits for local communities and broader society. Concerned with the well-being of the local communities, KPKKT and Pesama have been carrying out SIA exercises since 2009 to identify the problems faced by the communities and determine appropriate mitigation strategies to address them. The issues raised include river water quality, damage to crops by wildlife and road safety, especially to school children. Specific mitigation measures were proposed and taken by KPKKT by way of regular consultation with relevant authorities and local communities. As part of its continuous improvement process, KPPKT examines the effects on social and economic environments annually. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 57
Enviromental Statement (Continued)
Jeram Lesung, another area of outstanding natural beauty that is part of our HCVF. 58 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Sustainability Report
59 ABOUT THIS REPORT (GRI 101,102-1,102-46) 60 SCALE AND SCOPE OF REPORTING (GRI 102-2, 102-4, 102-5, 102-46) 61 REPORTING FORMAT (GRI 102-54) 61 REPORTING PERIOD AND CYCLE (GRI 102-50, 102-52) 61 FEEDBACK (GRI 102-53)
62 ABOUT OUR COMPANY (GRI 102-1,102-2, 102-3, 102-4, 102-6)
65 MESSAGE BY THE CEO GROWING A LEGACY OF STRENGTH PAIRING PEOPLE RESILIENCE WITH NEW OPPORTUNITY (GRI 102-14)
66 SUSTAINABILITY ROADMAP 66 STATUS OF IMPLEMENTATION (GRI 103-2) 67 GOVERNANCE STRUCTURE (GRI 102-18, 102-20, 102-22, 102-23, 102-24, 102-26) 69 SUSTAINABILITY POLICY (GRI 102-29) 70 STAKEHOLDER ENGAGEMENT (GRI 102-21, 102-40, 102-42, 102-43, 102-44) 72 MATERIALITY MATTERS (GRI 102-21, 102-29, 102-30, 102-31, 102-33, 102-34) 74 KEY PERFORMANCE INDICATORS (KPIS), ACTION PLANS AND REPORTING REGIME (GRI 102-30, 102-31, 102-33, 102-34) 84 ALIGNMENT TO THE UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS (UNSDG)
93 EMBRACING THE CORPORATE GOVERNANCE AND ACCOUNTABILITY CULTURE (GRI 102-17, 102-30, 205-3, 206-1, 207)
101 ECONOMIC PERFORMANCE: CREATING AND SUSTAINING VALUE (GRI 201, 202, 203, 204, 205, 206, 207)
105 ENVIRONMENT: ENSURING BALANCE WITH NATURE (GRI 301, 302, 303, 304, 305, 306, 307, 308)
122 SOCIAL: ENABLING AND EMPOWERING OUR HUMAN RESOURCES (GRI 401 - 419)
148 GOALS FOR SUSTAINABLE, ECOLOGICAL, AND ORGANIC GROWTH GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 59
About this Report (GRI 101,102-1,102-46)
2020 is the third year Golden The Sustainability Framework guides us to continuously implement best practices, active measures and improvements to the Group’s Pharos Berhad (GPB or the Group) management of the EES aspects of our business. The Group has produced its Sustainability must ensure focus and consistency in improving our financial Report. The Group’s baseline performance, enhancing our Board’s effectiveness, strengthening our Management’s capabilities and improving talent management reporting is based on existing to achieve the objectives, key performance indicators (KPIs) and measures under the Three Pillars of relevant targets to achieve our sustainability goals. Sustainability – Economic Viability, The Group faced numerous setbacks in 2020 due to COVID-19. Thus Environmental Protection and far, the global pandemic has led to factory closures, production Social Equity (EES). As a state-owned standstills and has disrupted our development plans. The Group enterprise, our goals are to improve has had to repivot efforts to ensure business continuity starting with the implementation of health and safety measures to protect and implement responsible our employees, workers and local communities. As such, the Group business practices throughout the was unable to proceed with the action plans it set out to meet Group’s operations and supply the KPIs set for previously identified Material Matters. Instead, we needed to review, re-evaluate and reassess priority matters chains. in addressing pandemic-related risks which directly impacted our business. (Please refer to the MD&A in the Annual Report and the The Group also aims to Economic segment of the Sustainability Report for more information on the Group’s Strategic Business Plan). harmoniously co-exist with the local communities, whilst protecting the While treading carefully within the parameters of our recovery plan, we also continue to monitor global initiatives within the wood forests, peatlands and biodiversity and glass manufacturing industries to ensure strict compliances as where we operate. Hence, we must outlined in our Environmental Statement (please refer to pages 54 to showcase the synergy between our 56 of this Annual Report). offerings, production processes and The environment, as our business, is dependent on sustainable meeting customer needs. practices, and we are mindful of the grave environmental concerns, as climate change is intrinsically linked to our operations. Our challenge lies in balancing human well-being and social equity while significantly reducing environmental risks. 60 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
About this Report (Continued) (GRI 101, 102-1,102-46)
We recognise that collective efforts and team work is required to sustain and develop a better future for our employees, supply chain, Prosperity and multi-stakeholder groups. The support of and collaborative Planet Peace efforts with our employees, workers, shareholders, business associates, government agencies, regulatory bodies and the communities are the drivers for improving the Group’s prospects.
People Partnerships The Group’s Sustainability Working Group (SWG) has retained its momentum to peg disclosures to the Global Reporting Initiative (GRI) Standards and the F4GBM criteria. Our overarching objective is to measure our progress with a focus on the 5Ps that shape the United Nations Sustainable Development Goals (UNSDG): People, Planet, Prosperity, Peace, and Partnerships.
SCALE AND SCOPE OF REPORTING (GRI 102-2, 102-4, 102-5, 102-46)
This Report covers GPB’s sustainability initiatives and activities as well as the Group’s performance in selected indicators of the EES Sustainability Pillars as outlined by the GRI. In terms of scope, this Report encompasses GPB’s operations and activities in Malaysia, a company listed on Bursa Malaysia’s Main Market, and its subsidiaries:
COMPANY LOCATION BUSINESS ACTIVITIES/PRODUCTS
Permint Timber Kuala Terengganu, Investment holding. Corporation Sdn Bhd Terengganu
Kumpulan Pengurusan Bandar Bukit Besi, Kayu Kayan Trengganu Harvesting and sustainable forest management. Dungun Sdn Bhd (KPKKT)
Pesaka Trengganu Bandar Bukit Besi, Sawmilling, producing woodchips. Berhad (Pesaka) Dungun
Pesama Timber Bandar Chukai, Sawmilling, harvesting, moulding, producing finger joints and Corporation Sdn Bhd Kemaman woodchips and kiln drying. (Pesama)
Permint Plywood Bandar Al-Muktafi Rental of buildings, plant and machinery, selling of logs, sale of rights Sdn Bhd (PPSB) Billah Shah, Dungun to logs, trading of woodchips and manufacture and sale of veneer.
Golden Pharos Glass Telok Panglima Manufacturing and trading of glass. Sdn Bhd (GP Glass) Garang, Selangor
The Group does not have any operations undertaken by joint venture partners or associate companies beyond our direct and express control. The Group’s ownership and corporate structure is presented in the Corporate Structure on page 11 of the Annual Report. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 61
About this Report (Continued) (GRI 101, 102-1,102-46)
REPORTING FORMAT (GRI 102-54)
C E We have based our reporting on: I N M V O I R • GRI Standards Sustainability Reporting Guidelines
N O
O N
C
SUSTAINABLE M • Bursa Malaysia Securities Berhad’s (Bursa Securities)
E E
DEVELOPMENT N Main Market Listing Requirements (MMLR)
T
nd • Bursa Sustainability Reporting Guide 2 Edition
• FTSE4Good Bursa Malaysia (F4GBM) SOCIAL The relevant GRI indicators and F4GBM references are included in the headings and sub-headings throughout this Report.
REPORTING PERIOD AND CYCLE (GRI 102-50, 102-52)
This Sustainability Report covers the period from 1 January to 31 December 2020 as part of the Group’s annual review and updates on corporate sustainability.
FEEDBACK (GRI 102-53)
In order to improve our sustainability efforts and reporting, we welcome and value any feedback on the Group’s sustainable development practices. Please direct any enquiries or comments to:
GOLDEN PHAROS BERHAD 66-2, Taman Seri Intan Jalan Sultan Omar 20300 Kuala Terengganu Terengganu
+609 630 1330
+609 631 0617
ZULKIFLI OMAR www.goldenpharos.com Chief Sustainability Officer 62 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
About Our Company (GRI 102-1,102-2, 102-3, 102-4, 102-6)
GPB is a Government Linked Company (GLC) owned by the Terengganu State Government and headquartered in Kuala Terengganu. The Group is primarily engaged in forest concession management, harvesting and distribution of timber, sawmilling and processing of wood-based products, and the manufacturing and sales of architectural panel glass.
GPB is a long-standing supplier of timber to the local construction sector while supplemented by exports of wood and glass products to the United Kingdom, East Asia, Southeast Asia, Australia, New Zealand and other parts of Europe.
Sawntimber for export. GP Glass supplied architectural glass for the Gleneagles Hospital building in Kuala Lumpur
United Kingdom Parts of Europe
East Asia
Southeast Asia
Australia
New Zealand GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 63
About Our Company (Continued) (GRI 102-1,102-2, 102-3, 102-4, 102-6)
The principal activities of our main subsidiaries are listed as follows:
KPKKT is the Group’s timber concession management for approximately 129,143 hectares (ha) of KPKKT rich natural tropical rain forest (TRF) in Terengganu, 108,900 ha at the Dungun Timber Complex (DTC) and 20,243 ha at Cherul Forest Concession (CFC).
Pesaka has a similar portfolio as Pesama with activities in sawmilling, kiln drying and wood PESAKA treatment at their plant located in Bukit Besi, Dungun.
Pesama established in 1973, is a wholly-owned subsidiary of Golden Pharos Berhad. Pesama is located at the Jakar Industrial Area in Chukai, Kemaman, Terengganu covering an area of about 29.43 acres. Pesama has an experienced workforce of more than 200 workers in managing its PESAMA principal activities of sawmilling, moulding, kiln drying and wood treatment. Pesama’s products are derived from a reliable supply of raw materials from the Group’s forest concessions, and backed by internationally recognised certifications to maintain the highest level of quality standards for its products and services.
Operating from Bandar Al-Muktafi Billah Shah in Dungun, PPSB is a producer of woodchips and PPSB veneer for the local and export markets.
GP Glass is a manufacturer of tempered and laminated glass with a facility in Telok Panglima Garang in Selangor. Its innovative solutions in tempered safety glass, laminated safety glass, heat GP GLASS strengthened glass, double glazing units and ceramic painted glass are installed across Malaysia and selected markets overseas.
Details of GPB’s financial performance and production figures in FY2020 are presented in this Annual Report on pages 24 to 25 and 30 to 32. 64 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
DATO’ NADZA ABDUL Chief Executive Officer GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 65
Message by the CEO GROWING A LEGACY OF STRENGTH PAIRING PEOPLE RESILIENCE WITH NEW OPPORTUNITY (GRI 102-14)
In the face of the COVID-19 crisis, we have had to optimise our resilience and rebalance our risk and liquidity, while assessing opportunities for sustainable growth strategies coming out of the downturn.
Rather emphatically that climate disruption is We based our Most Materiality Matters on EES issues approaching “a point of no return”, and it has that are most important to our business and our been a “deep emergency” that long predates the stakeholders. And one of our most important features pandemic. “Greenhouse gases, just like viruses, for the reporting period has been the resilience of our do not respect national boundaries”. people. We understand that building resiliency, speed, and transparency into the culture does not happen overnight ANTÓNIO GUTERRES, the UN Chief but now is as good a time as any to start thinking about how we want to cultivate the next steps.
Sustainability, it has been said many times, is most often Although what we did yesterday matters, and having defined as meeting the needs of the present without sustained a pre-pandemic turnaround while championing compromising the ability of future generations to meet new sustainability initiatives underscores how fast we theirs. When we first chose the appropriate UNSDG, we have responded to unprecedented socio-economic looked at Most Materiality Matters from its material challenges, it has now spurred us to reimagine our benefit point-of-view, and our sustainability reporting sustainability goals as we evolve with global health and was merely for compliance purposes. However, we economic and environmental changes. now acknowledge that adopting sustainable practices aligned with the UNSGDs has helped our organisation We today strive to be a human-centric, systems-minded become more efficient, competitive and resilient even in company that promotes sustainability and a shared challenging periods. workforce resilience to profit from regeneration.
Responding to the pandemic has underscored the need to accelerate the adoption of agile ways of working and adding value chains to kick-start transformations to help outmanoeuvre uncertainty and challenges while we continue to navigate the impacts of the COVID-19 DATO’ NADZA ABDUL pandemic. Chief Executive Officer 66 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Sustainability Roadmap Status of Implementation (GRI 103-2)
The coronavirus pandemic has reached almost every country in the world. It has disrupted lives and livelihoods, businesses and governments. Despite the development of new vaccines, many are still wondering what recovery could look like. Global economies are in flux. It is and will be a difficult period for job seekers, with most countries now in recession.
The IMF estimates that the global economy shrunk by 4.4% in 2020. And with this in mind, we are actively preparing for the next normal. We have learnt to cope with the pandemic. Now we have to learn how to thrive in a post-pandemic world sustainably. We have been working harder and collaborating on crisis management issues by revaluating our Sustainability Roadmap to provide a step-by-step guide towards building a comprehensive framework for the challenges we will face while maintaining our push for better sustainability performances.
Since the launch of the Sustainability Roadmap in 2018, we have successfully integrated sustainable development initiatives that has not only infused a sense of acceptance, appreciation and understanding for corporate sustainability amongst employees at every level of GPB, it has spearheaded a new ecologically friendly culture between stakeholders, partners and communities. Integrating sustainability into the corporate strategy has also helped improve the socio-economic standing of the communities we work with. After three years of gradually improving sustainability KPIs, our employees now see the bigger picture and have adopted a unique eco-culture into their day-to-day work tasks. GPB believes this holistic approach is key for a total sustainable transformation.
In 2018, we established a governance structure to oversee and coordinate all sustainability efforts. The Group outlined a Sustainability Policy that prioritised the Group’s Material Matters in line with stakeholder interests and on what matters most to future-proof the Company. This portion of the Roadmap was duly completed in FY2019.
IMPLEMENTATION OF ROADMAP AND TIMELINES 1 2 3 4 5 GOVERNANCE SUSTAINABILITY MATERIALITY KPIS, ACTION GRI & UNSDG STRUCTURE POLICY STUDY PLANS & REPORTING PLATFORM
To establish a To outline and To identify and select • To set KPIs for • To prepare Governance determine, the Materiality Matters Material Matters disclosures Structure to drive overall direction of that are relevant and to formulate according to GRI the implementation the Sustainability and matter most to Action Plans. guidelines. and reporting of Policy. stakeholders and the • To assign • To align approach sustainable efforts. Group. responsibilities to perimeters to the compile results selected UNSDG and track progress. protocols.
2018/2019 2019/2020 GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 67
Sustainability Roadmap (Continued) Governance Structure (GRI 102-18, 102-20, 102-22, 102-23, 102-24, 102-26)
The next phase of our Roadmap was executed in FY2019 and extended into FY2020. It involved the setting of key performance indicators (KPIs) for each of the Material Matters determined in the previous phase. Subsequently, Action Plans were reviewed BOARD OF and tweaked to meet the new KPIs. The Company also assigned DIRECTORS responsibility to the respective subsidiaries, departments, business units and individuals to monitor progress and compile CHIEF EXECUTIVE OFFICER results. Dato’ Ahmad Nadzarudin bin Abdul Razak The final part of the Roadmap compiles disclosures in accordance to specific GRI Standards and F4GBM indicators which are aligned SUSTAINABILITY COMMITTEE
to the selected UNSDG. Chief Sustainability Officer Zulkifli Omar The Group established a Provisional Governance Structure in Heads of Departments FY2019. The purpose of sustainability governance is to help us implement sustainability strategies across the business, manage Internal Audit : Haji Muhamad bin Sulong goal-setting and reporting processes, strengthen relations (Retired on 31 January 2020) with external stakeholders, and ensure overall accountability. Azman bin Jusoh (Appointed on 15 February 2021) The structure was detailed out and endorsed on 10 February Finance : Syukri bin Ali 2020 between GPB’s senior management and our appointed Human Resource consultants employed to help us manage a wide range of & Administration : Wan Zuhairiah binti Wan Ali@ sustainability issues. The Provisional Governance Structure Wan Damsek oversees sustainability risks and opportunities that is guided Corporate by policies and processes referenced against international Communication : Fauzan bin Abdul sustainability standards. Company Secretary : Suraya binti Mohd Hairon
Under this structure, the CEO, Dato’ Nadza Abdul, works in Heads of Subsidiaries tandem with the Sustainability Committee (SCoM) and the KPKKT : Suhairi bin Sulong Sustainability Working Group (SWG) to determine the overall Pesaka : Hilmi bin Awang direction and specific strategies to drive sustainability goals Pesama : Mohd Shamsol bin Mohd Shafie which are then presented for endorsement by the Board. PPSB : Ahmad Bazli bin Razali The Board is required to evaluate the Group’s sustainability GP Glass : Stanley Lau Chan Ming performance periodically based on reports submitted by the SCoM. Members of both committees consist of all Heads of Departments (HOD) at the Group level and all heads of subsidiaries (HOS) from all five active subsidiary companies. Collectively, they are responsible for managing and effectively implementing the Group’s sustainability efforts. 68 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Sustainability Roadmap (Continued) Governance Structure (GRI 102-18, 102-20, 102-22, 102-23, 102-24, 102-26)
En Zulkifli Omar was appointed as the Chief Sustainability Officer While the world has yet to fully recover from the 2009 Global (CSO) in February 2020. As the CSO, his role is to help the company Financial Crisis (GFC), we now face the pandemic touted as one ensure its long-term future by protecting communities, restoring of the worst ‘black swans’ the world has ever experienced. The and conserving ecosystems, and creating competitive profit World Bank estimates the global Gross Domestic Product (GDP) to projections. His department drafts and implements sustainable be hit harder than even the GFC, going deeper into the negative organisational policies that address environmental concerns, and territory as more countries struggle to contain the spread of evaluates the efficacy of sustainability programmes, including COVID-19. recommending and implementing improvements as necessary. His team also conducts research to identify environmental and Lockdown measures were Malaysia’s response to the COVID-19 sustainability concerns, interests, and issues. pandemic, resulting in stop-work orders in almost all business sectors. In addition, movement restrictions and disruptions to As we move forward, our sustainability goals and corporate social supply chains worsened the state of the country’s economy. The responsibilities will shift from compliance to innovation. This Group’s businesses were significantly affected and, we had to new ideology will eventually enhance the Group’s reputation and focus on rolling out business continuity plans based on new risk strengthen the core of the Group. factors that emerged from the pandemic. As such, we could not meet the targets set for our sustainability initiatives in FY2020. Currently, each HOD and HOS is required to track and compile sustainability performance results. They are also required to track NOTE: Please see page 67 of our Annual Report 2020 for the their team’s progress towards achieving GPB’s key sustainability Governance Structure. objectives. And within the Group’s framework, they are also tasked with creating Sustainability Teams among their respective employees.
The SWG Team led by CSO En Zulkifli Omar is responsible for coordinating with all GPB business units and departments. Achieving the targets of KPIs set for sustainability initiatives is a collaborative effort. Hence all employees accountable and responsible for providing data and information are thoroughly briefed and guided to ensure the accuracy of the information contained in the sustainability report. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 69
Sustainability Roadmap (Continued) Sustainability Policy (GRI 102-29)
The Corporate Social Responsibility (CSR) Policy was approved by the Board to ensure that we rigorously adhere to the highest standards in ethical behaviour, environmental sustainability, active engagement with communities where we operate. The approved Sustainability Policy will be the sustainability blueprint in every aspect of the Group’s operations and ancillary activities.
SUSTAINABILITY POLICY
“Golden Pharos Group is committed to upholding the three pillars of sustainability:
Commendable in Exemplary in Economic Matters Environmental Matters ECONOMIC ENVIRONMENT
Praiseworthy in Social Matters SOCIAL
We intend to sustainably grow the company for our shareholders, stakeholders, employees and communities we work with in order to manage our biodiversity, human capital and natural resources for the next generation to sustainably carry on. 70 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Sustainability Roadmap (Continued) Stakeholder Engagement (GRI 102-21, 102-40, 102-42, 102-43, 102-44)
Stakeholder engagement is an important component in achieving our sustainability goals. Our stakeholders comprise of various parties which have an interest or concern in the company. We have identified our key stakeholders, looked at their engagement procedures, and management priorities, to identify significant risks and opportunities for the Group.
The table below summarises the engagement sessions we had with each stakeholder group throughout the year.
SHAREHOLDERS EMPLOYEES CLIENTS/ LOCAL AND INVESTORS CUSTOMERS COMMUNITIES
• Annual General Meeting. • Talent Development • Periodic project • Sponsorship of • Annual Report and Programmes. meetings and site visits. community service Sustainability Report. • Induction Exercise for • Website/Social Media events. • Announcement of New Employees. Platforms. • Social and Quarterly Results. • Town Hall Meetings. • Customer Feedback environmental initiatives. • Website. • Social, Sports, Health Surveys. • Donations. • Networking Sessions. and Wellness Activities. • Events/Roadshows.
ENGAGEMENT METHOD • Circulation of Human Resource Policies.
• Financial Performance. • Training and Career • Product pricing. • Community • Updates on Business Development. • Marketing and engagement. Performance. • Diverse and Inclusive promotions. • Life-improving • Sustainable Future Workplace. • Delivery service. programmes. Business Opportunities. • Employee Well-being, • Quality products. • Environmental and Health and Safety. social impacts. • Internship and Industry • Corporate Social Placement. Responsibility (CSR). • Code of Conduct.
PRIORITIES • Code of Business Ethics. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 71
Sustainability Roadmap (Continued) Stakeholder Engagement (GRI 102-21, 102-40, 102-42, 102-43, 102-44)
GOVERNMENT AGENCIES/ VENDORS/ CERTIFICATION MEDIA REGULATORS SUPPLIERS BODIES
• Regulatory discussions • Vendor/supplier • On-site inspections. • Media interviews, and meetings with registration. • Regular meetings. briefing sessions and authorities. media conferences. • Procurement policies. • Submission of regulatory • Public consultation with • Performance evaluation. documentation. • Press releases. local authorities. • Site visits and meetings. • Internal and external • Site inspections. audit exercises. • Seminars, briefings and training. ENGAGEMENT METHOD
• Compliance to • Product and service • Adherence to • Brand positioning, requirements set by quality, service scope International image and credibility government agencies and payment schedule. Organisation for rating. or other regulatory • Clear procurement Standardisation (ISO), • Business performance authorities. policies and practices. Forest Stewardship and growth. Council (FSC®) and • Compliance • Ethical business Chain of Custody (CoC) conduct and regulatory to regulatory Certification. compliance. requirements of Bursa • Compliance to Malaysia Securities requirements set by PRIORITIES Berhad, Companies regulatory authorities. Commission of Malaysia and other reporting guidelines. • Policies are aligned with areas of national interests including initiatives. 72 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Sustainability Roadmap (Continued) Materiality Matters (GRI 102-21, 102-29, 102-30, 102-31, 102-33, 102-34)
Materiality is a concept that defines why and how specific issues are essential to our organisation and our stakeholders. Materiality Matters are materiality assessments that form the backbone of sustainability reporting. They identify material issues and what needs to be done by addressing internal and external impacts the Group has on the economic, environmental, social and governance (EESG) aspects. A material issue can significantly impact financial, economic, reputational, and legal aspects within the Group; which can affect both internal and external stakeholders.
The 2019 materiality assessment shaped our sustainability strategy and defined its reporting parameters. The Board and Management Team analysed risk factors on the selected 10 Most Material Matters upgrades for our business processes and prospects. The Materiality Study was assessed by consulting a targeted group of shareholders, business partners, associates, employees, suppliers, vendors, service providers, various authorities, and discussions with the communities we serve.
After identifying potential sustainability issues that are directly relevant to our value chain, we analysed these issues using the three different lenses of Economic, Environmental and Social (EES). We then proceeded to look for an approach that balances long-term profitability while hedging on sustainable environmental measures to reduce our environmental impact, including improving and increasing our social responsibilities.
These pillars are sub-divided into:
ENVIRONMENT
ECONOMIC (Financial) (Governance)
SOCIAL (Workplace) (Marketplace) (Community) GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 73
Sustainability Roadmap (Continued) Materiality Matters (GRI 102-21, 102-29, 102-30, 102-31, 102-33, 102-34)
The study published a series of online surveys in 2019 where the data was compiled and reviewed by sustainability consultants in February 2020 before being confirmed in the Group’s 10 Most Material Matters listing. These are:
10 MOST MATERIAL MATTERS MATERIALITY MATTER SUSTAINABILITY PILLAR
1. Economic & Business Performance Economic (Financial) 2. Eliminating Bribery and Corruption Economic (Governance) 3. Risk Management Economic (Governance)
4. Protecting Land and Biodiversity Environment 5. Energy Management Environment
6. Protecting the Safety & Health of Workers & Sub-Contractors Social (Workplace) 7. Training, Education & Career Development Social (Workplace) 8. Employee Engagement & Satisfaction Social (Workplace) 9. Customer Feedback & Satisfaction Social (Marketplace) 10. Certification Social (Marketplace)
The next stage of our Sustainability Roadmap involved the establishing of KPIs for the 10 Most Material Matters by formulating Action Plans to meet targets, while assigning responsibility tiers to track both the progress, and the review of results. 74 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Sustainability Roadmap (Continued) Key Performance Indicators (KPIs), Action Plans and Reporting Regime (GRI 102-30, 102-31, 102-33, 102-34)
The COVID-19 pandemic had a significant impact on the Group’s ability to meet the KPIs for its Most Material Matters. Restrictions and limits on the physical presence of management personnel in the office, cancellation of face-to-face meetings, training sessions, briefings and other delayed events were a significant constraint on the implementation of our sustainability measures. In addition, our focus during this period was on supporting financial and operational performance to ensure business sustainability.
MOST MATERIAL MATTERS: KPIs, ACTION PLANS & RESPONSIBILITY
ECONOMIC AND BUSINESS PERFORMANCE
KPI 2020 Performance Action Plan Remarks Responsibility
Revenue: 4% annual Revenue: -17.9% 3-Year Business Recovery Plan Affected by Respective HOS increase until 2024. decrease (RM47.2 (BRP) COVID-19 and from GPB and million). related restrictions. all subsidiaries. PAT: 5% annual 1. Average selling price increase increase until 2024. LAT: Improvement of by 5%. Despite not meeting 27.3% (RM6.70 million). KPIs, LAT was Dividend: 30% 2. Net recovery increase by 1%. significantly reduced of PAT or 40% of Dividend: Nil. from previous year. EBITDA until 2024. 3. Output capacity increase by NAV: 8.7% increase 1%. No PAT. NAV: Increase until (0.50 sen). 2024. Achieved 4. Participate in trade shows (international & local exhibitions).
5. Introduce new products (ETP & timber furniture).
6. Identify new buyers.
7. Monitor company performance monthly (GMC & HOTC meetings).
PAT/LAT = Profit After Tax/Loss After Tax ETP = Engineered Timber Products EBITDA = Earnings Before Interest, Taxes, Depreciation GMC = Group Management Committee and Amortisation HOTC = Heads of Timber Companies NAV = Net Asset Value HOS = Heads of Subsidiaries GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 75
Sustainability Roadmap (Continued) Key Performance Indicators (KPIs), Action Plans and Reporting Regime (GRI 102-30, 102-31, 102-33, 102-34)
ELIMINATING BRIBERY AND CORRUPTION
KPI 2020 Performance Action Plan Remarks Responsibility
1. Formation of IGU. Established on 1 June 1. Propose IGU structure Implementation CEO. 2020. (FY2019). of Code of Ethics 2. Implementation Achieved Policy: June 2020. of Code of Ethics 2. Seek structure endorsement Policy. Approved in June 2020. from Audit Committee and the Achieved Board (FY2019).
3. Commence recruitment process for CIGO (FY2020).
4. CIGO to establish integrity reporting framework (FY2020).
5. CIGO to obtain integrity certification from MACC (FY2020).
6. Establish a Code of Business Ethics incorporating Whistleblowing Policy, No Gifts Policy, CSR Policy (FY2020).
IGU = Integrity Governance Unit CIGO = Chief Integrity & Governance Officer 76 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Sustainability Roadmap (Continued) Key Performance Indicators (KPIs), Action Plans and Reporting Regime (GRI 102-30, 102-31, 102-33, 102-34)
RISK MANAGEMENT
KPI 2020 Performance Action Plan Remarks Responsibility
80% compliance • 44% (7 Action Plans) 1. Disruption in logs supply 1. EIA approval was CEO. with approved risk ahead of time. a. Purchase external logs. obtained from the management and Achieved b. Establish forest plantation DOE on 7 August Action Plans. (EIA by end 2020). 2020 (Target date: • 44% (7 Action Plans) 20 June 2020). on time. Achieved 2. Evaluation of investment risks 2. Incorporation of a. To adopt Terengganu Inc’s KPIs on submission • 12% (2 Action Plans). policy on investments. of information to Delayed b. To adopt Terengganu Inc’s GPB Group was SOPs. achieved on 6 August 2020 3. Business sustainability (Target date: a. To execute ROSO. 31 July 2020). b. To pursue suitable downstream business. c. GP Glass to explore new market/segment.
4. Monitoring of investment risks a. To adopt Terengganu Inc’s SOPs.
5. Accurate and timely financial reporting a. Financial system improvements. b. Knowledge enhancements.
RMWC = Risk Management Working Committee Terengganu Inc = Terengganu Incorporated Sdn Bhd SOP = Standard Operating Procedures GP Glass = Golden Pharos Glass Sdn Bhd EIA = Environmental Impact Assessment DOE = Department of Environment ROSO = Remodelling of Sawmill Operation GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 77
Sustainability Roadmap (Continued) Key Performance Indicators (KPIs), Action Plans and Reporting Regime (GRI 102-30, 102-31, 102-33, 102-34)
PROTECTING LAND AND BIODIVERSITY
KPI 2020 Performance Action Plan Remarks Responsibility
1. Selective 1. NA. 1. Strict compliance & monitoring 1. Complied. KPKKT/Pesama. Management with all relevant Manuals (e.g. System Forestry Manual, Outdoor (Sustainable Working Manual, SMS, Logging Practice). Operations, etc.), SOPs, PEFC and FSC® principles.
2. Annual FSC® 2. To ensure 2. Ensure compliance to new 2. No new updates. Surveillance Audit compliance of updated standards. (Poaching,HCVF). new updated standards.
3. Recertification 3. To conduct 3. To provide training on 3. Training is every 5 years. training sessions. certification standards. on-going via mentoring sessions.
4. AAC 2% imposed 4. To undergo audit 4. To conduct internal pre-audit by 4. MC&I internal by the State. by JPNT. JPNT before actual surveillance audit conducted audits. by JPNT. Achieved
5. Cutting rotation 5. To establish 5. Engagement with relevant 5. Direct of 30 year. regular authorities (Wildlife engagement with communication Department, FRIM, JPNT) and JPNT. and engagement NGOs (e.g. WWF, Malaysian with JPNT. Nature Society, etc.).
FSC® = Forest Stewardship Council WWF = World Wildlife Fund FRIM = Forest Research Institute Malaysia SOP = Standard Operating Procedures HCVF = High Conservation Value Forest KPKKT = Kumpulan Pengurusan Kayu Kayan Trengganu Sdn Bhd JPNT = Terengganu State Forestry Department PEFC = Programme for the Endorsement of Forest AAC = Annual Allowable Cut Certification NGO = Non-Governmental Organisation Pesama = Pesama Timber Corporation Sdn Bhd SMS = Selective Management System 78 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Sustainability Roadmap (Continued) Key Performance Indicators (KPIs), Action Plans and Reporting Regime (GRI 102-30, 102-31, 102-33, 102-34)
ENERGY MANAGEMENT
KPI 2020 Performance Action Plan Remarks Responsibility
Two renewable Breakdown of 1. To install PV solar at GP Glass 1. Pending GP Glass and energy projects in electricity consumption and Pesaka (FY2021). Pesaka. 2020. and cost for FY2020 vs FY2019. 2. To conduct feasibility study for 2. Action Plan was CSBD. construction of a mini hydro cancelled. GPB (Headquarters) power plant at KPKKT concession RM18,246 area (FY2021). Reasons: To (2019: RM25,436) focus on our core businesses for the KPKKT time being. RM26,661 (2019: RM34,472) 3. To harvest forest residual 3. Has not been KPKKT and Pesaka. and process into woodchips implemented yet. Pesaka (FY2021). RM25,505 (2019: RM207,577) 4. To process sawdust into biomass 4. Has not been Pesaka. briquette charcoal (FY2021). implemented yet. Pesama RM377,294 5. To construct biomass pellet 5. Timeline was (2019: RM505,215) plant (To establish timeline in established FY2020). but milestones PPSB required revision. RM100,321 (2019: RM68,571)
GP Glass RM1,365,577 (2019: RM1,759,211)
Total RM1,913,604 (2019: RM2,600,482)
GP Glass = Golden Pharos Glass Sdn Bhd Pesama = Pesama Timber Corporation Sdn Bhd KPKKT = Kumpulan Pengurusan Kayu Kayan Trengganu GDBM = Group Downstream Business Manager Sdn Bhd CSBD = Corporate Services and Business Development Pesaka = Pesaka Trengganu Berhad GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 79
Sustainability Roadmap (Continued) Key Performance Indicators (KPIs), Action Plans and Reporting Regime (GRI 102-30, 102-31, 102-33, 102-34)
PROTECTING THE SAFETY AND HEALTH OF WORKERS AND SUB-CONTRACTORS
KPI 2020 Performance Action Plan Remarks Responsibility
1. Reduction to 1. 2 incidents in 1. Conduct OSHWA inspection Due to the GPOSHCOM. maximum 4 2020 (GP Glass). by SHO or 2 Group Safety COVID-19 pandemic, incidents Achieved Committee members: safety information (GP Glass). a. KPKKT - twice per year. and promotion b. Other subsidiaries - once programmes were 2. Zero NOP in 2. Zero NOP by DOSH. per year. sent and conducted compliance with Achieved through social DOSH. 2. Training. media such as WhatsApp groups, 3. Zero deaths. 3. Zero deaths. virtual conferences, Achieved posters and memos.
4. To achieve at 4. 80%. least 80% of Achieved yearly audited result by DOSH.
5. To proactively 5. Strict COVID-19 undertake SOPs according to safety & health the MoH guidelines measures (yearly were enforced inspection by at all offices at OSHWA). headquarters, subsidiaries, factories and work sites.
GP Glass = Golden Pharos Glass Sdn Bhd OSHWA = Occupational Safety and Health Workplace NOP = Notice of Prohibition Assessment DOSH = Department of Occupational Safety and Health KPKKT = Kumpulan Pengurusan Kayu Kayan Trengganu Sdn Bhd Pesama = Pesama Timber Corporation Sdn Bhd SHO = Safety and Health Officer Pesaka = Pesaka Trengganu Berhad GPOSHCOM = Golden Pharos Occupational Safety & Health Committee 80 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Sustainability Roadmap (Continued) Key Performance Indicators (KPIs), Action Plans and Reporting Regime (GRI 102-30, 102-31, 102-33, 102-34)
TRAINING, EDUCATION AND CAREER DEVELOPMENT
KPI 2020 Performance Action Plan Remarks Responsibility
1. 100% utilisation 98.5% of executive 1. Source training providers The HRDF was not HRA. of HRDF. employees attended registered with HRDF. fully utilised as free 16 hours of training training was provided in 2020. 2. Minimum 2 in-house training online under the programmes to be claimed Government’s HRDF 97.8% of from HRDF, minimum 4 hours Strategic Initiative for non-executive per company (excludes KPKKT). SMEs. 90% of training employees attended was conducted 3 hours of training in online. 2020. 1. HRDF Strategic Initiative for SME: Smart Progeny.
2. More than 4 hours achieved.
2. Succession 1. Identify key positions in the 1. Positions HRA. planning. company. identified.
2. Identify internal employees 2. Internal who can replace key persons. Promotion – i.e. Head of PPSB. 3. Groom selected employees - provide training. 3. HRDF Strategic Initiative for SME: 4. Offer retention programmes Smart Progeny. i.e. compensation and benefits. 4. Bonus, Annual Increment and ESGS for Manager level and above.
HRDF = Human Resources Development Fund KPKKT = Kumpulan Pengurusan Kayu Kayan Trengganu Sdn Bhd HRA = Human Resources and Administration Department PPSB = Permint Plywood Sdn Bhd ESGS = Employee Share Grant Scheme GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 81
Sustainability Roadmap (Continued) Key Performance Indicators (KPIs), Action Plans and Reporting Regime (GRI 102-30, 102-31, 102-33, 102-34)
EMPLOYEE ENGAGEMENT AND SATISFACTION
KPI 2020 Performance Action Plan Remarks Responsibility
1. Monthly sports 1. 10 events in 2020. 1. Organise sport events 10 events in 2020 HRA & CCD. events at Achieved once a month at 1. CEO’s Bowling Challenge headquarters level. headquarters level. Trophy 2020. 2. Bukit Maras Hike and 2. 10 gatherings per 2. 5 gatherings in 2. Organise events by Paragliding. year (CEO and 2020. subsidiaries twice a 3. CEO’s Badminton Challenge workers). year. Trophy 2020. 4. Golden Pharos Golden Ride Hogoh Pahang. 3. 12 gatherings per 3. 6 gatherings in 3. Organise gatherings year (HOS and 2020. once a month. 5. Chemerong-Berembun- Langsir Hike. workers). 4. Organise signature 6. Muhibbah Cycling 2020. annual events (eg. 7. GPB-Manis FM Friendly Badminton Tournament. MTB Golden Ride and 8. GPB Group Club Futsal Chemerong-Berembun- Tournament. Langsir expedition). 9. Kayaking in Sungai Kelemin, Pasir Raja, Bukit Besi. 5. Conduct DAL briefing 10. Ride with TI Group CEO to (Corporate Services). Kota Baharu, Kelantan.
5 gatherings in 2020 1. Golden Pharos Sports Club (KeSuGoRos) Solat Hajat Ceremony. 2. Retirement Ceremony for Head of Internal Audit, Golden Pharos. 3. 33rd Annual General Meeting. 4. Business Recovery Plan 202.1. 5. Visit by the CEO to logging compartment 64, Jengai Forest Reserve.
6 gatherings in 2020 1. Employee Appreciation and Solat Hajat Ceremony. 2. Safety Briefing on COVID-19. 3. Kacau Bubur Asyura Programme. 4. Code of Business Ethics Briefing. 5. Official Visit by the Terengganu State Government. 6. Flood Relief Programme.
HOS = Heads of Subsidiaries DAL = Discretionary Authority Limits HRA = Human Resources and Administration Department CCD = Corporate Communication Department 82 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Sustainability Roadmap (Continued) Key Performance Indicators (KPIs), Action Plans and Reporting Regime (GRI 102-30, 102-31, 102-33, 102-34)
CUSTOMER FEEDBACK AND SATISFACTION
KPI 2020 Performance Action Plan Remarks Responsibility
1. CSI - 0.2 annual Expected CSI of 3.5. 1. Improve CSI CSO. increment until • Make sure your company is 2022. ‘alive’. • Set clear expectations. 2. Improve process • Reduce reaction to customer for handling needs. complaints • Identify issues that may (GP Glass). occur. • Boost employee satisfaction 3. Establish SOPs level. for customer complaints (all 2. Keep track record of complaints subsidiaries and for each department. headquarters). 3. Establish SOPs for customer complaints (all subsidiaries and headquarters): • Complaints (Phone, email, letter). • Stage 1 – Frontline Resolution . Solved • Stage 2 . Investigation (product/ cause/solve). . Acknowledge customer within maximum 3 days. . Provide decision within 20 working days. . Written response. . Solved.
CSI = Customer Satisfaction Index SOP = Standard Operating Procedures GP Glass = Golden Pharos Glass Sdn Bhd CSO = Chief Sustainability Officer GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 83
Sustainability Roadmap (Continued) Key Performance Indicators (KPIs), Action Plans and Reporting Regime (GRI 102-30, 102-31, 102-33, 102-34)
CERTIFICATION
KPI 2020 Performance Action Plan Remarks Responsibility
1. Maximum 6 CAR 1. 1 CAR. 1. Compilation and monitoring of 1. Pesaka – 1 minor Respective HOS ® during annual Achieved PEFC and FSC SOPs. CAR. of Pesaka,Pesama surveillance and PPSB. audit. 2. Ensure compliance to updated 2. Pesama – no CAR. standards. 3. PPSB – no CAR. 3. Provide training on certification standards.
4. Internal pre-audit before actual surveillance audit.
CAR = Corrective Action Requests PEFC = Programme for the Endorsement of Forest Certification FSC® SOP = Forest Stewardship Council Standard Operating Procedures HOS = Heads of Subsidiaries Pesaka = Pesaka Trengganu Berhad Pesama = Pesama Timber Corporation Sdn Bhd PPSB = Permint Plywood Sdn Bhd 84 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Sustainability Roadmap (Continued) Alignment to the United Nations Sustainable Development Goals (UNSDG)
We need to turn the recovery into a real opportunity to do things right for the future.
UN Secretary-General António Guterres
The 2030 Agenda for Sustainable Development was launched in 2015 to end poverty and set the world on a path of peace, prosperity and opportunity for all. The 17 Sustainable Development Goals (SDG) demand nothing short of a transformation of the financial, economic and political systems that govern our ” societies today. A notion to make the planet a healthier In the wake of the prolonged COVID-19 pandemic which blighted much of place and to guarantee these human rights of all. 2020 and looks set to extend throughout 2021, the UN has reiterated the significance and relevance of the UNSDG, stating:
The pandemic is an unprecedented wake-up call, laying bare deep inequalities and exposing precisely the failures that are addressed in the 2030 Agenda for Leveraging this moment of crisis, Sustainable Development and the Paris Agreement when usual policies and social on climate change. While the world was developing norms have been disrupted, its SDG toward eliminating poverty and hunger, and bold steps can steer the world to reverse climate change but with the rapid spread of the novel coronavirus turned a public health back on track towards the emergency into one of the worst international crises Sustainable Development Goals. of our lifetimes, changing the world as we know it. This This is the time for change, for a report presents an overview of progress towards the SDG before the pandemic started, and also looks at profound systemic shift to a more some of the impacts of COVID-19 on our targets. sustainable economy that works for both people and the planet.” GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 85
Sustainability Roadmap (Continued) Alignment to the United Nations Sustainable Development Goals (UNSDG)
GPB fully subscribes to the UN’s agenda for sustainable development and we have aligned our sustainability drive to that of the UNSDG. In tandem with the GRI disclosures, this provides a guide for the Group to ensure long-term sustainability for all our stakeholders.
ALIGNMENT OF MATERIALITY MATTERS TO GRI AND UNSDG
MATERIALITY SUSTAINABILITY MAPPING TO GRI ALIGNMENT WITH UNSDG MATTER PILLAR
1. ECONOMIC Economic 201 - Economic Performance & BUSINESS (Financial) PERFORMANCE
2. ELIMINATING Economic 204 - Procurement Practices BRIBERY AND (Governance) 205 - Anti-Corruption CORRUPTION
3. RISK 102 - General Disclosures MANAGEMENT Economic (Governance)
4. PROTECTING Environment 304 - Biodiversity LAND AND 307 - Environmental Compliance BIODIVERSITY
5. ENERGY Environment 302 - Energy MANAGEMENT
6. CUSTOMER Social 206 - Anti-Competitive Behaviour FEEDBACK & (Marketplace) 416 - Customer Health & Safety SATISFACTION 417 - Marketing & Labelling 418 - Customer Privacy
7. CERTIFICATION Social 416 - Customer Health & Safety (Marketplace) 417 - Marketing & Labelling
8. PROTECTING THE Social 403 - Occupational Health & Safety SAFETY AND HEALTH (Workplace) OF WORKERS AND SUB-CONTRACTORS
404 - Training & Education 9. TRAINING, Social EDUCATION (Workplace) AND CAREER DEVELOPMENT
10. EMPLOYEE 402 - Labour Management Relations Social ENGAGEMENT & 407 - Freedom of Association & (Workplace) SATISFACTION Collective Bargaining 86 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Sustainability Roadmap (Continued) Alignment to the United Nations Sustainable Development Goals (UNSDG)
Listed below are the UNSDG we have adopted and we will endeavor to add more targets as we move forward (https://sustainabledevelopment.un.org/topics/sustainabledevelopmentgoals):
END POVERTY IN ALL ITS FORMS EVERYWHERE 1.1 By 2030, eradicate extreme poverty for all people everywhere (currently measured as people living on less than US$1.25 a day). Globally, the number of people living in extreme poverty declined from 36% in 1990 to 1.4 By 2030, ensure that all men and women, in particular 10% in 2015. But the pace of change is decelerating and the COVID-19 crisis risks reversing the poor and the vulnerable, have equal rights to decades of progress in the fight against poverty. Developing countries are most at economic resources, as well as access to basic services, ownership and control over land and other forms of risk during, and in the aftermath, of the pandemic, not only as a health crisis but as a property, inheritance, natural resources, appropriate new devastating social and economic crisis over the months and years to come. According to the technology and financial services, including microfinance United Nations Development Programme (UNDP), income losses are expected to exceed options. $220 billion in developing countries, and an estimated 55% of the global population have 1.5 By 2030, build the resilience of the poor and those in vulnerable situations and reduce their exposure and no access to social protection. These losses will reverberate across societies; impacting vulnerability to climate-related extreme events and other education, human rights and, in the most severe cases, basic food security and nutrition. economic, social and environmental shocks and disasters (Referencing: https://www.un.org/sustainabledevelopment/poverty/&UNDP.org) 1.a Ensure significant mobilisation of resources from a variety of sources, including through enhanced development initiatives to implement programmes and GPB is one of the leading corporations in the less-developed East Coast of Peninsular policies to end poverty in all its dimensions Malaysia, and represents a critical source of economic opportunities for underdeveloped 1.b Create sound policy frameworks at the national and communities in Terengganu and its neighbouring states. The Group stimulates the regional levels, based on pro-poor and gender-sensitive immediate economy by providing business opportunities to local vendors and suppliers, development strategies and support accelerated investment in poverty eradication actions. creating jobs for residents, supporting education, and empowering the community with CSR and other spin-offs to help the underprivileged and needy.
