Growing VALUE Sharpening FOCUS ANNUAL REPORT 2018 MANUFACTURING TRADING LICENSING INFRASTRUCTURE GROWING VALUE SHARPENING FOCUS As we constantly assess our ability to sustainably grow the value of Kumpulan Perangsang Selangor Berhad (“Perangsang Selangor” or “the Group”), we take cognisance of our responsibility towards a wider set of constituents in society and in discharging accountability to multiple stakeholders. Therefore, our business plans include an imperative to continuously identify the next catalysts for growth. We have in place a growth agenda that has resulted in the Group having a stronger footing in both regional and global arenas. Since then, we have evolved and expanded our reach via organic growth or through acquisitions of fast growing value-accretive companies. We are proudly a Malaysian investment holding entity with focused investments in four core sectors; namely manufacturing, trading, licensing and infrastructure. Today, we have expanded our operations regionally and globally. Our resilient performance over the years has been the product of proactive steps leading to breakthroughs in new sectors and further expansions in identified target markets. These highlights aptly describe this year’s Annual Report theme, Growing Value Sharpening Focus. DIGITAL VERSION OF ANNUAL REPORT 2018 Access the digital version of Annual Report 2018 by scanning the QR Code in 3 easy steps: 1 2 3 Download the “QR Code Run the QR Code Reader Get access to the soft copy Reader” on App Store or app and point your camera of the Annual Report. Google Play. to the QR Code. The softcopy version of Kumpulan Perangsang Selangor Berhad’s Annual Report 2018 is available from our website. We also welcome your feedback to make sure we are covering the things that matter to you. Go to www.perangsangselangor.com or scan the code above with your smartphone. V To be the Leading Corporation, StimulatingEconomic I Growth in Selangor and Beyond. S M I S O NIS To venture into business O activities that create value for our stakeholders. To have a N leading regional presence. To ensure sustainable financial performance with optimum returns to shareholders. To achieve quality standards surpassing customers’ expectations. To enhance quality of life by being a caring, community-oriented and environment-friendly organisation. nd Annual Shah Alam 2, SACC Convec, Thursday General No. 4 Jalan Perbadanan 14/9 10.00 a.m. 23 May 2019 42 Meeting 40000 Shah Alam, Selangor Darul Ehsan Growing Value Sharpening Focus Our Vision and Mission ABOUT PERANGSANG SELANGOR OUR ACHIEVEMENTS 4 Who We Are 68 Calendar of Events 6 2018 Key Highlights 72 Awards and Accolades 7 2018 at a Glance 74 Media Highlights 8 Corporate Milestones 10 Corporate Structure SUSTAINABILITY 11 Organisation Structure 12 Corporate Information 78 Sustainability Statement 132 CSR News HIGHLIGHTS GOVERNANCE 14 5-year Financial Highlights 16 Key Corporate Actions & Announcements 134 Corporate Governance Overview Statement 17 Financial Calendar 155 Statement of Risk Management and Internal Controls 18 Investor Relations 166 Audit Committee Report LEADERSHIP PERSPECTIVE & PROFILES 24 Chairman’s Statement 32 Management Discussion and Analysis 52 Board of Directors’ Profiles 62 Key Senior Management Profiles 65 Heads of Subsidiaries 67 Heads of Departments C O N E NT T S 2 Kumpulan Perangsang Selangor Berhad | Annual Report 2018 Growing Value Sharpening Focus Manufacturing Trading Infrastructure Licensing FINANCIAL STATEMENTS ACCOUNTABILITY 172 Directors’ Report 294 Analysis of Shareholdings 178 Statement by Directors 297 Additional Compliance Information Disclosures 178 Statutory Declaration 300 List of Group Properties 179 Independent Auditors’ Report 303 Corporate Directory 184 Statements of Profit or Loss 304 Notice of 42nd Annual General Meeting 185 Statements of Comprehensive Income 308 Statement Accompanying 186 Consolidated Statement of Financial Position Notice of Annual General Meeting 188 Statement of Financial Position • Appendix A 189 Consolidated Statement of Changes in Equity • Proxy Form 191 Statement of Changes in Equity 192 Statements of Cash Flows 195 Notes to the Financial Statements Kumpulan Perangsang Selangor Berhad | Annual Report 2018 3 Growing Value Sharpening Focus ABOUT PERANGSANG SELANGOR WHO We Are MANUFACTURING Century Bond Bhd (“CBB”) is an integrated packaging solutions provider driven by four business divisions, namely paper bags, carton boxes, plastics and original equipment manufacturer (“OEM”) for consumer products. Its paper division operates from three plants located in Ipoh and Senai in Malaysia, and Medan in Indonesia. The carton boxes division runs at its plants in Nilai and Established on 11 August 1975, Kumpulan Senai. The other two divisions – plastics and OEM operates from (“Perangsang Perangsang Selangor Berhad CBB’s plant in Senai. Selangor” or “the Group”), the flagship corporation of the state of Selangor, was listed on the Main CPI (Penang) Sdn Bhd (“CPI”) is an integrated plastic injection Board of Bursa Malaysia Securities Berhad (“Bursa moulding company serving over 90 clients worldwide. As a contract Malaysia”) on 22 July 2003 with a paid-up capital of manufacturer with experience in plastic injection moulding, tool RM431.4 million. The current paid-up capital is fabrication, secondary and sub-assembly processes as well as RM537.9 million. electronics box-build processes, CPI’s clientele includes customers from various industries including automotive, telecommunications, As an investment holding company, Perangsang medical as well as electronics. Selangor has focused investments in four core assets spanning across the manufacturing, trading, King Koil Manufacturing West, LLC (“KKMW’’) was established licensing and infrastructure sectors. At associate on 22 January 2018, marking King Koil® brand’s first level, Perangsang Selangor has interest in companies manufacturing initiative in the United States of America (“the US”). involved in the Oil & Gas and infrastructure sectors. Based in Phoenix, Arizona, KKMW currently supplies King Koil mattresses to retailers in the western region of the US, following While strengthening our business to optimise returns, the shift in business model in the US from licensing to a direct-to- Perangsang Selangor is committed to making significant retail structure. contributions towards sustainable development in the areas of economic, environment and social for the benefits of all stakeholders. 4 Kumpulan Perangsang Selangor Berhad | Annual Report 2018 ABOUT PERANGSANG SELANGOR Growing Value Sharpening Focus WHO We Are TRADING LICENSING Aqua-Flo Sdn Bhd (“Aqua-Flo”) is in the business of supplying water King Koil Licensing Company Inc (“KKLC”) operates the King chemicals and providing technical services to the water, waste and Koil® brand licensing business globally. King Koil® brand was first sewage treatment plants. Having access to a modern and high-tech established in the US over 100 years ago and remains as one of water laboratory in Malaysia, Aqua-Flo works closely with local and the most recognisable mattress brands in the US and globally. international water and wastewater treatment specialists. King Koil® mattresses and bedding products are distributed in 90 countries via 28 licensees worldwide. KKLC’s long-standing relationship with the International Chiropractor’s Association (“ICA”) ensures that King Koil® is firmly positioned to offer a healthier night’s sleep to consumers all over the world. INFRASTRUCTURE Smartpipe Technology Sdn Bhd (“Smartpipe”) is an integrated water solutions provider, specialising in pipe rehabilitations as well as pipe replacements. Smartpipe is the sole company authorised by Netherlands-based Wavin Overseas BV (“Wavin”) to sell and install Compact Pipe® and Wavins’s other pipe rehabilitation products in Malaysia. Combining its expertise in trenchless pipe rehabilitation with experience in the conventional pipe replacement works, Smartpipe is well positioned to address the non-revenue water topic in Malaysia. KPS-HCM Sdn Bhd (“KPS-HCM”) focuses on providing general civil engineering works and building construction and maintenance for both the public and private sectors. Following the successful completion of a seven-year concession for road maintenance works, its services are extended to include road and pavement, drainage and sewerage pipeline works and deployment of flood mitigation ponds. Sistem Penyuraian Trafik KL Barat Sdn Bhd (“SPRINT”) is one of the main expressway networks in Klang Valley. It is a three-lane dual carriageway that was built to ease traffic congestion into the city of Kuala Lumpur from the western suburbs of Petaling Jaya, Damansara and surrounding areas. The 26.5 km expressway is divided into three sections that include the Kerinchi Link, Damansara Link and Penchala Link. Perangsang Selangor holds 20% of equity interest in SPRINT via its associate company, Sistem Penyuraian Trafik KL Barat Holdings Sdn Bhd. Kumpulan Perangsang Selangor Berhad | Annual Report 2018 5 Growing Value Sharpening Focus ABOUT PERANGSANG SELANGOR 2018 Key Highlights Revenue RM582.3 million EBITDA Loss After Tax (RM127.1) million and Zakat RM196.8 million Net Assets per Share Dividend Attributable to Owners of 4.25 sen the Parent Loss Before Tax and Zakat RM2.11 RM179.6 million 6 Kumpulan Perangsang Selangor Berhad | Annual Report 2018 ABOUT PERANGSANG SELANGOR Growing Value Sharpening Focus 2018 AT A glance 11 January 2018 27 March 2018 Setting new direction for Acquisition