Attraction of Success

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2 Attraction of Success Attraction of Success shows that the hardwork we have put into the work brings us great return. We hope that through our efforts in our work attracts success and able to have a greater achievement.

3 ANNUAL REPORT Our Vision Our Mission TRUSTED FOR CONSTRUCTION & DEVELOPMENT EXCELLENCE TOWARDS BETTER LIVING AND SOCIETY NEEDS TO BUILD AND DEVELOP PROPERTIES TOWARDS CLIENTSʼ NEEDS & EXPECTATIONS FOR CONTINUOUS CLIENTSʼ SUPPORT Team Operating Principles (CARES) COMMUNICATE WITH PURPOSE We will consistently deliver and promote the Organization s Mission and goals towards achieving Organization s Vision. We will create a result-oriented environment which will encourage openness, honest opinions, creativity and innovation through effective communication. APPRECIATE AND RECOGNIZE We will take every opportunity to acknowledge individual contribution and commitment towards achieving the desired and positive outcomes. We will continuously value, appreciate and reward the effort of individuals and teams for their achievements. RESPECT AND CARE We will build a conducive and caring work environment through encouragement, support, cooperation and mutual respect amongst all team members. We will be sensitive to the needs of organization and individual, care for one another, promote good mannerism and politeness throughout the organization. EFFECTIVE COLLABORATION WITH SHARED RESPONSIBILITY We will focus and work together through team contribution and participation irrespective of what are the situations. We will encourage team member to collaborate effectively with one another, take full responsibility for action taken, comply to policies, and be fully committed to achieve the current and future goals of the organization. SPIRITED WORK ENVIRONMENT We will create a great working environment where people can still SMILE despite the situation, in good times and difficult times. We will build a truly inspiring organization, a great place to be in and an organization to work for, by developing positive attitudes and great understanding amongst all team members.

4 2 PRINSIPTEK CORPORATION BERHAD ( H) CONTENTS CORPORATE INFORMATION MANAGEMENT S DISCUSSION AND ANALYSIS CORPORATE STRUCTURE AND PRINCIPAL ACTIVITIES FIVE-YEARS FINANCIAL HIGHLIGHTS PROFILE OF BOARD OF DIRECTORS STATEMENT ON CORPORATE GOVERNANCE STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL AUDIT COMMITTEE REPORT FINANCIAL STATEMENTS STATEMENT OF DIRECTORS RESPONSIBILITY OTHER COMPLIANCE INFORMATION LIST OF PROPERTIES ANALYSIS OF SHAREHOLDINGS ANALYSIS OF WARRANTHOLDINGS NOTICE OF ANNUAL GENERAL MEETING PROXY FORM

5 ANNUAL REPORT CORPORATE INFORMATION BOARD OF DIRECTORS Independent Non-Executive Chairman Y Bhg Tan Sri Dato Seri Mohamad Noor Abdul Rahim Managing Director Y Bhg Dato Foo Chu Jong Executive Director Foo Chu Pak Independent Non-Executive Director Y Bhg Datin Paduka Low Siew Moi Y Bhg To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain AUDIT COMMITTEE Chairman Y Bhg Tan Sri Dato Seri Mohamad Noor Abdul Rahim Members Y Bhg Datin Paduka Low Siew Moi Y Bhg To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain NOMINATION COMMITTEE Chairman Y Bhg Datin Paduka Low Siew Moi Members Y Bhg Tan Sri Dato Seri Mohamad Noor Abdul Rahim Y Bhg To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain REMUNERATION COMMITTEE Chairman Y Bhg To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain Members Y Bhg Tan Sri Dato Seri Mohamad Noor Abdul Rahim Y Bhg Dato Foo Chu Jong AUDITORS Morison Anuarul Azizan Chew 18, Jalan 1/64 Off Jalan Kolam Air/Jalan Ipoh Kuala Lumpur, Malaysia REGISTERED OFFICE No. 83 & 85, Jalan SS15/4C, Subang Jaya Selangor Darul Ehsan, Malaysia Tel : PRINCIPAL BANKERS Malayan Banking Berhad RHB Bank Berhad STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad Stock Name: PSIPTEK Stock Code: 7145 Sector: Construction COMPANY SECRETARIES Goh Boon-Ui (MIA 24019) Lim Seck Wah (MAICSA ) WEBSITE ADDRESS prinsiptek@prinsiptek.com SHARE REGISTRARS Mega Corporate Services Sdn Bhd Level 15-2, Bangunan Faber Imperial Court Jalan Sultan Ismail Kuala Lumpur, Malaysia Tel : Fax :

6 4 PRINSIPTEK CORPORATION BERHAD ( H) MANAGEMENT S DISCUSSION AND ANALYSIS SIT FROM THE LEFT : Y Bhg Tan Sri Dato Seri Mohamad Noor Abdul Rahim Independent Non-Executive Chairman Y Bhg Dato Foo Chu Jong Managing Director STAND FROM THE LEFT : Y Bhg To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain Independent Non-Executive Director Foo Chu Pak Executive Director Y Bhg Datin Paduka Low Siew Moi Independent Non-Executive Director The following Management s Discussion and Analysis ( MDA ) of the operating performance and financial condition of Prinsiptek Corporation Berhad ( Prinsiptek, PCB, the, the Company, we, us, or our ) for the year ended 31 December 2016, should be read in conjunction with the 31 December 2016 Audited Financial Statements and related notes thereto. The discussion of results, causes and trends should not be construed to imply any conclusions that such results, causes or trends will necessarily continue in the future. SUMMARY Despite a challenging market environment due to difficult macroeconomic conditions, the will assure that the Company remains committed to creating value for our shareholders in the long term. These go a long way towards strengthening our reputation in the marketplace, reflecting Prinsiptek as the respected and trusted organisation, and position the for future growth. The financial year under review was challenging as the construction and development markets have slowdown due to the Government s various cooling measures to curb a speculative market, declining crude oil prices and weakening of the Malaysian Ringgit against the US Dollar. Notwithstanding these challenges, the remained resilient and focused on managing its projects in hand as well as planned for future launches.

7 ANNUAL REPORT MANAGEMENT S DISCUSSION AND ANALYSIS (Cont d) Our strategy going forward is to build our reputation as a value driven contractor. For any constructions and developments to be successful, Prinsiptek must always prioritise to build and develop properties towards the needs of the clients and expectations of the buyers for their continuous support. GROUP FINANCIAL PERFORMANCE We are pleased to report that the registered total revenue of RM million for the financial year ended 31 December 2016 ( FY2016 ) as compared to RM million in the preceding financial year. There was a decrease in revenue by 13.07% due to the completion of certain construction projects and property development projects in Klang Valley. The Construction Division continued to be the main contributor to the revenue representing 72.12% of the total revenue, with the trading and other Divisions of 14.52%. In terms of the Property Development Division, it has contributed a balance of 13.36% to the revenue. The recorded a higher net profit of RM5.04 million for the FY2016 as compared to RM2.37 million in the preceding financial year. The increase of profit was due to the recognition of higher profit margin projects coupled with a better control of its operating expenses and finance costs incurred during the financial year.

8 6 PRINSIPTEK CORPORATION BERHAD ( H) MANAGEMENT S DISCUSSION AND ANALYSIS (Cont d) As at 31 December 2016, the recorded a total of RM million unbilled construction order book. The remains committed and focused in its core business. The has successfully secured a total of RM million contracts during the financial year and the is confident in securing some potential construction projects in the coming future. CONSTRUCTION The is principally involved in construction. We are committed to being a value-driven contractor not only in our projects but also in all our undertakings. Clients needs have always been our emphasis, whereby we innovate and redefine the art of constructing, by creating an integrated construction. Our current ongoing construction projects in Malaysia such as TTDI Sentralis in Shah Alam and Penang Sentral in Penang; have been encouraging and being the reason of continuous growth for the. The would maintain and remain to work hand in hand with the credible clients, which long term growth of the company is intact as the current economic and market conditions appear to be challenging. We have also started to embrace Industrialised Building System (IBS) as a method of attaining better construction quality and productivity, reducing risks related to occupational safety and health, alleviating issues for skilled workers and dependency on manual foreign labour as well as achieving the ultimate goal of reducing the overall cost of construction. The IBS implementation has proven in our development project, that we have achieved a better and smoother operation. The will continue to implement IBS for achieving higher quality, gaining speed of construction and minimising on site duration. PROPERTIES Our landmark project, the highly acclaimed residential project at Puncak 7, Shah Alam, with the overwhelming hilltop view of the entire city has created the right aspiration and interest of property connoisseurs. Besides, the demand of the mixed development properties developed by our subsidiary in Ayutthaya, Bangkok Thailand has been very encouraging. We are pleased to note that our current project in Shah Alam has contributed consistently to the, arising from the steady population growth in the Klang Valley over the last few years. Following the successful completion of Phase 1 of our Puncak 7 residential project consisting of 211 units with GDV of RM million, which 90% of the units has been sold out. This year, we are planning to launch Phase 2 of our Puncak 7 residential project that comprises 17 units of double-storey link terrace houses and 208 units of SOHO in Serdang Perdana. We are also pleased to state that the Malaysia Property Insight has awarded our Puncak 7 residential homes project as the Prestigious Developer Awards The Best Hill Top Living Development. In order to maintain its profitability, the shall continue to increase its sales from existing and new launches. As at 31 December 2016, the s future property development projects in Malaysia and overseas market may worth approximately RM million.