ENSURE HEALTHY LIVES AND PROMOTE 3.6 By 2020, halve the number of global deaths and injuries WELL-BEING FOR ALL AT ALL AGES from road traffic accidents. 3.8 To provide health coverage, including financial risk Before the pandemic, major progress was made in improving the health of millions of protection, access to quality essential healthcare services people. Significant strides were made in increasing life expectancy and reducing some and access to safe, effective, quality and affordable essential medicines and vaccines for all. of the common killers associated with child and maternal mortality. But more efforts are 3.9 To reduce deaths and illness from hazardous chemicals, needed to fully eradicate a wide range of diseases and address many different persistent environmental pollution and contamination. and emerging health issues. By focussing on providing more efficient funding in health systems, improved sanitation and hygiene, and increased access to physicians, significant progress can be made in helping to save lives. Currently, the world is facing a global health crisis unlike any other. COVID-19 is spreading human suffering, destabilising the global economy and upending the lives of billions of people around the globe. (Referencing: https://www.un.org/sustainabledevelopment/health/&UNDP.org)
We have always adopted a holistic approach towards ensuring our employees’ safety, health, and well-being and assume this responsibility with great importance. We prioritise occupational safety and healthcare while encouraging a work-life balance to nurture their physical and mental dispositions. GPB will continually be at the forefront to protect our people and communities from COVID-19, adhering to all directives by the Government to curb the spread of the virus, especially in rural areas where healthcare is less prevalent. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 87
Sustainability Roadmap (Continued) Alignment to the United Nations Sustainable Development Goals (UNSDG)
ENSURE INCLUSIVE AND EQUITABLE QUALITY EDUCATION AND PROMOTE LIFELONG LEARNING OPPORTUNITIES FOR ALL
Education enables upward socio-economic mobility and almost instantly improves the living standards of more impoverished communities. Over the past decade, major progress was made towards increasing access to education and school enrolment rates at all levels, particularly for girls. In 2020, as the COVID-19 pandemic spread across the globe, never before have so many children been out of school at the same time, disrupting learning and upending lives, especially for the most vulnerable and marginalised. The global pandemic has far-reaching consequences that may jeopardise hard-won gains made in improving international education. (Referencing: https://www.un.org/sustainabledevelopment/education/&UNDP.org)
The Group advocates lifelong education and consistently drives employees to embrace knowledge acquisition and new skills development through external and internal training. We have also stepped up our contributions to developing youth learning infrastructure by working with schools and other educational facilities in areas where we operate.
4.1 To support regional and national level initiatives for all girls and boys to have complete, equitable and quality primary and secondary education leading to relevant and effective learning outcomes - a UN worldwide initiative aimed to achieve this GOAL by 2030. 4.2 To ensure that every child has access to quality early childhood development, care and pre-primary education in preparation for primary education. 4.3 To ensure equal access for all women and men to affordable and quality technical, vocational and tertiary education. 4.4 To increase the number of youth and adults who have relevant skills for employment, decent jobs and entrepreneurship. 4.5 To eliminate gender disparities in education and ensure equal access to all education levels and provide vocational training for everyone. 4.6 To ensure that all youth and a higher number of adults achieve literacy and numeracy. 4.7 By 2030, ensure that all learners acquire the knowledge and skills needed to promote sustainable development, including, among others, through education for sustainable development and sustainable lifestyles, human rights, gender equality, promotion of a culture of peace and non-violence, global citizenship and appreciation of cultural diversity and culture’s contribution to sustainable development. 4.a Build and upgrade education facilities that are child, disability and gender sensitive and provide safe, non-violent, inclusive and effective learning environments for all. 4.b Substantially expand the number of scholarships available to internal, regional and national candidates for enrolment in higher education institutions.
ACHIEVE GENDER EQUALITY AND EMPOWER ALL WOMEN AND GIRLS 5.5 Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision making Gender equality is a fundamental human right and a necessary foundation for a peaceful, in political, economic and public life. prosperous, and sustainable world. There has been progress over the last decades with more girls 5.a Undertake reforms to give women equal going to school, fewer girls are forced into early marriage, more women are serving in parliament rights to economic resources, as well as access to ownership and control over land and leadership positions, and laws are being reformed to advance gender equality. The effects of the and property, financial services, inheritance COVID-19 pandemic could reverse the limited progress made on gender equality and women’s rights. and natural resources. The coronavirus outbreak exacerbates existing inequalities for women and girls across every sphere 5.b Enhance the use of enabling technology, - from health and the economy to security and social protection. mainly information and communications technology, to promote the empowerment (Referencing: https://www.un.org/sustainabledevelopment/gender-equality/&UNDP.org) of women. 5.c Adopt and strengthen sound policies and The Group does not tolerate discrimination in any form and advocates gender equality as a basic enforceable legislation to promote gender right. Guided by the Group’s Code of Ethics, we respect the rights of everyone in the workplace, equality and empowerment of all women marketplace and society regardless of age, gender, disability, race or any other reason protected and girls at all levels. by law. We strive to achieve a good balance amongst our employees, where our female employees enjoy similar benefits, opportunities, resources and rewards as their male counterparts. Our Corporate Social Responsibility (CSR) programmes are also designed to include and empower women through education, sports and community related activities. These initiatives are also extended to underprivileged women in our communities. 88 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Sustainability Roadmap (Continued) Alignment to the United Nations Sustainable Development Goals (UNSDG)
ENSURE ACCESS TO WATER AND SANITATION FOR ALL
While substantial progress has been made in increasing access to clean drinking water and sanitation, billions of people, mostly in rural areas, still lack these basic services. The COVID-19 pandemic has demonstrated the critical importance of sanitation, hygiene and adequate access to clean water for preventing and containing diseases. Hand hygiene saves lives. According to the World Health Organisation, handwashing is one of the most effective actions you can take to reduce the spread of pathogens and prevent infections, including the COVID-19 virus. Yet billions of people still lack safe water sanitation, and funding is inadequate. (Referencing: https://www.un.org/sustainabledevelopment/water-and-sanitation/&UNDP.org)
In FY2020, due to COVID-19 related restrictions and stop work orders, our water usage decreased compared to consumption in FY2019. This we believe is a one-off trend. We have put in place preventive measures to ensure the proper and safe discharge of wastewater into the environment and water bodies. As a direct response to this GOAL we aim to gradually reduce water usage through effective water resource management and waste management practices.
6.1 By 2030, achieve universal and equitable access to safe and affordable drinking water for all. 6.3 By 2030, improve water quality by reducing pollution, eliminating dumping and minimising release of hazardous chemicals and materials, halving the rate of untreated wastewater, increasing recycling and safe reuse. 6.4 By 2030, substantially increase water-use efficiency across all sectors and ensure sustainable withdrawals and supply of freshwater to address water scarcity. 6.a By 2030, expand international cooperation and capacity-building support to less developed countries in water and sanitation-related activities and programmes, including water harvesting, desalination, water efficiency, wastewater treatment, recycling and reuse technologies. 6.b Support and strengthen the participation of local communities in improving water and sanitation management.
ENSURE ACCESS TO AFFORDABLE, RELIABLE, SUSTAINABLE AND MODERN ENERGY
The world has been making progress with encouraging signs that energy is becoming more sustainable and widely available. Access to electricity in poorer countries has begun to accelerate, energy efficiency continues to improve, and renewable energy is making impressive gains in the electricity sector. Nevertheless the lack of access to energy may hamper efforts to contain COVID-19 because energy services are key to preventing disease and fighting pandemics where it is crucial from powering healthcare facilities and supplying clean water for essential hygiene, to enabling communications and IT services that connect people while maintaining social distancing. (Referencing https://www.un.org/sustainabledevelopment/energy/&UNDP.org)
7.1 By 2030, ensure access to affordable, reliable and modern energy services. 7.2 By 2030, increase the of renewable energy in the energy mix. 7.3 By 2030, double the rate of improvement in energy efficiency. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 89
Sustainability Roadmap (Continued) Alignment to the United Nations Sustainable Development Goals (UNSDG)
PROMOTE INCLUSIVE AND SUSTAINABLE ECONOMIC GROWTH, EMPLOYMENT AND DECENT WORK FOR ALL
Sustained and inclusive economic growth can drive progress, create decent jobs for all and improve living standards. Unfortunately the COVID-19 pandemic has disrupted billions of lives and endangered the global economy. The International Monetary Fund (IMF) expects a global recession as bad as or worse than in 2009. As job losses escalate, the International Labor Organisation estimates that nearly half of the global workforce is at risk of losing their livelihoods. (Referencing https://www.un.org/sustainabledevelopment/economic-growth/&UNDP.org)
At GPB, our goal is to sustain and increase job opportunities within the Group. We have always given priority to local employment in order to ensure jobs are available to residents in regions where work can be sparse and hard to come by. We understand that gainful employment is a key driver of sustainability, economic growth and livelihoods.
8.1 Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7% gross domestic product growth per annum, especially in the least developed countries. 8.2 Achieve higher levels of economic productivity through diversification, technological upgrading and innovation, especially in high-value added and labour-intensive sectors. 8.3 Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalisation and growth of regional micro, small and medium-sized enterprises, including opening up avenues for financial services. 8.4 Improve progressively, resource efficiency in consumption and production and endeavour to decouple economic growth from environmental degradation, in accordance with the 10-year framework of programmes on sustainable consumption and production. 8.5 By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, with equal pay structures at all levels. 8.6 Substantially reduce the proportion of youth not in employment, education or training. 8.8 Protect labour rights and promote safe and secure working environments for all workers, including migrant workers, in particular women migrants, and those in precarious employment.
BUILD RESILIENT INFRASTRUCTURE, PROMOTE SUSTAINABLE INDUSTRIALISATION AND FOSTER INNOVATION
Inclusive and sustainable industrialisation, together with innovation and infrastructure, can unleash dynamic and competitive economic forces that generate employment and income. They play a key role in introducing and promoting new technologies, facilitating international trade and enabling the efficient use of resources. This includes scaling up investment in scientific research and innovation. (Referencing https://www.un.org/sustainabledevelopment/infrastructure-industrialisation/&UNDP.org)
Transformation is an essential aspect of GPB’s drive towards exemplary efficiency and greater sustainability. We leverage on innovation as the catalyst for such transformation, especially in the area of automation and the use of digital technology throughout our manufacturing processes, sales, marketing and education programmes. The Group is progressively developing innovative ideas into its infrastructure and spearheading sustainable production processes.
9.3 Increase the access of small-scale industrial and other enterprises to financial services, including affordable credit, and support their integration into value chains and market segments. 9.4 By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes. 9.5 Enhance scientific research, upgrade the technological capabilities of industrial sectors by encouraging innovation and substantially increasing research and development using public and private research and development spending. 9.b Support domestic technology development, research and innovation, including by ensuring a conducive policy environment for, inter alia, industrial diversification and value addition to commodities. 9.c Significantly increase access to information and communications technology and strive to provide affordable access to the Internet. 90 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Sustainability Roadmap (Continued) Alignment to the United Nations Sustainable Development Goals (UNSDG)
REDUCE INEQUALITY WITHIN AND AMONG COUNTRIES 10.1 By 2030, progressively achieve and sustain income growth of the bottom 40% of the population at a rate higher than the national Reducing inequalities and ensuring no one is left behind are integral to achieving the current average. Sustainable Development Goals. Despite some positive signs toward reducing relative income 10.2 By 2030, empower and promote the social, inequality, inequality still persists. COVID-19 has deepened existing inequalities, hitting the poorest economic and political inclusion of all, irrespective of age, sex, disability, race, and most vulnerable communities the hardest. At the same time, social, political and economic ethnicity, origin, religion or economic or inequalities have amplified the impacts of the pandemic. On the economic front, the COVID-19 other status. pandemic has significantly increased global unemployment and dramatically slashed worker incomes. 10.3 Ensure equal opportunity and reduce (Referencing https://www.un.org/sustainabledevelopment/inequality/&UNDP.org) inequalities of outcome, eliminating discriminatory laws, policies and practices and promoting appropriate legislation, The Group is spearheading efforts to reduce inequalities in Malaysia by providing opportunities in policies and action. areas that have comparatively lower development and employment prospects than other parts of the country. We are an important component in efforts to enable and empower the Bumiputera community, which is the predominant populace in the East Coast of Malaysia. At the same time, we believe in equal opportunity for all, irrespective of race, religion, gender or age, as is evident in our business partnerships and collaborations.
MAKE CITIES INCLUSIVE, SAFE, RESILIENT AND SUSTAINABLE 11.1 By 2030, ensure access for all to adequate, safe and basic services. 11.6 By 2030, reduce the adverse per capita The world is becoming increasingly urbanised. While cities and metropolitan areas are powerhouses environmental impact of cities, including by of economic growth, they however, also account for about 70% of global carbon emissions and paying attention to waste management. over 60% of resource use. Rapid urbanisation is resulting in a growing number of slum dwellers, 11.a Support positive economic, social and inadequate and overburdened infrastructure and services (such as waste collection and water and environmental links between urban and rural areas by strengthening national and sanitation systems, roads and transport), worsening air pollution and unplanned urban sprawl. regional development planning. (Referencing https://www.un.org/sustainabledevelopment/cities/&UNDP.org)
At GPB, we are fully aware that our industrial activities can have a negative impact on the ability of cities and suburban communities to survive and thrive. GPB is fastidious in managing the quality of life with initiatives, among others, that involve the proper implementation of waste management, infrastructure and is mitigating pollution at every level Group-wide. By doing so, we hope to close the gap within and between urban and rural living. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 91
Sustainability Roadmap (Continued) Alignment to the United Nations Sustainable Development Goals (UNSDG)
ENSURE SUSTAINABLE CONSUMPTION AND PRODUCTION PATTERNS
Worldwide consumption and production is a driving force of the global economy and rests on the use of the natural environment and resources in a way that continues to have destructive impacts on the planet. Economic and social progress over the last century has been accompanied by environmental degradation that is endangering the very systems on which our future development, indeed, our very survival depends on. (Referencing https://www.un.org/sustainabledevelopment/sustainable-consumption-production/&UNDP.org)
GPB always seeks to strike a balance between economic growth, environmental protection and social empowerment. In this specific regard, we set out to maximise our consumption of natural resources for production while minimising waste. We believe in the value of a circular economy and practise the 3R principles of reduce, reuse and recycle. The COVID-19 pandemic, while damaging, offers an opportunity to build recovery plans that will reverse current trends and change our consumption and production patterns towards a more sustainable future.
12.1 Implement a 10-year framework of programmes on sustainable consumption and production. 12.2 By 2030, achieve sustainable management and efficient use of natural resources. 12.4 Administer environmentally sound management of chemicals and all wastes throughout their life cycle, in accordance with agreed international frameworks, and to significantly reduce their release to air, water and soil in order to minimise their adverse impacts on human health and the environment. 12.5 By 2030, substantially reduce waste generation through prevention, reduction, recycling and reuse. 12.6 Adopt sustainable practices and integrate sustainability information into reporting cycles. 12.7 Promote public procurement practices that are sustainable, and in accordance with national policies and priorities. 12.8 By 2030, ensure that people everywhere have the relevant information and awareness for sustainable development and lifestyles that is in harmony with nature.
TAKE URGENT ACTION TO COMBAT CLIMATE CHANGE AND ITS IMPACTS
Climate change is affecting every country on every continent. It is disrupting national economies and affecting lives. Weather patterns are changing, sea levels are rising, and weather events are becoming more extreme. Although greenhouse gas emissions are projected to drop about 6% in 2020 due to travel bans and economic slowdowns resulting from the COVID-19 pandemic, this improvement is only temporary. Climate change is not on pause. Once the global economy begins to recover from the pandemic, emissions are expected to return to higher levels. As countries move toward rebuilding their economies after COVID-19, recovery plans can shape the 21st century economy in ways that are clean, green, healthy, safe and more resilient.
The current crisis is an opportunity for a profound, systemic shift to a more sustainable economy that works for both people and the planet. (Referencing https://www.un.org/sustainabledevelopment/climate-change/&UNDP.org)
The Group is committed to plans and initiatives aimed at lowering our carbon footprint in order to help arrest climate change. In our case, we continuously monitor all our activities with the view to control pollution from industrial or individual activities.
13.2 Integrate climate change measures into policies and planning. 13.3 Improve education and awareness on climate change mitigation, adaptation, impact reduction and early warning signs. 13.b Promote mechanisms for raising capacity for effective climate change related planning and management by focussing on women, youth and local and marginalised communities. 92 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Sustainability Roadmap (Continued) Alignment to the United Nations Sustainable Development Goals (UNSDG)
SUSTAINABLY MANAGE FORESTS, COMBAT DESERTIFICATION, HALT AND REVERSE LAND DEGRADATION, HALT BIODIVERSITY LOSS
Nature is critical to our survival. It provides us with our oxygen, regulates our weather patterns, pollinates our crops, produces our food, feed and fibre. But it is under increasing stress. Forests are vitally important for sustaining life on Earth, and play a major role in the fight against climate change. Thus investing in land restoration is critical for improving livelihoods, reducing vulnerabilities, and reducing risks for the economy. (Referencing https://www.un.org/sustainabledevelopment/biodiversity/&UNDP.org)
With timber being our primary business, GPB recognises our role and responsibility in preserving and protecting the natural environment and ecosystems. We practise selective logging and engage in forest rehabilitation and rejuvenation. We have also put in place measures to protect the natural habitats of wildlife, in particular, endangered species identified by the International Union for Conservation of Nature (IUCN).
15.1 Ensure the conservation, restoration and sustainable use of terrestrial and inland freshwater ecosystems and their services, in particular forests, wetlands, mountains and drylands, by being in line with obligations under international agreements. 15.2 Promote sustainable management of all types of forests, halt deforestation, restore degraded forests and substantially increase afforestation and reforestation. 15.3 By 2030, combat desertification, restore degraded land and soil, including land affected by desertification, to achieve a land degradation-neutral world. 15.5 Take urgent and significant action to reduce the degradation of natural habitats, halt the loss of biodiversity and protect to prevent the extinction of threatened species. 15.6 Promote fair and equitable sharing of the benefits arising from the utilisation of genetic resources and promote appropriate access to such resources. 15.9 Integrate ecosystem and biodiversity values into national and local planning and development processes, and implement poverty reduction strategies. 15.a Mobilise and significantly increase financial resources from all sources to conserve and sustainably use biodiversity and ecosystems.
PROMOTE JUST, PEACEFUL AND INCLUSIVE SOCIETIES
Human rights are key in shaping the pandemic response. By respecting human rights in this time of crisis, we will build more effective and inclusive solutions for the emergency of today and the recovery for tomorrow. (Referencing https://www.un.org/sustainabledevelopment/peace-justice/&UNDP.org)
The Group understands the importance of operating a business on a foundation of integrity, transparency and accountability. We actively remind, and discourage, corruption and other unethical business behaviour through regular seminars and training programmes. Beyond this, we also champion human rights, equal opportunity and diversity.
16.3 Promote the rule of law at the national and international levels and ensure equal access to justice for all. 16.5 Substantially reduce corruption and bribery in all forms. 16.6 Develop effective, accountable and transparent institutions at all levels. 16.7 Ensure responsive, inclusive, participatory and representative decision-making at all levels. 16.8 Broaden and strengthen the participation of developing countries in the institutions of global governance. 16.b Promote and enforce non-discriminatory laws and policies for sustainable development. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 93
EMBRACING THE CORPORATE GOVERNANCE AND ACCOUNTABILITY CULTURE (GRI 102-17, 102-30, 205-3, 206-1, 207) 95 IMPLEMENTATION OF THE INTEGRITY GOVERNANCE UNIT (IGU) 96 ANTI-CORRUPTION (GRI 102-17, 205-3) 96 ANTI-COMPETITIVE BEHAVIOUR (GRI 206-1) 96 TAX (GRI 207) 97 MANAGING RISKS (GRI 102-30) 98 RISK ISSUES AND STRATEGIES 100 STRESS TEST 94 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Embracing the Corporate Governance and Accountability Culture (GRI 102-17, 102-30, 205-3, 206-1, 207)
Good corporate governance (CG) is a prerequisite To uphold effective corporate governance practices in all business dealings, we to reaping investor confidence and unleashing have established the following policies and frameworks to guide both internal shareholder value. Ensuring an efficient link and external stakeholders: between finance and business operations and building a sustainable business is particularly important in the aftermath of the economic and Dividend Policy financial crisis caused by the onset of the COVID-19 1 pandemic. The world is still reeling from the dire impact and consequences of a pandemic economy, Code of Conduct And Whistleblowing Policy and suffice to say, we will continue reviewing and addressing matters within the CG dimensions to 2 impact GPB’s stakeholder value creation positively. There has also been an increasing awareness Corporate Social Responsibility (CSR) Policy amongst investors and other stakeholders in scrutinising a company’s positive or negative 3 impact, in EESG requirements. Dasar Perlindungan Hutan KPKKT (Forest Protection Policy)
Good corporate governance synchronises risk (KPKKT) management and compliance to ensure the 4 Company has proper control mechanisms, meets Polisi Kesihatan dan Keselamatan Pekerja (Occupational Health its objectives and operates efficiently in people, and Safety Policy) (KPKKT, Pesama, Pesaka, GP Glass) processes, technology and information. 5
The Group has an established framework to Please refer to pages 150 to 153 for more information on the Group’s Policies. exercise proper oversight over responsibilities and tasks at all levels and translates the framework’s elements and policies into working practices within the Group. We will continue to strengthen the Group’s governance processes to ensure that the business as a whole aligns with best practices and that our approach to disclosure remains understandable and transparent. All employees undergo internal training on the policies and other key topics such as guidance on money laundering, trade compliance, and sanctions to ensure they perform their roles and duties accordingly. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 95
Embracing the Corporate Governance and Accountability Culture (Continued) (GRI 102-17, 102-30, 205-3, 206-1, 207)
The Board is mindful of its accountability to shareholders and IMPLEMENTATION OF THE INTEGRITY GOVERNANCE UNIT various stakeholders of GPB and provides effective stewardship (IGU) to promote ethical standards throughout the Group and amongst its multi-stakeholders. In FY2020, the Board reviewed In January 2020, the Board approved the establishment of the several CG areas which included: Integrity Governance Unit with the appointment of an Integrity & Governance Officer (IGO) to drive execution of the Group’s • Risk mitigation. integrity, governance and anti-corruption initiatives.
• Ensuring transparency, especially everything of interest to The IGU that was formally established on 1 June 2020, is led investors to increase the level of confidence by investors by the IGO who is responsible to outline the overall structure and banks in the company to improve capital flow. of the Company’s integrity and anti-corruption initiatives to be implemented in the coming years and has been tasked with • Strengthening the company’s internal policies, control presenting reports to the Audit Committee Member semi- mechanisms and dealings with its internal and external annually as per the recommendation of the MACC. Thus far, stakeholders. the IGU has presented to the Board suggestions to improve our Employee Code of Conduct, Code of Business Ethics (COBE), • Aiming at establishing faster decision-making processes Whistleblowing Policy, and No Gift Policy based on the policies by establishing a clear delineation of roles between established by our parent company, Terengganu Inc. We will be Board members, management and employees. adopting a new Anti-Bribery & Corruption Policy which will be approved by the Board for implementation Groupwide before • Improving reporting on performance to empower the end of FY2021. These policies are guidelines to inculcate a managers and persons-in-charge to make more informed greater culture of integrity and ethical principles amongst our and fact-based decisions, leading ultimately to improving employees and stakeholders. It is essential to tackle the roots sales margins and reducing costs. of corruption at all levels to safeguard the Group’s reputation and enforce better accountability and responsibility with all • Establishing rules to reduce potential fraud and internal and external stakeholders. malpractices amongst employees; and avoiding conflicts of interest, namely through minority shareholders To be fully certified, the IGO will be undergoing the Certified being given their share of voice by being represented by Integrity Officer Programme (CeIO) training conducted by independent directors. the Malaysian Anti-Corruption Academy (MACA) scheduled in July in Terengganu. These initiatives are in line with the Prime Minister’s directive and the expected enforcement of Section 17A, Malaysian Anti-Corruption Commission (MACC) (Amendment) Act 2018 for adequate procedures.
Please refer to pages 154 to 176 for GPB’s Corporate Governance Overview Statement for more information. 96 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Embracing the Corporate Governance and Accountability Culture (Continued) (GRI 102-17, 102-30, 205-3, 206-1, 207)
ANTI-CORRUPTION (GRI 102-17, 205-3)
GPB is a firm believer and advocate of anti-corruption in business Employees are informed that the company will practices. We have a Code of Conduct that outlines our ethics work on developing (or updating) company and other governance-related issues to ensure management and policies and procedures. employees at every level maintain a high level of integrity in all 1 dealings within and outside the company. We did not record any Anti-corruption and related policies are emailed and incidents of corrupt activities within the Group or its subsidiary memos will be given to all human resource units of companies during the year in review. 2 subsidiaries to be disseminated to employees. In addition, our Code of Conduct also features mechanisms for Meetings are conducted with all employees to reporting any breaches in ethical conduct from whistleblowing introduce any new handbooks or manuals and to and other policies. These are communicated to our stakeholders: review their intended purpose. shareholders, customers, employees and vendors in the following 3 manner:
ANTI-COMPETITIVE BEHAVIOUR TAX (GRI 206-1) (GRI 207)
The Group is not a monopoly in any of our business activities and, The Group honours all of its obligations regarding taxation as such, is not subject to any legal action, or otherwise, for anti- according to the respective laws in Malaysia; such as the Income competitive behaviour or anti-trust practices. Tax Act 1967.
25 September 2020 STATE GOVERNMENT’S VISIT TO GOLDEN PHAROS GLASS SDN BHD Representatives from Terengganu State Government visited GP Glass at Teluk Panglima Garang, Klang, Selangor to view the company’s glass processing. The products of GP Glass obtained the Brand Leadership Award at the prestigious BrandLaureate BestBrands Awards in 2019. The visit was led by YB Haji Muhd Nurkhuzaini Abdul Rahman, the Ex-Officio of State Government who is also the Chairman of GP Glass. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 97
Embracing the Corporate Governance and Accountability Culture (Continued) (GRI 102-17, 102-30, 205-3, 206-1, 207)
MANAGING RISKS During the year in review, our risk assessment (GRI 102-30) framework identified several potential risks, with two deemed to be ‘high-risk nature’: The goal of Risk Management is to identify risks and ensure that they are addressed. This GRI disclosure addresses the effectiveness of our
risk management processes specifically. It allows us to understand the Disruption in logs supply nature of the Group’s economic, environmental and social impacts. The goal of Sustainability Risk Management (SRM) is to align profit with 1 the Group’s environmental policies. 2Business sustainability
For each of these risks, we have outlined their root causes or potential impact on our business before developing the respective strategies and action plans, which are detailed below:
Risk Root Cause Likelihood1 Impact2 Rating3 Almost certain Likely Possible Unlikely Rare Insignificant Minor Moderate Major Catastrophic Low Medium High Extreme
Disruption in 1. Reliance on sole supplier for supply of logs. Logs Supply 2. Reduction in Annual Allowable Cut by JPNT.
3. Insufficient or irregular supply of logs due to weather, topographical factors or technical delay in license approval.
4. Logistics issue e.g. vehicle breakdown, accidents, etc.
5. Breakdown in logging equipment.
6. Work stoppage by authorities due to non-compliance of certain criteria.
7. Poor cutting techniques in production stage by workers.
1 Likelihood in descending order: Almost certain, Likely, Possible, Unlikely, Rare 2 Impact in ascending order: Insignificant, Minor, Moderate, Major, Catastrophic 3 Rating in ascending order: Low, Medium, High, Extreme 98 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Embracing the Corporate Governance and Accountability Culture (Continued) (GRI 102-17, 102-30, 205-3, 206-1, 207)
MANAGING RISKS (CONTINUED)
Risk Root Cause Likelihood1 Impact2 Rating3 Almost certain Likely Possible Unlikely Rare Insignificant Minor Moderate Major Catastrophic Low Medium High Extreme
Business 1. Dependency on revenue generated from Sustainability logging operations.
2. External interferences.
3. Unsuccessful forest plantation projects.
4. Change in Government policies i.e. reduction of quota.
5. Perceived as a sunset industry.
6. Operational/Financial performance of the mill affecting the timber division.
RISK ISSUES AND STRATEGIES
Risk Issues Risk Issues
INSUFFICIENT LOGS SUPPLY QUOTA REDUCTION
Ways to Overcome Ways to Overcome
• Carry out Remodelling of Sawmill Operation (ROSO) Carry out Remodelling of Sawmill Operation (ROSO) - Restructure two sawmills into one. - Restructure two sawmills into one. - To eliminate duplicate sawmill operations. - To eliminate duplicate sawmill operations. - Streamline product focus for Pesaka and Pesama. - Streamline product focus for Pesaka and Pesama.
• Implement forest plantation Implement forest plantation - To carry out commercial forest plantation. - To carry out commercial forest plantation. - To ensure sustainable logs supply in the long run. - To ensure sustainable logs supply in the long run.
• Purchase sawntimber from external sources for direct Maintain good rapport with JPNT. export (Trading). GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 99
Embracing the Corporate Governance and Accountability Culture (GRI 102-17, 102-30, 205-3, 206-1, 207)
RISK ISSUES AND STRATEGIES (CONTINUED)
Risk Issues Risk Issues
PRODUCTION CAPACITY REGULATIONS BY AUTHORITIES
Ways to Overcome Ways to Overcome
• Hire more sawyers. • Environmental conditions of the Environmental • Source external sawyers. Impact Assessment (EIA) for forest plantation project application. • Comply with regulations from JPNT, JAS and Perhilitan. Risk Issues • Close monitoring by internal Environmental Officers.
INCOMPLETE PRODUCTION LINE Risk Issues Ways to Overcome FUNDING CONSTRAINTS • Acquire dryer for veneer production. • Acquire machinery to restart plywood line. Ways to Overcome
• To seek waiver of Pampasan Kayu Balak for the change Risk Issues of status from ‘forest reserve’ to ‘forest plantation’. • Apply soft loan from Forest Plantation Development IMPACT OF PANDEMIC COVID-19 Sdn Bhd (FPDSB).
Ways to Overcome Risk Issues
• Implement cost cutting measures. MARKETING STRATEGIES • Defer CAPEX.
Ways to Overcome
Risk Issues • To change focus from traditional to digital marketing. • To maximise the trademark of Double Panda (PPSB). DELAY IN FOREST PLANTATION OPERATIONS.
Ways to Overcome Risk Issues
• Regular follow-up. BUSINESS SUSTAINABILITY • ‘Mesyuarat Pelarasan’ between KPKKT & JPNT. • Improve liaison and maintain good rapport with JPNT. Ways to Overcome
• Carry out Remodelling of Sawmill Operation (ROSO) - Restructure two sawmills into one. - To eliminate duplicate sawmill operations. - Streamline product focus for Pesaka and Pesama. • Expand into downstream operations. • Pursue new businesses from existing resources. 100 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Embracing the Corporate Governance and Accountability Culture (Continued) (GRI 102-17, 102-30, 205-3, 206-1, 207)
STRESS TEST
Industry: Timber
Worst Case Scenario: The business implications of reductions in Annual Allowable Cut (AAC) quotas
P&L Impact Capital Impact Mitigating Measures
Positive Impact
Negative Impact • Reduction in revenue, • Carry forward 5 logging PBT & PAT. licences from 2020 to 2021. • Implement log-fishing harvesting technique. • Experiment with Block System harvesting method. • Transform method of monitoring of logging contractors.
Industry: Glass Manufacturing
Worst Case Scenario: Construction industry slowdown continues/has not recovered
P&L Impact Capital Impact Mitigating Measures
Negative Impact • Reduction in revenue, • Secure government PBT & PAT. projects. • Penetrate new markets/ segments. • Online marketing platform. • To commission a study on the topic of ‘To Retain or Divest’. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 101
ECONOMIC PERFORMANCE: CREATING AND SUSTAINING VALUE (GRI 201, 202, 203, 204, 205, 206, 207)
103 MARKET PRESENCE (GRI 202-1, 202-2)
104 PROCUREMENT PRACTICES (GRI 102-9, 204-1)
GP Glass supplied architectural glass products for the Crystal Mosque (Masjid Kristal) - touted as one of the most unique mosques in the country. Located in the Islamic Heritage Park, Wan Man Island, Terengganu, it is one of the most popular tourist attractions in Malaysia. 102 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
ECONOMIC PERFORMANCE: Creating and Sustaining Value (GRI 201, 202, 203, 204, 205, 206, 207)
COVID-19 and its consequences had a significant impact on the Economic aspect of our sustainability development. Since its outbreak in early 2020, the pandemic has delayed business plans, disrupted operations and splinter financial performances; and in the process, threatened the economic ecosystem built around companies, including GPB.
GPB primarily operates to generate and sustain income for shareholders and investors. The Group is also responsible for ensuring job and financial security for its 427 employees, contributions to job creation in the local market and creating business opportunities for vendors, suppliers and service providers. In addition, we are proudly a Malaysian company that contributes to the nation’s economic growth with taxation and other statutory payments.
We sustain this ecosystem by expanding our market presence with quality products and reliable services, while practising good business ethics and responsible governance which is critical to maintaining the Group’s reputation as a trusted company with brands that generate confidence and customer satisfaction. We understand the vital economic role we play in creating and sustaining value for all our stakeholders, and as an integral component of the local economy that is in many ways responsible for the welfare of the communities where we operate.
The Group’s performance was hampered by pandemic restrictions, which temporarily halted logging and manufacturing activities. Partial operations resumed when restrictions were lifted. We shut down all activities in accordance with the Government’s first enforcement of the Movement Control Order (MCO) on 18 March 2020, before we were allowed to resume operations at 50% capacity with the implementation of the Conditional MCO (CMCO) on 4 May 2020. Operations only returned to full capacity with the Recovery MCO (RMCO) on 10 June 2020.
FY2020 was a difficult year as operations were disrupted due to the pandemic. We have identified and analysed risk associated with our logging and sawmilling operations with mitigation measures to ensure business continuity and recovery for the Group. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 103
ECONOMIC PERFORMANCE: Creating and Sustaining Value (Continued) (GRI 201, 202, 203, 204, 205, 206, 207)
This situation resulted in reduced production and ultimately depressed sales for both our timber and glass businesses. Revenue dropped from RM57.5 million in FY2019 to RM47.2 million in FY2020 during a year when we were projected to recover from losses incurred in FY2019. Nevertheless, we reduced our losses significantly in FY2020, recording a lower Loss After Tax (LAT) of RM6.7 million compared with RM9.2 million in the previous year.
It should be noted that the Group was on the path towards recovery in FY2017 and FY2018 following the implementation of our three-year Business Recovery Plan (BRP) which went into effect in 2017. The goal for FY2020 and beyond was to maintain this recovery momentum to steadily improve financial performances in the years to come.
In the wake of the COVID-19 crisis, the Group has outlined a new five-year Strategic Plan for 2021 to 2025, including charting the way forward in a post-pandemic landscape. The Strategic Plan is a comprehensive blueprint designed to address current challenges, redress prevailing weaknesses, build on existing strengths and capitalise on new opportunities. Regardless of our financial position, GPB understands its responsibility towards all our stakeholders’ financial expectations and economic aspirations.
Further details on the Financial Results and our performance is presented in the MD&A section on pages 16 to 29 of this Annual Report 2020.
MARKET PRESENCE Although we do not have a specific policy on local hiring, we (GRI 202-1, 202-2) nevertheless lean towards providing job opportunities for talent who reside within Terengganu State. The majority of our As a State-owned GLC, GPB casts a considerable footprint in the employees come from nearby communities who reside in Kuala market and is considered an exemplary employer that not only Terengganu and other districts in the State. Similarly, most creates new job opportunities but is reputed to give some of the employees of our Selangor-based subsidiary, GP Glass, source best remuneration packages in the East Coast of Terengganu talent from the State and neighbouring Kuala Lumpur. where our headquarters and the bulk of business operations are located. In FY2020, eight out of our 11 senior management personnel at the Group level and in subsidiary companies are locals from We offer significantly higher salaries of at least 1.5 times higher their respective States, as shown below (all subsidiaries and for entry-level employees compared with Malaysia’s minimum headquarters are in Terengganu except for GP Glass, which is monthly wage of RM1,200 for FY2020. located in Selangor):
GPB’S ENTRY-LEVEL WAGE VERSUS ORIGIN OF SENIOR MANAGEMENT MINIMUM WAGE 2020 (RM) PERSONNEL – GROUP AND SUBSIDIARY COMPANIES Terengganu Selangor Kelantan
MALE FEMALE GPB 3 - - GPB 1,754 1,750 KPKKT 1 1 -
Minimum Wage 1,200 1,200 Pesaka 1 - -
Ratio 1.46:1.00 1.46:1.00 Pesama 2 - -
PPSB - - 1 All contract workers are paid as per the minimum wage requirement. GP Glass - 2 - 104 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
ECONOMIC PERFORMANCE: Creating and Sustaining Value (Continued) (GRI 201, 202, 203, 204, 205, 206, 207)
As a leading company in Terengganu, GPB’s business activities The onset of COVID-19 and the subsequent restrictions to invariably pass on economic prosperity and other benefits to economic activity and the restrictions on movement prevented local businesses, communities, and the State Government. the Group from developing any other facilities that benefit the community. Overall, our business operations in forest management, logging and related timber industries have augmented the development PROCUREMENT PRACTICES in parts of Terengganu, especially in remote areas where the (GRI 102-9, 204-1) built-up infrastructure is sparse and sporadic. GPB generates significant business to an extensive chain of The Group’s contribution to infrastructure and ancillary services, vendors and service providers. As of 31 December 2020, all 37 which in some cases are to facilitate our operations, have served of Pesaka’s vendors and service providers are local businesses. to benefit various communities. This initiative has also spurred On the other hand, Pesama engaged the services of 51 local economic, educational, leisure and recreational activities. suppliers and one foreign supplier. In Selangor, GP Glass sources its consumables, raw materials and other services from 57 local companies; which most are long-term business associates.
10 September 2020 GROUP’S VISIT TO PERAK In collaboration with the Perak State Forestry Department, CEO Dato’ Nadza Abdul led a contingent from GPB to visit a timber concession area to learn the method of logging in blocks. While the process is slower, it contributes toward better preservation of the forest. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 105
Sungai Jerangau flows through Jerangau Forest Reserve in KPKKT’s Dungun Timber Complex, managed by GP Forest Plantation.
ENVIRONMENT: ENSURING BALANCE WITH NATURE (GRI 301, 302, 303, 304, 305, 306, 307, 308) 108 ENVIRONMENTAL RESPONSIBILITY 109 MATERIALS (GRI 301) 110 ENERGY (GRI 302) 111 WATER AND EFFLUENTS (GRI 303-5) 113 BIODIVERSITY (GRI 304-1, 304-2, 304-3, 304-4) 114 FOREST MANAGEMENT 117 WILDLIFE PROTECTION 118 PROTECTED WILDLIFE 119 EMISSIONS (GRI 305) 119 EFFLUENTS AND WASTE (GRI 306-2, 306-3, 306-5) 120 NON-HAZARDOUS SOLID WASTE 2020 121 ENVIRONMENTAL COMPLIANCE (GRI 307-1) 121 SUPPLIER ENVIRONMENTAL ASSESSMENT (GRI 308) 106 106 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
ENVIRONMENT: Ensuring Balance with Nature (GRI 301, 302, 303, 304, 305, 306, 307, 308)
In 2020 the COVID-19 pandemic spread with alarming speed, infecting millions and bringing economic activity to a near- standstill as countries imposed tight restrictions on movement to halt the spread of the virus. As the health and human toll grows, the economic damage is already evident and represents the largest economic shock the world has experienced in decades.
(World Bank: The June 2020 Global Economic Prospects describes both the immediate and near-term outlook for the impact of the pandemic and the long-term damage it has dealt to prospects for growth.)
Under these conditions, environmental sustainability development must content with both in-house and stakeholder disruptions, from fragmented supply chains, greater use of heavy machinery, high carbon emissions, and the lack of viable economic alternatives to decarbonise unilaterally has made Bukit Besar in Kuala Terengganu town centre is a popular hiking trail for nature enthusiasts. CEO Dato’ Nadza Abdul and officers from GPB hiked up the hill to these environmental GRIs (300 series) all the more the the spot where GPB had sponsored a signboard in 2018 at Bukit Botok at important as we now live in a new post pandemic the peak of Bukit Besar. norm.
GPB has taken note of the looming warnings and has put resources in place and drawn up independent initiatives to strike a balance between our business operations, particularly logging activities, and sustainable efforts for the regeneration of forests, natural habitats and wildlife. The goal is to reduce the depletion of natural resources while growing to meet economic, environmental and social demands. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 107
Chemerong Waterfalls, one of the highest waterfalls in Malaysia, is accessible to the public to enjoy the fresh and cool water set amidst the sounds of nature. 108 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
ENVIRONMENT: Ensuring Balance with Nature (Continued) (GRI 301, 302, 303, 304, 305, 306, 307, 308)
ENVIRONMENTAL RESPONSIBILITY
While all our operational and manufacturing sites have regulations in place to safeguard the environment, we are nevertheless committed towards managing the environmental footprint of our headquarters and site offices.
Green Practices
Between FY2015 to FY2018 we distributed our Annual Reports in a CD-ROM package. A fixed number of hard copies were printed in accordance with statutory requirements and requests from shareholders. We now send e-notifications for AGMs, Extraordinary General Meetings and the digital version of the Annual Report 2020 will be available on the Company’s website. With the onset of digitalisation, we now encourage shareholders to log on to the company’s website (http://www.goldenpharos.com) to access relevant documents, announcements and corporate news. In addition, the printed copies for the FY2018 and FY2019 Annual Reports were printed on FSC® certified paper.
It must also be noted that the Board of Directors are given iPads to reduce paper usage, and to avoid the printing and circulation of documents to and by the Board. Our senior Management Team, HODs and employees use digital touchscreen devices, laptops, smartphones, remote conference facilities and smart engagement techniques for all meetings.
We also practise the following initiatives as part of our conservation efforts:
Utilise alternative means of data and Encourage recycling of paper, plastic and glass information distribution with the Group-wide by sorting materials before discarding them. use of email and thumb drives.
Encourage ‘bring your own’ containers for Mandate the culture of turning-off everything packing of purchased food and drinks to from lights to appliances and computers minimise general waste. during break times and non-working hours.
Conduct video and voice conferencing for meeting to negate the need to travel. This has significantly reduced our corporate carbon footprint.
GPB’s 2019 and 2020 Annual Reports were distributed digitally to shareholders and nominal hard copies were printed on FSC® Certified paper. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 109
ENVIRONMENT: Ensuring Balance with Nature (Continued) (GRI 301, 302, 303, 304, 305, 306, 307, 308)
MATERIALS (GRI 301)
The Group’s production of sawntimber and woodchips are supplied by the logs we harvest while our glass products are made from sand and limestone. Apart from these base materials, we also source for carton boxes and plastic film for packaging. In this respect, we look at resource-saving production processes in order to reach our sustainability goals.
Raw material management is key, and we have put in place programmes to improve water usage and energy efficiency, while lowering pollutant emissions and amounts of waste. These are some of our initiatives:
Recycling production materials internally from both logging and sawmilling operations, and glass processing which does not require disturbing the natural environment or causing negative environmental 1 impacts.
Encourage Environmentally Preferable Purchasing (EPP) or Green Purchasing from responsible suppliers for sourcing raw material and production equipment. This includes decisions made in the workplace 2 at head office and subsidiaries for office supplies, cleaning agents, maintenance works and all electronic appliances and electrical equipment.
Advocating and campaigning for nature conservation, recycling and healthy lifestyles at external events such as the Golden MTB Ride and 3 hiking activities at the Chemerong-Berembun-Langsir reserve.
As per the GRI guidelines, we will compile statistics on the weight or volume of raw materials used in production and packaging (GRI 301-1), the amount of recycled materials used (GRI 301-2) and the proportion of reclaimed products and their respective packaging (GRI 301-3) in the next Sustainability Report.
This exercise is set to enhance material optimisation at all levels of production and related activities.
Haji Burhanuddin Hilmi Mohamed@Harun (2nd from left), being briefed by the management during his first visit to Pesama after his appointment as President/ Executive Director of Terengganu Inc. 110 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
ENVIRONMENT: Ensuring Balance with Nature (Continued) (GRI 301, 302, 303, 304, 305, 306, 307, 308)
ENERGY (GRI 302)
Energy conservation is a priority at GPB, both as a cost-saving measure as well as a contributory ENERGY CONSUMPTION factor towards reducing the use of fossil fuels, RM1,913,604 coal and other-pollutant causing materials used FY2019: RM2,600,482 to generate electricity. Energy Management FY2018: RM2,663,930 therefore was included as one of the 10 Most FY2017: RM2,793,087 Material Mattets with action plans already in place to reduce external power supply through Electricity usage at our headquarters and our subsidiary companies are the harnessing of solar power and biomass as presented in the charts below. They represent the baseline to monitor the a fuel alternative. Details of these initiatives are progress of our energy conservation and its savings. featured in the section on KPIs, Action Plans and Reporting Regime on pages 74 to 83. ELECTRICITY CONSUMPTION 2017 - 2020 TOTAL ANNUAL COST (RM) Beyond our commitment to conserve energy, we are also exploring ways to lower dependency RM18,246 RM26,661 RM31,869 on environmentally-unsound sources of fuels. RM23,199 We have also put in place a mini-hydroelectric plant to generate clean energy while exploring Head quarters KPKKT its potential as a new business opportunity.
