GOLDEN PHAROS BERHAD (198601003051) (152205-W) GROWING A LEGACY OF STRENGTH ANNUAL REPORT 2020 LAPORAN TAHUNAN 2020 was an exceptional year when the world experienced a crisis like no other. We have achieved commendable performance and undergone GROWING A challenging periods in the past, yet never before have we faced a situation LEGACY OF that undermined global financial stability, ground economies worldwide to a standstill and humanity suffered through the tragic loss of life, STRENGTH retrenchments and loss of income. As a Terengganu state-owned Government-Linked Company, Golden Pharos Berhad (GPB or the Group) we had to act swiftly and take quick action to help our employees and the communities where we operate through enforcing strict health and safety protocols and income security. Governance and accountability were at the forefront throughout the year, and we had to urgently address risk issues in business continuity and operational and financial performance. In response to the crisis, we shifted work priorities to focus on the most critical aspects, streamlined procedures to speed up decision making, and continued active engagement with all our employees and multi-stakeholder groups. While the Group’s financial performance was negatively impacted, we remained resilient and steadfast in mitigating the risks by establishing several initiatives to ensure the Group’s business and operational sustainability. With continuous collaboration and support of our people and valued stakeholders, we can move forward with cautious optimism to overcome business disruptions. Armed with determination, grit and genuine concern to revitalise and stabilise GPB, we aspire to generate shareholder value continuously in Growing a Legacy of Strength. th 34 Gamelan 3, Primula Beach Hotel, Tuesday, 29 June 2021 Annual General Meeting Jalan Persinggahan, 20400 Kuala Terengganu, GOLDEN PHAROS BERHAD 10.30 a.m. Terengganu Darul Iman. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 1 VISION To become a premier natural resources organisation GP Glass supplied its high quality laminated glass for building construction throughout Malaysia. MISSION • To improve our results • To meet our customer expectations • To maximise return to our shareholders • To promote green and eco-friendly environment • To provide workforce with rewarding employment • To use our position as an integrated timber producer Woodchips are one of the main contributors of the Group’s annual revenue. CORE VALUES G O L D E N E P E E F E M T S D E K I I T I K A L M A K T D A I R A I N S I S F G I Woodchips processing at the Pesaka factory supervised thoroughly to ensure good product quality and condition before being delivered to customers. 2 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD What’s Inside OVERVIEW LEADERSHIP 1 Vision, Mission and Core Values 35 Board of Directors 4 At a Glance 36 Chairman’s Profile 5 Key Highlights 37 Board of Directors’ Profile 6 Who We Are 40 Chief Executive Officer’s Profile 8 Milestones and Achievements 41 Group Senior Management 10 Corporate Information 42 Group Senior Management’s Profile 11 Group Structure OUR STRATEGIC PERFORMANCE OUR ACHIEVEMENTS 12 Chairman’s Message O 48 Corporate Highlights 16 Management Discussion and 52 Media Highlights Analysis 54 Environmental Statement 30 Financial Highlights 31 Financial Highlights SUSTAINABILITY - Segmental Information 32 Financial Highlights 58 Sustainability Report - Sales by Region 33 Investor Relations 35 Financial Calendar The logs are assembled and checked at the log yard before they are Chemerong waterfalls is a tourist attraction, located at Pasir processed at the factory. Raja, Dungun. It is a favourite destination for hikers to Gunung Berembun. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 3 GOVERNANCE GOLDEN PHAROS BERHAD 150 Policies ANNUAL REPORT 2020 DIGITAL VERSION 154 Corporate Governance Overview Statement 177 Statement on Risk Management and Follow the steps below to scan the Internal Control QR Code reader in 3 easy steps 180 Audit Committee Report PROPERTIES 186 List of Properties Download the “QR Code Reader” on App store or Google Play. FINANCIAL REVIEW 188 Financial Statements ADDITIONAL INFORMATION Run the QR Code Reader 296 Analysis of Shareholdings app and point your camera to the QR Code. 297 List of Top 30 Shareholders 299 Notice of Annual General Meeting 302 Statement Accompanying Notice of Annual General Meeting • Proxy Form Get access to the softcopy of the Annual Report. The softcopy version of Golden Pharos Berhad’s Annual Report 2020 is available from our website. We also welcome your feedback. Please email: [email protected] Go to http://www.goldenpharos.com or scan the code Exterior glass facade at Southern Airline Corporation, Vietnam with your smartphone. supplied by GP Glass. 