9 ANNUAL REPORT MANAGEMENT S DISCUSSION AND ANALYSIS (Cont d) SUSTAINABILITY AND PROFITABLE GROWTH The s strategy for sustainable and profitable growth continues to focus on doing more of what we do best and doing it even better. We are constantly striving to serve our existing clients better by improving our service standards while present innovating service offerings, and at the same time, attracting the best possible new clients to complement our diversified client portfolio. We maintain an equally strong customer focus and are at all times working to position the as the construction company of choice for our clients. While striving for growth, we continue to focus on realizing operational efficiencies while improving standards in our processes and internal controls. Our engaged and committed employees help to drive these efficiencies and we are constantly realizing economies of scale to drive profitability growth. We will remain focused on our strategy of properties, overseas and in Malaysia while building up a sustainable capacity in construction. We will continue to create value for our shareholders by actively engaging with strategic business partners in developed and transparent global property markets with sturdy legal framework. OUTLOOK AND PROSPECT The year 2016 was a year of macroeconomic difficulty and challenging and unpredictable markets, which coincided with a year of investment and development growth for the. We enter 2017 with a committed and driven management team and established business development prospects. All of the key development that is needed for growth is now in place, including the SOHO development in Serdang Perdana is expected to be another challenging year for the local property sector. Headwinds include weak consumer sentiment, rising cost of living, low-income growth, high household debt and a relatively high loan rejection rate by banks. Home price growth has eased to single digits in recent times and may continue to trend slightly downwards before the market recovers, especially in the high-rise segment where there are pockets of oversupply. Still, we foresee that certain property segments will continue to achieve good take-up rates due to demand from genuine homebuyers, particularly mid-rise segment properties in accessible and good locations. The maintains optimistic of its property development division especially the demand of medium cost properties in the Klang Valley, Penang and Johor are still strong. We are well positioned to serve our clients and customers seamlessly across the value chain and the is placing more emphasis towards the current demand for the Gated and Guarded concept, affordable pricing homes, eco friendly building materials and harmony living environment. The is actively tendering for new projects in both the infrastructure and building works segments to replenish its order book for the next three years. However, in view of the slowdown in the economy and property market in Malaysia, Prinsiptek will be more prudent and cautious in taking on new construction contracts. Overall, the is confident that it will be able to deliver satisfactory performance in 2017 on the back of the existing unbilled construction order book of RM million from on-going projects that will continue to contribute towards the s revenue.

10 8 PRINSIPTEK CORPORATION BERHAD ( H) CORPORATE STRUCTURE AND PRINCIPAL ACTIVITIES 91% PRINSIPTEK INTERNATIONAL LIMITED 60% PRINSIPTEK THAI LIMITED 100% MAGNIFICIENT DEGREE SDN BHD 100% JERAM PERWIRA SDN BHD 100% TANAH PERANGSANG SDN BHD 100% PENTALAND SDN BHD 100% SOLIDVEST PROPERTIES SDN BHD ( H) 70% ANTARA MURNI DEVELOPMENT SDN BHD 100% PRINSIPTEK (M) SDN BHD 100% ESA PILE SDN BHD 100% PRINSIPTEK PROPERTIES SDN BHD 100% GABUNGAN SANJUNG SDN BHD 100% NBL LAND DEVELOPMENT SDN BHD 100% LKD TRADING SDN BHD PRINCIPAL ACTIVITY INVESTMENT HOLDING CONSTRUCTION PROPERTY DEVELOPMENT TRADING PROVISION OF PROJECT MANAGEMENT & SECRETARIAL SERVICES

11 ANNUAL REPORT FIVE-YEARS FINANCIAL HIGHLIGHTS Revenue (RM 000) Profit Before Tax (RM 000) Profit For The Year (RM 000) 500,000 8,000 7,961 7,000 7,000 6, ,000 6,000 5,000 5, , ,000 4,000 4, ,000 3,000 3, ,000 2,000 2,000 1,000 1, Profit Attributable to Equity Holders (RM 000) Gross Earnings Per Share (Sen) Net Earnings Per Share (Sen) 5, ,000 4, , , , Basic Diluted Basic Diluted

12 10 PRINSIPTEK CORPORATION BERHAD ( H) PROFILE OF BOARD OF DIRECTORS Y BHG TAN SRI DATO SERI MOHAMAD NOOR ABDUL RAHIM Independent Non-Executive Chairman/Malaysian/Male Y Bhg Tan Sri Dato Seri Mohamad Noor Abdul Rahim, aged 72, was appointed as the Independent Non-Executive Chairman of Prinsiptek Corporation Berhad ( PCB ) on 4 December He is also the Chairman of the Audit Committee and a member of the Nomination and Remuneration Committees of PCB. He holds a Bachelor of Arts (Honours) Degree from University Malaya. His last post in the civil service was the Secretary General of the Ministry of Home Affairs in He was the Secretary General of the Ministry of Domestic Trade and Consumer Affairs from 1996 to Prior to that, he held the positions of State Secretary of Pulau Pinang, Federal Development Director (Prime Minister s Department) of Kelantan, State Financial Officer of Perak, Director General of Kuala Lumpur City Hall, and Under-Secretary (Supply Division) for both the Ministry of Defence and Ministry of Finance. Currently, he also sits on the Board of Mitrajaya Holdings Berhad, Pinehill Pacific Berhad as Independent Non-Executive Director and TSR Capital Berhad as an Independent Non-Executive Chairman. In the field of sports, he is currently the President of Malaysian Petanque Federation and Vice Chairman of Malaysian Golf Association. Y BHG DATO FOO CHU JONG Managing Director/Malaysian/Male Y Bhg Dato Foo Chu Jong, aged 59, is the founder of Prinsiptek (M) Sdn Bhd ( PST ). He was appointed as the Managing Director of Prinsiptek Corporation Berhad ( PCB ) on 21 November He is also a member of the Remuneration Committee of PCB. He started his career in the construction industry in the early eighties when he was exposed to the development of commercial buildings, condominiums, hotels and housing estates. Y Bhg Dato Foo s sharp entrepreneurial acumen, dedicated and visionary leadership are the main factors which have led PST to achieve a numerous highly acclaimed projects. These include the Staff Hostels and Hotel Awana Golf and Country Club in Genting Highlands, Mixed Development in Gohtong Jaya and First World Hotel in Genting Highlands. He has gained a vast experience and knowledge through his involvement in most of the civil and engineering works where he has secured and completed billions worth of contracts. Being a hands-on Managing Director, he is actively involved in the day to day operations of the group to ensure that all projects are carried out and well managed. Enterprise Asia and the organizing committee of the Asia Pacific Entrepreneurship Awards 2009 have conferred to Y Bhg Dato Foo the Most Promising Entrepreneurship Award on 20 August 2009 for his outstanding and exemplary achievements in entrepreneurship. In 28 August 2014, Y Bhg Dato Foo was again conferred the Outstanding Entrepreneurship Award by the Enterprise Asia and the organizing committee of the Asia Pacific Entrepreneurship Awards Currently, Y Bhg Dato Foo sits on the Board of all subsidiaries of PCB. He does not hold any directorship in any other public companies. He is also the President of Kochow Association Malaysia. In addition, Y Bhg Dato Foo also sits on the Committee of several Unions, Non-Profit Organisations and Chinese Associations in Malaysia and abroad. Y Bhg Dato Foo is a major shareholder of PCB.

