SCB-AR2016.Pdf

CON ENTS

2-9 Notice of Annual General Meeting 10-16 Appendix 1 17 Statement accompanying the Notice of Annual General Meeting 18 Corporate Information 19 Financial Highlights 20-23 Directors’ Profile 24-26 Managing Director’s Statement 27 Statement on Corporate Social Responsibility 28-42 Statement on Corporate Governance 43-45 Statement of Risk Management and Internal Control 46-48 Audit Committee Report 49 Statement of Directors’ Responsibility in relation to the Financial Statements 50-52 Other Information required by the Main Market Listing Requirements of Bursa Malaysia Securities Berhad 53-56 Directors’ Report 57 Statement by Directors 57 Statutory Declaration 58-59 Independent Auditors’ Report 60-61 Statements of Comprehensive Income 62-63 Statements of Financial Position 64-65 Statements of Changes in Equity 66-67 Statements of Cash Flows 68-141 Notes to the Financial Statements 142 Supplementary Information 143 List of Properties owned by the Group 144-145 Analysis of Shareholdings Enclosed Proxy Form

Annual Report 2016 1 Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN THAT the Twenty Third (23rd) Annual General Meeting of Suiwah Corporation Bhd. (“SCB” or “the Company”) will be held at Sunshine Banquet Hall, Level 4, Sunshine Square Complex, 1, Jalan Mayang Pasir, 11950 Bayan Baru, Penang on Friday, 28 October 2016 at 11.00 a.m. to transact the following businesses:

AGENDA ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the year ended 31 May 2016 together with the Reports (Please refer of the Directors and Auditors thereon. to Note 1)

2. To approve the declaration of the first and final single tier dividend of 3.5% for the financial year ended Resolution 1 31 May 2016.

3. To re-elect the following Directors who are retiring in accordance with Article 87 of the Company’s Articles of Association and being eligible, offer themselves for re-election: -

(a) YBhg. Dato’ Hwang Thean Long; Resolution 2 (b) YBhg. Datuk Haji Radzali Bin Hassan; Resolution 3 (c) Mr. Wong Thai Sun Resolution 4

4. To consider and if thought fit, to pass the following resolution pursuant to Section 129 of the Companies Act, 1965 as ordinary resolution:

“THAT Dato’ Ahmad Hassan bin Osman who is over the age of seventy years and retiring in accordance Resolution 5 with Section 129 of the Companies Act, 1965, be hereby re-appointed as Director of the Company and to hold office until the conclusion of the next Annual General Meeting.”

5. To approve the payment of Directors’ fees of Ringgit Malaysia Two Hundred and Eighty Two Thousand Resolution 6 (RM282,000) only for the year ended 31 May 2016.

6. To re-appoint Messrs. Ernst & Young as Auditors of the Company for the ensuing year and to authorise Resolution 7 the Directors to fix their remuneration.

SPECIAL BUSINESS

7. To consider and if thought fit, to pass the following resolutions with or without modification: -

7.1 ORDINARY RESOLUTION: AUTHORITY TO ISSUE AND ALLOT SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965

“THAT, subject to Section 132D of the Companies Act, 1965 (“Act”), the Articles of Association Resolution 8 of the Company, other applicable laws, guidelines, rules and regulations and approvals of the relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue and allot shares in the Company, at any time to such persons and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten per centum (10%) of the issued and paid-up share capital of the Company (excluding treasury shares) for the time being AND THAT the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad;

AND FURTHER THAT such authority shall commence immediately upon the passing of this resolution and continue to be in force until the conclusion of the next Annual General Meeting of the Company.”

Annual Report 2016 2 Notice of Annual General Meeting (cont’d)

7.2 ORDINARY RESOLUTION: PROPOSED RENEWAL AND NEW SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE INVOLVING DATO’ HWANG THEAN LONG, DATIN CHEAH GAIK HUANG, HWANG POH CHOO, HWANG SIEW PENG, HWANG SHIN HUNG, HWANG YEN MING, SUIWAH HOLDINGS SDN BHD AND SUIWAH SUPERMARKET SENDIRIAN BERHAD

“THAT approval be and is hereby given to the Company’s subsidiaries to enter into and give Resolution 9 effect to the recurrent related party transactions of a revenue or trading nature involving Dato’ Hwang Thean Long, Datin Cheah Gaik Huang, Hwang Poh Choo, Hwang Siew Peng, Hwang Shin Hung, Hwang Yen Ming, Suiwah Holdings Sdn Bhd and Suiwah Supermarket Sendirian Berhad (hereinafter referred to as “Related Parties”) as specified in Section 2.3 under Part A of the Circular dated 30 September 2016, and falling within the ambit of Part E, Paragraph 10.09 of Chapter 10 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, which are necessary for the day-to-day operations and undertaken in the ordinary course of business of the Company, on terms not more favourable to Related Parties than those generally available to the public and not detrimental to minority shareholders of the Company;

THAT such approval unless revoked or varied by the Company in general meeting shall continue to be in full force and effect until:

(i) the conclusion of the next Annual General Meeting (“AGM”) of the Company following the general meeting at which this mandate was passed, at which time it will lapse, unless by a resolution passed at the general meeting whereby the authority is renewed; or

(ii) the expiration of the period within which the next AGM of the Company after the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (“the Act”) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or

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

whichever is the earlier;

THAT the above mandate is subject to annual renewal and disclosure will be made in the annual report of the aggregate value of transactions conducted by the Group.

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

7.3 ORDINARY RESOLUTION: PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE INVOLVING DATUK HAJI RADZALI BIN HASSAN AND HOZONE SDN BHD

“THAT approval be and is hereby given to the Company’s subsidiaries to enter into and give Resolution 10 effect to the recurrent related party transactions of a revenue or trading nature involving Datuk Haji Radzali bin Hassan and person connected to him, namely Hozone Sdn Bhd (hereinafter referred to as “Interested Persons”) as specified in Section 2.3 under Part A of the Circular dated 30 September 2016, and falling within the ambit of Part E, Paragraph 10.09 of Chapter 10 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad which are necessary for the day-to-day operations and undertaken in the ordinary course of business of the Company, on terms not more favourable to Interested Persons than those generally available to the public and not detrimental to minority shareholders of the Company;

Annual Report 2016 3 Notice of Annual General Meeting (cont’d)

THAT such approval unless revoked or varied by the Company in general meeting shall continue to be in full force and effect until:

(ii) the expiration of the period within which the next AGM of the Company after the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (“the Act”) (but must not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or

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

whichever is the earlier;

THAT the above mandate is subject to annual renewal and disclosure will be made in the annual report of the aggregate value of transactions conducted by the Group.

7.4 ORDINARY RESOLUTION: PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE INVOLVING A DIRECTOR OF THE COMPANY’S SUBSIDIARY, NAMELY LEONG KONG MENG

“THAT approval be and is hereby given to the Company’s subsidiaries to enter into and give Resolution 11 effect to the recurrent related party transactions of a revenue or trading nature involving a Director of the Company’s subsidiary, namely Leong Kong Meng (hereinafter referred to as “Interested Director”) as specified in Section 2.3 under Part A of the Circular dated 30 September 2016, and falling within the ambit of Part E, Paragraph 10.09 of Chapter 10 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, which are necessary for the day-to- day operations and undertaken in the ordinary course of business of the Company, on terms not more favourable to Interested Director than those generally available to the public and not detrimental to minority shareholders of the Company;

THAT such approval unless revoked or varied by the Company in general meeting shall continue to be in full force and effect until:

(ii) the expiration of the period within which the next AGM of the Company after the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (“the Act”) (but must not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or

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

whichever is the earlier;

Annual Report 2016 4 Notice of Annual General Meeting (cont’d)

THAT the above mandate is subject to annual renewal and disclosure will be made in the annual report of the aggregate value of transactions conducted by the Group.

7.5 ORDINARY RESOLUTION: PROPOSED RENEWAL OF AUTHORITY FOR THE COMPANY TO PURCHASE ITS OWN SHARES OF UP TO 10% OF ITS ISSUED AND PAID-UP ORDINARY SHARE CAPITAL (“PROPOSED RENEWAL OF SHARE BUY-BACK MANDATE”)

“THAT subject to the Companies Act, 1965 (“the Act”), the provisions of the Company’s Resolution 12 Memorandum and Articles of Association, Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and all other applicable laws, guidelines, rules and regulations, the Directors of the Company be and is hereby authorised, to the fullest extent permitted by law, to purchase such amount of ordinary shares of RM1.00 each in the Company (“SCB Shares”) from time to time through Bursa Securities upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company provided that:-

(i) the aggregate number of SCB Shares which may be purchased or held by the Company shall not exceed ten per centum (10%) of the total issued and paid-up ordinary share capital for the time being of the Company, subject to a restriction that the Company continues to maintain a shareholding spread that is in compliance with the Main Market Listing Requirements of Bursa Securities after the share purchase;

(ii) the maximum fund to be allocated by the Company for the purpose of purchasing the SCB Shares under the Proposed Renewal of Share Buy-Back Mandate shall not exceed the retained profits and/or the share premium account of the Company for the time being;

(iii) the authority hereby given shall commence immediately upon passing of this ordinary resolution and shall continue to be in force until:

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

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

whichever occurs first; but not so as to prejudice the completion of purchase(s) by the Company of the SCB Shares before the aforesaid expiry date and, made in any event, in accordance with the provisions of the guidelines issued by Bursa Securities and any prevailing laws, rules, regulations, orders, guidelines and requirements issued by any relevant authorities; and

Annual Report 2016 5 Notice of Annual General Meeting (cont’d)

(iv) upon completion of the purchase(s) of the SCB Shares by the Company, authority be and is hereby given to the Directors of the Company to decide at their absolute discretion to either to cancel the SCB Shares so purchased and/or to retain the SCB Shares so purchased as treasury shares which may be distributed as shares dividends to shareholders and if retained as treasury shares, may resell the treasury shares on Bursa Securities and/ or subsequently cancelled, or to retain part of the SCB Shares so purchased as treasury shares and cancel the remainder in the manner as prescribed by the Act, rules, regulations and orders made pursuant to the Act and the requirements of the Bursa Securities and any other relevant authority for the time being in force;

AND THAT authority be and is hereby unconditionally and generally given to the Directors of the Company to take all such steps as are necessary or expedient to implement, finalise, complete or to effect the Proposed Renewal of Share Buy-Back Mandate with full powers to assent to any conditions, modifications, resolutions, variations and/or amendments (if any) as may be imposed by the relevant authorities and to do all such acts and things as the said Directors may deem fit and expedient in the best interest of the Company to give effect to and to complete the purchase of the SCB Shares.”

7.6 ORDINARY RESOLUTION: MANDATE FOR YB SENATOR DATO’ HAJI MOHD SUHAIMI BIN ABDULLAH TO CONTINUE TO ACT AS AN INDEPENDENT NON-EXECUTIVE DIRECTOR OF THE COMPANY

“THAT approval be and is hereby given to YB Senator Dato’ Haji Suhaimi bin Abdullah, who Resolution 13 has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, to continue to act as an Independent Non-Executive Director of the Company in compliance with the recommendation of Malaysian Code on Corporate Governance 2012.”

7.7 ORDINARY RESOLUTION: MANDATE FOR DATO’ AHMAD HASSAN BIN OSMAN TO CONTINUE TO ACT AS AN INDEPENDENT NON-EXECUTIVE DIRECTOR OF THE COMPANY

“THAT approval be and is hereby given to Dato’ Ahmad Hassan bin Osman, who has served as Resolution 14 an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, to continue to act as an Independent Non-Executive Director of the Company in compliance with the recommendation of Malaysian Code on Corporate Governance 2012.”

7.8 ORDINARY RESOLUTION: MANDATE FOR MR. JEN SHEK VOON TO CONTINUE TO ACT AS AN INDEPENDENT NON- EXECUTIVE DIRECTOR OF THE COMPANY

“THAT approval be and is hereby given to Mr. Jen Shek Voon, who has served as an Independent Resolution 15 Non-Executive Director of the Company for a cumulative term of more than nine (9) years, to continue to act as an Independent Non-Executive Director of the Company in compliance with the recommendation of Malaysian Code on Corporate Governance 2012.”

7.9 ORDINARY RESOLUTION: MANDATE FOR MR. WONG THAI SUN TO CONTINUE TO ACT AS AN INDEPENDENT NON- EXECUTIVE DIRECTOR OF THE COMPANY

“THAT subject to passing of the resolution 4 above, approval be and is hereby given to Mr. Resolution 16 Wong Thai Sun, who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, to continue to act as an Independent Non- Executive Director of the Company in compliance with the recommendation of Malaysian Code on Corporate Governance 2012.”

Annual Report 2016 6 Notice of Annual General Meeting (cont’d)

7.10 Special Resolution:- Proposed Amendments to the Articles of Association of the Company

“THAT the amendments to the Articles of Association of the Company as set out in the Appendix Resolution 17 I annexed to the Annual Report 2016 be and are hereby approved and adopted.

AND THAT the Directors and/or Secretary of the Company be hereby authorised to take all steps as are necessary and expedient in order to implement, finalise and give full effect to the Proposed Amendments to the Articles of Association of the Company.”

NOTICE OF DIVIDEND ENTITLEMENT

NOTICE IS ALSO HEREBY GIVEN THAT the first and final single tier dividend of 3.5% in respect of the financial year ended 31 May 2016, if approved by members of the Company, will be paid on 17 November 2016. The entitlement date for the dividend payment is 3 November 2016.

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

(a) Shares transferred to the Depositor’s Securities Account before 4.00 p.m. on 3 November 2016 in respect of ordinary transfers; and

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

By Order of the Board,

THUM SOOK FUN (MIA 24701) Company Secretary

Dated: 30 September 2016 Penang

Explanatory Notes to Special Business:-

(i) Resolution No. 8 - Authority to issue and allot shares pursuant to Section 132D of the Companies Act, 1965

For Resolution No. 8, further information in relation to the general mandate for issue of securities is set out in the Statement Accompanying Notice of 23rd AGM.

(ii) Resolution Nos. 9 to 11 - Proposed Renewal and New Shareholders’ Mandate for the recurrent related party transactions of a revenue or trading nature (“Proposed RRPT Mandate”)

The proposed adoption of Resolution Nos. 9 to 11, if passed, will enable the Company and/or its subsidiaries to enter into the recurrent transactions involving the interest of the Related Parties which are of a revenue or trading nature and necessary for the Group’s day to day operations subject to the transactions being carried out in the ordinary course of business on terms not more favorable than those generally available to the public and are not detriment to the minority shareholders of the Company.

For further information, please refer to the Part A of the Circular/Statement to Shareholders dated 30 September 2016, which is dispatched together with the Company’s Annual Report 2016.

Annual Report 2016 7 Notice of Annual General Meeting (cont’d)

(iii) Resolution No. 12 - Proposed Renewal of Share Buy-Back Mandate

The proposed adoption of Resolution No. 12 is to renew the authority granted by the shareholders of the Company at the 22nd AGM of the Company held on 26 November 2015. The Proposed Renewal of Share Buy-Back Mandate, if passed, will empower the Directors to buy-back and/or hold up to a maximum of 10% of the Company’s issued and paid- up ordinary share capital at any point of time, by utilising the funds allocated which shall not exceed the total retained profits and/or share premium account of the Company. This authority, unless revoked or varied by the Company in a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company, or the expiration of period within which the next Annual General Meeting is required by law to be held, whichever is earlier.

For further information, please refer to the Part B of the Circular/Statement to Shareholders dated 30 September 2016, which is dispatched together with the Company’s Annual Report 2016.

(iv) Resolution Nos. 13 to 16 - Mandate for YB Senator Dato’ Haji Mohd Suhaimi bin Abdullah, Dato’ Ahmad Hassan bin Osman, Mr. Jen Shek Voon and Mr. Wong Thai Sun to continue to act as Independent Non-Executive Directors of the Company

Both the Nomination Committee and the Board have assessed the independence of the following Independent Directors, who have served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, and recommended them to continue to serve as Independent Non-Executive Director of the Company based on the following justifications:- • YB Senator Dato’ Haji Mohd Suhaimi bin Abdullah; • Dato’ Ahmad Hassan bin Osman; • Mr. Jen Shek Voon; and • Mr. Wong Thai Sun.

(a) they continue to fulfill the definition of independence as set out in Malaysian Code on Corporate Governance 2012 and Main Market Listing Requirements of Bursa Securities; (b) their existing tenure in office (despite of more than 9 years) do not impair their independence; (c) they remain objective and independent in expressing their view and in participating in deliberation and decision making of the Board and Board Committee(s); and (d) they continue to demonstrate conduct and behaviour that are essential indicators of independence.

(v) Resolution 17 – Proposed Amendments to the Articles of Association of the Company

The Proposed Amendments are to align the Company’s Articles of Association with the amendments made to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

Annual Report 2016 8 Notice of Annual General Meeting (cont’d)

Notes: 1. The first agenda of this meeting is meant for discussion only, as the provisions of Section 169 (1) andSection169 (3) of the Companies Act, 1965 does not requires a formal approval for the audited financial statements from the shareholders. Hence, this Agenda is not put forward for voting. 2. In respect of deposited securities, only members whose names appear in the Record of Depositors on 19 October 2016 shall be eligible to attend, speak and vote at the Meeting. 3. A member entitled to attend and vote at the Meeting is entitled to appoint two (2) or more proxies to attend and vote in his or her stead. Where a member appoints two (2) proxies, the appointments shall be invalid unless he or she specifies the proportions of his or her shareholdings to be represented by each proxy. 4. A proxy may but does not need to be a member. There shall be no restriction as to the qualification of the proxy and the provision of Section 149(1)(a), (b) and (c) of the Companies Act, 1965 shall not apply to the Company. A proxy appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting. 5. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer or attorney duly authorised. 6. Where a member of the Company is an exempt authorised nominee as defined under Securities Industry (Central Depositories) Act 1991 which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. 7. The instrument appointing a proxy and the power of attorney or other authority if any, under which it is signed or a notarially certified copy of the power or authority shall be deposited at the registered office of the Company at No. 1-20- 1 SUNTECH @ Penang Cybercity, Lintang Mayang Pasir 3, 11950 Bayan Baru, Penang not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof.

Annual Report 2016 9 Appendix 1

SPECIAL RESOLUTION PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY

The Articles of Association of the Company are proposed to be amended in the following manner:-

Article Existing Article Proposed Amendments No.

63 In every notice calling a general meeting of the In every notice calling a general meeting of the company, there shall appear with reasonable Company, there shall appear with reasonable prominence a statement that a member is entitled prominence a statement that:- to appoint two (2) or more proxies to attend and (a) a member is entitled to appoint up to two (2) vote in his place at a meeting of the Company or at a or more proxies to attend and vote in his place meeting of any class of members of the Company and at a meeting of the Company or at a meeting of that a proxy need not be a member. There shall be no any class of members of the Company and that restriction as to the qualification of the proxy and the a proxy need not be a member. There shall be provisions of Section 149 (1) (a), (b), (c) of the Act shall no restriction as to the qualification of the proxy not apply to the Company. If a member appoints two and the provisions of Section 149 (1) (a), (b), (c) (2) or more proxies, the appointments shall be invalid of the Act shall not apply to the Company. If a unless he specifies the proportions of his holdings member appoints two (2) or more proxies, the to be represented by each proxy. A proxy shall have appointments shall be invalid unless he specifies the same rights as members to speak at the general the proportions of his holdings to be represented meeting. by each proxy. A proxy shall have the same rights as members to speak at the general meeting.

(b) Where a member is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds.

(c) Where a member is an authorised nominee as defined under Depositories Act, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each securities account it holds which is credited with ordinary shares of the Company. The appointment of two (2) proxies in respect of any particular securities account shall be invalid unless the authorised nominee specifies the proportion of its shareholding to be represented by each proxy.

Annual Report 2016 10 Appendix 1

SPECIAL RESOLUTION PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY (cont’d)

Article Existing Article Proposed Amendments No.

68 At any general meeting a resolution put to the vote Subject to the Listing Requirements, at any general of the meeting shall be decided on a show of hands meeting any resolution set out in the notice of any unless a poll is (before or on the declaration of the general meeting or a resolution put to the vote of the result of the show of hands) demanded:- meeting or in any notice of resolutions which may properly be moved and is intended to be moved at (a) by the Chairman of the meeting; any general meeting shall be voted by poll. (b) by at least three (3) members present in person or by proxy; The poll may be conducted manually using voting slips (c) by any member or members present in person or electronically using various forms of electronic or by proxy and representing not less than one- voting devices. Such votes shall be counted by the tenth of the total voting rights of all the members poll administrator, and verified by the scrutineers, as having the right to vote at the meeting; or may be appointed by the Chairman of the meeting (d) by a member or members holding shares in the for purpose of determining the outcome of the Company conferring a right to vote at the meeting resolution(s) to be decided on poll. being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

Unless a poll is so demanded a declaration by the Chairman that a resolution has on a show of hands been carried or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the book containing the minutes of the proceedings of the Company shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favor of or against the resolution. The demand for a poll may be withdrawn.

69 If a poll is duly demanded it shall be taken in such The poll shall be taken in such manner and either manner and either at once or after an interval or at once or after an interval or adjournment or adjournment as the Chairman directs, and the result otherwise as the Chairman of the meeting directs, of the poll shall be the resolution of the meeting at and the result of the poll shall be the resolution which the poll was demanded, but a poll demanded of the meeting. The Chairman of the meeting may on the election of a Chairman or on a question of (and if so directed by the meeting shall) appoint adjournment shall be taken forthwith. The demand scrutineers and may, in addition to the powers of for a poll shall not prevent the continuance of a adjourning meetings contained in Article 67, adjourn meeting for the transaction of any business other than the meeting to some place and time fixed for the the question on which the poll has been demanded. purpose of declaring the result of the poll. The Chairman of the meeting may (and if so directed by the meeting shall) appoint scrutineers and may, in addition to the powers of adjourning meetings contained in Article 67, adjourn the meeting to some place and time fixed for the purpose of declaring the result of the poll.

Annual Report 2016 11 Appendix 1

SPECIAL RESOLUTION PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY (cont’d)

Article Existing Article Proposed Amendments No.

70 Unless otherwise required by the Act, no resolution Unless otherwise required by the Act, no resolution of the Company shall be passed unless it has been of the Company shall be passed unless it has been passed by a majority of the members as being entitled passed by a majority of the members as being entitled to do so vote in person or by proxy at the meeting. In to do so vote in person or by proxy at the meeting. In the case of an equality of votes, whether on a show the case of an equality of votes, whether on a show of hands or on a poll, the Chairman of the meeting of hands or on a poll; the Chairman of the meeting at which the show of hands takes place or at which at which the show of hands takes place or at which the poll is demanded shall be entitled to a second or the poll is demanded shall be entitled to a second or casting vote. casting vote.

71 Subject to any rights or restrictions for the time being Subject to any rights or restrictions for the time being attached to any class or classes of shares, at meetings attached to any class or classes of shares, at meetings of members or classes of members, each member of members or classes of members, each member entitled to be present and to vote at any general entitled to be present and to vote at any general meeting of the company and may vote in person or meeting of the company and may vote in person or by proxy or by attorney and on show of hand every by proxy or by attorney and on show of hand every person present who is a member or representative person present who is a member or representative or proxy of a member shall have on vote, and, on a or proxy of a member shall have on vote, and, on a poll, every member present in person or by proxy or poll, every member present in person or by proxy or by attorney or other duly authorised representative by attorney or other duly authorised representative shall have one vote for each share be holds. A person shall have one vote for each share be holds. A person entitled to more than one vote need not use all his entitled to more than one vote need not use all his votes or cast all the votes he uses on a poll in the same votes or cast all the votes he uses on a poll in the same way. way.

73 (a) A holder may appoint more than two proxies (a) A holder may appoint up to more than two to attend at the same meeting. Where a holder (2) proxies to attend and vote in his place at a appoints two or more proxies, he shall specify the meeting of the Company or at a meeting of any proportion of his shareholdings to be represented class of members of the Company at the same by each proxy. meeting. Where a holder appoints two (2) or more proxies, he shall specify the proportion of his shareholdings to be represented by each proxy.

(c) Where a member of the Company is an Exempt (c) Where a member of the Company is an Exempt Authorized Nominee which holds ordinary shares Authorized Nominee which holds ordinary shares in the Company for multiple beneficial owners in the Company for multiple beneficial owners in one securities account (“omnibus account”), in one securities account (“omnibus account”), there is no limit to the number of proxies which there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds. Where respect of each omnibus account it holds. Where an Exempt Authorised Nominee appoints more an Exempt Authorised Nominee appoints more than one (1) proxy in respect of each Omnibus than one (1) proxy in respect of each Omnibus Account, the appointment shall be invalid unless Account, the appointment shall be invalid unless the Exempt Authorised Nominee specifies the Exempt Authorised Nominee specifies proportion of its shareholding to be represented proportion of its shareholding to be represented by each proxy. by each proxy.

Annual Report 2016 12 Appendix 1

SPECIAL RESOLUTION PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY (cont’d)

Article Existing Article Proposed Amendments No.

Where a member is an authorized nominee as defined under the Depositories Act, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each securities account it holds which is credited with ordinary shares of the Company. The appointment of two (2) proxies in respect of any particular securities account shall be invalid unless the authorised nominee specifies the proportion of its shareholding to be represented by each proxy.

73 (d) A proxy need not be a member. There shall be no (d) A proxy need not be a member. There shall be restriction as to the qualification of the proxy and no restriction as to the qualification of the proxy the provisions of Section 149 (1) (a), (b), (c) of the and the provisions of Section 149 (1) (a), (b), (c) Act shall not apply to the Company. of the Act shall not apply to the Company. Where a holder appoints two (2) proxies, he shall A proxy appointed to attend and vote at a meeting specify the proportion of his shareholdings to of the Company shall have the same rights as the be represented by each proxy. member to speak at the meeting. A proxy appointed to attend and vote at a meeting of the Company shall have the same rights as the member to speak at the meeting.

74 A member who is of unsound mind or whose person A member who is of unsound mind or whose person or estate is liable to be dealt with in any way under the or estate is liable to be dealt with in any way under the law relating to mental disorder may vote, whether on law relating to mental disorder may vote, whether on a show of hands or on a poll, by his committee or by a show of hands or on a poll, by his committee or by such other person as properly has the management of such other person as properly has the management his estate, and any such committee or other person of his estate, and any such committee or other person may vote by proxy or attorney PROVIDED THAT may vote by proxy or attorney PROVIDED THAT such evidence as the directors may require of the such evidence as the directors may require of the authority of the person claiming to vote shall have authority of the person claiming to vote shall have been deposited at the office not less than forty-eight been deposited at the office not less than forty-eight (48) hours before the time appointed for holding the (48) hours before the time appointed for holding the meeting. meeting.

Annual Report 2016 13 Appendix 1

SPECIAL RESOLUTION PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY (cont’d)

Article Existing Article Proposed Amendments No.

77 The instrument appointing a proxy and the power of The instrument appointing a proxy and the power of attorney or other authority if any, under which it is attorney or other authority if any, under which it is signed or a notarially certified copy of the power or signed or a notarially certified copy of the power or authority, shall be deposited at the office or at such authority, shall be deposited at the office or at such other place as is specified for that purpose in the other place as is specified for that purpose in the notice convening the meeting, not less than forty eight notice convening the meeting, not less than forty (48) hours before the time for holding the meeting or eight (48) hours or otherwise permitted under the adjourned meeting at which the person named in the Listing Requirements or any combination thereof instrument proposes to vote, or, in the case of a poll, before the time for holding the meeting or adjourned not less than twenty four (24) hours before the time meeting. , at which the person named in the appointed for the taking of the poll, and in default the instrument proposes to vote. or, in the case of a poll, instrument of proxy shall not be treated as valid. Such not less than twenty four (24) hours before the time a power of attorney (or a notarially certified copy of appointed for the taking of the poll, and in default such power of attorney) once deposited or delivered the instrument of proxy shall not be treated as valid. in a manner so permitted in relation to a meeting, Such a power of attorney (or a notarially certified adjourned meeting or poll shall be deemed deposited copy of such power of attorney) once deposited or or delivered in a manner so permitted in relation to delivered in a manner so permitted in relation to a all future meetings, adjourned meetings and polls meeting, adjourned meeting or poll shall be deemed for which such power of attorney is by its terms deposited or delivered in a manner so permitted in valid. An instrument of proxy or power of attorney relation to all future meetings, adjourned meetings shall be invalid unless such instrument or power of and polls for which such power of attorney is by attorney (or a notarially certified copy of such power its terms valid. An instrument of proxy or power of of attorney) is deposited or delivered in a manner so attorney shall be invalid unless such instrument or permitted. A member is not precluded from attending power of attorney (or a notarially certified copy of the meeting in person after lodging the instrument of such power of attorney) is deposited or delivered in proxy; however, such attendance shall automatically a manner so permitted. A member is not precluded revoke the authority granted to the proxy. from attending the meeting in person after lodging the instrument of proxy; however, such attendance shall automatically revoke the authority granted to the proxy.

78 A proxy shall be entitled to vote on a show of hands on A proxy shall be entitled to vote on a show of hands on any question at any general meeting notwithstanding any question at any general meeting notwithstanding any provision to the contrary in the Act. any provision to the contrary in the Act.

Annual Report 2016 14 Appendix 1

SPECIAL RESOLUTION PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY (cont’d)

Article Existing Article Proposed Amendments No.

80 The instrument appointing a proxy and the power The instrument appointing a proxy and the power of of attorney or other authority if any, under which it attorney or other authority if any, under which it is is signed or a notarially certified copy of the poser or signed or a notarially certified copy of the poser or authority shall be deposited at the office or at such authority shall be deposited at the office or at such other place as is specified for the purpose in the notice other place as is specified for the purpose in the convening the meeting, not less than forty-eight hours notice convening the meeting, not less than forty- before the time for holding the meeting or adjourned eight hours before the time for holding the meeting meeting at which the person named in the instrument or adjourned meeting at which the person named in proposes to vote, or, in the case of a poll, not less than the instrument proposes to vote or, in the case of a twenty-four hours before the time appointed for the poll, not less than twenty-four hours before the time taking of the poll, and in default the instrument of appointed for the taking of the poll, and in default proxy shall not be treated as valid. the instrument of proxy shall not be treated as valid.

(Deleted)

131 The directors shall from time to time in accordance The directors shall from time to time in accordance with Section 169 of the Act cause to be prepared and with Section 169 of the Act cause to be prepared laid before the Company in general meeting such and laid before the Company in general meeting such profit and loss accounts, balance sheets and report profit and loss accounts, balance sheets and report as as are referred to in the section. The interval between are referred to in the section. The interval between the close of a financial year of the Company and the the close of a financial year of the Company and the issue of annual audited financial statements, the issue of annual audited financial statements, the directors’ and auditors’ reports to the Exchange shall directors’ and auditors reports to the Exchange shall not exceed four (4) months. The Company must issue not exceed four (4) months. The Company must issue to the Members an annual report relating to it within to the Members an annual report relating to it within six (6) months after the expiry of its financial year end six (6) months after the expiry of its financial year end in printed form or in CD-ROM form or in such other in printed form or in CD-ROM form electronic format form of electronic media or any combination thereof or in such other form of electronic media or any not less than twenty one (21) days (or such period as combination thereof not less than twenty one (21) may be allowed by the Act or Listing Requirements) days (or such period as may be allowed by the Act before the date of the meeting be sent to every or Listing Requirements) permitted under the Listing member of, and to every holder of debentures of the Requirements or any combination thereof shall, not Company under the provisions of the Act or of these less than twenty one (21) days (or such other shorter Articles. The requisite number of copies of each such period as may be agreed by all members entitled document as may be required by the Exchange shall to attend and vote at the meeting) before the date at the same time be likewise sent to the Exchange: of the meeting be sent to every member of, and to Provided that this Article shall not require a copy of every holder of debentures of the Company under the these documents to be sent to any person of whose provisions of the Act or of these Articles. The requisite address the Company is not aware or to more than number of copies of each such document as may be one of joint holders but any member to whom a copy required by the Exchange shall at the same time be of these documents has not been sent shall be entitled likewise sent to the Exchange, provided that this to receive a copy free of charge on application at the Article shall not require a copy of these documents to office. be sent to any person of whose address the Company is not aware or to more than one of joint holders but any member to whom a copy of these documents has not been sent shall be entitled to receive a copy free of charge on application at the office.

Annual Report 2016 15 Appendix 1

SPECIAL RESOLUTION PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY (cont’d)

Article Existing Article Proposed Amendments No.

143 The Company in general meeting may upon the Subject to the Act, the Company in general meeting recommendation of the directors resolved that it is may upon the recommendation of the directors desirable to capitalise any part of the amount for resolved that it is desirable to capitalise any part of the time being standing to the credit of any of the the amount for the time being standing to the credit Company’s reserve accounts or to the credit of the of any of the Company’s reserve accounts or to the profit and loss account or otherwise available for credit of the profit and loss account or otherwise distribution, and accordingly that such sum be set available for distribution, and accordingly that such free for distribution amongst the members who would sum be set free for distribution amongst the members have been entitled thereto if distributed by way of who would have been entitled thereto if distributed dividend and in the same proportions on condition by way of dividend and in the same proportions on that the same be not paid in cash but be applied either condition that the same be not paid in cash but be in or towards paying up any amounts for the time applied either in or towards paying up any amounts being unpaid on any shares held by such members for the time being unpaid on any shares held by such respectively or paying up in full unissued shares members respectively or paying up in full unissued or debentures of the Company to be allotted and shares or debentures of the Company to be allotted distributed credited as fully paid up to and amongst and distributed credited as fully paid up to and such members in the proportion aforesaid, or partly in amongst such members in the proportion aforesaid, or the one way and partly in the other, and the Directors partly in the one way and partly in the other, and the shall give effect to such resolution. A share premium Directors shall give effect to such resolution. A share account and a capital redemption reserve may, for premium account and a capital redemption reserve the purposes of this Article, be applied in the paying may, for the purposes of this Article, be applied in the up of unissued shares to be issued to members of paying up of unissued shares to be issued to members the Company as fully paid bonus shares and for such of the Company as fully paid bonus shares and for other purposes as the directors may in their absolute such other purposes as the directors may in their discretion think conducive to the interests of the absolute discretion think conducive to the interests Company to the extent and in the manner so allowed of the Company to the extent and in the manner so by the Act and by these Articles. allowed by the Act and by these Articles.