4 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD At a Glance GOLDEN PHAROS BERHAD WAS INCORPORATED IN 1986 SETTLEMENT OF RM12 MILLION AMOUNT OWING TO TERENGGANU INCORPORATED SDN BHD (TERENGGANU INC) VIA THE ISSUANCE OF 12 MILLION ISO 14001:2004 REDEEMABLE PREFERENCE SHARES CERTIFIED FOR GOLDEN PHAROS GLASS SDN BHD GOLDEN PHAROS BERHAD LISTED ON THE MAIN MARKET OF WAS FINALIST IN BURSA MALAYSIA 2019 ASIA SUSTAINABILITY SECURITIES BERHAD REPORTING AWARDS SINCE 1993 GPB AWARDED COMPANY OF THE YEAR (LOGGING & SAWMILL) BY CSR MALAYSIA. SEGMENT REVENUE FOR OPERATING UNIT HARVESTING & SAWMILLING MANUFACTURING OTHERS 65.1% 34.7% 0.2% GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 5 Key Highlights REVENUE RM47.20million (FY2019: RM57.47 million) LOSS PER SHARE (4.93sen) (FY2019: (6.79 sen)) SHAREHOLDERS’ EQUITY RM68.40million (FY2019: RM62.90 million) LOSS BEFORE TAX (RM6.37million) (FY2019: (RM8.98 million)) 6 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD Who We Are Morning view at Langsir Waterfall in the Group’s concession area. GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 7 Golden Pharos Berhad (GPB) has been listed on the Main Board of Bursa Securities Malaysia Berhad (Bursa Securities) since 1993. GPB is also a Terengganu state Government Link Corporation (GLC) by virtue of 70.97% shareholding via the State’s investment arms, Terengganu Incorporated Sdn Bhd and Lembaga Tabung Amanah Warisan Negeri Terengganu which hold 62.65% and 8.32% respectively. Its principal activities cover forest concession management, harvesting and distribution, sawmilling and value-added processing of wood-based products, as well as manufacturing and sales of architectural panel glass. 1997onwards GPB became a fully integrated timber corporation. 1996 GPB acquired Permint Timber Corporation Sdn Bhd. 1993 GPB was listed on the Main Board of the Kuala Lumpur Stock Exchange. 1992 Converted into a public company. Production of tempered glass started. 1986 GPB was incorporated. 8 ANNUAL REPORT 2020 GOLDEN PHAROS BERHAD Milestones and Achievements 1980 1992 1996 l GPB took over the l May - Tempered glass plant was l March - GPB became a fully manufacturing of timber doors set up at Telok Panglima Garang integrated timber corporation from Golden Pharos Wood Industrial Site, producing 20,000 with the acquisition of Permint Industries Sdn Bhd. square metres of tempered glass Timber Corporation Sdn Bhd. per month. l November - The second phase of glass production was implemented to supply architectural glass and shower screens for domestic buildings and the construction industry. 2006 l GPB was ranked 1st place in the consumer product 2012 industry sector and 2nd place 2007 overall under the Corporate st l Golden Pharos Glass Sdn l GPB was ranked 1 place Governance Survey Report for Bhd (GP Glass) certified with in the consumer product the small capital public listed st ISO 14001:2004 International industry sector and 1 place companies, conducted by the Standards. overall under the Corporate Minority Shareholder Watchdog Governance Survey Report for Group (MSWG) in collaboration l GP Glass awarded the small capital public listed with the Nottingham University ISO 9001:2006 certification. companies, conducted by the Business School. MSWG in collaboration with l Pesama Timber Corporation the Nottingham University Sdn Bhd (Pesama) obtained Business School. FSC® endorsed certification for Cherul Forest Concession. 2015 l GPB entered into a Memorandum of Understanding with Dongwha Malaysia Sdn Bhd. 2014 l Permint Plywood Sdn Bhd (PPSB) l GPB entered into a Memorandum of Understanding entered into a Joint Venture with Malaysian Timber Industry Board (MITB) and Agreement with Cymao Plywood Sdn Pengusaha Kayu Kayan & Perabot Bumiputera Malaysia (PEKA). Bhd (CPSB) to revive PPSB’s facility by establishing a JV company, GP Dynamic Venture Sdn Bhd (GPDV). GOLDEN PHAROS BERHAD ANNUAL REPORT 2020 9 Milestones and Achievements (Continued) 2016 2017 2018 l PPSB entered into a l GP Glass was awarded l PPSB re-started operations after closing Shareholders’ Agreement with Company of The Year (Small down its business in 2005. CPSB. Medium Enterprise) at Terengganu Inc Excellence l PPSB was certified with Programme for l PPSB subscribed to RM0.96 Award 2017. the Endorsement of Forest Certification million (60%) of GPDV’s paid (PEFC) for veneer production. up capital. GPDV’s intended l Pesama and Pesaka activities were to manufacture Trengganu Berhad l PPSB signed an agreement with BioBenua and sell veneer, plywood and (Pesaka) were awarded Teknologi to process agar wood oil. decorative plywood. the Performance Award for Sawmill Category (Air l Kumpulan Pengurusan Kayu Kayan l In June 2016, PPSB Pollution Control) by the Trengganu Sdn Bhd (KPKKT) initiated commenced the production Department of Environment commercial Forest Plantation for long- of woodchips to maximise the Terengganu. term timber supply. value of the Group’s wood waste. l PPSB was awarded the PEFC 'Chain of Custody of Forest Based Products' certification at Majlis SIRIM Industri 2018 'Best Partner For Innovation'. 2019 l First dividend payment of 1.27 sen per share was declared and paid after 11 years. l GP Glass was awarded Brand Leadership Award at the BrandLaureate BestBrands Awards 2018/2019. l The then Minister of Human Resource, 2020 YB M Kulasegaran appointed Chief Executive l April 2020 - GPB was finalist in 2019 Asia Officer, Dato’ Nadza Abdul as Director of Sustainability Reporting Award in Singapore.