13 ANNUAL REPORT PROFILE OF BOARD OF DIRECTORS (Cont d) FOO CHU PAK Executive Director/Malaysian/Male Mr. Foo Chu Pak, aged 57, was appointed to the Board on 21 November Mr. Foo has completed his Bachelor of Civil Engineering (Honors) at the Summit University of Louisiana in year of He pursued his next embellishment in Honolulu University of Hawaii having completed his Master s Degree in Business Administration in year of Mr. Foo has more than 34 years of experience in both building and construction industry, serving in various capacities. He has vast experience and expertise in the management of civil and engineering works. He has completed billions worth of highly acclaimed projects. These include developments such as hotel, condominium, road and bridge, mixed development, government project, office tower & etc. Currently, he sits on the Board of all subsidiaries of PCB. He does not hold any directorship in any other public companies. Mr. Foo is also the Treasurer of Kochow Association Sekinchan. In addition, he sits on the Committee of several Unions, Non- Profit Organisations and Chinese Association in Malaysia. Mr. Foo is a major shareholder of PCB. Y BHG DATIN PADUKA LOW SIEW MOI Independent Non-Executive Director/Malaysian/Female Y Bhg Datin Paduka Low Siew Moi, aged 67, was appointed Independent Non-Executive Director of Prinsiptek Corporation Berhad ( PCB ) on 11 July She serves as Chairman of the Nomination Committee and a member of the Audit Committee of PCB. She holds a Bachelor of Economics (Accounting) and a Diploma in Accountancy (Post Graduate) from University of Malaya and a member of the Malaysian Institute of Accountants (MIA). She has more than 40 years of experience in accounting, finance and administration. She started her working career with Perbadanan Kemajuan Negeri Selangor ( PKNS ) in 1973 and had since held various managerial positions. In 1990, she was seconded to work with the private sector, IGB Corporation Berhad ( IGB ) and IJM Corporation Berhad ( IJM ) for 4 years. She was formerly the Deputy General Manager (Corporate Affairs) of PKNS and also acting as the General Manager of PKNS from November 2008 until March She has been working as an advisor under Menteri Besar Incorporated Selangor from May 2009 until October At present she is holding directorships in Prestige Field Development Sdn Bhd and Stratmont Development Sdn Bhd. She does not hold any directorships in any other public companies. Y BHG TO PUAN SERI HAJJAH NUR RAHMAH BINTI HJ MOHD ZAIN Independent Non-Executive Director/Malaysian/Female Y Bhg To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain, aged 62, was appointed Independent Non-Executive Director of Prinsiptek Corporation Berhad ( PCB ) on 20 August She is also a Chairman of the Remuneration Committee and a member of the Audit and Nomination Committees of PCB. She is an Executive Director of Cempaka Anugerah Sdn Bhd since From 1985 to 2004, she was an Executive Director of Skoga Redimix Sdn Bhd. She has vast experience in the field of marketing, administration, management and strategic planning. Currently, she is also an Independent Non-Executive Director of Concrete Engineering Products Berhad. OTHER INFORMATION OF DIRECTORS Save as disclosed above, Dato Foo Chu Jong and Mr. Foo Chu Pak are siblings, the other Directors do not have any family relationship with any Director and/or major shareholder of the Company. None of the Directors have any conflict of interest with the Company. None of the Directors has been convicted of any offences within the past five (5) years other than traffic offences, if any.

14 12 PRINSIPTEK CORPORATION BERHAD ( H) STATEMENT ON CORPORATE GOVERNANCE The Board of Directors ( Board ) affirms its overall responsibility in ensuring good Corporate Governance is practised throughout the with the objective of protecting and enhancing shareholders value, and the financial position of the. Pursuant to Paragraph of the Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa ), this corporate governance statement (the Statement ) sets out how the Company has applied the 8 Principles and observed the 26 Recommendations of the Malaysian Code on Corporate Governance (Code) for the financial year ended 31 December Where a specific Recommendation of the Code has not been observed during the financial year, the non-observation, including the reasons thereof, and the alternative practice adopted, if any, is mentioned in this Statement. PRINCIPLE 1 ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT The is led and controlled by an effective Board. The Board comprises highly reputable and professional persons of calibre and credibility, who have the necessary experience, knowledge and skills to bring an independent judgment in the process of strategic decision making. The Board recognises its key role in charting the strategic directions for the and regularly meets to review corporate strategies, resolve operational matters and monitor financial performance of the. The Board leads the and is responsible for the stewardship of the s strategic direction and development. In addition, the Board s responsibilities include reviewing the overall objective, key policies, control and operations of the, identifying risks and ensuring the existence of adequate internal controls and management systems to measure and manage risks. The presence of Non-Executive Directors who are independent from the management ensures adequate check and balance and independent view at all Board s deliberations. The Independent Directors also help in providing constructive views, advice and opinion objectively to safeguard interest of investors, customers and other stakeholders. They are also free from any business or other relationships that could materially interfere with the exercise of their independent judgment. Board Charter The Board is aware of the need to clearly demarcate the duties and responsibilities of the Board, Board Committees and Management, including the limits of authority accorded, in order to provide clarity and guidance to Directors and Management. As such, it has adopted a Board Charter, setting out, inter-alia, the roles of the Board, Board Committees, Executive and Non-Executive Directors and Management. The Charter, which serves as a referencing point for Board s activities to enable Directors to carry out their stewardship role and discharge their fiduciary duties towards the, also contains a formal schedule of matters reserved to the Board for deliberation and decision so that the control and direction of the s businesses are in its hands. The Charter has been uploaded on the Company s website at in line with Recommendation 1.7 of the Code. The Board charter was last reviewed in February Code of Ethics The Board has approved the Code of Ethics on 27 February Sustainability of Business The Board is mindful of the importance of business sustainability and, in conducting the s business, the impact on the environmental, social and governance aspects is considered. The Board has no formal policy on the Company s sustainability, the environment, social and governance elements but has been continuously practice prudence in energy savings, use the recycle material and always on the move to look for business opportunity. Supply of, and Access to, Information All Directors have access to all information within the as well as the advice and services of the Company Secretaries whether as a full Board or in their individual capacity to assist them in their decision making. Where necessary, the Directors may engage independent professionals at the s expense on specialised issues to enable the Directors to discharge their duties with adequate knowledge on the matters being deliberated.

15 ANNUAL REPORT STATEMENT ON CORPORATE GOVERNANCE (Cont d) For effective Board proceedings, the Directors would receive the structured agenda together with comprehensive management reports and proposal papers at least 3 days before the Board meeting. This is to ensure that all Directors are given time to prepare, obtain additional information or clarification prior to their attendance at the meeting. Company Secretary The Company Secretary is a qualified officer and meet the provision in Companies Act The Directors have unrestricted access to the advice and services of the Company Secretary. The Board is regularly updated and advised by the Company Secretary on new statutes and directives issued by regulatory authorities, and the resultant implications to the Company and the Directors in relation to their duties and responsibilities. The Company Secretary also serves notice to Directors reminding on trading in the Company s shares, during closed period in accordance with the closed period stated in Chapter 14 on Dealings in Securities of the Bursa Securities Main Market Listing Requirements. The Company Secretary attends and ensures that all Board meetings are properly convened, and that an accurate and proper record of the proceedings and resolutions passed are taken and maintained in the minutes book at the registered office of the Company. The Company Secretary also facilitates the communication of key decisions and policies between the Board, Board Committees and the Senior Management. PRINCIPLE 2- STRENGTHEN COMPOSITION OF THE BOARD The Board comprises five (5) members of whom two (2) are Executive Directors and three (3) Independent Non-Executive Directors. This is in compliance with the one-third requirement for Independent Directors to be appointed to the Board as required under the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ). This ensures that minority shareholders interests are adequately represented. The individual profile of each Director is presented on pages 10 to 11 of this Annual Report. The combination of different professionals with different background, experience and skills contribute a balance Board composition. The business and financial experience of each member of the Board has inevitably contributed to the success in steering the toward sustaining its remarkable financial results. The Board delegated certain of its responsibilities to the Board Committees with clearly defined terms of reference outlining their objectives, duties and responsibilities. The Board Committees exercise transparency and full disclosure in their proceedings where applicable issues are reported to the Board with appropriate recommendations by the Board Committees. Audit Committee The Audit Committee s activities during the financial year are set out under the Audit Committee Report on pages 22 to 23 of this Annual Report. Nomination Committee Selection and Assessment of Directors Prior to the appointment of a director to the Board, the Nomination Committee is fully entrusted with the role of proposing and recommending new nominee(s) to the Board for deliberation on the suitability of the candidate for directorship. Following appointment, new Director(s) will be duly briefed via an orientation familiarisation programme, including visits to the s business and operation premises and meetings with Senior Management will be arranged for new Directors to facilitate their understanding of the. The Nomination Committee taking into account of diversity of skills, expertise, background and experience in evaluating the appointment of Director(s) and the selection is not just based on gender. The Company does not have a policy on boardroom gender but believes in providing equal opportunity to all candidates based on merit. Currently, the Board has two female Directors on Board. The Nomination Committee consist of the following members during the financial year ended 31 December 2016:- 1. Y Bhg Datin Paduka Low Siew Moi Chairman (Independent Non-Executive Director) 2. Y Bhg Tan Sri Dato Seri Mohamad Noor Abdul Rahim Member (Independent Non-Executive Chairman of the Board) 3. Y Bhg To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain Member (Independent Non-Executive Director)

16 14 PRINSIPTEK CORPORATION BERHAD ( H) STATEMENT ON CORPORATE GOVERNANCE (Cont d) The Committee is empowered by its terms of reference and its responsibilities are as follows: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) To review regularly the Board Structure, Size, Composition and make recommendations to the Board with regards to any adjustments that are deemed necessary; To propose and identify new nominees for the appointment to the Board; To access Directors on an on-going basis, the effectiveness of the Board as a whole, the Board Committees and the Contribution of each individual Director as well as the Chief Executive Officer; To recommend to the Board, Directors to fill the seats on Board Committee; To review annually the Board s mix of skills and experience and other qualities including core competencies which is non-executive Director should bring to the Board; To develop the criteria to assess the independence of the independent Director of the Company; To determine annually whether or not a Director is Executive, Non-Executive or Independent; To recommend to the Board for continuation (or not) in service of executive Director(s) and Directors who are due for retirement by rotation; To recommend to the Board for continuation in service of Independent Director(s) who have served the Board for a cumulative term of more than 9 years; To consider, in making its recommendations, candidates for directorships proposed by the Chief Executive Officer and, within the bounds of practicability, by any other senior executive or any Director or shareholder; and To orientate and educate new Directors on the nature of business, currents issues within the and the corporate strategy, the expectations of the concerning input from the Directors and the general responsibilities of Directors. In accordance with the Company s Articles of Association, one-third (1/3) of the Directors including the Managing Director shall retire by rotation from office at each Annual General Meeting ( AGM ) and they shall be eligible for re-election at such AGM. The Directors to retire shall be the Directors who have been longest in office since their appointment or last re-election. In addition, all Directors including the Managing Director shall be subject to retirement by rotation once every three (3) years. Remuneration Committee The Remuneration Committee consist of the following members during the financial year ended 31 December 2016:- 1. Y Bhg To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain - Chairman (Independent Non-Executive Director) 2. Y Bhg Tan Sri Dato Seri Mohamad Noor Abdul Rahim Member (Independent Non-Executive Chairman of the Board) 3. Y Bhg Dato Foo Chu Jong - Member (Managing Director) The Remuneration Committee is delegated with responsibilities to set up the policy framework and to recommend to the Board on all elements of the remuneration package of the executive directors. The determination of remuneration packages of nonexecutives directors, including the non-executive Chairman, is a matter for the Board as a whole with the Directors concerned abstaining from deliberation and voting on decision in respect of his individual remuneration. The fees payable to the Directors will be recommended by the Board for approval by shareholders at the Annual General Meeting ( AGM ).