Annual Report 2016 16 Statement Accompanying the Notice of Annual General Meeting (Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Securities)

A) Details of the individuals who are standing for re-election as Directors

As at date of this notice, there are no individuals who are standing for election as Directors (excluding the above Directors who are standing for re-election or re-appointment) at this forthcoming 23rd Annual General Meeting.

B) Statement relating to general mandate for issue of securities in accordance with Paragraph 6.03(3) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad

The resolution in relation to the authority to issue and allot shares pursuant to Section 132D of the Companies Act, 1965, is a renewal of the general mandate for the issue of new ordinary shares in the Company which was approved at the last Annual General Meeting (AGM) of the Company held on 26 November 2015.

As at the date of the Notice of the 23rd AGM, no new shares in the Company were issued pursuant to the mandate granted to the Directors at the 22nd AGM held on 26 November 2015 and which will lapse at the conclusion of the 23rd AGM.

The general mandate if passed, will provide flexibility for the Company and empower the Directors of the Company to issue and allot ordinary shares in the capital of the Company for any fund raising activities, including but not limited to placing of shares, working capital and/or funding of strategic development of the Group. The renewal of the General Mandate is sought to provide flexibility and to avoid any delay arising from and cost in convening a general meeting to obtain approval from its shareholders for such issuance of shares up to an amount not exceeding in total 10% of the issued and paid-up share capital of the Company, as the Directors consider appropriate in the best interest of the Company. This General Mandate, unless revoked or varied by the Company in a general meeting, will expire at the conclusion of next AGM of the Company.

Annual Report 2016 17 Corporate Information

BOARD OF DIRECTORS DATO’ HWANG THEAN LONG - Managing Director DATIN CHEAH GAIK HUANG - Executive Director MS. HWANG SIEW PENG - Executive Director MR. HWANG SHIN HUNG - Executive Director DATUK HAJI RADZALI BIN HASSAN - Non-Independent Non-Executive Director YB SENATOR DATO’ HAJI MOHD SUHAIMI BIN ABDULLAH - Independent Non-Executive Director DATO’ AHMAD HASSAN BIN OSMAN - Independent Non-Executive Director MR. WONG THAI SUN - Independent Non-Executive Director MR. JEN SHEK VOON - Independent Non-Executive Director

AUDIT COMMITTEE YB SENATOR DATO’ HAJI MOHD SUHAIMI BIN ABDULLAH - Chairman DATO’ AHMAD HASSAN BIN OSMAN - Member MR. WONG THAI SUN - Member MR. JEN SHEK VOON - Member

NOMINATION COMMITTEE DATO’ AHMAD HASSAN BIN OSMAN - Chairman YB SENATOR DATO’ HAJI MOHD SUHAIMI BIN ABDULLAH - Member MR. WONG THAI SUN - Member

REMUNERATION COMMITTEE DATO’ AHMAD HASSAN BIN OSMAN - Chairman YB SENATOR DATO’ HAJI MOHD SUHAIMI BIN ABDULLAH - Member MR. WONG THAI SUN - Member

COMPANY SECRETARY THUM SOOK FUN (MIA 24701)

REGISTERED OFFICE No. 1-20-1 SUNTECH @ Penang Cybercity, Lintang Mayang Pasir 3, 11950 Bayan Baru, Penang, Malaysia. Tel. No. : +604-6437387 Fax No. : +604-6437389 Web Page : http://www.suiwah.com.my

SHARE REGISTRAR SECURITIES SERVICES (HOLDINGS) SDN BHD Suite 18.05, MWE Plaza, No. 8, Lebuh Farquhar, 10200 Penang, Malaysia. Tel. No. : +604-2631966 Fax No. : +604-2628544

AUDITORS ERNST & YOUNG (AF0039) Chartered Accountants 21st Floor, MWE Plaza, No. 8, Lebuh Farquhar, 10200 Penang, Malaysia.

ADVOCATES & SOLICITORS GHAZI & LIM ZAID IBRAHIM & CO

PRINCIPAL BANKERS OCBC BANK (MALAYSIA) BERHAD UNITED OVERSEAS BANK (MALAYSIA) BERHAD

STOCK EXCHANGE LISTING MAIN MARKET OF BURSA MALAYSIA SECURITIES BERHAD Stock Code : 9865 Stock Name : SUIWAH

Annual Report 2016 18 Financial Highlights

2013 2014 2015 2016 RM’000 RM’000 RM’000 RM’000

Revenue 372,335 378,165 399,036 375,834 Profit before tax 19,187 14,845 16,278 12,430 Paid up capital 61,000 61,000 61,000 61,000 Reserves 129,922 144,210 151,722 157,513

Revenue Profit Before Tax

400,000 25,000

390,000 399,036 20,000

380,000 15,000 19,187 (RM’000) (RM’000) 16,278

370,000 10,000 14,845 378,165 12,430 375,834 372,335 360,000 5,000

350,000 0 2013 2014 2015 2016 Year 2013 2014 2015 2016 Year

Paid-up Capital Reserves

70,000 160,000

60,000 150,000 157,513

50,000 61,000 61,000 61,000 61,000 140,000 151,722

40,000 144,210 (RM’000) (RM’000) 130,000 30,000 120,000 20,000 129,922

10,000 110,000

0 100,000 2013 2014 2015 2016 Year 2013 2014 2015 2016 Year

Annual Report 2016 19 Directors’ Profile

DATO’ HWANG THEAN LONG Managing Director Aged 67, Male, Malaysian

Dato’ Hwang Thean Long was appointed to the Board on 10 December 1992. He is presently the Managing Director of the Company and also acting as director of the subsidiary companies namely Crimson Omega Sdn Bhd, PT Sunshine Amanjaya Indonesia, Qdos Holdings Bhd, Qdos Marketing Sdn Bhd, Sunshine (Labuan) Private Limited, Sunshine Paramount Sdn Bhd (formerly known as Sunshine Supermarket & Departmental Store Sdn. Bhd.), Sunshine Wholesale Mart Sdn Bhd, Qdos Interconnect Sdn Bhd and Qdos FRI Sdn Bhd.

He has more than 45 years of experience in business industry especially supermarket retailing. He started his career with a mini market when he joined his father, the late Mr. Hwang Siong Wah, the founder of the well-known Swee Wah general merchant at Ayer Itam, Penang in 1970. After taking over the Swee Wah general merchant, he has expanded the business by opening additional outlets, which comprise of Sunshine Square, Sunshine Farlim Shopping Mall, Suiwah Ayer Itam, Sunshine Lip Sin, and Sunshine Bertam. His current directorship in other public company includes Penang Commercial and Industrial Development Berhad.

He is also a major shareholder of the Company by virtue of his interests held through Suiwah Holdings Sdn Bhd and Suiwah Supermarket Sendirian Berhad in the Company. He is the spouse of Datin Cheah Gaik Huang, an Executive Director of the Company and the father of Ms. Hwang Siew Peng and Mr. Hwang Shin Hung, both are Executive Directors in the Company.

Dato’ Hwang Thean Long attended all the five (5) Board Meetings held during the financial year ended 31 May 2016.

YB SENATOR DATO’ HAJI MOHD SUHAIMI BIN ABDULLAH Independent Non-Executive Director Aged 58, Male, Malaysian

YB Senator Dato’ Haji Mohd Suhaimi Bin Abdullah was appointed to the Board on 10 December 1992. He is presently the Chairman of the Audit Committee and a member of the Nomination and Remuneration Committee of the Company. He is also a director of the subsidiary company, namely Qdos Holdings Bhd.

He graduated from Havering Technical College, London in 1981 with Diploma in Business Studies. Subsequently, he obtained a professional qualification in the Chartered Institute of Transport from School of Transport, University of London in 1985 and is a member of the Chartered Institute of Transport since 1989. From 1982 to 1984, while he was completing his studies, he was engaged as a secretary with the Majlis Pelajar-Pelajar Malaysia in London, UK. There, he managed the administrative and communicative matters between Ministries of Malaysia, which have contact with the Malaysian Students Societies Council in the UK and Ireland.

From 1984 to 1985, he was employed as a Marketing Executive in Mafeta Travel Agency Limited, London, UK where he managed the sales and marketing of air tickets for Malaysia and Far East countries. From 1985 to 1987, the Foundation of Mara Education engaged him as an Assistant Secretary II, where he handled the administrative matters of the foundation.

Also in 1986, he joined Angkatan Seniman Abad XX Sdn Bhd as an Executive Director. He was in charged of all administrative and financial matters for the company, which produced feature films and sitcoms for local media. Then in 1987, he joined YPM Realities Sdn Bhd as a General Manager and subsequently joined Yayasan Bumiputera Pulau Pinang Berhad also as a General Manager in 1991. He was in charge of the overall management and day-to-day operations of the companies. He currently is the Managing Director and Chief Executive Officer of Silver Ridge Holdings Bhd.

YB Senator Dato’ Haji Mohd Suhaimi Bin Abdullah attended three (3) of the five (5) Board Meetings held during the financial year ended 31 May 2016.

Annual Report 2016 20 Directors’ Profile (cont’d)

DATIN CHEAH GAIK HUANG Executive Director Aged 63, Female, Malaysian

Datin Cheah Gaik Huang was appointed to the Board on 14 March 1997. She has more than 35 years of working experience in the supermarket retailing business and also acting as director of the subsidiary companies namely Aljano Sdn Bhd, Magirex Sdn Bhd, Sunshine Electrical Superstore Sdn. Bhd, Sunshine Paramount Sdn Bhd (formerly known as Sunshine Supermarket & Departmental Store Sdn. Bhd.) and Sunshine Wholesale Mart Sdn Bhd. She does not hold any directorship in other public companies.

She is the spouse of Dato’ Hwang Thean Long, the Managing Director and a major shareholder of the Company. Therefore, she is deemed to have an interest in shares of the Company by virtue of her husband’s shareholdings held through SHSB and SSSB in the Company. She is also the mother of Ms. Hwang Siew Peng, who is an Executive Director of the Company.

Datin Cheah Gaik Huang attended all the five (5) Board Meetings held during the financial year ended 31 May 2016.

MS. HWANG SIEW PENG Executive Director Aged 42, Female, Malaysian

Ms. Hwang Siew Peng was appointed to the Board on 26 December 2001. She also sits on the Board of Directors of several subsidiary companies of the Company and other private companies.

She holds a Bachelor of Commerce Degree (Marketing and Management) from Curtin University of Technology, Western Australia. She worked as store operational assistant before joining Suiwah group of companies as Business Development Executive in the year 2000. She does not hold any directorship in other public companies.

She is the daughter to Dato’ Hwang Thean Long and Datin Cheah Gaik Huang, who are the Executive Directors and major shareholders of the Company. Therefore, she is deemed to have interest in shares of the Company by virtue of the shareholdings of her parents.

Ms. Hwang Siew Peng attended three (3) of the five (5) Board Meetings held during the financial year ended 31 May 2016.

DATO’ AHMAD HASSAN BIN OSMAN Independent Non-Executive Director Aged 78, Male, Malaysian

Dato’ Ahmad Hassan Bin Osman was appointed to the Board on 18 December 1995 and on 16 September 2004, his position has been redesignated from Non-Independent Non-Executive Director to Independent Non-Executive Director. He is presently the Chairman of the Nomination Committee and Remuneration Committee and also a member of Audit Committee in the Company. He is also a director of the subsidiary company, namely Qdos Interconnect Sdn Bhd.

He graduated from the University of Malaya, Kuala Lumpur in 1962 and subsequently obtained a Masters Degree in Economics from the University of Wisconsin, Madison in 1978.

He has vast experience in the public service, spanning a period of over 31 years. His last post with the Government was as the Secretary-General of the Ministry of Housing and Local Government, Malaysia. Upon retirement, he was appointed as an Executive Director of the Islamic Development Bank based in Jeddah, Saudi Arabia from 1994 to 1997. His current directorship in other public company includes Kimble Corporation Bhd.

Dato’ Ahmad Hassan Bin Osman attended all the five (5) Board Meetings held during the financial year ended 31 May 2016.

Annual Report 2016 21 Directors’ Profile (cont’d)

MR. WONG THAI SUN Independent Non-Executive Director Aged 61, Male, Malaysian

Mr. Wong Thai Sun was appointed to the Board on 26 December 2001. He is a member of the Audit Committee, Nomination Committee and Remuneration Committee of the Company.

He holds a Bachelor of Economics and Accountancy from Australian National University. He is a member of the Malaysian Institute of Accountants and the Certified Public Accountants, Australia.

He has public practice experience in accountancy for over 31 years in Malaysia and in overseas and currently has his own public practice firm, which is Wong Thai Sun & Associates. He is the Independent Non-Executive Director of D’nonce Technology Bhd and Emico Holdings Bhd.

Mr. Wong Thai Sun attended all the five (5) Board Meetings held during the financial year ended 31 May 2016.

MR. JEN SHEK VOON Independent Non-Executive Director Aged 69, Male, Singaporean

Mr. Jen Shek Voon was appointed to the Board on 1 July 2004. He is also a member of the Audit Committee of the Company.

He has been appointed to the Board of Directors, including past directorships of a number of publicly listed companies on the stock exchanges of Singapore, Malaysia and Hong Kong SAR. He does not hold any directorship in other public companies in Malaysia. He is a fellow member of the Singapore Institute of Directors.

He holds Master of Bachelor of Accounting (Hons) from University of Singapore and obtained a post-graduate Commerce Hons degree from the University of New South Wales. He is a fellow of the Institute of Chartered Accountants in Australia and New Zealand, Association of Chartered Certified Accountants in United Kingdom and the Taxation Institute of Australia. He also is a Chartered Accountant of the Institute of Singapore Chartered Accountants (“ISCA”) and a member of Information System Audit and Control Association, British Computer Society, Institute of Internal Auditors and the Malaysian Institute of Accountants.

He currently manages his own public accounting practice, Jen Shek Voon PAS, as a sole proprietor. Mr. Jen is a Public Accountant Singapore, licensed by the Singapore Accounting and Corporate Regulatory Authority (“ACRA”) and have undertaken the necessary continuing professional education courses.

Mr. Jen Shek Voon attended all the five (5) Board Meetings held during the financial year ended 31 May 2016.

Annual Report 2016 22 Directors’ Profile (cont’d)

DATUK HAJI RADZALI BIN HASSAN Non-Independent Non-Executive Director Aged 59, Male, Malaysian

Datuk Haji Radzali Bin Hassan is a Pioneering Environmental Entrepreneur, was appointed to the Board on 16 September 2004.

Born in 1957 in Perak, Datuk Radzali completed his Masters in Business Administration and holds an Advance Diploma in International Business Studies.

Datuk Radzali was conferred the Kestaria Setia DiRaja Award by DYMM Paduka Baginda Yang DiPertuan Agong in 1997 and Darjah Mulia Seri Melaka by TYT Yang Di Pertua Negeri Melaka and Darjah Setia Pangkuan Negeri by TYT Yang Di Pertua Negeri Pulau Pinang.

Datuk Radzali is currently the Chairman/Group Managing Director of Harta Maintenance Sdn Bhd and Harta Group of Companies since April 1980, is also acting as director of the subsidiary companies namely Qdos Interconnect Sdn Bhd, Qdos Holdings Bhd and Qdos Flexcircuits Sdn Bhd. Datuk Radzali does not hold any directorship in other public companies.

Datuk Radzali is a major shareholder of the Company by virtue of his interests held through Hozone Sdn Bhd in the Company. Datuk is also a Director and shareholder of Hozone Sdn Bhd.

Datuk Haji Radzali Bin Hassan attended three (3) of the five (5) Board Meetings held during the financial year ended 31 May 2016.

MR. HWANG SHIN HUNG Executive Director Aged 30, Male, Malaysian

Mr. Hwang Shin Hung was appointed to the Board on 24 April 2015. He also sits on the Board of Directors of several subsidiary companies of the Company and other private companies.

He graduated from the University of Cambridge with a Master’s Degree in Industrial System, Manufacture and Management. He also holds a Bachelor Engineering in Electrical & Electronic Engineering from Imperial College London.

He started his career in Suiwa Hi-Tech Industrial Park in China and also worked at Intel (Product Engineer) and PricewaterhouseCoopers (Corporate Finance). He was a project consultant in numerous British companies such as Biochrom Ltd, Harvard Bioscience Inc., Shearline Ltd., Apollo Ltd., Halma Plc. and Herga Electric Ltd. He joined Federations of Malaysian Manufacturers Penang Branch and holds the position of Office Chairman for the period of 2014-2015. He was also elected as the FREPENCA Committee Member in the Free Industrial Zone, Penang, Companies’ Association for the period of 2015-2016.

He is the son to Dato’ Hwang Thean Long, who is the Managing Director and major shareholder of Suiwah Corporation Bhd.

Mr. Hwang Shin Hung attended all the five (5) Board Meetings held during the financial year ended 31 May 2016.

Save for the family relationship as disclosed above, none of the above Directors have any family relationship with other Directors and/or major shareholders of the Company. None of the above Directors have any conflict of interest with the Company or any conviction for any offences other than traffic offences within the past five (5) years.

Annual Report 2016 23 Managing Director’s Statement

On behalf of the Board of Directors, I have the pleasure to present to you the Annual Report of Suiwah Corporation Bhd. (“Suiwah” or “the Company”) and its group of companies (“the Group”) for the financial year ended 31 May 2016.

FINANCIAL OVERVIEW

The Group’s revenue for year ended 31 May 2016 (“FY2016”) amounting to RM375.834 million, a decrease of 5.81% from RM399.036 million recorded in the preceding year ended 31 May 2015. The Group profit before tax for FY2016 was RM12.430 million, as compared with its profit before tax of RM16.278 million previously, a decrease of 23.64%.

The drop in profit during the financial year had translated to a lower earnings per share of 13.32 sen as compared to 17.67 sen recorded in the preceding year.

The net decrease of 5.81% in the Group revenue is mainly due to a decrease in retail revenue of 7.14% and 60.76% from property investment and development segment despite of an increase in manufacturing segment’s revenue of 5.76%.

Higher demand from customers for certain product lines and commercialization of new flex project has resulted in an improvement of 5.76% in revenue to RM80.236 million in manufacturing segment’s sales.

Retail market conditions during the year continued to be difficult. Retail growth was affected by higher costs of living and the impact of the Goods and Services Tax implementation. This has resulted retail business segment registered a decline of 7.14% in revenue to RM291.962 million and profit before tax decreased by 29.51% to RM7.874 million as compared to preceding year.

Property investment and development segment recorded a decrease in revenue of 60.76%, from RM8.289 million to RM3.253 million. Loss for the reporting period was RM110K as compared to profit before tax of RM680K recorded in the preceding corresponding year, as no sales were recorded from its property development division, mainly waiting for better buyer sentiment before completing the transaction.

DIVIDEND

As part of the Group’s on-going effort to return value to the shareholders, the Board has recommended a first and final single tier dividend of 3.5% for FY2016. The proposed final dividend will be tabled for the shareholders’ approval at the forthcoming Twenty-third Annual General Meeting to be held on 28 October 2016.

OPERATIONS REVIEW

Retail Segment

Retail operational excellence required capital discipline and efficiency. We remained focus on driving the productivity loop to leverage operating expenses. We also foster an environment that leverages best practices across the enterprise to drive process improvements. We have made great progress and is well positioned ourselves for future intersection with digital retail.

The future will bring a lot of changes as the rapid growth of digital and mobile commerce enables us to serve customers in new and exciting ways, our customers continue to search for value, broad assortment and a shopping experience that saves them time and money. With greater convergence of digital and physical retail, we are investing in capabilities to provide customers even more choices and convenience. Our goal is to deliver relevant, personalized and seamless shopping experience across all channels.

One of the most exciting things about serving more customers in new ways is the opportunity to create good jobs and attract new talent to build careers. Building the best team in retail is central of our strategy. Operating with integrity is a cornerstone for building trust. Our training and leadership development programs reinforce towards upholding the highest standards of integrity in all our business entities.

Annual Report 2016 24 Managing Director’s Statement (cont’d)

Manufacturing Segment

The Group’s manufacturing segment recorded higher sales for FY2016 due to the increasing sales from Flexible Printed Circuit Boards (FPC) and Integrated Circuits Substrates (ICS).

The emerging IoT market encourages the increasing requirements for flexes and substrates, leading the next wave of growth after the smartphone phenomenon over the last decade. The Group continues to invest in research and development (“R&D”), high-tech equipment and human capital to build an advanced circuits conglomerate in Malaysia.

On 29 July 2016, the Company through its wholly-owned subsidiary, Qdos Holdings Bhd, incorporated two 100% owned subsidiaries, namely Qdos FRI Sdn Bhd and Qdos Ventures Sdn. Bhd. to facilitate the expansion of the Group’s business activities and product lines and also to venture or invest in high end technology products and services.

The Group continues to expand its business and a new factory will be constructed at the Batu Kawan Industrial Park in 2017.

Property Investment and Development Segment

2016 marked the official commencement of Sunshine Tower’s earthwork and piling work. The Group will continue to be a niche developer and leverage on its partnership with well-known and reputable overseas partners in undertaking the construction of Sunshine Tower. Towards this, the Group has acquired the knowledge and insights from foreign expertise to quickly capitalise on opportunities that come our way.

We are in the midst of enhancing the value of our development with better connectivity and infrastructure leading into and out of this development project. We are ready to inspire our community to Stay, Work, Business, Shop and Play. This fully integrated and vibrant development is set to bring in colours into the life of Ayer Itam township. In the coming months, the Management will focus on the Sunshine Tower construction progress, sales and leasing of Sunshine Tower, which will contribute positively to the Group’s future results. The project saw encouraging take-ups and is targeted to hand over by last quarter of year 2019.

LOOKING AHEAD

As a team, we are committed to serving our stakeholders better every day, in this challenging, deflationary and uncertain market. We are confident that the investments we are making are leading to sustainable improvements for stakeholders whilst creating long-term value for our shareholders.

CORPORATE RESPONSIBILITY

Within our business strategies, corporate responsibility remains an integral part of our efforts, despite the economic challenges we have faced. As we work to strengthen our business, we are committed to doing it right for our employees, shareholders, consumers, customers and the environment. We support programs that improve our local communities. We believe that our customers and suppliers value our efforts to operate in an ethical, environmentally sustainable, and socially responsible manner. The Group’s commitment to these aspects can be located in Statement on Corporate Social Responsibility in this Annual Report.

CORPORATE GOVERNANCE

The Group’s commitment to corporate governance is outlined in the Statement of Corporate Governance and other related reports found in the relevant sections of this Annual Report. The Board of Directors of the Company also ensures that the decision making process is impartial. Independence is assured in key appointments as well as maintaining proper standards of conduct at all times.

Annual Report 2016 25 Managing Director’s Statement (cont’d)

APPRECIATION

On behalf of the Group and the Board of Directors, I would like to thank all our shareholders, customers, bankers, suppliers, business associates and regulatory authorities for their invaluable and continuing support to the Group. We would also like to extend our gratitude and appreciation to the management team and all the employees of the Group for their diligent services, commitment and loyalty to the Group and innovations which have enabled the Group to achieve another successful year.

I would also like to extend my personal thanks to my fellow Directors for their constant dedication as the Group attributed its success to the leadership of its Board of Directors and it also owes much to the dedication of its employees and the support of its loyal customers and trust given by all our shareholders.

The Group will continue to embark on a series of adjustments its business strategies with an aim to diversify satisfactory performance for the upcoming financial year.

Thank you.

DATO’ HWANG THEAN LONG Managing Director

Date: 20 September 2016

Annual Report 2016 26 Statement on Corporate Social Responsibility (“CSR”)

Suiwah Corporation Bhd’s corporate culture has always given regard to diversity and integrity. Our commitments are resolutely long term ensuring benefits not only to our partners, but to the society as a whole. With the efforts of our staff and management including charity bodies and non-governmental organizations, active CSR activities as follows has been carried out for another meaningful year:-

• Nepal Earthquake Relief Fund This campaign was a joint effort by Penang Bodhi Heart Sanctuary, Penang Hindu Association, Premaseva Charitable Organisation, Temple of Fine Arts and Sunshine. Donations by way of essential items and monies amounting to RM35,000.00 was collected to help earthquake victims in Nepal.

• Sunshine Penang Table Tennis Invitational Junior League 2015 and 2016 As the main sponsor, Sunshine Wholesale Mart Sdn Bhd sponsored RM10,000.00 to materialize this competition for year 2015 which was held on 30 June 2015 for PTTA affiliates/schools in Penang with the objective of cultivating interest towards table tennis in younger generations. The Retail Group extend another sponsorship of RM10,000.00 towards this competition for year 2016 which was held on 11 April 2016.

• Majlis Sumbangan Kebajikan Masyarakat Sempena Hari Raya 2016 In conjunction with the Hari Raya Puasa celebration, Sunshine offered goodie bags which containing food items and cash vouchers worth RM300.00 to 30 needy families in Bertam, Kepala Batas.

• Sunshine Hari Raya Charity Visit One of our annual CSR activity of Sunshine is continue to sponsor Sunshine Gift Vouchers and Raya hampers to Pusat Pemulihan Dalam Komuniti (PDK) Permatang Damar Laut, Bayan Lepas. Our visit to the home on 9 July 2015 has brought shining eyes and broad smiles on the faces of the children of the home.

• Sunshine Cup Penang State Chinese Primary School Mathematics Competition 2015 Sunshine has once again taken the role as the main and sole sponsor of this competition which was held on 12 September 2015 at Sunshine Square Banquet Hall. This competition was organized by Penang Chinese Primary School Association and was supported by the Education Department of Penang to pique students’ interest in mathematics and encourage them to value the intellectual pursuits.

• Lantern Parade with Residents’ Association of Bayan Baru Parades promote unity among the different races. Sunshine and the Residents’ Association of Bayan Baru organized a lantern parade on 26 September 2015 involving residents of Bayan Baru to celebrate Mid-Autumn Festival. Sunshine has sponsored lanterns, mooncakes for the children and gift vouchers as lucky draw prizes for this event.

• Green School Award The Retail Group continue to support the Penang State Government in its “Green School Award” to intensify excellence in environmental education for young generation in utilizing resources in sustainable way and environment friendly. The Retail Group has sponsored RM10,000.00 as prizes for the top 3 primary schools.

• Penang International Science Fair (PISF) PISF is an event organized as part of Penang Science Cluster’s mission of inspiring innovation which focuses on developing young minds and exposing them to science and engineering through a unique, stimulating and innovative experience. Qdos has sponsored a total of 10,080 bottles of drinking water to ensure good hydration for those who had participated and visited this fair which was held on 14 and 15 November 2015.

• Penang Chinese Calligraphy Competition Sunshine sponsored the venue for this competition which was held on 24 January 2016 at Sunshine Square Banquet Hall. This competition was held in conjunction with Chinese New Year Celebration with the aim to promote Chinese culture and Mandarin language learning among young scholars.

• Heroes of The Ocean Water Carnival 2016 In conjunction with WWF Malaysia (“World Wildlife Fund”) and Shark Savers Malaysia’s My Fin My Life Campaign, a water carnival was held on 11 June 2016 at the SETIA SPICE Aquatic Centre to create awareness on the harmfulness of consuming shark fins and the importance of protecting the future of mother nature. Sunshine has sponsored RM5,000.00 to support this good cause.

• Blood Donation Campaign Qdos has extended its laudable effort to Penang General Hospital to carry out blood donation campaign to supplies of blood to the blood bank to save lives. The campaign was held on 9 September 2015 and 17 May 2016 at Qdos’s building and a total of 56 packs of blood were collected.

Annual Report 2016 27 Statement on Corporate Governance

Introduction

The Board of Directors (“Board”) of Suiwah Corporation Bhd (“SCB” or “Company”) recognizes the importance of adopting good corporate governance throughout the Group as a fundamental part of the Board’s responsibility to protect and enhance long-term shareholders’ value and the financial performance of the Company, whilst taking into account of the interests of other stakeholders.

The Statement below sets out how the Group has applied the principles and recommendations of Malaysian Code on Corporate Governance 2012 (“MCCG 2012” or “Code”) together with the provisions contained in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Listing Requirements”).

This Statement outlines the Group’s main corporate governance practices and policies in alignment with the recommended principles of MCCG 2012 as below:

• Establish clear roles and responsibilities • Strengthen composition • Reinforce independence • Foster commitment • Uphold integrity in financial reporting • Recognise and manage risks • Ensure timely and high quality disclosure • Strengthen relationship between company and shareholders

The following paragraphs describe how the Group has applied the Principles of the Code and how the Board has complied with the recommendations set out in the Code for the financial year ended 31 May 2016.

Principle 1 - Establish Clear Roles and Responsibilities

1.1 Board should establish clear functions reserved for Board and those to delegated to Management

The Board has been entrusted with the overall responsibility for the overall governance, strategic direction and overseeing the investments of the Group.

The Board retains full and effective control of the Group and assumes responsibility for determining the Group’s strategies and direction, shareholders and investors’ relationship, approval of annual and quarterly financial results, acquisition and disposal, major capital expenditure as well as reviewing the adequacy and integrity of the Group’s system of internal controls.

The responsibilities of the Board are inclusive of but not limited to:-

• review, adopt and monitor the implementation of a strategic plan for the Company to enhance the future growth of the Company;

• oversee the conduct of the Company’s business and evaluates whether the business is properly managed;

• identify principal risks and ensure the implementation of appropriate controls and systems to monitor and manage these risks in order to achieve a proper balance between risk incurred and potential returns to shareholders;

• review the adequacy and the integrity of the Company’s internal control system and management information systems, including systems for ensuring compliance with applicable laws, regulations, rules, directives and guidelines;

Annual Report 2016 28 Statement on Corporate Governance (cont’d)

• oversee the development and implementation of shareholders’ communication policy for the Company to ensure effective communication with its shareholders and other stakeholders; and

• ensure that the Company’s financial statements are true and fair, and comply with all applicable laws and governmental regulations applicable to the Company’s business and its conduct.

While Management is responsible for the day to day running of the Group’s business in accordance with the corporate objectives and goals and targets set by the Board.

The Board has delegated certain functions to the Board Committees, e.g. Audit Committee, Nominating Committee and Remuneration Committee, which each operating within it has clearly defined terms of reference. The Chairman of each Committee will report to the Board on the outcome of the Committee’s meetings which also include the key issues deliberated at the Committee’s meetings.

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

The Company is cognizant of the principle that there should be a clear division of responsibility between the Chairman and the Managing Director.

Currently, the position of the Chairman of the Company is vacant subsequent to the demise of the late Tun Dato’ Seri Utama Dr. Lim Chong Eu. In this respect, the Board normally elects among themselves to chair its meeting.

The Managing Director is responsible for, inter alia, exercising control over quality, quantity and timeliness of the flow of information between management and the Board, and assisting in ensuring compliance with our Company’s guidelines on corporate governance. The Managing Director is also responsible for the operations, strategic planning, business development and general charting the growth of our Company.

None of the members of the Board have unfettered powers of decision as the Group is running objectively on a transparent basis as the Board feels that there is adequate representation of independence and Non-Executive Directors (4 out of 9 are Independent Directors) on the Board. The Board is of the view that the process of decision making by the Board is independent and based on collective decisions without any individual exercising any considerable concentration of power or influence and there is a good balance of power and authority with all critical committees chaired by independent Directors.

The Board comprises of the Managing Director, three (3) Executive Directors, one (1) Non-Independent Non-Executive Director and four (4) Independent and Non-Executive Directors, all of whom bring to the Group a broad and valuable range of experience. The Board has more than 1/3 Independent Directors as its members in which four (4) out of Nine (9) Directors are Independent and Non-Executive Directors.

The presence of Independent and Non-Executive Directors in the Board provide objectivity and they are of the caliber necessary to carry sufficient weight in Board decisions. The role of the Independent and Non-Executive Directors is particularly important in ensuring that the strategies proposed by the management are fully discussed and examined, and takes into account the long-term interests, not only of the shareholders, but also of employees, customers, suppliers, and the many communities in which the Group conducts business.

The Group Managing Director is responsible for the day to day management of the business and operations of the Company and Group. He is supported by a management team to ensure the operations are carried out smoothly.

The Board meets regularly at least four (4) times a year, but additional meetings would be convened as and when necessary. At the end of every quarter, the Group’s financial statements and results are tabled and deliberated by the Board. During the Board Meeting, the Board reviews the operation and performance of the Group and any other strategic issues that may affect the Group’s business.

Annual Report 2016 29 Statement on Corporate Governance (cont’d)

1.3 Formalise ethical standards through a code of conduct and ensure its compliance

The Board has in place a code of ethics for the Directors. The code includes amongst of others the respect for the individual, create a culture of open and honest communication, set the tone at the top, uphold the law, avoid conflict of interest, set metrics and report results accurately. The Code of Conduct is available for reference at the Company’s website at www.suiwah.com.my.