Our extensive forest concessionary areas house RM21,299 RM25,436 RM30,699 RM34,472 numerous rivers and tributaries ideal for the construction of environmentally friendly mini- hydros as a substitute to our dependance on RM25,505 conventional dams. RM377,294 RM454,815 RM168,202
In the reporting year, our electricity bill dropped RM207,577 Pesaka to RM 1,913,604, which is 26.41% lower than it Pesama was in FY2019. In FY2019, the total electricity bill RM505,215 was RM2,600,482, representing a 2.4% reduction RM493,499 RM221,627 from RM2,663,930 in FY2018. This is the third consecutive year our electricity cost has gone RM554 down. RM1,365,577 RM30,967 RM2,114,448 We intend on calculating our energy intensity (GRI 302-3) and the reduction in energy consumption RM100,321 GP Glass PPSB (GRI 302-4) in the next Sustainability Report. At RM1,759,211 this stage, we will defer reporting on GRI 302-2 RM68,571 (energy consumption outside the organisation) RM1,865,839 and 302-5 (reductions in energy requirements of products and services) until such time when we are in a position to fulfil the reporting 2020 2019 2018 2017 requirements. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 111
ENVIRONMENT: Ensuring Balance with Nature (Continued) (GRI 301, 302, 303, 304, 305, 306, 307, 308)
WATER AND EFFLUENTS (GRI 303-5)
We are currently reviewing the reporting requirements for interactions with water as a shared resource (GRI 303-1), management of water-discharge related impacts (GRI303-2), water withdrawal (GRI303-3) and water discharge (GRI303-4). Where relevant, we hope to begin tracking our performance and compiling results for the next Sustainability Report.
WATER CONSUMPTION 2017 - 2020 TOTAL ANNUAL COST (RM)
RM2,167 RM1,865 RM1,097 RM14,601 RM1,074 RM1,991
Head KPKKT Pesaka quarters RM32,858
RM810 RM1,900 RM22,366 RM1,021 RM2,050
RM58,637 RM19,005 RM932 RM38,768 RM91,600 RM3,299
RM33,848 Pesama GP Glass PPSB RM107,845 RM5,423 RM2,442 RM42,343 RM102,172
2020 2019 2018 2017
WATER USAGE
RM105,833 2020 recorded RM105,833 as the cost of water against FY2019: RM188,409 RM188,409 in FY2019. It was RM166,669 in 2018 and RM129,203 FY2018: RM166,669 in 2017. This is a 43.83% decrease in consumption in 2020 from FY2017: RM129,203 that in FY2019. 112 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
ENVIRONMENT: Ensuring Balance with Nature (Continued) (GRI 301, 302, 303, 304, 305, 306, 307, 308)
Wastewater Treatment Plant, GP Glass. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 113
ENVIRONMENT: Ensuring Balance with Nature (Continued) (GRI 301, 302, 303, 304, 305, 306, 307, 308)
BIODIVERSITY (GRI 304-1, 304-2, 304-3, 304-4)
Having evolved over 130 million years, Malaysia’s forests are among the oldest in the world and provide a repository for biodiversity in the form of rich flora and fauna, as well as a habitat for wildlife to flourish.
The protection of this natural resource is an imperative goal as we are a forest management concessionaire involved in harvesting logs for our downstream timber activities.
Our approach to forest resource management, biodiversity conservation, climate amelioration and environmental protection is outlined in a 30-year Malaysia’s Forests, Forest Management Plan (FMP) 2008-2037, which was revisited and updated in 2015 to accommodate changes in the future. over 130 million years old
In essence, the FMP is a living blueprint to guide our policies and strategies to sustainably manage and protect the invaluable biodiversity of wildlife, flora and fauna around us.
10 Ways to Protect & Conserve Biodiversity
1 2 1. Government Legislation. 2. Nature Preserves. 3. Reducing Invasive Species. 4. Habitat Restoration. 3 6 5. Captive Breeding & Seed Banks. 4 5 6. Research. 7. Reduce Climate Change. 8. Purchase Sustainable Products. 7 10 9. Sustainable Living 8 9 10. Education 114 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
ENVIRONMENT: Ensuring Balance with Nature (Continued) (GRI 301, 302, 303, 304, 305, 306, 307, 308)
FOREST MANAGEMENT PERMANENT RESERVED FORESTS (PRF) AT DUNGUN TIMBER COMPLEX (DTC)
A subsidiary of the Group, KPKKT, manages 108,900 ha of tropical forest at the Dungun Timber Complex (DTC) in Jerangau Dungun, Terengganu, Malaysia and 20,243 9,710 ha ha at the Cherul Forest Concession (CFC) in Kemaman, Terengganu, Malaysia.
There are six Permanent Reserved Forests Pasir Raja Barat (PRF) at DTC while the CFC forms part of 6,463 ha Besul the Cherul Permanent Reserved Forest. Tambahan 1,157 ha
N Pasir Raja Besul Selatan 6,190 ha 31,512 ha
Besut Jengai 51,640 ha Setiu Kuala Terengganu
Hulu Marang Terengganu
Dungun KPKKT practises Sustainable Forest Management (SFM), which is guided by a Selective Management System (SMS) that is inline with the principles and requirements of the FSC® and Malaysian Criteria and Indicators (MC&I) for Forest Management Certification Kemaman (Natural Forest).
In 21 April 2008 we were awarded the FSC® Certification for well-managed forests under the purview of the Scientific Certification Systems (SCS). SCS conducts third-party auditing and certification of forest management operations throughout the world. Since then, KPKKT has successfully complied with the SCS-FSC® Interim Standard for Forest Management Certification in Malaysia Version 5.0.2014 and is certified until 27 February 2024. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 115
ENVIRONMENT: Ensuring Balance with Nature (Continued) (GRI 301, 302, 303, 304, 305, 306, 307, 308)
The guidelines for SFM cover the following:
Determination of an annual working area to meet Efficient timber haulage and transportation to the Annual Allowable Cut (AAC) imposed by the minimise forest damage. 1 State Forestry Department. 7 Proper boundary demarcation to prevent accidental Post-felling operation to mitigate impact on the 2 encroachment beyond the annual working area. 8 environment. Area rehabilitation and timber stand improvement Pre-felling inventory to determine cutting limits. 3 9 to assess and regenerated forests**.
Tree marking to identify logging selection. * To reduce the impact of logging activities on the biodiversity, we practise Reduced Impact Logging (RIL), and avoid ground cutting of slip roads by using existing forests roads cleared during its first 30-year rotation of 4 timber harvesting (KPKKT is already into the second rotation).
Road and bridge construction and maintenance to ** A post-felling inventory operation is conducted several years after the completion of logging to assess the regeneration status of the residual facilitate harvesting activities*. timber stand and decide on the appropriate timber stand improvement (TSI) operations for rehabilitation. The most common TSI operation is 5 open-area planting by using fast-growing indigenous species from the nursery, which KPKKT maintains in the Jengai PRF covering an area of Selective felling operations to minimise 0.56 ha and capable of accommodating 40,000 tree seedlings at any one 6 unnecessary damage to the environment*. time.
COMMON TIMBER STAND IMPROVEMENT MANAGEMENT Metres Upper or emergency canopy: 40 Composed of Shorea spp., tualang (Koompassia excelsal). Dipterocarpus spp. and kempas (Koompassia 35 malaccensis) tress, characterised by widely spaced crowns. 30 Main canopy: Generally a continous layer of dome-crowned tress and 25 epiphytic fig (Ficus app.) and a rich habitat for birds and monkeys 20
Lower tree canopy or understorey: 15 Consist of densely packed saplings and palms from whose branches lianas hang, rattans climb and on which 10 epiphytic ferns and orchids sit.
5
Forest Floor 116 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
ENVIRONMENT: Ensuring Balance with Nature (Continued) (GRI 301, 302, 303, 304, 305, 306, 307, 308)
The current AAC is 1,900 ha for standing timbers, a Our forest areas are also home to species under the International Union maximum that excludes non-productive areas such as for Conservation of Nature (IUCN) Red List and National Conservation List rivers and water bodies, buffer zones, sensitive sites, rock under the Wildlife Protection Act 2010. The species are: outcrops, forest infrastructure, roads and others.
As per the recommendations of the FMP, KPKKT adheres to stringent guidelines to protect the network Chengal of High Conservation Value Forest (HCVF) including regular assessments to preserve unique, threatened or Keruing Sarawak endangered biodiversity, including the conservation of wildlife.
Salacca In line with the requirements for habitat protection and flabellate restoration, we preserved 61 ha of HCVF at Compartment Eria 31 and 24 ha in Compartment 24, both are located in atrovinosa Jerangau, DTC were externally audited and verified by SCS for the year in review. In addition, we have also entered into a partnership with Forest Research Institute Malaysia Licuala (FRIM) for the protection and restoration of HCVFs, a collaboration which will strengthen our independent Macaranga measures.
We are also committed to reducing the impact of logging on the environment by protecting residual potential crop Rafflesia trees (PCT), preserving biodiversity, replenishing soil, protecting water resources and restoring habitats.
Our forest protection measures focus on encroachment, pests and disease outbreaks, fire, and pollution. These measures include the demarcation and control of boundaries, improvements in nursery practice and forest hygiene, securing buffer zones, and training in improving fire-fighting skills for employees and contract workers. In the case of soil and peat management, we stringently adhere to standards and guidelines to reduce the destruction of vegetation and Among the endangered tree species identified during a peat, and due to the instability of peat soils, good soil management survey carried out for FMP were four Dipterocarp species practices are used. In addition, we constantly monitor our logging areas along with the discovery of 35 new species in Terengganu; to prevent soil erosion. of which 11 are endemic to Malaysia. Apart from fauna, the survey also identified the Pandan Swamp as a To maintain the integrity and quality of water resources within the potentially threatened and endangered ecosystem. The concessionary areas, we maintain buffer zones around rivers and Pandan Swamp is located in the DTC area, and is listed as streams. Other measures include careful tree felling to avoid trees falling an important water stress area. into rivers while no felling activities are allowed on rainy and windy days. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 117
ENVIRONMENT: Ensuring Balance with Nature (Continued) (GRI 301, 302, 303, 304, 305, 306, 307, 308)
WILDLIFE PROTECTION With this knowledge we have developed various strategies to reduce poaching and encroachment; with one initiative being KPKKT collaborates with organisations such as the WWF to regular independent patrols who work in concert with federal identify threatened and endangered mammal species. A total and state forestry authorities. In addition, we conduct community of 19 such species listed in the IUCN Red List were recorded outreach programmes on the importance of biodiversity. in our tropical rainforests and include the Malayan tiger, Asian elephant, Malayan tapir, dhole and white-handed gibbon. Over We have instituted a policy of no hunting inside our logging areas and above this, our forests are also home to 176 near-threatened, and have trained contractors on how not to upset the balance of threatened and endangered bird species. the wildlife.
ENDANGERED SPECIES IN OUR CONCESSION AREAS
Dipterocarpaceae Species:
• Balau (Shorea Spp) • Mt Rambai Daun (Shorea Acuminata) • Damar Hitam (Shorea Spp (Yellow)) • Mt Sarang Punai (Shorea Parvifolia) • Gerutu (Parashorea Spp) • Mt Seraya (Shorea Curtisii) • Kapur (Dryobalanops Aromatica) • Mt Tembaga (Shorea Leprosula) • Keruing (Dipterocarpus Spp) • Mt Paang (Shorea Bracteolata) • Merawan (Hopea Spp) • Keladan (Dryobarnops • Mt Langgong (Shorea Lepidota) Oblongifolia) • Mt Nemesu (Shorea Pauciflora) • Mt Melantai (Shorea Mammals: Macroptera) • Tapirs (Tapirus indicus) • Tigers (Panthera tigris) • Leopard (Panthera pardus)
• Clouded Leopard (Neofelis nebulosa) Other Species: • Leopard Cat (Prionailurus bengalensis) • Karas (Aquilaria Malaccensis) • Asian Golden Cat/Asiatic Golden Cat/Temminck’s • Kembang Semangkok (Scaphium Spp) Golden Cat (Pardofelis temminckii) • Kulim (Scorodocarpus Borneensis) • Marbled Cat (Pardofelis marmorata)
Birds: • Hornbills (Family bucerotidae) • Malayan Peacock-pheasant/Crested Peacock-pheasant/Malaysian Peacock-pheasant (Polyplectron malacense) 118 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
ENVIRONMENT: Ensuring Balance with Nature (Continued) (GRI 301, 302, 303, 304, 305, 306, 307, 308)
PROTECTED WILDLIFE “TOWARDS MAINTAINING BIODIVERSITY”
SARAWAK HORNBILL ELEPHANT TAPIR PORCUPINE
FOX
TIGER ANTELOPE JUNGLEFOWL
DEER
GREATER MOUSE DEER
PANGOLIN MOUSE DEER
WHITE-RUMPED SHAMA
GAUR GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 119
ENVIRONMENT: Ensuring Balance with Nature (Continued) (GRI 301, 302, 303, 304, 305, 306, 307, 308)
EMISSIONS EFFLUENTS AND WASTE (GRI 305) (GRI 306-2, 306-3, 306-5)
The Group ensures strict emission controls for all production As part of efforts to control pollution and contamination of the and manufacturing activities, and fully complies with the natural environment our treatment and disposal of waste is now Environmental Quality (Clean Air) Regulations 1978 under the in accordance with all relevant laws and regulations. DOE. The bulk of the effluent produced in our operations comes from In 2021, we intend to compile results of, among others: direct GP Glass where waste is produced as by-product from polishing greenhouse gas (GHG) emissions (GRI 305-1); including GHG glass. To treat the continuous flow of effluence, GP Glass has its emissions from the consumption of electricity, heating, cooling own wastewater treatment plant to ensure treatment complies and others (GRI 305-2), GHG emissions intensity (GRI 305-4) and with Standard B (Third Schedule of Environmental Quality reduction targets for GHG emissions (GRI 305-5). At this stage, [Sewage and Industrial Effluent] Regulation 1979). we will defer tracking results of GHG emissions outside the company from upstream and downstream activities (GRI 305-3).
The Ex-officio of Terengganu State Government, YB Haji Mohd Nurkhuzaini Abdul Rahman, who is also the Chairman of GP Glass, was given a brief on the durability of the laminated glass produced by the company. 120 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
ENVIRONMENT: Ensuring Balance with Nature (Continued) (GRI 301, 302, 303, 304, 305, 306, 307, 308)
NON-HAZARDOUS SOLID WASTE 2020
In terms of solid waste, the following table shows Our subsidiary, Pesama recycled a total of 1,555 kg of lubricating oil and hydraulic the total non-hazardous waste produced and the oil for sawmill operation-greasing purposes. disposal methods used at GP Glass:
PESAMA GP GLASS Spent lubricating oil Spent hydraulic oil (SW305) (SW306) Contaminated rags, gloves, kg plastics, papers, filters (SW410) 1,245 310 kg 160 kg FY2019: 95 kg Disposal Method Reused for sawmill operation-greasing Disposed containers, bags or equipment (SW409) 2020 is the baseline year for this initiative. 33 kg FY2019: 49 kg However, our timber subsidiary company Pesaka, only recycles non-hazardous engine oil waste, where 600 litres were reused during the year in review.
Residue oil (SW315) 268 kg PESAKA FY2019: 179 kg Spent lubricating oil (SW305) Disposal Method Reused for sawmill Spent mineral oil (SW307) 45 kg operation-greasing 1,432 kg FY2019: 1,362 kg Disposed containers, bags or equipment (SW409) Disposal Method Metal/Brine/Soap sludge Competent containing metals such as kg Contractor chromium, copper, nickel, zinc, 100 lead, cadmium, aluminium, tin, vanadium and beryllium (SW204)
13,500 kg Contaminated rags, gloves, FY2019: 3,346 kg plastics, papers, filters (SW410) Disposal Method Competent 30 kg Contractor
Disposal Method Landfill 2020 is the baseline year for this initiative. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 121
ENVIRONMENT: Ensuring Balance with Nature (Continued) (GRI 301, 302, 303, 304, 305, 306, 307, 308)
Our forest management subsidiary KPKKT stringently enforces all relevant regulations for employees and contractors on the use of potentially-polluting chemicals and lubricants, including the approved disposal methods for such materials.
Our subsidiaries have put in place contingency plans to deal with any eventualities - such as a chemical spillage or other accidents. There were no incidents of spillage of any kind during the year in review.
We are currently compiling data on water discharge by quality and destination (GRI 306-1), transport of hazardous waste (GRI 306-4) and water bodies affected by water discharges and/or from runoffs (GRI 306-5). We expect to feature baseline results in the subsequent Sustainability Report.
ENVIRONMENTAL COMPLIANCE SUPPLIER ENVIRONMENTAL ASSESSMENT (GRI 307-1) (GRI 308)
The Group adheres to laws, treaties and declarations on GPB does not have a structured evaluation of environmental forestry, biodiversity and the environment at industry, national considerations for its identification and selection of vendors and and international levels, and abides by all regulations and suppliers. However, we are reviewing this aspect of our supply chain standards related to manufacturing, as per listed below: and may include data for this requirement in the future. 1 National Forestry Act 1984 2 National Forestry Policy 1997 3 Wildlife and National Parks Act 2010 4 Environmental Quality Act 1974 Occupational Safety and Health Act 5 1994 6 FSC® Certification MC&I for Forest Management 7 (Natural Forest) National and International Convention on Biological Diversity Jeram Lesung is located at Langsir, nearby its campsite where 8 everyone can try its natural swimming pool with jacuzzi. 122 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
SOCIAL: ENABLING AND EMPOWERING OUR HUMAN RESOURCES (GRI 401 - 419) 123 EMPLOYMENT (GRI 102-8, 401-1, 401-2, 401-3) 126 STATUTORY CONTRIBUTIONS 126 RETIREMENT BENEFITS 126 STOCK 126 FOREIGN EMPLOYEES 126 LABOUR MANAGEMENT RELATIONS (GRI 402-1) 126 POLICY OF NOTICE PERIOD FOR SIGNIFICANT CHANGES IN OPERATIONS 127 EXISTING COVID-19 HEALTH AND SAFETY PROTOCOLS (GRI 403-1, 403-2, 403-3, 403-4, 403-5, 403-6, 403-8, 403-9, 403-10) 127 OCCUPATIONAL SAFETY AND HEALTH (GRI 403-1, 403-2, 403-3, 403-4, 403-5, 403-6, 403-8, 403-9, 403-10) 132 EMPLOYEE ENGAGEMENT 133 TRAINING AND EDUCATION (GRI 404-1, 404-2, 404-3) 135 DIVERSITY AND EQUAL OPPORTUNITY (GRI 405-1, 405-2) 136 NON-DISCRIMINATION (GRI 406-1) 137 FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING (GRI 407) 137 CHILD LABOUR (GRI 408) 137 FORCED OR COMPULSORY LABOUR (GRI 409) 137 SECURITY PRACTICES (GRI 410-1) 137 RIGHTS OF INDIGENOUS PEOPLE AND LAND TENURE RIGHTS (GRI 411-1) 138 HUMAN RIGHTS ASSESSMENT (GRI 412-1) 139 COMPLAINTS AND GRIEVANCES MANAGEMENT 140 LOCAL COMMUNITIES (GRI 413-1, 413-2) 145 SUPPLIER SOCIAL ASSESSMENT (GRI 414) 145 PUBLIC POLICY (GRI 415-1) 146 CUSTOMER HEALTH AND SAFETY (GRI 416-1, 416-2) 146 MARKETING AND LABELLING (GRI 417-1, 417-2, 417-3) 146 CUSTOMER PRIVACY (GRI 418-1) 146 SOCIO-ECONOMIC COMPLIANCE (GRI 419-1) 147 CUSTOMER FEEDBACK AND SATISFACTION 123 GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 123
SOCIAL: Enabling and Empowering Our Human Resources (GRI 401 - 419)
The social sustainability pillar refers to Compliance to Regulations and Laws Pertaining social issues related to one’s well-being and to Workplace Matters includes aspects like healthcare, education, 1. Employment Act 1955 2. Occupational Safety and Health Act 1994 housing and employment. 3. Factories and Machinery (Noise Exposure) Regulations 1989 At GPB, we believe that PEOPLE makes 4. Malaysian Anti-Corruption Commission Act 2009 5. Industrial Relations Act 1967 up the foundation of the Social Pillar of 6. Minimum Wages Order 2018 Sustainability and thus, maintaining a 7. Whistleblower Protection Act 2010 balance between the lives and livelihoods 8. National Wages Consultative Council Act 2011 of our employees is our corporate responsibility.
It also extends to the marketplace, where customers expect quality products and reliable services at competitive prices without compromising their well-being or privacy. The final subset of this Sustainability Pillar involves a company’s outreach to society and its efforts to uplift the community.
EMPLOYMENT (GRI 102-8, 401-1, 401-2, 401-3)
GPB sets out employment terms and conditions for executive and non-executive employees, covering compensation, promotion, privacy, talent development, industrial relations, Freedom of Association and discrimination. The terms and conditions also cover the Policy working environment, work schedules that incorporate rest 1 periods, holidays, cause and procedures for disciplinary actions Foreign or dismissal, maternity privileges and occupational safety and Minimum Workers health. Wages & Leave Recruitment Pay Policies in Guidelines & Malaysia Procedures In As an established business with deep and long-standing ties in the 2 3 Malaysia workplace, marketplace and community, GPB strongly believes in growing together with our stakeholders while constantly developing human resources and sharing opportunities with our people and communities where we operate. 124 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
SOCIAL: Enabling and Empowering Our Human Resources (Continued) (GRI 401 - 419)
KEY HIGHLIGHTS AND COMMITMENTS OF POLICIES & GUIDELINES FOR EMPLOYMENT: 1 2 3 4 5 6 No recruitment No retention Paying Freedom of Robust No fee policy of employee/ workers association grievance discrimination worker statutory for workers mechanisms of workers and passports minimum and procedures wage procedures for worker recruitment processes
25 August 2020 HAPPY 63RD INDEPENDENCE DAY In conjunction with Malaysia’s 63rd Independence Day, the GPB employees donned striped and colourful clothes, in tandem with the Jalur Gemilang theme. This programme was initiated by the Terengganu Inc Group. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 125
SOCIAL: Enabling and Empowering Our Human Resources (Continued) (GRI 401 - 419)
As of 31 December 2020, the Group had a total permanent employee complement of 321 people and a further 106 contract workers for manual labour, especially during the logging season. We do not engage in part-time employment. The breakdown of employees, including new hires, is provided in the following tables:
WORKPLACE DIVERSITY
76% 427 of the total workforce are total workforce permanent employees 443 in FY2019 77% in FY2019 40.5% of the total workforce are below 40 years old 30.8% 3.8% 43% in FY2019 of the total workforce are new are women employees 30% in FY2019 6% in FY2019
WORKFORCE BY QUALIFICATION WORKFORCE BY RACE
1.7% 9.7% 88.6% 83% PhD & Masters Degree Diploma or below Malay 2% in FY2019 11% in FY2019 87% in FY2019 82% in FY2019
WORKFORCE BY CLASSIFICATION 1.7% Chinese 6% 10% 84% 2% in FY2019 Manager and above Executive Non-Executive 6% in FY2019 9% in FY2019 85% in FY2019 4.3% Indian 5% in FY2019 TOTAL INTERNS AND TEMPORARY EMPLOYEES
101 5 11% Contract Trainee Foreigner 103 in FY2019 7 in FY2019 14% in FY2019 126 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
SOCIAL: Enabling and Empowering Our Human Resources (Continued) (GRI 401 - 419)
We provide fair remuneration to our employees FOREIGN EMPLOYEES at every level and in many cases higher than the market average, including generous benefits covering Via the Outsourced Contract for Services, GP Glass employs 46 foreign healthcare, insurance, parental leave, retirement labourers, six from Nepal, 16 from Bangladesh and 24 from Myanmar. gratuity and stock options. These benefits include: Besides the employee benefits stated above, GPB provides housing allowances for all full-time employees, staff quarters for factory workers at MARRIAGE LEAVE our sawmilling plants, and rented terrace housing for the foreign labourers. On such premises, regular inspections are conducted according to the working days for guidelines prepared by the Labour Department. This is to avoid potential first legal marriage. 3 health and safety risks at worksites and worker housing locations. The Employee Handbook clearly outlines the policies and employee rights PARENTAL LEAVE which are communicated to all executive and non-executive employees during their induction session. The Handbook also contains the company’s days of maternity leave from birth, up to five legal obligations to its employees and states the company’s culture and 60 children. expectations. day of paternity LABOUR MANAGEMENT RELATIONS leave from birth. 1 (GRI 402-1) With regards to related policies and guidelines spelt out in the terms and conditions of employment, the Group is committed to building and STATUTORY CONTRIBUTIONS maintaining productive and collaborative relationships with our employees.
Employees Provident Fund (EPF), Social Security Organisation (SOCSO) and Employment Insurance Our Board Members and Senior Management Team conduct regular site System. visits at our logging and sawmilling, and glass processing sites. Apart from gaining a first-hand view of the processes and operations, these visits
RETIREMENT BENEFITS encourage proactive on-site engagement between our Board Members, Senior Management and employees. Gratuity payment as a token of appreciation for the services they have provided towards the company. POLICY OF NOTICE PERIOD FOR SIGNIFICANT CHANGES IN OPERATIONS
Depending on the level of severity, priorities and the impact of any major
STOCK operational changes, the notice period varies from between two weeks and 12 months, or as and when required for employees to adapt and adjust Employee Share Option Scheme (ESOS) and Executive accordingly. Share Grant Share (ESGS) wherein employees will be granted the right to subscribe the share option The contractual offer letter of employment clearly states termination enabling them to buy the Company’s shares at price procedures. However, unless it differs, then procedures will follow the lower than the current market price. Employment Act 1955. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 127
SOCIAL: Enabling and Empowering Our Human Resources (Continued) (GRI 401 - 419)
EXISTING COVID-19 HEALTH AND SAFETY PROTOCOLS (GRI 403-1, 403-2, 403-3, 403-4, 403-5, 403-6, 403-8, 403-9, 403-10) Work from Home (WFH) Policy.
In addressing the health and mental well-being concerns of our employees and workers, we have put in place support mechanisms for employees to adjust and cope with the new work-life situation and post pandemic GPOSHCom COVID-19 Disease Screening Flow. implications.
In combating the spread of COVID-19, concerns on the health and safety of employees are now our top priority. We enforced appropriate SOPs and Procedures and Guidelines on how to Manage COVID-19 at the immediately put into effect appropriate safety measures. While adequate Office which include HAZARD health and safety related procedures and guidelines have always been in IDENTIFICATION, RISK ASSESSMENT place and governed by existing policies, regulations, local standards, and AND RISK CONTROL (HIRARC) FOR COVID-19 OUTBREAK. stringent SOPs, we have reviewed and updated all SOPs for pandemic status quo situations.
Several memos have been issued All employees were duly informed and are required to adhere to the to notify employees and while rules and regulations imposed by the authorities. These included using also posted in office premises and factories. PPE, enhanced cleansing procedures, sanitising all our premises, and rearranging office layouts to enable social distancing. Our employees were advised and encouraged to strictly follow the guidelines issued by the Briefing of employees regarding COVID-19 and SOPs at the workplace. Management on the MCO, WFH, and all new health and safety protocols.
OCCUPATIONAL SAFETY AND HEALTH (GRI 403-1, 403-2, 403-3, 403-4, 403-5, 403-6, 403-8, 403-9, 403-10)
The well-being and safety of our employees and contract workers take precedence over all other considerations at GPB, especially considering logging and manufacturing carry higher risks than most other industries.
Golden Pharos Occupational Safety & Health Committee (GPOSHCOM) was established on 28 November 2018 to ensure our employees and workers consistently operate in accordance with the Occupational Safety and Health Act 1994 (OSHA 1994) and the Factories and Machinery Act 1967 (FMA 1967), which are enforced by the DOSH under the Ministry of Human Resources.
The OSHA 1994 and FMA 1967 provide the legislative framework to promote, stimulate, and encourage high safety and health standards in the workplace. All our workers, visitors and contractors, including sub-contractors, are to strictly follow SOPs and adhere to all statutory requirements, relevant standards, guidelines and codes of practice concerning safety and health and, as well as respect human rights. GPOSHCOM reports to the CEO once every three months. GPOSHCOM will present safety and health related reports and activities during Group Management Committee (GMC) meetings to specifically address safety and health issues, Safe Man Hours (no recordable incidents occured during hours worked), Lost Time Injury, safety programmes and compliances. 128 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
SOCIAL: Enabling and Empowering Our Human Resources (Continued) (GRI 401 - 419)
Occupational Safety and Health also involve processes covering the identification of hazards and assessing risks and procedures for investigations in the event of any untoward incident. Among others, these assessments include methods for:
1 Hazard reporting 3 Corrective actions Stop work and evacuation from any Continuous improvements 2 hazardous situation 4
20 April 2021 PRECAUTIONS AT PERMINT PLYWOOD SDN BHD Permint Plywood Sdn Bhd received an approval from Ministry of International Trade and Industry (MITI) to operate during the MCO. Therefore, precautions had been made by the company by implementing the social distancing, wearing masks and sanitising. The factory was also sanitised three times daily during the operations. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 129
SOCIAL: Enabling and Empowering Our Human Resources (Continued) (GRI 401 - 419)
GPOSHCOM ORGANISATION CHART
Advisor DATO’ NADZA ABDUL (CEO GPB)
Chairman
NIK NUR HAFIZI BIN NIK ZULKERNAIN Secretary
NAHAIDA BINTI EMBONG
PPSB Pesama GP GLASS KPKKT Pesaka
MUHAMMAD NURMAZIAH BINTI NIK NUR HAFIZI BIN OSMADI ABD MANAP FAKQRUL FAISAL RAMLI NIK ZULKERNAIN BIN OTHMAN BIN MAT BIN MOHD SHAROM
MUHAMAD AL AMIN BIN KAMARUZAMAN (Environmental Officer) A flowchart of these processes is presented below:
SCOPE OF OSH MANAGEMENT SYSTEM
Scope of OSHMS
External and internal Support issues & Operation Plan Do
Context Leadership Intended of the Performance Planning and worker outcomes of the organisation evaluation participation OSHMS
Needs and expectations Act Check of workers and other interested parties Improvement Source: based on ISO 45001 Occupational Safety & Health Management System 130 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
SOCIAL: Enabling and Empowering Our Human Resources (Continued) (GRI 401 - 419)
To prepare for potential incidents, we have an emergency plan that During the year in review, there were two incidences of work- includes regular training sessions and drills to ensure the readiness of related injuries and ill-health incidents at GP Glass. the Group’s employees and workers and the surrounding community where we operate.
In addition, our Hazard Identification, Risk Assessment and Risk SOCSO HEALTH SCREENING Control (HIRARC) is a comprehensive framework to further protect the health of our employees and contract workers via regular Chemical Health Risk Assessments (CHRA), noise monitoring and medical check- ups. Health Screenings for Females
These health and safety measures are communicated to employees Blood and urine test by Group and subsidiary-level OSH committees. These committees conduct sittings every quarter to brief as well as consult with Blood pressure employees and contract workers. Over and above meetings, we also communicate updates and post constant reminders on notice boards and through memos, emails, and WhatsApp messaging. Pap smears
According to the Occupational Safety and Health Workplace Mammograms and a complete Assessment (OSHWA) checklist, training is mandatory for all relevant report by the doctor workers. This exercise also reviews the effectiveness of the respective programmes and trainers. Since the launch of SOCSO’s free health screening programme in 2013, all employees above the age of 40 has Health Screening for Males undergone a health screening test at appointed SOCSO panel clinics.
Blood and urine tests All operators and workers who handle chemicals at our treatment plants undergo pre-employment and pre-placement medical examinations. They are put under medical surveillance as required Blood pressure under the Occupational Safety and Health (Use and Standard of Exposure Chemicals Hazardous to Health) Regulations, 2000 P.U.(A)131 enforced by DOSH.
As per safety regulations, our logging and sawmill workers are provided with personal protective equipment (PPE) and are trained to use the survival gear in the event of a mishap.
We are currently reviewing the reporting requirements for preventing and mitigating OSH impacts linked by our business relationships (GRI 403-7). GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 131
SOCIAL: Enabling and Empowering Our Human Resources (Continued) (GRI 401 - 419)
All the cases were duly reported to DOSH and other relevant Having selected Training and Education as an important material authorities. We have taken proactive steps to conduct more rigid matter, we are capitalising on external funding such as the Human safety briefings to reduce the number of incidents and accidents. Resource Development Fund (HRDF) for employees to access relevant training programmes. However, we did not utilise 100% Given its importance, OSH is listed under our 10 Most Material of the fund as we opted to use free online training programmes. Matters. As presented in the Materiality Matters section of this Our employees also attended online training courses under report, we have set KPIs to achieve zero deaths and a maximum HRDF Strategic Initiative for SMEs. of four incidents at GP Glass for FY2020. We have begun our succession planning for the Company, starting We are pleased to report that GP Glass achieved these KPIs with with identifying key positions in the Group and subsidiaries. reporting zero deaths and two incidents for the reporting period. Efforts are being stepped up to achieve better results inthe During the year in review, 98.5% of our executive employees following year. attended an average of 16 hours of training, while 97.8% of non-executive employees had an average three hours of Within the Action Plans outlined to achieve these targets, are scheduled training. The bulk of the training sessions were plans to conduct OSHWA inspections by the respective Safety and conducted online. Health Officer (SHO) or Group Safety Committee members twice a year at KPKKT, and once a year at our subsidiaries. The total cost for training in FY2020 was RM41,169 (FY2019: RM178,240) which was 77% lower from the previous year. To reduce incident and accident rates, we have put the following measures into place:
Regular toolbox meetings/safety briefings to 98.5% 97.8% workers before commencement of work executive non-executive 1 employees employees The Operations Unit conducts periodic training sessions for workers on SOPs, OSH and 2 Sustainability. 16 hours 3 hours 3 Safety and warning signs are regularly updated. of training of training The SHO conducts an annual Compliance and Sustainability Audit for all operating units to ensure Total training cost compliance with all regulatory requirements and the RM41,169 4 Group’s OSH Policy. 2019: RM178,240 132 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
SOCIAL: Enabling and Empowering Our Human Resources (Continued) (GRI 401 - 419)
EMPLOYEE ENGAGEMENT
We believe employee engagement is built on open and timely communication on company goals, achievements and points of interest. We use multiple channels to interact with employees, motivate them, and encourage collaboration. We also engage in meaningful activities with our employees to foster comradeship.
SPORTS EVENTS IN 2020 GATHERINGS IN 2020
Kelab Sukan Golden Pharos (KeSuGoRos) Solat Hajat Prayer 1. 2020 CEO Bowling Trophy Tournament. 1. Ceremony. 2. Hiking up Maras Hill and Paragliding. 2. Golden Pharos Director and Head of Audit’s Retirement Event. 3. 2020 CEO Badminton Trophy Tournament. 3. 33rd Annual General Meeting. 4. Golden Pharos Golden Ride Hogoh Pahang. 4. Business Recovery Plan 2021. 5. Hiking up Chemerong-Berembun-Langsir. Chief Executive Officer’s Visit to Compartment 64 of the Logging 5. Area at Jengai Forest Reserve. 6. Kayuhan Muhibbah 2020 (Social Cycling Event). 6. Solat Hajat Prayer Ceremony and Staff Appreciation Ceremony. 7. Friendly Badminton Tournament between GPB – Manis FM. 7. COVID-19 Safety Briefing Programme. 8. GPB Group Club Futsal Trophy Tournament. 8. Asyura Porridge Stirring Programme. 9. Kayaking at Sungai Kelemin, Pasir Raja, Bukit Besi. 9. Code of Business Ethics Briefing Programme. 10. Ride with TI Group CEOs to Kota Bharu, Kelantan. 10. Official Visit from Terengganu State Government.
11. Flood Assist Programme.
26 July 2020 HIKING AND PARAGLIDING Kelab Sukan Golden Pharos (KeSuGoRos) organised hiking and paragliding activities at Bukit Maras, Kuala Nerus for its members after the MCO was lifted, partly to celebrate coming out of the lockdown. More than 30 members participated in the event. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 133
SOCIAL: Enabling and Empowering Our Human Resources (Continued) (GRI 401 - 419)
TRAINING AND EDUCATION (GRI 404-1, 404-2, 404-3)
Upskilling and reskilling talent have become increasingly essential given the prevailing trends favouring new business models and digital processes on both the demand and supply sides. This has taken on even greater urgency now that the COVID-19 pandemic has highlighted the limitations in traditional ways of working and doing business.
At GPB, we recognise this evolving reality and are committed to continuous training and educating our management and employees to gain and maintain an advantage even during crises.
TRAINING PROGRAMMES
1 Machine Handling & Quality (Serial Export - 14 Kursus Pengurusan Jenazah 27 Sesi Libat Urus MARA TERENGGANU Edgework) In House Training : Pesama MARA In House Training : GP Glass 15 Kursus Pengenalan Malaysian Grading 28 Simple Risk Assessment and Control for 2 Machine Handling & Quality (Architectural - Rules (MGR) Chemical (SIRAC) Edgework) MTIB JKKP In House Training : GP Glass 16 Bevel Machine Setting & Troubleshooting 29 60 Minutes Programme We Are OSH 3 Jom Guna Levi Mr Tan Fook Shing (Kong Weng Glass) Leaders/JKKP Negeri Terengganu HRDF JKKP 17 Taklimat Pematuhan Akta Keselamatan & 4 Malaysia Budget 2021 Webinar Kesihatan Pekerjaan (AKPP) 994 berkaitan 30 Briefing Policy : COBE, Code of Conduct, Ernst & Young Langkah-langkah Pencegahan COVID-19 No Gift & Whistleblowing In House Training : KPKKT In House Training : GPB 5 Toyota Style Problem Solving Model Expitris Worldwide Sdn Bhd 18 COVID-19 Briefing by SHO 31 Technical Report Preparation Workshop In House Training : Pesama for Eimas CePSWaM Competency 6 Kursus Pengurusan Stok Secara Efektif Certificate 2020 FR Resources Group PLT 19 COVID-19 Briefing by SHO Airwastewater Management Sdn Bhd In House Training : Pesaka 7 Training Online System (SOCSO Payment, 32 CEO Talk Series Eco World Business, New Medical Expenses, Online Payment, Leave 20 New Risk Management Method According World Tracking & Staff Cost) To ISO45001:2018/SBE Management PLT ECO World Development Group Berhad In House Training : Pesama Safety Big Event Management PLT 33 Briefing with Ernst & Young 8 Pekerja Mahir Melalui Kaedah Neuro 21 EY Webinar in Strategy on COVID-19 Ernst & Young Linguistic Programming Ernst & Young In House Training : Pesama 34 Authorised Entrant And Standby 22 Briefing on COVID-19 Person For Confined Space Course 9 Sustainability Report Workshop In House Training : GP Glass NIOSH Monteiro Lewis Communications Sdn Bhd 23 Taklimat Prosedur Kerja Selamat & 35 Termination of Employment 10 PERKESO ISSA Seminar on New Norms of Pencegahan COVID-19 di Tempat Kerja P2P Hub Sdn Bhd Work In House Training : KPKKT PERKESO 36 Seminar Industri Buluh MTIB 24 Seminar Pencegahan Kebakaran Malaysia Malaysia Timber Industry Board 11 SSM Training : MBRS for Preparers Pusat Pencegahan Kebakaran Malaysia SSM Malaysia 37 Termination of Employment 25 Toyota Style Problem Solving Model Terengganu Inc 12 Kursus Asas MGR In House Training : GP Glass In House Training : Pesama 38 Programme Corporate Tea Talk SSM 26 Chemical Handling Terengganu 2020 13 Townhall bersama Kementerian Sumber In House Training : GP Glass SSM Manusia Kementerian Sumber Manusia 134 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
SOCIAL: Enabling and Empowering Our Human Resources (Continued) (GRI 401 - 419)
TRAINING PROGRAMMES
39 5-Year Strategic Plan CEO Workshop 54 Microsoft Excel Advance 70 Bengkel Tampil Berwibawa di Hadapan In House Training : GPB Pusat Latihan Komputer Dinamik Kamera/Facing the Camera Workshop Malaysia Press Institute 40 LHDN-MEF Tax Seminar 2020 55 Pahang OSH Seminar 2020 LHDN-MEF Big Event Management 71 Director’s Removal, Resigntion & Appointment (Case Analysis : Afandi v Global 41 MTC Webinar on Impact of COVID-19 on 56 Dialog TiGU bersama SPRM Terengganu Advanced) Timber Industry SPRM Learnabee International Sdn Bhd Malaysian Timber Council 57 Webinar : HR - How to Handle Staff 72 Kursus Kewartawanan Digital & Multimedia 42 Webinar : Economic Affairs Talk by MTC PAKAR HR Malaysia Press Institute Malaysian Timber Council 58 DELL Technologies Forum - 10 73 Taklimat Insentif dan Pembiayaan bagi 43 Breast Cancer Awareness DELL Mempromosikan Revolusi Industri 4.0 Terengganu Inc kepada pihak Industri Perkayuan Malaysia 59 Productivity1010 : A roadmap for Your Lembaga Perindustrian Kayu Malaysia 44 Risk Awareness Week 2020 Opening Event & Company’s Digitisation by MPC Webinar @ Risks : Now & Beyond Malaysia Productivity Corporation 74 Preference Shares Under Companies Act GRC Consultant & Professional 2016 (Terengganu Inc) 60 Webinar : Transformation Digital for Wood Learnabee International Sdn Bhd Industries by MPC 45 Budaya Kerja Cemerlang: Amanah Satu Malaysia Productivity Corporation 75 Beneficial Owners S56 CA 2016 : Reporting Tanggungjawab Framework for Beneficial Ownership of Terengganu Inc 61 Neurohacking Live Session 2.0 Legal Persons MITI Learnabee International Sdn Bhd 46 Building Your Digital Marketing Strategy in 2020 and Beyond 62 Webinar : HR : Sharing HR Knowledge 76 Webinar Timber Trade 2020 : Malaysia Malaysian Timber Council PAKAR HR & Germany - Status, Challenges, Perspectives 47 Webinar Timber Trade 2020 : Malaysia 63 APEC Alternative Sipute Resolution Malaysia Timber Industry Board & Germany - Status, Challenges, – Mediation in Post COVID-19 Times by Perspectives MATRADE 77 Pandemic Impact on Industry #2: The Malaysia Timber Industry Board MATRADE Relevance of IR4.0 on Pharmaceutical & Related Industry 48 Global Talent Management Leader 64 MFRS 136 : Impairment of Assets Malaysia Productivity Corporation Smart Progeny Resources PLT Malaysian Institute of Accountants (MIA) 78 Risk Awareness Week 2020 Opening Event & 49 The Critical Importance of Digital Marketing, 65 Kursus Pemantapan Pengetahuan Pembinaan Webinar @ Risks: Now & Beyond Social Media & Content Marketing in the Jalan Hutan mengikut Spesifikasi Jalan Hutan Terengganu Inc New Normal Business Landscape 2010 Pindaan 2013 Malaysian Timber Council In House Training : KPKKT 79 EY Webinar : Malaysia Budget 2021 Ernst & Young 50 Manual handling Toolbox 66 Fire Drill 2020 In House Training : Pesaka In House Training : GP Glass 80 Bengkel Rancangan Pengurusan Ladang Hutan (RPLH) 51 Beyond 2020 - Digital Transformation 67 Psychology of Managing Workplace Conflict In House Training : GPFP INTEL PRIMA LINK TRAINING & CONSULTANCY SDN BHD 81 Kursus Asas MGR Anjuran PESAMA 52 Akta Orang Muda In House Training : Pesama In House Training : Pesaka 68 MTC Webinar : Riding the Wave of Digital Disruption with Industry 4.0 82 SSM Training Programme 2020 53 Budaya Kerja Cemerlang: Amanah Satu Malaysian Timber Council Companies Commission (COMTAC) Tanggungjawab Terengganu Inc 69 Terengganu Inc Group Legal Engagement 2020 Terengganu Inc GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 135
SOCIAL: Enabling and Empowering Our Human Resources (Continued) (GRI 401 - 419)
We also conducted reviews on employee performances to assess improvement and new requirements for our training modules. The table below outlines the proportion of employees who underwent performance reviews in FY2020:
20 5.6% 68 GPB 19.1% 67 18.8% KPKKT
GPFP
PESAKA 37 355 4 10.4% EMPLOYEES 1.1% PESAMA
PPSB
62 GP GLASS 17.4%
97 27.3%
All expenses for training programmes and employee engagement Female employees in our Group are mainly programmes conducted throughout FY2020 were duly budgeted involved in management and administration, for and approved by the management. Please refer to the with equal opportunities given to male and Financial Statements in this Annual Report for more information female employees to upgrade personal skills and on the financial aspects of the Group. chart their career advancement.