17 ANNUAL REPORT STATEMENT ON CORPORATE GOVERNANCE (Cont d) Directors Remuneration The Details of the Directors remuneration for the financial year ended 31 December 2016 are as follows:- Remuneration (RM) Executive Directors Non-Executive Directors Total Description Company Subsidiary Company Subsidiary Salary - 810, ,063 Fee , ,000 Bonus - 68, ,097 Benefit-in-kind - 106, ,878 Total - 985, ,000-1,105,038 The number of Directors whose remunerations falls within the following bands is as follows:- Range of Remuneration Number of Executive Directors Number of Non-Executive Directors RM50,000 and below - 3 RM50,001 RM150, RM150,001 RM350, RM350,001 RM650, Total 2 3 PRINCIPLE 3- REINFORCE INDEPENDENCE OF THE BOARD There is a clear segregation of duties between the Chairman of the Board ( the Chairman ) and the Managing Director so as to ensure that there is always a balance of power and authority. Essentially, the Chairman acts as the Advisor and set direction to the Board and shall preside at various meetings, namely general meetings of shareholders and Board meetings in order to address issues to be highlighted by and to members independently, whilst the Managing Director has the responsibility to manage the day-to-day business operations of the by ensuring that strategies, policies and matters approved by the Board and other committees are carried out diligently. All decisions of the Board are based on the decision of the majority and no single Board member can make any decision on behalf of the Board, unless duly authorized by the Board. As such, no individual or a group of individuals dominate the decision making process. The Board is of the view that it has the right mix of individual qualities to fulfil its role. Taken as a whole, the Board represents many years experience in financial, business management and public corporate affairs and is therefore suited to the oversight of your Company. The Independent Non-Executive Directors continue to provide unbiased and independent views, advice and judgment to take into account the interest, not only of the but also of shareholders, employees, communities in which the conducts business and other stakeholders. In the opinion of the Board, the appointment of a Senior Independent Non-Executive Director is not necessary as the Board has identified its Chairman, Y Bhg Tan Sri Dato Seri Mohamad Noor Abdul Rahim, to whom concerns of shareholders, management and others may be conveyed. The Board operates in an open environment in which opinions and information are freely exchanged and in these circumstances any concerns need not be focussed on a single director as all members of the Board fulfil this role individually and collectively. The Executive Directors valued their contribution and spirit of working together and to give their objective remarks rationally. In this respect, the Executive Directors recommend the retention of Y Bhg Tan Sri Dato Seri Mohamad Noor Abdul Rahim and Y Bhg To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain who have served the Company for more than 9 years to continue the office as Independent Non-Executive Directors pursuant to Code.

18 16 PRINSIPTEK CORPORATION BERHAD ( H) STATEMENT ON CORPORATE GOVERNANCE (Cont d) PRINCIPLE 4- FOSTER COMMITMENT OF DIRECTORS The Board meets at least five (5) times a year, scheduled well in advance before the end of the preceding financial year to facilitate the Directors in planning their meeting schedule for the year. When necessary, additional meetings will be convened by the Board to make important decisions on ad hoc basis. It is the practice of the Company for Directors to devote sufficient time and efforts to carry out their responsibilities. All Board members are required to notify the Chairman on any new directorships notwithstanding that the Listing Requirements of Bursa Securities allows a Director to sit on the board of 5 listed issues. Certain matters requiring Board s decisions during the intervals between the Boards meetings are sought by way of circular resolutions enclosing all relevant information to enable the Board to make informed decisions. All circular resolutions approved by the Board will be tabled for notation and confirmation at the next Board meeting. To facilitate the Directors time planning, an annual meeting schedule is prepared and circulated at the beginning of every year, as well as the tentative closed periods for dealings in securities by Directors based on the targeted date of announcements of the s quarterly results. Board Meetings During the financial year ended 31 December 2016, Five (5) Board s meetings were held. The records of attendance of the Directors held during the financial year ended 31 December 2016 are as follows:- Directors Number of Meetings Attended Percentage of Attendance Y Bhg Tan Sri Dato Seri Mohamad Noor Abdul Rahim 5/5 100% Y Bhg Datin Paduka Low Siew Moi 5/5 100% Y Bhg To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain 4/5 80% Y Bhg Dato Foo Chu Jong 5/5 100% Foo Chu Pak 4/5 80% Four (4) the above meetings were held at the Company s registered office and One (1) of the above meeting was held at Latitude 1.01º, Level 1, Hotel Armada Petaling Jaya, Selangor Darul Ehsan. Directors Training Continuing Education Programmes All members of the Board have attended and successfully completed the Mandatory Accreditation Programme prescribed by Bursa Securities for Directors of public-listed companies. However, the Board is mindful of the need for Directors to attend continuous education programmes to keep them abreast of new developments pertaining to legislations, regulations and changing commercial risks that may affect business operations and compliance matters. Appropriate training and education programmes are identified and arranged for Directors participation from time to time to further enhance their skills and knowledge. Members of the Board have attended various training programmes in areas of financial reporting, leadership, corporate governance, contract administration in construction and environmental awareness.

19 ANNUAL REPORT STATEMENT ON CORPORATE GOVERNANCE (Cont d) Details of training programmes attended by members of the Board in 2016 are as follows: Name of Directors Training programme attended Date (a) Y Bhg Tan Sri Dato Seri Mohamad Noor Abdul Rahim Board Chairman Series Part 2: Leadership Excellence From the Chair [Bursa Malaysia] 11 August 2016 (b) Y Bhg Datin Paduka Low Siew Moi Nuts & Bolts of Disclosure Obligations of Directors (S131 & S135) [MAICSA] 10 October 2016 (c) Y Bhg To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain Borrowings Secured or Unsecured? [MAICSA] 5 October 2016 (d) Y Bhg Dato Foo Chu Jong Technical Visit to Centralized Labour Quarters (CLQ), Sungai Buloh - (V3 Mudajaya) [QS Division, Royal Institution of Surveyors Malaysia] 8 March 2016 Structuring Successful Property Joint Ventures [Crowe Horwath] 10 March 2016 How to Evaluate Preliminaries Claim? [QS Division, Royal Institution of Surveyors Malaysia] 23 April 2016 Arbitrating in Asia The Good, The Bad and The Ugly! [Kuala Lumpur Regional Centre for Arbitration] 23 June 2016 Technical Briefing for Company Secretaries of Listed Issuers: (1) Amendments to Listing Requirements Relating to Disclosure, Corporate Governance Requirements & Future Financial Information; (2) Common Disclosure Issues and Case Studies [Bursa Malaysia] 2 June 2016 (e) Foo Chu Pak Technical Visit to Centralized Labour Quarters (CLQ), Sungai Buloh - (V3 Mudajaya) [QS Division, Royal Institution of Surveyors Malaysia] 8 March 2016 How to Evaluate Preliminaries Claim? [QS Division, Royal Institution of Surveyors Malaysia] 23 April 2016 Arbitrating in Asia The Good, The Bad and The Ugly! [Kuala Lumpur Regional Centre for Arbitration] 23 June 2016 Innovative Concrete Systems: Design & Materials [American Concrete Institute Kuala Lumpur Chapter] 18 August 2016 During the year, Directors also received regular updates and briefings, particularly on regulatory, industry and legal developments, including information on significant changes in business. The Directors continue to undergo relevant training programmes to further enhance their skills and knowledge in the discharge of their stewardship role.