The Board conducted themselves in an ethical manner while executing their duties and functions, and complied with the Company’s Code of Ethics recommended by the Companies Commission of Malaysia.

In addition to the Company Directors’ Code of Ethics established by the Companies Commission of Malaysia, both Directors and employees are required to uphold the highest integrity in discharging their duties and in dealings with various stakeholders such as shareholders, customers, fellow employees and regulators. The Directors have a duty to create and maintaining a safe working and the business operations environment and safeguarding Company assets and resources.

The Directors have a duty to declare immediately to the Board should they be interested in any transaction to be entered into directly or indirectly by the Company and further obtain the permission. An interested Director is required to abstain from deliberations and decisions of the Board on the transaction and he does not exercise any influence over the Board in respect of the transaction. In the event a corporate proposal is required to be approved by shareholders, interested Directors are required to abstain from voting in respect of their shareholdings in the Company on the resolutions pertaining to the corporate proposal, and will further undertake to ensure that persons connected to them similarly abstain from voting on the resolutions.

The Board has formalised and adopted the Whistle-blowing Policy on 17 September 2015. The Whistle-blowing Policy serves as an essential part of the Group’s internal control system setting out a framework for all employees and stakeholders of the Group to report any concern about any malpractice within the Group. It also helps to nurture a good organizational culture with the Group and develop a culture of openness, transparency, accountability and integrity, which ultimately formulates standards of corporate behavior creating an ethical corporate climate. The Whistle-blowing Policy is available at the Company’s website.

1.4 Ensure the Company’s strategy promote sustainability

The Company focuses on key areas of environment conservation and social contribution with the aim to promote sustainable development. The Board promotes good Corporate Governance in the application of sustainability practices throughout the Company and the Group, the benefits of which are believed to translate into better business performance. A report on sustainability activities, demonstrating the Company’s commitment to the global environmental, social, governance and sustainability agenda, appears in the Corporate Responsibility Statement of this Annual Report.

1.5 Procedures to allow the Directors access to information and advice

Yearly Board meetings are scheduled in advance during the first quarter of the year so that the Directors are able to plan ahead their respective meeting schedules. The Board holds regular meetings of not less than 4 times a year. Special Board meetings may be convened as and when necessary to consider urgent proposals and matters that require the Board’s expeditious review or consideration.

All Directors have full and timely access to information through the Board papers distributed in a timely manner prior to the Board meetings. The Board papers provide, among others, periodic financial information, annual budget, operational and corporate issues, investment proposals and management proposals that require the Board’s approval. Senior management staff may be invited to attend Board meetings to provide the Board detailed explanations and clarifications on certain matters that are tabled by them to the Board. The Directors may also interact directly with the Management, or request further explanation, information or updates on any aspect of the Company’s operations or business concerns with them. In this way the Board has full access to all information on the Company’s affairs to enable the proper discharge of duties.

Annual Report 2016 30 Statement on Corporate Governance (cont’d)

The Board may seek independent professional advice at the Company’s expense of specific issues to enable it to discharge its duties in relation to the matters being deliberated. Individual Director may also obtain independent professional or other advice in furtherance of their duties, subject to the approval of the Board, depending on the quantum of the fees involved.

1.6 Ensure Board is supported by suitably qualified and competent Company Secretary

The Board is satisfied with the performance and support rendered by the Company Secretary to the Board in the discharge of its functions. The Company Secretary plays an advisory role to the Board in relation to the Company’s constitution, Board’s policies and procedures and compliance with the relevant regulatory requirements, codes or guidance and legislations. The Board is supported by suitably qualified and competent company secretary who is a member of a professional body.

The Board has ready and unrestricted access to the advice and services of the Company Secretary, who is considered capable of carrying out the duties to which the post entails.

The Company Secretary provides support to the Chairman to ensure the effective functioning of the Board and also organises and attends all Board meetings and Board Committee meetings, ensuring that an accurate and proper record of deliberation of issues discussed, decisions and conclusions are taken.

The Company Secretary also serves notice to the Directors and Principal Officers on the closed periods for trading in the Company’s shares, in accordance with the black-out periods for dealing in the Company’s securities pursuant to Chapter 14 of the Listing Requirements.

The Company Secretary records, prepares and circulates the minutes of the meetings of the Board and Board Committees and ensures that the minutes are properly kept at the registered office of the Company and produced for inspection, if required. In addition, the Company Secretary also updates the Board regularly on amendments to the Listing Requirements, practice and guidance notes, and circulars from Bursa Malaysia Securities Berhad (“Bursa Securities”), legal and regulatory developments and impact, if any, to the Company and its business.

1.7 Formalise, periodically review and make public the Board Charter

The Board had on 22 September 2014 formalised a Board Charter (“Charter”) to document these roles and responsibilities to ensure accountability of the Board. The Board is guided by the Charter, which provides a reference for Directors in relation to the Board’s role, powers, duties and functions. The Charter also serves as a reference point for the Board’s activities where the Board has established clear functions reserved for the Board and those delegated to the Management. The Charter provides guidance for Directors and Management on the responsibilities of the Board, its Committees and requirements of Directors.

The Charter is subject to periodical review to ensure consistency with the Board’s strategic intent as well as in line with the latest statutory and regulatory requirements. Salient terms of the Charter are made available at the Company’s website.

Principle 2 – Strengthen Composition

2.1 Establish a Nominating Committee (“NC”) which should comprise exclusively Non-Executive Directors, a majority of whom must be independent

The NC of the Company was established on 29 April 2002. The NC comprises three (3) Non-Executive Directors, majority of whom are Independent Non-Executive Directors as follows:

Chairman YBhg. Dato’ Ahmad Hassan Bin Osman (Independent Non-Executive Director)

Annual Report 2016 31 Statement on Corporate Governance (cont’d)

Members YB Senator Dato’ Haji Mohd Suhaimi Bin Abdullah (Independent Non-Executive Director) Mr. Wong Thai Sun (Independent Non-Executive Director)

The NC convened One (1) meeting with full attendance during the financial year 2016.

The key activities carried by NC during financial year 2016 are summarized as follows:-

(i) Reviewed and recommended to the Board on the appointment of Mr. Hwang Shin Hung as Executive Director of the Company after evaluating his knowledge, skills, expertise, experience, competencies and ability of time commitment to the Board; (ii) Recommended the re-appointment of YBhg. Dato’ Ahmad Hassan bin Osman who retired pursuant to Section 129(6) of the Companies Act, 1965 at the Twenty-second (22nd) Annual General Meeting (“AGM”) and to hold office at the conclusion of the next AGM; (iii) Recommended the re-election of YBhg. Datin Cheah Gaik Huang, YB Senator Dato’ Haji Mohd Suhaimi bin Abdullah and Mr. Jen Shek Voon who retired pursuant to Article 87 of the Company Articles of Association at the 22nd AGM; (iv) Recommended the re-election of Mr. Hwang Shin Hung who retired pursuant to Article 89 of the Company Articles of Association at the 22nd AGM; (v) Reviewed and recommended for the Independent Directors who have served more than nine (9) years to remain acting as Independent Directors; (vi) Reviewed the Directors’ evaluation or appraisal process; (vii) Assessed the overall performance of the Board members annually; and (viii) Evaluated the effectiveness, composition and balance of the Board of Directors as well as the Board Committees.

2.2 NC should develop, maintain and review criteria for recruitment process and annual assessment of Directors

The NC is empowered to bring to the Board, recommendations as to the appointment of any new Director or to fill board vacancies as and when they arise in making its recommendation, the NC will consider the required mix of skills, knowledge, expertise, experience and other qualities, including core competencies which should bring to the Board. The terms of reference of the NC could be found at the Company’s website at www. suiwah.com.my.

The NC also ensures that the Board has an appropriate balance of expertise and ability. For this purpose, the Committee regularly reviews the profile of the required skills and attributes. In addition, the Committee also regularly assesses the effectiveness of the Board as a whole and the contribution of each individual director including Independent Non- Executive Director. All assessments and evaluations carried out by the NC in discharging its functions have been well documented.

The performance of the Board as a whole as well as Board Committees are assessed annually via an evaluation survey questionnaire known as Board Evaluation Questionnaire (Questionnaire), to evaluate the overall performance against the criteria as set out in the Questionnaire. The aim of the Questionnaire is to enhance its effectiveness, strength and to identify areas that need to be improved.

The Questionnaire is divided the following sections:-

(i) Board Activity (ii) Mission and purpose (iii) Governance Alignment (iv) Board Organisation (v) Board Meetings (vi) Board Membership

Annual Report 2016 32 Statement on Corporate Governance (cont’d)

The main criterias set out in the abovementioned sections are as follows:-

• Satisfaction with the quality of materials and presentations in the meetings and timely circulation of meeting papers before commencement of the meetings • Presentations and discussions consistently reference the organisation’s mission statement and actual operational achievement • Exercises its governance role • Endorsement of framework for the Board’s meeting • Frequency and participation in discussion • Ideal mix of core skill and competency to discharge its responsibility and strong independent element of the Board

During the financial year under review, the Questionnaire was conducted in the Board by the NC as a whole. The Company Secretary runs through all the points in the Questionnaire with the members of the NC for discussion in the NC meeting. The findings of the Questionnaire which was carried out in September 2016 confirmed that the Board have discharged their duties and responsibilities effectively for financial year 2016. On this, the Board also concurred with the NC’s recommendation and findings to maintain the optimum Board size. The optimal size would enable effective oversight, delegation of responsibilities and productive discussions among members of the Board.

The NC also ensures that the procedures for appointing new Directors are transparent, rigorous and that appointments are made on merit and against objective criteria for the purpose.

The nomination and election process for new director(s) is as follows:-

(i) The NC receives a nomination from:- a. A Director of the Company; or b. Requisition from the shareholders. (ii) The NC shall review the proposed candidate(s) and if need be, to meet up with the candidate(s) for an interview; (iii) The NC shall report its findings and recommendations to the Board for consideration; (iv) The Board through the NC, will review the suitability of an individual to be appointed taking into account the skills, expertise, background, experience, independent judgement, board interaction and any criteria deemed fit; (iv) If the nomination is from one of the Directors, the election process shall be conducted at a meeting of the Directors by show of hands; (v) If the nomination is from the shareholders, the election process shall be conducted at an AGM or Extraordinary General Meeting by poll, as the case maybe; and (vi) Invitation or offer to be made to the proposed candidate(s) after the approval from the Board members at the meeting.

The Board, upon the assessment and recommendation made by the NC, has formalised a Board Diversity Policy on 17 September 2015 to ensure the Company’s strategic intent for boardroom diversity is the attraction, retention and development of a diverse team of skilled people towards the delivering of the Company’s strategy.

While the Board recognizes the initiatives by the government to enlarge the women’s representation at boardroom, the Board composition comprise of two (2) female Directors out of the nine (9) Directors.

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

The Remuneration Committee (“RC”) of the Company comprises a majority of non-executive directors and its composition is as follows:-

Chairman Dato’ Ahmad Hassan Bin Osman (Independent Non-Executive Director)

Annual Report 2016 33 Statement on Corporate Governance (cont’d)

Members YB Senator Dato’ Haji Mohd Suhaimi Bin Abdullah (Independent Non-Executive Director) Mr. Wong Thai Sun (Independent Non-Executive Director)

The RC has convened only one (1) meeting with full attendance during the financial year 2016.

The RC is primarily responsible for recommending the policy and framework of directors’ remuneration, including the terms and remuneration of the executive directors, to the Board in order to align with the business strategy and long term objectives of the Company. The remuneration of directors is determined at levels which enable the Company to attract and retain Directors with the relevant experience and expertise to govern the Group effectively.

During the financial year 2016, the RC had performed its duty to assess annually the remuneration package of its Executive Directors and proposed the remuneration of Executive Directors to the Board for consideration.

In the case of Executive Directors, the remuneration comprises salary, allowances and bonus. The fees payable to Non-Executive Directors are approved by shareholders at each AGM. All Directors are also paid allowance for each meeting they attend.

The details of the Directors’ remuneration for the financial year ended 31 May 2016 are as follows:

Company Group

Executive Non-Executive Executive Non-Executive Category of Remuneration Directors Directors Directors Directors (RM) (RM) (RM) (RM)

Directors’ Fees 200,000 82,000 209,000 91,000 Salaries, Bonus and Other Emoluments - - 907,446 - Meeting Allowance 22,000 49,000 22,000 49,000

Total 222,000 131,000 1,138,446 140,000

The number of Directors whose remuneration falls into each successive band of RM50,000 is as follows:

Company Group

Range of Remuneration Executive Non-Executive Executive Non-Executive Directors Directors Directors Directors

Below RM50,000 3 5 - 5 RM100,001- RM150,000 - - 1 - RM150,001- RM250,000 1 - - - RM250,001- RM300,000 - - 1 - RM350,001- RM400,000 - - 2 -

Total 4 5 4 5

Annual Report 2016 34 Statement on Corporate Governance (cont’d)

Principle 3 – Reinforce Independence

3.1 Board should undertake an assessment of its Independent Directors annually

The Board, through the NC assessed the independence of Independent Directors on an annual basis, with a view to ensure the Independent Directors bring independent and objective judgement to the Board and this mitigates potential conflict of interest or undue influence from interested parties. A proposed Director must satisfy the test of independence of an “independent director” as defined under Paragraph 1.01 and Practice Note 13 of the Listing Requirements that he/she is independent of Management and free from any business or other relationship which could interfere with the exercise of independent judgement or the ability to act in the best interests of the Company, taking into account the candidate’s character, integrity and professionalism.

Where there is a likely conflict of interest position, the Board would take appropriate action to rectify the situation. Should any Director have an interest in any matter under deliberation, he is required to disclose his interest and abstain from participating in the discussions and voting on the matter.

For the financial year ended 2016, all Independent Non-Executive Directors had provided their confirmation of independence to the NC and the Board based on the Company’s criteria of assessing independence in line with the definition of “independent directors” prescribed by the Listing Requirements. The NC and the Board had assessed and concluded that all the Independent Non-Executive Directors of the Company remain independent.

These information, together with the annual evaluation and assessment of the Board during the financial year, form the basis and justification for recommending whether the retiring Directors should be nominated for re-election or re-appointment at the AGM, as the case may be.

3.2 Tenure of Independent Director should not exceed cumulative term of nine (9) years. Upon completion of tenure, Independent Director can continue serving but as Non-Executive Director

One of the recommendation of the Code states that the tenure of an Independent Director should be capped at nine (9) years, either be a consecutive service of nine (9) years or a cumulative service of nine (9) years with intervals. Upon completion of the nine (9) years tenure in office, an Independent Director may continue to serve on the company subject to the re-designation as a Non-Independent Director.

Currently, the following Independent Directors, who have served the Company as Independent Non-Executive Directors for a cumulative term more than nine (9) years are:- (i) YB Senator Dato’ Haji Mohd Suhaimi Bin Abdullah (ii) YBhg. Dato’ Ahmad Hassan Bin Osman (iii) Mr. Wong Thai Sun (iv) Mr. Jen Shek Voon

However, the NC and the Board have assessed the independence of YB Senator Dato’ Haji Mohd Suhaimi Bin Abdullah, Dato’ Ahmad Hassan Bin Osman, Mr. Wong Thai Sun and Mr. Jen Shek Voon are satisfied with the skills, contribution and independent judgment that the said independent Directors bring to the Board and was of the view that the said Independent Directors remain objective and independent in expressing their views and in participating in deliberations and decision making of the Board and Board Committees. The length of their service on the Board does not in any way interfere with their exercise of independent judgment and ability to act in the best interests of the Company.

As all the members of NC have acted as Independent Directors for the tenure in office for more than a cumulative term of nine (9) years and in line with Recommendation 3.2 of MCCG 2012, the Board (save for YB Senator Dato’ Haji Mohd Suhaimi Bin Abdullah, YBhg. Dato’ Ahmad Hassan Bin Osman, Mr. Wong Thai Sun and Mr. Jen Shek Voon who have abstained themselves from deliberation and forming the opinion on the subject matter) recommends and supports them to continue to act as an Independent Non-Executive Directors of the Company. The relevant motion on the subject matter will be presented to the shareholders for consideration at the forthcoming AGM.

Annual Report 2016 35 Statement on Corporate Governance (cont’d)

3.3 Must justify and seek shareholders’ approval in retaining Independent Directors (serving more than 9 years)

This was explained in the foregoing section.

3.4 Positions of Chairman and Managing Director to be held by different individuals

This was explained in the Paragraph 1.2 above.

3.5 The Board must comprise majority Independent Directors if the Chairman is not an Independent Director

It is recommended that the Board must comprise a majority of Independent Directors where the position of the Chairman is not an Independent Director. Currently, four (4) out of nine (9) directors are Independent Non-Executive Directors. The Board therefore has a strong independent element in its composition as there is an appropriate balance of power and authority in the Board to ensure that no individual dominates the decision making process and the results thereof.

Principle 4: Foster Commitment

4.1 Board should set expectations on time commitment for its members and protocols for accepting new directorships

The Board meets quarterly to review and deliberate all matters relating to the overall control, business performance and strategy of the Company. Additional meetings will be called when and if necessary. The relevant reports and Board Papers are distributed to all Directors in advance of the Board Meeting to allow the Directors sufficient time to peruse for effective discussion and decision making during the meetings. All pertinent issues discussed at the meetings in arriving at decisions and conclusions are properly recorded in the discharge of the Board’s duties and responsibilities.

The Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of the Company.

A total of five (5) Board meetings were held in financial year ended 31 May 2016. The following is the record of attendance by the Board members during the financial year:-

Name of Directors Total Meetings Attended % of Attendance

Executive Directors

Dato’ Hwang Thean Long 5 100 Datin Cheah Gaik Huang 5 100 Hwang Siew Peng 3 60 Hwang Shin Hung 5 100

Independent and Non-Executive Directors

YB Senator Dato’ Haji Mohd Suhaimi Bin Abdullah 3 60 Dato’ Ahmad Hassan Bin Osman 5 100 Wong Thai Sun 5 100 Jen Shek Voon 5 100

Non-Independent and Non-Executive Director

Datuk Haji Radzali Bin Hassan 3 60

Annual Report 2016 36 Statement on Corporate Governance (cont’d)

All the Directors have complied with the minimum 50% attendance requirement in respect of Board Meeting as stipulated in the Listing Requirements. In the intervals between Board meetings, for exceptional matters requiring urgent Board decisions, the Board decisions are obtained via circular resolutions to which sufficient information required is attached to facilitate the Board in making informed decisions.

The Directors are reminded to notify the Board before accepting any new directorship.

4.2 Board should ensure members have access to appropriate continuing education programme

All Directors have attended the Mandatory Accreditation Programme (“MAP”) as required by Bursa Securities on all directors of listed companies.

The Directors are encouraged to attend the relevant training courses deemed necessary so as to keep abreast with the changes on guidelines issued by the relevant authorities as well as the latest developments in the market place, which can complement their services to the Group. The Directors are also updated by the Company Secretary on any changes to legal and governance requirements of the Group.

The Directors observe Recommendation 4.2 of the MCCG 2012 by attending conferences, briefings and workshops to update their knowledge and enhance their skills. All Directors attended at least one seminar or training programme during the financial year.

During the financial year ended 31 May 2016, the training programmes and seminars attended by the Directors are as follows:-

Title of the seminars/ workshops / courses attended Mode of No. of Training hours / days spent

YB Senator Dato’ Haji Mohd Suhaimi Bin Abdullah • The New Auditor’s Report – Sharing the UK Experience Seminar 4 hours • 26th International Federation of Non-Government Organisations Conference & 2 days World Conference and 22nd ASEAN NGOs Workshop Workshop

Dato’ Ahmad Hassan Bin Osman • The New Auditor’s Report – Sharing the UK Experience Seminar 4 hours • Ring The Bell For Gender Equality Forum 4 hours

Dato’ Hwang Thean Long • CIMB Bank - Merchant Seminar in Hokkaido, Japan Seminar 6 days

Datuk Haji Radzali Bin Hassan • Lean Management For Business Excellence Course 2 days • Business Excellence – Job Description & Job Specifications Course 1 day • Business Excellence – Terms Of Reference (TOR) Course 1 day • Business Excellence – Strategic Mapping Course 1 day • Business Excellence – CEO Forum Forum 1 day • Strengthening Corporate Governance Disclosure Forum 4 hours

Jen Shek Voon • Corporate Accounting Reports: Disclosures Seminar 7 hours • Preparation of Financial Statements: Essential FRSs Seminar 7 hours • Early Warning Signs of Companies Going Insolvent Seminar 7 hours • Outreach Forum for CFOs: CFOs – Cornerstone to Quality Financial Reporting Forum 2.45 hours • Retrenchments and Redundancies: Legal Framework Seminar 2.5 hours

Annual Report 2016 37 Statement on Corporate Governance (cont’d)

Title of the seminars/ workshops / courses attended Mode of No. of Training hours / days spent

Wong Thai Sun • Capital Allowances – Principles and Latest Developments Seminar 1 day • Tax Updates Seminar 1 day • Getting Your GST-03 Correct (From a Preparer’s Perspective) Seminar 1 day • Comparing Salient Features of PERS vs MPERS Seminar 2 days • Seminar Percukaian Kebangsaan 2015 Seminar 1 day • 2016 Budget Seminar: Summary & Highlights for Corporate Accountants Seminar 1 day • Tax Issue for Land Traders, Investors and Property Developers Seminar 1 day • Preparation and Submission of Return Forms 2015 Seminar 1 day • New Framework and New Guidelines Issued by IRBM Seminar 1 day • Managing Tax Audits in Present Regime Seminar 1 day

Hwang Siew Peng • Study Trip to Chengdu & Chongqing, China by PPK Study Trip 9 days • Digital Empowerment: 360 degree Retail Transformation with Seminar 5 hours Internet of Things and Payment by MCMC • RetailEX FranchisEx ASEAN 2015 – Riding The Wave of ASEAN Expansion Forum 2 days in Bangkok, Thailand • Advance Retail Management Programme on The Future of Retailing Seminar 4 days in London, United Kingdom • CIMB Bank - Merchant Seminar in Hokkaido, Japan Seminar 6 days

Hwang Shin Hung • IC Interposer and Embedded Passive Technologies Seminar 1 day • 6th Asia Symposium On Quality Electronic Design 2015 Conference 2 days • 5th Malaysia-China Entrepreneur Conference Conference 1 day • MAP 2015: Mandatory Accreditation Programme For Directors Seminar 1 day of Public Listed Companies • CCD Towards Achieving Operational Excellence Seminar 1 day

Apart from the above formal seminars or courses, the Directors were also updated on the statutory and regulatory requirements from time to time through the Company Secretary during the Board meetings. The Board will continue to keep abreast with new statutory or regulatory development and various operational issues facing the changing business environment within the Group. The External Auditors also continuously brief the Audit Committee on any changes to the Malaysian Financial Reporting Standards that affect the Group’s financial statements during the year. These updates are also circulated to the Directors via email for their knowledge and understanding.

During the financial year 2016, the Directors were updated by the Company Secretary during its Meeting on the regulatory updates including amendments to the Listing Requirements regarding to Sustainability Statement in Annual Reports of Listed Issuers and the Sustainability Reporting Guide and Toolkits. The Board was also briefed on the Analysis of Corporate Governance Disclosure in Annual Report of the Company for the financial year 2016 and took note of the recommendations made by Bursa Securities based on their findings and analysis.

Principle 5: Uphold integrity in financial reporting

5.1 Audit Committee should ensure financial statements comply with applicable financial reporting standards

The Board acknowledges their responsibility to ensure that the financial statements of the Company and the Group are prepared in accordance with the provisions of the Companies Act, 1965 and approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs and the result of the Company and of the Group.

Annual Report 2016 38 Statement on Corporate Governance (cont’d)

The composition and the key functions of the Audit Committee as well as the summary of its activities are as set out in the Audit Committee Report as set out in this Annual Report.

The Audit Committee discussed with the external auditors on their observations in relation to significant accounting and auditing issues as well as the relevancy and appropriateness of the accounting principles applied and judgement affecting the financial statements.

The Audit Committee assists the Board in scrutinizing information for disclosure to ensure accuracy, adequacy and completeness. The Responsibility Statement by the Directors pursuant to the Listing Requirements in relation to the financial statements is set out in this Annual Report.

5.2 Audit Committee should have policies and procedures to assess suitability and independence of External Auditors

A transparent and appropriate relationship with the External Auditors to enable them to independently report to shareholders, in accordance with statutory and professional requirement is established through the Audit Committee. The role of the Audit Committee members and their relationship with the External Auditors may be found in the Audit Committee Report in the Annual Report.

The Audit Committee has obtained a written assurance from the external auditors confirming that they were, and has been, independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements.

The Audit Committee also met with the External Auditors twice during the financial year ended 31 May 2016 without the presence of Management and Executive Directors in compliance with the best practices of the Code. The Audit Committee would meet with the external auditors additionally whenever it deems necessary. In addition, the external auditors are invited to attend the AGM of the Company and are available to answer shareholders’ questions on the conduct of the statutory audit and the preparation and contents of their audit report.

The Audit Committee is satisfied with the competence and independence of the external auditors and had recommended the re-appointment of the external auditors to the Directors. On 1 September 2016, the Board, upon concurrence with the outcome of the assessment, approved the re-appointment of the external auditors, Ernst & Young for shareholders’ approval at the coming AGM.

Principle 6: Recognise and Manage Risks

6.1 Board should establish a sound framework to manage risks

The Audit Committee oversees the risk oversight and risk management of the Company through the adoption of risk management policy.

The Group is in the process to develop and formalize an appropriate risk management framework and structure and details of the risk management are set out in the Statement on Risk Management and Internal Controls in this Annual Report.

Annual Report 2016 39 Statement on Corporate Governance (cont’d)

6.2 Board should establish an internal audit function which reports directly to Audit Committee

It is the responsibility of the Board to maintain sound system of internal controls to safeguard shareholders’ investment.

The Internal Audit function of the Group has been outsourced to a professional firm earlier but subsequently assumed by in-house internal auditors to assist the Audit Committee in discharging its duties and responsibilities. The role of the Internal Audit is to provide the Audit Committee with independent assessment for adequate, efficient and effective internal control system to ensure compliance with policies and procedures. The Internal Audit function is also involved in risk management, risk evaluation and recommendation of control activities to manage such identified risk. The attainment of such objectives involves the following activities being carried out by the Internal Auditors:

(i) Reviewing and appraising the soundness, adequacy and application of accounting, financial and other controls and promoting effective control of the Company and the Group at reasonable cost; (ii) Ascertaining the extent to whom the Group’s and the Company’s assets are accounted for and safeguarded from losses of all kinds; (iii) Attending stock counts of merchandise; (iv) Appraising the reliability and usefulness of information developed within the Group and the Company for management reporting purposes; (v) Carrying out audit work and to liaise with the external auditors to maximise the use of resources and for effective coverage of audit risks; (vi) Recommending improvement to the existing systems of controls; (vii) Carrying out investigations and special reviews requested by management and/or the Audit Committee of the Company; (viii) Continuously identifying opportunity for improvement in the operations of business processes of the Company and the Group; and (ix) Discuss with management action taken to improve the system of internal control.

The Internal Auditors attended the meetings and reported directly to the Audit Committee on the internal audit reports during the financial year. The Internal Auditors tabled their audit findings on inventory management and procurement and risk assessment 2016 to the Audit Committee.

Principle 7: Ensure timely and high quality disclosure

7.1 Ensure company has appropriate corporate disclosure policies and procedures

The Board recognises the importance of disclosing all material information in an accurate, clear and complete manner in accordance with the disclosure requirements as set out in the Listing.

The Board has delegated the authority to the Executive Directors to approve all announcements for the release to Bursa Securities. The Group Managing Director and/or Executive Directors work closely with the Board, the Senior Management and the Company Secretary who are privy to the information to maintain strict confidentiality of the information.

7.2 Encourage company to leverage on information technology for effective dissemination of information

The Company continues to recognise the importance of transparency and accountability to its shareholders and investors. The Board always ensures that the shareholders are informed of the financial performance and major corporate activities of the Company. Such information is communicated to shareholders and investors through various disclosures and announcements to Bursa Securities, including the quarterly financial results, annual reports and where appropriate, circulars and press releases.

Annual Report 2016 40 Statement on Corporate Governance (cont’d)

Apart from the mandatory announcements through the Bursa Securities, the Company also maintains its website at www.suiwah.com.my to let the shareholders and investors to access the corporate information, financial information, corporate governance matters and business activities of the Group.

Investor relations activities such as meetings with fund managers and analysts and interviews by the press are held at appropriate time to explain the Group’s strategy, performance and major developments.

Principle 8: Strengthen relationship between Company and shareholders

8.1 Take reasonable steps to encourage shareholder participation at general meetings

The AGM is the principal form for communicating with shareholders. Shareholders who are unable to attend are allowed to appoint a proxy, who need not be the shareholders, to attend and vote on their behalf. Board members are present to answer questions raised by shareholders. Shareholders are given the opportunity to ask questions during the questions and answers session prior to each resolution being proposed to consideration by shareholders.

The Company provides information to the shareholders with regard to, amongst others, details of the AGM, their entitlement to attend the AGM, the right to appoint a proxy and also the qualifications of a proxy.

The Managing Director, Executive Directors and Senior Management personnel will participate in a discussion with shareholders when necessary to ensure they are given as accurate and fair representation of the Group’s performance and position.

Dialogues and discussions with investors and analysts are conducted within the framework of the relevant Corporate Disclosure Guidelines under the Listing Requirements and comply with the Best Practices in Corporate Disclosure published by the Malaysian Institute of Chartered Secretaries and Administrators.

As part of ongoing effort to strengthen relationships with its shareholders, the Company continuously discloses and disseminates relevant information in a timely manner to its shareholders. This practice is not just to comply with the Listing Requirements pertaining to continuing disclosure, it is also in accordance with the recommendations as recommended in the MCCG 2012 with regard to strengthening engagement and communication with shareholders.

8.2 Board should encourage poll voting

In line with the amendments made to the Listing Requirements, the voting at the forthcoming AGM will be conducted by poll, instead of by show of hands. Poll voting more accurately and fairly reflects shareholders’ views by ensuring that every vote is recognized, in accordance with the principle of “one share one vote”. The practice, thus enforces greater shareholder rights, and allows shareholders who appoint the Chairman of the meeting as their proxy to have their votes properly countered in the fulfillment of their voting rights.

Poll voting could be conducted manually using voting slips, or electronically, for the purpose of more efficiently determining the outcome of the resolutions. All shareholders were briefed on the voting procedures by the independent scrutineer prior to the poll voting at the general meetings and the polling process for the resolutions will normally be conducted upon completion of deliberation of all items to be transacted at the AGM.

Annual Report 2016 41 Statement on Corporate Governance (cont’d)

8.3 Board should promote effective communication and proactive engagements with shareholders

In maintaining the commitment to effective communication with shareholders, the Group adopts the practice of comprehensive, timely and continuing disclosures of information to its shareholders as well as to the general investing public. The practice of disclosure of information is not just established to comply with the requirements of the Listing Requirements. It also adopts the recommendations of the Code with regard to strengthening engagement and communication with shareholders. Where possible and applicable, the Group also provides additional disclosure of information on a voluntary basis. The Group believes that consistently maintaining a high level of disclosure and extensive communication with its shareholders is vital to shareholders and investors to make informed investment decisions.

The Annual Report is the main channel of communication between the Company and its stakeholders. The Annual Report communicates comprehensive information about the financial results and activities undertaken by the Group. As a listed issuer, the contents and disclosure requirements of the annual report are also governed by the Listing Requirements.

Another key avenue of communication with its shareholders is the Company’s AGM, which provides a useful forum for shareholders to engage directly with the Company’s Directors. At each AGM, the Directors of the Company would be present at the meetings to answer any questions that the shareholders may ask. The Chairman of the meeting provided time for the shareholders ask questions for each agenda in the notice of the AGM. The External Auditors were also present at the AGM to answer any questions that the shareholders may ask. The shareholders were also able to meet with the Directors after the meeting while they mingled with the shareholders, proxies and corporate representatives.

Compliance Statement

The Board is satisfied that in financial year 2016, save for the above relevant explanations, the Company is in compliance with principles and recommendations of the Code.

This statement is made in accordance with the resolution of the Board dated 1 September 2016.

Annual Report 2016 42 Statement of Risk Management and Internal Control

The Board recognises that risk management and internal control is about commitment to safeguard shareholders’ investment and the Company’s assets.

Accordingly, the Board is committed to nurture and preserve throughout the Group a sound system of risk management and internal controls and good corporate governance practices as set out in the Board’s Statement on Risk Management and Internal Control made in compliance with Para 15.26(b) of the Listing Requirements of Bursa Securities and guided by the Statement on Risk Management & Internal Control: Guidelines for Directors of Listed Issuers.

Board Responsibility

The Board affirms its overall responsibility for the Group’s system of risk management and internal control which is key to managing principal risks which may impede the achievement of the Group’s corporate and business objectives. This responsibility includes reviewing the adequacy and integrity of this system which covers enterprise risk management, financial, organisational, operational and compliance controls. However, in view of the inherent limitations in any system, such system of internal control can only provide reasonable and not absolute assurance against material misstatements, frauds or losses and unforeseen emerging risks. The Board regards risk management as an integral part of business operations and confirms that the Management will continue to undertake the process of identifying, evaluating and managing significant risks. The Board delegates the oversight of risk management and internal control to the Audit Committee.

The Group’s overall risk management objective is to ensure that the Group creates value for its shareholders whilst minimising potential adverse effects on its performance and positions.