DIVERSITY AND EQUAL OPPORTUNITY Although males outnumber females by more (GRI 405-1, 405-2) than two-to-one amongst permanent and fixed contract employees, we nevertheless strive to In line with the Group’s Gender and Diversity Policy, we encourage bolster our female employment numbers, for diversity in the workplace and free of any form of harassment, instance, by offering higher remuneration to including race, religion, national origin, gender, ethnicity, ancestry, female entry-level employees. These details were non-disqualifying physical or mental disabilities, marital status or outlined earlier in the Employment section of this gender identity issues. report
While the Group encourages female employees to raise their During the reporting period, we did not employ proficiency in their role and responsibilities continuously, itis any differently-abled persons. evident that the nature of our core businesses is male-dominated and will remain so due to the labour intensive tasks involved in most of our operations. 136 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
SOCIAL: Enabling and Empowering Our Human Resources (Continued) (GRI 401 - 419)
NON-DISCRIMINATION (GRI 406-1)
The Group maintains a non-discriminatory workplace, whether on race, religion, gender, age group, disability or any other factor that distinguishes individual employees apart from others.
Our employment terms and conditions expressly prohibit any form of discrimination while employees are also reminded from time to time against discriminatory language or behaviour towards each other. There were no incidents of discrimination of any kind recorded during the year in review.
29 October 2020 BREAST CANCER AWARENESS CAMPAIGN Terengganu Inc organises the Breast Cancer Awareness Campaign annually which is held throughout the month of October. All employees are encouraged to wear pink outfits every Wednesday in support of breast cancer patients and survivors. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 137
SOCIAL: Enabling and Empowering Our Human Resources (Continued) (GRI 401 - 419)
FREEDOM OF ASSOCIATION AND COLLECTIVE RIGHTS OF INDIGENOUS PEOPLE AND LAND TENURE RIGHTS BARGAINING (GRI 407) (GRI 411-1)
Although GPB does not practise collective bargaining in We co-exist harmoniously and cooperatively with the Orang Asal determining employee remuneration, benefits, working settlements in the immediate vicinity of our forest concession conditions and other issues, we keep an open-door policy areas. Although the Orang Asal do not live inside the areas, our on any discussions and suggestions on such matters. In subsidiary companies, KPKKT and Pesama, are always sensitive any event, we consistently consult our employees to better to their needs and will provide the appropriate assistance in understand their needs and preferences to maintain a the event they trespass into the forest sites. On this score, all contented and motivated work environment. employees and contractors have been briefed to act accordingly in their dealings with the Orang Asal community. CHILD LABOUR (GRI 408) Regarding tenure rights, we recognise the responsibilities, such as respect for the long-protection and sustainable use of land, In accordance with the relevant employment laws and forests and fisheries. This is done in accordance with national regulations in Malaysia, we do not employ under-aged obligations, local laws and regulations. labour. This restriction extends to existing and potential businesses in our supply chain. We respect the individual rights of indigenous and local communities to give or withhold their Free, Prior and Informed FORCED OR COMPULSORY LABOUR Consent (FPIC) to the development of land to which they hold (GRI 409) legal, communal or customary rights.
GPB is against forced or compulsory labour internally, as The Group ensures legal compliance and international best well as amongst our vendors and suppliers. practices where FPIC is implemented. In 2020, there were no reported violations of the rights of indigenous people living in SECURITY PRACTICES (GRI 410-1) Malaysia.
The Group’s security guards come from a professional KPKKT and Pesama are also members of the Joint Consultative security company where third party training is mainly Committee at the district level, formed to resolve any forest land focussed on premise protection and control of visitor access. ownership disputes, if any. There have never been any such While they are not trained in our human rights policies, disputes in our forest concession areas. nevertheless, their conduct is monitored by our Human Resources and Administration Department. 138 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
SOCIAL: Enabling and Empowering Our Human Resources (Continued) (GRI 401 - 419)
HUMAN RIGHTS ASSESSMENT (GRI 412-1)
GPB is a strong supporter of human rights. However, the Group does not have any specific policies or guidelines on this matter, having never been subject to any human rights reviews or impact assessments. As yet, we have never held any training on human rights policies or procedures (GRI 412-2), or dealt with any investments and contracts which specifically include related clauses or requirements for screening (GRI 412-3).
However, we are committed to protecting the rights of our employees in accordance with all relevant legal requirements and regulations, as well as with the Universal Declaration of Human Rights.
9 January 2020 FSC® AUDIT VISIT AT DUNGUN TIMBER COMPLEX Auditors from the Forest Stewardship Council (FSC®) visited a logging concession area in Bukit Besi together with representatives from KPKKT. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 139
SOCIAL: Enabling and Empowering Our Human Resources (Continued) (GRI 401 - 419)
COMPLAINTS AND GRIEVANCES FLOW CHART ON CONTROL OF SOCIAL ISSUES (STAKEHOLDERS) MANAGEMENT REPORTS/COMPLAINTS/GRIEVANCE APPLICATIONS
Guidelines and grievance procedures to Report/Complaint/Grievance Application form received. handle social-related concerns, including sexual harassment, are outlined in the Whistleblowing Policy and is also available on the Group’s website: www.goldenpharos.com. Matter is handled at the respective subsidiaries.
As part of the FSC® certification, our timber divisions are required to organise stakeholder meetings with related Government agencies; FIRST MEETING DOSH, BOMBA, DOE, heads of communities, To be held between subsidiaries’ management and party concerned contractors and sub-contractors, schools and 14 working days after receiving employees, including their family members as the form. well. In 2020, several meetings were held to provide a briefing of our operations and for YES stakeholders to give feedback on any issues. CASE SETTLED CASE SETTLED
We manage all grievances, complaints NO and conflicts in an open, transparent and CASE STUDY BY SUBSIDIARIES’ consultative manner with proper procedures Report to GPB HQ MANAGEMENT for handling, investigating and resolving issues, Recorded in File either on social or environmental concerns. - Records of communication. - Social Impact Assessment (SIA).
INFORMATION GATHERING AND INVESTIGATION PROCESS (SIA is carried out by independent consultants).
14 WORKING DAYS
Presentation of results to GPB management for further action.
14 WORKING DAYS NEGOTIATION Recommended ways of Action Taken settlement Either one or both negotiation 1. Intermediation steps are undertaken. Discussion process. 2. Responsible approach by CSR. 30 WORKING DAYS
CASE SETTLED 140 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
SOCIAL: Enabling and Empowering Our Human Resources (Continued) (GRI 401 - 419)
LOCAL COMMUNITIES (GRI 413-1, 413-2)
The Group engages in community outreach as much as possible, believing in the tenets that we should always conduct our businesses in a responsible manner. The Group’s timber products are FSC® certified. FSC® certification requires mandatory active engagement with the local communities.
Currently, we focus our community efforts on encouraging education and sports activities among the community and developing a safe environment for them. We believe this focus will help alleviate poverty while reducing pollution and health risks. To achieve these aims, we have local community consultation committees which collaborate on development programmes based on local community needs.
Meanwhile, our CSR Policy sets out an allocation of either 0.5% of annual revenue or 10% of Profit Before Tax (PBT) for community projects and direct contributions. These contributions are allocated specifically for approved organisations that are registered with the Registrar of Societies Malaysia (ROS). The activities are organised for either social causes, education, sports activities or economic development, which support the local society.
GPB 2020 CSR CONTRIBUTION
RM10,000 RM11,000 RM14,000 Terengganu State Sports Flood Relief Academic Institutions Development Fund
RM5,000 RM 22,000 RM Ramadhan Hampers GPB Back To School 18,000 Terengganu Inc Events for Employees (School Aids)
RM 9,000 RM RM Employee Deaths/ 28,000 23,000 ® Community Development Accidents/Marriages FSC Programme
RM 16,000 RM Contribution of 3,000 Media Engagement Preserved Dates for Employees TOTAL RM RM21,000 RM13,000 193,000 Associations Tabung Darul Iman Fund GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 141
SOCIAL: Enabling and Empowering Our Human Resources (Continued) (GRI 401 - 419)
To comply with the 10 FSC® certification principles, the Company shall contribute to maintaining or enhancing the social and economic well-being of local communities Forestry, logging, affected by operations. sawntimber and plantations are the Company’s main business activities.
NATURE AND COMMUNITY ENVIRONMENT
EXTRACT FROM CSR POLICY
To support and create public SPORTS EDUCATION awareness of healthy lifestyle among its employees. The FSC® certification also stresses that the Company To support any educational activities and purposes in order to shall maintain or enhance the create awareness among the public, which relates to nature social well-being of workers. and environment and complies with the categories above.
13 January 2020 KELAB SUKAN GOLDEN PHAROS (KeSuGoRos) Our CEO Dato’ Nadza Abdul took the initiative to learn paragliding. The event was organised by GPB’s sports club, KeSuGoRos which was held at the Kuala Terengganu iconic Drawbridge in Kuala Terengganu. 142 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
SOCIAL: Enabling and Empowering Our Human Resources (Continued) (GRI 401 - 419)
FLOWCHART FOR APPROVAL OF CSR CONTRIBUTION
Requester Contribution Form Category NO Reject
YES NO
Budget NO To be reviewed
YES
Budget Budget Budget Budget
HOS CEO GMC BOD
Finance Department
Payment/Contribution
HOS= Head of Subsidiaries GMC= Group Management Committee CEO= Chief Executive Officer BOD= Board of Directors
Our employees are encouraged to participate in programmes We carry out Social Impact Assessments (SIA) periodically to organised by the Group or in collaboration with other Non- ensure the interests of the forest-dependent communities in Governmental Organisations (NGOs). Such programmes are a the vicinity of our concession areas. The SIAs can lead the way platform for meaningful engagements with the communities towards uplifting the local economy and communities by creating where we operate and gives us the opportunity to better employment and business opportunities. understand their perceptions and feedback. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 143
SOCIAL: Enabling and Empowering Our Human Resources (Continued) (GRI 401 - 419)
KPKKT had previously commissioned independent consultants Among the 20 recommendations for mitigation measures to conduct SIAs in 2009 and 2014 with the latest one completed presented in the SIA were: in 2018 and subsequently updated on 6 January 2020 with the objective to: Creation of a database on pertinent social and economic information Identify the benefits and adverse effects on the communities. 1 Image-building to portray KPKKT as friendly and a 1 socially-acceptable company Understand any negative perceptions that might hinder local communities from participating in project 2 activities. Capacity building and employee education on 2 community engagement Propose mitigation measures for any advers effects. 3 Implementation of an aggressive forest 3 rehabilitation programme Propose stakeholder participation to promote better understanding and build rapport between KPKKT and 4 the communities. 4 Better conservation The latest SIA determined that the local population does not 5 depend on the forest for their livelihood primarily due to Enhancement of public relations via increased opportunities in other sectors. Some communities, however, CSR activities still regularly enter the forest to collect forest produce for their 6 own consumption. The forest produce collected was limited to Construction of better infrastructure for villages freshwater fish, fruits, vegetables, timber and rattan. 7 in the vicinity. A majority of respondents to the SIA survey stated that KPKKT has been managing the forest concession areas well, although Likewise, Pesama last updated its SIA in April 2017 following the some highlighted concerns over logging activities on water inaugural assessment carried out in 2012 featuring a similar resources. In addition, the SIA noted that poorly-supervised forest scope as KPKKT’s SIA. In Pesama’s case, the SIA focussed on the activities could potentially impact the non-timber forest produce four villages and an Orang Asal settlement near its CFC and found (NTFP), which could, in the long run, threaten the livelihood and that none of the communities depended on the forest for their job opportunities for forest-dependent communities. livelihood, although individuals continued to forage for food and timber supplies.
Nevertheless, all five groups expressed concerns over the environment and the need to protect natural forest resources, such as drinking and non-drinking water, water recreation, fisheries and tourism. Many of the mitigation measures recommended by Pesama’s SIA were similar to KPKKT’s version. 144 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
SOCIAL: Enabling and Empowering Our Human Resources (Continued) (GRI 401 - 419)
14 February 2020 27 March 2020 KAYUHAN MUHIBBAH 2.0 CSR IN THE COVID-19 PANDEMIC GP Cycling Team, a committee of Kelab Sukan Golden Pharos In appreciation of the frontliners who were working day and (KeSuGoRos) organised Kayuhan Muhibbah, which assembled night to fight the deadly COVID-19 virus, GPB’s Corporate more than 100 cyclists from Kuala Terengganu and Kuala Nerus to Communication took the initiative to contribute food packets to cycle and hike Bukit Peleting in Kuala Nerus. This was also part of all frontliners at Hospital Sultanah Nur Zahirah and Polis Diraja GPB’s CSR activities handled by its official club. Malaysia in Kuala Terengganu. We successfully distributed a total of 500 food packs.
29 February 2020 14 September 2020 2020 CEO BOWLING CHALLENGE TROPHY MAJLIS KACAU BUBUR ASYURA KeSuGoRos organised the CEO’s Bowling Challenge Trophy, where Pesama organised the Majlis Kacau Bubur Asyura amongst its five subsidiaries competed for the trophy. Pesama was declared employees to distribute the delicacy to the local community. This the winner of the tournament at the event that was held at activity was another CSR initiative for the community which was PB Sentral, Kuala Terengganu. organised during the month of Muharram. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 145
SOCIAL: Enabling and Empowering Our Human Resources (Continued) (GRI 401 - 419)
SUPPLIER SOCIAL ASSESSMENT (GRI 414)
As of FY2020, GPB has yet to screen suppliers using any social criteria. However, this issue is under consideration for implementation in the years ahead.
PUBLIC POLICY (GRI 415-1)
GPB is a Terengganu State GLC with no affiliations with or makes any contributions to any political parties. While our Board Members and senior management personnel may participate in various industry events and talks, and consult with industry authorities, they do not engage in any public policy development or lobbying.
22 September 2020 BRIEFING ON CODE OF BUSINESS ETHICS A briefing session on the Code of Business Ethics was organised by GPB’s Integrity and Governance Unit (IGU). The session was conducted at KPKKT, in Bukit Besi, Terengganu. The briefing was conducted by IGU Officer, Encik Amirul Syafiq Che Ajizi. 146 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
SOCIAL: Enabling and Empowering Our Human Resources (Continued) (GRI 401 - 419)
CUSTOMER HEALTH AND SAFETY MARKETING AND LABELLING (GRI 416-1, 416-2) (GRI 417-1, 417-2, 417-3)
The Group prioritises the health and safety of customers by Product labelling is an important part of consumer assurance as ensuring all our products conform to the respective local and it provides authentication on various concerns, such as origin, international standards. As such, we are committed to quality quality standards, components, materials and others. Our glass and industry best practices as set out by the requirements of products feature information, such as glass type, SIRIM logo and various certifications. other pertinent data. During the year in review, we did not record any incidents of non-compliance with regulations or in the case of As of FY2020, we have six certifications from various auditing marketing communication. and standards bodies, including SIRIM Berhad (formerly known as Standard and Industrial Research Institute of Malaysia) for CUSTOMER PRIVACY glass products produced by subsidiary company GP Glass. (GRI 418-1)
During the year in review, there was no record of any incidents At all times, we respect customer privacy and did not register any of non-compliance to health and safety requirements resulting complaints on this issue during the year in review. We are in full in fines and penalties, nor were there any incidents ofnon- compliance with the Personal Data Protection Act 2010 (PDPA). compliance resulting in warnings. SOCIO-ECONOMIC COMPLIANCE (GRI 419-1)
GPB did not incur any fines or sanctions for non-compliance with laws and regulations in the socio-economic area. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 147
SOCIAL: Enabling and Empowering Our Human Resources (Continued) (GRI 401 - 419)
CUSTOMER FEEDBACK AND The results of the survey, which rated customer perception of various aspects of SATISFACTION our service from a scale of 0 - 5 (with 5 being the highest score), is shown below:
GPB engages with our customers on a CUSTOMER FEEDBACK SURVEY RESULTS Management regularly basis to build and strengthen Urgent Delivery Support Responsiveness to Enquiry Commitment on Tasks relations, apart from also providing an avenue for feedback on our quality 4.0 4.2 4.0 4.4 4.1 4.1 4.2 4.2 3.9 of products and reliability of service. Through our interactions and surveys with customers, we are better placed to gauge and understand their expectations. 2020 2019 2018 2020 2019 2018 2020 2019 2018
During the year in review, our subsidiary company, GP Glass conducted a customer Quality of Products Completion of Delivery Cost Competitiveness survey in December, which underscored the need for our employees to better 4.2 4.1 4.1 3.9 4.0 3.9 3.7 4.0 3.7 understand proper procedures in responding to customers, and to improve the quality of our products. 2020 2019 2018 2020 2019 2018 2020 2019 2018
Customers were also asked to share their general opinions of GP Glass and its products. While the majority did not comment, the most commonly highlighted matters were product pricing, service support, and late customer feedback. These are areas we have prioritised since 2020.
39
32
26
5 5 3 3 3 4 3 2 2 2 1 2 2
0 0 2020 2019 2018 2020 2019 2018 2020 2019 2018 2020 2019 2018 2020 2019 2018 2020 2019 2018
Price is Expensive Quality Needs Improvement Delivery Needs Improvement
Good Support Late Feedback to Customer No Comment 148 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
GOALS FOR SUSTAINABLE,ECOLOGICAL, AND ORGANIC GROWTH
The spillover effects of the COVID-19 outbreak on businesses will likely come through increased workplace regulation and travel restrictions, reduced customer spending, delayed investments, disrupted supply chains, and uncertainty in financial markets.
While the world slowly recovers, we are looking into what matters most in our sustainable efforts and what makes good business sense moving forward. Our five-year Strategic Plan (FY2021-FY2025) was borne out of analysing, understanding and prioritising the social and environmental issues that present sources of risk and opportunity for the Group.
The concept has been widened to better collate, assess and prioritise the context of our overall progress in achieving the sustainable goals we set for ourselves, and by placing the utmost importance in transparency while constantly reviewing our management strategies and performance matrixes.
In tandem, we will do our utmost and act decisively to protect our planet from both the coronavirus and the existential threat of climate disruption. We must, and will , protect what matters most to us.
The The inclusiveness livelihoods of The land we we have built communities work on. with our we work in. stakeholders.
The respect The trust we have earned And… of our with business Mother Earth. shareholders. partners. GOVERNANCE
150 Policies
154 Corporate Governance Overview Statement
177 Statement on Risk Management and Internal Control
180 Audit Committee Report
150 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Policies
CODE OF CONDUCT AND DIVIDEND POLICY WHISTLEBLOWING POLICY
The Board of Directors (Board) of Golden Pharos The Group continues to adopt the Code of Conduct, which includes the Berhad (GPB) is pleased to announce a revised dividend Whistleblowing Policy to ensure that all employees conduct themselves with policy as follows: integrity and ethically.
1. This dividend policy was approved in financial This Code of Conduct (the Code) contains policies and guidelines relating year 2018. to the standards and ethics that all employees are expected to observe and obey in the course of their employment in the Company. The Code is 2. GPB has adopted a dividend policy with a intended to maintain discipline and order in the workplace. It also sets out the dividend payout ratio of the higher of: circumstances in which such employees would be deemed to have breached the Code and the actions that can be taken against them if they do so. • 40% of the Group’s Profit After Tax (PAT); OR The Whistleblowing Policy applies to the Company and all its subsidiary • 30% of the Group’s Earnings Before Interest, companies (if any). Employees (including permanent, contract, part time or Tax, Depreciation & Amortization (EBITDA) casual employees), Directors, Shareholders, Consultants, Contractors, outside agencies or any parties with a business relationship with the Company or its 3. The above dividend payout ratio is subject to the subsidiaries (if any) are encouraged to disclose any wrongdoings that may cashflow and the financial position of GPB. adversely impact the Company.
4. Pursuant to Section 131 of the Companies All stakeholders are encouraged to make a report directly either verbally or in Act 2016, GPB may only make a distribution of writing including emails, telephone conversations and letters which are to be dividend to the shareholders out of profit of GPB addressed to one of the following personnel : available if GPB is solvent.
a) Chief Executive Officer; 5. Pursuant to Section 112 of the Companies Act b) Executive Director; or 2016, before making a distribution of dividend, c) Human Resources Manager; GPB must satisfy a solvency test whereby:
• GPB is able to pay its debts as they become GOLDEN PHAROS BERHAD due during the period of 12 months 66-2 Taman Seri Intan immediately following the date of dividend Jalan Sultan Omar distribution; AND 20300 Kuala Terengganu
• The value of assets of GPB is greater than Phone : +609 630 1330 the value of its liabilities. Fax : +609 631 0617 Email : [email protected]
The Code of Conduct and Whistleblowing Policy are available on the Company’s website at www.goldenpharos.com GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 151
Policies (Continued)
CORPORATE SOCIAL RESPONSIBILITY (“CSR”) POLICY KUMPULAN PENGURUSAN KAYU-KAYAN TRENGGANU GPB’s CSR Policy ensures that we rigorously adhere to the highest SDN. BHD. standards in ethical behaviour, environmental sustainability, active engagement with the communities where we operate and more. DASAR PERLINDUNGAN HUTAN KPKKT (FOREST PROTECTION POLICY) The CSR Programmes contribute to the harmonious and sustainable development of society and the environment with the intention of building and maintaining sound relationships with the Kumpulan Pengurusan Kayu-Kayan Trengganu Sdn. Bhd. (KPKKT) Group’s stakeholders. diberi tanggungjawab oleh Kerajaan Negeri Terengganu untuk mengurus hutan jangka panjang di Dungun Timber Complex (DTC) In line with Group’s core businesses, the following are the secara lestari merangkumi keluasan 106,697 ha. categories and justification for organising CSR Programmes:
KPKKT bertanggungjawab untuk mengawal dan memelihara dari CATEGORIES JUSTIFICATION sebarang aktiviti pencerobohan tanah dan hutan atau aktiviti yang Nature and Forestry, logging, sawn-timber and tidak sah bagi memastikan kelestarian hutan terus terpelihara. Environment plantations are the Company’s main business activities, which are related to KPKKT komited mengamalkan kaedah tebangan secara memilih nature and environment. (SMS) serta menjalankan aktiviti pengusahahasilan hutan secara Community To comply with the 10 Forest Stewardship ril sebagaimana peraturan pensijilan MC&I dan FSC disamping Council (FSC) certification principles, the mematuhi ISO yang ditetapkan oleh Jabatan Perhutanan Company shall contribute to maintaining Semenanjung Malaysia (MS ISO 9001/2008). or enhancing the social and economic wellbeing of local communities affected by KPKKT akan melaksanakan pemantauan dan kawalan secara management activities. tetap ke atas kawasan operasi supaya tidak dicerobohi dan setiap aktiviti dijalankan mengikut kehendak peraturan perhutanan dan Sports To support and create public awareness of healthy lifestyle among its employees. alam sekitar. The FSC certification also stresses that the Company shall maintain or enhance the Dari semasa ke semasa, KPKKT akan berhubung dan bekerjasama social wellbeing of workers. dengan Pejabat Hutan Daerah serta agensi-agensi berkaitan dalam usaha untuk sama-sama menjaga kawasan hutan dan Education To support any educational activities menyalurkan maklumat sekiranya kawasan hutan dicerobohi. purposes in order to create awareness among public about nature and environment, that comply with the categories above. KPKKT akan memberi latihan kepada kontraktor dan kakitangan mengenai peraturan dan undang-undang perhutanan.
CSR activities and contributions must be based on the approved Adalah menjadi harapan kami supaya syarikat ini terus menjadi annual CSR budget, where the amount budgeted should be lower badan yang terunggul di Malaysia serta menjaga nama baik than 0.5 % of annual revenue or 10 % of Profit Before Tax (PBT). syarikat dalam menguruskan hutan secara berkekalan dari Contributions are allocated for approved organisations, where sebarang pencerobohan dan ancaman dari pihak yang tidak GPB and subsidiaries are operating, which support social causes, bertanggungjawab. education, sports activities and economic developments.
Approved organisations are organisations that are registered with The Registrar of Societies Malaysia (ROS) and actively involved in the local society. 152 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Policies (Continued)
KUMPULAN PENGURUSAN KAYU-KAYAN TRENGGANU PESAKA TRENGGANU BERHAD SDN. BHD.
POLISI KESIHATAN DAN POLISI KESIHATAN DAN KESELAMATAN PEKERJA KESELAMATAN PEKERJA (OCCUPATIONAL HEALTH (OCCUPATIONAL HEALTH AND SAFETY POLICY) AND SAFETY POLICY)
Adalah dengan ini syarikat sentiasa memberikan komitmen Dengan objektif bagi mewujudkan suasana kerja yang aman, sepenuhnya terhadap keselamatan, kesihatan dan kesejahteraan selesa, selamat dan berkesan, maka pihak pengurusan untuk semua kakitangan serta semua individu yang terlibat dengan menggariskan perkara berikut: aktiviti syarikat. Syarikat juga BERTANGGUNGJAWAB menjaga kebajikan terhadap keselamatan dan kesihatan kakitangannya dan i. Menyediakan dan menyelenggara jentera atau mesin supaya sentiasa dalam keadaan sempurna dan selamat. menyediakan tempat kerja yang selamat selesa dan sesuai serta tidak terdedah kepada sebarang risiko terhadap keselamatan dan ii. Mewujudkan sistem kerja atau peraturan kerja di mana ciri- kesihatan. ciri keselamatan diberi keutamaan.
Ini selaras dengan kehendak peruntukan-peruntukan yang iii. Memberikan maklumat dan panduan secukupnya kepada terdapat di dalam AKTA KESELAMATAN DAN KESIHATAN DALAM kakitangan supaya dapat menjalankan kerja secara betul dan PEKERJAAN (AKTA 514). bagi menghadapi masalah yang timbul.
Dalam merealisasikan hasrat di atas, syarikat akan sentiasa iv. Mengadakan sistem kawalan dan pemeriksaan dari semasa memberi sokongan kepada program-program dan latihan yang ke semasa bagi menjamin keselamatan di samping menyiasat berkaitan dengan keselamatan dan kesihatan di tempat kerja. semua laporan kemalangan. Syarikat juga akan menyemak dan mengemaskini polisi ini dari v. Menyediakan kemudahan dan peralatan yang sesuai untuk semasa ke semasa. SEMUA PEKERJA DAN PENGURUSAN sedia keselamatan dan kebajikan pekerja. memberi kerjasama bagi memastikan semua program yang dirancang berjalan dengan lancar. vi. Mematuhi Akta Keselamatan dan Kesihatan Pekerjaaan 1994 serta lain-lain peraturan berkaitan. Perlu ditekan, semua individu mesti mempunyai kesedaran serta bertanggungjawab dalam menjalankan aktiviti syarikat dengan vii. Menyemak, meminda serta mengemaskini polisi ini dari kaedah dan cara kerja yang selamat. masa ke semasa menurut kesesuaian.
“UTAMAKAN KESELAMATAN DUNIA DAN AKHIRAT” Bagi tujuan tersebut di atas, pihak pengurusan syarikat akan sentiasa memberi sokongan serta kerjasama sepenuhnya kepada Jawatankuasa Keselamatan dan Kesihatan Pekerja.
“KERJA BERHEMAT JIWA SELAMAT” GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 153
Policies (Continued)
PESAMA TIMBER CORPORATION SDN. BHD. GOLDEN PHAROS GLASS SDN. BHD.
POLISI KESIHATAN DAN POLISI KESIHATAN DAN KESELAMATAN PEKERJA KESELAMATAN PEKERJA (OCCUPATIONAL HEALTH (OCCUPATIONAL HEALTH AND SAFETY POLICY) AND SAFETY POLICY)
Selaras dengan moto ‘PEKERJA AKTIF PESAMA PRODUKTIF, Golden Pharos Glass Sdn. Bhd. (GP Glass) is committed to providing PEKERJA BERDEDIKASI PENGELUARAN BERKUALITI’, syarikat a safe and healthy working environment in accordance with the memberikan komitmen sepenuhnya terhadap keselamatan, Occupational Safety and Health Act and any applicable law. kesihatan dan kesejahteraan untuk semua kakitangan serta GP Glass will ensure that the safety and health of workers semua individu yang terlibat dengan aktiviti syarikat. Syarikat juga is assured because employees are the main assets of BERTANGGUNGJAWAB menjaga kebajikan terhadap keselamatan the company. dan kesihatan kakitangannya dan menyediakan tempat kerja yang In order to ensure that the policy objectives are achieved, selamat, selesa dan sesuai serta tidak terdedah kepada sebarang GP Glass will strive to: - risiko terhadap keselamatan dan kesihatan. • Provide and maintain a safe workplace that complies with the local and international laws and safety standards. Ini selaras dengan kehendak peruntukan-peruntukan yang • Provide training and safety procedures as a guideline to terdapat di dalam AKTA KESELAMATAN DAN KESIHATAN DALAM enable employees to work safely and efficiently. PEKERJAAN (AKTA 514). • Provide safety equipment according to the workplace requirements and provide briefing of the use of safety Dalam merealisasikan hasrat di atas, syarikat akan sentiasa equipment. memberi sokongan kepada program-program dan latihan yang berkaitan dengan keselamatan dan kesihatan di tempat kerja. The duties and responsibilities of employees are to fully cooperate SEMUA PEKERJA DAN PENGURUSAN sedia memberi kerjasama on the implementation of security policies through: - bagi memastikan semua program yang dirancang berjalan dengan • Working safely and efficiently. lancar. • Use safety equipment according to workplace requirements. • Report accidents that occur, near accidents and hazardous Perlu ditekankan, semua individu mesti mempunyai kesedaran sites that may cause injury as soon as possible. serta bertanggungjawab dalam menjalankan aktiviti syarikat • Comply with company rules and procedures to ensure a safe dengan kaedah dan cara kerja yang selamat. workplace.
Safety and health policy will be reviewed and updated as necessary. “UTAMAKAN KESELAMATAN DUNIA DAN AKHIRAT” “TOGETHER WE PRACTICE SAFETY AND HEALTH” 154 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Corporate Governance Overview Statement
THE BOARD OF DIRECTORS OF GOLDEN PHAROS BERHAD (“GPB” OR “THE COMPANY”) PRESENTS THIS
STATEMENT TO PROVIDE SHAREHOLDERS AND INVESTORS WITH AN OVERVIEW OF THE CORPORATE
GOVERNANCE (“CG”) PRACTICES OF THE COMPANY UNDER THE STEWARDSHIP OF THE BOARD DURING
FINANCIAL YEAR 2020 AND UP TO THE DATE OF THIS STATEMENT. THIS OVERVIEW IS GUIDED BY THE KEY
CG PRINCIPLES SET OUT IN THE MALAYSIAN CODE ON CORPORATE GOVERNANCE (“MCCG 2017”).
This Corporate Governance Overview Statement is made pursuant to Paragraph 15.25(1) of the Main Market Listing Requirements (“Listing Requirements”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) and guidance was drawn from Practice Note 9 of Listing Requirements and the Corporate Governance Guide (3rd Edition) issued by Bursa Securities. It should be read together with the Corporate Governance Report (“CG Report”) prepared based on a prescribed format as enumerated in Paragraph 15.25(2) of the Listing Requirements so as to provide a detailed articulation on the application of the Company’s CG practices vis-à-vis the MCCG. The CG Report is available on the Company’s website at http://www.goldenpharos.com.
EMBRACING THE CG CULTURE
In building a sustainable business and discharging its prescribed roles, the Board is mindful of its accountability to shareholders and various stakeholders of GPB. The Board is committed to ensuring that it provides effective stewardship and promotes ethical standards in the Company. One of the ways in which the Board achieves this is by requiring adherence to good governance principles and practices throughout the Company.
The Board is pleased to present this Corporate Governance Overview Statement and explain how GPB has applied the 3 principles that are set out in the MCCG. a) Board Leadership & Effectiveness b) Effective Audit & Risk Management c) Integrity in Corporate Reporting & Meaningful Relationship with Stakeholders GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 155
Corporate Governance Overview Statement (Continued)
GPB’s Corporate Governance Framework is premised upon the following statutory provisions, best practices, policies and guidelines:
PRINCIPLE A BOARD LEADERSHIP & EFFECTIVENESS ITS IMPORTANCE
This section provides an overview of the An effective Board does not place itself in a comfortable setting Board and how it and its Committees and it does not remain static. A dynamic Board should constantly interlink. Details of the activities considered evolve in response to the environment in which it operates. by the Board and also some of the core Challenges as well as teamwork are essential features of the responsibilities are also explained. Board.
PRINCIPLE B EFFECTIVE AUDIT & RISK MANAGEMENT ITS IMPORTANCE
This section describes the work of the From a risk perspective, diligent measured risk management Audit Committee and the enterprise risk structures and framework help to address risks and strategy. management function in the Group including This includes overall management of all risks covering market the implementation of risk framework, risk, credit risk, operational risk, reputational risk and cyber risk. processes and the Group’s risk appetite and internal control.
PRINCIPLE C INTEGRITY IN CORPORATE REPORTING ITS IMPORTANCE & MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS An understanding of the importance of maintaining and fostering good meaningful relationship with our stakeholders plays a key This section provides an overview of how role within our ecosystem. we communicate with stakeholders, their concerns and expectations.
GPB’s Corporate Governance Framework is premised upon the following statutory provisions, best practices, policies and guidelines:
CORPORATE GOVERNANCE FRAMEWORK
Companies Act 2016 Listing Requirements MCCG 2017 Corporate Governance Guide (“CA 2016”) Bursa Securities 3rd Edition issued by Bursa Malaysia Berhad 156 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Corporate Governance Overview Statement (Continued)
PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS • Promoting sound corporate culture and overseeing the Group’s adherence to high standards of conduct, ethics and Role of the Board corporate professional behaviour.
The Board’s pivotal role is to lead and establish GPB Group’s Roles of the Chairman and Chief Executive Officer vision, strategic direction, key policies and framework, including the management of the succession planning process of the Group The roles of the Chairman and Chief Executive Officer remain and the appointment of key senior management. separate and distinct. The Chairman of the Board is Non- Independent and Non-Executive. The Chairman plays an The roles and responsibilities of the Chairman, Board, CEO important leadership role within the Group and is responsible for: and Company Secretary is clearly defined in a Board Charter. The Board’s responsibilities include but are not limited to the • Setting the agenda for meetings of the Board that focus on following: strategic direction and performance.
• Reviewing and approving the strategic business plans of • Maintaining on-going dialogue and relationship of trust the Group developed by Management in alignment with the with and between the Directors and management. approved risk appetite and considering the sustainability of the Group’s businesses. This encompasses the annual • Ensuring clear and relevant information is provided to budget, medium term aspirations, new investments/ Directors in a timely manner. divestments as well as key projects. • Ensuring sufficient time is allowed for the discussion of • Overseeing the conduct of the business to ascertain its complex or critical issues. proper management including setting clear objectives and policies within which senior executives are to operate. The Board delegates the authority and responsibility for managing the everyday affairs of the Group to the Chief Executive Officer, • Identifying and approving policies pertaining to the and through him and subject to his oversight, to other Senior management of all risk categories including but not limited Management. The Board monitors the performance of the Chief to credit, financial, market, liquidity, operational, legal and Executive Officer on behalf of the shareholders. reputational risks.
• Reviewing the adequacy and the integrity of internal controls and management information systems, including systems for compliance with applicable laws, rules, regulations, directives and guidelines.
• Reviewing the leadership and succession planning of the Group with a view to ensuring the Group’s continued ability to sustain and compete effectively in the market.
• Serving as the ultimate approving authority for all significant financial expenditures. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 157
Corporate Governance Overview Statement (Continued)
Role of the Company Secretary Changes to the composition of the Board during the financial year under review and up to the date of this statement were as follows: The Company Secretary reports directly to the Board and is the source of guidance and advice to the Directors on areas Resigned on 31/12/2020 Appointed on 3/1/2021 of corporate governance, relevant legislation, regulations and policies, besides ensuring compliance with the listing requirements Dr Wan Ahmad Rudirman Burhanuddin Hilmi bin of Bursa Securities and other regulatory requirements. bin Wan Razak Mohamed @ Harun
The Company Secretary attends Board and Board Committee Board Diversity meetings and is responsible for the accuracy and adequacy of records of the proceedings of Board and Board Committee The Board acknowledges the importance of diversity, including meetings and resolutions. gender, ethnicity, age and business experience to the effective functioning of the Board. The Company Secretary also serves closed period notices to Directors and Senior Management for trading in the Company’s While it is important to promote such diversity, the normal shares and briefs the Board on the content and timing of sensitive selection criteria of a Director, based on an effective blend of or material announcements to Bursa Securities. competencies, skills, extensive experience and knowledge in areas identified by the Board, should remain a priority so as not to The Company Secretary also ensures that the Group complies with compromise on effectiveness in carrying out the Board’s functions all the statutory reporting requirements under the Companies and duties. Hence, the Board is committed to ensure that its Act 2016. composition not only reflects the diversity as recommended by MCCG, as best as it can, but also has the right mix of skills and Board Composition balance to contribute to the achievement of the Group’s goals.
The Board is chaired by a Non-Independent Non-Executive The Board currently has no female Director, but the Board seeks Director and currently comprises seven (7) Directors, four (4) of to appoint in the future a female Director who meets the pre- whom are Non-Independent Non-Executive Directors (“NINED”) determined skill sets and competencies. and three (3) Independent Non-Executive Directors (“INED”). The Board continues to achieve a balance of skills, knowledge, experience and perspective among its Directors. The profiles of the Directors are set out on pages 36 to 39 of this Annual Report.
The Directors collectively provide the necessary mix of skills, knowledge and experience in key areas. These include accountancy, finance, legal, risk management, socio politics, governance, economics, and forestry. 158 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Corporate Governance Overview Statement (Continued)
As at 31 December 2020, the Board Composition, Tenure, Age and Gender for GPB is set out in the table below.
BOARD COMPOSITION Non-Independent Independent Non-Executive Director Non-Executive Director
TENURE Up to 2 years More than 2 years and up to 3 years More than 3 years and up to 4 years
NIL
AGE 40 - 50 50 - 60 60 - 70
GENDER Male Female
NIL
14% 57% 57% Corporate CEO/ Managing Director
Accounting / Financial Management
Human Capital EXPERIENCE & Legal / Regulatory SKILLS 14%
Government Experience 14% Forestry Field
Breadth of Business Experience 86% 29%
Corporate Governance 14% GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 159
Corporate Governance Overview Statement (Continued)
Corporate Breadth Forestry Government Legal/ Human Accounting/ Corporate Governance of Business Field Experience Regulatory Capital Financial CEO/ Experience Management Managing Director
YBM Dato’ 3 3 3 3 3 Tengku Hassan bin Tengku Omar
Dato’ Bentara 3 3 3 3 Dalam Dato’ Haji A. Rahman bin Yahya
Dr Wan Ahmad 3 3 3 Rudirman bin Wan Razak
Associate 3 Professor Dr Mohd Zaki bin Hamzah
Muhammad 3 3 3 Ramizu bin Mustaffa
Mohd 3 3 Badaruddin bin Ismail
Saiffuddin bin 3 3 Othman
Total 57% 86% 14% 29% 14% 14% 57% 14% 160 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Corporate Governance Overview Statement (Continued)
Appointment of New Directors c. The NRC may identify Director candidate using executive search firms, recommendation from management or The Company’s Constitution permits the Board to appoint a recommendation from other Directors. person to be a Director of the Company at any time, either to fill a casual vacancy or as an addition to the existing Directors, Procedures not exceeding nine (9). The policies and procedures for new appointments are as follows: a. The NRC will perform a preliminary assessment of potential candidate based on referrals from executive search firms, Policies management or other Directors. a. The Nomination and Remuneration Committee (“NRC”) b. NRC will assess the suitability in terms of technical expertise, will establish the minimum requirements on the skills experience and the behavioural and cultural fit with the and core competencies of a Director based on the annual Board in addition to ascertaining the candidate’s interest, review of the required mix of skills, experience and core availability and terms of appointment. This will be tabled at competencies within the Board as well as to ascertain the the NRC for further discussion and deliberation on whether ‘fit and proper’ criteria for each Director. the candidate is suitable to be recommended to the Board for appointment. b. When assessing a person for nomination to the Board, the qualifications and skills to be considered by the NRC shall c. The Board will deliberate on the recommended candidate include, but are not limited to: and, if deemed appropriate, appoint the candidate.
• Whether or not the person qualifies as a Director Director Induction who is ‘independent’ under applicable laws and regulations, including applicable provisions of a. Newly appointed Board members would attend the the Listing Requirements of Bursa Securities, and Company’s Induction Programme which includes a whether the person is qualified under applicable Mandatory Accreditation Programme as required by Listing laws and regulations to serve as a Director of the Requirements. Company. b. The new Board member will be fully briefed on the terms of • Whether or not the person meets the ‘fit and proper’ his appointment, duties and responsibilities, as well as on criteria under applicable laws and regulations. the nature, operations and current issues of the Company.
• Whether or not the person is willing to serve as c. The NRC will review the induction process on a periodic a Director and to commit the time necessary to basis to ensure that all pertinent information is provided perform the duties as a Director. to the Director, and that adequate time has been given for the Director to familiarise with the Company, its Board and • The contribution that the person can make to the operations. Board and to the overall desired Board composition, considering the person’s business experience, education and such other factors as the Board may consider relevant.
• The character and integrity of the person. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 161
Corporate Governance Overview Statement (Continued)
Re-election and re-appointment of Director • Whether or not an independent director still qualifies as ‘independent’ under applicable laws and A candidate who is appointed as Director of the Company must regulations, including applicable provisions of the seek re-election by shareholders at the next Annual General Listing Requirements of Bursa Securities. Meeting (“AGM”). The Constitution of the Company further provides for the rotation of Directors whereby one third or more c. Based on the assessment results, the NRC will recommend of the Directors are to retire at every AGM of the Company and the Directors seeking re-election to the Board, who will then that all Directors must retire at least once in 3 years and shall be recommend to the shareholders for approval at the AGM. eligible for re-election. Annual Board Effectiveness Evaluation (“BEE”) for FY2020 Directors who are due for re-election at the forthcoming AGM and who have given their written consent to be re-appointed, are Our Board undergoes an annual assessment to review set out in the Notice of the AGM. Directors who are due for re- its performance. Apart from being an assessment of past election are also subject to the following policies and procedures: performance, the BEE is used as a tool to identify the strengths and weaknesses of our Board, Board Committees and individual Policies Directors to enable them to raise the bar on Board performance, which is a key trait of a progressive Board. a. Retirement of Directors by rotation will follow the requirements stipulated in the constitution of the Company. Similar to the previous year, the BEE for FY2020 was conducted in November 2020 by our Board and supported by our Company b. Tenure of Directorship will follow the requirements Secretary. BEE FY2020 was a peer-evaluation process where all stipulated in the MCCG 2017. our Directors were asked to evaluate themselves individually as a director and collectively as a Board. Procedures The results of BEE FY2020 did not indicate any significant a. The NRC will assess the performance and contribution of weaknesses and found that our Board, Board Committees each Director to the Board and Board Committees based on and each individual Director have continued to the results of the annual Board Assessments and individual perform their duties satisfactorily and that the level of Directors’ self and peer assessment. independence shown by INEDs is high. b. The NRC will consider the current Directors in the same Based on the findings, our Board has recommended the manner as other candidates, taking into consideration re-election of several Directors who will be retiring at the the Director’s performance during his term, including forthcoming 2020 AGM and will consider increasing the level of consideration of the following factors: independent representation on our Board to bring it in line with the MCCG’s recommendation. In respect of Board responsibilities, • Compliance with governing legislation, regulations enhancing board oversight over the execution of strategies and or guidelines, particularly conflict of interest, transformation plans is a key focus in FY2020. confidentiality, fit and proper criteria, and duty of care provisions. 162 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Corporate Governance Overview Statement (Continued)
BEE FY2020 was also extended to the board of directors of all of our group subsidiaries.
In order to drive continuous improvement in Board performance, Terengganu Incorporated Sdn Bhd (“Terengganu Inc”) Group has appointed ICC Consultant Centre Sdn. Bhd. ("ICC") to assist and facilitate the first Terengganu Inc Group Board Annual Assessment for directors who has served during the period from 1 January 2019 to date.
The scope of the BEE for FY2020 covered the following areas:
INDIVIDUAL DIRECTOR’S BOARD PERFORMANCE COMMITTEE EVALUATION EVALUATION EVALUATION
• Board contribution • Board composition • Quality of recommendation for decision making • Knowledge and abilities • Board roles and functioning • Relevant expertise • Teaming • Information management • Ability, performance, experience • Integrity • Monitoring company performance • Chairman and Committee based on • Personal commitment • Directors’ development and management appropriate criteria • Technical Field of Knowledge • Board relationship with the management • Communication 'Know-How' Board of Directors • Non-Technical Competencies of Board • Industry 'Know-How' Board of Members Directors
Meetings and Time Commitment
The calendar of meetings of the Board and Board Committees is drawn up and distributed to the Board in the quarter preceding the beginning of the new calendar year. This is to enable the members of the Board to meet the time commitment for the meetings.
In addition to the above, all Directors of the Company have complied with the Listing Requirements of Bursa Securities of not holding more than five (5) directorships in listed issuers at any given time. This is to ensure the Directors do not have competing time commitments that may impair their ability to discharge their responsibilities effectively.
The Board may from time to time and if deemed appropriate, consider and approve any matter via circular resolution in writing. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 163
Corporate Governance Overview Statement (Continued)
Board Meeting attendance in FY2020:
Number of Meetings
Held During Tenure in Name of Directors Office Attendance %
YBM Dato’ Tengku Hassan bin Tengku Omar 6 6 100
Dato’ Bentara Dalam Dato’ Haji A. Rahman bin Yahya 6 6 100
Dr Wan Ahmad Rudirman bin Wan Razak 6 5 83 (Resigned on 31/12/2020)
Associate Professor Dr Mohd Zaki bin Hamzah 6 6 100
Muhammad Ramizu bin Mustaffa 6 6 100
Mohd Badaruddin bin Ismail 6 5 83
Saiffuddin bin Othman 6 6 100
Burhanuddin Hilmi bin Mohamed @ Harun - - - (Appointed on 3/1/2021)
Board Committees
The Board delegates certain responsibilities to the Board Committees. The Committees that assist the Board are as follows:
GPB BOARD Responsible for providing stewardship and oversight of the Group’s business affairs
Nomination and Long Term Incentive Strategy and Audit Remuneration Plan Committee Investment Committee Committee Committee
The criteria for membership are based on a Director’s skills and experience as well as their ability to add value to the Board Committee.