20 18 PRINSIPTEK CORPORATION BERHAD ( H) STATEMENT ON CORPORATE GOVERNANCE (Cont d) PRINCIPLE 5- UPHOLD INTEGRITY IN FINANCIAL REPORTING BY COMPANY Financial Reporting In preparing the annual financial statements and quarterly announcement of financial results to shareholders, the Board has always strived to present a balanced and understandable assessment of the s financial position and prospects to shareholders. The Audit Committee assists the Board in ensuring accuracy and adequacy of information by reviewing and recommending for adoption of information for disclosure. The Statement of Directors Responsibility for preparing Annual Audited Financial Statements pursuant to Paragraph (a) of the Main Market Listing Requirements of Bursa Securities is set out on page 91 of this Annual Report. Relationship with Auditors The Board has appropriately established a formal and transparent relationship with the s auditors. The External Auditors attend Audit Committee meetings when necessary and have direct access to the Audit Committee and Internal Auditors for independent discussion. The External Auditors met with the Audit Committee twice in the financial year ended 31 December 2016 without the presence of the Executive Directors. Details of statutory audit, audit-related and non-audit fees paid/payable in the financial year ended 31 December 2016 to the external auditors are set out below:- Fees paid/payable to Morison Anuarul Azizan Chew (RM) Description Company Subsidiary Total Audit Fees 17,000 82,732 99,732 Non-Audit Fees 3,000-3,000 Total 20,000 82, ,732 PRINCIPLE 6- RECOGNISE AND MANAGE RISKS OF THE GROUP The Board had yet to establish a structured risk management framework to identify, evaluate, control, report and monitor significant risks faced by the.the Board affirms the importance of maintaining a sound system of internal controls and risk management practices to good corporate governance. In order to enhance consistency within the, the Board has appointed an external consultant, Baker Tilly Monteiro Heng Governance Sdn. Bhd. ( BTMHG ) to provide professional services for internal control assessment and to carry out internal audit function for the. In additional to that, all the various Head of Departments have regular meeting to address and mitigation plan to manage the business risks. The Statement on Risk Management and Internal Control set out on pages 20 to 21 of this Annual Report provides an overview of the state of internal controls within the. PRINCIPLE 7- ENSURE TIMELY AND HIGH QUALITY DISCLOSURE The practises an open communication policy with its investors. In its efforts to promote effective communication, the Board has dialogue with shareholders and investors and recognises that timely and equitable dissemination of relevant information shall be provided to them through public announcements made to Bursa Securities, the Company s annual reports, circulars and financial results on quarterly basis to enable shareholders and investors to have an overview of the s business activities and performance. In addition, the strives to improve the contents of the Annual Report in line with the developments in corporate governance practices. The Company s Annual Report can be accessed at the Company s website at via a direct link to Bursa Securities website.

21 ANNUAL REPORT STATEMENT ON CORPORATE GOVERNANCE (Cont d) PRINCIPLE 8- STRENGTHEN RELATIONSHIP BETWEEN THE COMPANY AND ITS SHAREHOLDERS Shareholder participation at general meeting The Board believes that the AGM is the best forum to promote a closer relationship with our shareholders and to keep shareholders informed of all material business and corporate developments concerning the. The shareholders are given sufficient notice for the holding of AGMs through annual reports sent to them at least 21 clear days prior to the date of the AGMs. At the AGMs, the Board will present to the shareholders a comprehensive report on the performance of the and the shareholders are encouraged to participate in the questions and answers session thereat, and are given the opportunity to raise question or seek more information during the AGMs. In line with the amendment in Listing Requirements, all resolutions in general meeting will be voted by poll. An independent scrutineer will be appointed to the poll voting. Communication and engagement with shareholders The Board recognises the importance of being transparent and accountable to the Company s investors and, as such, has various channels to maintain communication with them. The various channels are through the quarterly announcements on financial results to Bursa, relevant announcements and circulars, when necessary, the Annual and Extraordinary General Meetings and through the s website where shareholders can access pertinent information concerning the. The Company has adopted shareholders communication policy on 25 August Corporate Social Responsibility As a responsible corporate citizen, the will continuously ensure that all pertinent matters relating to corporate social responsibility are considered and supported in its operations for the well being of the stakeholders, community and environment. The makes donations and contributions to the local communities from time to time. In addition, the also offers industrial training opportunities to the undergraduates from colleges and universities to assist them in gaining hands-on experience in their respective fields. Compliance Statement The Board strives to ensure that the Company complies with Principles and Best Practice of the Code. The Board will endeavour to improve and enhance the procedures from time to time.

22 20 PRINSIPTEK CORPORATION BERHAD ( H) STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL INTRODUCTION The Board of Directors ( Board ) is responsible for the adequacy and effectiveness of the s risk management and internal control system. The Board recognizes the importance of good corporate governance and is committed in maintaining a sound system of internal controls to safeguard shareholders investment and the s assets. In doing so, the Board acknowledges its responsibility to identify major risks faced by the and ensure that relevant internal controls are in place in order to manage these risks. In view of the above, the Board is pleased to provide the following Statement on Internal Control which outlines the nature and scope of internal controls of the during the year pursuant to Paragraph (b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ). Meanwhile, the Board understands fully its responsibility to maintain a sound system of internal controls and ensure accurate information to be presented in the financial statements. The Board also acknowledges that the Board is ultimately responsible for the s system of internal control, which includes the establishment of an appropriate control environment and framework, as well as reviewing its adequacy and integrity. The system of internal controls is designed to manage rather than eliminate the risk of failure in achieving its business objectives. In pursuing the business objectives, internal controls can only provide reasonable but not absolute assurance against material misstatement, loss or fraud. As such, the Board recognises that a sound system of internal controls is an important part of managing risks in an effort to attain a balanced achievement of its business objectives, and operational efficiency and effectiveness. The Board has received assurance from the Managing Director that the s risk management and internal control system is operating adequately and effectively, in all material aspects, based on the risk management and internal control system of the Company. The Board is of the view that the risk management and internal control system in the are adequate and have been effective in their function with no significant problems noted during the period under review. THE RISK MANAGEMENT PROCESS The Board has endeavoured to identify the relevant major risks faced by the on a regular basis and in order to prevent the occurrence of the identified risks or mitigate the impact of these risks so as to ensure that the achieves its business objectives. In managing the major risks, the Board has always carried out necessary preliminary studies and evaluation on various projects which will be undertaken by the. This entails proper delegation of duties and responsibilities from the Board to the Managing Director, Executive Directors and Senior Management ( Management ) in running the main operating functions of the within the s strategic business plans. In this respect, the Management comprises personnel with many years of hands-on experience who are able to identify business risks relevant to the and design the appropriate internal controls to manage these risks. At the same time, the Management also attends various management and operation meetings in order to discuss matters of concern in relation to various projects undertaken by the as well as any obstacles in achieving the s strategic business plans. The Management has also adopted the open discussion approach in the day-to-day running of the. This has enabled various major business risks being identified easily and dealt with in a prompt manner. KEY ELEMENTS OF THE GROUP S INTERNAL CONTROLS The has incorporated various key elements into its system of internal controls in order to safeguard shareholders investment and the s assets by: giving authority to the Board Committee members to investigate and report on any areas of improvement for the betterment of the ; performing in-depth study on major variances and deliberating irregularities in the Board meetings and Audit Committee meetings so as to identify the causes of the problems and formulate solutions to resolve them;

23 ANNUAL REPORT STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL (Cont d) arranging regular interactive meetings with the External Auditors, Internal Auditors and/or other consultants to identify and rectify any weaknesses in the system of internal controls. The Board would also be informed on the matters brought up at the Audit Committee meetings on a timely basis; delegating necessary authority to the Managing Director in order for him to play a major role as the link between the Board and Management in implementing the Board s expectation of effective system of internal controls and managing the s various operations; determining proactive actions to create awareness on the importance of staff s and line management s involvement in the system of internal controls as well as risk management by providing various training courses, seminars and workshops conducted by the external consultants; keeping the Management informed on the development of action plan for enhancing system of internal controls and allowing various management personnel to have access to important information for better decision making; making frequent on-site visits to the business and operations premises by Senior Management personnel so as to acquire a first hand view on various operational matters and addressing the issues accordingly; monitoring key commercial, operational and financial risks through reviewing the system of internal controls and other operational structures so as to ensure that reasonable assurance on the effectiveness and efficiency of the same will mitigate the various risks faced by the to an appropriate level acceptable to the Board; and reviewing and updating the Policies and Procedures on regular basis which set out guideline and expected standards for the operations, so as to maintain effectiveness at all times. INTERNAL AUDIT FUNCTIONS AND EFFECTIVENESS OF INTERNAL CONTROL The Board had engaged external consultant, Baker Tilly Monteiro Heng Governance Sdn Bhd ( BTMHG ) to carry out the internal audit function. The duty of BTMHG is to examine and evaluate major processes of operations of the in order to assist the Board in the effective discharge of the Board s responsibilities. The total cost incurred for the internal audit functions in respect of the financial year ended 31 December 2016 amounted to RM28, BTMHG adopts a risk-based approach in developing its audit plan. The Internal Auditors conduct briefing and interview with Senior Management to identify significant concerns and risks perceived by the Senior Management in order to draw up the risk-based internal audit plan focusing on several key auditable areas. During the financial year under review, the Internal Auditors carried out reviews on the following core areas based on the approved internal audit plan to assess the adequacy and effectiveness of internal controls within the : (i) (ii) (iii) (iv) (v) (vi) Project and Contract Management for Construction Division; Claims Processing and Payment Control for Construction Division; Follow-up Review for Purchasing Management and Accounts Payable; Human Resource Management and Payroll Function; Follow-up Review for Project and Contract Management, Claim Processing and Payment Control for Construction Division; and Corporate Governance Compliance. From the above review, certain control weaknesses and improvement areas have been identified and are being addressed by the management and the Board so as to enhance the integrity of internal controls. The Board is of the opinion that none of the weaknesses have resulted in any material losses, contingencies or uncertainties that would require mention in the Company s Annual Report The Management of the continues to take measures to strengthen the internal control environment from time to time based on the recommendations proposed by the Internal Auditors. Furthermore, the Board recognises that the development of the system of internal controls is an ongoing process as part of its efforts in managing the risk faced by the. Consequently, the Board maintains an ongoing commitment to further strengthen the control environment within the.