Operating Risk

The Group’s policy is to assume operating risks that are within its core businesses and competencies to manage. Operating risk management ranges from managing strategic operating risks to managing diverse day-to-day operational risks. The management of the Group’s day-to-day operational risks is mainly decentralised at the business unit level and guided by approved standard operating procedures. Operational risks that cut across the organisation (such as those relating to supply chain and integrated systems) are coordinated centrally.

Financial Risk

The Group is exposed to various financial risks relating to credit, interest rates and foreign currency exchange rates. The Group’s risk management objectives and policies coupled with the required quantitative and qualitative disclosures relating to its financial risks are set out in Note 44 to the financial statements on pages 131 to 136.

Human Capital Performance Appraisal, Training and Employee Continued Education Program

Annual appraisal systems are implemented for the employees at all levels within the Group, enforcing dialogue between management and subordinates for continuous improvement on employees’ performance. Arising from this appraisal, training need analysis is performed to identify the required training for employees to address the areas of improvement identified.

Directors’ Training

The Board and employees of the Group are committed to adhering to the best practices in corporate governance and observing the highest standards of integrity and behaviour in all activities conducted by the Group.

In furtherance of these commitments, the Education Program was aimed at providing the Directors with constructive strategic business plan, opportunities and risks.

The expectations of the Board are clearly discussed with and understood by, the Management.

Annual Report 2016 43 Statement of Risk Management and Internal Control (cont’d)

Insurance

Adequate insurance for major assets; building and machinery in all operating divisions and subsidiaries are in place to ensure the Group’s assets are sufficiently covered against any calamity that will result in material losses to the Group.

Information Technology Controls and Security

Disaster Recovery (“DR”) solution has been established to ensure both critical data, application and complete system are protected across its retail business segment, in the event of IT-disabling disaster strikes.

Internal Control Systems

The Group manages its risks by implementing various internal control mechanisms. The key elements of the internal control systems are as follows:

• The Group has an organisational structure that is aligned with its business and operational requirements, with clearly defined lines of responsibility and authority levels

• Authority and responsibility of each operating unit or department are clearly defined under respective job description. Each department is functioned and report independently to the Chief Executive Officer

• Grievance Procedures is incorporated in The Employees Handbook to raise employees concerns regarding malpractices and irregularities affecting the Group

• Code of ethics are established and adhered to by all employees to ensure high standards of conduct and ethical values in all business practices

• The Board reviews all areas of significant financial risk and approves all significant capital projects and investments after careful corporate review

• Annual budgets are reviewed and approved by the Chief Executive Officer. The Group senior management meets on a monthly basis with operating company management to review their business and financial performance against the business plans and approved budgets. Significant business risks and variances relevant to each operating company are reviewed in these meetings

• Regular visits to operating units by senior management

• In house training and development programmes conducted by outsourced training house, corresponding to the needs of all level of employees

• Relevant executive directors and senior management have been delegated with specific accountability for monitoring the performance of designated business operating units

• The Group has in place a Management Information System that captures, compiles, analyses and reports relevant data, which enables management to make business decision in an accurate and timely manner

• Management and financial reports are generated regularly to facilitate the Board and the Group’s Management in performing financial and operating review of the various operating units

• Regular management and operation meetings are conducted by senior management

• Board meetings are held at least once in a quarter with a formal agenda on matters for discussion. The Board is kept updated on the Group’s activities and operation on a timely and regular basis

• The system of internal control was satisfactory and has not resulted in any material losses, contingencies or uncertainties that would require disclosure in the Group’s Annual Report

Annual Report 2016 44 Statement of Risk Management and Internal Control (cont’d)

Review of the Statement by External Auditor

The external auditor has reviewed this Statement for inclusion in the Group’s Annual Report for the financial year ended 31 May 2016. The external auditor has reported to the Board that nothing has come to its attention that causes it to believe that the Statement is inconsistent with its understanding of the process adopted by the Board in reviewing the adequacy and integrity of the risk management system and internal controls.

Summary

The Board has received assurance from the Chief Executive Officer and Managing Director that the Group’s risk management and internal control system is operating adequately and effectively, in all material aspects, throughout the financial year under review and up to the date of this statement.

The Group will continue to monitor all major risks affecting the Group and take the necessary measures to mitigate them and enhance the adequacy and effectiveness of the risk management and internal control system of the Group.

This Statement on Risk Management and Internal Control is made in accordance with the resolution of the Board of Directors dated 8 September 2016.

Annual Report 2016 45 Audit Committee Report

The Board of Directors (“the Board”) presents the Audit Committee (“AC”) report which provides insights into the manner in which the AC discharged its functions for the Group in the financial year ended 31 May 2016 (“FY2016”).

INTRODUCTION

The AC was established by the Board of the Company on 21 June 1995 to assist the Board in discharging its statutory duties and responsibilities relating to accounting and financial reporting practices of the Company and its subsidiaries, monitoring the management of risk and system of internal control, external and internal audit process, compliance with legal and regulatory matters and such other matters that may be specifically delegated to the AC by the Board.

MEMBERS AND MEETINGS

The present composition of the AC comprises of four (4) members of the Board, all of whom are Independent Non-Executive Directors, as follows:-

YB Senator Dato’ Haji Mohd Suhaimi Bin Abdullah - Chairman (Independent Non-Executive Director) YBhg. Dato’ Ahmad Hassan Bin Osman - Member (Independent Non-Executive Director) Mr. Wong Thai Sun - Member (Independent Non-Executive Director) Mr. Jen Shek Voon - Member (Independent Non-Executive Director)

The above composition of AC meets the requirements of paragraph 15.09(1)(a) and (b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“MMLR”).

The Chairman of the AC shall be appointed among the members of the AC who shall be an Independent Director. In the absence of the AC Chairman and/or an appointed deputy, the remaining AC members present shall elect one of themselves to chair the AC meeting.

Mr. Wong Thai Sun is a member of the Malaysian Institute of Accountancy (“MIA”) and the Certified Public Accountants, Australia. Mr. Jen Shek Voon is a Chartered Accountant and a member of the Institute of Singapore Chartered Accountants (“ISCA”) and Information System Audit and Control Association, British Computer Society, Institute of Internal Auditors and MIA. As such, the composition of AC meets the requirements of paragraph 15.09(1)(c) of the MMLR, which stipulates that at least one member of the AC must be a qualified accountant.

All members of the AC are financially literate and are able to analyse and interpret financial statements to effectively discharge their duties and responsibilities as members of the AC. The Nomination Committee (“NC”) had on 1 September 2016 reviewed the terms of office and performance of the AC members and based on the results of its review, the NC was satisfied that the AC and its members have discharged their functions, duties and responsibilities in accordance with the AC’s Terms of Reference and supported the Board in ensuring the Group upholds appropriate corporate governance standards.

The terms of reference of the AC can be viewed on the Company’s website at www.suiwah.com.my

During FY2016, five (5) AC meetings were held. Details of attendance of each member at the AC meetings are as follows:-

No. of the No. of the AC Name of AC Members AC Meetings held Meetings attended % of Attendance

YB Senator Dato’ Haji Mohd Suhaimi Bin Abdullah 5 3 60 YBhg. Dato’ Ahmad Hassan Bin Osman 5 5 100 Mr. Wong Thai Sun 5 5 100 Mr. Jen Shek Voon 5 5 100

The agenda and relevant meeting papers are prepared and distributed to the members before the meetings. The meetings were of adequate length to allow the AC to accomplish its agenda with sufficient time to discuss emerging issues.

Annual Report 2016 46 Audit Committee Report (cont’d)

The external auditors and the relevant key personnel were invited to attend the meeting as and when necessary. The external auditors will report their findings of the significant accounting and auditing issues to the AC for review, deliberation and decision making. While, the finance team will present the unaudited quarterly financial statements, as well as other financial reporting related matters for the AC’s deliberation and recommendation to the Board for approval, where appropriate.

In FY2016, the AC met twice with the external auditors without the presence of the Executive Directors and management team once in September 2015 and again in April 2016. During these meetings, the external auditors highlighted to the AC on those outstanding issues arisen when they conducted their audit. Based on the auditors’ feedback, the Management had provided full cooperation to the external auditors in the course of their audits.

SUMMARY OF ACTIVITIES

The works of the AC were primarily in accordance with its terms of reference. The main works undertaken by the AC during the FY2016 were as follows:-

(i) Financial Performance and Reporting

• The AC reviewed the quarterly unaudited consolidated financial statements and annual consolidated financial statements of the Company and the Group together with the finance team as well as the external auditors, focusing particularly on significant changes to accounting policies and practices, going concern assumptions, adjustments arising from the audits, compliance with the relevant accounting standards and other legal requirements to ensure that the financial statements presented a true and fair view of the Company’s financial performance before recommending them to the Board for approval; and

• The AC deliberated on audit issues raised by the external auditors and the action plans required to address those issues.

(ii) Oversight of External Auditors

• The AC deliberated on the external auditors’ report at its meeting with regard to the relevant disclosures in the annual audited financial statements for FY2016.

• On 29 April 2016, the AC reviewed the external auditors’ 2016 audit plan outlining their scope of work including any significant issues and concerns arising from the audit.

• The AC reviewed the external auditors’ findings arising from audits, particularly comments and responses in management letters as well as the assistance given by the employees of the Group in order to be satisfied that appropriate action is being taken.

• The AC also discussed and reviewed with external auditors the applicability and the impact of the new accounting standards and new financial reporting regime issued by the Malaysian Accounting Standards Board.

• The AC met twice with the external auditors without the presence of the Executive Directors and management team to discuss issue of concern to the External Auditors arising from the annual statutory audit.

• On 29 July 2016, the AC reviewed the revised Terms of Reference of the Audit Committee.

• The AC reviewed re-appointment and audit fees of the external auditors for the ensuing year prior to the Board of Directors for approval.

• The AC reviewed and evaluated the performance and effectiveness of the external auditors on September 2016. The areas assessed were (i) caliber; (ii) Quality Processes / Performance; (iii) Audit Team; (iv) independence and objectivity; (v) audit scope and planning; (vi) audit fees; and (vii) audit communication. Based on the results of the evaluation, the AC was satisfied with the external auditor’s performance and therefore, the AC had recommended to the Board, the re-appointment of the external auditors at the forthcoming Annual General Meeting (“AGM”) to be held in October 2016.

Annual Report 2016 47 Audit Committee Report (cont’d)

(iii) Internal Audit (“IA”)

• Reviewed the IA Plan 2016 as tabled by the in-house internal auditors

• Reviewed the adequacy and performance of IA function and its comprehensiveness of the coverage of activities within the Group, as well as the adequacy of resources in the IA Department

• Reviewed IA report from internal auditors and assessed the internal auditors’ findings and the management’s responses and made the necessary recommendations to the Board of Directors for approval

(iv) Related Party Transaction

The AC reviewed any related party transaction and conflict of interest situation that may arise within the Company and the Group including any transaction, procedure or course of conduct that raises the questions on management integrity.

During FY2016, the AC members have sufficient resources available to discharge their responsibilities. The AC not only has access to any information that it needs, but also have the right to seek independent advice and the power to investigate any matter within the ambit of its authority.

IA Function

The IA function of the Group is assumed by the internal auditors to assist the AC in discharging its duties and responsibilities. The role of internal auditors is to provide the AC with independent assessment for adequate, efficient and effective Internal Control System to ensure compliance with policies and procedures. The IA function is also involved in risk management, risk evaluation and recommendation of control activities to manage such identified risk.

The Group has appointed an in-house Internal Auditor to lead the IA Department (“IAD”) which was established in October 2015. During FY2016, the work of audits and findings conducted by the Group’s IA were as follows:

• Prepare the IA Plan 2016 of the Group and to review IA Task Status and its progress for financial year 2015

• Performed outlet store visit to observe and understand its operation and reviewed reports provided by outlet on major selected areas

• Reviewed the existing standard operating procedures (“SOP”) of Sales and Marketing Department and recommended some updates/tighten control elements be incorporated under the existing SOP

• Reviewed and monitored the related party transactions to ascertain that the current procedures practiced by Management is in line with the Main Market Listing Requirements of Bursa Securities

The Internal Auditor has resigned on 27 April 2016 and there are no internal auditors since then. The AC is considering the option of outsourcing the IA function to external accounting firm or to recruit another internal auditors to continue the IA works.

The total costs incurred for the IA function of the Group for the FY2016 was RM20,285.00.

This statement is made in accordance with the resolution of the Board dated 1 September 2016.

Annual Report 2016 48 Statement of Directors’ Responsibility in Relation to the Financial Statements

The Board is required to prepare audited financial statements which give a true and fair view of the state of affairs of the Group and the Company at the end of each financial year and of their results and their cash flows for that year then ended.

In preparing the financial statements for the year ended 31 May 2016, the Board considers that:

(i) all applicable approved accounting standards in Malaysia have been followed;

(ii) the Group and the Company have used appropriate accounting policies and have consistently applied them;

(iii) reasonable and prudent judgments and estimates were made; and

(iv) the financial statements were prepared on the going concern basis as the Board has a reasonable expectation, having made enquiries, that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future.

The Board is responsible for ensuring that the Group and the Company maintain accounting records which disclose with reasonable accuracy the financial position of the Group and the Company, and which enable them to ensure that the financial statements comply with the Companies Act, 1965.

The Board has general responsibilities for taking such steps that are reasonably available to them to safeguard the assets of the Group, and to prevent and detect fraud and other irregularities.

This statement is made in accordance with the resolution of the Board dated 1 September 2016.

Annual Report 2016 49 Other Information required by the Main Market Listing Requirements of Bursa Malaysia Securities Berhad

Utilisation of Proceeds

No proceeds were raised by the Company from any corporate exercise during the financial year and no new shares being issued by the Company during the financial year based on the general mandate granted by the shareholders pursuant to Section 132D of the Companies Act, 1965 at the last Annual General Meeting of the Company.

Non-Audit Fees

The amount of non-audit fees paid/payable to the external auditors by the Company and its subsidiaries (“Group”) for the financial year 2016 were as follows:- Company (RM) Group (RM) Non-audit fees paid/payable to:- - Ernst & Young (“EY”) Malaysia 6,000 6,000 - Affiliates of BDO (BDO Tax Services Sdn Bhd) 3,200 54,411 Total 9,200 60,411

Note : if the non-audit fees incurred were significant, details on the nature of the services is needed.

Audit Fees

The amount of audit fees paid to the Auditors by the Company and its Group for the financial year 2016 were as follows: Company (RM) Group (RM) Statutory fees paid/payable to:- - Ernst & Young (“EY”) Malaysia 25,000 151,720 - BDO - 14,907 Total 25,000 166,627

Note : if the audit fees incurred were significant, details on the nature of the services is needed.

Material Contracts Involving the Interest of the Directors and Major Shareholders

Other than those related party transactions disclosed in Note 42 to the audited financial statements, there were no material contracts outside the ordinary course of business, including contract relating to loan entered into by the Company and its subsidiaries involving the interest of the Directors and major shareholders that are still subsisting at the end of financial year or which were entered into since the end of the previous financial year.

Recurrent Related Party Transactions of a Revenue or a Trading Nature

The summary of the Recurrent Related Party Transactions which have been entered by the Group during FY2016 pursuant to the shareholders’ mandate obtained in the Twenty-Second Annual General Meeting held on 26 November 2015 are as follows:-

Transaction Value No. Nature of Transaction Interested Related Parties (RM)

1 Rental of premises which is located at Sunshine • SHSB 1,943,316 Square (Level 2, 3 & 4), 1, Jalan Mahsuri measuring • Suiwah Supermarket approximately 9,635 square metres by Suiwah Holdings Sendirian Berhad (SSSB) Sdn Bhd (SHSB) to Sunshine Wholesale Mart Sdn Bhd • Dato’ Hwang Thean Long (SWMSB) for a monthly rental and service charges of • Datin Cheah Gaik Huang RM161,943 • Ms. Hwang Siew Peng • Mr. Hwang Shin Hung

2 Purchase of direct materials such as polyester and • Mr. Looi Tik Miow 161,511 pressure sensitive adhesive by Qdos Flexcircuits Sdn Bhd (QFSB) from Zephyr (Penang) Sdn Bhd (ZSB)

Annual Report 2016 50 Other Information required by the Main Market Listing Requirements of Bursa Malaysia Securities Berhad(cont’d)

Transaction Value No. Nature of Transaction Interested Related Parties (RM)

3 Purchase of label sticker by SWMSB from ZSB • Looi Tik Miow NIL

4 Rental of premises which is located at 608 M&N, • SHSB 48,000 Jalan Paya Terubong, Ayer Itam, Penang measuring • SSSB approximately 4,500 square feet by Dato’ Hwang • Dato’ Hwang Thean Long Thean Long to SWMSB for a monthly rental of RM4,000 • Datin Cheah Gaik Huang • Ms. Hwang Siew Peng • Mr. Hwang Shin Hung

5 Rental of premises which is located at 88 Lintang • SHSB 24,000 Mayang Pasir 1, Mk 12, 11950 Bayan Baru, Penang • SSSB measuring approximately 139.79 square metres by • Dato’ Hwang Thean Long Meridian Chance Sdn Bhd (MCSB) to SWMSB for a • Datin Cheah Gaik Huang monthly rental of RM2,000 • Ms. Hwang Siew Peng • Mr. Hwang Shin Hung • Hwang Yen Ming

6 Purchase of Dycem Cleanzone for floor coverings and • Hozone Sdn Bhd (HSB) NIL mat solutions by QFSB from Sinar Bekal (M) Sdn Bhd • Datuk Haji Radzali Bin Hassan (SBSB)

7 Provide Surface Mounted Technology (SMT) and other • SHSB 824,730 subcontract services related to flexible printed circuits • SSSB boards to QFSB by Nanometric Electronics Sdn Bhd • Dato’ Hwang Thean Long (NESB) • Datin Cheah Gaik Huang • Ms. Hwang Siew Peng • Mr. Hwang Shin Hung • Mr. Leong Kong Meng

8 Sales of food and non-food merchandise from SWMSB • SHSB NIL to NESB • SSSB • Dato’ Hwang Thean Long • Datin Cheah Gaik Huang • Ms. Hwang Siew Peng • Mr. Hwang Shin Hung • Mr. Leong Kong Meng

9 Rental of 80 car park bays located at Level 3 Sunshine • SHSB 85,792 Square Complex, Lintang Mayang Pasir 1, Mk 12, 11950 • SSSB Bayan Baru, Penang by SHSB to SWMSB for a monthly • Dato’ Hwang Thean Long rental of RM4,000. • Datin Cheah Gaik Huang • Ms. Hwang Siew Peng • Mr. Hwang Shin Hung

10 Rental of hostel which is located at No 136-K, MK 13, • SHSB 21,600 Lorong Rambutan, 11500 Air Itam, Penang measuring • SSSB approximately 1,949 square feet paid by QFSB to Dato • Dato’ Hwang Thean Long Hwang Thean Long for a monthly rental of RM1,800 • Datin Cheah Gaik Huang • Ms. Hwang Siew Peng • Mr. Hwang Shin Hung

Annual Report 2016 51 Other Information required by the Main Market Listing Requirements of Bursa Malaysia Securities Berhad(cont’d)

Transaction Value No. Nature of Transaction Interested Related Parties (RM)

11 Rental of office space which is located at 1-20-1, • SHSB 439,760 SUNTECH @ Penang Cybercity, Lintang Mayang Pasir 3, • SSSB 11950 Bayan Baru, Penang, measuring approximately • Dato’ Hwang Thean Long 20,473 square feet by SHSB to SWMSB for a monthly • Datin Cheah Gaik Huang rental and service charges of RM36,647 • Ms. Hwang Siew Peng • Mr. Hwang Shin Hung

12 Rental of office which is located at 32B, Level 3, Jalan • SHSB 36,000 Mahsuri, 11950 Bayan Baru, Penang, measuring • SSSB approximately 6,833 square feet by Hwang & Hwang • Dato’ Hwang Thean Long Enterprise (H&H) to SWMSB for a monthly rental of • Datin Cheah Gaik Huang RM6,000 • Hwang Siew Peng • Hwang Shin Hung • Hwang Poh Choo

13 Rental of office which is located at 1-12-1 & 1-12A-1, • SHSB 24,408 SUNTECH @ Penang Cybercity, Lintang Mayang Pasir 3, • SSSB 11950 Bayan Baru, Penang, measuring approximately • Dato’ Hwang Thean Long 2,260 square feet by SHSB to SWMSB for a monthly • Datin Cheah Gaik Huang rental and service charges of RM4,068 • Hwang Siew Peng • Hwang Shin Hung

Annual Report 2016 52 Directors’ Report

The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 May 2016.

Principal activities

The principal activities of the Company are investment holding, provision of management services and letting of property.

The principal activities of the subsidiaries, joint venture and associate are described in Notes 18, 19 and 20 to the financial statements respectively.

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

Results Group Company RM RM

Profit for the year 7,621,339 17,217,619

Attributable to: Equity holders of the Company 7,628,508 17,217,619

Non-controlling interests (7,169) -

7,621,339 17,217,619

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 other than as disclosed in the financial statements.

Dividend

The amount of dividend paid by the Company since 31 May 2015 was as follows: RM In respect of the financial year ended 31 May 2015 as reported in the directors’ report of that year:

First and final single tier dividend of 6%, approved on 2 December 2015 and paid on 16 December 2015 3,437,679

At the forthcoming Annual General Meeting, a first and final single tier dividend of 3.5% in respect of the current financial year ended 31 May 2016, on 57,250,648 ordinary shares (the number of outstanding ordinary shares in issue of the Company as at 31 May 2016 after the set off with 3,749,600 ordinary shares bought back by the Company and held as treasury shares subsequent to the financial year end) amounting to RM2,003,773 (3.5 sen net per share) will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividends when approved by the shareholders will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 May 2017.

Annual Report 2016 53 Directors’ Report (cont’d)

Directors

The names of the directors of the Company in office since the date of the last report and at the date of this report are:

Dato’ Hwang Thean Long Dato’ Haji Mohd Suhaimi bin Abdullah * Dato’ Ahmad Hassan bin Osman * Datin Cheah Gaik Huang Hwang Siew Peng Wong Thai Sun * Jen Shek Voon ^ Datuk Haji Radzali bin Hassan Hwang Shin Hung

* Being members of Audit, Remuneration and Nomination Committees ^ Being member of Audit Committee

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 acquisition of shares in or debentures of the Company or any other body corporate.

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 salaries of directors who are full-time employees of the Company or its subsidiaries as shown in Note 7 to the financial statements) by reason of a contract made by the Company or a related corporation with any director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest, except as disclosed in Note 42 to the financial statements.

Directors’ interests

According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in shares in the Company during the financial year were as follows:

Number of ordinary shares of RM1 each 1 June 31 May 2015 Acquired Sold 2016 The Company

Direct interest Dato’ Hwang Thean Long 4,445,381 - - 4,445,381 Dato’ Haji Mohd Suhaimi bin Abdullah 417,125 - - 417,125 Datin Cheah Gaik Huang 26,400 - - 26,400 Hwang Siew Peng - 300,000 - 300,000

Indirect interest Dato’ Hwang Thean Long * 10,959,105 1,117,440 - 12,076,545 Hwang Siew Peng ** 15,430,886 1,117,440 - 16,548,326 Datuk Haji Radzali bin Hassan *** 12,117,948 - - 12,117,948

Indirect interest Interest of Spouse/Children of the Directors ^ Dato’ Hwang Thean Long 26,400 300,000 - 326,400 Datin Cheah Gaik Huang 15,404,486 1,417,440 - 16,821,926

Annual Report 2016 54 Directors’ Report (cont’d)

Directors’ interests (contd.)

* By virtue of his interests in shares of Suiwah Holdings Sdn. Bhd. and Suiwah Supermarket Sendirian Berhad, both companies incorporated in Malaysia, Dato’ Hwang Thean Long is deemed to have an interest in the shares of the Company and all its subsidiaries to the extent both these companies have interests.

** By virtue of the interests of her parents, Dato’ Hwang Thean Long and Datin Cheah Gaik Huang, Hwang Siew Peng is deemed to have an interest in the shares of the Company and all its subsidiaries to the extent her parents have interests.

*** By virtue of his interest in shares of Hozone Sdn. Bhd. (“Hozone”), a company incorporated in Malaysia, Datuk Haji Radzali bin Hassan is deemed to have an interest in the shares of the Company, and all its subsidiaries to the extent Hozone has an interest.

^ Disclosure pursuant to Section 134 (12) (c) of the Companies Act 1965

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

Treasury shares

During the financial year, the Company bought back 55,200 of its issued ordinary shares from the open market at an average price of RM2.66 per share. The total consideration paid for the share buy back including transaction costs was RM146,844. The shares bought back are being held as treasury shares.

As at 31 May 2016, the Company held as treasury shares a total of 3,746,600 of its 61,000,248 issued ordinary shares. Such treasury shares are held at a carrying amount of RM5,549,796 including transaction costs and further relevant details are disclosed in Note 30(a) to the financial statements.

Subsequent to the financial year end, the Company bought back 3,000 of its issued ordinary shares from the open market at an average price of RM2.40 per share. The total consideration paid for the share buy back was RM7,242, consisting of consideration paid amounting to RM7,200 and transaction costs of RM42. The share buy back transactions were financed by internally generated funds.

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 for doubtful debts has been made in the financial statements of the Group. The directors were also satisfied that there were no known bad debts and that no allowance for doubtful debts was necessary in the financial statements of the Company; and

(ii) to ensure that any current assets which were unlikely to realise their values 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.

Annual Report 2016 55 Directors’ Report (cont’d)

Other statutory information (contd.)

(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 provision for doubtful debts in the financial statements of the Group inadequate to any substantial extent nor are they aware of any circumstances which would render it necessary to write off any bad debts or to make any allowance for doubtful debts in the financial statements of the Company; 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 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 and of the Company which have arisen since the end of the financial year which secures the liabilities of any other person; or

(ii) any contingent liability of the Group and of the Company which have 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.

Subsequent events

Details of the subsequent events are disclosed in Note 47 to the financial statements.

Auditors

The auditors, Ernst & Young, have expressed their willingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the directors dated 8 September 2016.

Dato’ Hwang Thean Long Wong Thai Sun

Annual Report 2016 56 Statement by Directors Pursuant to Section 169(15) of the Companies Act 1965

We, Dato’ Hwang Thean Long and Wong Thai Sun, being two of the directors of Suiwah Corporation Bhd., do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 60 to 141 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 1965 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 May 2016 and of their financial performance and cash flows for the year then ended.

The information set out in Note 49 to the financial statements on page 142 have been prepared in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Signed on behalf of the Board in accordance with a resolution of the directors dated 8 September 2016.

Dato’ Hwang Thean Long Wong Thai Sun

Statutory declaration Pursuant to Section 169(16) of the Companies Act 1965

I, Dato’ Hwang Thean Long, being the director primarily responsible for the financial management of Suiwah Corporation Bhd., do solemnly and sincerely declare that the accompanying financial statements set out on pages 60 to 142 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’ Hwang Thean Long at Georgetown in the state of Penang on 8 September 2016. Dato’ Hwang Thean Long

Before me, MOK CHENG YOON No. P140 Commissioner for Oaths

Annual Report 2016 57 Independent Auditors’ Report to the members of Suiwah Corporation Bhd.(Incorporated in Malaysia)

Report on the financial statements

We have audited the financial statements of Suiwah Corporation Bhd., which comprise the statements of financial position as at 31 May 2016 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 60 to 141.

Directors’ responsibility for the financial statements

The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 May 2016 and of their financial performance and 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 1965 in Malaysia.

Report on other legal and regulatory requirements

In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 18 to the financial statements, being financial statements that have been included in the consolidated financial statements.

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.

(d) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act.

Annual Report 2016 58 Independent Auditors’ Report to the members of Suiwah Corporation Bhd. (Incorporated in Malaysia)(cont’d )

Other reporting responsibilities

The supplementary information set out in Note 49 on page 142 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

Other matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

Ernst & Young Adeline Chan Su Lynn AF: 0039 No. 3082/07/17(J) Chartered Accountants Chartered Accountant

Penang, Malaysia Date: 8 September 2016

Annual Report 2016 59 Statements of Comprehensive Income For the financial year ended 31 May 2016

Group Company 2016 2015 2016 2015 Note RM RM RM RM

Revenue 4 375,833,935 399,036,393 17,456,684 30,256,684 Other operating income 5 4,115,718 2,747,711 2,569,378 3,596,588 Changes in inventories of merchandise, finished goods and work-in-progress 14,732,734 6,301,392 - - Raw materials and consumable goods used (49,087,376) (44,460,262) - - Inventories purchased (244,882,915) (266,413,398) - - Employee benefits expense 6 (31,008,039) (28,321,683) (222,000) (192,680) Inventories written down (245,807) - - - Reversal of inventories written down - 330,780 - - Amortisation of intangible asset 17 (383,488) (345,295) - - Amortisation of land use rights 16 - (41,143) - - Commission (1,410,772) (1,540,136) - - Depreciation of: - property, plant and equipment 13 (7,463,735) (8,292,663) (929) (929) - investment property 14 - - (473,171) (473,171) Net gain on financial assets at fair value through profit or loss 206,825 4,960 - - Net fair value gain/(loss) on derivatives 324,801 (220,297) - - Promotional expenses (6,109,014) (5,968,583) - - Property, plant and equipment written off (2,939) (1,838) - - Operating leases - minimum lease payment for: - land and buildings (3,610,688) (3,556,135) - - - equipment and machinery (42,000) (102,000) - - Subcontract charges (4,652,332) (4,566,012) - - Upkeep and maintenance (7,221,271) (5,636,879) - - Utilities (11,996,508) (12,011,536) (1,283) (1,704) Other operating expenses 8 (13,633,377) (9,511,676) (571,749) (609,543)

Operating profit, balance carried forward 13,463,752 17,431,700 18,756,930 32,575,245

Annual Report 2016 60 Statements of Comprehensive Income For the financial year ended 31 May 2016(cont’d)

Group Company 2016 2015 2016 2015 Note RM RM RM RM

Operating profit, balance brought forward 13,463,752 17,431,700 18,756,930 32,575,245

Finance costs 9 (1,142,388) (1,072,917) (630,907) (1,954,044) Share of profit/(loss) in a joint venture 108,630 (81,267) - -

Profit before tax 12,429,994 16,277,516 18,126,023 30,621,201 Income tax expense 10 (4,808,655) (6,142,555) (908,404) (951,078)

Profit net of tax 7,621,339 10,134,961 17,217,619 29,670,123

Other comprehensive income Other comprehensive income to be reclassified to profit or loss in subsequent periods Foreign currency translation 1,600,064 824,749 - -

Total comprehensive income for the year 9,221,403 10,959,710 17,217,619 29,670,123

Profit for the year attributable to: Equity holders of the Company 7,628,508 10,126,599 17,217,619 29,670,123 Non-controlling interests (7,169) 8,362 - -

7,621,339 10,134,961 17,217,619 29,670,123

Total comprehensive income attributable to:

Equity holders of the Company 9,228,572 10,951,348 17,217,619 29,670,123 Non-controlling interests (7,169) 8,362 - -

9,221,403 10,959,710 17,217,619 29,670,123

Earnings per share attributable to equity holders of the Company (sen) Basic/Diluted, for profit for the year 11 13.32 17.67

The accompanying accounting policies and explanatory information form an integral part of the financial statements.

Annual Report 2016 61 Statements of Financial Position As at 31 May 2016

Group Company 2016 2015 2016 2015 Note RM RM RM RM

Assets

Non-current assets Property, plant and equipment 13 146,488,499 140,588,615 1,277 2,206 Investment property 14 - - 22,553,949 23,027,120 Inventory property 15 6,887,567 6,865,612 - - Land use rights 16 - - - - Intangible asset 17 6,578,360 6,186,535 - - Investments in subsidiaries 18 - - 68,019,012 68,298,619 Investment in a joint venture 19 13,688,295 12,713,214 - - Investment in an associate 20 - - - - Investment securities 21 3,114 3,114 - - Goodwill on consolidation 22 4,665,045 4,665,045 - - Prepayment 23 500,000 500,000 - -

178,810,880 171,522,135 90,574,238 91,327,945

Current assets Inventory property 15 18,137,059 16,950,609 - - Inventories 24 37,047,145 37,205,784 - - Trade and other receivables 25 23,871,837 32,420,186 56,359,005 48,808,592 Other current assets 26 12,947,309 8,498,946 17,977 18,400 Derivatives 39 104,504 - - - Tax recoverable 3,191,739 931,732 - - Loan receivables 27 2,000 1,500 - - Short term investments 28 8,992,952 16,292,026 - - Cash and bank balances 29 26,353,453 25,489,950 13,147,676 5,345,711

130,647,998 137,790,733 69,524,658 54,172,703

Total assets 309,458,878 309,312,868 160,098,896 145,500,648

Annual Report 2016 62 Statements of Financial Position As at 31 May 2016 (cont’d)

Group Company 2016 2015 2016 2015 Note RM RM RM RM

Equity and liabilities

Equity attributable to equity holders of the Company Share capital 30 61,000,248 61,000,248 61,000,248 61,000,248 Treasury shares 30 (5,549,796) (5,402,952) (5,549,796) (5,402,952) Share premium 30 13,934,711 13,934,711 13,934,711 13,934,711 Other reserve 31 (487,557) (2,087,621) - - Retained earnings 32 144,065,777 139,874,948 78,575,453 64,795,513

212,963,383 207,319,334 147,960,616 134,327,520 Non-controlling interests 254,747 884,196 - -

Total equity 213,218,130 208,203,530 147,960,616 134,327,520

Non-current liabilities Government grant 33 3,046,798 64,583 - - Borrowings 34 9,280,326 10,103,992 - - Trade and other payables 35 7,455,506 6,881,303 - - Deferred tax 36 2,028,314 1,518,735 - -

21,810,944 18,568,613 - -

Current liabilities Provision for liabilities 37 256,517 256,517 - - Government grant 33 419,531 50,000 - - Borrowings 34 6,077,904 5,926,361 - - Trade and other payables 35 65,261,318 72,537,222 11,796,641 10,687,239 Other current liabilities 38 171,540 277,959 23,950 14,846 Derivatives 39 - 220,297 - - Deferred revenue 40 1,771,475 1,923,157 - - Tax payable 471,519 1,349,212 317,689 471,043

74,429,804 82,540,725 12,138,280 11,173,128

Total liabilities 96,240,748 101,109,338 12,138,280 11,173,128

Total equity and liabilities 309,458,878 309,312,868 160,098,896 145,500,648

The accompanying accounting policies and explanatory information form an integral part of the financial statements.