The Chief Executive Officer and other Senior Management are invited to attend all Board Committee meetings. 164 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Corporate Governance Overview Statement (Continued)
a. Nomination and Remuneration Committee (NRC)
The committee comprises exclusively of the following Non-Executive Directors, a majority of whom are independent:
Name Designation Directorship
Associate Professor Dr Mohd Zaki bin Hamzah Chairman Independent
Dr Wan Ahmad Rudirman bin Wan Razak Member Non-Independent (Resigned on 31/12/2020)
Mohd Badaruddin bin Ismail Member Independent
Saifuddin bin Othman Member Independent
Burhanuddin Hilmi bin Mohamed Harun Member Non-Independent (Appointed to NRC on 14/1/2021)
The Committee is responsible for:
• Regularly reviewing the overall composition of the Board, in terms of the appropriate size, skills, experience, qualification and diversity in terms of gender, ethnicity and age as well as the balance between Executive Directors, Non-Executive Directors and Independent Directors.
• Recommending the appointment of Directors to the Board and Committees of the Board as well as annually reviewing the mix of skills, experience and competencies that Non-Executive and Executive Directors should bring to the Board.
• Assessing the performance and effectiveness of individuals and collective members of the Board and Board Committees of the Company and its subsidiaries.
• Recommending to the Board a formal and transparent procedure for developing the remuneration policy for Directors, key management personnel, the Head of Internal Audit and staff for the approval of the Board. The Committee shall ensure that compensation is competitive and consistent with the Group’s culture, objectives and strategy and reflects the responsibility and commitment which goes with Board membership and key management personnel. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 165
Corporate Governance Overview Statement (Continued)
The Committee met four (4) times during FY2020:
No. of NRC Meetings
Held During Tenure in Name of Directors Office Attendance %
Associate Professor Dr Mohd Zaki bin Hamzah (Chairman) 4 4 100
Dr Wan Ahmad Rudirman bin Wan Razak 4 3 75 (Resigned on 31/12/2020)
Mohd Badaruddin bin Ismail 4 3 75
Saiffuddin bin Othman 4 4 100
Burhanuddin Hilmi bin Mohamed @ Harun - - - (Appointed to NRC on 14/1/2021)
b. Long Term Incentive Plan Committee (LTIP Committee)
The Long-Term Incentive Plan (LTIP) was approved by the shareholders of GPB at an Extraordinary General Meeting held on 26 June 2018 and on 8 August 2018, the board approved the formation of LTIP Committee. The primary function of the LTIP Committee is to completely administer the implementation of the Employee Share Option Scheme (“ESOS”) and the Executive Share Grant Scheme (“ESGS”) in accordance with the approved By-Laws.
The LTIP Committee has the full authority to make decisions on matters that shall be final and binding which fall within the purpose and responsibilities of LTIP Committee in accordance with the By-Laws. The CEO is the member of LTIP Committee and he shall not participate in the deliberation or discussion of his own allocation.
The LTIP Committee membership is as follows:
Name Designation Directorship
Muhammad Ramizu bin Mustaffa Chairman Non-Independent
Dato’ Bentara Dalam Dato’ Haji A. Rahman bin Yahya Member Non-Independent
Associate Professor Dr Mohd Zaki bin Hamzah Member Independent
Dato’ Ahmad Nadzarudin bin Abdul Razak Member CEO 166 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Corporate Governance Overview Statement (Continued)
The Committee met two (2) times during FY2020:
Held During Tenure in Attendance % Name of Directors Office
Muhammad Ramizu bin Mustaffa (Chairman) 2 2 100
Dato’ Bentara Dalam Dato’ Haji A. Rahman bin Yahya 2 2 100
Associate Professor Dr Mohd Zaki bin Hamzah 2 2 100
Dato’ Ahmad Nadzarudin bin Abdul Razak 2 2 100 c. Audit Committee (AC)
The AC currently comprises 4 members, of whom 3 are Independent Directors and 1 is a Non-Independent Director. The AC is chaired by Mohd Badaruddin bin Ismail, an Independent Director. None of the current members of the AC is a former key audit partner involved in auditing the Group.
The AC has policies and procedures to review, assess and monitor the performance, suitability and independence of the external auditors. Prior to the commencement of the annual audit, the AC will seek confirmation from the external auditors as to their independence. This confirmation would be re-affirmed by the external auditors to the AC upon their completion of annual audit.
The AC membership is as follows:
Name Designation Directorship
Mohd Badaruddin bin Ismail Chairman Independent
Associate Professor Dr Mohd Zaki bin Hamzah Member Independent
Muhammad Ramizu bin Mustaffa Member Non-Independent
Saiffuddin bin Othman Member Independent
The Committee met five (5) times during FY2020:
Held During Tenure Attendance % Name of Directors in Office
Mohd Badaruddin bin Ismail (Chairman) 5 4 80
Associate Professor Dr Mohd Zaki bin Hamzah 5 4 80
Muhammad Ramizu bin Mustaffa 5 5 100
Haji Saiffuddin bin Othman 5 5 100
The activities of the AC are disclosed on pages 180 to 185 of this Annual Report. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 167
Corporate Governance Overview Statement (Continued)
d. Strategy and Investment Committee (SIC)
The SIC was established to consider and evaluate strategic proposals and investment/ divestment related proposals of GPB Group for recommendation to the Board. It is also tasked with considering and deliberating all proposals relating to GPB Group’s properties (i.e. land and buildings).
The combined experience and knowledge of the members enables SIC to assess and evaluate strategic and major proposals objectively. SIC remains strong and productive in its deliberations and provide clear guidance to management on key issues and concerns before submitting any recommendations to the Board for approval.
The SIC membership is as follows:
Name Designation Directorship
Dato’ Bentara Dalam Dato’ Haji A. Rahman bin Yahya Chairman Non-Independent
Dr. Wan Ahmad Rudirman bin Wan Razak Member Non-Independent (Resigned on 31/12/2020)
Muhammad Ramizu bin Mustaffa Member Non-Independent
Burhanuddin Hilmi bin Mohamed @ Harun Member Non-Independent (Appointed to SIC on 14/1/2021)
The Committee met two (2) times during FY2020:
Held During Name of Directors Tenure in Attendance % Office
Dato’ Bentara Dalam Dato’ Haji A. Rahman bin Yahya 2 2 100
Dr. Wan Ahmad Rudirman bin Wan Razak 2 2 100 (Resigned on 31/12/2020)
Muhammad Ramizu bin Mustaffa 2 2 100
Burhanuddin Hilmi bin Mohamed @ Harun - - - (Appointed to SIC on 14/1/2021) 168 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Corporate Governance Overview Statement (Continued)
Board Charter No Gift Policy The Board has formalised and adopted a Board Charter which serves as a source of reference for Directors. The Board Charter The establishment of this policy is to avoid any actual or perceived is established to provide guidance and clarity on the Board’s roles conflict of interest in any ongoing or potential business dealings and responsibilities. The Board Charter also sets out processes and decision making, and to demonstrate commitment to the and procedures for convening Board meetings. highest standards of ethics and integrity.
The GPB Board Charter is provided to each Director and the Board Anti-Bribery and Anti-Corruption Policy reviews its Charter periodically, subject to changes in regulations and best practices. The Group has established an Anti-Bribery and Anti-Corruption Policy which prohibits all forms of bribery and corruption practices Code of Conduct and Business Ethics pursuant to Section 17A of the Malaysian Anti-Corruption Commission Act 2009. The Company is committed to uphold a The Board is aware of the need to establish a corporate culture high standard of business ethics to create an environment of that would foster the common goal of achieving business mutual trust whilst increasing confidence of our stakeholders profitability, whilst cultivating ethical business conducts. The internally and externally. Board has approved the adoption of Terengganu Inc Group Code of Conduct and Business Ethics to supplement the existing Directors’ Training & Development Employee Code of Conduct Policy of which all directors and employees are required to adhere to, failure of which will result in The Board recognises the importance of ensuring that Directors appropriate action being taken. are continuously being developed to acquire or enhance the requisite knowledge and skills to discharge their duties effectively. Whistleblowing Policy and Procedures All new Directors appointed to the Board attend a formal induction The Whistleblowing Policy is intended to directly support the Core programme to familiarise themselves with the Group’s strategy Values, Code of Business Ethics and Government requirement. and aspiration, line of businesses and corporate functions, key It is an avenue to encourage and enable employees and others financial highlights, audit, compliance and risk management. The to raise legitimate concerns to be objectively investigated and programme is conducted by the Chief Executive Officer as well as addressed within the Group. Senior Management.
The policy provides an alternative avenue for the internal or As required by the Listing Requirements of Bursa Securities, external stakeholders to raise concerns related to possible all Directors have successfully completed the Mandatory improprieties in matters of compliance and other malpractices in Accreditation Programme (“MAP”) within the stipulated time an appropriate manner and without fear of reprisal or retaliation. frame of four months from their respective date of appointment. Apart from the MAP, all Directors appointed to the Board have also attended other relevant training programmes, talks, seminars, dialogue sessions and focus group sessions organised by regulatory authorities and professional bodies to further enhance their business acumen and professionalism in discharging their duties to the Group. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 169
Corporate Governance Overview Statement (Continued)
The Board also continuously evaluates and determines the training needs of the directors. Training must aid the director in the discharge of his or her duties as a director.
The Directors of the Company attended the following training programmes, talks, seminars, dialogue sessions and focus group sessions during the FY2020:
Directors Training for FY2020
Name of Directors Courses/ Training Programmes attended
YBM Dato’ Haji Tengku Hassan bin Tengku Omar • Corporate Tea Talk SSM Terengganu 2020
Dato’ Bentara Dalam Dato’ Haji A. Rahman bin Yahya • MIA Webinar Series: Budget 2021: Key Updates and Changes for Corporate Accountants
Dr Wan Ahmad Rudirman bin Wan Razak • Invest Malaysia Virtual Series 1: Economic Recovery - Policies and Opportunities • Risk Awareness Week 2020 Opening Event & Webinar @ Risks: Now & Beyond
Associate Professor Dr Mohd Zaki bin Hamzah • Corporate Tea Talk SSM Terengganu 2020
Muhammad Ramizu bin Mustaffa • Companies Act 2016. Transactions by Directors
Haji Saiffuddin bin Othman • Corporate Tea Talk SSM Terengganu 2020
Mohd Badaruddin bin Ismail • Corporate Tea Talk SSM Terengganu 2020 • MIA Webinar Series: Budget 2021: Key Updates and Changes for Corporate Accountants
Remuneration
The Board believes in a competitive and transparent remuneration framework that supports the Directors’ and Senior Management’s responsibilities and fiduciary duties in managing the Group to achieve its long-term objectives and enhance stakeholders’ value.
One of the principal authorities of the Board delegated to the NRC is to review, deliberate and recommend to the Board a remuneration policy for Directors and Senior Management guided by the Group Human Resource policy, market norms and industry practice.
The Directors are paid Directors’ fees, Board Committee allowance, other allowances, directors & officers insurance coverage and out- patient medical claims. 170 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Corporate Governance Overview Statement (Continued)
Aggregate Remuneration of the Directors
The details of the aggregate remuneration of the Directors of the Company [comprising remuneration received and/or receivable from the Company during FY2020], including Directors who have resigned are as follows:
Fees Other Total Emoluments
YBM Dato’ Haji Tengku Hassan bin Tengku Omar 30,000 188,300 218,300
Dato’ Bentara Dalam Dato’ Haji A. Rahman bin Yahya 25,000 23,100 48,100
Dr Wan Ahmad Rudirman bin Wan Razak 25,000 22,500 47,500
Associate Professor Dr Mohd Zaki bin Hamzah 25,000 30,500 55,500
Muhammad Ramizu bin Mustaffa 25,000 30,100 55,100
Mohd Badaruddin bin Ismail 25,000 30,700 55,700
Saiffuddin bin Othman 25,000 29,700 54,700
TOTAL 534,900
The number of Directors whose remuneration fall within the following bands are:
Number of Directors
Number of Directors
Directors Remuneration Executive Directors Non-Executive Directors
Less than RM50,000 - 2
RM50,000 to RM100,000 - 4
RM100,001 to RM150,000 - -
RM150,001 to RM200,000 - -
RM200,001 and above - 1 GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 171
Corporate Governance Overview Statement (Continued)
PRINCIPLE B – EFFECTIVE AUDIT AND RISK MANAGEMENT
1. Audit Committee The AC is empowered by the Board to review Effective and Independent Audit Committee: any matters concerning the appointment and re- appointment, resignations or dismissals of external • The Chairman of the AC is not the Chairman of the auditors and review and evaluate factors relating to Board. the independence of the external auditors. The terms - The Chairman of the AC is an independent of engagement for services provided by the external director who is not the Chairman of the Board. auditors are reviewed by the AC prior to submission to the Board for approval. Feedback based on the • Cooling-off Period for a Former Audit Partner to be assessment areas is obtained from the AC, the appointed as AC Member. internal auditor, and senior management and the - The AC has a 2-year cooling-off period policy Head of Departments. for a candidate who was a former audit partner before appointment as a member of the AC Under this policy, only non-audit services which are as recommended by Practice Note 8.2 of the able to provide clear efficiencies and value-added MCCG. However, the said policy currently does benefits to the Group and do not impede the external not apply to the AC given none of the AC or auditors’ audit works will be accepted by the AC. Board members is a former audit partner. On the other hand, the AC also seeks written • Policies and Procedures for Assessment of Suitability, assurance from the external auditors, confirming that Objectivity and Independence of External Auditors. they are, and have been, independent throughout the conduct of the audit engagement with the Company The AC maintains a transparent and professional in accordance with the independence criteria set relationship with the external auditors of the out by the MIA. The external auditors provide such Company. The external auditors fill an essential role declaration in their annual audit plan presented to by enhancing the reliability of the Company’s Annual the AC prior to the commencement of audit for a Audited Financial Statements and by giving assurance particular financial year. to stakeholders of the reliability of the Annual Audited Financial Statements. The external auditors have an obligation to bring any significant defects in the Company’s system of control and compliance to the attention of the Management; and if necessary, to the AC and the Board. 172 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Corporate Governance Overview Statement (Continued)
2. Risk Management & Internal Control Framework
The Company has put in place a systematic risk management framework and processes to identify, evaluate and monitor principal risks and to implement appropriate internal control processes to manage risks across the Group. Risks include long-term business strategies, regulatory and compliance concerns, substitution and technology applications and fraudulent practices.
Although many risks are outside the Company’s direct control, a range of activities are in place to mitigate the key risks identified, as set out in the Statement on Risk Management and Internal Control. The risk management and internal control system is regularly reviewed and mitigated by Management to ensure that the Group’s assets and investments are protected and preserved.
The Board is of the view that the system of risk management and internal controls in place during 2020, is sound and sufficient to safeguard the Group’s assets, as well as shareholders’ investments, and the interests of customers, regulators, employees and other stakeholders.
The details of the Risk Management and Internal Control Framework are set out in the Statement on Risk Management and Internal Control on pages 177 to 179 of this Annual Report.
PRINCIPLE C – INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS
1. Communication with Stakeholders
To ensure Timely and High-Quality Disclosure.
• Effective, Transparent and Regular Communication with its Stakeholders.
The Group recognises the importance of prompt and timely dissemination of information to shareholders and investors in order for these stakeholders to be able to make informed investment decisions. Towards this, the Company’s website incorporates an announcement section which provides all relevant information on the Company and is accessible by the public. This announcement section enhances the investor relations function by including all announcements made, annual reports as well as the quarterly reports.
The Board ensures that shareholders are provided with a balanced and meaningful evaluation of the Company’s financial performance, its current position and prospects, through the issuance of the Annual Audited Financial Statements and quarterly financial reports, as well as corporate announcements on significant developments affecting the Company in accordance with the Listing Requirements.
In ensuring equal and fair access to information by the investing public, various channels of communications are employed. Examples include quarterly announcements on financial results to Bursa Securities, relevant announcements and circular via Bursa LINK as required under the Listing Requirements, the Annual and Extraordinary General Meetings and through the Company’s website at www.goldenpharos.com, from which shareholders and prospective investors can access corporate information, annual reports, press releases, financial information and Company announcements. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 173
Corporate Governance Overview Statement (Continued)
2. Conduct of General Meetings
To strengthen Relationship between the Company and Shareholders.
• Encourage Shareholder Participation at General Meetings.
The Company recognises the importance of maintaining transparency and accountability to its shareholders. The Board believes that they are not only accountable to shareholders but is also responsible for managing a successful and productive relationship with the Company’s stakeholders. In this regard, the Board will ensure that all the Company’s shareholders and stakeholders are treated equitably and the rights of all investors, including minority shareholders, are protected.
The Company dispatched its Notice of AGM to shareholders 30 days before the AGM in 2020. The Board believes the current practice would allow the shareholders to make necessary arrangements to attend and participate either in person, by corporate representative, by proxy or by attorney together with the Notice of AGM, which provides information to shareholders with regard to, among others, details of the AGM, their entitlement to attend the AGM, the right to appoint proxy and also qualification of proxy.
Where special business items appear in the Notice of the AGM, a full explanation is provided to shareholders on the effect of the proposed resolution emanating from the special business item. The AGM is the principal opportunity for the Board to meet shareholders and for the Chairman to provide an overview of the Company’s progress and receive questions from shareholders. The Company allows a member to appoint a proxy who may but need not be a member of the Company. If the proxy is not a member of the Company, he or she need not be an advocate, an approved company auditor or a person approved by the Registrar of Companies.
• Effective Communication and Proactive Engagements
All the Directors shall endeavour to be present in person to engage directly with and be accountable to the shareholders for their stewardship of the Company at the 34th AGM. The proceedings of the AGM will include the CEO’s briefing on the Company’s overall performance for FY2020, the presentation of the external auditors’ unqualified report to the shareholders, and a Q&A session during which the Chairman will invite shareholders to raise questions pertaining to the Company’s financial statements and other items for adoption at the meeting, before putting a resolution to vote.
The Directors, CEO and external auditors will be in attendance to respond to the shareholders’ queries.
• Facilitate Greater Shareholder Participation at General Meetings
Under Paragraph 8.29A(1) of the Listing Requirements, a listed company must, among others, ensure that any resolution set out in the notice of any general meeting, is voted by poll. For this purpose, the share registrar will be appointed as the Poll Administrator and an independent scrutineer will be appointed to validate the votes cast at the 34th AGM.
The Board will consider leveraging technology to facilitate electronic poll voting and remote shareholder participation in the coming general meetings in order to reflect shareholders’ views more fairly and to ensure accurate and efficient outcomes of the voting process.
At the commencement of all general meetings, the Chairman will inform the shareholders of their rights to a poll voting. Separate resolutions are proposed for substantially separate issues at the meeting and the Chairman will declare the number of proxy votes received, both for and against each separate resolution where appropriate. The outcome of a general meeting will be announced to Bursa on the same meeting day. 174 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Corporate Governance Overview Statement (Continued)
Statement of Directors’ Responsibility in respect of the OTHER INFORMATION REQUIRED BY THE BURSA SECURITIES Audited Financial Statements LISTING REQUIREMENTS
The Board is required by the Companies Act 2016 to prepare Utilisation of Proceeds Raised from Corporate Proposals financial statements for each financial year which give a true and fair view of the Group and its state of affairs, results and cash There were no proceeds raised from corporate proposals in flows at the end of the financial year. FY2020.
Following discussions with the external auditors, the Directors Audit and Non-Audit Fees consider if the appropriate accounting policies are consistently applied and supported by reasonable as well as prudent For the FY2020, the audit fees payable by the Company and the judgements and estimates, and that all accounting standards Group to the external auditors, Ernst & Young are as follows: which they consider applicable have been followed during the preparation of the financial statements. Company Audit Fee : RM66,000 The Board of Directors is responsible for ensuring that the Group Non-Audit Fee : RM20,000 keeps accounting records which are disclosed with reasonable accuracy, and for ensuring that the financial statements comply Group with the Companies Act 2016. Audit Fee : RM160,000 Non-Audit Fee : RM20,000 The Board and Board Committees have the general responsibility for taking such steps to safeguard the assets of the Group. Material Contracts
Statement on Compliance with the Requirements of Bursa There were no material contracts entered into by the Company Securities in Relation to Application of Principles of MCCG and its subsidiaries, involving the interest of directors and major 2017 Pursuant to Paragraph 15.25 of the Listing Requirements shareholders, either still subsisting at the end of the year or, if not then subsisting, entered into since the end of the previous year. The Board has reviewed, deliberated and approved this Corporate Governance Overview Statement and is pleased to report to its Recurrent Related Party Transactions of a revenue or trading shareholders that to the best of its knowledge, the Company has nature complied with and shall remain committed to continuously apply the Principles laid down in the MCCG 2017. There were no recurrent related party transactions of revenue nature which required shareholders’ mandate during the year This Corporate Governance Overview Statement is made in ended 31 December 2020. accordance with the resolution of the Board of Directors dated 25 February 2021. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 175
Corporate Governance Overview Statement (Continued)
Long Term Incentive Plan (“LTIP”) • Basis of allocation At the discretion of the LTIP Committee after taking into The Company's Long Term Incentive Plan ("LTIP" or "Scheme") is consideration: governed by the By-Laws which was approved by the shareholders - For directors – contribution to the performance of on 26 June 2018, and is administered by the LTIP Committee, which the Group and positions in board committees; and is appointed by the Board of Directors, in accordance with the By- - For employees – performance, seniority, length of Laws of LTIP. Under the LTIP, offers to employees and directors service and contribution to the performance of the of the Group were implemented on 30 August 2018 (ESGS and Group. ESOS offered to employees) 30 August 2019 (ESOS offered to GPB - Directors and senior management must not Directors) and 4 November 2019 (ESOS offered to Directors of participate in the deliberation or discussion of their Subsidiaries Company) . The LTIP consists of the followings: own allocation. i. Employee Share Option Scheme (“ESOS”) - Eligible Persons • Retention period are granted ESOS options to subscribe for Shares at a pre- Pursuant to the Listing Requirements, non-executive determined subscription price. directors must not sell, transfer or assign the new GPB Shares obtained within 1 year from the date of offer of the ii. Executive Share Grant Scheme (“ESGS”) - Eligible Persons ESOS options. are awarded Shares subject to the achievement of performance targets set by the Company. The total number of options granted, exercised, lapsed and outstanding under the ESOS and ESGS for the year under review Details of LTIP: are set out in the table below:
• Size TESGS ESOS Up to 15% of the total number of issued shares of the 293,665 6,089,000 Company. Based on the number of shares on 26 June 2018 As At 1 January 2020 of 134,546,515 shares, up to 20,181,977 shares can be Granted - - issued under the Proposed LTIP. Exercised/Vested - -
• Duration Lapsed - (786,000) 5 years, with an option for additional 5 years. At 31 December 2020 293,665 5,303,000
• Eligible person - ESOS - All directors and confirmed Malaysian employees of the Group. - ESGS - Executive directors (if any) and confirmed senior managerial employees of the Group. 176 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Corporate Governance Overview Statement (Continued)
All the Directors of GPB have been granted ESOS Options as follows:
Aggregate options Aggregate options Aggregate options Granted Exercised/ Lapsed Balance
Dato' Haji Tengku Hassan bin Tengku Omar 125,000 - 125,000
Dato' Bentara Dalam Dato' Haji A. Rahman bin Yahya 100,000 - 100,000
Dr Wan Ahmad Rudirman bin Wan Razak 75,000 75,000 - (Resigned on 31/12/2020)
Associate Professor Dr. Mohd Zaki bin Hamzah 100,000 - 100,000
Muhammad Ramizu bin Mustaffa 100,000 - 100,000
Mohd Badaruddin bin Ismail 100,000 - 100,000
Haji Saiffuddin bin Othman 75,000 75,000
Pursuant to the approval of the shareholders at an EGM on 26 June 2018, Dato’ Ahmad Nadzarudin bin Abdul Razak, the Chief Executive Officer of GPB, has been granted the following:
ESOS Options ESGS Shares Aggregate Aggregate Aggregate Aggregate Aggregate Aggregate Shares options options options Shares Shares Vested Balance Granted Exercised Balance Granted
Dato’ Ahmad 250,000 - 250,000 1,000,000 636,600 363,400 Nadzarudin bin Abdul Razak
In accordance with the Company's ESOS By-Laws, not more than eighty per cent (80%) of the new ordinary shares available under the Scheme shall be allocated in aggregate to the managerial employees of the Group. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 177
Statement on Risk Management and Internal Control
The Board of Directors (“Board”) acknowledges the importance of a sound system of internal control to safeguard shareholders’ investments and the Group’s assets.
Set out below is the Board’s statement about the state of risk management and internal control of the Group during the year. The statement is consistent with the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers (“SORMIC”), as referred to in Practice Note 9 - Internal Control and Corporate Governance Statement of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”).
Board Responsibilities Risk Management
The Board affirms its overall responsibility for maintaining sound The Board subscribes to the fact that an effective risk internal control systems, and for reviewing the adequacy and management practice is a critical component of a sound integrity of those systems. The system of internal control covers system of risk management and internal control. Accordingly, risk management, financial, operational and compliance controls. the Board confirms that there is in place a formal and an on-going process to identify, evaluate and manage significant In view of the limitations that are inherent in any system of risks faced by the Group that may impede the achievement internal control, it is imperative to note that the systems are of the Group’s objectives throughout the year and that a designed to mitigate rather than eliminate the risk of failure to review on the adequacy and effectiveness of the risk achieve business objectives. Accordingly, the system can only management and internal control system has been undertaken. provide reasonable, but not absolute, assurance against material misstatement, loss or fraud. The Group recognises that it is obliged to systematically manage and regularly review its risk profile at a strategic, financial, The Board has received assurance from the Chief Executive compliance and operational level. The Group’s Enterprise Officer (“CEO”) and the Head of Finance that the Group’s risk Risk Management (“ERM”) framework defines our Group’s risk management and internal control system is operating adequately management process in managing the Group’s key risks on a and effectively in all material aspects, based on the risk continuous basis and also action plans towards effective risk management and internal control system of the Group. management and internal control practices. 178 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Statement on Risk Management and Internal Control (Continued)
The Board believes that the risk management framework • Operating policies and procedures, which incorporate is adequately overseen by the Audit Committee and assisted regulatory and internal requirements, are prescribed by the management via the Group Risk Management in the standard operating procedures and circulars. Steering Committee (“GRMSC”), represented by divisional The documents are updated as and when necessary to heads at head office who co-ordinate the implementation meet the changing operational needs. of the risk management process throughout the Group. • The Board meets quarterly to review the Group’s The GRMSC has meeting to discuss principal risks operational and financial performance against the identified, relevant controls that are in place and the action plans approved budget, approve quarterly reports to Bursa with the working committee of each subsidiary company. At Securities and deliberate on issues that require Board the subsidiary level, the Risk Management Working Committee approval. In addition, the Board is also updated on changes (“RMWC”) is chaired by the Head of Company and the members in the business environment that may adversely affect comprise the Head of Divisions. This Committee implements risk business performance and relevant actions taken. management process and control systems for their business and report to the RMSC. The management reports the Group • To review the Group’s performance against budget, to solve risk assessment, risk register and the risk action plans to the business issues including internal control matters and to Audit Committee and the Board quarterly for review and undertake risk management, the CEO conducts regular endorsement. meetings as follows: 1. Fortnightly with Heads of Department at Group level Risk assessments are also carried out before committing and Heads of Subsidiaries resources to new projects and initiatives by identifying its 2. Monthly with all Heads of Timber Companies impact on current operations and business objectives, which are reported in proposal papers to approving management and/or 3. Monthly with all Heads of Subsidiaries board committees. 4. Quarterly with the Board of Directors of all subsidiaries Other key elements of internal control 5. Periodically with the President of the Holding Company. The Board is committed to ensure that a proper control structure and environment is maintained within the Group • The annual budget is deliberated thoroughly between the in order to achieve a sound system of internal control. management at head office and the business unit before The Board has the following elements in place: tabling to the Board for consideration and approval.
• There is in place a clearly defined responsibility and • The Audit Committee, with the assistance of the internal authority of Board Committees. These Committees report audit department, provides an independent assessment on the adequacy, efficiency and effectiveness of the Group’s back to the Board with their recommendation for approval internal control system and advises management on areas by the Board. that require improvement. The internal audit department also reviews the extent to which its recommendations have • The Group has an organisation structure that clearly defines been accepted and implemented by the management. lines of responsibility and delegation of authority to ensure proper identification of accountability and segregation of duties. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 179
Statement on Risk Management and Internal Control (Continued)
• Internal audit reports are tabled at the Audit Committee Review of the statement by external auditors meetings, which in turn reports to the Board its assessments and recommendations. Internal control deficiencies and As required by Paragraph 15.23 of the MMLR of Bursa Securities, issues highlighted are addressed by the management the external auditors have reviewed this Statement on Risk appropriately. Management and Internal Control for inclusion in the Annual Report for the year ended 2020. Their limited assurance review • The Strategy and Investments Committee (“SIC”) assists was performed in accordance with the Recommended Practice the Board in reviewing and recommending to the Board, Guide (RPG) 5 (Revised) issued by the Malaysian Institute of significant matters related to all existing and potential Accountants. RPG 5 (Revised) does not require the external investments of the Group. The SIC shall also review and auditors to form an opinion on the adequacy and effectiveness of assess all risks associated with investments and the the risk management and internal control systems of the Group. management thereof. Based on their review, nothing has come to their attention that • The Group risk assessment, risk register and risk action cause them to believe that the Statement on Risk Management plans are reported to the Audit Committee and the Board and Internal Control to be included in the Annual Report is quarterly for review and endorsement. inconsistent with their understanding of the process the Board of Directors has adopted in the review of the adequacy and Reporting to Shareholders/Stakeholders effectiveness of the risk management and internal control systems of the Group. External stakeholder relations and communication is given a high priority in view of the types of risks faced by the Group. Conclusion Specifically, sustainability issues require appropriate engagement with NGOs and other interested parties. The Group, being a state The system of risk management and internal control described in government linked company, necessitates an effective external this statement is considered by the Board to be adequate within communications strategy to ensure the reputation of the Group the context of the business environment throughout the Group’s is protected. businesses. The Board continues to take appropriate initiatives to enhance the internal control system to ensure that it remains The Group has established processes and procedures to ensure relevant over time in an evolving business environment. the quarterly and annual accounts, which cover the Group’s performance, are submitted to Bursa Securities for release to This statement is made in accordance with the resolution of the shareholders and stakeholders on a timely basis. All quarterly Board of Directors dated 24 May 2021. results are reviewed and approved by the board prior to announcement.
The annual reports of the Company that include the annual audited financial statements together with the auditors’ and directors’ reports are issued to the shareholders within the stipulated time prescribed under the MMLR of Bursa Securities. 180 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Audit Committee Report
Members and Meetings
The Audit Committee comprises of three Independent Non-Executive and one Non Independent Non-Executive Directors of the Board. The Committee had five (5) meetings during the financial year. Details of the members and the attendance of the meetings are as follows:
No. of Meetings Attended
Held During Tenure in Name of Directors Office Attendance %
Mohd Badaruddin bin Ismail 5 4 80 Chairman (Independent Non-Executive)
Associate Professor Dr Mohd Zaki bin Hamzah 5 4 80 (Independent Non-Executive)
Haji Saiffuddin bin Othman 5 5 100 (Independent Non-Executive)
Muhammad Ramizu bin Mustaffa 5 5 100 (Non Independent Non-Executive)
The External Auditor was invited to attend the meeting when the ii. Reviewed a total of Five (5) internal audit reports annual financial statement was being tabled. The Internal Audit presented by the Internal Audit Department on findings Head, the Chief Executive Officer and the Group Finance Manager and recommendations with regards to system and were in attendance at the meetings to table the internal audit control weaknesses noted in the course of their audit and management’s response thereto and ensuring material reports and to present the performance results of the Company findings are adequately addressed by management. and the Group.
iii. Reviewed the quarterly results of the Group and made Other members of senior management of the Group attended recommendations to the Board for approval. some of these meetings upon invitation by the Chairman of the
Committee. iv. Reviewed any related party transactions and conflict of interest situation that arose within the Group. Summary of Activities v. Evaluated the performance of the external auditors and During the period, the Audit Committee carried out its duties as made recommendations to the Board on their appointment, set out in the terms of reference. Other main issues discussed by scope of work and audit fees. the Audit Committee were as follows: vi. Reviewed quarterly the risk profile of the Group (including i. Reviewed the Annual Audit Plan for the year 2020 to ensure risk registers) and risk action plans to manage and/or adequate scope and coverage over the activities of the mitigate business risks as identified from time to time. Group. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 181
Audit Committee Report (Continued)
INTERNAL AUDIT FUNCTIONS During the financial year, the Internal Auditors had conducted independent reviews and evaluated risk exposures relating to The Group has its own Internal Audit Department, which the Group’s governance, operations and information system as carries out the internal audit function and assists the Audit follows: Committee in ensuring compliance with the established policies and procedures, monitoring significant risks, highlighting on • Reliability and integrity of financial and operational areas that need improvement and reviews to the extent that information its recommendations in addressing the internal control issues • Effectiveness and efficiencyf o operations are implemented. Internal Audit Department also provides independent and objective assessment on governance processes • Safeguarding of assets throughout the Group. • Compliance with set policies and procedures
The Internal Audit Department reports directly to the Audit • Identification of opportunities to improve the operations Committee and assist the Board of Directors in monitoring and processes significant exposures to risks and contribute to the improvement • Investigations and special audit reviews of internal control system. • Adequacy and effectiveness of the Group’s governance, The Group in-house internal audit function is carried out by the risk management and internal control system using the Group Internal Audit Department which was headed by the Head Committee of Sponsoring Organisations of the Treadway of Internal Audit, En. Muhamad bin Sulong until his retirement Commission (COSO) Internal Control – Integrated on 31 January 2020. On 15 February 2021, En. Azman Bin Jusoh Framework was appointed as a new head and lead the department. Internal Audit Department is independent from the activities or operation The Internal Audit Department had also cooperated in the of other operating units within the Group and reports directly to development of the Anti – Bribery and Corruption (ABC) the Audit Committee. Policy for the Group together with the Group Integrity and Governance Unit. This ABC policy has been developed to The Group practices risk-based approach auditing and monitoring of controls. The monitoring process also forms the basis for be in line with the Guidelines on Adequate Procedures continually improving the risk management process in the issued pursuant to the Section 17A of the Malaysian Group’s overall goals. Anti-Corruption and Commission Act 2009 and its amendments.
During the year under review, the Internal Audit Department The Internal Auditors also established follow-up review to carried out audit assignments on various operating subsidiaries monitor and to ensure that internal audit recommendations of the Group. Audit reports were issued to the Audit are effectively implemented. Significant matters were reported Committee and the respective subsidiaries incorporating directly to the Audit Committee and Senior Management to findings and recommendations with regard to the system and ensure improvement and corrective actions are taken. control weaknesses noted during the course of the audit and management’s responses on the audit findings. The Internal Audit The internal audit works had been carried out according to the Department also followed up on implementation and disposition internal audit plan approved by the Audit Committee for the of all findings and recommendations. financial year. 182 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Audit Committee Report (Continued)
An annual assessment for evaluating the adequacy and iii. at least one (1) member: effectiveness of the Internal Audit Function was carried outin 2020. The Audit Committee was also satisfied that the Internal (a) must be a member of the Malaysian Institute of Audit Function, backed by 2 staff of executive level who possessed Accountants (MIA); or the relevant qualification and experience, had adequate resources (b) if he is not a member of the MIA, he must have to fulfill the internal audit plan for the next financial year. at least three (3) years’ working experience and: The Internal Auditors had confirmed that they are free from any relationships or conflicts of interest which could impair their • he must have passed the examinations objectivity and independence in their audit assignments. specified in Part 1 of the 1st Schedule of the Accountants Act 1967; or During the year, all the internal audit activities were performed in-house and the total cost incurred was RM99,437.92 comprising • he must be a member of one of the of manpower, training, travelling and accommodation. associations of accountants specified in Part II of the 1st Schedule of the The Audit Committee Report was made in accordance with the Accountants Act 1967; resolution of the Board of Directors duly passed on 25 February 2021. • fulfils such other requirements as prescribed or approved by Bursa TERMS OF REFERENCE OF AUDIT COMMITTEE Malaysia Securities Berhad (“Bursa Securities”). MEMBERSHIP iv. No alternate Director shall be appointed as a member 1 The Audit Committee (“AC”) shall be appointed by the Board of the AC. of Directors from among their number and shall comprise of not less than three (3) members which fulfils the following v. Former key audit partners may be appointed as a requirements:- member of the AC, but must observe a cooling-off period of at least two (2) years prior to his or her i. All the AC members must be Non-Executive Directors, appointment. with a majority of them being Independent Directors; and 2 The chairman of the AC shall be appointed by the Board from among their Independent Directors who must not be ii. all the AC members should be financially literate; the Chairman of the Board.
3 The terms of office and performance of the Committee and each of its members must be reviewed by the Board of Directors at least once every 3 years to determine whether the Committee and its members have carried out their duties in accordance with their terms of reference. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 183
Audit Committee Report (Continued)
4 In the event of any vacancy in the Committee resulting in c At least once a year, the Committee shall meet with the non-compliance of the listing requirement of the Bursa the external auditors without any executive Board Securities pertaining to composition of audit committee, members present. the Board of Directors shall within three months of that event fill the vacancy. 5 Reporting Procedure
MEETINGS a. The minutes of each meeting shall be circulated to all members of the Board together with the Board 1 Frequency meeting papers.
a. Meetings shall be held not less than four times a 6 Meeting Procedure year. The Committee shall regulate its own procedure, in b. Upon the request of the external auditor, the particular:- Chairman of the Committee shall convene a meeting of the Committee to consider any matter the external a. the calling of meetings; auditor believes should be brought to the attention of the Directors or shareholders. b. the notice to be given of such meetings;
2 Quorum c. the voting and proceedings of such meetings;
a. A quorum shall consist of a majority of Independent d. the keeping of minutes; and Directors. e. the custody, production and inspection of such 3 Secretary minutes.
a. The Company Secretary shall be the Secretary 7 Circular Resolution of the Committee or in his absence, another a. Circular Resolutions signed by all the members shall person authorised by the Chairman of the be valid and effective as if it had been passed ata Committee. meeting of the Committee.
4 Attendance RIGHTS
a. The chief Executive Officer, the Head of Internal The Committee in performing its duties shall in accordance with a Audit, the Head of Finance, and the representative of procedure to be determined by the Board of Directors: the external auditor shall normally attend meetings.
a. have authority to investigate any matter within its b. Other Directors and employees may attend any terms of reference; particular meeting only at the Committee’s invitation, specific to the relevant meeting. b. have the resources which are required to perform its duties; 184 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Audit Committee Report (Continued)
c. have full and unrestricted access to any information (iv) compliance with accounting standards and pertaining to the Company; other legal requirements.
d. have direct communication channels with the c. any related party transaction and conflict of interest external auditor and person(s) carrying out the situation that may arise within the Company or Group internal audit function or activity; including any transaction, procedure or course of conduct that raises questions or management e. be able to obtain independent professional or other integrity. advice; and
f. be able to convene meetings with external auditors, d. the Statement of Corporate Governance prior to the the internal auditors or both, excluding the approval by the Board of Directors. attendance of other directors and employees of the Company, whenever deemed necessary. 3 In respect of the appointment of external auditors:
a. to review whether there is reason (supported by FUNCTIONS grounds) to believe that the external auditors is not
suitable for reappointment; The Committee shall, amongst others, discharge the following functions: b. to consider the nomination of a person or persons as external auditors and the audit fee; 1 To review with the external auditor: c. to consider any questions of resignation or dismissal a. the audit plan; of external auditors.
b. his evaluation of the system of internal controls; 4 In respect of the internal audit function:
a. to review the adequacy of the scope, functions, c. his audit report; and competency and resources of the internal audit function and that it has the necessary authority to d. his management letter and management’s response; carry out its work;
2 To review: b. to review the internal audit programme, processes,
the results of the internal audit programme, processes a. the assistance given by the Company’s employees to or investigation undertaken and whether or not the external auditor; appropriate action is taken on the recommendations of the internal audit function; b. the quarterly results and year-end financial statements, prior to the approval by the Board of c. to review any appraisal or assessment of the Directors, focusing particularly on:- performance of members of the internal audit function; (i) the going concern assumption; d. to approve any appointment or termination of senior staff members of the internal audit function; (ii) changes in or implementation of major
accounting policy changes; e. to inform itself of any resignation of internal audit staff member and provide the resigning staff member (iii) significant nda unusual events; and an opportunity to submit his reasons for resigning. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 185
Audit Committee Report (Continued)
f. the internal audit function must be independent of f. Recommend to the Board, the approval of and/ the activities it audits; the internal audit activity should or amendments to the Group risk management be free from interference in determining the scope of framework and the strategies, including policies, internal audit, performing work, and communicating procedures, systems, capability and parameters, as results; and relevant;
g. the internal audit function reports directly to the g. Periodically review the Company’s risk management Audit Committee. framework and supporting structure;
h. at the end of each financial year, to review and h. Consider the risks in context and recommend to the verify the allocation of new Shares offered or vested Board, mitigation of the risks identified; pursuant to the company’s Long Term Incentive Plan. i. Review the risk profile of the Group (including risk registers) and risk action plans to manage and/or 5 In respect of risk management mitigate business risks as identified from time to a. Review the context within which risk is managed in time; and relation to the Company’s strategic direction and j. Review the Statement on Risk Management and objectives; Internal Control (“SORMIC”) of the Group and b. Oversee and provide oversight and direction for recommend to the Board of Directors for approval implementation of risk management in the Company and for inclusion in the Annual Report. and consistent application of Enterprise Risk Management (“ERM”) principles; 6 To promptly report such matters to Bursa Securities if the Committee is of the view that the matter reported by it to c. Oversee the formulation of the Group’s overall the Board of Directors has not been satisfactorily resolved ERM and strategies, including policies, procedures, resulting in a breach of the Listing Requirements. systems, capability and parameters to identify, assess and manage risks, including any new or 7 To carry out other functions as may be agreed to by the emerging trends of threats to ensure their relevance Committee and the Board of Directors. and appropriateness to the Group’s position and business;
d. Advise and report on the overall risk appetite, tolerance and strategy on managing business risks;
e. Review and deliberate the report by the management on the Group’s key business risks and to ensure that internal controls and business plan in place are adequate and effective and that appropriate timely mitigation measures and actions are taken by the management to address, manage and monitor the risks; 186 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
List of Properties
Net book Land area Tenure Age of value Properties Description (sq.metre) of land building 31/12/2020 (RM)
1. Lot No 6720 & 7621, Glass factory 12,141 99 years 30 years 7,198,216 Mukim Telok Panglima Garang leasehold State of Selangor expiring on 11.6.2086
2. P.T. No. 105 H.S. (D) 4961 Plywood mill 219,850 60 years 38 years 8,306,054 Mukim Hulu Paka leasehold District of Dungun expiring on State of Terengganu 14.7.2042
3. Lot No. 1431, 1432 and 1433 3 units single 2,359 99 years 38 years 252,399 Mukim Hulu Paka storey detached leasehold District of Dungun house expiring on State of Terengganu 15.4.2096
4. Lot No. 3164 3.5 storey 130 Freehold 27 years 862,002 Mukim of Batu Buruk shop office District of Kuala Terengganu State of Terengganu
5. P.T. No. 109 H.S. (D) 569 Vacant 48,940 60 years - 1,349,705 Mukim Hulu Paka industrial land leasehold District of Dungun expiring on State of Terengganu 24.2.2058
6. Lot No. 2049 Vacant 138,000 60 years - 3,301,672 Mukim Hulu Paka industrial land leasehold District of Dungun expiring on State of Terengganu 17.6.2060
7. Lot No. 2050 Vacant 48,420 60 years - 1,157,978 Mukim Hulu Paka industrial land leasehold District of Dungun expiring on State of Terengganu 17.6.2060
8. Lot No. 2051 Vacant 17,840 60 years - 425,867 Mukim Hulu Paka industrial land leasehold District of Dungun expiring on State of Terengganu 17.6.2060
9. Lot No. 7348 Sawmill 158,000 30 years 40 years 3,396,350 Mukim Jerangau leasehold District of Dungun expiring on State of Terengganu 4.3.2038 GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 187
List of Properties (Continued)
Net book Land area Tenure Age of value Properties Description (sq.metre) of land building 31/12/2020 (RM)
10. Lot No.70259 & 72275 Vacant 23,225 30 years - 466,590 Mukim Kuala Paka industrial land leasehold District of Dungun expiring on State of Terengganu 15.10.2037
11. Lot No. 743 Vacant 25,231 60 years - 681,820 Mukim Telok Kalung industrial land leasehold District of Kemaman expiring on State of Terengganu 25.4.2029
12. P.T. 6400 & 6401 1 unit 7,834 60 years 26 years 688,780 Mukim Jerangau single storey leasehold District of Dungun office & 1 unit expiring on State of Terengganu rest house 24.9.2054
13. Lot No. 12556 Sawmill 35,728 50 years 45 years 6,158,454 Mukim of Chukai leasehold District of Kemaman expiring on State of Terengganu 15.10.2045
14. Lot No. 9803 Sawmill 31,126 60 years 45 years 3,531,781 Mukim of Chukai leasehold District of Kemaman expiring on State of Terengganu 22.2.2053
15. Lot No S22-33 1 unit single 133 Freehold - 10,000 Perumahan Jalan Kenari storey terrace 44110 Lembah Beringin house State of Selangor
16. Lot No S22-44 1 unit single 133 Freehold - 10,000 Perumahan Jalan Kenari storey terrace 44110 Lembah Beringin house State of Selangor
17. Lot No. PT 60056 Vacant 198,300 60 years - 11,577,944 Mukim of Banggul industrial land leasehold District of Kemaman expiring on State of Terengganu 21.2.2071
The last revaluation carried out by the Group was on 28 January 2021. FINANCIAL STATEMENTS
189 Directors’ Report
195 Statement by Directors
195 Statutory Declaration
196 Independent Auditors’ Report
201 Statements of Comprehensive Income
203 Statements of Financial Position
205 Statements of Changes In Equity
207 Statements of Cash Flows
210 Notes to the Financial Statements GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 189
Directors’ Report
The directors hereby submit their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2020.