24 22 PRINSIPTEK CORPORATION BERHAD ( H) AUDIT COMMITTEE REPORT FORMATION The Audit Committee was formed by the Board of Directors ( Board ) on 4 December MEMBERS The Audit Committee consists of the following members during the financial year ended 31 December 2016: 1. Y Bhg Tan Sri Dato Seri Mohamad Noor Abdul Rahim - Chairman (Independent Non-Executive Chairman of the Board) 2. Y Bhg Datin Paduka Low Siew Moi - Member (Independent Non-Executive Director) 3. Y Bhg To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain Member (Independent Non-Executive Director) MEETINGS AND ATTENDANCE The Audit Committee held five (5) meetings during the financial year ended 31 December The attendance of each Audit Committee member is as follows: AC Members Number of Meetings Attended Percentage of Attendance Y Bhg Tan Sri Dato Seri Mohamad Noor Abdul Rahim 5/5 100% Y Bhg Datin Paduka Low Siew Moi 5/5 100% Y Bhg To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain 4/5 80% The Audit Committee meetings were attended by the Audit Committee members and Senior Management. The Managing Director and Executive Director were also present at certain meetings as invitees. The representatives of the Internal and External Auditors attended these meetings upon invitation. The Company Secretary sits in all the AC meetings. TERMS OF REFERENCE The Terms of Reference of the Audit Committee has been uploaded to the corporate website at SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE During the financial year, the activities undertaken by the Audit Committee are summarized as follows: Reviewed the external auditor s scope of work and audit plan for the financial year. Prior to the audit fieldwork, representatives from the external auditor presented their audit strategy and plan to the Audit Committee; Reviewed the suitability and independence of external auditors and recommended to the Board the re-appointment of the external auditor; Met with external auditor twice (2) during the financial year without the presence of any Executive Directors; Reviewed the internal audit plan, process and reports which highlighted the audit issues, recommendations and management s response. Discuss with the management and ensure appropriate actions were taken to improve the system of internal control based on improvement opportunities identified in the internal audit reports; Reviewed the unaudited quarterly financial results of the and making relevant recommendations to the Board for approval. Reviewed the audited financial statements of the prior to submission to the Board for its consideration and approval;

25 ANNUAL REPORT AUDIT COMMITTEE REPORT (Cont d) Reviewed related party transactions entered into by the, conflict of interest situations and report the same to the Board; Reviewed the Statement on Risk Management and Internal Control and its recommendation to the Board for inclusion in the Annual Report; Reviewed the Statement on Corporate Governance and its recommendation to the Board for inclusion in the Annual Report; and Reviewed the Audit Committee Report for inclusion in the Annual Report. INTERNAL AUDIT FUNCTION AND SUMMARY OF ACTIVITIES The internal audit function for the has been outsourced to an external consultant, Baker Tilly Monteiro Heng Governance Sdn Bhd who has performed an independent review of the s various departments during the financial year ended 31 December The Internal Auditors of the reports directly to the Audit Committee and assist the Audit Committee in identifying and managing risks to enhance the internal control system. The Audit Committee approves the internal audit plan and the scope of Internal Audit covering the relevant departments within the from time to time. The core areas reviewed by the internal auditors during the financial year ended 31 December 2016 are disclosed in the Statement on Risk Management & Internal Control. The Audit Committee is of the view that there is no significant breakdown or weaknesses in the systems of internal controls of the that may result in material losses incurred by the for the financial year. The professional fees incurred for the internal audit function in respect of financial year ended 31 December 2016 amounted to RM28,

26 24 PRINSIPTEK CORPORATION BERHAD ( H) FINANCIAL STATEMENT DIRECTORS REPORT STATEMENT BY DIRECTORS STATUTORY DECLARATION INDEPENDENT AUDITORS REPORT STATEMENTS OF FINANCIAL POSITION STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME STATEMENTS OF CHANGES IN EQUITY STATEMENTS OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS REALISED AND UNREALISED PROFITS/LOSSES

27 ANNUAL REPORT DIRECTORS REPORT The Directors have pleasure in submitting their report together with the audited financial statements of the and of the Company for the financial year ended 31 December Principal Activities The principal activities of the Company are those of management and investment holding. The principal activities of the subsidiary companies are disclosed in Note 5(b) to the financial statements. There have been no significant changes in the nature of these activities during the financial year. Financial Results Company Profit before taxation 7,960,583 1,689,527 Taxation (2,920,673) 828 Profit for the financial year 5,039,910 1,690,355 Attributable to: Equity holders of the Company 4,332,642 1,690,355 Non-controlling interests 707,268-5,039,910 1,690,355 Dividends No dividend has been paid or declared by the Company since the end of the previous financial year. The Board of Directors does not recommend any dividend to be paid for the financial year under review. Reserves and Provisions There were no material transfers to or from reserves and provisions during the financial year under review other than those disclosed in the financial statements. Issue of Shares and Debentures There were no issuance of shares or debentures during the financial year. Options Granted Over Unissued Shares No options were granted to any person to take up unissued shares of the Company during the financial year under review. Warrants On 17 November 2014, the Company issued 126,782,744 Five (5) years Free Warrants 2014/2019 ( Warrants ) pursuant to a renounceable rights issue of two warrants for every three rights shares of RM0.10 each held in the Company. During the financial year, none of the Warrants were exercised. As at 31 December 2016, there was a total of 126,782,744 unexercised Warrants. The salient features of the Warrants are disclosed in Note 20 to the financial statements.

28 26 PRINSIPTEK CORPORATION BERHAD ( H) DIRECTORS REPORT (Cont d) Directors The Directors in office during the financial year and during the period from the end of the financial year to the date of this report are: Tan Sri Dato Seri Mohamad Noor Abdul Rahim To Puan Seri Hajjah Nur Rahmah Bt Hj. Mohd Zain Datin Paduka Low Siew Moi Dato Foo Chu Jong Foo Chu Pak Directors Interests According to the register of Directors shareholdings, particulars of interests of Directors who held office at the end of the financial year in shares and options over shares in the Company are as follows: Number of ordinary shares of RM0.10 each at at Acquired Disposed Prinsiptek Corporation Berhad Direct interest Dato Foo Chu Jong 36,974, ,974,999 Indirect interest (1) Dato Foo Chu Jong 102,476, ,476,562 Foo Chu Pak 102,476, ,476,562 (1) Deemed interest through shareholdings in Daya Setempat Sdn. Bhd. by virtue of Section 6A of the Companies Act, Number of warrants at at Acquired Disposed Prinsiptek Corporation Berhad Direct interest Dato Foo Chu Jong 14,789, ,789,999 Indirect interest (2) Dato Foo Chu Jong 40,990, ,990,624 Foo Chu Pak 40,990, ,990,624 (2) Deemed interest through warrant holdings in Daya Setempat Sdn. Bhd. by virtue of Section 6A of the Companies Act, By virtue of their interests in the shares of the Company, Dato Foo Chu Jong and Foo Chu Pak are deemed to have interests in the shares of all its subsidiary companies to the extent the Company has an interest. Other than as disclosed above, according to the register of Directors shareholdings, the Directors in office at the end of the financial year did not hold any interest in shares or debentures in the Company or its subsidiaries during the financial year.

29 ANNUAL REPORT DIRECTORS REPORT (Cont d) Directors Benefits Since the end of the previous financial year, no Director of the and of the Company has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest. Neither during nor at the end of the financial year, was the Company or its subsidiary companies a party to any arrangement the object of which is to enable the Directors to acquire benefits by means of the acquisition of shares in or debentures of the and of the Company or any other body corporate. Other Statutory Information (a) Before the financial statements of the and of the Company were prepared, the Directors took reasonable steps: (i) (ii) to ascertain that action had been taken in relation to the writing off of bad debts and the making of provision for impairment loss on receivables and satisfied themselves that all known bad debts had been written off and that adequate provision had been made for impairment loss on receivables; and to ensure that any current assets which were unlikely to be realised their value as shown in the accounting records in the ordinary course of business including the value of current assets as shown in the accounting records of the and of Company have been written down to an amount which the current assets might be expected so to realise. (b) At the date of this report, the Directors are not aware of any circumstances which would render: (i) (ii) (iii) (iv) the amount written off for bad debts or the provision for impairment loss on receivables in the financial statements of the and of the Company inadequate to any substantial extent; the values attributed to the current assets in the financial statements of the and of the Company misleading; any amount stated in the financial statements of the and of the Company misleading; and adherence to the existing method of valuation of assets or liabilities of the and of the Company misleading or inappropriate. (c) (d) No contingent or other liability of any company in the has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may affect the ability of the and of the Company to meet their obligations when they fall due. At the date of this report, there does not exist: (i) (ii) any charge on the assets of the or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or any contingent liability in respect of the or of the Company which has arisen since the end of the financial year.