Annual Report 2016 63 Statements of Changes in Equity For the financial year ended 31 May 2016

Total Total equity (28,571) (146,844) (622,280) 9,221,403 (3,438,867) (3,437,679) 10,959,710 213,218,130 208,203,530 200,711,258 208,203,530

- - - - RM Non- 8,362 (7,169) 254,747 884,196 875,834 884,196 (622,280) interests interests controlling controlling

- RM Total Total (28,571) (146,844) 9,228,572 (3,438,867) (3,437,679) 10,951,348 212,963,383 207,319,334 199,835,424 207,319,334

- - - RM Retained Retained earnings 7,628,508 (3,438,867) (3,437,679) 10,126,599 144,065,777 139,874,948 133,187,216 139,874,948 Distributable

- - - - - RM Other 824,749 (487,557) reserves reserves 1,600,064 (2,087,621) (2,912,370) (2,087,621)

------RM RM Share Share premium premium 13,934,711 13,934,711 13,934,711 13,934,711 Non-distributable

- - - - - RM Attributable to equity holders of the Company to equity holders Attributable shares shares (28,571) Treasury Treasury (146,844) (5,374,381) (5,402,952) (5,549,796) (5,402,952)

------RM Share Share capital capital 61,000,248 61,000,248 61,000,248 61,000,248

Group 1 June 2014 At income comprehensive Total the year for 12) Dividend (Note shares of treasury Purchase 2015 31 May At 1 June 2015 At income comprehensive Total the year for 12) Dividend (Note shares of treasury Purchase non-controlling to Distribution interests 2016 31 May At

Annual Report 2016 64 Statements of Changes in Equity For the financial year ended 31 May 2016(cont’d)

Non-distributable Distributable Share Treasury Share Retained Total capital shares premium earnings equity RM RM RM RM RM Company

At 1 June 2014 61,000,248 (5,374,381) 13,934,711 38,564,257 108,124,835 Total comprehensive income for the year - - - 29,670,123 29,670,123 Dividend (Note 12) - - - (3,438,867) (3,438,867) Purchase of treasury shares - (28,571) - - (28,571)

At 31 May 2015 61,000,248 (5,402,952) 13,934,711 64,795,513 134,327,520

At 1 June 2015 61,000,248 (5,402,952) 13,934,711 64,795,513 134,327,520 Total comprehensive income for the year - - - 17,217,619 17,217,619 Dividend (Note 12) - - - (3,437,679) (3,437,679) Purchase of treasury shares - (146,844) - - (146,844)

At 31 May 2016 61,000,248 (5,549,796) 13,934,711 78,575,453 147,960,616

The accompanying accounting policies and explanatory information form an integral part of the financial statements.

Annual Report 2016 65 Statements of Cash Flows For the financial year ended 31 May 2016

Group Company 2016 2015 2016 2015 Note RM RM RM RM

Operating activities

Profit before tax 12,429,994 16,277,516 18,126,023 30,621,201 Adjustments for: Amortisation of: - government grant 5 (335,825) (50,000) - - - land use rights 16 - 41,143 - - - intangible assets 17 383,488 345,295 - - Bad debts written off 8 98,300 116,170 - - Depreciation of: - property, plant and equipment 13 7,463,735 8,292,663 929 929 - investment property 14 - - 473,171 473,171 Gross dividends from subsidiaries 4 - - (15,800,000) (28,600,000) Finance costs 9 1,142,388 1,072,917 630,907 1,954,044 Interest income 5 (676,294) (1,106,250) (2,569,378) (3,596,588) Net gain on financial assets at fair value through profit or loss (206,825) (4,960) - - Net fair value (gain)/loss on derivatives (324,801) 220,297 - - Inventories written down 245,807 - - - Reversal of inventories written down - (330,780) - - Property, plant and equipment written off 2,939 1,838 - - Allowance for impairment of doubtful debts 8 3,600 55,508 - - Reversal of allowance for impairment loss 5 (55,508) - - - Unrealised foreign exchange (gains)/losses 8 (638,240) 1,701,979 (44,313) - Share of (profit)/loss in a joint venture (108,630) 81,267 - -

Operating cash flows before changes in working capital 19,424,128 26,714,603 817,339 852,757 Increase in inventory property (1,208,405) (290,507) - - Increase in prepayment - (500,000) - - Decrease/(Increase) in receivables 9,139,697 (12,619,532) 103,926 (103,926) (Increase)/Decrease in other current assets (4,448,363) (7,993,097) 423 (3,468) Increase in inventories (87,168) (3,138,963) - - (Decrease)/Increase in payables (6,701,701) 11,922,264 58,355 (16,077) (Decrease)/Increase in other current liabilities (106,419) 277,959 9,104 14,846 (Decrease)/Increase in deferred revenue (151,682) 210,623 - -

Cash generated from operations 15,860,087 14,583,350 989,147 744,132 Interest paid (1,142,388) (1,072,917) - - Interest received 676,294 1,106,250 161,026 79,132 Tax paid (7,436,776) (2,405,240) (1,061,758) (539,271)

Net cash from operating activities 7,957,217 12,211,443 88,415 283,993

Annual Report 2016 66 Statements of Cash Flows For the financial year ended 31 May 2016(cont’d)

Group Company 2016 2015 2016 2015 Note RM RM RM RM

Investing activities

Decrease/(Increase) in deposits pledged to banks 362,373 (12,466) - - Increase in deposits placed with licensed banks (more than 3 months) (342,234) (31,619) - - Decrease in short term investments 7,505,899 8,022,030 - - Distribution to non-controlling interests (622,280) - - - Distribution from an investment in a subsidiary - - 279,607 -

Cash flows from investing activities 6,903,758 7,977,945 279,607 - Net dividends received - - 15,800,000 28,600,000 Purchase of property, plant and equipment 13 (12,189,255) (17,220,388) - - Government grant received 33 3,687,571 - - -

Net cash (used in)/from investing activities (1,597,926) (9,242,443) 16,079,607 28,600,000

Financing activities

Repayment of term loan, net (778,264) (2,229,911) - - Dividend paid to: - shareholders of holding company 12 (3,437,679) (3,438,867) (3,437,679) (3,438,867) Purchase of treasury shares 30 (146,844) (28,571) (146,844) (28,571) Increase in amounts due from subsidiaries - - (5,245,987) (10,195,774) Increase/(Decrease) in amounts due to subsidiaries - - 464,453 (13,088,892) Net changes in bankers’ acceptances 2,997,091 (4,921,016) - -

Net cash used in financing activities (1,365,696) (10,618,365) (8,366,057) (26,752,104)

Net increase/(decrease) in cash and cash equivalents 4,993,595 (7,649,365) 7,801,965 2,131,889 Effects of exchange rate changes (1,219,003) 98,639 - - Cash and cash equivalents as at 1 June 2015 / 2014 19,450,168 27,000,894 5,345,711 3,213,822

Cash and cash equivalents as at 31 May 2016 / 2015 29 23,224,760 19,450,168 13,147,676 5,345,711

The accompanying accounting policies and explanatory information form an integral part of the financial statements.

Annual Report 2016 67 Notes to the Financial Statements For the financial year ended 31 May 2016

1. Corporate information

The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad (“Bursa Malaysia”). The registered office of the Company is located at No. 1-20-1 SUNTECH @ Penang Cybercity, Lintang Mayang Pasir 3, 11950 Bayan Baru, Penang.

The principal activities of the Company are investment holding, provision of management services and letting of property. The principal activities of the subsidiaries, joint venture and associate are described in Notes 18, 19 and 20 respectively. There have been no significant changes in the nature of the principal activities during the financial year.

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 1965 in Malaysia.

The financial statements have been prepared on a historical cost basis except those disclosed below in the accounting policies.

The financial statements are presented in Ringgit Malaysia (“RM”).

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except as follows:

On 1 June 2015, the Group and the Company adopted the following new and amended MFRSs and IC Interpretation mandatory for annual financial periods beginning on or after 1 June 2015.

Effective for financial periods Description beginning on or after Amendments to MFRS 119: Defined Benefit Plans: Employee Contributions 1 July 2014 Annual Improvements to MFRSs 2010-2012 Cycle 1 July 2014 Annual Improvements to MFRSs 2011-2013 Cycle 1 July 2014

The nature and impact of the new and amended MFRSs and IC Interpretation are described below:

Annual Improvements to MFRSs 2010–2012 Cycle

The Annual Improvements to MFRSs 2010-2012 Cycle include a number of amendments to various MFRSs, which are summarised below. The directors of the Company do not anticipate that the application of these amendments will have a significant impact on the Group’s financial statements.

MFRS 3 Business Combinations

The amendments to MFRS 3 clarifies that contingent consideration classified as liabilities (or assets) should be measured at fair value through profit or loss at each reporting date, irrespective of whether the contingent consideration is a financial instrument within the scope of MFRS 9 or MFRS 139. The amendments are effective for business combinations for which the acquisition date is on or after 1 July 2014. This is consistent with the Group’s current accounting policy and thus, this amendment did not impact the Group.

Annual Report 2016 68 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

2. Summary of significant accounting policies(contd.)

2.2 Changes in accounting policies(contd.)

Annual Improvements to MFRSs 2010–2012 Cycle

MFRS 8 Operating Segments

The amendments are to be applied retrospectively and clarify that:

- an entity must disclose the judgements made by management in applying the aggregation criteria in MFRS 8, including a brief description of operating segments that have been aggregated and the economic characteristics used to assess whether the segments are similar; and

- the reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker.

The Group has not applied the aggregation criteria as mentioned above. The Group continues to present the reconciliation of segment assets to total assets.

MFRS 116 Property, Plant and Equipment and MFRS 138 Intangible Assets

The amendments remove inconsistencies in the accounting for accumulated depreciation or amortisation when an item of property, plant and equipment or an intangible asset is revalued. The amendments clarify that the asset may be revalued by reference to observable data by either adjusting the gross carrying amount of the asset to market value or by determining the market value of the carrying value and adjusting the gross carrying amount proportionately so that the resulting carrying amount equals the market value. In addition, the accumulated depreciation or amortisation is the difference between gross and carrying amounts of the asset. This amendment did not have any impact on the Group.

MFRS 124 Related Party Disclosures

The amendments clarify that a management entity providing key management personnel services to a reporting entity is a related party of the reporting entity. The reporting entity should disclose as related party transactions the amounts incurred for the service paid or payable to the management entity for the provision of key management personnel services. This amendment is not applicable to the Group as the Group does not receive any management services from other entities.

Annual Improvements to MFRSs 2011–2013 Cycle

The Annual Improvements to MFRSs 2011-2013 Cycle include a number of amendments to various MFRSs, which are summarised below. The directors of the Company do not anticipate that the application of these amendments will have a significant impact on the Group’s financial statements.

MFRS 3 Business Combinations

The amendments to MFRS 3 clarify that the standard does not apply to the accounting for formation of all types of joint arrangement in the financial statements of the joint arrangement itself. This amendment is to be applied prospectively. The Group is not a joint arrangement and thus this arrangement is not relevant to the Group.

MFRS 13 Fair Value Measurement

The amendments to MFRS 13 clarify that the portfolio exception in MFRS 13 can be applied not only to financial assets and financial liabilities, but also to other contracts within the scope of MFRS 9 (or MFRS 139 as applicable). The Group does not apply the portfolio exception.

Annual Report 2016 69 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

2. Summary of significant accounting policies(contd.)

2.2 Changes in accounting policies(contd.)

Annual Improvements to MFRSs 2011–2013 Cycle (contd.)

MFRS 140 Investment Property

The amendments to MFRS 140 clarify that an entity acquiring investment property must determine whether:

- the property meets the definition of investment property in terms of MFRS 140; and - the transaction meets the definition of a business combination under MFRS 3,

to determine if the transaction is a purchase of an asset or is a business combination.

In previous financial years, the Group has applied MFRS 3 and not MFRS 140 in determining whether an acquisition is of an asset or is a business combination. Accordingly, this amendment did not have any impact to the Group.

2.3 Standards 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 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 Description beginning on or after

Annual improvements to MFRSs 2012 - 2014 cycle 1 January 2016 Amendments to MFRS 116 and MFRS 138: Clarification of Acceptable Methods of Depreciation and Amortisation 1 January 2016 Amendments to MFRS 116 and MFRS 141: Agriculture: Bearer Plants 1 January 2016 Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Deferred Amendments to MFRS 11: Accounting for Acquisitions of Interests in Joint Operations 1 January 2016 Amendments to MFRS 127: Equity Method in Separate Financial Statements 1 January 2016 Amendments to MFRS 101: Disclosure Initiatives 1 January 2016 Amendments to MFRS 10, MFRS 12 and MFRS 128: Investment Entities: Applying the Consolidation Exception 1 January 2016 MFRS 14 Regulatory Deferral Accounts 1 January 2016 Amendments to MFRS 107: Disclosure Initiatives 1 January 2017 Amendments to MFRS 112: Recognition of Deferred Tax Assets for Unrealised Losses January 2017 MFRS 15 Revenue from Contracts with Customers 1 January 2018 MFRS 15 Clarification to MFRS 15 1 January 2018 MFRS 9 Financial Instruments 1 January 2018 Amendments to MFRS 2: Classification and Measurement of Share-based Payment Transactions 1 January 2018 MFRS 16 Leases 1 January 2019

The directors expect that the adoption of the above standards and interpretations will have no material impact on the financial statements in the period of initial application except as discussed below:

Annual Report 2016 70 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

2. Summary of significant accounting policies(contd.)

2.3 Standards Issued but not yet effective (contd.)

Annual Improvements to MFRSs 2012–2014 Cycle

The Annual Improvements to MFRSs 2012-2014 Cycle include a number of amendments to various MFRSs. The directors of the Company do not anticipate that the application of these amendments will have a significant impact on the Group’s financial statements.

MFRS 7 Financial Instruments: Disclosures

The amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement in a financial asset. An entity must assess the nature of the fee and arrangement against the guidance for continuing involvement in MFRS 7 in order to assess whether the disclosures are required.

In addition, the amendment also clarifies that the disclosures in respect of offsetting of financial assets and financial liabilities are not required in the condensed interim financial report.

MFRS 134 Interim Financial Reporting

MFRS 134 requires entities to disclose information in the notes to the interim financial statements if not disclosed elsewhere in the interim financial report.

The amendment states that the required interim disclosures must either be in the interim financial statements or incorporated by cross-reference between the interim financial statements and wherever they are included within the greater interim financial report (e.g., in the management commentary or risk report). The other information within the interim financial report must be available to users on the same terms as the interim financial statements and at the same time.

Amendments to MFRS 116 and MFRS 138: Clarification of Acceptable Methods of Depreciation and Amortisation

The amendments clarify that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset forms part of the business) rather than the economic benefits that are consumed through the use of an asset. As a result, a revenue-based method cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortise intangible assets.

The amendments are effective prospectively for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments are not expected to have any impact to the Group as the Group has not used a revenue-based method to depreciate its non-current assets.

Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The amendments clarify that:

- gains and losses resulting from transactions involving assets that do not constitute a business, between investor and its associate or joint venture are recognised in the entity’s financial statements only to the extent of unrelated investors’ interests in the associate or joint venture; and

- gains and losses resulting from transactions involving the sale or contribution to an associate of a joint venture that constitute a business is recognised in full.

Annual Report 2016 71 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

2. Summary of significant accounting policies(contd.)

2.3 Standards Issued but not yet effective (contd.)

Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (contd.)

The amendments are to be applied prospectively to the sale or contribution of assets occurring in annual periods beginning on or after 1 January 2016. Earlier application is permitted. The directors of the Company do not anticipate that the application of these amendments will have a material impact on the Group’s financial statements.

Amendments to MFRS 11 Joint Arrangements: Accounting for Acquisitions of Interests in Joint Operations

The amendments to MFRS 11 require that a joint operator which acquires an interest in a joint operations which constitute a business to apply the relevant MFRS 3 Business Combinations principles for business combinations accounting. The amendments also clarify that a previously held interest in a joint operation is not remeasured on the acquisition of an additional interest in the same joint operation while joint control is retained. In addition, a scope exclusion has been added to MFRS 11 to specify that the amendments do not apply when the parties sharing joint control, including the reporting entity, are under common control of the same ultimate controlling party.

These amendments are to be applied prospectively for annual periods beginning on or after 1 January 2016, with early adoption permitted. The directors of the Company do not anticipate that the application of these amendments will have a material impact on the Group’s consolidated financial statements.

Amendments to MFRS 127: Equity Method in Separate Financial Statements

The amendments will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associate in their separate financial statements. Entities already applying MFRS and electing to change to the equity method in its separate financial statements will have to apply this change retrospectively. For first-time adopters of MFRS electing to use the equity method in its separate financial statements, they will be required to apply this method from the date of transition to MFRS. The amendments are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments will not have any impact on the Group’s financial statements.

Amendments to MFRS 101: Disclosure Initiatives

The amendments to MFRS 101 include narrow-focus improvements in the following five areas:

(i) Materiality (ii) Disaggregation and subtotals (iii) Notes structure (iv) Disclosure of accounting policies (v) Presentation of items of other comprehensive income arising from equity accounted investments

The directors of the Company do not anticipate that the application of these amendments will have a material impact on the Group’s financial statements.

Annual Report 2016 72 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

2. Summary of significant accounting policies(contd.)

2.3 Standards Issued but not yet effective (contd.)

Amendments to MFRS 10, MFRS 12 and MFRS 128: Investment Entities: Applying the Consolidation Exception

The amendments clarify that the exemption from presenting consolidated financial statements applies to a parent entity that is a subsidiary of an investment entity, when the investment entity measures all of its subsidiaries at fair value. The amendments further clarify that only a subsidiary that is not an investment entity itself and provides support services to the investment entity is consolidated. In addition, the amendments also provides that if an entity that is not itself an investment entity has an interest in an associate or joint venture that is an investment entity, the entity may, when applying the equity method, retain the fair value measurement applied by that investment entity associate or joint venture to the investment entity associate’s or joint venture’s interests in subsidiaries.

The amendments are to be applied retrospectively and are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments will not have any impact on the Group’s financial statements.

Amendments to MFRS 107: Disclosure Initiatives

The amendments to MFRS 107 requires an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes.

The directors of the Group and the Company do not anticipate that the application of these amendments will have a material impact on the Group and the Company’s financial statements.

MFRS 15 Revenue from Contracts with Customers

MFRS 15 establishes a new five-step model that will apply to revenue arising from contracts with customers. MFRS 15 will supersede the current revenue recognition guidance including MFRS 118 Revenue, MFRS 111 Construction Contracts and the related interpretations when it becomes effective.

The core principle of MFRS 15 is that an entity should recognise revenue which depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Under MFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e when “control” of the goods or services underlying the particular performance obligation is transferred to the customer.

Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2018 with early adoption permitted. The Group and the Company are currently assessing the impact of MFRS 15 and plan to adopt the new standard on the required effective date.

MFRS 9 Financial Instruments

In November 2014, MASB issued the final version of MFRS 9 Financial Instruments which reflects all phases of the financial instruments project and replaces MFRS 139 Financial Instruments: Recognition and Measurement and all previous versions of MFRS 9. The standard introduces new requirements for classification and measurement, impairment and hedge accounting. MFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory. The adoption of MFRS 9 will have an effect on the classification and measurement of the Group’s financial assets, but no impact on the classification and measurement of the Group’s financial liabilities.

Annual Report 2016 73 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

2. Summary of significant accounting policies(contd.)

2.3 Standards Issued but not yet effective (contd.)

MFRS 16 Leases

MFRS 16 requires lessees to account for all leases under a single on-balance sheet model. The standard includes two recognition exemptions for lessees – leases of ’low-value’ assets and short-term leases. At the commencement date of a lease, a lessee will recognise a liability to make lease payments and an asset representing the right to use the underlying asset during the lease term.

Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset and to remeasure the lease liability upon the occurrence of certain events. The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.

A lessee can choose to apply the standard using either a full retrospective or a modified retrospective transition approach. The Group and the Company are currently assessing the impact of MFRS 16 and plans to adopt the new standard on the required effective date.

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:

(i) Power over the investee (i.e existing rights that give it the current ability to direct the relevant activities of the investee);

(ii) Exposure, or rights, to variable returns from its investment with the investee; and

(iii) 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:

(i) The size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

(ii) Potential voting rights held by the Company, other vote holders or other parties;

(iii) Rights arising from other contractual arrangements; and

(iv) 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.

Annual Report 2016 74 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

2. Summary of significant accounting policies(contd.)

2.4 Basis of consolidation(contd.)

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.

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.

2.5 Transactions with non-controlling interests

Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and is presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position, separately from equity attributable to owners of the Company.

Changes in the Company owners’ ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non- controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the parent.

Total comprehensive income within a subsidiary is attributed to the non-controlling interest even if it results in a deficit balance.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

- derecognises the assets (including goodwill) and liabilities of the subsidiary; - derecognises the carrying amount of any non-controlling interest; - derecognises the cumulative translation differences recorded in equity; - recognises the fair value of the consideration received; - recognises the fair value of any investment retained; - recognises any surplus or deficit in profit or loss; and - reclassifies the parent’s share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate.

2.6 Subsidiaries

A subsidiary is an entity over which the Company has all the following:

(i) Power over the investee (i.e existing rights that give it the current ability to direct the relevant activities of the investee);

(ii) Exposure, or rights, to variable returns from its investment with the investee; and

(iii) The ability to use its power over the investee to affect its returns.

Annual Report 2016 75 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

2. Summary of significant accounting policies(contd.)

2.6 Subsidiaries (contd.)

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less any accumulated 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 Investments in associates and joint ventures

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.

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

On acquisition of an investment in associate or joint venture, 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 or joint venture’s profit or loss for the period in which the investment is acquired.

An associate or a joint venture is equity accounted for from the date on which the investee becomes an associate or a joint venture.

Under the equity method, on initial recognition the investment in an associate or a joint venture 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 or joint venture after the date of acquisition. When the Group’s share of losses in an associate or a joint venture equals or exceeds its interest in the associate or joint venture, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture.

Profits and losses resulting from upstream and downstream transactions between the Group and its associate or joint venture are recognised in the Group’s financial statements only to the extent of unrelated investors’ interests in the associate or joint venture. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.

The financial statements of the associates and joint ventures 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.

After application of the equity method, the Group applies MFRS 139 Financial Instruments: Recognition and Measurement to determine whether it is necessary to recognise any additional impairment loss with respect to its net investment in the associate or joint venture. When necessary, the entire carrying amount of the investment is tested for impairment in accordance with MFRS 136 Impairment of Assets as a single asset, by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss is recognised in profit or loss. Reversal of an impairment loss is recognised to the extent that the recoverable amount of the investment subsequently increases.

In the Company’s separate financial statements, investments in associates and joint ventures are accounted for at cost less any accumulated impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.

Annual Report 2016 76 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

2. Summary of significant accounting policies(contd.)

2.8 Intangible assets

(a) 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 is allocated, from the acquisition date, to each of the Group’s cash-generating units that are expected to benefit from the synergies of the combination.

The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired, by comparing the carrying amount of the cash-generating unit, including the allocated goodwill, with the recoverable amount of the cash-generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the 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.

Goodwill and fair value adjustments arising on the acquisition of foreign operation on or after 1 January 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated in accordance with the accounting policy set out in Note 2.27.

Goodwill and fair value adjustments which arose on acquisitions of foreign operation before 1 January 2006 are deemed to be assets and liabilities of the Company and are recorded in RM at the rates prevailing at the date of acquisition.

(b) Other intangible assets

Intangible assets acquired separately are measured initially at cost. Following initial acquisition, intangible assets are measured at cost less any accumulated amortisation and any 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.

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.

Annual Report 2016 77 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

2. Summary of significant accounting policies(contd.)

2.9 Property, plant and equipment and depreciation

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 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 recognises 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.

Freehold land is not depreciated. Depreciation of other property, plant and equipment is computed on a straight- line basis over the estimated useful lives of the assets as follows:

Leasehold land 60 - 99 years Long-term leasehold apartment 1.27% Buildings 2% - 18% Plant and machinery 10% - 20% Office equipment, renovation, furniture and fittings 10% - 20% Computers 20% - 33.3% Motor vehicles 10% - 20%

Capital work-in-progress are not depreciated as these assets are not yet available for use.

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 profit or loss in the year the asset is derecognised.

2.10 Investment properties

Investment properties are measured at cost model which is to measure investment properties at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:

Buildings 1% - 2%

A property interest under an operating lease is classified and accounted for as an investment property on a property-by-property basis when the Group holds it to earn rentals or for capital appreciation or both. Any such property interest under an operating lease classified as an investment property is carried at fair value.

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.

Annual Report 2016 78 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

2. Summary of significant accounting policies(contd.)

2.10 Investment properties (contd.)

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 2.9 up to the date of change in use.

2.11 Inventory property

Property acquired or being constructed for sale in the ordinary course of business, rather than to be held for rental or capital appreciation, is held as inventory property and is measured at the lower of cost and net realisable value.

Net realisable value is the estimated selling price in the ordinary course of the business, based on market prices at the reporting date and discounted for the time value of money if material, less costs to completion and the estimated costs of sale.

The cost of inventory property recognised in profit or loss on disposal is determined with reference to the specific costs incurred on the property sold and an allocation of any non-specific costs based on the relative size of the property sold.

2.12 Impairment of non-financial assets

The Group assesses 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 makes 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 except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.

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.

Annual Report 2016 79 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

2. Summary of significant accounting policies(contd.)

2.13 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 financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets.

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

Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other losses or other income.

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

(b) Loans and receivables

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

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

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

Financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold the investment to maturity.

Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisation process.

Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months after the reporting date which are classified as current.

Annual Report 2016 80 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

2. Summary of significant accounting policies(contd.)

2.13 Financial assets (contd.)

(d) Available-for-sale financial assets

Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories.

After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss.

Dividends on an available-for-sale equity instrument are recognised in profit or loss when the Group’s and the Company’s right to receive payment is established.

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less any accumulated impairment losses.

Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date.

A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the Company commit to purchase or sell the asset.

2.14 Impairment of financial assets

The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.

(a) Trade and other receivables and other financial assets carried at amortised cost

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

Annual Report 2016 81 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

2. Summary of significant accounting policies(contd.)

2.14 Impairment of financial assets(contd.)

(a) Trade and other receivables and other financial assets carried at amortised cost(contd.)

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account.

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

(b) Available-for-sale financial assets

Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired.

If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to profit or loss.

Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For available-for-sale debt investments, impairment losses are subsequently reversed in profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in profit or loss.

2.15 Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

Financial liabilities, within the scope of MFRS 139, are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.

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

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include exchange differences.

The Group and the Company have not designated any financial liabilities as at fair value through profit or loss.

Annual Report 2016 82 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

2. Summary of significant accounting policies(contd.)

2.15 Financial liabilities(contd.)

(b) Other financial liabilities

The Group’s and the Company’s other financial liabilities include trade payables, other payables and loans and borrowings.

Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

A financial liability is derecognised when the obligation under the liability is extinguished. 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 a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

2.16 Fair value instruments

The Group and the Company measure financial instruments, such as, embedded derivatives, at fair value at each reporting date. Also, fair values of financial instruments measured at amortised cost are disclosed in Note 43.

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:

- in the principal market for the asset or liability; or - 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 by the Company.

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:

Annual Report 2016 83 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

2. Summary of significant accounting policies(contd.)

2.16 Fair value instruments (contd.)

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.

The Group and the Company determine the policies and procedures for recurring fair value measurement, such as properties and unquoted available-for-sale (“AFS”) financial assets.

External valuers may be involved for valuation of significant assets, such as properties and AFS financial assets. Involvement of external valuers is decided upon annually by the Group and by the Company. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained.

At each reporting date, the Group and the Company analyse the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Group’s and the Company’s accounting policies. For this analysis, the Group and the Company verify the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.

The Group and the Company, in conjunction with the Group’s and the Company’s external valuers, also compare the changes in the fair value of each asset and liability with relevant external sources, where practical, to determine whether the change is reasonable.

For the purpose of fair value disclosures, the Group and the Company have determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

2.17 Income taxes

i. 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.

ii. 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.

Annual Report 2016 84 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

2. Summary of significant accounting policies(contd.)

2.17 Income taxes (contd.)

ii. Deferred tax (contd.)

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.

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.

iii. Sales tax and Goods and Services Tax (“GST”)

Revenues, expenses and assets are recognised net of the amount of sales tax and GST except:

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

- receivables and payables that are stated with the amount of sales tax and GST included.

Annual Report 2016 85 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

2. Summary of significant accounting policies(contd.)

2.17 Income taxes (contd.)

iii. Sales tax and Goods and Services Tax (“GST”)

The net amount of sales tax and GST recoverable from, or payable to, the taxation authority is included as part of other current assets or liabilities in the statements of financial position.

2.18 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.

2.19 Treasury shares

When shares of the Company, that have not been cancelled, recognised as equity are reacquired, the amount of consideration paid is recognised directly in equity. Reacquired shares are classified as treasury shares and presented as a deduction from total equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of treasury shares. When treasury shares are reissued by resale, the difference between the sales consideration and the carrying amount is recognised in equity.

2.20 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term, highly liquid investments with maturity of 3 months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. These also include bank overdrafts that form an integral part of the Group’s and the Company’s cash management.

2.21 Inventories

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

Cost of inventories of merchandise held for resale is determined using the weighted average method.

Cost of manufactured goods is determined using the first in, first out method. The cost of raw materials comprises costs of purchase. The cost of finished goods and work-in-progress comprise costs of raw materials, direct labour, other direct costs and appropriate proportions of manufacturing overheads based on normal operating capacity.

The cost of properties held for sale comprises cost associated with the acquisition of land, direct costs and appropriate proportions of common costs. Cost is determined on a specific identification basis.

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

Annual Report 2016 86 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

2. Summary of significant accounting policies(contd.)

2.22 Leases

i. As lessee

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.

Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life and the lease term.

Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

ii. As lessor

Leases where the Group and the Company retain substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in Note 2.28 (v).

2.23 Borrowings costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.

2.24 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.

Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to a financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.

Annual Report 2016 87 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

2. Summary of significant accounting policies(contd.)

2.25 Provisions

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

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.

2.26 Employee benefits

i. 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. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

ii. Defined contribution plans

Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such contributions are recognised as an expense in profit or loss as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund (“EPF”). The Group’s foreign subsidiary also make contributions to its respective country’s statutory pension scheme.

2.27 Foreign currencies

i. Functional and presentation currency

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

ii. 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. Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined.

Annual Report 2016 88 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

2. Summary of significant accounting policies(contd.)

2.27 Foreign currencies (contd.)

ii. Foreign currency transactions(contd.)

Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation.

Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.

iii. Foreign operations

The results and financial position of foreign operations that have a functional currency different from the presentation currency of the consolidated financial statements are translated into RM as follows:

- Assets and liabilities for each statement of financial position presented are translated at the closing rate prevailing at the reporting date;

- Income and expenses for each statement of comprehensive income are translated at average exchange rates for the year, which approximate the exchange rates at the dates of the transactions; and

- All resulting exchange differences are taken to the foreign currency translation reserve within equity.

Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 January 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the reporting date. Goodwill and fair value adjustments which arose on the acquisition of foreign subsidiaries before 1 January 2006 are deemed to be assets and liabilities of the parent company and are recorded in RM at the rates prevailing at the date of acquisition.

2.28 Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

i. Sale of goods

Revenue is recognised net of sales taxes and upon transfer of significant risks and rewards of ownership to the buyer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

Annual Report 2016 89 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

2. Summary of significant accounting policies(contd.)

2.28 Revenue recognition(contd.)

ii. Sale of completed property

A property is regarded as sold when the significant risks and returns have been transferred to the buyer, which is normally on unconditional exchange of contracts. For conditional exchanges, sales are recognised only when all the significant conditions are satisfied.

iii. Dividend income

Dividend income is recognised when the Group’s right to receive payment is established.

iv. Management fees

Management fees are recognised when services are rendered.

v. Rental income

Rental income is recognised on a straight-line basis over the term of the lease. The aggregate cost of incentives provided to lessees is recognised as a reduction of rental income over the lease term on a straight-line basis.

vi. Interest income

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

vii. Revenue on award credits

Revenue on award credits is recognised based on the number of award credits that have been redeemed in exchange for free or discounted goods, relative to the total number of award credits expected to be redeemed.

2.29 Government grant

Government grant is recognised at its fair value where there is reasonable assurance that the grant will be received and all conditions attached will be met. Where the grant relates to an asset, the fair value is recognised as deferred capital grant in the statements of financial position and is amortised to the statements of comprehensive income over the expected useful life of the relevant asset by equal annual instalments.