PRINCIPAL ACTIVITIES
The principal activities of the Company are investment holding and provision of management services to the subsidiaries.
The principal activities of the subsidiaries are manufacturing and trading of glass and woodchip, investment holding, sawmiling, moulding, producing finger joint and furniture and kiln drying, harvesting and sustainable forest management, and rental of buildings, plant and machinery, selling of logs and right to log and manufacture and sale of veneer.
Other information relating to the subsidiaries are disclosed in Note 19 to the financial statements.
RESULTS
Group Company RM’000 RM’000
(Loss)/profit net of tax (6,693) 10,628
There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements.
In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature.
DIVIDENDS
No dividend has been paid and declared by the Company since the end of the previous financial year.
The directors do not recommend any payment of dividend in respect of the current financial year. 190 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Directors’ Report (Continued)
DIRECTORS
The names of the directors of the Company in office since the beginning of the financial year to the date of this report are:
Dato’ Haji Tengku Hassan bin Tengku Omar Dato’ Bentara Dalam Dato’ Haji A. Rahman bin Yahya Associate Professor Dr. Mohd Zaki bin Hamzah Haji Saiffuddin bin Othman Muhammad Ramizu bin Mustaffa Mohd Badaruddin bin Ismail Haji Burhanuddin Hilmi bin Mohamed@Harun (appointed on 3 January 2021) Dr. Wan Ahmad Rudirman bin Wan Razak (resigned on 31 December 2020)
The names of the directors of the Company’s subsidiaries since the beginning of the financial year to the date of this report (not including those directors listed above) are:
Golden Pharos Glass Sdn. Bhd. Mohd Nurkhuzaini bin Ab Rahman Dato’ Ahmad Nadzarudin bin Abdul Razak Zulkifli bin Ali
GP Forest Plantation Sdn. Bhd. Dato’ Ahmad Nadzarudin bin Abdul Razak Suhairi bin Sulong Syukri bin Ali
Golden Pharos Biomass Sdn. Bhd. (formerly known Golden Pharos Overseas Sales Sdn. Bhd.) Dato’ Ahmad Nadzarudin bin Abdul Razak Suhairi bin Sulong Zulkifli bin Omar
Golden Pharos Overseas Sdn. Bhd. Dato’ Ahmad Nadzarudin bin Abdul Razak Suhairi bin Sulong Zulkifli bin Omar
Golden Pharos Fiber Sdn. Bhd. Dato’ Ahmad Nadzarudin bin Abdul Razak Suhairi bin Sulong Zulkifli bin Omar
GP Tropical Furniture Sdn. Bhd. Dato’ Ahmad Nadzarudin bin Abdul Razak Suhairi bin Sulong Zulkifli bin Omar GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 191
Directors’ Report (Continued)
DIRECTORS (CONTINUED)
Permint Timber Corporation Sdn. Bhd. Dato’ Ahmad Nadzarudin bin Abdul Razak Suhairi bin Sulong Zulkifli bin Omar
Pesama Timber Corporation Sdn. Bhd. Ir. Saiful Azmi bin Suhaili Dato’ Ahmad Nadzarudin bin Abdul Razak Haji Johan bin Ibrahim Haji Wan Ali bin W Yusof Mohd Hafiz bin Adam
Pesaka Trengganu Berhad Haji Wan Hassan bin Mohd Ramli Dato’ Ahmad Nadzarudin bin Abdul Razak Haji Ghazali bin Sulaiman Haji Zainal Abidin bin Mohamed
Kumpulan Pengurusan Kayu-Kayan Trengganu Sdn. Bhd. Haji Satiful Bahari bin Mamat Dato’ Ahmad Nadzarudin bin Abdul Razak Abdul Hadi bin Ripin@Ariffin Mohd Harun bin Esa Associate Professor Dr. Mohd Zaki Bin Hamzah Roslan bin Rani (appointed on 28 February 2021) Muhamad bin Abdullah (resigned on 28 February 2021)
Permint Plywood Sdn. Bhd. Haji Maliaman bin Kassim Dato’ Ahmad Nadzarudin bin Abdul Razak Mohd Badaruddin bin Ismail Haji Anuar bin Awang
GP Dynamic Venture Sdn. Bhd. Dato’ Ahmad Nadzarudin bin Abdul Razak Zulkifli bin Omar Syukri bin Ali 192 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Directors’ Report (Continued)
HOLDING COMPANY
The holding company is Terengganu Incorporated Sdn. Bhd., a company incorporated in Malaysia.
DIRECTORS’ BENEFITS
Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate, other than those arising from the share options granted under the Employee Share Option Scheme (“ESOS”).
Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salary of a full-time employee of the Company as shown below) by reason of a contract made by the Company or a related corporation with any director or with a firm of which he is a member, or with a company in which he has a substantial financial interest.
The directors’ benefits are as follows:
Group Company RM’000 RM’000
Fees 311 151 Share option granted under ESOS 51 32 Other emoluments 900 344 Benefits-in-kind 11 11
1,273 538
DIRECTORS’ INTERESTS
According to the register of directors’ shareholdings, the interests of the directors in office at the end of the financial year in options over shares in the Company and its related corporations during the financial year were as follows:
Number of options over ordinary shares Name of directors 1.1.2020 Granted Lapsed 31.12.2020
Dato’ Haji Tengku Hassan bin Tengku Omar 125,000 - - 125,000 Dato’ Bentara Dalam Dato’ Haji A. Rahman bin Yahya 100,000 - - 100,000 Dr. Wan Ahmad Rudirman bin Wan Razak 75,000 - (75,000) - Associate Professor Dr. Mohd Zaki bin Hamzah 100,000 - - 100,000 Haji Saiffuddin bin Othman 75,000 - - 75,000 Muhammad Ramizu bin Mustaffa 100,000 - - 100,000 Mohd Badaruddin bin Ismail 100,000 - - 100,000 GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 193
Directors’ Report (Continued)
EXECUTIVE SHARE GRANT SCHEME (“ESGS”) AND EMPLOYEE SHARE OPTIONS SCHEME (“ESOS”)
The Company’s Long Term Incentive Plan (“LTIP” or “Scheme”) is governed by the By-Laws which was approved by the shareholders on 26 June 2018, and is administered by the LTIP Committee which is appointed by the Board of Directors, in accordance with the By-Laws of LTIP.
The LTIP comprised of ESGS and ESOS. The salient features, terms and details of the LTIP are disclosed in Note 32 to the financial statements.
During the financial year, the Company does not grant any shares under the ESGS and options under the ESOS to eligible employees of the Company and/or its eligible subsidiary companies.
OTHER STATUTORY INFORMATION
(a) Before the statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the directors took reasonable steps:
(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and
(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.
(b) At the date of this report, the directors are not aware of any circumstances which would render:
(i) the amount written off for bad debts or the amount of the allowance for doubtful debts inadequate to any substantial extent; and
(ii) the values attributed to the current assets in the financial statements of the Group and of the Company misleading.
(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.
(e) At the date of this report, there does not exist:
(i) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or 194 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Directors’ Report (Continued)
OTHER STATUTORY INFORMATION (CONTINUED)
(e) (continued)
(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year.
(f) In the opinion of the directors:
(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; and
(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.
SIGNIFICANT EVENT
Details of significant event are disclosed in Note 40 to the financial statements.
SUBSEQUENT EVENTS
Details of subsequent events are disclosed in Note 41 to the financial statements.
AUDITORS
The auditors, Ernst & Young PLT, have expressed their willingness to continue in office.
Auditors’ remuneration are disclosed in Note 9 to the financial statements.
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young PLT, as part of the terms of its audit engagement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young PLT for the financial year ended 31 December 2020.
Signed on behalf of the Board in accordance with a resolution of the directors dated 28 April 2021.
Dato’ Haji Tengku Hassan bin Tengku Omar Mohd Badaruddin bin Ismail GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 195
Statement by Directors Pursuant to Section 251(2) of the Companies Act 2016
We, Dato’ Haji Tengku Hassan bin Tengku Omar and Mohd Badaruddin bin Ismail, being two of the directors of Golden Pharos Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 201 to 295 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2020 and of their financial performance and cash flows for the year then ended.
Signed on behalf of the Board in accordance with a resolution of the directors dated 28 April 2021.
Dato’ Haji Tengku Hassan bin Tengku Omar Mohd Badaruddin bin Ismail
Statutory Declaration Pursuant to Section 251(1)(b) of the Companies Act 2016
I, Dato’ Ahmad Nadzarudin bin Abdul Razak , being the officer primarily responsible for the financial management of Golden Pharos Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 201 to 295 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act 1960.
Subscribed and solemnly declared by the abovenamed Dato’ Ahmad Nadzarudin bin Abdul Razak at Kuala Terengganu in the state of Terengganu Darul Iman on 28 April 2021. Dato’ Ahmad Nadzarudin bin Abdul Razak (I/C No.: 680813-11-5289)
Before me, 196 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Independent Auditors’ Report to the members of Golden Pharos Berhad (Incorporated in Malaysia)
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Golden Pharos Berhad., which comprise the statements of financial position as at 31 December 2020 of the Group and of the Company, and statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 201 to 295.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 December 2020, and of their financial performance and their cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.
Basis for opinion
We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independence and other ethical responsibilities
We are independent of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Code of Ethics for Professional Accountants (including International Independence Standards) (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current year. 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. For the matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditors’ responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis of our audit opinion on the accompanying financial statements. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 197
Independent Auditors’ Report to the members of Golden Pharos Berhad (Incorporated in Malaysia) (Continued)
Key audit matter at Group’s financial statements
Revenue Recognition
We draw your attention to summary of significant accounting policies in Note 2.22 and the disclosure of revenue in Note 4 to the financial statements.
For the financial year ended 31 December 2020, the Group recorded revenue of approximately RM47,200,000 mainly derived from its harvesting, sawmilling, kiln drying of timber, sales of logs and rights to log, and glass manufacturing segments. We identified revenue as an area of audit focus because of the significance of the amount of the revenue to the Group’s financial statements at the reporting date. Further, we also assessed the risk of material misstatement in respect of revenue recognition to be higher as the key performance indicator for the key management personnel are measured based on the financial performance (where revenue is the key determinant of the overall financial performance) of the Group. Specifically, we focused our audit efforts to determine the possibility of overstatement of revenue.
In addressing the matter above, we have amongst others performed the following audit procedures:
(i) Tested the Group’s internal controls over nature, timing and amount of revenue recognised. (ii) Inspected the terms of sales documentation to determine the point of transfer of control, including any directly attributable costs of sales. (iii) Inspected documents which evidenced the delivery of goods to customers. (iv) Focused on testing the recording of sales transactions close to the year end, including credit notes issued after year end, to establish that the sales recorded before year end were not subsequently cancelled.
Key audit matter at Company’s financial statements
Impairment of investments in subsidiaries
We draw your attention to summary of significant accounting policies in Note 2.11, significant accounting judgements and estimates in Note 3.2(f) and the disclosure of investments in subsidiaries in Note 19 to the financial statements.
As at 31 December 2020, the net carrying amount of investments in subsidiaries of the Company stood at approximately RM77,099,000.
MFRS 136: Impairment of Assets requires the Company to re-assess the recoverable amount of the investments in subsidiaries as at the reporting date, whenever there is any indication that the previously recognised impairment losses may no longer exist or may have changed. As a result of the assessment, the Company recorded a reversal of impairment of RM1,075,000 during the financial year.
We focused on this area because of the significance of the carrying amount of the investments in subsidiaries which represents 95% of the total assets of the Company as at the reporting date.
In addressing the matter above, we have amongst others performed the following audit procedures:
(i) Obtained an understanding of the Company’s policies and procedures to identify indications of impairment and evaluating the assumptions and methodologies used by the Company in performing the assessment. (ii) Obtained an understanding of the relevant internal process in estimating the recoverable amount of the cash-generating units (“CGUs”) of groups of CGUs. (iii) Evaluated the assumptions and methodologies used by the Company in assessing the recoverable amount of the cash-generating units (“CGUs”) of groups of CGUs. (iv) Assessed the adequacy of the Company’s disclosures within the financial statements. 198 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Independent Auditors’ Report to the members of Golden Pharos Berhad (Incorporated in Malaysia) (Continued)
Information other than the financial statements and auditors’ report thereon
Other information consists of the information included in the Directors’ report and the Company’s 2020 Annual Report other than the financial statements and our auditors' report thereon. Management is responsible for the other information. The Company's 2020 Annual Report is expected to be made available to us after the date of this auditors' report.
Our opinion on the financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
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 Company’s 2020 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 Standards and the requirements of the Companies Act 2016 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements of the Group and of the Company, the directors are responsible for assessing the Group's and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 199
Independent Auditors’ Report to the members of Golden Pharos Berhad (Incorporated in Malaysia) (Continued)
Auditors’ responsibilities for the audit of the financial statements (continued)
As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's and of the Company’s internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
- Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s or the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group or the Company to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that achieves fair presentation.
- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with the relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Company for the current year and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. 200 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Independent Auditors’ Report to the members of Golden Pharos Berhad (Incorporated in Malaysia) (Continued)
Other matter
This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
Ernst & Young PLT Muhammad Affan bin Daud 202006000003 (LLP0022760-LCA) & AF 0039 No. 03063/02/2022 J Chartered Accountants Chartered Accountant
Kuala Terengganu, Terengganu Darul Iman, Malaysia 28 April 2021 GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 201
Statements of Comprehensive Income For the financial year ended 31 December 2020
Group Company Note 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM'000 RM'000 RM'000 RM'000
Revenue 4 47,200 57,472 12,344 5,332
Cost of sales (40,221) (49,660) - -
Gross profit 6,979 7,812 12,344 5,332
Other items of income Interest income 5 267 429 70 44 Dividend income 6 36 68 - - Other income 7 2,480 438 1,945 8,760
Other items of expense Selling and distribution expenses (1,192) (1,444) - - Administrative expenses (14,146) (15,922) (3,719) (8,971) Finance costs 8 (673) (350) (12) (23) Other expenses (317) (205) - - Share of results of an associate 192 197 - -
(Loss)/profit before tax 9 (6,374) (8,977) 10,628 5,142
Income tax expense 12 (319) (229) - -
(Loss)/profit net of tax (6,693) (9,206) 10,628 5,142
(Loss)/profit attributable to: Owners of the parent (6,693) (9,206) 10,628 5,142
202 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Statements of Comprehensive Income (Continued) For the financial year ended 31 December 2020
Group Company Note 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM'000 RM'000 RM'000 RM'000
Other comprehensive income: Items that will be reclassified subsequently to profit or loss: Net (loss)/gain on fair value changes of fair value through other comprehensive income ("FVTOCI") financial assets 31 (237) 848 - -
Other comprehensive (loss)/income for the year, net of tax (237) 848 - -
Total comprehensive (loss)/income for the year, net of tax (6,930) (8,358) 10,628 5,142
Total comprehensive (loss)/income attributable to: Owners of the parent (6,930) (8,358) 10,628 5,142
Loss per share attributable to owners of the parent (sen per share): Basic 13 (4.93) (6.79)
Diluted 13 (4.75) (6.54)
The accompanying accounting policies and explanatory information form an integral part of the financial statements. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 203
Statements of Financial Position As at 31 December 2020
Group Company Note 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM'000 RM'000 RM'000 RM'000
Assets
Non-current assets Property, plant and equipment 14 13,696 14,984 390 423 Right-of-use assets 15 25,839 26,712 35 108 Investment properties 16 18,119 18,540 - - Intangible assets 17 1,155 2,405 - - Goodwill 18 - - - - Investments in subsidiaries 19 - - 77,099 76,024 Investments in associates 20 3,571 3,514 - - Deferred tax assets 21 798 1,878 - - Investment securities 22 2,010 2,211 - -
65,188 70,244 77,524 76,555
Current assets Inventories 24 6,762 6,298 - - Trade and other receivables 25 9,866 10,508 1,510 1,780 Prepayments 3,423 2,815 1,746 2 Tax recoverable 3,149 1,590 - - Cash and bank balances 26 13,137 22,242 1,513 4,643
36,337 43,453 4,769 6,425 Non-current assets held for sale 23 20 - - -
36,357 43,453 4,769 6,425
Total assets 101,545 113,697 82,293 82,980 204 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Statements of Financial Position (Continued) As at 31 December 2020
Group Company Note 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM'000 RM'000 RM'000 RM'000
Equity and liabilities
Current liabilities Defined benefit obligations 28 702 580 - 24 Borrowings 27 1,832 2,823 114 84 Lease liabilities 15 24 25 23 36 Trade and other payables 29 13,335 30,324 3,357 26,744 Tax payable 4 4 - -
15,897 33,756 3,494 26,888
Net current assets/(liabilities) 20,460 9,697 1,275 (20,463)
Non-current liabilities Defined benefit obligations 28 7,014 7,332 190 227 Borrowings 27 10,241 9,686 254 168 Lease liabilities 15 1 27 12 72
17,256 17,045 456 467
Total liabilities 33,153 50,801 3,950 27,355
Net assets 68,392 62,896 78,343 55,625
Equity attributable to owners of the parent Share capital 30 80,447 68,447 80,447 68,447 Retained earnings/(accumulated losses) 8,243 14,936 (3,206) (13,834) Other reserves 31 (20,298) (20,487) 1,102 1,012
Total equity 68,392 62,896 78,343 55,625
Total equity and liabilities 101,545 113,697 82,293 82,980
The accompanying accounting policies and explanatory information form an integral part of the financial statements. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 205
Statements of Changes in Equity For the financial year ended 31 December 2020
------681 426 255 426 share 34 221 255 221 RM’000 reserve options Employee
------from arising (22,718) (22,718) (22,718) (22,718) RM’000 merger Reserve
------477 714 (237) (237) 714 848 848 (134) RM’000 reserve Fair value adjustment
------Non-distributable 1,262 1,262 from 1,262 Equity 1,262 RM’000 owners contribution
- - - - - 426 426 (237) (237) total Other 221 848 221 848 (20,487) (21,556) RM’000 (20,298) (20,487) reserves, (Note 31)
Attributable to owners of the parent ------8,243 butable 14,936 14,936 25,879 (6,693) (6,693) (9,206) (9,206) (1,737) RM’000 (1,737) earnings Retained
------Non- Distri- 68,192 Share 80,447 12,000 12,000 255 255 68,447 68,447 capital RM’000 (Note 30) distributable
total 848 72,515 62,896 68,392 426 255 221
62,896 (1,737) (8,358) 12,426 (6,930) (9,206) (1,261)
(237) Equity, (6,693) RM’000 12,000
31 31 30 31 30 31 39 Note
FVTOCI financial assets Grant of ESOS Group Opening balance at 1 January 2020 Loss for the year Other comprehensive income Net loss on fair value changes of Total comprehensive loss Transactions with owners Share-based payment under the LTIP: Issuance of redeemable preference shares Total transactions with owners Closing balance at 31 December 2020 Opening balance at 1 January 2019 Loss for the year Other comprehensive income Net gain on fair value changes of FVTOCI financial assets Total comprehensive (loss)/income Transactions with owners Issuance of ordinary shares: Exercise of ESGS Share-based payment under the LTIP: Grant of ESOS Dividend Total transactions with owners Closing balance at 31 December 2019 206 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Statements of Changes in Equity (Continued) For the financial year ended 31 December 2020
- - - - - 5 90 90 45 45 40 40 135 share RM’000 reserve options Employee
------967 967 967 967 from Equity contri- bution RM’000 owners
- - - - - 90 90 40 40 972 1,102 total 1,012 1,012 Other RM’000 reserves, (Note 31)
- - - - - Non-distributable
5,142 (3,206) (1,737) (1,737) losses 10,628 (13,834) (17,239) (13,834) RM’000
Accumulated
- - - - - 255 255 Share 80,447 12,000 12,000 68,447 68,447 68,192 capital RM’000 (Note 30)
90 40 255
total 5,142 (1,737) (1,442) 55,625 51,925 12,090 55,625
10,628 12,000
78,343 Equity, RM’000
30 31 30 31 Note
comprehensive income comprehensive income Company Opening balance at 1 January 2020 Profit for the year, representing total Transactions with owners payment under the LTIP: Grant of ESOS Share-based Issuance of redeemable preference shares Total transactions with owners Closing balance at 31 December 2020 Opening balance at 1 January 2019 Profit for the year, representing total Transactions with owners Issuance of ordinary shares: Exercise ESGS payment under the LTIP: Grant of ESOS Share-based Dividend Total transactions with owners Closing balance at 31 December 2019 The accompanying accounting policies and explanatory information form an integral part of the financial statements. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 207
Statements of Cash Flows For the financial year ended 31 December 2020
Group Company Note 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM'000 RM'000 RM'000 RM'000
Cash flows from operating activities (Loss)/profit before tax (6,374) (8,977) 10,628 5,142
Adjustments for: Dividend income from: - Subsidiaries 4 - - (9,836) (2,953) - Investment securities 6 (36) (68) - - Profit and interest income from deposits with licensed banks 5 (267) (429) (70) (44) Profit income from Al-Mudharabah 7 (8) (30) (6) - Reversal of impairment losses on: - Trade receivables 7 (17) - - - - Other receivables 7 (20) - (737) - Reversal of impairment losses on investments in subsidiaries 7 - - (1,075) (8,729) Finance costs 8 673 350 12 23 Depreciation of: - Property, plant and equipment 9 2,554 2,698 205 196 - Right-of-use assets 9 873 779 73 72 - Investment properties 9 401 508 - - Impairment on property, plant and equipment 9 23 - - - Impairment on intangible assets 9 225 - - - Amortisation of intangible assets 9 1,979 2,611 - - Gain on disposal of property, plant and equipment 9 (17) (63) (33) - Property, plant and equipment written off 9 2 - 1 - Inventories written off 9 4 71 - - Allowance for impairment on: - Trade receivables 9 401 17 - - - Other receivables 9 425 21 6 3,309 Impairment losses on investments in subsidiaries 9 - - - 1,075 Other receivables written off 9 13 - - - Share of results of an associate (192) (197) - - Share-based payment under the LTIP: - Exercise of ESGS 10 - 255 - 255 - Grant of ESOS 10 426 221 90 40 Provision for defined benefit obligations 10 773 803 45 42 Provision for short-term accumulating compensated absences 10 - 94 - 11
Total adjustments 8,215 7,641 (11,325) (6,703) 208 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Statements of Cash Flows (Continued) For the financial year ended 31 December 2020
Group Company Note 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
Operating cash flows before changes in working capital 1,841 (1,336) (697) (1,561)
Changes in working capital: (Increase)/decrease in inventories (468) 1,045 - - (Increase)/decrease in trade and other receivables (160) 2,332 1,001 7,082 (Increase)/decrease in prepayments (608) 305 (1,744) - Decrease in trade and other payables (4,987) (370) (2,109) (3,157)
Total changes in working capital (6,223) 3,312 (2,852) 3,925
Cash flows (used in)/from operations (4,382) 1,976 (3,549) 2,364 Profit received from Al-Mudharabah 8 30 6 - Finance costs paid (630) (307) - - Income taxes refunded 1 944 - - Income taxes paid (800) (2,250) - - Defined benefit paid 28 (969) (1,251) (106) (28)
Net cash flows (used in)/from operating activities (6,772) (858) (3,649) 2,336
Cash flows from investing activities Purchases of property, plant and equipment 14 (472) (1,295) (29) (45) Proceeds from disposal of property, plant and equipment 17 110 70 - Addition of intangible assets 17 (954) (3,832) - - Placement of deposits with licensed banks - (200) - (200) Withdrawal of deposits with licensed banks 451 - - - Dividend received from: - Subsidiaries - - 560 2,953 - Investment securities 135 68 - - Profit and interest received 267 429 70 44
Net cash flows from/(used in) investing activities (556) (4,720) 671 2,752 GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 209
Statements of Cash Flows (Continued) For the financial year ended 31 December 2020
Group Company Note 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
Cash flows from financing activities Contractual lease payments 15 (29) (30) (76) (78) Dividend paid on ordinary shares 39 - (1,737) - (1,737) Drawdown of borrowings 952 9,743 - - Repayments of borrowings (1,009) (506) - - Repayments of obligations under finance leases (196) (282) (64) (125) Interest paid (43) (43) (12) (23)
Net cash flows (used in)/from financing activities (325) 7,145 (152) (1,963)
Net (decrease)/increase in cash and cash equivalents (7,653) 1,567 (3,130) 3,125 Cash and cash equivalents at 1 January 19,646 18,079 4,443 1,318
Cash and cash equivalents at 31 December 26 11,993 19,646 1,313 4,443
The accompanying accounting policies and explanatory information form an integral part of the financial statements. 210 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements For the financial year ended 31 December 2020
1. CORPORATE INFORMATION
The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at Wisma TI, PT 3071, Chendering, 21080 Kuala Terengganu, Terengganu Darul Iman.
The principal place of business of the Company is located at 66-2, Taman Sri Intan, Jalan Sultan Omar, 20300 Kuala Terengganu, Terengganu Darul Iman.
The holding company is Terengganu Incorporated Sdn. Bhd., a company incorporated in Malaysia.
The principal activities of the Company are investment holding and provision of management services to the subsidiaries. The principal activities of the subsidiaries are manufacturing and trading of glass, investment holding, sawmiling, moulding, producing finger joint and furniture and kiln drying, harvesting and sustainable forest management, and rental of buildings, plant and machinery, sales of logs and right to log, and manufacture and sale of veneer.
There have been no significant changes in the nature of the principal activities during the financial year.
Other information relating to the subsidiaries are disclosed in Note 19.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of preparation
The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards ("MFRS"), International Financial Reporting Standards ("IFRS") and the requirements of the Companies Act 2016 in Malaysia.
The financial statements of the Group and of the Company are prepared under the historical cost convention except as disclosed in the summary of significant accounting policies.
The financial statements are presented in Ringgit Malaysia ("RM") and all values are rounded to the nearest thousand (RM’000) except when otherwise indicated. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 211
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.2 Changes in accounting policies
The accounting policies adopted are consistent with those of the previous financial year except as follows:
On 1 January 2020, the Group and the Company adopted the following new and amended MFRSs and interpretation mandatory for annual financial periods beginning on or after 1 January 2020.
Effective for annual periods beginning Description on or after
Amendments to MFRS 2: Share-Based Payments 1 January 2020 Amendments to MFRS 3: Business Combinations: Definition of a Business 1 January 2020 Amendments to MFRS 6: Exploration for and Evaluation of Mineral Resources 1 January 2020 Amendments to MFRS 14: Regulatory Deferral Accounts 1 January 2020 Amendments to MFRS 101 : Presentation of Financial Statements: Definition of Material 1 January 2020 Amendments to MFRS 108: Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Material 1 January 2020 Amendments to MFRS 134: Interim Financial Reporting 1 January 2020 Amendments to MFRS 137: Provision, Contingent Liabilities and Contingent Asset 1 January 2020 Amendments to MFRS 138: Intangible Assets 1 January 2020 Amendments to MFRS 9: Financial Instruments, MFRS 139: Financial Instruments: Recognition and Measurements and MFRS 7: Financial Instruments: Disclosure - Interest Rate Benchmark Reform 1 January 2020 Amendments to IC Interpretation 12: Service Concession Arrangements 1 January 2020 Amendments to IC Interpretation 20: Stripping Costs in the Production Phase of a Surface Mine 1 January 2020 Amendments to IC Interpretation 22: Foreign Currency Transactions and Advance Consideration 1 January 2020 Amendments to IC Interpretation 132: Intangible Assets - Web Site Costs 1 January 2020 Amendments to MFRS 16: Leases - Covid-19-Related Rent Concessions 1 June 2020
The adoption of standards and interpretation above did not have any material impact on the financial statements of the Group and of the Company. 212 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.3 Standards and interpretations issued but not yet effective
The standards and interpretations that are issued but not yet effective up to the date of issuance of the Group's and of the Company’s financial statements are disclosed below. The Group and the Company intend to adopt these standards, if applicable, when they become effective.
Effective for annual periods beginning Description on or after
Amendments to MFRS 9: Financial Instruments, MFRS 139: Financial Instruments: Recognition and Measurements and MFRS 7: Financial Instruments: Disclosure - Interest Rate Benchmark Reform - Phase 2 1 January 2021 Amendment to MFRS 16: Leases - Covid-19-Related Rent Concessions beyond 30 June 2021 1 April 2021 Amendments to MFRSs contained in the document entitled “Annual Improvements to MFRS Standards 2018–2020” 1 January 2022 Amendments to MFRS 3: Business Combinations - Reference to the Conceptual Framework 1 January 2022 Amendments to MFRS 116: Property, Plant and Equipment - Property, Plant and Equipment - Proceeds before Intended Use 1 January 2022 Amendments to MFRS 137: Provisions, Contingent Liabilities and Contingent Assets - Onerous Contracts - Cost of Fulfilling a Contract 1 January 2022 MFRS 17: Insurance Contracts 1 January 2023 Amendments to MFRS 17: Insurance Contracts 1 January 2023 Amendments to MFRS 101: Presentation of Financial Statements- Classification of Liabilities as Current or Non-current 1 January 2023 Amendments to MFRS 101: Presentation of Financial Statements - Disclosure of Accounting policies 1 January 2023 Amendments to MFRS 108: Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates 1 January 2023 Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Deferred
The initial application of the standards and interpretations is not expected to have any material financial impact to the current period or prior period financial statements of the Group and of the Company.
GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 213
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.4 Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.
The Company controls an investee if and only if the Company has all the following:
(a) Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); (b) Exposure, or rights, to variable returns from its investment with the investee; and (c) The ability to use its power over the investee to affect its returns.
When the Company has less than a majority of the voting rights of an investee, the Company considers the following in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power over the investee:
(a) The size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders; (b) Potential voting rights held by the Company, other vote holders or other parties; (c) Rights arising from other contractual arrangements; and (d) Any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.
Subsidiaries are consolidated when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra- group transactions are eliminated in full.
Losses within a subsidiary are attributed to the non-controlling interests even if that results in a deficit balance.
Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. The resulting difference is recognised directly in equity and attributed to owners of the Company.
214 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.4 Basis of consolidation (continued)
When the Group loses control of a subsidiary, a gain or loss calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets and liabilities of the subsidiary and any non-controlling interest, is recognised in profit or loss. The subsidiary’s cumulative gain or loss which has been recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss or where applicable, transferred directly to retained earnings. The fair value of any investment retained in the former subsidiary at the date control is lost is regarded as the cost on initial recognition of the investment.
Business combinations
Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. The Group elects on a transaction-by-transaction basis whether to measure the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Transaction costs incurred are expensed and included in administrative expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of MFRS 9: Financial Instruments ("MFRS 9"), is measured at fair value with changes in fair value recognised in the statement of profit or loss in accordance with MFRS 9. Other contingent consideration that is not within the scope of MFRS 9 is measured at fair value at each reporting date with changes in fair value recognised in profit or loss.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss. The accounting policy for goodwill is set out in Note 2.7. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 215
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.5 Subsidiaries
A subsidiary is an entity over which the Group has all the following:
(a) Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); (b) Exposure, or rights, to variable returns from its investment with the investee; and (c) The ability to use its power over the investee to affect its returns.
In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.
2.6 Investments in associates
An associate is an entity in which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
On acquisition of an investment in associate, any excess of the cost of investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill and included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities of the investee over the cost of investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associate’s profit or loss for the period in which the investment is acquired.
An associate is equity accounted for from the date on which the investee becomes an associate.
Under the equity method, on initial recognition the investment in an associate is recognised at cost, and the carrying amount is increased or decreased to recognise the Group's share of the profit or loss and other comprehensive income of the associate after the date of acquisition. When the Group’s share of losses in an associate equal or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
Profits and losses resulting from upstream and downstream transactions between the Group and its associate are recognised in the Group’s financial statements only to the extent of unrelated investors’ interests in the associate. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. 216 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.6 Investments in associates (continued)
After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group’s investment in its associates. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in profit or loss.
The financial statements of the associates are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.
In the Company’s separate financial statements, investments in associates are accounted for at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.
2.7 Goodwill
Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to the Group’s cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
The cash-generating units to which goodwill have been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each cash-generating unit (or group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods.
Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained.
GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 217
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.8 Property, plant and equipment
All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and to the Company and the cost of the item can be measured reliably.
Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group and the Company recognise such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.
Leasehold land is depreciated over the period of lease ranging from 30 years to 99 years. Freehold land has an unlimited useful life and therefore is not depreciated. Work-in-progress included in property, plant and equipment are not depreciated as these are assets not yet available for use. Depreciation of other property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful lives of the assets, at the following annual rates and useful life:
Buildings 2% - 5% Plant and machinery 5% - 20% Furniture, fittings and equipment 5% - 20% Motor vehicles 10% - 20% Road and bridge 5% - 20%
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.
The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss in the year the asset is derecognised.
218 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.9 Investment properties
Investment properties are initially measured at cost, including transaction costs. Investment properties are measured using cost model. Thus, subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment losses.
Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss on the retirement or disposal of an investment property is recognised in profit or loss in the year of retirement or disposal.
Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. For a transfer from owner-occupied property to investment property, the property is accounted for in accordance with the accounting policy for property, plant and equipment set out in Note 2.8 up to the date of change in use.
2.10 Intangible assets
Intangible assets acquired separately are measured initially at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial acquisition, intangible assets are measured at cost less any accumulated amortisation and accumulated impairment losses.
Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in profit or loss.
Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually, or more frequently if the events and circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. Such intangible assets are not amortised. The useful life of an intangible asset with an indefinite useful life is reviewed annually to determine whether the useful life assessment continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 219
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.11 Impairment of non-financial assets
The Group and the Company assess at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group and the Company make an estimate of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units (“CGU”)).
In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.
Impairment losses are recognised in profit or loss.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss, unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period.
220 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.12 Financial assets
Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the instrument.
(a) Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (“FVTOCI”), and fair value through profit or loss ("FVTPL").
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them.
With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at FVTPL, transaction costs.
Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under MFRS 15.
In order for a financial asset to be classified and measured at amortised cost or FVTOCI, it needs to give rise to cash flows that are solely payments of principal and interest (“SPPI”) on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.
The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (“regular way trades”) are recognised on the trade date, that is the date that the Group commits to purchase or sell the asset. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 221
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.12 Financial assets (continued)
(b) Subsequent measurement
For purposes of subsequent measurement, financial assets are classified into four (4) categories:
(i) Financial assets at amortised cost (debt instruments) (ii) Financial assets at FVTOCI with recycling of cumulative gains and losses (debt instruments) (iii) Financial assets designated at FVTOCI with no recycling of cumulative gains and losses upon derecognition (equity instruments) (iv) Financial assets at FVTPL
The Group does not have any financial assets at FVTOCI with recycling of cumulative gains and losses (debt instruments) or financial assets at FVTPL.
Financial assets at amortised cost (debt instruments)
The Group and the Company measure financial assets at amortised cost if both of the following conditions are met:
- The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and
- The contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest (“EIR”) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
The Group's and the Company's financial assets at amortised cost comprises trade and other receivables, and cash and bank balances.
Financial assets designated at FVTOCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)
Upon initial recognition, the Group and the Company can elect to classify irrevocably its equity investments as equity instruments designated at FVTOCI when they meet the definition of equity under IAS 32: Financial Instruments: Presentation and are not held for trading. The classification is determined in an instrument-by-instrument basis. 222 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.12 Financial assets (continued)
(b) Subsequent measurement (continued)
Financial assets designated at FVTOCI with no recycling of cumulative gains and losses upon derecognition (equity instruments) (continued)
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income in the statement of profit or loss when the right of payment has been established, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in other comprehensive income. Equity instruments designated at FVTOCI are not subject to impairment assessment.
(c) Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group's and the Company's statements of financial position) when:
(i) The rights to receive cash flows from the asset have expired; or
(ii) The Group and the Company have transferred their rights to receive cash flows from the asset or have assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either: (a) the Group and the Company have transferred substantially all the risks and rewards of the asset, or (b) the Group and the Company have neither transferred nor retained substantially all the risks and rewards of the asset, but have transferred control of the asset.
When the Group and the Company have transferred their rights to receive cash flows from an asset or have entered into a pass-through arrangement, they evaluate if, and to what extent, they have retained the risks and rewards of ownership. When they have neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group and the Company continue to recognise the transferred asset to the extent of its continuing involvement. In that case, the Group and the Company also recognise an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group and the Company have retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group and the Company would be required to repay. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 223
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.13 Impairment of financial assets
The Group and the Company recognise an allowance for expected credit losses ("ECLs") for all debt instruments not held at FVTPL. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group and the Company expect to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
For trade receivables, the Group and the Company apply a simplified approach in calculating ECLs. Therefore, the Group and the Company do not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group and the Company have established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.
The Group and the Company consider a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group and the Company may also consider a financial asset to be in default when internal or external information indicates that the Group and the Company are unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group and the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
2.14 Cash and cash equivalents
Cash and short-term deposits in the statements of financial position comprise cash at banks and on hand and short-term deposits with a maturity of three months or less.
For the purpose of the statements of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdraft.
224 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.15 Inventories
Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the inventories to their present location and condition are accounted for as follows:
- Raw materials and consumable materials: purchase costs on a first-in first-out basis.
- Finished goods and work-in-progress: costs of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and the estimated costs necessary to make the sale.
2.16 Provisions
Provisions are recognised when the Group and the Company have a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
2.17 Financial liabilities
(a) Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at FVTPL or amortised cost.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings, net of directly attributable transaction costs. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 225
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.17 Financial liabilities (continued)
(b) Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at FVTPL
Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVTPL.
Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments that are not designated as hedging instruments in hedge relationships as defined by MFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the profit or loss.
Financial liabilities designated upon initial recognition at FVTPL are designated at the initial date of recognition, and only if the criteria in MFRS 9 are satisfied. The Group has not designated any financial liabilities at FVTPL.
Financial liabilities at amortised cost
The Group's and the Company's other financial liabilities at amortised cost include trade and other payables, and loans and borrowings.
After initial recognition, trade and other payables, and loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the effective interest rate amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate.
(c) Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the profit or loss.
226 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.18 Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the statements of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
2.19 Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument.
Financial guarantees are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequent to initial recognition, financial guarantees are recognised as income in profit or loss over the period of the guarantee. If it is probable that the liability will be higher than the amount initially recognised less amortisation, the liability is recorded at the higher amount with the difference charged to profit or loss.
2.20 Employee benefits
(a) Short-term benefits
Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group and the Company. Short-term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short-term non-cumulating compensated absences such as sick leave are recognised when the absences occur.
(b) Defined contribution plans
The Group and the Company participate in the national pension scheme as defined by the law of the countries in which it has operations. The Malaysian companies in the Group make contributions to the Employee Provident Fund in Malaysia, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.
(c) Defined benefit plans
The net defined benefit liability or asset is the aggregate of the present value of the defined benefit obligation (derived using a discount rate based on high quality corporate bonds) at the end of the reporting period reduced by the fair value of plan assets (if any), adjusted for any effect of limiting a net defined benefit asset to the asset ceiling. The asset ceiling is the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 227
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.20 Employee benefits (continued)
(c) Defined benefit plans (continued)
The cost of providing benefits under the defined benefit plans is determined separately for each plan using the projected unit credit method.
Defined benefit costs comprise the following: - Service cost - Net interest on the net defined benefit liability or asset - Remeasurements of net defined benefit liability or asset
Service costs which include current service costs, past service costs and gains or losses on non-routine settlements are recognised as expense in profit or loss. Past service costs are recognised when plan amendment or curtailment occurs.
Net interest on the net defined benefit liability or asset is the change during the period in the net defined benefit liability or asset that arises from the passage of time which is determined by applying the discount rate based on high quality corporate bonds to the net defined benefit liability or asset. Net interest on the net defined benefit liability or asset is recognised as expense or income in profit or loss.
Remeasurements comprising actuarial gains and losses, return on plan assets and any change in the effect of the asset ceiling (excluding net interest on defined benefit liability) are recognised immediately in other comprehensive income in the period in which they arise. Remeasurements are recognised in retained earnings within equity and are not reclassified to profit or loss in subsequent periods.
Plan assets are assets that are held by a long-term employee benefit fund or qualifying insurance policies. Plan assets are not available to the creditors of the Group, nor can they be paid directly to the Group. Fair value of plan assets is based on market price information. When no market price is available, the fair value of plan assets is estimated by discounting expected future cash flows using a discount rate that reflects both the risk associated with the plan assets and the maturity or expected disposal date of those assets (or, if they have no maturity, the expected period until the settlement of the related obligations).
The Group’s and the Company’s right to be reimbursed of some or all of the expenditure required to settle a defined benefit obligation is recognised as a separate asset at fair value when and only when reimbursement is virtually certain. 228 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.20 Employee benefits (continued)
(d) Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group and the Company recognise termination benefits when it is demonstrably committed to either to terminate the employment of current employees according to the detailed plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. In the case of an offer made to encourage voluntary redundancy, the measurement of termination benefits is based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the reporting date are discounted to present value.
(e) Share-based payment transactions
The Group and the Company operate an equity-settled share-based long term incentive plan ("LTIP" or "Scheme") which comprises the Executive Share Grant Scheme ("ESGS") and Employee Share Option Scheme ("ESOS") for its employees.
ESGS
Managerial employees are entitled to ESGS when the Vesting Conditions are fully and duly satisfied pursuant to By-Laws 13.1.
The ESGS are settled by way of issuance and transfer of new shares upon vesting. The total fair value of ESGS granted is recognised as an employee cost with a corresponding increase in the share options reserve within equity over the vesting period after taking into account the probability that the ESGS will vest.
At each reporting date, the Group and the Company revise its estimates of the number of ESGS that are expected to vest on vesting date. It recognises the impact of the revision of original estimates, if any, in profit or loss and a corresponding adjustment to equity over the remaining vesting period. The equity amount is recognised in the share-based payment reserve. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 229
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.20 Employee benefits (continued)
(e) Share-based payment transactions (continued)
ESOS
The ESOS allows the Group's and the Company's employees to acquire shares of the Company. The total fair value of share options granted is recognised as an employee cost with the corresponding increase in share options reserve within equity over the vesting period and taking into account the probability that the options will vest.
The fair value of share options is measured at grant date using the binomial model, taking into account, if any, the market vesting conditions upon which the options were granted but excluding the impact of any non-market vesting conditions. Non-market conditions are included in assumptions about the number of options that are expected to become exercisable on vesting date.
At each reporting date, the Group and the Company revise its estimates of the number of options that are expected to become exercisable on vesting conditions. It recognises the impact of the revision of original estimates. If any, in profit or loss and a corresponding adjustment to equity over the remaining vesting period. The equity amount is recognised in the share-based payment reserve.
The fair value of the share options recognised in the share-based payment reserve is transferred to share capital when the share options are exercised, or transferred to retained earnings upon expiry of the share-based payment options.
The proceeds received net of any direct attributable transactions costs are credited to equity when the option are exercised.
2.21 Leases
(i) As lessee
The Group and the Company apply a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group and the Company recognise lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
230 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.21 Leases (continued)
(i) As lessee (continued)
Right-of-use assets
The Group and the Company recognise a right-of-use assets at the lease commencement date. The right-of-use assets are initially measured at cost, which comprises the initial amount of the lease liabilities adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or site on which it is located, less any lease incentives received.
The right-of-use assets are subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use assets 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 of property, plant and equipment, as follows:
Leasehold land 30 - 99 years Buildings 2 years
Where an indication of impairment exists, the carrying amount of the right-of-use assets is assessed and written down immediately to its recoverable amount. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.11.
Lease liabilities
At the commencement date of the lease, the Group and the Company recognise lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and the Company and payments of penalties for terminating the lease, if the lease term reflects the Group and the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 231
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.21 Leases (continued)
(i) As lessee (continued)
Lease liabilities (continued)
In calculating the present value of lease payments, the Group and the Company use the incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
The Group and the Company apply the short-term lease recognition exemption to its short-term leases of equipment (i.e., those leases that have a lease term of twelve (12) months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and leases of low value assets are recognised as expense on a straight-line basis over the lease term.
(ii) As lessor
Leases in which the Group and the Company do not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
232 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.22 Revenue
Revenue is measured at the fair value of consideration received or receivable.
(a) Sale of goods
Revenue from sale of goods is recognised at the point in time upon control of the goods are transferred to the customers, generally on delivery of goods.
(b) Sale of logging compartments
Sale of logging compartments is recognised upon performance obligation stated in the contracts is met and at the point in time upon control of the goods are transferred to the customers.
(c) Rental income
Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease term on a straight-line basis.
(d) Dividend income
Dividend income is recognised when the Group’s and the Company's right to receive payment is established.
(e) Management fees
Management fees are recognised when services are rendered.