30 28 PRINSIPTEK CORPORATION BERHAD ( H) DIRECTORS REPORT (Cont d) Other Statutory Information (cont d) (e) In the opinion of the Directors: (i) (ii) the results of the operations of the and of the Company for the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the and of the Company for the financial year in which this report is made. Auditors The auditors, Messrs. Morison Anuarul Azizan Chew, have expressed their willingness to accept re-appointment. Signed on behalf of the Board of Directors in accordance with a resolution of the Directors. DATO FOO CHU JONG FOO CHU PAK

31 ANNUAL REPORT STATEMENT BY DIRECTORS Pursuant to Section 169(15) of the Companies Act, 1965 We, DATO FOO CHU JONG and FOO CHU PAK, being two of the Directors of PRINSIPTEK CORPORATION BERHAD, do hereby state that, in the opinion of the Directors, the financial statements set out on pages 34 to 89 are drawn up in accordance with the Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the state of affairs of the and of the Company as at 31 December 2016 and of the results of their operations and the cash flows of the and of the Company for the financial year ended on that date. The information set out in page 90 to the financial statements 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 Malaysia Institute of Accountants. Signed on behalf of the Board of Directors in accordance with a resolution of the Directors. DATO FOO CHU JONG FOO CHU PAK STATUTORY DECLARATION Pursuant to Section 169(16) of the Companies Act, 1965 I, DATO FOO CHU JONG, being the Director primarily responsible for the financial management of PRINSIPTEK CORPORATION BERHAD, do solemnly and sincerely declare that the financial statements set out on pages 34 to 89 and page 90 respectively are to the best of my knowledge and belief, 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, Subscribed and solemnly declared by the ) abovenamed DATO FOO CHU JONG ) at ) on this date of ) DATO FOO CHU JONG Before me, COMMISSIONER FOR OATHS

32 30 PRINSIPTEK CORPORATION BERHAD ( H) INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF PRINSIPTEK CORPORATION BERHAD (Company No.: H) (Incorporated in Malaysia) Report on the audit of the Financial Statements Opinion We have audited the financial statements of Prinsiptek Corporation Berhad, which comprise the statements of financial position as at 31 December 2016 of the and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the and of the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 34 to 89. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the and of the Company as at 31 December 2016, and of their financial performance and their cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. Basis for Opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence and Other Ethical Responsibilities We are independent of the and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants ( By-Laws ) and the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants ( IESBA Code ), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the and of the Company for the current year. These matters were addressed in the context of our audit of the financial statements of the and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter H how our audit addressed the key audit matter Impairment assessment of goodwill As at 31 December 2016, the has goodwill with a carrying amount of RM8,260,819. We have focused on this area due to the significant degree of judgement and estimates over the impairment assessment of intangible assets. We evaluated management s impairment assessment and the process by which they were developed, including its oversight of the impairment assessment by the Board of Directors. We challenged assumptions used in the impairment model, amongst others, include: forecast revenue; forecast other operating and administrative costs; forecast capital expenditure; and discount rates. Sensitivity analysis was performed on key assumptions used by management and we assessed the impact on the recoverable amount of the intangible assets within a reasonable foreseeable range.

33 ANNUAL REPORT INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF PRINSIPTEK CORPORATION BERHAD (Company No.: H) (Incorporated in Malaysia) (Cont d) Report on the audit of the Financial Statements (cont d) Key Audit Matters (cont d) Key audit matter H how our audit addressed the key audit matter Recoverability of trade and other receivables As at 31 December 2016, the s trade and other receivables stood at RM96,931,419. We focused on this area due to the inherent subjectivity in making judgements in relation to credit risk exposures in determining the recoverability of trade receivables. We obtained an understanding on the s credit control and analysed the trade receivables ageing. Our procedures to assess the accuracy and completeness of the impairment loss allowance account included the following: Scrutinised the trade receivables ageing and investigate unusual trends and conditions; Reviewed long outstanding receivables with consideration of subsequent collections after the end of the reporting period; For exceptions noted, evaluated and challenged management s judgements on its credit risk and impairment assessment, taking into account specific known customer circumstances and correspondence, including status updates on reconciliation process; and Assessing the adequacy of the and the Company s disclosures in respect of credit risk. Information Other than the Financial Statements and Auditors Report Thereon The Directors of the Company are responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the financial statements of the and of the Company and our auditors report thereon. Our opinion on the financial statements of the and of the Company does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements of the and of the Company, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the and of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Statements The Directors of the Company are responsible for the preparation of financial statements of the and of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 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 of the and of the Company that are free from material misstatement, whether due to fraud or error. In preparing the financial statements of the and of the Company, the Directors are responsible for assessing the s and the Company s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the or the Company or to cease operations, or have no realistic alternative but to do so.

34 32 PRINSIPTEK CORPORATION BERHAD ( H) INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF PRINSIPTEK CORPORATION BERHAD (Company No.: H) (Incorporated in Malaysia) (Cont d) Auditors Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements of the and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements of the and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the s and the Company s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors. Conclude on the appropriateness of the Directors use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the s or the Company s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial statements of the and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the or the Company to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements of the and of the Company, including the disclosures, and whether the financial statements of the and of the Company represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the to express an opinion on the financial statements of the. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial statements of the and of the Company for the current year and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

35 ANNUAL REPORT INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF PRINSIPTEK CORPORATION BERHAD (Company No.: H) (Incorporated in Malaysia) (Cont d) Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report on the following: (a) (b) (c) (d) In our opinion, the accounting and other records and the registers required by the Companies Act, 1965 in Malaysia to be kept by the Company and its subsidiaries of which we acted as auditors have been properly kept in accordance with the requirements of the Companies Act, 1965 in Malaysia. 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 5(b) to the financial statements. We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company s financial statements are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements of the and we have received satisfactory information and explanations as required by us for those purposes. The independent auditors reports on the financial statements of the subsidiary companies did not contain any qualification or any adverse comment made under Section 174(3) of the Companies Act, 1965 in Malaysia. Other Reporting Responsibilities The supplementary information set out in page 90 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. 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 any responsibility to any other person for the content of this report. MORISON ANUARUL AZIZAN CHEW Firm Number: AF Chartered Accountants MUHAMAD HAFIZ BIN CHE YUSOF Approved Number: 3125/06/18 (J) Chartered Accountant KUALA LUMPUR

36 34 PRINSIPTEK CORPORATION BERHAD ( H) STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2016 Non-Current Assets company note RM Property, plant and equipment 3 7,290,339 12,586,587-1 Land and property development costs 4 79,897,540 81,501, Investment in subsidiary companies ,888,835 46,888,835 Intangible assets 6 8,260,819 8,260, Trade receivables 7 8,953,765 7,503, Other receivables 8 5,668,075 7,877, ,070, ,729,334 46,888,835 46,888,836 Current Assets Inventories 9 6,538,489 6,497, Land and property development costs 4 90,143,302 79,645, Trade receivables 7 69,526,348 95,614, Other receivables 8 15,683,857 25,086,728 2,460,181 2,460,181 Tax recoverable 56, ,252 37,341 58,792 Amount owing by customers on contracts 10 76,453,681 77,679, Amount owing by subsidiary companies ,495,017 70,080,836 Cash held under Housing Development Account , , Fixed deposits with licensed banks 13 6,266,864 9,673, Cash and bank balances 1,807,568 5,714,421 37, , ,642, ,614,892 70,030,021 72,852,096 Current Liabilities Trade payables 14 64,785,612 74,841, Other payables 15 12,594,589 34,095,737 62,359 48,614 Amount owing to customers on contracts 10 1,102,104 15,870, Amount owing to subsidiary companies ,075,000 8,601,176 Hire purchase payables 16 38, , Bank borrowings 17 59,191,464 45,233, Tax payable 793, , ,505, ,172,627 4,137,359 8,649,790 Net current assets 128,136, ,442,265 65,892,662 64,202, ,206, ,171, ,781, ,091,142 The accompanying notes form an integral part of the financial statements.

37 ANNUAL REPORT STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2016 (Cont d) Financed By: company note RM Share capital 18 31,695,686 31,695,686 31,695,686 31,695,686 Share premium 19 8,552,024 8,552,024 8,552,024 8,552,024 Reserve 20 91,257,029 89,295,909 69,969,197 69,969,197 Retained profits 54,103,311 49,770,669 2,564, ,235 Equity attributable to equity holders of the Company 185,608, ,314, ,781, ,091,142 Non-controlling interests 1,728,998 1,810, Total equity 187,337, ,125, ,781, ,091,142 Non-Current Liabilities Trade payables 14 13,445,512 12,763, Hire purchase payables 16-38, Bank borrowings 17 36,325,431 52,304, Deferred tax liabilities 21 1,098, , ,869,894 66,046, ,206, ,171, ,781, ,091,142 The accompanying notes form an integral part of the financial statements.