Grant contributed towards the acquisition of plant and equipment is deducted from the cost of those assets.

2.30 Land use rights

Land use rights are initially measured at cost. Following initial recognition, land use rights are measured at cost less accumulated amortisation and accumulated impairment losses. The land use rights are amortised over the lease term of 6 years.

Annual Report 2016 90 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

2. Summary of significant accounting policies(contd.)

2.31 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 46, including the factors used to identify the reportable segments and the measurement basis of segment information.

2.32 Contingencies

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

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

2.33 Current and non-current classification

The Group and the Company present assets and liabilities in statements of financial position based on current and non-current classification.

An asset is classified as current when it is:

- expected to be realised or intended to be sold or consumed in normal operating cycle; - held primarily for the purpose of trading; - expected to be realised within 12 months after the reporting period; or - cash and cash equivalents unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

All other assets are classified as non-current.

A liability is classified as current when:

- it is expected to be settled in normal operating cycle; - it is held primarily for the purpose of trading; - it is due to be settled within 12 months after the reporting period; or - there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period.

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities, respectively.

2.34 Offsetting of financial instruments

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

Annual Report 2016 91 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

2. Summary of significant accounting policies(contd.)

2.35 Related parties

A related party is defined as follows:

a) a person or a close member of that person’s family is related to the Company if that person:

(i) has control or joint control over the Company; (ii) has significant influence over the Company; or (iii) is a member of the key management personnel of the Company or of a parent of the Company.

b) an entity is related to the Company if any of the following conditions applies:

(i) if the entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others); (ii) one entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member); (iii) both entities are joint ventures of the same third party; (iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity; (v) the entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity related to the Company. If the Company is itself such a plan, the sponsoring employers are also related to the Company; (vi) the entity is controlled or jointly controlled by a person identified in (a); or (vii) a person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

3. Significant accounting judgements and estimates

The preparation of the financial statements of the Group and of the Company 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

In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements:

i. Classification of property

The Group has developed certain criteria based on MFRS 140: Investment Property in making judgement whether a property qualifies as an investment property. Investment property is a property held to earn rentals or for capital appreciation or both.

The Company has leased out its building to a subsidiary for its use as a supermarket and departmental store and accordingly the building is classified as investment property in the Company’s financial statements. The building is classified as property, plant and equipment in the Group’s financial statements as it is held for use in the supply of goods and services.

Property that is held for sale in the ordinary course of business is classified as inventory property.

Annual Report 2016 92 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

3. Significant accounting judgements and estimates (contd.)

3.1 Judgements made in applying accounting policies(contd.)

ii. Operating lease commitments – the Company as a lessor

The Company has entered into property leases with a subsidiary on its investment properties. The Company has determined that it retains all the significant risks and rewards of ownership of these properties which are leased out as operating leases.

iii. Determination of functional currency

The Group measures foreign currency transactions in the respective functional currencies of the Company and its subsidiaries. In determining the functional currencies of the entities in the Group, judgement is required to determine the currency that mainly influences sales prices for goods and services and of the country whose competitive forces and regulations mainly determines the sales prices of its goods and services. The functional currencies of the entities in the Group are determined based on management’s assessment of the economic environment in which the entities operate and the entities’ process of determining sales prices. Management has assessed that prices are mainly denominated and settled in the respective local currency of the entities of the Group except for one of its subsidiary where USD has significant influence over the subsidiary’s primary economic environment in which the subsidiary operates while the other entities’cost base is mainly denominated in their respective local currency. Therefore, management concluded that the functional currency of the entities of the Group is their respective local currency except that subsidiary where its functional currency is USD.

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.

i. Impairment of goodwill

The Group determines whether goodwill are impaired at least on an annual basis. This requires an estimation of the value-in-use of the cash-generating units (“CGU”) to which goodwill are allocated. Estimating a value-in-use amount requires management to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of the goodwill as at 31 May 2016 of the Group was RM4,665,045 (2015: RM4,665,045) is disclosed in Note 22.

ii. Deferred tax assets

Deferred tax assets are recognised for all unused tax losses and unabsorbed 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. The total carrying value of unrecognised tax losses and capital allowances of the Group is disclosed in Note 36.

iii. Deferred revenue

The Group allocates the consideration received from the sale of goods to the goods sold and the points issued under its loyalty programme. The consideration allocated to the points issued is measured at their fair value.

The carrying amount of deferred revenue allocated to the award credits at the reporting date was RM1,771,475 (2015: RM1,923,157) is disclosed in Note 40.

Annual Report 2016 93 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

3. Significant accounting judgements and estimates (contd.)

3.2 Key sources of estimation uncertainty(contd.)

iv. Impairment loss on investments in subsidiaries, joint venture and associate

The Company carried out the impairment test based on the estimation of the higher of the value-in- use or the fair value less cost to sell of the cash-generating units (“CGU”) to which the investments in subsidiaries, joint venture and associate belong to. Estimating the recoverable amount requires the Company to make an estimate of the expected future cash flows from the CGU and also to determine a suitable discount rate in order to calculate the present value of those cash flows. The Company has recognised impairment loss in respect of investments in subsidiaries and associate.

The carrying amount at the reporting date for investments in subsidiaries, joint venture and associate is disclosed in Notes 18, 19 and 20 respectively.

4. Revenue Group Company 2016 2015 2016 2015 RM RM RM RM

Sales of goods 369,516,508 386,986,245 - - Sales of completed properties - 4,801,892 - - Loan interest income - 2,990 - - Rental income from: - investment property - - 1,656,684 1,656,684 - operating leases, other than those relating to investment property 6,317,427 7,245,266 - - Gross dividends from subsidiaries - - 15,800,000 28,600,000

375,833,935 399,036,393 17,456,684 30,256,684

5. Other operating income Group Company 2016 2015 2016 2015 RM RM RM RM

Advertising and promotional income 333,839 379,206 - - Amortisation of government grant (Note 33) 335,825 50,000 - - Bad debts recovered 13,896 - - - Commission income 4,772 7,742 - - Insurance claim 33,004 3,844 - - Interest income 676,294 1,106,250 2,569,378 3,596,588 Miscellaneous 2,662,580 1,200,669 - - Reversal of allowance for impairment loss (Note 25(a)) 55,508 - - -

4,115,718 2,747,711 2,569,378 3,596,588

Annual Report 2016 94 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

6. Employee benefits expense Group Company 2016 2015 2016 2015 RM RM RM RM

Wages and salaries 24,483,050 22,659,045 - - Executive directors’ remuneration (Note 7) 1,556,493 1,437,626 222,000 192,600 Social security contributions 235,018 212,990 - - Contributions to defined contribution plan 1,828,269 1,667,087 - - Other benefits 2,905,209 2,344,935 - 80

31,008,039 28,321,683 222,000 192,680

7. Directors’ remuneration Group Company 2016 2015 2016 2015 RM RM RM RM Directors of the Company

Executive: Salaries and other emoluments 788,826 423,806 22,000 18,000 Fees 209,000 177,600 200,000 174,600 Bonus 61,000 47,000 - - Contributions to defined contribution plan 79,620 34,912 - -

1,138,446 683,318 222,000 192,600

Non-executive: Other emoluments 49,000 52,500 49,000 52,500 Fees 91,000 74,000 82,000 65,000

140,000 126,500 131,000 117,500

Directors of subsidiaries

Executive: Salaries and other emoluments 356,396 650,735 - - Fees 3,000 9,000 - - Bonus 14,000 14,000 - - Contributions to defined contribution plan 44,651 80,573 - -

418,047 754,308 - -

Non-executive: Fees 150,000 150,000 - -

Total directors’ remuneration (Note 42(b)) 1,846,493 1,714,126 353,000 310,100 Estimated money value of benefits-in-kind 21,479 23,215 - -

Total directors’ remuneration including benefits-in-kind 1,867,972 1,737,341 353,000 310,100

Annual Report 2016 95 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

7. Directors’ remuneration(contd.) Group Company 2016 2015 2016 2015 RM RM RM RM Analysis: Total executive directors’ remuneration (Note 6) 1,556,493 1,437,626 222,000 192,600 Total non-executive directors’ remuneration (Note 8) 290,000 276,500 131,000 117,500

Total directors’ remuneration 1,846,493 1,714,126 353,000 310,100 Estimated money value of benefits-in-kind 21,479 23,215 - -

Total directors’ remuneration including benefits-in-kind 1,867,972 1,737,341 353,000 310,100

The executive directors’ remuneration of the Group amounting to RM1,556,493 (2015: RM1,437,626) are paid to the present directors of the Group.

The number of directors of the Company whose total remuneration during the year fell within the following bands is analysed below:

Number of directors 2016 2015 Executive directors: Below RM50,000 - 1 RM100,001 - RM150,000 1 2 RM250,001 - RM300,000 1 - RM350,001 - RM400,000 2 1

Non-executive directors: Below RM50,000 5 5

8. Other operating expenses

Included in other operating expenses are: Group Company 2016 2015 2016 2015 RM RM RM RM Auditors’ remuneration: - statutory audit - current year 154,127 152,645 25,000 25,000 - underprovision in prior years 12,500 15,500 - 3,000 - other services 6,000 6,000 6,000 6,000 Allowance for impairment of doubtful debts 3,600 55,508 - - Bad debts written off 98,300 116,170 - - Foreign exchange losses/(gains) - realised 250,277 1,988,078 - - - unrealised (638,240) 1,701,979 (44,313) - Non-executive directors’ remuneration (Note 7) 290,000 276,500 131,000 117,500

Annual Report 2016 96 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

9. Finance costs Group Company 2016 2015 2016 2015 RM RM RM RM Interest expense: Bankers’ acceptances 28,996 56,919 - - Bank overdrafts 141,019 11,049 - - Term loans 560,815 657,978 - - Amounts due to subsidiaries - - 630,907 1,954,044 Unwinding of discount on non-current payable 411,558 346,971 - -

1,142,388 1,072,917 630,907 1,954,044

10. Income tax expense Group Company 2016 2015 2016 2015 RM RM RM RM Current year income tax: Malaysian income tax 4,088,110 6,021,556 909,354 821,042 Under/(Over)provision in prior year 210,966 305,710 (950) 130,036

4,299,076 6,327,266 908,404 951,078

Deferred tax (Note 36): Relating to origination and reversal of temporary differences 268,598 (214,365) - - Relating to reduction in Malaysian income tax rate - 9,574 - - Underprovision in prior year 240,981 20,080 - -

509,579 (184,711) - -

Income tax recognised in profit or loss 4,808,655 6,142,555 908,404 951,078

Domestic income tax is calculated at the Malaysian statutory tax rate of 24% (2015: 25%) of the estimated assessable profit for the year.

Taxation of other jurisdictions is calculated at the rates prevailing in the respective jurisdiction.

A reconciliation of income tax expense applicable to profit before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company is as follows: 2016 2015 RM RM Group

Profit before tax 12,429,994 16,277,516

Taxation at Malaysian statutory tax rate of 24% (2015: 25%) 2,983,199 4,069,379 Effect on opening deferred tax of reduction in Malaysian income tax rate - 9,574 Different tax rates in other countries (824) (1,041) Expenses not deductible for tax purposes 1,205,359 2,387,056 Income not subject to tax (151,974) (1,248,582)

Annual Report 2016 97 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

10. Income tax expense (contd.) 2016 2015 RM RM Group (contd.)

Effect of utilisation of previously unrecognised deferred tax assets - (151,920) Utilisation of current year’s reinvestment allowances (373,795) (517,360) Deferred tax assets not recognised during the year 694,743 1,269,659 Underprovision of income tax expense in prior year 210,966 305,710 Underprovision of deferred tax in prior year 240,981 20,080

Income tax expense for the year 4,808,655 6,142,555

Company

Profit before tax 18,126,023 30,621,201

Taxation at Malaysian statutory tax rate of 24% (2015: 25%) 4,350,245 7,655,300 Expenses not deductible for tax purposes 361,744 724,434 Income not subject to tax (3,802,635) (7,558,692) (Over)/Underprovision of income tax expense in prior year (950) 130,036

Income tax expense for the year 908,404 951,078

11. Basic earnings per share

Basic earnings per share amounts are calculated by dividing profit for the year attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year, excluding treasury shares held by the Company.

Diluted earnings per share amounts are calculated by dividing profit for the year from continuing operations, net of tax, attributable to owners of the parent by the weighted average number of ordinary shares outstanding 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. Group 2016 2015 RM RM

Profit for the year attributable to ordinary equity holders of the Company (RM) 7,628,508 10,126,599 Weighted average number of ordinary shares in issue 57,253,648 57,308,848 Basic earnings per share (sen) 13.32 17.67

Diluted earnings per share (sen) 13.32 17.67

Annual Report 2016 98 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

12. Dividend Amount Net dividend per share 2016 2015 2016 2015 RM RM Sen Sen Group and Company

In respect of financial year ended 31 May 2014:

First and final single tier dividend of 6% declared on 17 November 2014 and paid on 18 December 2014 - 3,438,867 - 6.00

In respect of financial year ended 31 May 2015:

First and final single tier dividend of 6% declared on 2 December 2015 and paid on 16 December 2015 3,437,679 - 6.00 -

3,437,679 3,438,867 6.00 6.00

At the forthcoming Annual General Meeting, a first and final single tier dividend of 3.5% in respect of the current financial year ended 31 May 2016, on 57,250,648 ordinary shares (the number of outstanding ordinary shares in issue of the Company as at 31 May 2016 after the set off with 3,749,600 ordinary shares bought back by the Company and held as treasury shares subsequent to year end) amounting to RM2,003,773 (3.5 sen net per share) will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividends when approved by the shareholders will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 May 2017.

13. Property, plant and equipment Office equipment, renovation, furniture, Capital Land and Plant and fittings and Motor work-in- Buildings* machinery computers vehicles progress Total Group RM RM RM RM RM RM

2016

Cost At 1 June 2015 121,920,883 72,262,833 24,293,763 3,232,757 22,260,646 243,970,882 Additions - 2,020,871 397,743 - 9,770,641 12,189,255 Reclassifications 6,746,172 7,216,039 157,322 - (14,119,533) - Write off - (1,059,044) (39,241) - - (1,098,285) Exchange differences - 1,162,671 53,492 - 75 1,216,238

At 31 May 2016 128,667,055 81,603,370 24,863,079 3,232,757 17,911,829 256,278,090

Annual Report 2016 99 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

13. Property, plant and equipment (contd.) Office equipment, renovation, furniture, Capital Land and Plant and fittings and Motor work-in- Buildings* machinery computers vehicles progress Total Group RM RM RM RM RM RM

2016

Accumulated depreciation At 1 June 2015 28,457,429 51,765,127 20,593,069 2,566,642 - 103,382,267 Depreciation charge for the year 2,014,052 4,306,212 983,607 159,864 - 7,463,735 Write off - (1,056,755) (38,591) - - (1,095,346) Exchange differences - 33,927 5,008 - - 38,935

At 31 May 2016 30,471,481 55,048,511 21,543,093 2,726,506 - 109,789,591

Net carrying amount At 31 May 2016 98,195,574 26,554,859 3,319,986 506,251 17,911,829 146,488,499

2015

Cost At 1 June 2014 119,450,098 65,297,711 23,635,944 3,131,457 16,014,632 227,529,842 Additions 2,470,785 1,099,359 953,347 101,300 12,595,597 17,220,388 Reclassifications - 6,349,583 - - (6,349,583) - Write off - (483,820) (295,528) - - (779,348)

At 31 May 2015 121,920,883 72,262,833 24,293,763 3,232,757 22,260,646 243,970,882

Accumulated depreciation At 1 June 2014 25,824,513 47,917,637 19,744,941 2,380,023 - 95,867,114 Depreciation charge for the year 2,632,916 4,331,310 1,141,818 186,619 - 8,292,663 Write off - (483,820) (293,690) - - (777,510)

At 31 May 2015 28,457,429 51,765,127 20,593,069 2,566,642 - 103,382,267

Net carrying amount At 31 May 2015 93,463,454 20,497,706 3,700,694 666,115 22,260,646 140,588,615

Annual Report 2016 100 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

13. Property, plant and equipment (contd.)

* Land and buildings Short-term Long-term Long-term Freehold leasehold leasehold leasehold land land land apartment Buildings Total Group RM RM RM RM RM RM

2016

Cost At 1 June 2015 4,521,690 3,313,143 17,370,000 1,030,570 95,685,480 121,920,883 Reclassifications - - 6,746,172 - - 6,746,172

At 31 May 2016 4,521,690 3,313,143 24,116,172 1,030,570 95,685,480 128,667,055

Accumulated depreciation At 1 June 2015 - 1,063,683 1,798,409 41,704 25,553,633 28,457,429 Depreciation charge for the year - 63,848 231,673 13,212 1,705,319 2,014,052

At 31 May 2016 - 1,127,531 2,030,082 54,916 27,258,952 30,471,481

Net carrying amount At 31 May 2016 4,521,690 2,185,612 22,086,090 975,654 68,426,528 98,195,574

2015

Cost At 1 June 2014 4,521,690 3,313,143 17,370,000 1,030,570 93,214,695 119,450,098 Additions - - - - 2,470,785 2,470,785

At 31 May 2015 4,521,690 3,313,143 17,370,000 1,030,570 95,685,480 121,920,883

Accumulated depreciation At 1 June 2014 - 999,835 1,096,591 28,492 23,699,595 25,824,513 Depreciation charge for the year - 63,848 701,818 13,212 1,854,038 2,632,916

At 31 May 2015 - 1,063,683 1,798,409 41,704 25,553,633 28,457,429

Net carrying amount At 31 May 2015 4,521,690 2,249,460 15,571,591 988,866 70,131,847 93,463,454

Annual Report 2016 101 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

13. Property, plant and equipment (contd.) Office equipment, renovation, furniture, Plant and fittings and Motor machinery computers vehicles Total Company RM RM RM RM

2016

Cost At 1 June 2015 / At 31 May 2016 1,443,263 44,295 535,017 2,022,575

Accumulated depreciation At 1 June 2015 1,441,812 43,541 535,016 2,020,369 Depreciation charge for the year 299 630 - 929

At 31 May 2016 1,442,111 44,171 535,016 2,021,298

Net carrying amount At 31 May 2016 1,152 124 1 1,277

2015

Cost At 1 June 2014 / At 31 May 2015 1,443,263 44,295 535,017 2,022,575

Accumulated depreciation At 1 June 2014 1,441,513 42,911 535,016 2,019,440 Depreciation charge for the year 299 630 - 929

At 31 May 2015 1,441,812 43,541 535,016 2,020,369

Net carrying amount At 31 May 2015 1,451 754 1 2,206

(a) Included in property, plant and equipment are:

(i) a motor vehicle of the Company with net carrying amount of RM1 (2015: RM1) which is registered under the name of an employee of a subsidiary in trust for the Company;

(ii) motor vehicles of a subsidiary with net carrying amount of RM10,901 (2015: RM29,037) which are registered under the name of a director of the Company, i.e. Dato’ Hwang Thean Long in trust for the said subsidiary;

(iii) freehold land and building of a subsidiary with a net carrying amount of RM4,521,690 (2015: RM4,521,690) and RM32,133,782 (2015: RM32,810,141) respectively, pledged to a bank to secure bank borrowings as disclosed in Note 34; and

Annual Report 2016 102 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

13. Property, plant and equipment (contd.)

(a) Included in property, plant and equipment are: (contd.)

(iv) fully depreciated property, plant and equipment which are still in use with the following costs:

Group Company 2016 2015 2016 2015 RM RM RM RM

Buildings 12,095,359 12,095,359 - - Plant and machinery 47,076,168 30,081,718 1,440,273 1,440,273 Office equipment, renovation, furniture and fittings 12,845,691 12,159,974 18,290 18,290 Computers 4,951,380 4,953,611 21,803 21,803 Motor vehicles 1,858,228 1,622,473 535,017 535,017

78,826,826 60,913,135 2,015,383 2,015,383

(b) The short-term leasehold land has unexpired lease of 33 years to 34 years (2015: 34 years to 35 years).

(d) The long-term leasehold apartment has an unexpired lease of 74 years (2015: 75 years).

(e) Included in the buildings of the Group are buildings erected on land leased from statutory bodies with a net carrying amount of RM1,566,572 (2015: RM1,777,005).

14. Investment property Company 2016 2015 Leasehold land and building RM RM

Cost At 1 June 2015 / 31 May 2016 29,078,033 29,078,033

Accumulated depreciation At 1 June 2015 / 2014 6,050,913 5,577,742 Depreciation charge for the year 473,171 473,171

At 31 May 2016 / 2015 6,524,084 6,050,913

Net carrying amount At 31 May 2016 / 2015 22,553,949 23,027,120

Company

The investment property of the Company has an open market value of approximately RM31,490,000 (2015: RM28,100,000) and is leased to a subsidiary for its use as a supermarket and departmental store.

The title deed of the investment property is registered under the name of a corporate shareholder of the Company, i.e. Suiwah Holdings Sdn. Bhd., a company in which a director of the Company, i.e. Dato’ Hwang Thean Long has a substantial interest. The strata title of the building is in the process of being transferred to the Company.

Annual Report 2016 103 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

14. Investment property (contd.)

Direct operating expenses incurred by the Company on the investment property during the financial year amounted to RM675,008 (2015: RM660,511).

Valuation technique and inputs used in the fair value disclosure is shown below:

Significant Fair value Valuation unobservable Description RM technique input Range

At 31 May 2016

Leasehold land and building 31,490,000 Market Price per RM272 - comparable square feet RM747 approach

At 31 May 2015

Leasehold land and building 28,100,000 Market Price per RM272 - comparable square feet RM608 approach

15. Inventory property Group 2016 2015 RM RM Non-current Note Land held for property development (a) 6,887,567 6,865,612

Current Property development cost (b) 18,137,059 16,950,609

25,024,626 23,816,221

(a) Land held for property development Freehold Development land cost Total RM RM RM Group

2016 At 1 June 2015 4,470,910 2,394,702 6,865,612 Costs incurred during the year - 21,955 21,955

At 31 May 2016 4,470,910 2,416,657 6,887,567

2015 At 1 June 2014 - - - Reclassification 4,470,910 2,394,702 6,865,612

At 31 May 2015 4,470,910 2,394,702 6,865,612

Annual Report 2016 104 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

15. Inventory property (contd.)

(b) Property development costs Freehold Leasehold Development land land costs Total RM RM RM RM Group

2016 At 1 June 2015 - 12,417,091 4,533,518 16,950,609 Costs incurred during the year - - 1,186,450 1,186,450

At 31 May 2016 - 12,417,091 5,719,968 18,137,059

2015 At 1 June 2014 4,470,910 12,417,091 6,637,713 23,525,714 Costs incurred during the year - - 290,507 290,507 Reclassification (4,470,910) - (2,394,702) (6,865,612)

At 31 May 2015 - 12,417,091 4,533,518 16,950,609

The long term leasehold land has an unexpired lease of 88 years (2015: 89 years).

16. Land use rights Group 2016 2015 RM RM

At 1 June 2015 / 2014 - 41,143 Amortisation during the year - (41,143)

At 31 May 2016 / 2015 - -

17. Intangible asset Group 2016 2015 RM RM Patent license Cost: At 1 June 2015 / 2014 6,905,900 6,905,900 Exchange differences 871,472 -

At 31 May 2016 / 2015 7,777,372 6,905,900

Accumulated amortisation: At 1 June 2015 / 2014 719,365 374,070 Amortisation during the year 383,488 345,295 Exchange differences 96,159 -

At 31 May 2016 / 2015 1,199,012 719,365

Net carrying amount: At 31 May 2016 / 2015 6,578,360 6,186,535

Annual Report 2016 105 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

18. Investments in subsidiaries Company 2016 2015 RM RM

Unquoted shares in Malaysia, at cost: 68,981,166 69,260,773 Accumulated impairment losses (962,154) (962,154)

68,019,012 68,298,619

During the financial year, a subsidiary, Great Support Sdn. Bhd. (“GSSB”), which has been placed under members’ voluntary winding-up (Note 18 (c)) has initiated its first return of approximately RM279,607, being the surplus of assets to the Company by way of cash.

Impairment assessment

As at 31 May 2016, the Company carried out a review of the recoverable amount of its investments in subsidiaries. The review has led to the retention of the impairment loss of RM962,154 previously recognised in profit or loss.

(a) Details of the Group’s subsidiaries are as follows: Proportion Non- of ownership controlling Name of Country of interest interests subsidiaries incorporation Principal activities 2016 2015 2016 2015 % % % %

Sunshine Wholesale Mart Malaysia Operator of a 100 100 - - Sdn. Bhd. supermarket and epartmental store and money lending

Sunshine Paramount Sdn. Malaysia Trading of construction 100 100 - - Bhd. (formerly known as materials Sunshine Supermarket & Departmental Store Sdn. Bhd.) (i)

Sunshine Link Sdn. Bhd. Malaysia Investment holding 100 100 - -

Aljano Sdn. Bhd. Malaysia Trading in general 100 100 - - merchandise, garments and construction materials

Magirex Sdn. Bhd. Malaysia Property investment 100 100 - -

Sunshine Electrical Malaysia Supply of electricity 100 100 - - Superstore Sdn. Bhd.

Great Support Sdn. Bhd. Malaysia Property development 75 75 25 25

Crimson Omega Sdn. Bhd. Malaysia Property development 100 100 - -

Silver Resort Sdn. Bhd. Malaysia Property development 100 100 - -

Annual Report 2016 106 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

18. Investments in subsidiaries (contd.)

(a) Details of the Group’s subsidiaries are as follows: (contd.) Proportion Non- of ownership controlling Name of Country of interest interests subsidiaries incorporation Principal activities 2016 2015 2016 2015 % % % %

Sunshine Amanjaya Malaysia Sub-letting of properties 100 100 - - Sdn. Bhd. (ii) and trading of merchandise goods

Sunshine (Labuan) Private Malaysia Dormant 100 100 - - Limited (ii)

Qdos Holdings Bhd. Malaysia Investment holding 100 100 - -

Sunshine Amanjaya Pte. Malaysia International trading 51 51 49 49 Ltd. (ii), (iii) business

PT. Sunshine Amanjaya Indonesia Intended principal 100 100 - - Indonesia (iv) activities are to act as a main distributor, importer, and exporter of merchandise goods

Held under Qdos Holdings Bhd.

Qdos Flexcircuits Sdn. Bhd. Malaysia Manufacturing of flexible 100 100 - - printed circuit boards

Qdos Technology Sdn. Bhd. Malaysia Researching, developing, 100 100 - - designing and prototyping of flexible printed circuit boards

Qdos Marketing Sdn. Bhd. Malaysia Designing flexible printed 100 100 - - circuit boards and trading in general merchandise

Qdos Interconnect Sdn. Bhd. Malaysia Manufacturing and trading in 100 100 - - semiconductor

Held under Qdos Flexcircuits Sdn. Bhd.

Qdos Flexcircuits (India) India Intended principal activity is 100 100 - - Private Limited (ii) to design flexible printed circuit boards

Annual Report 2016 107 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

18. Investments in subsidiaries (contd.)

(a) Details of the Group’s subsidiaries are as follows: (contd.)

(i) In prior year, the retail operation has been transferred to Sunshine Wholesale Mart Sdn. Bhd.. On 26 November 2015, the subsidiary has changed its name from Sunshine Supermarket & Departmental Store Sdn. Bhd. to Sunshine Paramount Sdn. Bhd.;

(ii) Audited by firms of auditors other than Ernst & Young;

(iii) The Company has a 50% equity interest in the subsidiary and the remaining 1% equity interest is held by a wholly owned subsidiary, Sunshine Wholesale Mart Sdn. Bhd.;

(iv) The Company has a 99% equity interest in the subsidiary and the remaining 1% equity interest is held by a wholly owned subsidiary, Sunshine Amanjaya Sdn. Bhd.;

(b) Summarised financial information of Great Support Sdn. Bhd. which has non-controlling interests that is material to the Group is set out below. The summarised financial information presented below is the amount before inter- company elimination. The non-controlling interests in respect of Sunshine Amanjaya Pte Ltd is not material to the Group.

(i) Summarised statement of financial position 2016 2015 RM RM

Non-current assets - - Current assets 709,141 3,172,642

Total assets 709,141 3,172,642

Current liabilities, representing total liabilities 4,651 4,651

Net assets 704,490 3,167,991

Equity attributable to: - owners of the Company 528,368 2,375,993 - non controlling interests 176,122 791,998

(ii) Summarised statement of comprehensive income

2016 2015 RM RM

Revenue - - Profit for the year, representing total comprehensive income for the year - 56,387

Profit for the year, representing total comprehensive income for the year attributable to: - owners of the Company - 42,290 - non controlling interests - 14,097

Dividend paid to non controlling interests - -

Annual Report 2016 108 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

18. Investments in subsidiaries (contd.)

(iii) Summarised cash flows 2016 2015 RM RM

Net cash from/(used in) operating activities 75,212 (165,369) Net cash (used in)/from investing activities (2,463,501) 64,256

Net decrease in cash and cash equivalents (2,388,289) (101,113) Cash and cash equivalents as at 1 June 2015 / 2014 3,079,398 3,180,511

Cash and cash equivalents as at 31 May 2016 / 2015 691,109 3,079,398

(c) On 25 May 2015, at Great Support Sdn. Bhd.’s Extraordinary General Meeting, a resolution was passed for it to be voluntarily wound up by way of a Member’s Voluntary Winding-up pursuant to Section 254(1)(b) of the Companies Act 1965 with effect from that date. As at 31 May 2016, the Member’s Voluntary Winding-up for Great Support Sdn. Bhd. is still in progress.

19. Investment in a joint venture Group 2016 2015 RM RM

Unquoted shares outside Malaysia, at cost 15,063,373 15,063,373 Share of post acquisition reserve 39,707 (68,923) Exchange differences (1,414,785) (2,281,236)

13,688,295 12,713,214

During the year ended 31 May 2011, the Group’s subsidiaries, Qdos Flexcircuits Sdn. Bhd. and its subsidiary, Qdos Flexcircuits (India) Private Limited have entered into a Shareholders’ Agreement with M.J Shantharam, Valdel Real Estate Pvt. Ltd and Exora Technologies Private Limited (‘’Exora’’) to subscribe up to 22,500,000 new shares of Rupees 10 each in Exora, representing 49% of the equity interest in Exora, for a total cash consideration of approximately RM15 million.

As at 31 May 2014, the Group’s subsidiaries have in total subscribed for 22,151,893 shares of Rupees 10 each in Exora, representing 49% of the equity interest in Exora for a total cash consideration of RM15,063,373.

The Group has 49% of the voting rights of its joint arrangement. Under the contractual arrangement, unanimous consent is required from all parties to the agreement for all relevant activities.

The joint arrangement is structured via a separate entity and provides the Group with the rights to the net assets of the entity under the arrangement. Therefore, this entity is classified as a joint venture of the Group.

Annual Report 2016 109 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

19. Investment in a joint venture (contd.)

(a) Details of the joint venture are as follows:

% of ownership interest held Accounting by the Group model Name of joint venture 2016 2015 Nature of relationship applied

Held under Qdos Flexcircuits Sdn. Bhd. and its subsidiary

Incorporated in India

Exora Technologies Private Limited 49 49 It is strategic for the Group’s business Equity development in India to venture method into the development of commercial/ residential properties in India through a special purpose vehicle.

(b) Summarised financial information of Exora is set out as below. The summarised information represents the amounts in the MFRS financial statements of the joint venture and not the Group’s share of those amounts.

(i) Summarised statement of financial position 2016 2015 RM RM Assets Non-current assets 5,403,292 5,055,841

Current Trade receivables 766,032 2,479,730 Cash and cash equivalents 5,038,293 4,412,897 Short term loans and advances 9,049,655 12,766,940 Other current assets 38,313,087 22,379,850

53,167,067 42,039,417

Total assets 58,570,359 47,095,258

Current liabilities Short term borrowings 5,616,547 6,215,769 Trade payables 202,563 153,906 Other current liabilities 15,201,861 5,816,538 Share application monies 9,810,532 9,160,152

Total liabilities 30,831,503 21,346,365

Net assets 27,738,856 25,748,893

Annual Report 2016 110 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

19. Investment in a joint venture (contd.)

(ii) Summarised statement of comprehensive income 2016 2015 RM RM

Revenue 1,125,243 - Cost of sales (1,111,313) - Other income 389,649 247,822 Administration expenses (55,411) (58,954) Finance cost (859) (203) Other expenses (12,744) (354,525)

Profit/(Loss) before tax 334,565 (165,860) Tax expense (112,897) -

Profit/(Loss) after tax, representing total comprehensive income 221,668 (165,860)

(c) Reconciliation of the summarised financial information presented above to the carrying amount of the Group’s interest in joint venture: 2016 2015 RM RM

Current assets 53,167,067 42,039,417 Non-current assets 5,403,292 5,055,841 Current liabilities (30,831,503) (21,346,365)

Net assets at 31 May 27,738,856 25,748,893

Interest in joint venture 13,592,039 12,616,958 Goodwill 96,256 96,256

Carrying value of the Group’s interest in joint ventures 13,688,295 12,713,214

20. Investment in an associate Group Company 2016 2015 2016 2015 RM RM RM RM

Unquoted shares outside Malaysia, at cost 1,631,726 1,631,726 1,631,726 1,631,726 Accumulated impairment losses - - (1,631,726) (1,631,726)

1,631,726 1,631,726 - - Share of post acquisition reserve (1,513,625) (1,513,625) - - Exchange difference (118,101) (118,101) - -

- - - -

Impairment assessment

The Company has carried out a review of the recoverable amount of its investment in associate due to its net liability position. The review has led to the retention of the impairment loss of RM1,631,726 previously recognised in profit or loss, reducing the net carrying amount of the investment to nil.