(f) Interest income
Interest income is recognised using the effective interest method.
2.23 Income taxes
(a) Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.
Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 233
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.23 Income taxes (continued)
(b) Deferred tax
Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all temporary differences, except:
- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
- in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:
- where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
- in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised. 234 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.23 Income taxes (continued)
(b) Deferred tax (continued)
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
2.24 Segment reporting
For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 38, including the factors used to identify the reportable segments and the measurement basis of segment information.
2.25 Share capital and share issuance expenses
An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments.
Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.
2.26 Redeemable preference shares ("RPS")
Redeemable preference shares are classified as equity as there is no contractual obligation to deliver cash or other financial assets to another person or entity or to exchange financial assets or liabilities with another person or entity that are potentially unfavourable to the issuer. RPS are recorded at nominal value. Dividends on RPS are recognised in equity in the period in which they are declared. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 235
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.27 Current versus non-current classification
Assets and liabilities in the statements of financial position are presented based on current/non-current classification. An asset is current when it is:
- Expected to be realised or intended to be sold or consumed in the normal operating cycle; - Held primarily for the purpose of trading; - Expected to be realised within twelve months after the reporting period; or - Cash and cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when: - It is expected to be settled in the normal operating cycle; - It is held primarily for the purpose of trading; - It is due to be settled within twelve months after the reporting period; or - There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
2.28 Fair value measurements
The Group and the Company measure its financial instruments, such as, derivatives, at fair value at each reporting date. Also, fair values of financial instruments measured at amortised cost are disclosed in Note 35(b).
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. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
(i) In the principal market for the asset or liability; or (ii) In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible to by the Group and the Company.
236 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.28 Fair value measurements (continued)
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset 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.
The Group and the Company use valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group and the Company determine whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
2.29 Foreign currency
(a) Functional and presentation currency
The individual financial statements of each entity in the Group and the Company are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia ("RM"), which is also the Company’s functional currency.
GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 237
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.29 Foreign currency (continued)
(b) Foreign currency transactions
Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions.
Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss.
3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the Group’s and the Company's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.
3.1 Judgements made in applying accounting policies
There were no significant judgements made in applying the accounting policies of the Group and the Company which may have significant effects of the amounts recognised in the financial statements.
3.2 Key sources of estimation uncertainty
The key assumptions 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 are discussed below.
(a) Estimated useful lives of plant and machineries
The cost of plant and machineries for the manufacture of glass and wood related products is depreciated on a straight- line basis over the assets useful lives. Management estimates the useful lives of these plant and machineries to be within 5 to 20 years. These are common life expectancies applied in the industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore, future depreciation charges could be revised. 238 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (CONTINUED)
3.2 Key sources of estimation uncertainty (continued)
(a) Estimated useful lives of plant and machineries (continued)
The net carrying amount of the Group’s plant and machineries at the reporting are disclosed in Note 14.
(b) Deferred tax assets
Deferred tax assets are recognised for all unabsorbed tax losses and unutilised capital allowances to the extent that it is probable that taxable profit will be available against which the losses and capital allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.
Assumptions about generation of future taxable profits depend on management’s estimates of future cash flows. These depend on estimates of future production and sales volume, operating costs, capital expenditure, dividends and other capital management transactions. Judgement is also required about application of income tax legislation. These judgements and assumptions are subject to risks and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognised in the statement of financial position and the amount of unrecognised tax losses and capital allowances.
The carrying amount of the Group’s deferred tax assets at the reporting date is disclosed in Note 21.
(c) Provision for expected credit losses ("ECLs") of trade and other receivables
The Group and the Company use a provision matrix to calculate ECLs for trade and other receivables. The provision rates are based on days past due for groupings of various customer segments that have similar loss patterns (e.g. by geography, product type, customer type and rating, and coverage by letters of credit and other forms of credit insurance).
The provision matrix is initially based on the Group’s and the Company's historical observed defaults rates. The Group and the Company will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. For instance, if forecast economic condition (e.g., gross domestic product) are expected to deteriorate over the next year which can lead to an increased number of defaults in the manufacturing sector, the historical default rates are adjusted. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 239
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (CONTINUED)
3.2 Key sources of estimation uncertainty (continued)
(c) Provision for expected credit losses ("ECLs") of trade and other receivables (continued)
The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Group's historical credit loss experience and forecast of economic conditions may also not be representative of customer's actual default in the future.
The information about ECLs in the Group's trade receivables is disclosed in Note 36(a).
(d) Defined benefit plan
The cost of defined benefit pension plan is determined using the actuarial valuations. The actuarial valuation involves making assumptions about discount rates, future salary increases and mortality rates. All assumptions are reviewed at each reporting date.
The carrying amounts of the Group's and of the Company's defined benefit plan at the reporting date and related assumptions are disclosed in Note 28.
(e) Leases - estimating the incremental borrowing rate
The Group and the Company unable to determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate ("IBR") to measure lease liabilities. The IBR is the rate of interest that the Group and the Company would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group and the Company ‘would have to pay’, which require estimation when no observable rates are available or when they need to be adjusted to reflect the terms and conditions of the lease. The Group and the Company estimate the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates.
(f) Investments in subsidiaries
MFRS 136: Impairment of Assets requires entities to assess at each reporting date whether there is any indication that an impairment loss may no longer exist or may have changed. If there is any such indication, the entity is required to recalculate the recoverable amount of the asset, which is the higher of its fair value less costs to sell and its value in use.
Judgements made by the management in the process of applying the Group’s accounting policies in respect of investments in subsidiaries includes determination whether reversal of impairment following certain indications such as, amongst others, evidence from internal reporting that the economic performance of the subsidiaries is or will be, better than expected.
The carrying amount of the investments in subsidiaries at the reporting date are disclosed in Note 19. 240 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
4. REVENUE
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
Sale of goods 42,817 53,791 - - Sale of logging compartments 4,265 3,583 - - Rental income (Note 16) 118 98 - - Dividend income from subsidiaries - - 9,836 2,953 Management fees from subsidiaries - - 2,508 2,379
47,200 57,472 12,344 5,332
All revenue from the products and service transferred are recognised at the point in time.
Set out below is the disaggregation of the Group’s revenue from contracts with customers:
Group For the financial year ended 31 December 2020 Harvesting Manufacturing Others Total RM’000 RM’000 RM’000 RM’000
Primary geographical markets: Malaysia 30,355 16,114 118 46,587 United Kingdom 372 - - 372 Other Region - 241 - 241
Total revenue from contracts with customers 30,727 16,355 118 47,200
Major product or service line: Logs 970 - - 970 Logging compartments 4,265 - - 4,265 Sawn timbers 25,120 - - 25,120 Mouldings 372 - - 372 Woodchips - 1,099 - 1,099 Veneer - 1,376 - 1,376 Manufactured glasses - 13,880 - 13,880 Rental income - - 118 118
Total revenue from contracts with customers 30,727 16,355 118 47,200 GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 241
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
4. REVENUE (CONTINUED) Group For the financial year ended 31 December 2019 Harvesting Manufacturing Others Total RM’000 RM’000 RM’000 RM’000
Primary geographical markets: Malaysia 36,080 19,653 98 55,831 United Kingdom 387 - - 387 Other regions 902 352 - 1,254
Total revenue from contracts with customers 37,369 20,005 98 57,472
Major product or service line: Logs 645 - - 645 Logging compartments 3,583 - - 3,583 Sawn timbers 32,203 - - 32,203 Mouldings 938 - - 938 Woodchips - 1,305 - 1,305 Veneer - 1,054 - 1,054 Manufactured glasses - 17,646 - 17,646 Rental income - - 98 98
Total revenue from contracts with customers 37,369 20,005 98 57,472
5. INTEREST INCOME Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
Profit and interest income from deposits with licensed banks 267 429 70 44
6. DIVIDEND INCOME Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000 Dividend income from: FVTOCI financial assets - Equity instruments (quoted in Malaysia) 36 68 - - 242 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
7. OTHER INCOME
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
Reversal of impairment losses on: - Trade receivables (Note 25(a)) 17 - - - - Other receivables (Note 25(c)) 20 - 737 - Sale of scrap and other products 599 120 - - Gain on disposal of property, plant and equipment 17 63 33 - Reversal of impairment losses on investments in subsidiaries - - 1,075 8,729 Realised gain on foreign exchange 21 20 - - Profit income from Al-Mudharabah 8 30 6 - Insurance compensation - 150 - - Wages subsidy programme 1,790 - 65 - Miscellaneous 8 55 29 31
2,480 438 1,945 8,760
8. FINANCE COSTS
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000 Interest expense on: - Obligations under finance leases 32 43 9 17 - Bankers’ acceptances 3 4 - - - Term loan 506 223 - - - Bank overdraft 130 77 - - - Lease liabilities (Note 15) 2 3 3 6
673 350 12 23 GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 243
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
9. (LOSS)/PROFIT BEFORE TAX
The following items have been included in arriving at (loss)/profit before tax:
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000 Auditors’ remuneration: - Current year 160 160 66 66 - Other services 20 20 20 20 Employee benefits expense (Note 10) 17,538 21,240 1,888 2,593 Wages subsidy programme 1,790 - 65 - Non-executive directors’ remuneration excluding benefits-in-kind (Note 11) 1,175 1,265 527 552 Depreciation of: - Property, plant and equipment (Note 14) 2,554 2,698 205 196 - Right-of-use assets (Note 15) 873 779 73 72 - Investment properties (Note 16) 401 508 - - Amortisation of intangible assets (Note 17) 1,979 2,611 - - Gain on disposal of property, plant and equipment (17) (63) (33) - Property, plant and equipment written off 2 - 1 - Impairment on property, plant and equipment (Note 14) 23 - - - Impairment on intangible assets 225 - - - Inventories written off (Note 24) 4 71 - - Allowance for impairment on: - Trade receivables (Note 25(a)) 401 17 - - - Other receivables (Note 25(c)) 425 21 6 3,309 Reversal of allowance for impairment on: - Trade receivables (Note 25(a)) (17) - - - - Other receivables (Note 25(c)) (20) - (737) - Other receivables written off 13 - - - Impairment losses on investments in subsidiaries - - - 1,075 Rental of equipment 22 36 9 8 Rental of land and buildings 35 29 77 77 244 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
10. EMPLOYEE BENEFITS EXPENSE
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
Wages and salaries 12,730 15,273 1,206 1,759 Social security contributions 211 229 13 15 Contributions to defined contribution plan 1,572 1,915 215 279 Provision for defined benefit obligations (Note 28) 773 803 45 42 Share-based payment under the LTIP: - Exercise of ESGS - 255 - 255 - Grant of ESOS 375 221 58 40 Provision for short-term accumulating compensated absences - 94 - 11 Other benefits 1,877 2,450 351 192
17,538 21,240 1,888 2,593
Included in employee benefit expense of the Group is executive director’s remuneration amounting to RM87,000 (31.12.2019: RM62,000) as further disclosed in Note 11.
11. DIRECTORS’ REMUNERATION
The details of remuneration received and receivable by the directors of the Company during the year are as follows:
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000 Executive director: Fees 48 24 - - Other emoluments 39 38 - -
Total executive directors’ remuneration (Note 10) 87 62 - - GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 245
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
11. DIRECTORS’ REMUNERATION (CONTINUED)
The details of remuneration received and receivable by the directors of the Company during the year are as follows (continued):
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000 Non-executive directors: Fees 263 300 151 180 Share option granted under ESOS 51 6 32 5 Other emoluments 861 959 344 367
Total non-executive directors’ remuneration (excluding benefits-in-kind) (Note 9) 1,175 1,265 527 552 Benefits-in-kind 11 5 11 -
Total non-executive directors’ remuneration (including benefits-in-kind) 1,186 1,270 538 552
Total directors’ remuneration 1,273 1,332 538 552
The number of directors of the Company whose total remuneration during the financial year fell within the following bands is analysed below:
Number of directors 31.12.2020 31.12.2019 RM’000 RM’000 Non-executive directors: Below RM 50,000 1 1 RM50,001 to RM 100,000 5 5 Above RM100,000 1 1
12. INCOME TAX EXPENSES
Major components of income tax expense
The major components of income tax expense for the years ended 31 December 2020 and 2019 are:
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
Profit or loss: Current income tax: - Malaysian income tax 386 481 - - - (Over)/under provision in respect of previous years (1,147) 111 - -
(761) 592 - -
246 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
12. INCOME TAX EXPENSE (CONTINUED)
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
Deferred tax (Note 21): - Relating to origination or reversal of temporary differences 225 (59) - - - Under/(over) provision in respect of previous years 855 (304) - -
1,080 (363) - -
Total income tax expense recognised in profit or loss 319 229 - -
Reconciliation between tax expense and accounting (loss)/profit
Current income tax is calculated at the statutory tax rate of 24% (31.12.2019: 24%) of the estimated assessable (loss)/profit for the year.
The reconciliation between tax expense and the product of accounting (loss)/profit multiplied by the applicable corporate tax rate for the financial years ended 31 December 2020 and 2019 is as follows:
31.12.2020 31.12.2019 RM’000 RM’000
Group
Loss before tax (6,374) (8,977)
Tax at Malaysian statutory tax rate of 24% (31.12.2019: 24%) (1,530) (2,154)
Adjustments: Income not subject to tax (1,235) (16) Non-deductible expenses 660 716 Effect of tax exempt and relief - (12) Deferred tax assets not recognised 2,762 1,935 Share of tax of an associate (46) (47) Under/(over) provision of deferred income tax in respect of previous years 855 (304) (Over)/under provision of income tax in respect of previous years (1,147) 111
Total income tax expense recognised in profit or loss 319 229 GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 247
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
12. INCOME TAX EXPENSE (CONTINUED)
31.12.2020 31.12.2019 RM’000 RM’000 Company
Profit before tax 10,628 5,142
Tax at Malaysian statutory tax rate of 24% (31.12.2019: 24%) (2,551) (1,234)
Adjustments: Income not subject to tax (2,794) (2,803) Non-deductible expenses 165 1,181 Deferred tax assets not recognised 78 388
Total income tax expense recognised in profit or loss - -
Tax savings during the financial year arising from:
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000 Utilisation of: - Current year’s tax losses 117 67 17 18 - Previously unutilised tax losses 381 445 - -
248 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
13. LOSS PER SHARE
(a) Basic
Basic loss per share is calculated by dividing the Group’s loss net of tax, attributable to owners of the parent of RM6,693,000 (31.12.2019: RM9,206,000) by the weighted average number of ordinary shares in issue during the financial year, of approximately 135,645,000 (31.12.2019: 135,645,000).
(b) Diluted
Diluted loss per share is calculated by dividing the Group’s loss net of tax, attributable to owners of the parent of RM6,693,000 (31.12.2019: RM9,206,000) by the weighted average number of ordinary shares in issue during the financial year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
The following reflects the loss and share data used in the computation of basic and diluted loss per share for the financial years ended 31 December: Group 31.12.2020 31.12.2019
Loss net of tax, attributable to owners of the parent (RM’000) (6,693) (9,206)
Weighted average number of ordinary shares (‘000) 135,645 135,645
Effect of dilution (‘000) - Employee Share Option Scheme (“ESOS”) 5,123 5,123
Weighted average number of ordinary shares for diluted loss per share (‘000) 140,768 140,768
Loss per share (sen): Basic (4.93) (6.79)
Diluted (4.75) (6.54) GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 249
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
14. PROPERTY, PLANT AND EQUIPMENT
Furniture, fittings Land and Plant and and Motor Road and Work-in- buildings* machinery equipment vehicles bridge progress Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group
Cost: At 1 January 2019 10,462 75,727 11,065 10,281 728 - 108,263 Additions 566 314 129 717 - - 1,726 Disposals - - (1) (584) - - (585) Write offs - - (65) - - - (65)
At 31 December 2019 and 1 January 2020 11,028 76,041 11,128 10,414 728 - 109,339 Additions 12 593 86 398 - 202 1,291 Disposals - - - (64) - - (64) Write offs - - (25) - - - (25)
At 31 December 2020 11,040 76,634 11,189 10,748 728 202 110,541
Accumulated depreciation and impairment: At 1 January 2019 4,926 68,476 10,410 8,286 162 - 92,260 Depreciation charge for the year (Note 9) 625 951 207 898 17 - 2,698 Disposals - - (1) (537) - - (538) Write offs - - (65) - - - (65)
At 31 December 2019 and 1 January 2020 5,551 69,427 10,551 8,647 179 - 94,355 Depreciation charge for the year (Note 9) 649 963 124 801 17 - 2,554 Impairment charge for the year (Note 9) - 23 - - - - 23 Disposals - - - (64) - - (64) Write offs - - (23) - - - (23)
At 31 December 2020 6,200 70,413 10,652 9,384 196 - 96,845
Net carrying amount:
At 31 December 2019 5,477 6,614 577 1,767 549 - 14,984
At 31 December 2020 4,840 6,221 537 1,364 532 202 13,696 250 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
14. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
*Land and buildings of the Group: Freehold land Buildings Total RM’000 RM’000 RM’000 Group (continued)
Cost:
At 1 January 2019 390 10,072 10,462 Addition - 566 566
At 31 December 2019 and 1 January 2020 390 10,638 11,028 Addition - 12 12
At 31 December 2020 390 10,650 11,040
Accumulated depreciation:
At 1 January 2019 - 4,926 4,926 Depreciation charge for the year - 625 625
At 31 December 2019 and 1 January 2020 - 5,551 5,551 Depreciation charge for the year - 649 649
At 31 December 2020 - 6,200 6,200
Net carrying amount:
At 31 December 2019 390 5,087 5,477
At 31 December 2020 390 4,450 4,840 GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 251
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
14. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Furniture, fittings and Motor equipment vehicles Total RM’000 RM’000 RM’000
Company
Cost: At 1 January 2019 389 856 1,245 Additions 45 - 45 Disposals (1) - (1) Write offs (3) - (3)
At 31 December 2019 and 1 January 2020 430 856 1,286 Additions 9 200 209 Disposals - (177) (177) Write offs (12) - (12)
At 31 December 2020 427 879 1,318
Accumulated depreciation: At 1 January 2019 334 337 671 Depreciation charge for the year (Note 9) 25 171 196 Disposals (1) - (1) Write offs (3) - (3)
At 31 December 2019 and 1 January 2020 355 508 863 Depreciation charge for the year (Note 9) 30 175 205 Disposals - (140) (140) Write offs (11) - (11)
At 31 December 2020 374 543 928
Net carrying amount:
At 31 December 2019 75 348 423
At 31 December 2020 53 336 390
Assets held under finance lease
During the financial year, the Group and the Company acquired equipment and motor vehicles with an aggregate cost of RM819,000 (31.12.2019: RM431,000) and RM180,000 (31.12.2019: RMNil) respectively, by means of finance lease. The cash outflow on acquisition of property, plant and equipment of the Group and of the Company amounted to RM472,000 (31.12.2019: RM1,295,000) and RM29,000 (31.12.2019: RM45,000) respectively.
The net carrying amount of plant and machinery, equipment and motor vehicles of the Group and of the Company held under finance leases at the reporting date were RM1,535,000 (31.12.2019: RM883,000) and RM352,000 (31.12.2019: RM317,000) respectively. 252 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
15. RIGHT-OF-USE ASSETS AND LEASE LIABITIES
The Group and the Company have lease contracts for various items of leasehold land and buildings used in its operations. The lease has lease terms from 2 to 99 years.
Set out below are the net carrying amounts of right-of-use assets of the Group and of the Company recognised and the movements during the year:
Leasehold land Buildings Total RM’000 RM’000 RM’000
Group
At 1 January 2019 - - - Effects of adoption of MFRS 16: - Reclassification from property, plant and equipment, net 27,412 - 27,412 - Commitments recognised - 79 79 Depreciation expense (Note 9) (733) (46) (779)
At 31 December 2019 and 1 January 2020 26,679 33 26,712 Depreciation expense (Note 9) (846) (27) (873)
At 31 December 2020 25,833 6 25,839
Buildings RM’000
Company
At 1 January 2019 - Effect of adoption of MFRS 16 180 Depreciation expense (Note 9) (72)
At 31 December 2019 and 1 January 2020 108 Depreciation expense (Note 9) (73)
At 31 December 2020 35
GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 253
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
15. RIGHT-OF USE ASSETS AND LEASE LIABILITIES (CONTINUED)
Set out below are the net carrying amounts of lease liabilities of the Group and of the Company recognised and the movements during the year:
Interest Group Company rate Maturity RM’000 RM’000
At 1 January 2019 - - Effect of adoption of MFRS 16 79 180 Accretion of interest (Note 8) 3 6 Payments (30) (78)
At 31 December 2019 and 1 January 2020 52 108 Accretion of interest (Note 8) 2 3 Payments (29) (76)
As at 31 December 2020 25 35
31 December 2019 Current 5.00% 2020 25 36
Non-current 5.00% 2021 - 2022 27 72
31 December 2020 Current 5.00% 2021 24 23
Non-current 5.00% 2022 1 12
The following are the amounts recognised in profit or loss:
Group 31.12.2020 31.12.2019 RM’000 RM’000
Depreciation expense of right-of-use assets (Note 9) 873 779 Interest expense on lease liabilities (Note 8) 2 3
Total amount recognised in profit or loss 875 782
Company 31.12.2020 31.12.2019 RM’000 RM’000
Depreciation expense of right-of-use assets (Note 9) 73 72 Interest expense on lease liabilities (Note 8) 3 6
Total amount recognised in profit or loss 76 78
The Group’s and the Company’s total cash outflows for leases is RM29,000 and RM76,000, respectively. 254 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
15. RIGHT-OF USE ASSETS AND LEASE LIABILITIES (CONTINUED)
Assets pledged as securities
In addition to assets held under finance leases, the Group’s land with net carrying amount of RM15,040,000 (2019: RM15,340,000) are mortgaged to secure the Group’s bank borrowings (Note 27).
16. INVESTMENT PROPERTIES
Leasehold land Buildings Total RM’000 RM’000 RM’000 Group
Cost: At 1 January 2019/31 December 2019/1 January 2020 22,129 349 22,478 Reclassification to non-current assets held for sale (Note 23) (20) (60) (80)
At 31 December 2020 22,109 289 22,398
Accumulated depreciation: At 1 January 2019 3,353 77 3,430 Depreciation charge for the year (Note 9) 502 6 508
At 31 December 2019/1 January 2020 3,855 83 3,938 Depreciation charge for the year (Note 9) 392 9 401 Reclassification to non-current assets held for sale (Note 23) - (60) (60)
At 31 December 2020 4,247 32 4,279
Net carrying amount: At 31 December 2019 18,274 266 18,540
At 31 December 2020 17,862 257 18,119
Fair value information
The Group has engaged an independent professional valuer, who holds a recognised relevant professional qualification and has experience in the locations and categories of the investment properties valued to determine the fair value of its investment property. A valuation is conducted at each financial year end. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 255
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
16. INVESTMENT PROPERTIES (CONTINUED)
Based on the valuation report dated 28 January 2021, fair values of leasehold land and buildings of the Group as at 31 December 2020 were RM26,673,000 (31.12.2019: RM25,564,000) and RM400,000 (31.12.2019: RM353,000) respectively.
Level 3 fair values
Fair value of the leasehold land and buildings have been generally derived using the sales comparison approach. Sales price of comparable properties in close proximity are adjusted for differences in key attributes such as property size, location and physical characteristics to arrive at market value. The most significant input into this valuation approach is price per square foot of comparable properties.
The following is recognised in profit or loss in respect of investment properties:
Group 31.12.2020 31.12.2019 RM’000 RM’000
Rental income (Note 4) 118 98
17. INTANGIBLE ASSETS
(a) Premium (b) Right Total RM’000 RM’000 RM’000 Group
Net carrying amount
At 1 January 2019 789 395 1,184 Additions 3,784 48 3,832 Amortisation expenses (Note 9) (2,594) (17) (2,611)
At 31 December 2019 and 1 January 2020 1,979 426 2,405 Additions 954 - 954 Amortisation expenses (Note 9) (1,979) - (1,979) Impairment (Note 9) - (225) (225)
At 31 December 2020 954 201 1,155
(a) Being premium paid by the Group to Jabatan Perhutanan Negeri Terengganu (“JPNT”) in respect of logging compartments in which the license for logging activities has been granted by JPNT. The amortisation of the premium to profit or loss is based on unit of logs production.
b) Being right to fell and extraction of Karas trees located in the Terengganu Forest Reserve granted by JPNT to the Group. The amortisation of the right to profit or loss is based on unit of trees felled and extracted. 256 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
17. INTANGIBLE ASSETS (CONTINUED)
Impairment testing for premium
The recoverable amount of the CGU has been measured based on fair value calculation which is based on calculations using sales consideration entered into with the respective parties, covering the expected period of the project.
The calculation of fair value is makes reference to the consideration as per the agreements entered into.
Impairment testing for right
The recoverable amount of the CGU has been measured based on a value in use calculation which is based on calculations using cash flow projections from financial budgets approved by the management and as agreed with the counterparties, covering the expected period of the project, i.e. approximately 1 year. As a result of this analysis, management has recognised an impairment charge of RM225,000 (2019: RM Nil) in the current year.
The calculation of value in use is most sensitive to the sales paramateres, which includes demand, price and output. Sales parameters are based on average values achieved historically. Decrease in demand, price and extraction output can lead to a decline in the expected revenue. Decrease in sales parameters by 1% would decrease value in use by RM33,000.
18. GOODWILL
Group 31.12.2020 31.12.2019 RM’000 RM’000
Cost: At 1 January/31 December 613 613
Accumulated impairment losses:
At 1 January/31 December (613) (613)
Net carrying amount: At 31 December - - GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 257
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
19. INVESTMENTS IN SUBSIDIARIES
Company 31.12.2020 31.12.2019 RM’000 RM’000
Unquoted shares, at cost 118,824 118,824 Less: Accumulated impairment losses (41,739) (42,814)
77,085 76,010 Provision for financial guarantee 14 14
77,099 76,024
During the year, the Company recorded a net reversal of impairment losses on the investments of RM1,075,000 based on its recoverable amount, determined based on fair value less costs to sell of the subsidiaries’ net assets.
(a) Details of subsidiaries are as follows:
Country of Proportion (%) of Names incorporation ownership interest Principal activities
31.12.2020 31.12.2019 Held by the Company:
GP Forest Plantation Sdn. Bhd. Malaysia 100 100 Forest plantation
Golden Pharos Glass Sdn. Bhd. Malaysia 100 100 Manufacturing and trading of glass
Golden Pharos Biomass Sdn. Bhd. Malaysia 100 100 Inactive (formerly known Golden Pharos Overseas Sales Sdn. Bhd.)
Golden Pharos Overseas Malaysia 100 100 Dormant Sdn. Bhd.**
Golden Pharos Fiber Sdn. Bhd. Malaysia 100 100 Dormant
Permint Timber Malaysia 100 100 Investment holding Corporation Sdn. Bhd. 258 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
19. INVESTMENTS IN SUBSIDIARIES (CONTINUED)
(a) Details of subsidiaries are as follows (continued):
Country of Proportion (%) of Names incorporation ownership interest Principal activities
31.12.2020 31.12.2019
Held through Permint Timber Corporation Sdn. Bhd.:
Pesama Timber Malaysia 100 100 Sawmilling, harvesting, moulding, Corporation Sdn. Bhd. producing finger joint and furniture, and kiln drying
Pesaka Trengganu Malaysia 100 100 Sawmilling Berhad
Kumpulan Pengurusan Malaysia 100 100 Harvesting and sustainable Kayu-Kayan Trengganu management Sdn. Bhd.
Permint Plywood Sdn. Bhd. Malaysia 100 100 Rental of buildings, plant and machinery, selling of logs, sale of right to log, trading of woodchips and manufacture and sale of veneer
GP Tropical Furniture Malaysia 50.39* 50.39* Dormant Sdn. Bhd.
Held through Permint Plywood Sdn. Bhd.:
GP Dynamic Venture Sdn. Bhd. Malaysia 100 100 Dormant
* Percentage of ownership interest was held by non-controlling interest equal to the proportion of voting rights held.
** This subsidiary holds 19% equity interest in Prestige Doors PLC (“PDP”), a company incorporated in the United Kingdom. PDP is currently dormant. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 259
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
20. INVESTMENTS IN ASSOCIATES
Group 31.12.2020 31.12.2019 RM’000 RM’000
Unquoted ordinary shares, at cost 3,981 3,981 Unquoted preference shares, at cost 7,764 7,764
11,745 11,745 Share of post-acquisition reserves 2,708 2,651
14,453 14,396 Less: Accumulated impairment losses (10,882) (10,882)
3,571 3,514
Represented by: Share of net tangible assets 3,571 3,514
Details of the associates are as follows:
Country of Proportion (%) of Names incorporation ownership interest Principal activities
31.12.2020 31.12.2019
Konsortium Perumahan Malaysia 35 35 Housing development Rakyat Terengganu Sdn. Bhd.
Kemaman Furniture Malaysia 43.59 43.59 Dormant Industries Sdn. Bhd.
Pesama Renors (M) Sdn. Bhd. Malaysia 25 25 Dormant
GPB Seabridge United 20 20 Dormant International, Inc.+ States of America
+ Audited by a firm of auditors other than Ernst & Young PLT. 260 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
20. INVESTMENTS IN ASSOCIATES (CONTINUED)
Konsortium Perumahan Rakyat Terengganu Sdn. Bhd.
The summarised financial information of the associate, not adjusted for the proportion of ownership interest held by the Group, is as follows:
(i) Summarised statement of financial position
31.12.2020 31.12.2019 RM’000 RM’000 Assets and liabilities: Total assets 25,937 24,282
Total liabilities (17,225) (15,734)
(ii) Summarised statement of comprehensive income
31.12.2020 31.12.2019 RM’000 RM’000 Results: Revenue 10,071 10,759
Profit for the year 164 457
(iii) Reconciliation of the summarised financial information presented above to the carrying amount of the Group’s interest in associate:
31.12.2020 31.12.2019 RM’000 RM’000
Net assets at 1 January 8,548 8,091 Profit for the year 164 457
Net assets at 31 December 8,712 8,548 Interest in associate 35% 35%
3,049 2,992 Goodwill 522 522
3,571 3,514 GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 261
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
(460) (798) As at
2020 6,747 (8,756) (1,878) (5,437) (1,648) (7,545) RM’000 RM’000 31.12.2019 31 December
6,878
(669) (131) (421) (798) 2,301 1,211 1,080 6,747 (7,545) RM’000 or loss RM’000 in profit (Note 12) 31.12.2020 Recognised
(39) 2019 As at 6,878 (1,878) (4,768) (3,949) (8,756) RM’000 31 December
- (72) (291) (363) 1,171 (1,462) RM’000 or loss in profit (Note 12) Recognised
(39) 2019 As at 6,950 (3,306) (5,120) (8,465) (1,515) RM’000 1 January
DEFERRED TAX December relates to the following: Deferred income tax as at 31 Group Deferred tax liabilities: Property, plant and equipment Deferred tax assets: Provisions and defined benefit obligations Other payables Unutilised tax losses, unabsorbed reinvestment allowances and capital Group Presented after appropriate offsetting as follows: Deferred tax assets Deferred tax liabilities 21. 262 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
21. DEFERRED TAX (CONTINUED)
Deferred tax assets have not been recognised in respect of the following items:
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
Unutilised tax losses 196,627 188,092 4,263 3,898 Unabsorbed capital allowances 11,793 10,611 1,705 1,651 Unutilised reinvestment allowances 3,850 3,850 - - Other deductible temporary differences 2,772 981 699 793
215,042 203,534 6,667 6,342
The above deferred tax assets have not been recognised due to uncertainty of its recoverability.
The availability of unutilised tax losses for offsetting against future taxable profits of a subsidiary in Malaysia is subject to no substantial changes in the shareholding of the subsidiary under the Income Tax Act 1967 and guidelines issued by the tax authority. With effect from year of assessment (“YA”) 2019, unutilised business losses arising from a YA is allowed to only be carried forward from YA 2018 for utilisation up to 7 consecutive YAs from that YA. In addition, any accumulated unabsorbed business losses brought forward from YA 2018 shall be allowed to be utilised for 7 consecutive YAs.
22. INVESTMENT SECURITIES
Group 31.12.2020 31.12.2019 RM’000 RM’000 Non-current Fair value through other comprehensive income (“FVTOCI”) financial assets Quoted in Malaysia: - Equity instruments 1,129 1,335 - Unit trust, Amanah Saham Darul Iman (“ASDI”) 881 876
2,010 2,211 GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 263
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
23. NON-CURRENT ASSETS HELD FOR SALE
Set out below are the net carrying amount of non-current assets held for sale of the Group recognised and the movement during the year.
Group Freehold land and building RM’000
At 1 January 2020 - Reclassification from investment properties (Note 16) 20
At 31 December 2020 20
The Group is in the midst of disposing 2 units of houses in Lembah Beringin, Selangor classified as investment properties previously. The acceptance of offer has been signed in November 2020. The Group is currently in the process to finalise the Sales and Purchase Agreement and Memorandum of Transfer in 2021.
24. INVENTORIES
Group 31.12.2020 31.12.2019 RM’000 RM’000
At cost: Raw materials 4,538 2,820 Consumables 404 467 Work-in-progress 156 577 Finished goods 1,484 2,034
6,582 5,898
At net realisable value: Raw materials 174 127 Finished goods 6 273
180 400
6,762 6,298
During the financial year, the amount of the Group’s inventories recognised as an expenses in cost of sales of theGroupwas RM27,510,000 (31.12.2019: RM37,784,000).
During the year, the Group’s inventories amounting to RM4,000 (31.12.2019: RM71,000) were written off (Note 9).
264 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
25. TRADE AND OTHER RECEIVABLES
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
Trade receivables (Note a) Third parties 15,011 19,041 - - Less: Allowance for impairment - Third parties (7,769) (11,929) - -
Trade receivables, net 7,242 7,112 - -
Other receivables Amounts due from subsidiaries (Note b) - - 80,289 81,291 Loans to subsidiaries - - 4,665 4,665 Amounts due from associates (Note b) 1,106 1,104 433 432 Sundry receivables 8,058 8,087 7,083 7,083 Deposits 2,300 2,518 15 15 Goods and Services Tax (“GST”) receivable 257 428 - -
11,721 12,137 92,485 93,486
Less : Allowance for impairment - Amounts due from subsidiaries - - (79,310) (80,041) - Loans to subsidiaries - - (4,665) (4,665) - Amounts due from associates (1,106) (1,104) - - - Sundry receivables (7,991) (7,637) (7,000) (7,000)
(9,097) (8,741) (90,975) (91,706)
Other receivables, net 2,624 3,396 1,510 1,780
Total trade and other receivables 9,866 10,508 1,510 1,780 Add: Cash and bank balances (Note 25) 13,137 22,242 1,513 4,643 Less: GST receivable (257) (428) - -
Total financial assets carried at amortised cost 22,746 32,322 3,023 6,423
(a) Trade receivables
Trade receivables are non-interest bearing and are generally on 30 to 90 days (31.12.2019: 30 to 90 days) terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.
Included in trade receivables is an amount of RM4,995,000 (31.12.2019: RM4,995,000) due from affiliated companies, which were fully impaired. Affiliated companies refer to companies related to Golden Pharos Berhad’s associates.
GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 265
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
25. TRADE AND OTHER RECEIVABLES (CONTINUED)
(a) Trade receivables (continued)
Ageing analysis of trade receivables
The ageing analysis of the Group’s trade receivables is as follows:
Group 31.12.2020 31.12.2019 RM’000 RM’000
Neither past due nor impaired 5,421 4,011 1 to 30 days past due not impaired 921 1,168 31 to 60 days past due not impaired 419 603 61 to 90 days past due not impaired 201 429 91 to 120 days past due not impaired 84 562 More than 121 days past due not impaired 196 339
1,821 3,101 Impaired 7,769 11,929
15,011 19,041
Receivables that are neither past due nor impaired
Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group.
None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.
Receivables that are past due but not impaired
The Group has trade receivables amounting to RM1,821,000 (31.12.2019: RM3,101,000) that are past due at the reporting date but not impaired.
Based on past experience and no adverse information to date, the directors of the Group are of the opinion that no allowance for impairment is necessary in respect of these balances as there has not been a significant change in the credit quality and the balances are still considered fully recoverable.
266 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
25. TRADE AND OTHER RECEIVABLES (CONTINUED)
(a) Trade receivables (continued)
Receivables that are impaired
The Group’s trade receivables that are impaired at the reporting date and the movement of the allowance for expected credit losses of trade receivables are as below: Group Individually impaired 31.12.2020 31.12.2019 RM’000 RM’000
Trade receivables - nominal amount 7,769 11,929 Less: Allowance for impairment (7,769) (11,929)
- -
Movement in allowance accounts:
Group 31.12.2020 31.12.2019 RM’000 RM’000
At 1 January 11,929 11,946 Charge for the year (Note 9) 401 17 Reversal for the year (Note 7) (17) - Write off (4,544) (34)
At 31 December 7,769 11,929
Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.
(b) Related party balances
Amounts due from subsidiaries are unsecured, non-interest bearing and are repayable on demand.
Loans to subsidiaries are unsecured, bear interest ranging from 2.5% to 4.0% per annum (31.21.2019: 2.5% to 4.0% per annum) and are repayable on demand.
Amounts due from associates are unsecured, non-interest bearing and are repayable on demand. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 267
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
25. TRADE AND OTHER RECEIVABLES (CONTINUED)
(c) Other receivables
Other receivables that are impaired
At the reporting date, the Group and the Company have provided allowance of impairment of RM9,097,000 (31.12.2019: RM8,741,000) and RM90,975,000 (31.12.2019: RM91,706,000) respectively, for other receivables.
Movement in allowance accounts:
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
At 1 January 8,741 8,855 91,706 88,397 Charge for the year (Note 9) 425 21 6 3,309 Reversal for the year (Note 7) (20) - (737) - Write off (49) (135) - -
At 31 December 9,097 8,741 90,975 91,706
26. CASH AND BANK BALANCES
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
Cash in hand and at banks 6,633 10,603 313 443 Deposits with licensed banks 6,504 11,639 1,200 4,200
13,137 22,242 1,513 4,643
Cash at banks earn interest at floating rates based on daily bank deposit rates. Deposits are made for varying periods of between 1 day to 365 days depending on the immediate cash requirements of the Group, and earn interests at the respective deposit rates. The weighted average effective interest rate as at 31 December 2020 for the Group was 3.16% (31.12.2019: 3.70%) per annum.
Deposits with licensed banks of the Group amounting to RM600,000 (31.12.2019: RM600,000) are pledged as securities for borrowings (Note 27). 268 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
26. CASH AND BANK BALANCES (CONTINUED)
For the purpose of the statements of cash flows, cash and cash equivalents comprise the following at the reporting date:
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
Cash in hand and at banks 13,137 22,242 1,513 4,643 Less: - Deposits with licensed banks with maturity period more than 90 days (789) (1,240) (200) (200) - Bank overdrafts (355) (1,356) - -
Cash and cash equivalents 11,993 19,646 1,313 4,443
27. BORROWINGS
Group Company Maturity 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000 Current Secured: Bankers’ acceptances On demand 334 176 - - Bank overdrafts On demand 355 1,356 - - Term loans 2021 881 1,033 - - Obligations under finance leases (Note 34(b)) 2021 262 258 114 84
1,832 2,823 114 84
Non-current Secured: Term loans 2022 - 2030 9,469 9,069 - - Obligations under finance leases (Note 34(b)) 2022 - 2027 772 617 254 168
10,241 9,686 254 168
Total borrowings 12,073 12,509 368 252 GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 269
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
27. BORROWINGS (CONTINUED)
The remaining maturities of the borrowings are as follows:
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
On demand or within one year 1,832 2,823 114 84 More than 1 year and less than 2 years 1,395 941 66 33 More than 2 years and less than 5 years 4,418 5,941 188 135 More than 5 years 4,428 2,804 - -
12,073 12,509 368 252
Bankers’ acceptances
The weighted average interest rate at the reporting date for bankers’ acceptances was 2.47% (2019: 3.83%) per annum. The bankers’ acceptances are secured by corporate guarantee provided by the Company to its subsidiaries.
Bank overdrafts
Bank overdrafts are denominated in RM, and are secured by a corporate guarantee by the holding company and deposit with a licensed bank (Note 26).
Term loans
These loans are secured by certain property, plant and equipment (Note 14), right-of-use assets (Note 15) and corporate guarantee by the Company to a subsidiary. These loans bore an interest rate range from 4.0% to 7.7% (31.12.2019: 4.0% to 8.6%) per annum.
Obligations under finance leases
These obligations are secured by a charge over the leased assets (Note 14). The discount rate implicit in the leases is range from 1.83% to 4.23% (31.12.2019: 2.64% to 16.84%) per annum.
270 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
27. BORROWINGS (CONTINUED)
Reconciliation of movement of liabilities to cash flows arising from financing activities
Obligations under Bankers’ Bank Term finance acceptances overdrafts loans leases Total RM’000 RM’000 RM’000 RM’000 RM’000 Group
Balance at 1 January 2019 205 - 840 722 1,767
Drawdown of: - Bankers’ acceptances 374 - - - 374 - Term loan - - 9,369 - 9,369
374 - 9,369 - 9,743
Repayments of: - Bankers’ acceptances (403) - - - (403) - Term loans - - (103) - (103) - Obligations under finance leases - - - (282) (282)
(403) - (103) (282) (788)
Total changes from financing cash flows (29) - 9,266 (282) 8,955
New addition, representing total liabilities - 1,356 - 431 1,787
Balance at 31 December 2019 and 1 January 2020 176 1,356 10,106 871 12,509
Drawdown of: - Bankers’ acceptances 952 - - - 952
952 - - - 952
Repayments of: - Bankers’ acceptances (794) - - - (794) - Term loans - - (215) - (215) - Bank overdraft - (1,356) - - (1,356) - Obligations under finance leases - - - (196) (196)
(794) (1,356) (215) (196) (2,561) GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 271
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
27. BORROWINGS (CONTINUED)
Reconciliation of movement of liabilities to cash flows arising from financing activities (continued)
Obligations under Bankers’ Bank Term finance acceptances overdrafts loans leases Total RM’000 RM’000 RM’000 RM’000 RM’000 Group (continued)
Total changes from financing cash flows 158 (1,356) (215) (196) (1,609)
New addition, representing total liabilities - 355 459 359 1,173
Balance at 31 December 2020 334 355 10,350 1,034 12,073
Obligations under finance leases RM’000 Company
Balance at 1 January 2019 377
Repayments of obligations under finance leases, representing total changes from financing cash flows (125)
Balance at 31 December 2019 and 1 January 2020 252
Repayments of obligations under finance leases, representing total changes fromfinancing cash flows (64)
New finance leases, representing total liabilities 180
Balance at 31 December 2020 368 272 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
28. DEFINED BENEFIT OBLIGATIONS
The Group operates an unfunded, defined benefit Retirement Benefit Scheme (“the Scheme”) for eligible employees. The Group’s obligations under this Scheme are determined based on triennial actuarial valuation using the projected unit credit method.
The amounts recognised in the statements of profit or loss and other comprehensive income are as follows:
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
Charged to profit or loss: - Current service cost 392 403 32 31 - Interest cost 381 400 13 11
Total included in employee benefits expense (Note 10) 773 803 45 42
The amounts recognised in the statements of financial position are determined as follows:
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
Present value of unfunded defined benefit obligations 7,716 7,912 190 251
Changes in present value of defined benefit obligations are as follows:
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
At 1 January 7,912 8,360 251 237 Recognised in profit or loss (Note 10) 773 803 45 42 Benefits paid (969) (1,251) (106) (28)
At 31 December 7,716 7,912 190 251
GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 273
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
28. DEFINED BENEFIT OBLIGATIONS (CONTINUED)
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000 Analysed as: Current 702 580 - 24
Non-current Later than 1 year but not later than 2 years 246 875 - - Later than 2 years but not later than 5 years 2,105 2,001 - 44 Later than 5 years 4,663 4,456 190 183
7,014 7,332 190 227
7,716 7,912 190 251
In calculating the defined benefit obligations and the related current service cost and past service cost using the Projected Unit Credit Method for the Group and the Company, the following assumptions were used and calculated on a weighted average basis.
31.12.2020 31.12.2019 % %
Discount rate 4.85 4.85 Expected rate of salary increase 5.00 5.00
The sensitivity of the defined benefit obligations to changes in the relevant actuarial assumptions is as follows:
Group Company Increase Decrease Increase Decrease RM’000 RM’000 RM’000 RM’000
Discount rate (50 basis point of movement) 359 (941) 94 (127) Expected rate of salary increase (50 basis point of movement) 939 (359) 127 (94)
The sensitivity analysis presented above may not be representative of the potential actual change in the defined benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. 274 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
29. TRADE AND OTHER PAYABLES
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000 Trade payables Third parties 1,402 5,488 - -
Other payables Amount due to holding company - 12,127 - 12,127 Amount due to a corporate shareholder 640 640 640 640 Amounts due to subsidiaries - - 1,784 13,217 Accruals 2,598 3,123 535 497 Sundry payables 8,695 8,946 398 263
11,933 24,836 3,357 26,744
Total trade and other payables 13,335 30,324 3,357 26,744 Add: Lease liabilities (Note 15) 25 52 35 108 Add: Borrowings (Note 27) 12,073 12,509 368 252
Total financial liabilities carried at amortised cost 25,433 42,885 3,760 27,104
(a) Trade payables
These amounts are non-interest bearing. Trade payables are normally settled on 60 days (31.12.2019: 60 days) terms.
(b) Other payables
These amounts are non-interest bearing. Other payables are normally settled on an average term of three months (31.12.2019: average term of three months).
(c) Amount due to holding company
The amount is unsecured, non-interest bearing and is repayable on demand.
(d) Amount due to a corporate shareholder
The amount relates to advances for working capital purposes named as Al-Mudharabah, which is non-interest bearing and is repayable on demand.
(e) Amounts due to subsidiaries
The amounts are unsecured, non-interest bearing and are repayable on demand. The amounts relate to funds placed by certain subsidiaries in the Pool Fund Account (“the Fund”) managed by the Company. The Fund is to be used for working capital requirements by the companies within the Group.
GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 275
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
30. SHARE CAPITAL
Group/Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 Unit’000 Unit’000 RM’000 RM’000 Issued and fully paid: Ordinary shares At 1 January 136,793 135,773 68,447 68,192 Issuance of shares arising from exercise of ESGS - 1,020 - 255
At 31 December 136,793 136,793 68,447 68,447
Redeemable preference shares At 1 January - - - - Issuance of redeemable preference shares 12,000 - 12,000 -
At 31 December 12,000 - 12,000 -
148,793 136,793 80,447 68,447
Ordinary shares
The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company’s residual assets.
Redeemable preference shares
During the year, the Company had issued 12,000,000 units of Redeemable Preference Shares (“RPS”) to Terengganu Incorporated Sdn. Bhd. (“TISB”) at RM1 per RPS. 276 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
30. SHARE CAPITAL (CONTINUED)
Redeemable preference shares (continued)
The salient terms of the RPS are as follows:
Tenure: Perpetual
Dividend: Non-cumulative dividend at a rate that is equivalent to the rate of dividend that is declared for ordinary shareholders of the Company for any particular financial year, provided always that the RPS holder shall only be entitled to receive dividend of up to a maximum amount of RM0.04 per RPS on an aggregate basis per annum (the “Maximum RPS Dividend Amount”).
For the avoidance of doubt, where the aggregate amount of dividend declared by the Company exceeds Maximum RPS Dividend Amount for any particular financial year, only ordinary shareholders of the Company shall be entitiled to receive such additional amount of dividend in the excess of the Maximum RPS Dividend Amount.
The distribution is at the sole and absolute discretion of the Company’s Board of Directors and subject to:
(i) the availability of distributable profits; and
(i) fulfillment of a solvency test under the Companies Act 2016
In respect of any payment of dividend declared by the Company for any particular financial year, the entitlement of the RPS holder and the ordinary shareholders of the Company to receive payment of dividend shall, up to Maximum RPS Dividend Amount, rank pari passu, without discrimination, preference or priority amongst themselves (the ‘Ranking of Dividend Payment”).
Any RPS that has already been redeemed shall not be entitled to any dividend payable for the RPS.
Listing: The RPS will not be listed on any stock exchange.
Conversion: The RPS cannot be converted into ordinary shares of the Company.
GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 277
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
30. SHARE CAPITAL (CONTINUED)
Redeemable preference shares (continued)
The salient terms of the RPS are as follows (continued):
Redemption: Subject to the Companies Act 2016, redeemable at the option of the Company at any time from the issue date at a redemption price of RM1 per RPS.
All RPS which are redeemed by the Company shall be cancelled immediately and cannot be resold.
Ranking: The RPS will be ranked pari passu, without discrimination, preference and priority amongst themselves.
Save and except for the entitlement to receive payment of dividend, where the Ranking of Dividend Payment shall apply, the RPS will be ranked in priority to the Shares and any other preference shares issued from time to time, in respect of payment out of the assets of the Company upon liquidation, dissolution or winding-up of the Company, provided always that the Board approves such payment out of the assets of the Company on the basis and further affirms the priority of payment to the RPS holder.
Rights of the RPS holder: The RPS holder is not entitled to any voting rights or participation in any rights, allotments and/or other distribution in the Company except in the following circumstances; (i) on a proposal to reduce the Company’s share capital;
(ii) on a proposal for the disposal of the whole of the Company’s property, business and undertaking;
(iii) on a proposal that affects their rights and privileges attached to the RPS;
(iv) on a proposal to wind up the Company; and
(v) during the winding up of the Company.
Transferability: Non-transferable
278 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
848 426 221 (237) Total (21,556) (20,298) (20,487) RM’000
- - 34 681 426 255 221 share RM’000 reserve options Employee
- - - - from merger arising (22,718) (22,718) RM'000 (22,718) Reserve
- - 477 848 714 (134) (237) reserve RM'000 Fair value adjustment
-
- - - from 1,262
1,262 1,262 RM’000 owners contribution
nvestment securities: FVTOCI financial assets OTHER RESERVES At 1 January 2019 Other comprehensive income: fair value changes - Net gain on Transaction with owners: January 2020 2019 and 1 At 31 December Other comprehensive loss: Transaction with owners: 2020 At 31 December Equity Group assets Investment securities: FVTOCI financial the LTIP: Share-based payment under Grant of ESOS I changes fair value - Net loss on the LTIP: under payment - Share-based Grant of ESOS 31. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 279
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
31. OTHER RESERVES (CONTINUED)
Equity Employee Contribution share from options owner reserve Total RM’000 RM’000 RM’000 Company
At 1 January 2019 967 5 972 Transaction with owners: Share-based payment under the LTIP: Grant of ESOS - 40 40
At 31 December 2019 and 1 January 2020 967 45 1,012
Transaction with owners: Share-based payment under the LTIP: Grant of ESOS - 90 90
At 31 December 2020 967 135 1,102
(a) Equity contribution from owners The amount represents waiver of amount due to the Group’s holding company.
(b) Fair value adjustment reserve Fair value adjustment reserve represents the cumulative fair value changes, net of tax, of fair value through other comprehensive income (“FVTOCI”) financial assets until they are disposed off or impaired.
(c) Reserve arising from merger Reserve arising on merger represents the difference between the nominal value of the shares issued as consideration for the acquisition of Permint Timber Corporation Sdn. Bhd. and its subsidiaries and the nominal value of the shares transferred for these investments.
(d) Employee share options reserve Employee share options reserve represents the grant of share options to the Group’s and the Company’s employees. The reserve is made up of the cumulative value of services received from employees recorded over the vesting period commencing from the grant date of the share options, and is reduced by the expiry of exercise of the share options. 280 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
32. EXECUTIVE SHARE GRANT SCHEME ("ESGS") AND EMPLOYEE SHARE OPTIONS SCHEME ("ESOS")
The Long Term Incentive Plan ("LTIP" or "Scheme") was implemented on 30 August 2018, 30 August 2019 and 4 November 2019. The LTIP which comprises the ESGS and ESOS allows the Company to grant shares and/or share options under ESGS and ESOS respectively to eligible employees of the Group and of the Company up to 15% of the issued and paid-up share capital of the Company. The LTIP is governed by the By-Laws of the LTIP which was approved by the shareholders on 26 June 2018 and is administered by the LTIP Committee and as such the LTIP shall be in force for a period of 5 years up to 29 August 2023, 29 August 2024 and 3 November 2025.
The main features of the Scheme are as follows:
(a) The maximum number of new ordinary shares which may be made available under the Scheme at the point in time when an LTIP award is offerred shall not be more than fifteen percent (15%) of the issued and paid-up ordinary share capital of the Company.
(b) The LTIP awards shall be awarded after taking into consideration the employee's position, contribution and performance (where applicable) or such criteria as the LTIP Committee may deem fit subject to the following:
(i) that the number of new ordinary shares made available under the Scheme shall not exceed the amount stipulated in (a) above,
(ii) not more than 10% of the total number of ordinary shares to be issued under Scheme at the point in time when an LTIP award is offered be allocated to any employee who, either singly or collectively through persons connected with the employee, holds 20% or more of the total number of issued shares of the Company, and
(iii) not more than 80% of the new ordinary shares available under the Scheme shall be allocated in aggregate to the managerial employees of the Group.
(c) In the case of the ESGS, the shares will be vested with the grantee at no consideration on the vesting date, while in the case of ESOS, the option price will be determined based on the five (5) days volume weighted average market price of the ordinary shares on the date the ESOS award is offered with a potential discount of not more than ten percent (10%) there from or such other percentage or discount as may be permitted by Bursa Malaysia Securities Berhad and/or any other relevant authorities as may be amended from time to time.
(d) The shares and share options granted under the ESGS and ESOS will vest over a period of up to five (5) years from the date of the LTIP award. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 281
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
32. EXECUTIVE SHARE GRANT SCHEME (“ESGS”) AND EMPLOYEE SHARE OPTIONS SCHEME (“ESOS”) (CONTINUED)
The movement during the financial year in the number of shares and share options in which employees of the Group and of the Company are entitled to are as follows:
ESGS ESOS 31.12.2020 31.12.2019 31.12.2020 31.12.2019
At 1 January 293,665 43,640 6,089,000 4,964,000 Granted - 1,270,000 - 1,125,00 Vested/exercised - (1,019,975) - - Lapsed - - (786,000) -
At 31 December 293,665 293,665 5,303,000 6,089,000
The fair values of the shares and share options granted under the ESGS and ESOS to which MFRS 2 applies were determined using binomial model. The significant inputs into the model were as follows:
ESGS Exercise price * * Date of grant 5.10.2018 4.7.2019 Fair value at grant date (per ordinary share) RM0.24 RM0.25 Vesting period/option life 5 years 5 years Weighted average share price on grant date RM0.21 RM0.22
ESOS Exercise price RM0.27 RM0.18 RM0.16 Date of grant 30.8.2018 30.8.2019 4.11.2019 Fair value at grant date (per ordinary share) RM0.27 RM0.21 RM0.18 Vesting period/option life 5 years 5 years 5 years Weighted average share price on grant date RM0.22 RM0.21 RM0.21
* The shares under the ESGS will vest with the grantee at no consideration on the vesting date.
The expected life of the shares and share options are based on historical data and is not necessarily indicative of the exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other features of the shares and/or share options granted were incorporated into the measurement of fair value. 282 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
33. RELATED PARTY TRANSACTIONS
(a) In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Company and related parties took place at terms agreed between the parties during the financial year:
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
With holding company: Secretarial fee charged - 3 - 3
With subsidiaries: Management fees charged (Note 4) - - (2,508) (2,379) Dividend income (Note 4) - - (9,836) (2,953) Building rental charged by a subsidiary - - 48 48
(b) Compensation of key management personnel
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
Short-term employee benefits 4,135 3,489 1,510 1,219 Defined contribution plan 388 505 149 195 Defined benefit plan 68 214 15 40 Share-based payment under the LTIP 107 288 43 276
4,698 4,496 1,717 1,730
Included in compensation of key management personnel is:
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
Directors’ remuneration (Note 11) 1,273 1,332 538 552
GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 283
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
34. COMMITMENTS
(a) Capital commitments
Capital expenditure as at reporting date is as follows: Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000 Approved but not contracted for: Property, plant and equipment 10,467 7,015 2,752 200
Approved and contracted for: Property, plant and equipment - 1,250 - -
(b) Finance lease commitments
The Group and the Company have finance leases for certain items of plant and machinery and motor vehicles (Note 14). These leases do not have terms of renewal, but have purchase options at nominal values at the end of the lease term.
Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:
Group Company 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000 Minimum lease payments: Not later than 1 year 312 302 132 95 More than 1 year and less than 2 years 239 222 80 41 More than 2 years and less than 5 years 623 471 207 146
Total minimum lease payments 1,174 995 419 282 Less: Amounts representing finance charges (140) (120) (51) (30)
Present value of minimum lease payments 1,034 875 368 252
Present value of payments: Not later than 1 year 262 258 114 84 More than 1 year and less than 2 years 169 162 55 26 More than 2 years and less than 5 years 603 455 200 142
Present value of minimum lease payments 1,034 875 368 252 Less: Amount due within 12 months (Note 27) (262) (258) (114) (84)
Amount due after 12 months (Note 27) 772 617 254 168
284 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
35. FAIR VALUE OF FINANCIAL INSTRUMENTS
(a) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value
Group Company Carrying Fair Carrying Fair amount value amount value RM’000 RM’000 RM’000 RM’000 31.12.2020
Financial liabilities: Borrowings (non-current) - Obligations under finance leases (Note 34(b)) 772 775 254 263 - Term loans 9,469 9,386 - -
31.12.2019
Financial liabilities: Borrowings (non-current) - Obligations under finance leases (Note 34(b)) 617 630 168 169 - Terms loans 9,069 9,426 - -
(b) Determination of fair value
Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value
The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value:
Note Lease liabilities 15 Trade and other receivables (current) 25 Cash and bank balances 26 Borrowings (current) 27 Trade and other payables (current) 29
The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values due totheir short-term nature.
The carrying amounts of the current portion of borrowings and lease liabilities are reasonable approximations of fair values due to the insignificant impact of discounting. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 285
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
35. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
(b) Determination of fair value (continued)
The following methods and assumptions are used to estimate the fair values of the following classess of financial instruments:
(i) Amounts due from/to subsidiaries and associates, and loans from/to subsidiaries
The Group and the Company do not anticipate the carrying amounts recorded at the reporting date that would eventually be received or settled to be significantly different from the fair values as the amounts are repayable on demand.
(ii) Quoted equity instruments
Fair value is determined directly by reference to their published market bid price at the reporting date.
(iii) Borrowings (non-current)
The fair values of these financial instruments are estimated by discounting expected future cash flows at market incremental lending rate for similar types of borrowing or leasing arrangements at the reporting date.
(iv) Financial guarantee
Fair value is determined based on probability weighted discounted cash flow method. The probability has been estimated and assigned for the following key assumptions:
- The likelihood of the guaranteed party defaulting within the guaranteed period;
- The exposure on the portion that is not expected to be recovered due to the guaranteed party’s default; and
- The estimated loss exposure if the party guaranteed were to default.
(c) Valuation of financial instruments
The table below analyses financial instruments, measured at fair value at the end of the reporting date, by the level in the fair value hierarchy into which the fair value measurement is categorised:
Level 1 Note 31.12.2020 31.12.2019 RM’000 RM’000 Group
Financial assets: Investment securities: FVTOCI 22 2,010 2,211
286 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk, foreign currency risk and market price risk.
It is, and has been throughout the current and previous financial year, the Group’s policy that no derivatives shall be undertaken except for the use as hedging instruments where appropriate and cost-efficient. The Group and the Company do not apply hedge accounting.
The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.
(a) Credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including investment securities and cash and bank balances), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.
The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.
The credit risk of the Group’s other financial assets, which comprise cash and cash equivalents and non-current investments, arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these financial assets. Information regarding credit enhancements for trade and other receivables is disclosed in Note 25.
Exposure to credit risk
The Group does not have any significant exposure to any individual customer or counterparty nor does it have any major concentration of credit risk related to any financial assets.
An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. Any receivables having significant balances past due more than 365 days, which are deemed to have higher default risk, are monitored individually. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 287
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
(a) Credit risk (continued)
Exposure to credit risk (continued)
At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by:
(i) The carrying amount of each class of financial assets recognised in the statements of financial position.
(ii) Corporate guarantees provided by the Company to banks for credit facilities granted to subsidiaries.
Credit risk concentration profile
The Group determines concentrations of credit risk by monitoring the country and industry sector profile of its trade receivables on an ongoing basis. The credit risk concentration profile of the Group’s trade receivables at the reporting date are as follows:
Group 31.12.2020 31.12.2019 RM’000 % of total RM’000 % of total
By industry sectors: Harvesting, sawmilling, kiln drying of timber, and sales of logs and logging compartments 1,807 25% 1,593 22% Manufacturing 5,435 75% 5,519 78%
7,242 100% 7,112 100%
At the reporting date, approximately 65% (2019 : 70%) of the Company’s other receivables were due from subsidiaries.
(b) Liquidity risk
Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities. 288 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
(b) Liquidity risk (continued)
Analysis of financial instruments by remaining contractual maturities
The table below summarises the maturity profile of the Group’s and of the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations.
RM’000 On demand or within One to More than 31 December 2020 one year five years five years Total Group
Financial liabilities: Trade and other payables 13,335 - - 13,335 Lease liabilities 25 1 - 26 Borrowings 2,290 7,609 4,988 14,887
Total undiscounted financial liabilities 15,650 7,610 4,988 28,248
Company
Financial liabilities: Trade and other payables 3,357 - - 3,357 Lease liabilities 25 13 - 38 Borrowings 132 287 - 419
Total undiscounted financial liabilities 3,514 300 - 3,814
GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 289
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
(b) Liquidity risk (continued)
Analysis of financial instruments by remaining contractual maturities (continued)
The table below summarises the maturity profile of the Group’s and of the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations. (continued)
RM’000 On demand or within One to More than 31 December 2019 one year five years five years Total Group
Financial liabilities: Trade and other payable 30,324 - - 30,324 Lease liabilities 27 29 - 56 Borrowings 2,405 7,310 4,581 14,296
Total undiscounted financial liabilities 32,756 7,339 4,581 44,676
Company
Financial liabilities: Trade and other payables 26,714 - - 26,714 Lease liabilities 38 76 - 114 Borrowings 95 187 - 282
Total undiscounted financial liabilities 26,847 263 - 27,110
(c) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of financial instrument will fluctuate because of changes in market interest rates. As the Group and the Company have no significant interest-bearing financial assets, the Group’s and the Company’s income and operating cash flows are substantially independent of changes in market interest rates.
The Group’s and the Company’s interest-bearing financial assets are mainly short-term in nature and have been mostly placed in fixed deposits.
The Group’s interest rate risk arises primarily from interest-bearing borrowings. Borrowings at floating rates expose the Group to cash flow interest rate risk. The Group manages its interest rate exposure by maintaining a mix of fixed and floating rate borrowings. Borrowings obtained at fixed rates expose the Group to fair value interest rate risk. The information on maturity dates and effective interest rates of financial assets and liabilities are disclosed in their respective notes.
290 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
(d) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.
The Group has transactional currency exposure arising from sales or purchases that are denominated in a currency other than the respective functional currencies of Group entities, primarily RM. The foreign currencies in which these transactions are denominated are mainly United States Dollars (“USD”).
The net unhedged financial assets and financial liabilities of the Group that are not denominated in their functional currencies are as follows:
31.12.2020 31.12.2019 RM’000 RM’000
Financial assets: Trade and other receivables 130 10
(e) Market price risk
Market price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates).
The Group is exposed to equity price risk arising from its investment in quoted equity instruments. The quoted equity instruments in Malaysia are listed on the Bursa Malaysia Securities Berhad. These instruments are classified as financial assets at fair value through other comprehensive income. The Group does not have exposure to commodity price risk, other than timber price.
37. CAPITAL MANAGEMENT
The primary objectives of the Group’s and the Company’s capital management are to ensure that they maintain a strong credit rating and healthy capital ratios in order to support its business and maximise shareholders’ value.
The Group and the Company manage their capital structure and make adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group and the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the financial years ended 31 December 2020 and 31 December 2019.
The Group and the Company monitor capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group and the Company include within net debt, loans and borrowings, trade and other payables, less cash and bank balances. Capital includes equity attributable to the owners of the parent less fair value adjustment reserve. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 291
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
37. CAPITAL MANAGEMENT (CONTINUED)
Group Company Note 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
Borrowings 27 12,073 12,509 368 252 Trade and other payables 29 13,335 30,324 3,357 26,744 Less: Cash and bank balances 26 (13,137) (22,242) (1,513) (4,643)
Net debts 12,271 20,591 2,212 22,353
Equity attributable to the owners 68,392 62,896 78,343 55,625 of the parent Less: Fair value adjustment reserve 31 (477) (714) - -
Total capital 67,915 62,182 78,343 55,625
Capital and net debt 80,186 82,773 80,555 77,978
Gearing ratio 15% 25% 3% 29%
38. SEGMENT INFORMATION
For management purposes, the Group is organised into business units based on their products and services, and has three reportable operating segments as follows:
(i) Harvesting, sawmilling, kiln drying of timber, and sales of logs and logging compartments;
(ii) Manufacturing: manufacturing and trading of glass, veneer and woodchips;
(iii) Others: including investment holding, rental of properties, none of which are of a sufficient size to be reported separately.
Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments.
Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. Group financing (including finance costs) and income taxes are managed on a group basis and are not allocated to operating segments. 292 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020 - - 68 779 429 1,444 1,726 2,698 (8,977) 57,472 50,801 RM’000 113,697 31.12.2019
508
57,472 6 -
36
873 395 267
1,291 2,554 1,416
(6,374) 47,200 33,153 47,200
101,545 RM’000
31.12.2020 As per consolidated financial statements
E A D F C A B Note - - - - - 9 (9) (43) (9,007) (5,911) (27,921) (27,921) RM’000 (148,204) (163,803) 31.12.2019
- - - 3 (3) (45) 932 (1,275) eliminations (19,814) (43,471) (43,471)
(21,190) RM’000 (146,524) Adjustments and (159,527)
31.12.2020 - - 72 98 45 45 348 195 8,339 8,040 5,911 8,437 RM’000 149,688 120,456 31.12.2019
- - 70 Others
72 209 119 204 (703) 19,341 22,235 19,679
63,339 22,354
120,310 RM’000
31.12.2020 - - 73 824 313 164 201 1,224 (5,624) 45,049 23,214 20,005 20,005 RM’000 31.12.2019
- - - 6 27
304 116
162 527
1,118
(4,414) Manufacturing 23,830 16,355
41,350 16,355 RM’000 31.12.2020 - 68 857 895 437 335 311 1,288 96,396 19,582 41,702 37,369 56,951 RM’000 31.12.2019 (2,386)
- 542 230 170 171
(111) 1,071 1,830 1,235
30,726 86,409 21,236 51,962 compartments 105,511 RM’000 31.12.2020 Harvesting, sawmilling, sales of logs and logging kiln drying of timber, and
to
non-cash and equipment assets properties assets held-for-sale profit non-current assets customers SEGMENT INFORMATION (CONTINUED) - Right-of-use - Investment - Non-current Other expenses Segment (loss)/ Assets Additions Segment assets Liabilities Segment liabilities Revenue External Dividend income Depreciation of: - Property, plant Inter-segment Total revenue Results Interest income 38. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 293
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
38. SEGMENT INFORMATION (CONTINUED)
Notes Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements
A Inter-segment revenues and expenses are eliminated on consolidation.
B Other non-cash expenses consist of the following items as presented in the respective notes to the financial statements:
Note 31.12.2020 31.12.2019 RM’000 RM’000
Reversal of impairment losses on: Trade and other receivables 7 (37) - Inventories written off 9 4 71 Property, plant and equipment written off 9 2 - Impairment on property, plant and equipment 9 23 - Impairment on intangible assets 9 225 - Share-based payment under the LTIP: - Exercise of ESGS 10 - 255 - Grant of ESOS 10 426 221 Provision for defined benefit obligations 10 773 803 Provision for short-term accumulatin compensated absences 10 - 94
1,416 1,444
C The following items are (deducted from)/added to segment (loss)/profit to arrive at “loss before tax” presented in the consolidated statement of comprehensive income:
31.12.2020 31.12.2019 Note RM’000 RM’000
Dividend 4 (19,679) (2,953) Reversal of impairment losses on investment in subsidiaries (1,075) (8,729) Allowance for impairment on trade and other receivables 9 1,381 3,309 Reversal of impairment losses on: Trade and other receivables 9 (937) - Impairment losses on investment in subsidiaries 9 - 1,075 Gain on disposal of property, plant and equipment 9 (371) - Share of results of associate (192) (197) Loss from intercompanies’ sales (317) (1,512)
(21,190) (9,007) 294 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
38. SEGMENT INFORMATION (CONTINUED)
Notes Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements (continued)
D Additions to non-current assets consist of:
31.12.2020 31.12.2019 RM’000 RM’000
Property, plant and equipment (Note 14) 1,291 1,726
E The following items are deducted from segment assets to arrive at total assets reported in the consolidated statement of financial position:
31.12.2020 31.12.2019 RM’000 RM’000
Inter-segment assets (146,524) (148,204)
F The following items are deducted from segment liabilities to arrive at total liabilities reported in the consolidated statement of financial position:
31.12.2020 31.12.2019 RM’000 RM’000
Inter-segment liabilities (159,527) (163,803)
Geographical information
Revenue based on the geographical location of customers is as disclosed in Note 4 to the financial statements. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 295
Notes to the Financial Statements (Continued) For the financial year ended 31 December 2020
39. DIVIDEND
Group and Company 31.12.2020 31.12.2019 RM’000 RM’000
Recognised during the financial year:
In respect of financial year 2018: Dividends on 135,773,193 ordinary shares: - First and final tax exempt (single-tier) dividend for 2018: RM0.0127 per share - 1,737
40. SIGNIFICANT EVENT
The Covid-19 outbreak has caused the global and domestic economy into turmoil. The Movement Control Order (“MCO”) implemented by the Government of Malaysia on 18 March 2020, which has since been extended and replaced with Conditional MCO and Recovery MCO up to 31 December 2020 and global lockdown by other countries in response to the Covid-19 pandemic has caused disruptions to the Group’s business operations.
Up to the date of these financial statements, the Group has seen a significant impact of Covid-19 outbreak on the Group’s earnings, cashflows and financial conditions. In relation to this, the Group has appropriately taken up the effects from the Covid-19 pandemic in respect of the judgements and assumptions used in the preparation of the financial statements for the financial year ended 31 December 2020, in particular the impairment assessments of its financial and non-financial assets.
41. SUBSEQUENT EVENT
(a) A state of emergency has been declared in Malaysia by the King, Yang Maha Mulia Seri Paduka Baginda Yang di-Pertuan Agong XVI Al-Sultan Abdullah Ri’ayatuddin Al-Mustafa Billah Shah Ibni Almarhum Sultan Haji Ahmad Shah Al-Musta’in Billah, effective from 11 January 2021 to 1 August 2021, to tackle the COVID-19 pandemic.
(b) On 3 March 2021, the Company granted 1,063,720 shares under Executive Share Grant Scheme (“ESGS”) to eligible employees of the Company and/or its eligible subsidiary companies. The exercise price on the grant date was RM0.235 per share.
(c) On 23 March 2021, the Group had disposed 3,412,032 units of its unit trust, Amanah Saham Darul Iman (“ASDI”) for RM0.2612 per unit, being recognised as investment securities. The gain or loss from the disposal will be recognised in the next financial year.
42. AUTHORISATION OF FINANCIAL STATEMENTS FOR ISSUE
The financial statements for the year ended 31 December 2020 were authorised for issue in accordance with a resolution of the directors on 28 April 2021. 296 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Analysis of Shareholdings As at 16 April 2021
Total Issued Capital : RM80,697,552 Total Number of Ordinary Shares Issued : 137,856,570 Total Number of Redeemable Preference Share : 12,000,000
DISTRIBUTION OF SHAREHOLDINGS AS AT 16 APRIL 2021
Category No. of Shares % Over Total No. of % Over Total Shares Holders Shareholders
1 -99 997 0.000 48 1.584 100 - 1,000 1,017,907 0.738 1,067 35.226 1,001 - 10,000 6,046,580 4.386 1,404 46.351 10,001 - 100,000 13,943,070 10.114 428 14.130 100,001 - 6,892,827 (*) 19,010,135 13.789 79 2.608 6,892,828 and above (**) 97,837,881 70.970 3 0.099
GRAND TOTAL 137,856,570 100.00 3,029 100.00
Remark: * less than 5% of issued shares
** 5% and above of issued shares
SUBSTANTIAL SHAREHOLDERS AS AT 16 APRIL 2021
Name No. of share %
TERENGGANU INCORPORATED SDN BHD 86,365,281 62.648
LEMBAGA TABUNG AMANAH WARISAN NEGERI TERENGGANU 11,472,600 8.322
GRAND TOTAL 97,837,881 70.970
DIRECTORS SHAREHOLDING AS AT 16 APRIL 2021
Name of Directors No. of Shares YBM DATO' HAJI TENGKU HASSAN BIN TENGKU OMAR 0 DATO' BENTARA DALAM DATO’ HAJI A RAHMAN BIN YAHYA 0 HAJI BURHANUDDIN HILMI BIN MOHAMED @ HARUN 0 ASSOCIATE PROFESSOR DR MOHD ZAKI BIN HAMZAH 0 MUHAMMAD RAMIZU BIN MUSTAFFA 0 MOHD BADARUDDIN BIN ISMAIL 0 SAIFFUDDIN BIN OTHMAN 0 GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 297
Analysis of Shareholdings (Continued) as at 16 April 2021
CHIEF EXECUTIVE OFFICER SHAREHOLDING AS AT 16 APRIL 2021
Name No. of Shares % DATO’ AHMAD NADZARUDIN BIN ABDUL RAZAK 646,600 0.469
LIST OF TOP 30 SHAREHOLDERS/ DEPOSITORS AS AT 16 APRIL 2021
Name No. of Shares %
1 TERENGGANU INCORPORATED SDN BHD 72,931,281 52.903
2 TERENGGANU INCORPORATED SDN BHD 13,434,000 9.744
3 LEMBAGA TABUNG AMANAH WARISAN NEGERI TERENGGANU 11,472,600 8.322
4 MAYBANK NOMINEES (TEMPATAN) SDN BHD 1,045,000 0.758
PLEDGED SECURITIES ACCOUNT FOR TAY ONG NGO @ TAY BOON FANG
5 UOB KAY HIAN NOMINEES (ASING) SDN BHD 878,800 0.637 EXEMPT AN FOR UOB KAY HIAN PTE LTD ( A/C CLIENTS )
6 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD 832,000 0.603 PLEDGED SECURITIES ACCOUNT FOR WENDY LEE YOKE PENG (CEB)
7 KHOO KAY LEONG 738,800 0.535
8 AHMAD NADZARUDIN BIN ABDUL RAZAK 646,600 0.469
9 RHB NOMINEES (TEMPATAN) SDN BHD 599,900 0.435 PLEDGED SECURITIES ACCOUNT FOR TAN GAIK SUAN
10 PUBLIC NOMINEES (TEMPATAN) SDN BHD 500,000 0.362 PLEDGED SECURITIES ACCOUNT FOR TAN YOK SON @ TAN SIEW TUAN (E-BPT)
11 CHIA PHAY CHENG 450,000 0.326
12 PUBLIC NOMINEES (TEMPATAN) SDN BHD 440,000 0.319 PLEDGED SECURITIES ACCOUNT FOR LING TUNG KONG (E-SRK)
13 SYED OMAR SHAHABUDDIN BIN SYED ABDULLAH 400,000 0.290
14 LIM SAY HAN 368,100 0.267
15 TAY ONG NGO @ TAY BOON FANG 330,000 0.239
16 AMSEC NOMINEES (TEMPATAN) SDN BHD 309,000 0.224 PHANG SAY HAP
17 TAN BON TIONG 305,500 0.221 298 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Analysis of Shareholdings (Continued) as at 16 April 2021
LIST OF TOP 30 SHAREHOLDERS/ DEPOSITORS AS AT 16 APRIL 2021 (CONTINUED)
Name No. of Shares %
18 CHUA KENG KIONG 300,000 0.217
19 PUBLIC NOMINEES (TEMPATAN) SDN BHD 300,000 0.217 PLEDGED SECURITIES ACCOUNT FOR LIM KIAN LEONG (E-BPT)
20 OOI SAY HUP 292,100 0.211
21 CHEONG PANG KWAN 287,000 0.208
22 CITIGROUP NOMINEES (ASING) SDN BHD 280,000 0.203 EXEMPT AN FOR OCBC SECURITIES PRIVATE LIMITED (CLIENT A/C-NR)
23 LIM HOCK SIANG 278,000 0.201
24 TAN KOW KIA 270,000 0.195
25 PUBLIC NOMINEES (TEMPATAN) SDN BHD 250,000 0.181 PLEDGED SECURITIES ACCOUNT FOR TAN THIAM MOOI (E-KTN/MTK)
26 OOI SAY HUP 245,200 0.177
27 MOHD SHAMSOL BIN MOHD SHAFIE 245,000 0.177
28 MAYBANK NOMINEES (TEMPATAN) SDN BHD 234,700 0.170 PLEDGED SECURITIES ACCOUNT FOR TAN PUAY SENG
29 LIM SWEE ING 230,000 0.166
30 HLB NOMINEES (TEMPATAN) SDN BHD 220,000 0.159 PLEDGED SECURITIES ACCOUNT FOR WONG LUP MUN @ WONG CHENG HOH
Total 109,113,581
Total No of Depositors 30
Total Percentage (%) 79.150 GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 299
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the Thirty-Fourth Annual General Meeting of the Company will be held at Gamelan 3, Primula Beach Hotel, Jalan Persinggahan, 20400 Kuala Terengganu, Terengganu Darul Iman on Tuesday, 29th June 2021 at 10.30 a.m. for the following purposes:
ORDINARY BUSINESS
1. To receive the Audited Financial Statements for the financial year ended 31 December 2020 together with the Reports of the Directors and Auditors thereon. (Please refer to the Explanatory Notes to the Agenda)
2. Directors’ Fees and any benefits payable
To consider and if thought fit, to pass the following resolutions:
(a) "THAT the payment of Directors’ Fees payable of RM192,000 for the financial year ended 31 December 2020 be approved (2019: RM180,000)." (Ordinary Resolution 1)
(b) “THAT the payment of Directors' Fees payable of up to RM600,000 for the financial period from 1 January 2021 until the conclusion of the next Annual General Meeting of the Company be approved.” (Ordinary Resolution 2)
(c) “THAT the payment of Directors’ Benefits (excluding Directors’ Fees) payable of RM501,800 for the financial period from 1 July 2021 until the conclusion of the next Annual General Meeting of the Company be approved (2020: RM623,400).” (Ordinary Resolution 3)
3. To re-elect the following Directors retiring in accordance with Clause 76 of the Constitution of the Company:
(a) Muhammad Ramizu bin Mustaffa (Ordinary Resolution 4)
(b) Associate Professor Dr Mohd Zaki bin Hamzah (Ordinary Resolution 5)
4. To re-elect the following Director retiring in accordance with Clause 78 of the Constitution of the Company:
(a) Burhanuddin Hilmi bin Mohamed @ Harun (Ordinary Resolution 6)
5. To re-appoint Messrs Ernst & Young as the Auditors of the Company and to authorise the Board of Directors to fix their remuneration. (Ordinary Resolution 7) 300 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Notice of Annual General Meeting (Continued)
6. To transact any other business of which due notice shall have been given.
By Order of the Board
Suraya Binti Mohd Hairon (LS 0007314) (SSM Practising Certificate No.: 202008000100) Company Secretary Kuala Terengganu 25 May 2021
Notes: 1. For the purpose of determining a member who shall be entitled to attend and vote at the meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to make available to the Company a Record of Depositors as at 22 June 2021 and only a depositor whose name appears on the Record of Depositors shall be entitled to attend the meeting or appoint proxy(ies) to attend and vote on his/her behalf. 2. Members/proxies/corporate representatives who wish to attend the meeting in person ARE REQUIRED TO PRE-REGISTER with the Company’s Share Registrar, Tricor Investor & Issuing House Services Sdn Bhd (“Tricor”), via the TIIH Online website at https://tiih.online no later than Sunday, 27 June 2021 at 10.30 a.m. Please follow the Pre-Register Procedures in the Administrative Guide for the AGM. 3. A member of the Company who is entitled to attend and vote at this meeting is entitled to appoint not more than two (2) proxies to attend and vote on his/her behalf. 4. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991 (“SICDA”), it may appoint one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. 5. Where a member is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. An exempt authorised nominee refers to an authorised nominee defined under SICDA which is exempted from compliance with the provisions of subsection 25A(1) of SICDA. 6. Where a member, an authorised nominee or an exempt authorized nominee appoints more than one (1) proxy, the proportion of shareholdings to be represented by each proxy must be specified in the instrument appointing the proxies, otherwise the appointment shall not be valid. 7. A proxy may but need not be a member of the Company. A proxy appointed to attend and vote shall have the same rights as the member to move any resolution or amendment thereto and to speak at the meeting. 8. The appointment of a proxy may be made in the following manner and must be received by the Company at least forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof: (i) In hard copy form In the case of an appointment made in hard copy form, the proxy form must be deposited at the registered office of the Company situated at 66-2 Taman Sri Intan, Jalan Sultan Omar, 20300 Kuala Terengganu, Terengganu Darul Iman or Share Registrar’s office, Tricor Investor & Issuing House Services Sdn Bhd, at 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 Services Centre at Unit G-3, Ground Floor, Vertical Podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur. (ii) By electronic means via facsimile In the case of an appointment made by facsimile transmission, the proxy form must be received via facsimile at +609-631 0617. (iii) By electronic means via email In the case of an appointment made via email transmission, the proxy form must be received via email at [email protected]. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 301
Notice of Annual General Meeting (Continued)
For options (ii) and (iii), the Company may request any member to deposit original executed proxy form to its registered office before or on the day of meeting for verification purpose. (iv) Online In the case of an appointment made via online lodgement facility, the proxy form can be electronically lodged with the Company’s Share Registrar via TIIH Online at https://tiih.online. Please refer to the Administrative Guide for the AGM on the procedures for electronic lodgement of Proxy Form via TIIH Online. 9. Any authority pursuant to which such an appointment is made by a power of attorney must be deposited at the Company’s Share Registrar’s office at the above address not less than forty-eight (48) hours before the time appointed for holding the AGM or adjourned general meeting at which the persons named in the appointment proposes to vote. A copy of the power 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. 10. Please ensure ALL the particulars as required in this proxy form are completed, signed and dated accordingly. 11. Please bring an ORIGINAL of the following identification papers (where applicable) and present it to the registration staff for verification: a. Identity card (NRIC) (Malaysian), or b Police report (for loss of NRIC) / Temporary NRIC (Malaysian), or c. Passport (Foreigner). 12. For a corporate member who has appointed an authorised representative, please deposit the ORIGINAL/CERTIFIED TRUE certificate of appointment of authorised representative with the Company’s Share Registrar, Tricor at the above address. The certificate of appointment of authorised representative should be executed under seal in accordance with the constitution of the corporate member. If the corporate member does not have a common seal, the certificate of appointment of authorised representative should be affixed with the rubber stamp of the corporate member (if any) and executed by at least two (2) authorised officers, of whom one shall be a director; or any director and/or authorised officers in accordance with the laws of the country under which the corporate member is incorporated.
Explanatory Notes on Ordinary Business:
(i) Item 1 of the Agenda This item is meant for discussion only. The provisions of Section 340(1) of the Companies Act 2016 require that the audited financial statements and the Reports of the Directors and Auditors thereon be laid before the Company at its Annual General Meeting. As such this Agenda item is not a business which requires a motion to be put to vote by shareholders.
(ii) Item 2 of the Agenda – Ordinary Resolution 1, 2 and 3 Directors’ Fees and any benefits payable Pursuant to Section 230(1) of the Companies Act 2016, the fees of the directors and any benefits payable to the directors of a listed company and its subsidiaries, shall be approved at a general meeting. The Ordinary Resolutions 1, 2 and 3 proposed under item 2 are in accordance with Section 230 (1)(b) of the Companies Act 2016, and if passed, will authorise the payment of directors’ fees and any benefits payable to directors of the Company for their services as directors during the financial year ended 31 December 2020, and for the financial period from 1 January 2021 until the conclusion of the next Annual General Meeting. Directors benefits include allowances and other emoluments payable to directors and in determining the estimated total the Board had considered various factors including the number of scheduled meetings for the Board and Board Committees which covers the period from 1 July 2021 until the conclusion of the next Annual General Meeting. At the 33rd AGM of the Company held on 28th July 2020, the shareholders had approved RM623,400 as the total Directors’ Benefits (excluding Directors’ Fees) payable to the Directors of the Company from 1 July 2020 to 30 June 2021. 302 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD
Statement Accompanying Notice of Annual General Meeting (Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad)
There is no person seeking election at the Annual General Meeting. GOLDEN PHAROS BERHAD [Registration No: 198601003051 (152205-W)] Proxy Form (Incorporated in Malaysia)
I/We (Full name as per NRIC in capital letters)
Company No./NRIC No. (new) (old)
of (Full address)
being a member of GOLDEN PHAROS BERHAD hereby appoint
NRIC No. (new) (old)
of or failing him/her (Full address) NRIC No. (new) (old)
of (Full address)
or failing him/her the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the 34th Annual General Meeting of the Company to be held at Gamelan 3, Primula Beach Hotel, Jalan Persinggahan, 20400 Kuala Terengganu, Terengganu Darul Iman on Tuesday, 29th June 2021 at 10.30 a.m. and at any adjournment thereof.
Name of Proxy NRIC No. No. of shares to be represented by proxy %
1.
2.
(Where two (2) proxies are appointed, please indicate the proportion of your shareholdings to be represented by each proxy.) My/Our proxy is to vote as indicated with an “X” below: If no specific discretion as to voting is given, the proxy will vote or abstain from voting at his discretion:
ORDINARY RESOLUTIONS FOR AGAINST
To approve payment of Directors’ Fees payable of RM192,000 for the financial year ended 1. 31 December 2020.
To approve payment of Directors’ Fees payable of up to RM600,000 for the financial period from 2. 1 January 2021 until the conclusion of the next Annual General Meeting of the Company.
To approve payment of Directors’ benefits (excluding Directors’ Fees) payable of RM501,800 for the 3. financial period from 1 July 2021 until the conclusion of the next Annual General Meeting of the Company.
4. To re-elect Muhammad Ramizu bin Mustaffa as Director.
5. To re-elect Associate Professor Dr Mohd Zaki bin Hamzah as Director.
6. To re-elect Burhanuddin Hilmi bin Mohamed @ Harun as Director.
To re-appoint Messrs Ernst & Young as the Auditors of the Company and to authorise the Board of 7. Directors to fix their remuneration.
Dated ______day of ______2021 Number of shares held *CDS Account No.
*Applicable for shares under nominee account only
Signature of Member/Common Seal ✂ Notes: 1. For the purpose of determining a member who shall be entitled to attend and vote at the meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to make available to the Company a Record of Depositors as at 22 June 2021 and only a depositor whose name appears on the Record of Depositors shall be entitled to attend the meeting or appoint proxy(ies) to attend and vote on his/her behalf. 2. Members/proxies/corporate representatives who wish to attend the meeting in person ARE REQUIRED TO PRE-REGISTER with the Company’s Share Registrar, Tricor Investor & Issuing House Services Sdn Bhd (“Tricor”), via the TIIH Online website at https://tiih.online no later than Sunday, 27 June 2021 at 10.30 a.m. Please follow the Pre-Register Procedures in the Administrative Guide for the AGM. 3. A member of the Company who is entitled to attend and vote at this meeting is entitled to appoint not more than two (2) proxies to attend and vote on his/her behalf. 4. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991 (“SICDA”), it may appoint one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. 5. Where a member is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. An exempt authorised nominee refers to an authorised nominee defined under SICDA which is exempted from compliance with the provisions of subsection 25A(1) of SICDA. 6. Where a member, an authorised nominee or an exempt authorized nominee appoints more than one (1) proxy, the proportion of shareholdings to be represented by each proxy must be specified in the instrument appointing the proxies, otherwise the appointment shall not be valid. 7. A proxy may but need not be a member of the Company. A proxy appointed to attend and vote shall have the same rights as the member to move any resolution or amendment thereto and to speak at the meeting. 8. The appointment of a proxy may be made in the following manner and must be received by the Company at least forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof: (i) In hard copy form In the case of an appointment made in hard copy form, the proxy form must be deposited at the registered office of the Company situated at 66-2 Taman Sri Intan, Jalan Sultan Omar, 20300 Kuala Terengganu, Terengganu Darul Iman or Share Registrar’s office, Tricor Investor & Issuing House Services Sdn Bhd, at 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 Services Centre at Unit G-3, Ground Floor, Vertical Podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur. (ii) By electronic means via facsimile In the case of an appointment made by facsimile transmission, the proxy form must be received via facsimile at +609-631 0617. (iii) By electronic means via email In the case of an appointment made via email transmission, the proxy form must be received via email at [email protected]. For options (ii) and (iii), the Company may request any member to deposit original executed proxy form to its registered office before or on the day of meeting for verification purpose. (iv) Online In the case of an appointment made via online lodgement facility, the proxy form can be electronically lodged with the Company’s Share Registrar via TIIH Online at https://tiih.online. Please refer to the Administrative Guide for the AGM on the procedures for electronic lodgement of Proxy Form via TIIH Online. 9. Any authority pursuant to which such an appointment is made by a power of attorney must be deposited at the Company’s Share Registrar’s office at the above address not less than forty-eight (48) hours before the time appointed for holding the AGM or adjourned general meeting at which the persons named in the appointment proposes to vote. A copy of the power 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. 10. Please ensure ALL the particulars as required in this proxy form are completed, signed and dated accordingly. 11. Please bring an ORIGINAL of the following identification papers (where applicable) and present it to the registration staff for verification: a. Identity card (NRIC) (Malaysian), or b. Police report (for loss of NRIC) / Temporary NRIC (Malaysian), or c. Passport (Foreigner). 12. For a corporate member who has appointed an authorised representative, please deposit the ORIGINAL/CERTIFIED TRUE certificate of appointment of authorised representative with the Company’s Share Registrar, Tricor at the above address. The certificate of appointment of authorised representative should be executed under seal in accordance with the constitution of the corporate member. If the corporate member does not have a common seal, the certificate of appointment of authorised representative should be affixed with the rubber stamp of the corporate member (if any) and executed by at least two (2) authorised officers, of whom one shall be a director; or any director and/or authorised officers in accordance with the laws of the country under which the corporate member is incorporated.
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The Share Registrar GOLDEN PHAROS BERHAD [Registration No:198601003051 (152205-W)]
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
GOLDEN PHAROS BERHAD (198601003051) (152205-W)
66-2, Taman Seri Intan, Jalan Sultan Omar 20300 Kuala Terengganu, Terengganu Darul Iman, Malaysia
+609 630 1330
+609 631 0617
www.goldenpharos.com