Annual Report 2016 111 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

20. Investment in an associate (contd.)

(a) Details of the associate are as follows:

% of ownership interest held Accounting by the Group model Name of associate 2016 2015 Nature of relationship applied

Incorporated in India

Valdel Oil and Gas Private 25 25 The intended principal activity is to Equity Limited (“VOG”) carry on business connected with method oil and natural gas.

(b) Summarised financial information of VOG is set out below. The summarised financial information represents the amounts in the MFRS financial statements of the associate and not the Group’s share of those amounts.

(i) Summarised statement of financial position 2016 2015 RM RM

Non-current assets 2,828,324 5,462,109 Current assets 201,357 410,738

Total assets 3,029,681 5,872,847

Non-current liabilities - 374 Current liabilities 3,876,417 7,274,751

Total liabilities 3,876,417 7,275,125

Net liabilities (846,736) (1,402,278)

(ii) Summarised statement of comprehensive income 2016 2015 RM RM

Revenue 312,803 547,690 Loss before tax (109,666) (188,975) Loss after tax, representing total comprehensive income (109,666) (188,975)

21. Investment securities Group 2016 2015 RM RM Non-current

Available-for-sale financial assets - - Equity instruments (quoted in Malaysia) 2,841 2,841 - Equity instruments (quoted outside Malaysia) 273 273

3,114 3,114

Market value 4,693 6,023

Annual Report 2016 112 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

22. Goodwill on consolidation Group 2016 2015 RM RM

At 31 May 4,665,045 4,665,045

Impairment test on goodwill

(a) Allocation of goodwill

Goodwill has been allocated to the Group’s cash-generating units (“CGU”) identified according to the business segment and relates to the manufacturing and designing of flexible printed circuits boards as follows:

2016 2015 RM RM

Manufacturing 4,665,045 4,665,045

(b) Key assumptions used in value-in-use (“VIU”) calculations

The recoverable amount of the CGU is determined based on VIU calculations using cash flow projections based on financial forecasts approved by management covering a 5-year period.

The following describes each key assumption on which management has based its cash flow projection for VIU calculations of CGU to undertake impairment testing of goodwill:

(i) Budgeted gross margin

The basis used to determine the value assigned to the budgeted gross margin is the average gross margin achieved in the year immediately before the budgeted year adjusted for expected efficiency improvement, market and economic conditions and internal resource efficiency, where applicable.

(ii) Growth rate

The weighted average growth rate used is consistent with the long term average growth rate for the relevant industry. The forecasted growth rate used to extrapolate cash flows beyond the five-year period is 3.6% (2015: 3.6%).

(iii) Discount rate

The discount rate used is on a basis that reflects specific risks relating to the relevant business segment. The pre-tax discount rate applied to the cash flow projections is 8.95% (2015: 10.93%).

Sensitivity to changes in assumptions

With regard to the assessment of value-in-use of the CGU, management believes that no reasonable change in any of the above key assumptions would cause the carrying value of the CGU to materially exceed its recoverable amount.

Annual Report 2016 113 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

23. Prepayment

The Group intends to develop the existing long-term leasehold land into one block of complex with a 39-storey commercial space and a 2-storey basement (“Development”). During the financial year ended 31 May 2015, the Group has obtained the approval to construct the Development from the Housing Development Authority.

On 10 March 2015, the Group and the Trustees of Leong San Tong Khoo Kongsi (Penang) Registered (the “Owner”) have entered into an agreement to create a fresh lease of 99 years from the date of issuance of strata titles in respect of the Development if the strata title is issued before 1 December 2021 or a lease expiring on 1 December 2120 if the strata title is issued on or after 1 December 2021. The leasehold land has an unexpired lease of 88 years as at the reporting date.

According to the agreement, the Group is liable to pay a consideration amounting to RM7.6 million as set out below:

(i) RM500,000 shall be paid upon the execution of the agreement; and (ii) RM7.1 million shall be paid within 30 days from the date of issuance of the strata titles in respect of the said Development by the relevant authorities (i.e. on or before 1 December 2021).

The long term prepayment of RM500,000 represents the amount fully paid upon the execution of the agreement.

24. Inventories Group 2016 2015 RM RM At cost:

Merchandise held for resale 18,602,574 21,168,567 Raw materials 6,892,728 7,979,172 Work-in-progress 3,823,710 3,911,140 Semi finished goods 643,830 - Finished goods 4,316,465 1,708,797 Properties held for sale 965,128 965,128 Spare parts 804,753 1,472,980 Inventory-in-transit 585,950 -

36,635,138 37,205,784

At net realisable value:

Finished goods 412,007 -

37,047,145 37,205,784

The cost of inventories recognised as an expense during the year amounted to RM279,237,557 (2015: RM304,572,268). A write down of inventories to net realisable value amounting to RM245,807 (2015: RM Nil) was made during the year. In prior year, a reversal of write-down of inventories amounting to RM330,780 was made when the related inventories were sold above their carrying amounts.

Annual Report 2016 114 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

25. Trade and other receivables Group Company 2016 2015 2016 2015 RM RM RM RM Trade receivables

Third parties 20,933,925 29,165,377 - - Allowance for impairment (3,600) (55,508) - -

Trade receivables, net 20,930,325 29,109,869 - -

Other receivables

Due from subsidiaries: - Magirex Sdn. Bhd. - - 712,328 1,249,870 - Sunshine Paramount Sdn. Bhd. (formerly known as Sunshine Supermarket & Departmental Store Sdn. Bhd.) - - 11,896,035 6,651,016 - Sunshine Wholesale Mart Sdn. Bhd. - - - 1,628,578 - Sunshine (Labuan) Private Limited - - 16,966 6,660 - Sunshine Amanjaya Pte. Ltd. - - - 471 - Sunshine Electrical Superstore Sdn. Bhd. - - - 159,673 - Sunshine Link Sdn. Bhd. - - 47,124 41,510 - Silver Resort Sdn. Bhd. - - 5,678,732 8,141,823 - Crimson Omega Sdn. Bhd. - - 38,004,391 30,814,201 - Qdos Flexcircuits Sdn. Bhd. - - 2,367 9,802 - Qdos Technology Sdn. Bhd. - - 40 40 - Qdos Marketing Sdn. Bhd. - - 22 22

Deposits for: - Rental 769,835 758,433 - - - Others 936,079 894,852 1,000 1,000 Rental income receivable 109,680 81,244 - - Sundry receivables 1,125,918 1,575,788 - 103,926

Other receivables 2,941,512 3,310,317 56,359,005 48,808,592

Total trade and other receivables 23,871,837 32,420,186 56,359,005 48,808,592 Add: Loan receivables (Note 27) 2,000 1,500 - - Add: Cash and bank balances (Note 29) 26,353,453 25,489,950 13,147,676 5,345,711

Total loans and receivables 50,227,290 57,911,636 69,506,681 54,154,303

(a) Trade receivables

The Group’s primary exposure to credit risk arises through the trade receivables of its subsidiaries carrying out manufacturing activities. The Group’s trading terms with its customers are mainly on credit, except for new customers, where payment in advance is normally required. The normal credit periods range from 30 to 90 days (2015: 30 to 75 days). Other credit terms are assessed and approved on a case-by-case basis. The Group seeks to maintain strict control over its outstanding receivables and has a credit control department to minimise credit risk. Overdue balances are reviewed regularly by senior management.

At 31 May 2016, the Group has significant exposure to a group of customers, which constitutes approximately 60% (2015: 43%) of the trade receivables as at year end.

Annual Report 2016 115 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

25. Trade and other receivables (contd.)

(a) Trade receivables (contd.)

Ageing analysis of trade receivables

The ageing analysis of the Group’s trade receivables is as follows: 2016 2015 RM RM

Neither past due nor impaired 12,734,363 16,801,003

1 to 30 days past due not impaired 5,154,944 6,943,381 31 to 60 days past due not impaired 2,598,761 2,741,720 61 to 90 days past due not impaired 317,647 1,027,562 91 to 120 days past due not impaired 110,595 738,511 More than 121 days past due not impaired 14,015 857,692

8,195,962 12,308,866 Impaired 3,600 55,508

20,933,925 29,165,377

Receivables that are neither past due nor impaired

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

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 RM8,195,962 (2015: RM12,308,866) that are past due at the reporting date but not impaired. These relate to customers which have no recent history of default and are monitored on an on-going basis. The receivables that are past due but not impaired are unsecured in nature.

Receivables that are impaired

The Group’s trade receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows: Group 2016 2015 RM RM Trade receivables: - nominal amounts 3,600 55,508 Allowance for impairment (3,600) (55,508)

- -

Movement in allowance accounts: Group 2016 2015 RM RM

At 1 June 2015 / 2014 55,508 - Charge for the year (Note 8) 3,600 55,508 Reversal of impairment loss (Note 5) (55,508) -

At 31 May 2016 / 2015 3,600 55,508

Annual Report 2016 116 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

25. Trade and other receivables (contd.)

(b) Amounts due from subsidiaries

Amounts due from subsidiaries are bearing interest ranging from 4% to 4.61% (2015: 4% to 4.72%) per annum and are repayable on demand. These amounts are unsecured and are to be settled in cash.

Further details on related party transactions are disclosed in Note 42.

Other information on financial risks of receivables are disclosed in Note 44.

26. Other current assets Group Company 2016 2015 2016 2015 RM RM RM RM

Prepayments 5,935,232 2,047,153 17,977 18,400 Goods and Services Tax recoverable 593,277 32,993 - - Share application monies 6,418,800 6,418,800 - -

12,947,309 8,498,946 17,977 18,400

Included in prepayments of the Group is transaction costs incurred amounting to RM2,881,427 (2015: RM1,000,000) for banking facilities to construct the Development project as disclosed in Note 23. As at the reporting date, the loan has yet to be drawndown by the Group.

Share application monies relate to the subscription of 49% equity interest in Exora Technologies Private Limited (“Exora”), a joint venture of the Group which is incorporated in India by a subsidiary, Qdos Flexcircuits (India) Private Limited (“Qdos India”). The new shares have yet to be allotted to Qdos India as at the reporting date, pending the increase in authorized share capital in Exora. The share application money has been pending for 22 months beyond the period for allotments.

27. Loan receivables Group 2016 2015 RM RM

Unsecured advances repayable within twelve months 2,000 1,500

The advances are made by a subsidiary, Sunshine Wholesale Mart Sdn. Bhd. whose principal activities include that of money lending under the Moneylenders Act 1951. The advances bear interest rates at Nil (2015: 6% to 12%) per annum.

Annual Report 2016 117 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

28. Short term investments Group 2016 2015 RM RM Financial assets at fair value through profit or loss - Unit trust funds (quoted in Malaysia) 7,669,520 15,804,309 - Unquoted investments 1,323,432 487,717

8,992,952 16,292,026

Market value of quoted unit trust funds 7,669,520 15,804,309

Other information on financial risks of short term investments is disclosed in Note 44.

29. Cash and bank balances Group Company 2016 2015 2016 2015 RM RM RM RM

Cash on hand and at banks 25,485,836 23,102,194 13,147,676 5,345,711 Deposits with licensed banks: - short term placements - 1,500,000 - - - fixed deposits 867,617 887,756 - -

26,353,453 25,489,950 13,147,676 5,345,711

Deposits with licensed banks of the Group amounting to RM80,901 (2015: RM443,274) have been pledged to banks as collaterals for bank facilities and bankers’ guarantees obtained.

Deposits with licensed banks of the Group amounting to RM231,356 (2015: RM213,854) are held in trust by a director.

The range of interest rates earned per annum and the maturities period during the financial year for short term placements and fixed deposits were as follows: 2016 2015

Interest rates 2.95% - 8.50% 2.95% - 8.85% Maturity period 365 - 366 days 3 - 365 days

Other information on financial risks of cash and cash equivalents is disclosed in Note 44.

Annual Report 2016 118 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

29. Cash and bank balances (contd.)

For the purposes of the statements of cash flows, cash and cash equivalents comprise the following as at the reporting date: Group Company 2016 2015 2016 2015 RM RM RM RM

Deposits with licensed banks 867,617 2,387,756 - - Less: Fixed deposits pledged to banks (80,901) (443,274) - - Fixed deposits (more than 90 days) (786,716) (444,482) - -

- 1,500,000 - - Add: Cash on hand and at banks 25,485,836 23,102,194 13,147,676 5,345,711 Less: Bank overdraft (Note 34) (2,261,076) (5,152,026) - -

Cash and cash equivalents 23,224,760 19,450,168 13,147,676 5,345,711

30. Share capital, share premium and treasury shares

Number of ordinary shares of RM1 each Amount Share Share capital capital (issued and Treasury (issued and Treasury Share fully paid) shares fully paid) shares premium RM RM RM

At 1 June 2014 61,000,248 (3,681,100) 61,000,248 (5,374,381) 13,934,711 Purchase of treasury shares - (10,300) - (28,571) -

At 31 May 2015 61,000,248 (3,691,400) 61,000,248 (5,402,952) 13,934,711

At 1 June 2015 61,000,248 (3,691,400) 61,000,248 (5,402,952) 13,934,711 Purchase of treasury shares - (55,200) - (146,844) -

At 31 May 2016 61,000,248 (3,746,600) 61,000,248 (5,549,796) 13,934,711

Number of ordinary Amount shares of RM1 each 2016 2015 2016 2015 RM RM Authorised:

At 1 June and 31 May 100,000,000 100,000,000 100,000,000 100,000,000

There is no movement in issued and fully paid/ authorised share capital during the year.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.

Annual Report 2016 119 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

30. Share capital, share premium and treasury shares (contd.)

(a) Treasury shares

The shareholders of the Company, by an ordinary resolution passed in the last annual general meeting held on 26 November 2015, renewed their mandate for the Company to buy back its own ordinary shares.

During the financial year, the Company bought back 55,200 (2015: 10,300) ordinary shares of RM1.00 each (“Shares”) from the open market at an average price of RM2.66 (2015: RM2.77) per Share. The total consideration paid for the share buy back was RM 146,844 (2015: RM28,571), including transaction costs of RM611 (2015: RM157). The Shares bought back are retained as treasury shares. None of the treasury shares held were resold or cancelled during the financial year.

As at 31 May 2016, the Company held a total of 3,746,600 Shares (2015: 3,691,400) as treasury shares out of its total issued and paid up share capital. Hence, the number of outstanding Shares in issue after deducting the treasury shares as at 31 May 2016 was 57,253,648 (2015: 57,308,848) Shares. The treasury shares have no rights to voting, dividends or participation in other distribution.

Subsequent to the financial year end, the Company bought back 3,000 of its issued ordinary shares from the open market at an average price of RM2.40 per Share. The total consideration paid for the share buy back was RM7,242, including transaction costs of RM42. The purchase transactions were financed by internally generated funds.

31. Other reserve (non-distributable) Foreign currency translation reserve 2016 2015 Group RM RM

At 1 June 2015 / 2014 (2,087,621) (2,912,370) Foreign currency translation 1,600,064 824,749

At 31 May 2016 / 2015 (487,557) (2,087,621)

Other reserve of the Group represents foreign currency translation reserve. The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency. It is also used to record the exchange differences arising from monetary items which form part of the Group’s net investment in foreign operations, where the monetary item is denominated in either the functional currency of the reporting entity or the foreign operation.

32. Retained earnings

The Company may distribute dividends out of its entire retained earnings as at 31 May 2016 and 31 May 2015 under the single tier system.

As at 31 May 2016, the Company has tax exempt profits available for distribution of approximately RM226,897 (2015: RM226,897), subject to the agreement of the Inland Revenue Board.

Annual Report 2016 120 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

33. Government grant Group 2016 2015 RM RM Cost: At 1 June 2015 / 31 May 2016 400,000 400,000 Received during the year 3,687,571 -

4,087,571 400,000

Accumulated amortisation: At 1 June 2015 / 2014 285,417 235,417 Amortisation during the year (Note 5) 335,825 50,000

At 31 May 2016 / 2015 621,242 285,417

Net carrying amount: Current 419,531 50,000 Non-current 3,046,798 64,583

3,466,329 114,583

Government grant relates to grant received for the acquisition of plant and equipment for development activities undertaken by subsidiaries of the Group to promote technology advancement. There are no unfulfilled conditions or contingencies attached to the grant.

34. Borrowings Group 2016 2015 RM RM Short term borrowings: Secured: Bank overdraft (Note 29) 2,261,076 5,152,026 Bankers’ acceptances 2,997,091 -

Term loan 6,077,904 5,926,361

Long term borrowings: Secured: Term loan 9,280,326 10,103,992

Total borrowings: Bank overdraft 2,261,076 5,152,026 Bankers’ acceptances 2,997,091 - Term loan 10,100,063 10,878,327

15,358,230 16,030,353

Maturity of borrowings: On demand or within one year 6,077,904 5,926,361 More than 1 year and less than 2 years 865,115 1,681,537 More than 2 years and less than 5 years 2,892,364 2,883,040 More than 5 years 5,522,847 5,539,415

15,358,230 16,030,353

Annual Report 2016 121 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

34. Borrowings (contd.)

The bank borrowings of the Group are secured by way of:

(i) a corporate guarantee by the Company;

(ii) a first party first fixed charge over a piece of land and building of a subsidiary with a net carrying amount of RM4,521,690 (2015: RM4,521,690) and RM32,133,782 (2015: RM32,810,141) respectively as disclosed in Note 13.

Bank overdraft is denominated in RM and bears an interest rate of 6% (2015: 6%) per annum.

The bankers’ acceptances bear interest rates at the reporting date ranging from 4.05% to 4.35% (2015: Nil) per annum.

The term loan of the Group is repayable over one hundred and fourty three (143) equal monthly instalments of RM111,590 commencing 4 January 2014. The last instalment may vary to ensure full settlement of the term loan. The term loan bears profit rates ranging from 5.35% to 5.42% (2015: 5.1% to 5.35%) per annum at the reporting date.

During the current financial year, a subsidiary has breached a covenant for the banker acceptances as it did not fulfil the requirement to maintain a specified financial ratio. The bank has the discretion to terminate the banking facilities and to demand immediate repayment of all outstanding amounts drawn under the banking facilities in the event of breach of covenant.

The subsidiary has fully settled the banker acceptances subsequent to the end of the year. The management has commenced renegotiation of the financial ratio and as of the date of the financial statements were authorised for issue, the renegotiation is still in progress.

Other information on financial risks of borrowings is disclosed in Note 44.

35. Trade and other payables Group Company 2016 2015 2016 2015 RM RM RM RM Current Trade payables Third parties 52,939,523 59,095,596 - - Related party * - 42,766 - -

52,939,523 59,138,362 - -

Other payables Due to subsidiaries: - Aljano Sdn. Bhd. - - 589,507 7,859,853 - PT Sunshine Amanjaya Indonesia - - 158,365 151,315 - Sunshine Amanjaya Sdn. Bhd. - - 4,670,314 2,345,393 - Sunshine Amanjaya Pte. Ltd. - - 3,350,948 - - Sunshine Wholesale Mart Sdn. Bhd. - - 2,638,474 - Due to tooling suppliers 143,180 137,901 - - Deposits received - 4,500 - - Rental deposits 1,378,175 1,426,475 - - Accruals 3,481,877 5,403,113 322,200 266,100 Other payables 7,275,081 6,347,179 66,833 64,578 Related party ** 43,482 79,692 - -

12,321,795 13,398,860 11,796,641 10,687,239

65,261,318 72,537,222 11,796,641 10,687,239

Annual Report 2016 122 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

35. Trade and other payables (contd.) Group Company 2016 2015 2016 2015 RM RM RM RM Non-current Other payable 7,455,506 6,881,303 - -

Total trade and other payables 72,716,824 79,418,525 11,796,641 10,687,239 Add: Borrowings (Note 34) 15,358,230 16,030,353 - - Total financial liabilities carried at amortised cost 88,075,054 95,448,878 11,796,641 10,687,239

* As at 31 May 2015, the related party is Zephyr (Penang) Sdn. Bhd., a company in which a director of a subsidiary, Qdos Holdings Bhd., i.e. Looi Tik Miow, has an interest. On 1 March 2016, Looi Tik Miow ceased to be a shareholder of Zephyr (Penang) Sdn. Bhd..

** The related party is Nanometric Electronics Sdn. Bhd., a company in which a director of the Company, i.e. Dato’ Hwang Thean Long, has an interest.

(a) Trade payables

Trade payables are non-interest bearing and the normal trade credit terms granted to the Group range from 30 to 90 days (2015: 30 to 90 days).

(b) Other payables

Included in current and non-current payables of the Group is RM1,355,546 (2015: RM573,442) and RM7,455,506 (2015: RM6,881,303) respectively for the acquisition of intangible assets. The amount is payable by way of instalments in the aggregate sum of USD3,000,000 either upon the achievement of certain cumulative targeted sales quantity or by instalments ranging between USD200,000 to USD400,000 over a period of 10 years by 31 December 2022, whichever is earlier. The gross payable is recognised based on the net present value discounted at a rate of 4.95% per annum.

Amounts due to subsidiaries are bearing interest ranging from 4% to 4.61% (2015: 4% to 4.72%) per annum and are repayable on demand. These amounts are unsecured and are to be settled in cash.

Further details on related party transactions are disclosed in Note 42.

Other information on financial risks of payables are disclosed in Note 44.

36. Deferred tax Group 2016 2015 RM RM

At 1 June 2015 / 2014 1,518,735 1,703,446 Recognised in profit or loss (Note 10) 509,579 (184,711)

At 31 May 2016 / 2015 2,028,314 1,518,735

Presented after appropriate offsetting as follows: Deferred tax liabilities 2,028,314 1,518,735 Deferred tax assets - -

At 31 May 2,028,314 1,518,735

Annual Report 2016 123 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

36. Deferred tax (contd.)

The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows:

Deferred tax liabilities of the Group Property, plant and Revaluation equipment surplus * Others Total RM RM RM RM

At 1 June 2015 1,267,879 1,031,543 81,797 2,381,219 Recognised in profit or loss 470,512 (69,683) 658,840 1,059,669

At 31 May 2016 1,738,391 961,860 740,637 3,440,888

At 1 June 2014 1,423,380 1,061,148 106,827 2,591,355 Recognised in profit or loss (155,501) (29,605) (25,030) (210,136)

At 31 May 2015 1,267,879 1,031,543 81,797 2,381,219

Deferred tax assets of the Group Unused tax losses and unabsorbed capital allowances Provisions Others Total RM RM RM RM

At 1 June 2015 (74,649) (476,080) (311,755) (862,484) Recognised in profit or loss (519,398) 34,539 (65,231) (550,090)

At 31 May 2016 (594,047) (441,541) (376,986) (1,412,574)

At 1 June 2014 (77,133) (543,529) (267,247) (887,909) Recognised in profit or loss 2,484 67,449 (44,508) 25,425

At 31 May 2015 (74,649) (476,080) (311,755) (862,484)

* Revaluation surplus relates to revaluation of property, plant and equipment in prior years. Upon transition to MFRS, the Group elected to measure all its property, plant and equipment using cost model. Accordingly, the revaluation surplus was transferred to retained earnings on date of transition to MFRS.

Deferred tax assets have not been recognised in respect of the following items: Group 2016 2015 RM RM

Unused tax losses 7,575,773 5,823,328 Unabsorbed capital allowances 1,991,624 854,671 Other deductible temporary differences 14,268 9,129

9,581,665 6,687,128

Annual Report 2016 124 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

36. Deferred tax (contd.)

The unused tax losses and unabsorbed capital allowances are available for offsetting against future taxable profits of the respective subsidiaries under the Income Tax Act 1967 and guidelines issued by the tax authority.

No deferred tax assets are recognised in respect of the above as it is not probable that future taxable profit will be available against which these items can be utilised.

37. Provision for liabilities Group 2016 2015 RM RM

At 31 May 256,517 256,517

This represents provision for liquidated damages in respect of the development projects undertaken by a subsidiary. The provision is recognised for expected liquidated damages claims based on the terms of the applicable sale and purchase agreements.

38. Other current liabilities Group Company 2016 2015 2016 2015 RM RM RM RM

Goods and Services Tax payable 171,540 277,959 23,950 14,846

39. Derivatives Group 2016 2015 RM RM Contract/ Contract/ Notional Assets/ Notional Assets/ amount (liabilities) amount (liabilities)

Non-hedging derivatives: Forward currency contracts: 6,329,700 104,504 11,559,100 (220,297)

The Group uses forward currency contracts to manage some of the transaction exposure. These contracts are not designated as cash flow or fair value hedges and are entered into for periods consistent with currency transaction exposure. Such derivatives do not qualify for hedge accounting.

Forward currency contracts are used to hedge the Group’s receivables and payables denominated in US Dollar (“USD”) for which firm commitments existed as at 31 May 2016, extending to November 2016 as disclosed in Note 44(b).

During the year, the Group recognised a gain of RM104,504 (2015: loss of RM 220,297) arising from fair value changes of its forward currency contracts. The fair value changes are attributable to changes in foreign exchange spot and forward rates. The method and assumptions applied in determining the fair values of derivatives are disclosed in Note 43.

Annual Report 2016 125 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

40. Deferred revenue

The Group operates a loyalty programme which allows customers to accumulate points when they purchase products in the Group’s supermarket and departmental stores. The points can be redeemed for free or for discounted goods from the Group’s supermarket and departmental stores.

Deferred revenue represents consideration received from the sale of goods that is allocated to the points issued under the loyalty programme that are expected to be redeemed but are still outstanding as at the reporting date.

At 31 May 2016, the estimated liability for unredeemed points amounted to RM1,771,475 (2015: RM1,923,157).

Group 2016 2015 RM RM

At 1 June 2015 / 2014 1,923,157 1,712,534 Recognised in profit or loss (net) (151,682) 210,623

At 31 May 2016 / 2015 1,771,475 1,923,157

41. Commitments

(a) Capital commitments Group 2016 2015 RM RM Capital expenditure: Approved and contracted for: - Land and building 800,000 4,973,000 - Machineries 473,000 231,000

Approved but not contracted for: - Building 30,000,000 -

(b) Operating lease commitments – as lessee

The Group has entered into non-cancellable operating lease agreements for the use of the leasehold land and buildings. These leases have an average life of between 3 and 12 years with no renewal or purchase option included in the contracts. There were no restrictions placed upon the Group by entering into these leases.

The future aggregate minimum lease payments under non-cancellable operating leases contracted for as at the reporting date but not recognised as liabilities, are as follows: Group 2016 2015 RM RM

Not later than 1 year 5,655,999 3,985,030 Later than 1 year and not later than 5 years 12,351,063 11,925,188 Later than 5 years 136,825 174,615

18,143,887 16,084,833

Annual Report 2016 126 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

41. Commitments (contd.)

The Group and the Company have entered into commercial property leases on the investment property and property, plant and equipment. These non-cancellable leases have remaining lease terms of between two and four years. All leases include a clause to enable upward revision of the rental charge on an annual basis based on prevailing market conditions.

Future minimum rentals receivable under non-cancellable operating leases at the reporting date are as follows:

Group Company 2016 2015 2016 2015 RM RM RM RM

Not later than 1 year 4,552,639 3,909,642 1,656,684 1,656,684 Later than 1 year and not later than 5 years 627,369 1,042,881 - -

5,180,008 4,952,523 1,656,684 1,656,684

42. Related party disclosures

(a) Related party transactions

In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and the Company and related parties took place at terms agreed between the parties during the financial year:

2016 2015 Group RM RM

Rental paid/payable to: - Suiwah Holdings Sdn. Bhd., a corporate shareholder 2,493,276 2,408,391 - Suiwah Supermarket Sdn. Bhd., a company in which a director of the Company, i.e. Dato’ Hwang Thean Long has an interest 21,600 21,600 - Hwang & Hwang Enterprises, a partnership in which a director of the Company, i.e. Dato’ Hwang Thean Long has an interest 36,000 - - a director of the Company, i.e. Dato’ Hwang Thean Long 66,000 48,000 - Meridian Chance Sdn. Bhd., a company connected with a director of the Company, i.e. Dato’ Hwang Thean Long by virtue of his family relationship 24,000 24,000 Purchases of merchandise from Zephyr (Penang) Sdn. Bhd., a company in which Looi Tik Miow, a director of a subsidiary, Qdos Holdings Bhd., has an interest * 161,511 217,291 Provision of Surface Mounted Technology(SMT) and other subcontract services related to flexible printed circuits boards to Qdos Flexcircuits Sdn. Bhd. by Nanometric Electronics Sdn. Bhd., a company in which Dato’ Hwang Thean Long, a director of the Company, has an interest 824,730 1,046,486 Laundry services charges paid/payable to Mylaco Sdn. Bhd., a company in which a director of the Company, i.e. Hwang Siew Peng has an interest - 814

Annual Report 2016 127 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

42. Related party disclosures (contd.)

(a) Related party transactions (contd.) 2016 2015 Company RM RM

Gross dividends from subsidiaries 15,800,000 28,600,000 Rental income from a subsidiary 1,656,684 1,656,684 Interest received/receivable from subsidiaries: - Sunshine Paramount Sdn. Bhd. (formerly known as Sunshine Supermarket & Departmental Store Sdn. Bhd.) 473,030 493,699 - Crimson Omega Sdn. Bhd. 1,626,383 236,322 - Sunshine Wholesale Mart Sdn. Bhd. - 2,473,897 - Magirex Sdn. Bhd. 46,157 139,182 - Sunshine (Labuan) Private Limited - 390 - Sunshine Amanjaya Sdn. Bhd. - 109,003 - Sunshine Amanjaya Pte. Ltd. - 470 - Silver Resort Sdn. Bhd. 260,527 62,904 - Sunshine Electrical Superstore Sdn. Bhd. 4,466 1,272 - Sunshine Link Sdn. Bhd. 2,007 317 - Qdos Flexcircuits Sdn. Bhd. 248 - Interest paid/payable to subsidiaries: - Crimson Omega Sdn. Bhd. - 1,764,340 - Aljano Sdn. Bhd. 335,869 150,891 - Silver Resort Sdn. Bhd. - 9,442 - Sunshine Amanjaya Sdn. Bhd. 170,564 21,991 - Sunshine Wholesale Mart Sdn. Bhd. 117,424 - - PT Sunshine Amanjaya Indonesia 7,050 7,380 Advances (from)/to or repayment (to)/from subsidiaries, net: - Sunshine Paramount Sdn. Bhd. (formerly known as Sunshine Supermarket & Departmental Store Sdn. Bhd.) 653,410 646,037 - Crimson Omega Sdn. Bhd. 5,146,590 (749,963) - Sunshine Wholesale Mart Sdn. Bhd. 1,339,769 439,586 - Magirex Sdn. Bhd. 583,699 323,037 - Aljano Sdn. Bhd. (2,850,000) - - Sunshine (Labuan) Private Limited 10,306 2,496 - Sunshine Link Sdn. Bhd. 3,608 - - Sunshine Amanjaya Sdn. Bhd. (1,862,129) 198,037 - Sunshine Amanjaya Pte. Ltd. (2,599,909) 4,721 - Silver Resort Sdn. Bhd. 2,869,702 - - Sunshine Electrical Superstore Sdn. Bhd. 164,140 51,963 - Qdos Flexcircuits Sdn. Bhd. (7,684) - Assignment of inter-company receivables/(payables) from a subsidiary, Sunshine Wholesale Mart: - Sunshine Paramount Sdn. Bhd. (formerly known as Sunshine Supermarket & Departmental Store Sdn. Bhd.) 5,006,288 1,207,566 - Crimson Omega Sdn. Bhd. 528,416 51,816,849 - Magirex Sdn. Bhd. - 55,465 - Aljano Sdn. Bhd. - (6,721,538) - Sunshine Amanjaya Sdn. Bhd. - (1,706,320) - Sunshine Amanjaya Pte Ltd - 1 - Silver Resort Sdn. Bhd. - 8,270,932 - PT Sunshine Amanjaya Indonesia - 72 - Sunshine Electrical Superstore Sdn. Bhd. - 106,438 - Sunshine Link Sdn. Bhd. - 41,192 - Qdos Flexcircuits Sdn. Bhd. - 9,802 - Qdos Technology Sdn. Bhd. - 40 - Qdos Marketing Sdn. Bhd. - 22

Annual Report 2016 128 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

42. Related party disclosures (contd.)

(a) Related party transactions (contd.)

Datin Cheah Gaik Huang, Hwang Siew Peng and Hwang Shin Hung are also deemed interested in the transactions in which Dato’ Hwang Thean Long has an interest by virtue of their family relationships.

* On 1 March 2016, Looi Tik Miow ceased to be a shareholder of Zephyr (Penang) Sdn. Bhd..

Information regarding outstanding balances arising from related party transactions as at 31 May 2016 are disclosed in Notes 25 and 35.

(b) Compensation of key management personnel

The remuneration of directors and other members of key management personnel during the year was as follows: Group Company 2016 2015 2016 2015 RM RM RM RM

Short term employee benefits 1,810,222 1,682,761 353,000 310,100 Defined contribution plan 135,115 125,229 - -

1,945,337 1,807,990 353,000 310,100

Included in the remuneration of total key management personnel are:

Group Company 2016 2015 2016 2015 RM RM RM RM

Directors’ remuneration (Note 7) 1,846,493 1,714,126 353,000 310,100

43. Fair value of financial instruments

(a) Fair value of financial instruments by classes that are carried at fair value

The following table shows an analysis of financial instruments carried at fair value by level of fair value hierarchy:

Level 1 Level 2 Level 3 Total Group RM RM RM RM

2016

Financial assets Investment securities Quoted equity instruments (Note 21) 3,114 - - 3,114

Short term investments - Quoted unit trust funds (Note 28) 7,669,520 - - 7,669,520 - Unquoted investments (Note 28) - 1,323,432 - 1,323,432

Derivatives (Note 39) - 104,504 - 104,504

Financial liabilities Derivatives (Note 39) - - - -

Annual Report 2016 129 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

43. Fair value of financial instruments (contd.)

(a) Fair value of financial instruments by classes that are carried at fair value (contd.)

Level 1 Level 2 Level 3 Total Group (contd.) RM RM RM RM

2015

Financial assets Investment securities Quoted equity instruments (Note 21) 3,114 - - 3,114

Short term investments - Quoted unit trust funds (Note 28) 15,804,309 - - 15,804,309 - Unquoted investments (Note 28) - 487,717 - 487,717

Derivatives (Note 39) - - - -

Financial liabilities Derivatives (Note 39) - 220,297 - 220,297

Assets for which fair values are disclosed

Company

2016

Investment properties (Note 14) - - 31,490,000 31,490,000

2015

Investment properties (Note 14) - 28,100,000 - 28,100,000

Fair value hierarchy

The Group and the Company classify fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making the measurement. The fair value hierarchy has the following levels:

Level 1 : Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 : Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

Level 3 : Inputs for the assets and liability that are not based on observable market data (unobservable inputs).

Annual Report 2016 130 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

43. Fair value of financial instruments (contd.)

(b) Fair value of financial instruments by classes 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 Trade and other receivables 25 Loan receivables 27 Bank borrowings (current) 34 Bank borrowings (non-current) 34 Trade and other payables (current) 35 Trade and other payable (non-current) 35

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date.

The carrying amounts of the bank borrowings are reasonable approximations of fair values due to the insignificant impact of discounting.

The fair values of bank borrowings and trade and other payables (non-current) are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date.

Amounts due from/to related companies and subsidiaries

The fair values of these financial instruments are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date.

Derivatives

Forward currency contracts are valued using a valuation technique with market observable inputs. The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates and interest rate curves.

44. Financial risk management objectives and policies

The Group is exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include interest rate risk, foreign currency risk, liquidity risk, credit risk and market price risk.

The Board of Directors reviews and agrees policies and procedures for the management of these risks. The Audit Committee provides independent oversight to the effectiveness of the risk management process.

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 does not apply hedge accounting.

The following sections provide details regarding the Group’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

Annual Report 2016 131 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

44. Financial risk management objectives and policies (contd.)

(a) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates.

As the Group and the Company has 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 as deposits in licensed banks.

The Group’s and the Company’s interest rate risk arises primarily from amount due from/(to) subsidiaries and interest-bearing borrowings. The amounts due from/(to) subsidiaries and borrowings at floating rates expose the Group and the Company to cash flow interest rate risk. Borrowings obtained at fixed rates expose the Group and the Company to fair value interest rate risk. The Group and the Company manages its interest rate exposure by maintaining a mix of fixed and floating rate borrowings.

Sensitivity analysis for interest rate risk

At the reporting date, if interest rates had been 10 basis points lower/higher, with all other variables held constant, the Group’s and the Company’s profit net of tax would have been RM15,358 (2015: RM16,030) higher/lower and RM34,162 (2015: RM36,528) lower/higher respectively, arising mainly as a result of higher/lower interest expense and lower/higher interest income on floating rate for loans and borrowings and amounts due from subsidiaries respectively. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.

(b) 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.

Some of the Group’s subsidiaries have transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of the Group’s subsidiaries, primarily RM. The foreign currency in which these transactions are denominated is mainly US Dollars (“USD”).

Approximately 19% (2015: 16%) of the Group’s subsidiaries’ sales are denominated in foreign currencies. The Group’s subsidiaries’ trade receivables and trade payables balances at the reporting date have similar exposures.

The Group also holds cash and cash equivalents denominated in foreign currencies for working capital purposes. At the reporting date, such foreign currency balances (mainly in USD) amounted to RM2,637,035 (2015: RM5,196,965) for the Group.

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the Group’s profit net of tax to a reasonably possible change in the USD exchange rates against the respective functional currencies of the Group entities, with all other variables held constant. Increase/(decrease) in profit net of tax 2016 2015 RM RM

USD/RM - strengthened 5% 446,066 581,308 - weakened 5% (446,066) (581,308)

Annual Report 2016 132 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

44. Financial risk management objectives and policies (contd.)

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.

The Group and the Company manage their debt maturity profile, operating cash flows and the availability of funding so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group and the Company maintain sufficient levels of cash or cash convertible investments to meet their working capital requirements. In addition, the Group and the Company strive to maintain available banking facilities of a reasonable level to its overall debt position. Furthermore, the Group and the Company are able to raise funds from both capital markets and financial institutions and balance its portfolio with combination of a mixture of short and long term fundings so as to achieve overall cost effectiveness.

Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations.

2016 On demand or One to Over within one year five years five years Total Group RM RM RM RM

Financial assets: Trade receivables 20,930,325 - - 20,930,325 Other receivables 2,943,512 - - 2,943,512 Cash and bank balances 26,353,453 - - 26,353,453 Short term investments 8,992,952 - - 8,992,952 Derivatives 104,504 - - 104,504

Total undiscounted financial assets 59,324,746 - - 59,324,746

Financial liabilities: Trade payables 52,939,523 - - 52,939,523 Other payables 12,619,049 7,437,600 1,652,800 21,709,449 Borrowings 6,597,247 5,356,320 6,230,738 18,184,305

Total undiscounted financial liabilities 72,155,819 12,793,920 7,883,538 92,833,277

Total net undiscounted financial liabilities (12,831,073) (12,793,920) (7,883,538) (33,508,531)

Company

Financial assets: Other receivables 1,000 - - 1,000 Amounts due from subsidiaries 56,358,005 - - 56,358,005 Cash and bank balances 13,147,676 - - 13,147,676

Total undiscounted financial assets 69,506,681 - - 69,506,681

Annual Report 2016 133 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

44. Financial risk management objectives and policies (contd.)

Analysis of financial instruments by remaining contractual maturities (contd.)

2016 On demand or One to Over within one year five years five years Total Company (contd.) RM RM RM RM

Financial liabilities: Other payables 389,033 - - 389,033 Amounts due to subsidiaries 11,407,608 - - 11,407,608

Total undiscounted financial liabilities 11,796,641 - - 11,796,641

Total net undiscounted financial assets 57,710,040 - - 57,710,040

2015 On demand or One to Over within one year five years five years Total Group RM RM RM RM

Financial assets: Trade receivables 29,109,869 - - 29,109,869 Other receivables 3,311,817 - - 3,311,817 Cash and bank balances 25,489,950 - - 25,489,950 Short term investments 16,292,026 - - 16,292,026

Total undiscounted financial assets 74,203,662 - - 74,203,662

Financial liabilities: Trade payables 59,138,362 - - 59,138,362 Other payables 14,090,019 5,529,275 2,764,638 22,383,932 Borrowings 6,491,103 6,695,387 6,273,932 19,460,422 Derivatives 220,297 - - 220,297

Total undiscounted financial liabilities 79,939,781 12,224,662 9,038,570 101,203,013

Total net undiscounted financial liabilities (5,736,119) (12,224,662) (9,038,570) (26,999,351)

Annual Report 2016 134 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

44. Financial risk management objectives and policies (contd.)

Analysis of financial instruments by remaining contractual maturities (contd.)

2015 On demand or One to Over within one year five years five years Total Company RM RM RM RM

Financial assets: Other receivables 104,926 - - 104,926 Amounts due from subsidiaries 48,703,666 - - 48,703,666 Cash and bank balances 5,345,711 - - 5,345,711

Total undiscounted financial assets 54,154,303 - - 54,154,303

Financial liabilities: Other payables 330,678 - - 330,678 Amounts due to subsidiaries 10,356,561 - - 10,356,561

Total undiscounted financial liabilities 10,687,239 - - 10,687,239

Total net undiscounted financial assets 43,467,064 - - 43,467,064

The table below shows the contractual expiry by maturity of the Company’s contingent liabilities and commitments. The maximum amount of the financial guarantee contracts are allocated to the earliest period in which the guarantee could be called.

2016 On demand or One to Over within one year five years five years Total Company RM RM RM RM

Financial guarantees 16,975,987 - - 16,975,987

2016 On demand or One to Over within one year five years five years Total Company RM RM RM RM

Financial guarantees 17,536,177 - - 17,536,177

(d) 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, cash and bank balances and derivatives), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.

Annual Report 2016 135 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

44. Financial risk management objectives and policies (contd.)

(d) Credit risk (contd.)

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.

For transactions that do not occur in the country of the relevant operating unit, the Group does not offer credit terms without the approval.

i. Exposure to credit risk

At the reporting date, the Group’s and the Company’s maximum exposure to credit risk are represented by:

(a) The carrying amount of each class of financial assets recognised in the statements of financial position.

(b) A nominal amount of RM16,975,987 (2015: RM17,536,177) relating to corporate guarantees provided by the Company to financial institutions as securities for credit facilities granted to subsidiaries.

Information regarding credit enhancements for trade and other receivables are disclosed in Note 25.

ii. Credit risk concentration profile

The Group determines concentrations of credit risk by monitoring the country 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:

2016 2015 RM % RM % By country: Within Malaysia 16,467,738 79 22,967,146 79 Germany 1,531,460 7 1,527,621 5 Switzerland - - 16,511 - Singapore 848,858 4 1,223,211 4 Other countries 2,082,269 10 3,375,380 12

Total 20,930,325 100 29,109,869 100

iii. Financial assets that are neither past due nor impaired

Information regarding trade receivables that are neither past due nor impaired is disclosed in Note 25.

iv. Financial assets that are either past due or impaired

Information regarding trade receivables that are either past due or impaired is disclosed in Note 25.

(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 Bursa Malaysia.

Annual Report 2016 136 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

45. Capital management

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 May 2016 and 31 May 2015.

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group includes within net debt, borrowings, trade and other payables, less short term investments and cash and bank balances. Capital includes equity attributable to the owners of the parent.

Group 2016 2015 Note RM RM

Borrowings 34 15,358,230 16,030,353 Trade and other payables 35 72,716,824 79,418,525 Less: - short term investments 28 (8,992,952) (16,292,026) - cash and bank balances 29 (26,353,453) (25,489,950)

Net debt 52,728,649 53,666,902

Equity attributable to the owners of the parent, representing total capital 212,963,383 207,319,334

Capital and net debt 265,692,032 260,986,236

Gearing ratio 20% 21%

46. Segment information

For management purposes, the Group is organized into business units based on their products and services, and there are four reportable operating segments as follows:

(i) Retail - operation of supermarkets and departmental stores and a hypermarket;

(ii) Manufacturing - manufacturing and designing of flexible printed circuits boards;

(iii) Property investment and development of residential and commercial properties; and

(iv) Trading

The directors are of the opinion that all inter-segment transactions have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from those obtained in transaction with unrelated parties.

There are minimal inter-segment sales within the Group.

Annual Report 2016 137 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

46. Segment information (contd.)

(a) Business segment Property investment and Retail Manufacturing development Trading Eliminations Consolidated 2016 RM RM RM RM RM RM

Revenue and expenses

Revenue Segment revenue Sales to external customers 291,962,079 80,236,205 3,253,139 382,512 - 375,833,935 Inter-segment sales 183,772 - 3,448,812 - (3,632,584) -

Total revenue 292,145,851 80,236,205 6,701,951 382,512 (3,632,584) 375,833,935

Results Segment results 6,817,065 5,024,901 875,032 70,460 - 12,787,458 Interest income 3,098,367 319,818 501,501 - (3,243,392) 676,294 Finance costs (1,142,388) Share of profit in a joint venture 108,630

Profit before tax 12,429,994 Income tax expense (4,808,655)

Profit for the year 7,621,339

Assets Segment assets 91,521,569 112,474,344 88,212,393 370,538 - 292,578,844 Investment in a joint venture - 13,688,295 - - - 13,688,295 Unallocated assets 3,191,739

Total assets 309,458,878

Liabilities Segment liabilities 50,401,530 22,636,096 2,641,497 2,703,562 - 78,382,685 Unallocated liabilities 17,858,063

Total liabilities 96,240,748

Other segment information Additions to non-current assets 1,146,017 9,487,255 1,555,983 - - 12,189,255 Amortisation expense - 383,488 - - - 383,488 Depreciation 2,762,083 4,153,537 517,098 31,017 - 7,463,735 Non-cash (benefits)/ expenses other than depreciation, amortisation and impairment losses (3,698) (1,457,204) 48,808 11,242 - (1,400,852)

Annual Report 2016 138 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

46. Segment information (contd.)

(a) Business segment Property investment and Retail Manufacturing development Trading Eliminations Consolidated 2015 RM RM RM RM RM RM

Revenue and expenses

Revenue Segment revenue Sales to external customers 314,399,191 75,868,252 8,289,426 479,524 - 399,036,393 Inter-segment sales 230,092 - 3,389,042 - (3,619,134) -

Total revenue 314,629,283 75,868,252 11,678,468 479,524 (3,619,134) 399,036,393

Results Segment results 10,100,785 4,504,727 1,778,718 (58,780) - 16,325,450 Interest income 7,492,652 836,111 2,717,141 171 (9,939,825) 1,106,250 Finance costs (1,072,917) Share of loss in a joint venture (81,267)

Profit before tax 16,277,516 Income tax expense (6,142,555)

Profit for the year 10,134,961

Assets Segment assets 93,951,206 111,774,665 86,661,268 3,280,783 - 295,667,922 Investment in a joint venture - 12,713,214 - - - 12,713,214 Unallocated assets 931,732

Total assets 309,312,868

Liabilities Segment liabilities 59,046,952 19,342,373 1,417,735 2,403,978 - 82,211,038 Unallocated liabilities 18,898,300

Total liabilities 101,109,338

Other segment information Additions to non-current assets 5,231,033 11,600,672 380,883 7,800 - 17,220,388 Amortisation expense - 345,295 41,143 - - 386,438 Depreciation 3,300,375 3,672,112 1,289,582 30,594 - 8,292,663 Non-cash expenses other than depreciation, amortisation and impairment losses 111,772 1,869,343 - 58,672 - 2,039,787

Annual Report 2016 139 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

46. Segment information (contd.)

(b) Geographical segments

The Group operates locally except for the manufacturing segment which has a wholly owned subsidiary in India. All of the Group’s manufacturing activities are conducted in Malaysia while the overseas subsidiary is intended to engage in the design of flexible printed circuit boards.

The following table provides an analysis of the Group’s revenue, segment assets and capital expenditure by geographical segment:

Singapore, United India, Vietnam States of Indonesia America, Sri Lanka, China Europe, Thailand and Taiwan and Ireland and Malaysia Australia Hong Kong New Zealand Consolidated RM RM RM RM RM 2016

Total revenue from external customers 346,551,571 4,368,219 2,884,796 22,029,349 375,833,935 Segment assets 283,670,062 6,860,937 - 2,047,845 292,578,844 Capital expenditure 12,189,255 - - - 12,189,255

2015

Total revenue from external customers 373,764,288 3,512,884 2,050,270 19,708,951 399,036,393 Segment assets 287,128,736 6,449,120 - 2,090,066 295,667,922 Capital expenditure 15,109,336 - - 2,111,052 17,220,388

47. Subsequent events

There were no material events subsequent to the end of the year except as follows:

(i) On 21 July 2016, a subsidiary was subjected to an audit conducted by Royal Malaysian Customs Department (“RMCD”) covering the period from April 2015 to June 2016. As it is still at the early stage and the subsidiary is still in discussions with RMCD, any provision for additional Goods and Services Tax payable will be made at an appropriate time when the outcome is certain.

(ii) On 29 July 2016, a subsidiary, Qdos Holdings Bhd. has incorporated two subsidiaries known as Qdos FRI Sdn. Bhd. (“QFRI”) and Qdos Ventures Sdn. Bhd. (“QVSB”).

The authorised share capital of QFRI and QVSB are RM400,000 divided into 400,000 ordinary shares of RM1.00 each whilst the issued and paid up share capital of QFRI and QVSB are RM100 divided into 100 ordinary shares of RM1.00 each. Qdos Holdings Bhd., a wholly owned subsidiary of the Company owns 100% of the said issued and paid-up capital of QFRI and QVSB.

The intended principal activities of QFRI is to design, manufacture assembly, sell or deal in Fine Resolution Interconnect or electronic products whilst the intended principal activities of QVSB is to venture, market, manufacture or investment in high end technology products and services.

Annual Report 2016 140 Notes to the Financial Statements For the financial year ended 31 May 2016(cont’d)

47. Subsequent events (contd.)

(iii) On 2 August 2016, a subsidiary, Qdos FRI Sdn Bhd (“QFRI”) has applied to Penang Development Corporation (“PDC”) to purchase a piece of 7.9 acres industrial land at Batu Kawan Industrial Park. On 9 August 2016, PDC has approved the application for the purchase of the said industrial land.

(iv) On 15 August 2016, a subsidiary, Qdos FRI Sdn Bhd (“QFRI”) has increased its authorised, issued and paid up share capital from RM400,000 and RM100 respectively to RM1,000,000 respectively divided into 1,000,000 ordinary shares of RM1.00 each. Qdos Holdings Bhd., a wholly owned subsidiary of the Company has subscribed an additional 999,900 ordinary shares of RM1.00 each in QFRI for a total cash consideration of RM999,900.

(v) On 24 August 2016, a subsidiary, Great Support Sdn. Bhd. (“GSSB”), which has been placed under members’ voluntary winding-up (Note 18 (c)) has initiated its second return of approximately RM509,000, being the surplus of assets to the shareholders of GSSB by way of cash.

48. Authorisation of financial statements for issue

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 8 September 2016.

Annual Report 2016 141 Supplementary Information

49. Supplementary information – breakdown of retained profits into realised and unrealised

The breakdown of the retained profits of the Group and of the Company as at 31 May 2016 into realised and unrealised profits is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

The retained earnings as at reporting date may be analysed as follows:

Group Company 2016 2015 2016 2015 RM RM RM RM

Total retained earnings of the Company and its subsidiaries - Realised 167,824,379 165,470,131 78,531,140 64,795,513 - Unrealised 351,743 (1,477,669) 44,313 -

168,176,122 163,992,462 78,575,453 64,795,513

Total share of accumulated profit/(losses) from joint venture - Realised 39,707 (68,923) - -

Total share of accumulated losses from associate - Realised (1,513,625) (1,513,625) - - - Unrealised (118,101) (118,101) - -

166,584,103 162,291,813 78,575,453 64,795,513 Consolidation adjustments (22,518,326) (22,416,865) - -

Retained earnings as per financial statements 144,065,777 139,874,948 78,575,453 64,795,513

Annual Report 2016 142 List of Properties owned by the Group as at 31 May 2016

Location Description Existing Use / Land Area / Tenure Age of Net Book Value Type Built Up Area Building (RM)

1, Persiaran Dagangan, Freehold land with Supermarket & 251,210 sq ft & Freehold Not 36,655,472 Pusat Bandar Bertam Perdana, 1 sub-basement and Departmental 423,049 sq ft Applicable 13200 Kepala Batas, 2 storey shopping mall, Penang Sunshine Bertam

Lot 7703, Mukim 13, Leasehold land Development 392,345 sq ft 99 years Not 27,813,226 North East District, land leasehold Applicable Bandar Baru Air Itam, expiring 2104 Penang

No. 1, Jalan Mayang Pasir, Basement level & Supermarket 34,671 sq ft & 99 years 23 years 22,553,949 11950 Bayan Baru, Level 1, 34,584 sq ft leasehold Penang Sunshine Square expiring 2091 Complex

No. 99, Lebuhraya Leasehold land Factory 87,736 sq ft & 60 years 16 years 8,327,556 Kampung Jawa, with double 89,160 sq ft leasehold Taman Perindustrian storey factory expiring 2049 Bayan Lepas, building 11900 Penang

PT5916, Mukim 13 Leasehold land Vacant land 220,122 sq ft 60 years Not 6,689,954 Seberang Perai Selatan leasehold Applicable Penang expiring 2075

Lots Nos. 7406, 7411-7434, 7436, Freehold land Development 354,639 sq ft Freehold Not 4,470,910 7443, 7446, 7451-7480, land Applicable 7506-7616 and 7619, Mukim 7, Province Wellesley South, Penang

No. 2A, Lebuhraya Leasehold land Warehouse 61,240 sq ft & 60 years 26 years 3,982,438 Kampung Jawa, with a warehouse 36,744 sq ft leasehold 11900 Bayan Lepas, and 3 storey office expiring 2050 Penang block

Unit 0225 Phase 12 Town House Accomodation 1,258 sq ft Freehold Not 2,047,846 1293, Coyote Creek Way Applicable Milpitas CA 95035 United States of America

No. 5047, Diatas Sebahagian Leasehold land Warehouse 64,400 sq ft 16 years 6 years 1,333,287 Lot HS (D) 9813, Plot (A), with a warehouse leasehold Jalan Bagan Dalam, expiring 2023 Dermaga Butterworth Seksyen 4, 12100 Seberang Perai Utara, Penang

3-9-3A, Jalan Bukit Jambul, Condominium Accomodation 2,281 sq ft 99 years 7 years 975,653 11900 Bayan Lepas leasehold Penang expiring 2090

Annual Report 2016 143 Analysis of Shareholdings as at 01 September 2016

Authorised Capital : RM100,000,000 Issued and Fully Paid-Up Capital : RM61,000,248 comprising of 61,000,248 Ordinary Shares of RM1.00 each Class of Equity Securities : Ordinary Shares of RM1.00 each (“Shares”) Voting Rights : 1 vote per Share

Distribution Schedule of Shareholders No of Holders Holdings No. of Shares % # 61 Less than 100 2,205 0.00 283 100 - 1,000 196,003 0.34 854 1,001 - 10,000 3,295,692 5.76 190 10,001 to 100,000 shares 5,496,023 9.60 31 100,001 to less than 5% of issued shares 17,542,266 30.64 4 5% and above of issued shares 30,718,459 53.66 1,423 57,250,648 100.00

# This represents the total issued and paid up capital of RM61,000,248, comprising of 61,000,248 Shares after deducting 3,749,600 Shares retained by the Company (or “SCB”) as treasury shares.

30 Largest Securities Account Holders (without aggregating the securities from different securities accounts belonging to the same person) No. Name No. of Shares held % #

1 HOZONE SDN.BHD. 12,117,948 21.17 2 SUIWAH HOLDINGS SDN. BHD. 7,591,200 13.26 3 DAUNPURI SDN. BHD. 6,595,171 11.52 4 SUIWAH HOLDINGS SDN. BHD. 4,414,140 7.71 5 DATO’ HWANG THEAN LONG 2,296,881 4.01 6 WONG THAN KIM 2,207,380 3.86 7 DATO’ HWANG THEAN LONG 2,148,500 3.75 8 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD 1,804,600 3.15 (PLEDGED SECURITIES ACCOUNT FOR LIM CHAI BENG) 9 LENA LEONG OY LIN 1,428,600 2.50 10 CARTABAN NOMINEES (TEMPATAN) SDN BHD 1,000,000 1.75 TMF TRUSTEES MALAYSIA BERHAD FOR RHB PRIVATE FUND-SERIES 6 11 LOOI TIK MIOW 668,300 1.17 12 TEO KWEE HOCK 640,500 1.12 13 MAYBANK NOMINEES (TEMPATAN) SDN BHD 543,000 0.95 MAYBANK TRUSTEES BERHAD FOR RHB DYNAMIC FUND 14 UNG PENG JOO 464,400 0.81 15 KENANGA NOMINEES (TEMPATAN) SDN BHD 417,125 0.73 (PLEDGED SECURITIES ACCOUNT FOR YB SENATOR DATO’ HAJI MOHD SUHAIMI BIN ABDULLAH) 16 BARBARA ELIZABETH NG 364,800 0.64 17 JF APEX NOMINEES (TEMPATAN) SDN BHD 324,900 0.57 (PLEDGED SECURITIES ACCOUNT FOR TEO SIEW LAI) 18 HWANG SIEW PENG 300,000 0.52 19 CHEK KENG LONG 290,960 0.51 20 LENA LEONG OY LIN 288,700 0.50 21 CHAN SENG CHEONG 230,820 0.40 22 LEONG KOK TAI 215,100 0.38 23 CH’NG BOON CHONG 192,700 0.34 24 LEE ENG HOCK & CO. SENDIRIAN BERHAD 190,000 0.33 25 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 177,600 0.31 (PLEDGED SECURITIES ACCOUNT FOR OOI CHIN HOCK) 26 YEO KHEE HUAT 168,380 0.29 27 CHIN MI CHIN 150,320 0.26 28 OOI SWEE LYE 145,200 0.25 29 OOI SOO CHIN 135,400 0.24 30 SCANSTELL SDN BHD 130,000 0.23

Annual Report 2016 144 Analysis of Shareholdings as at 01 September 2016 (cont’d)

Substantial Shareholders’ (Direct & Indirect) (excluding those who are bare trustees pursuant to Section 69 of the Companies Act, 1965) No. of Shares beneficially held by the Substantial Shareholders No. Name of Shareholders Direct Interest % # Indirect Interest % # Note 1 Hozone Sdn Bhd 12,117,948 21.17 - - 2 Suiwah Holdings Sdn Bhd 12,005,340 20.97 - - 3 Daunpuri Sdn Bhd 6,595,171 11.52 - - 4 Dato’ Hwang Thean Long 4,445,381 7.76 12,402,945 21.66 (i) 5 Datin Cheah Gaik Huang 26,400 0.05 16,821,926 29.38 (ii) 6 Suiwah Supermarket Sendirian Bhd 71,205 0.12 12,005,340 20.97 (iii) 7 Hwang Siew Peng 300,000 0.52 16,548,326 28.91 (iv) 8 Datuk Haji Radzali bin Hassan - - 12,117,948 21.17 (v) 9 Che Wan Bin Mat - - 6,595,171 11.52 (vi) 10 Yeoh Eng Wan - - 6,595,171 11.52 (vi)

Notes: (i) Deemed interested through his shareholdings in Suiwah Holdings Sdn Bhd (SHSB) and Suiwah Supermarket Sdn Bhd (SSSB) by virtue of Section 6A of the Companies Act, 1965 (the Act) and the shareholdings of his family members. (ii) Deemed interested through the shareholdings of the family members. (iii) Deemed interested through SHSB in SCB by virtue of Section 6A of the Act. (iv) Deemed interested through the shareholdings of her parents, Dato’ Hwang Thean Long and Datin Cheah Gaik Huang in SCB (v) Deemed interested through his shareholdings in Hozone Sdn Bhd pursuant to Section 6A of the Act. (vi) Deemed interested through their shareholdings in Daunpuri Sdn Bhd pursuant to Section 6A of the Act.

Directors’ Shareholdings (Direct & Indirect) No. of Shares beneficially held by the Directors Name of Directors Direct Interest % # Indirect Interest % # Note Dato’ Hwang Thean Long 4,445,381 7.76 12,402,945 21.66 (i) Datin Cheah Gaik Huang 26,400 0.05 16,821,926 29.38 (ii) YB Senator Dato’ Haji Mohd Suhaimi 417,125 0.73 - - bin Abdullah Dato’ Ahmad Hassan bin Osman - - - - Datuk Haji Radzali bin Hassan - - 12,117,948 21.17 (iii) Wong Thai Sun - - - - Hwang Siew Peng 300,000 0.52 16,548,326 28.91 (iv) Jen Shek Voon - - - - Hwang Shin Hung - - - -

Notes: (i) Deemed interested through his shareholdings in SHSB and SSSB by virtue of Section 6A of the Act and the shareholdings of his family members. (ii) Deemed interested through the shareholdings of the family members. (iii) Deemed interested through his shareholdings in Hozone Sdn Bhd pursuant to Section 6A of the Act. (iv) Deemed interested through the shareholdings of her parents, Dato’ Hwang Thean Long and Datin Cheah Gaik Huang in SCB.

Interest in the Related Corporation

Dato’ Hwang Thean Long, Datin Cheah Gaik Huang, Hwang Siew Peng and Datuk Haji Radzali Bin Hassan by virtue of their interest in Shares in the Company, are deemed interested in Shares of all the Company’s subsidiaries to the extent the Company has an interest.

Save as disclosed above, none of the other Directors in office have any interest in Shares in the Company or its related corporations.

Annual Report 2016 145 This page is intentionally left blank. Proxy Form Number of shares held CDS Account no.

I/We (Tel:) NRIC/ Passport No. (Full Name in Capital Letters) of (Full address in Capital Letters) being a member/members of SUIWAH CORPORATION BHD. (“the Company”) hereby appoint the following person(s):-

First Proxy No. of shares or % of shares Name / NRIC No. Address to be presented

Second Proxy No. of shares or % of shares Name / NRIC No. Address to be presented

or failing him/her/them, the Chairman of the meeting, as *my/our proxy to vote in *my/our name(s) on *my/our behalf at the Twenty Third (“23rd”) Annual General Meeting of the Company to be held at Sunshine Banquet Hall, Level 4, Sunshine Square Complex, 1, Jalan Mayang Pasir, 11950 Bayan Baru, Penang on Friday, 28 October 2016 at 11.00 a.m. and at any adjournment thereof.

*My/Our Proxy is to vote as indicated below:

First Proxy Second Proxy ORDINARY BUSINESS: For Against For Against Resolution 1 To approve the declaration of the first and final single tier dividend of 3.5% for the financial year ended 31 May 2016. Resolution 2 To re-elect Y. Bhg. Dato’ Hwang Thean Long as Director Resolution 3 To re-elect Y. Bhg. Datuk Haji Radzali Bin Hassan as Director. Resolution 4 To re-elect Mr. Wong Thai Sun as Director. Resolution 5 To re-appoint Y. Bhg.Dato’ Ahmad Hassan bin Osman as Director. Resolution 6 To approve the payment of Directors’ fees for the financial year ended 31 May 2016. Resolution 7 To re-appoint Messrs. Ernst & Young as auditors. SPECIAL BUSINESS Resolution 8 To renew the authority to issue and allot shares pursuant to Section 132D of the Companies Act, 1965. Resolution 9 Ordinary Resolution - Proposed renewal and new shareholders’ mandate for recurrent related party transactions of a revenue or trading nature (“RRPTs”) involving Dato’ Hwang Thean Long, Datin Cheah Gaik Huang, Hwang Poh Choo, Hwang Siew Peng, Hwang Shin Hung, Hwang Yen Ming, Suiwah Holdings Sdn Bhd and Suiwah Supermarket Sendirian Berhad. Resolution 10 Ordinary Resolution - Proposed renewal of shareholders’ mandate for RRPTs involving Datuk Haji Radzali bin Hassan and Hozone Sdn Bhd. Resolution 11 Ordinary Resolution - Proposed renewal of shareholders’ mandate for RRPTs involving Leong Kong Meng. Resolution 12 Ordinary Resolution - Proposed renewal of Shares Buy-Back Mandate. Resolution 13 Ordinary Resolution - Mandate for Y.B. Senator Dato’ Haji Mohd Suhaimi bin Abdullah to continue to act as an Independent Non-Executive Director of the Company. Resolution 14 Ordinary Resolution - Mandate for Dato’ Ahmad Hassan bin Osman to continue to act as an Independent Non-Executive Director of the Company. Resolution 15 Ordinary Resolution - Mandate for Mr. Jen Shek Voon to continue to act as an Independent Non- Executive Director of the Company. Resolution 16 Ordinary Resolution - Mandate for Mr. Wong Thai Sun to continue to act as an Independent Non- Executive Director of the Company. Resolution 17 To approve the proposed amendments made to the Articles of Association of the Company. (Please indicate with an “X” in the appropriate box against each Resolution how you wish your proxy to vote. If no instruction is given, the proxy will vote or abstain at his/her discretion).

* Strike out whichever not applicable.

Signed this day of , 2016.

Signature of Shareholder/Common Seal

Notes: 1. The first agenda of this meeting is meant for discussion only, as the provisions of Section 169 (1) and Section 169 (3) of the Companies Act, 1965 does not requires a formal approval for the audited financial statements from the shareholders. Hence, this Agenda is not put forward for voting. 2. In respect of deposited securities, only members whose names appear in the Record of Depositors on 19 October 2016 shall be eligible to attend, speak and vote at the Meeting. 3. A member entitled to attend and vote at the Meeting is entitled to appoint two (2) or more proxies to attend and vote in his or her stead. Where a member appoints two (2) proxies, the appointments shall be invalid unless he or she specifies the proportions of his or her shareholdings to be represented by each proxy. 4. A proxy may but does not need to be a member. There shall be no restriction as to the qualification of the proxy and the provision of Section 149(1)(a), (b) and (c) of the Companies Act, 1965 shall not apply to the Company. A proxy appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting. 5. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer or attorney duly authorised. 6. Where a member of the Company is an exempt authorised nominee as defined under Securities Industry (Central Depositories) Act 1991 which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. 7. The instrument appointing a proxy and the power of attorney or other authority if any, under which it is signed or a notarially certified copy of the power or authority shall be deposited at the registered office of the Company at No. 1-20-1 SUNTECH @ Penang Cybercity, Lintang Mayang Pasir 3, 11950 Bayan Baru, Penang not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof. $ Please fold across the line and close

Stamp

To: The Company Secretary

No. 1-20-1 SUNTECH @ Penang Cybercity, Lintang Mayang Pasir 3, 11950 Bayan Baru, Penang, Malaysia.

Please fold across the line and close