38 36 PRINSIPTEK CORPORATION BERHAD ( H) STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016 company note RM Revenue ,019, ,285,183 2,000, ,000 Cost of sales (189,426,648) (222,222,436) - - Gross profit 18,592,932 17,062,747 2,000, ,000 Other operating income 5,617,475 6,120,063-84,395 Administration expenses (6,388,600) (5,515,268) (141,721) (136,906) Other operating expenses (5,953,559) (8,833,971) (168,752) (174,142) Finance costs 23 (3,907,665) (4,896,327) - - Profit before taxation 24 7,960,583 3,937,244 1,689, ,347 Taxation 25 (2,920,673) (1,569,486) 828 (18,487) Profit for the financial year 5,039,910 2,367,758 1,690, ,860 Other comprehensive income: Items to be reclassified to profit or loss in subsequent periods - Exchange differences arising from translation of foreign operations 1,172,004 4,203, Total comprehensive income for the financial year 6,211,914 6,570,781 1,690, ,860 The accompanying notes form an integral part of the financial statements.

39 ANNUAL REPORT STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016 (Cont d) note RM Profit for the financial year attributable to: Equity holders of the Company 4,332,642 1,874,331 Non-controlling interests 707, ,427 5,039,910 2,367,758 Total comprehensive income for the financial year attributable to: Equity holders of the Company 6,293,762 5,973,075 Non-controlling interests (81,848) 597,706 6,211,914 6,570,781 Earnings per share attributable to equity holders of the Company (sen): Basic 26(a) Fully diluted 26(b) The accompanying notes form an integral part of the financial statements.

40 38 PRINSIPTEK CORPORATION BERHAD ( H) STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016 Attributable to Equity Holders of the Company Non-Distributable Distributable nonshare Share Exchange Warrant Capital Retained controlling Total capital Premium Reserve Reserve Reserve Profits Total Interests Equity RM RM At 1 January ,695,686 8,552,024 3,077,968 24,088,721 58,030,476 47,896, ,341,213 1,213, ,554,353 Profit for the financial year ,874,331 1,874, ,427 2,367,758 Other comprehensive income - - 4,098, ,098, ,279 4,203,023 Total comprehensive income for the financial year - - 4,098, ,874,331 5,973, ,706 6,570,781 At 31 December ,695,686 8,552,024 7,176,712 24,088,721 58,030,476 49,770, ,314,288 1,810, ,125,134 The accompanying notes form an integral part of the financial statements.

41 ANNUAL REPORT STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016 (Cont d) Attributable to Equity Holders of the Company Non-Distributable Distributable nonshare Share Exchange Warrant Capital Retained controlling Total capital Premium Reserve Reserve Reserve Profits Total Interests Equity RM RM At 1 January ,695,686 8,552,024 7,176,712 24,088,721 58,030,476 49,770, ,314,288 1,810, ,125,134 Profit for the financial year ,332,642 4,332, ,268 5,039,910 Other comprehensive income - - 1,961, ,961,120 (789,116) 1,172,004 Total comprehensive income for the financial year - - 1,961, ,332,642 6,293,762 (81,848) 6,211,914 At 31 December ,695,686 8,552,024 9,137,832 24,088,721 58,030,476 54,103, ,608,050 1,728, ,337,048 The accompanying notes form an integral part of the financial statements.

42 40 PRINSIPTEK CORPORATION BERHAD ( H) STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016 (Cont d) Non-Distributable share Share Warrant Capital Retained capital Premium Reserve Reserve Profits Total note RM Company At 1 January ,695,686 8,552,024 24,088,721 45,880, , ,836,282 Total comprehensive income for the financial year , ,860 At 31 December ,695,686 8,552,024 24,088,721 45,880, , ,091,142 At 1 January ,695,686 8,552,024 24,088,721 45,880, , ,091,142 Total comprehensive income for the financial year ,690,355 1,690,355 At 31 December ,695,686 8,552,024 24,088,721 45,880,476 2,564, ,781,497 The accompanying notes form an integral part of the financial statements.

43 ANNUAL REPORT STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016 company note RM Cash Flows From Operating Activities Profit before taxation 7,960,583 3,937,244 1,689, ,347 Adjustments for: Depreciation of property, plant and equipment 1,187,105 1,261, Interest expense 3,907,665 4,896, Property, plant and equipment written off 749, , Bad debts written off 1,150, , Gain on disposal of property, plant and equipment (578,129) (276,643) - - Interest income (2,818,591) (3,459,572) - - Fair value loss/(gain) on: - loan and receivables 1,126, , financial liabilities (1,142,707) (731,352) - - Dividend income - - (2,000,000) (500,000) Operating profit/(loss) before working capital changes 11,541,948 6,870,675 (310,472) (226,653) Changes in working capital: Inventories (41,146) 6,343, Land and property development costs (6,394,940) (10,101,177) - - Amount owing by/(to) customers on contracts (11,424,840) 16,551, Trade and other receivables 35,816,927 11,029, Trade and other payables (29,732,388) (27,690,197) 13,745 (12,496) Amount owing by subsidiary Companies - - (1,940,357) (24,013,578) (11,776,387) (3,866,274) (1,926,612) (24,026,074) Cash (used in)/generated from operations (234,439) 3,004,401 (2,237,084) (24,252,727) Interest received 975, , Interest paid (9,904,117) (10,637,411) - - Tax refund 246,580 34,354 32,517 - Tax paid (2,265,473) (1,213,999) (10,238) (11,925) (10,947,950) (11,209,613) 22,279 (11,925) Net cash used in operating activities (11,182,389) (8,205,212) (2,214,805) (24,264,652) The accompanying notes form an integral part of the financial statements.

44 42 PRINSIPTEK CORPORATION BERHAD ( H) STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016 (Cont d) company note RM Cash Flows From Investing Activities Additions to land held for property development 1,603,835 (17,076,369) - - Purchase of property, plant and equipment (102,431) (2,113,959) - - Proceeds from disposal of property, plant and equipment 3,816,353 1,157, Dividend received - - 2,000,000 - Net cash generated from/(used in) investing activities 5,317,757 (18,033,136) 2,000,000 - Cash Flows From Financing Activities Drawdown of bank borrowings 9,670,307 23,992, Repayment of bank borrowings (20,204,137) (9,549,757) - - Repayment of hire purchase payables (722,957) (2,572,484) - - Release of fixed deposits pledged 3,406,258 2,959, Net cash generated from financing activities (7,850,529) 14,829, Net decrease in cash and cash equivalents (13,715,161) (11,408,415) (214,805) (24,264,652) Effects of foreign exchange rate changes 1,171, , Cash and cash equivalents at beginning of the financial year (28,800,518) (17,741,637) 252,287 24,516,939 Cash and cash equivalents at end of the financial year (41,344,647) (28,800,518) 37, ,287 Cash and cash equivalents at end of the financial year comprises: Fixed deposits with licensed banks 13 6,266,864 9,673, Cash and bank balances 1,807,568 5,714,421 37, ,287 Cash held under Housing Development Account , , Bankers acceptance, letter of credits and trust receipts 17 (8,623,000) (12,574,000) - - Bank overdrafts and project loans 17 (34,694,956) (22,231,494) - - (35,077,783) (19,127,396) 37, ,287 Less: Fixed deposits pledged with licensed banks 13 (6,266,864) (9,673,122) - - (41,344,647) (28,800,518) 37, ,287 The accompanying notes form an integral part of the financial statements.

45 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS 1. Corporate Information The principal activities of the Company are those of management and investment holding. The principal activities of the subsidiary companies are disclosed in Note 5(b) to the financial statements. The Company is a public limited liability company, incorporated under the Companies Act, 1965 and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office and principal place of business of the Company are located at No. 83 and 85, Jalan SS15/4C, Subang Jaya, Selangor Darul Ehsan. 2. Basis of Preparation and Significant Accounting Policies 2.1 Basis of preparation The financial statements of the and the Company have been prepared in accordance with the Financial Reporting Standards ( FRS ) and the requirements of the Companies Act, 1965 in Malaysia. The financial statements have been prepared under the historical cost convention except as disclosed in summary of significant accounting policies. On 19 November 2011, Malaysian Accounting Standards Board ( MASB ) has issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards ( MFRS Framework ). The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141, Agriculture and IC interpretation 15, Agreement for Construction of Real Estate, including its parent, significant investor and venturer ( Transitioning Entities ). On 28 October 2015, MASB notifies that Transitioning Entities will be required to comply with the new MFRS framework for annual periods beginning 1 January The, being Transitioning Entities, will continue to apply with FRS until the MFRS Framework is adopted, no later than annual periods beginning on or after 1 January The preparation of financial statements in conformity with FRS requires the use of certain critical accounting estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reported period. It also requires Directors to exercise their judgement in the process of applying the s accounting policies. Although these estimates and judgement are based on the Directors best knowledge of current events and actions, actual results may differ. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 2.3. Accounting standards and amendments to accounting standards that are effective for the Company s financial year beginning on or after 1 January 2016 are as follows: FRS 14, Regulatory Deferral Accounts Amendment to FRS 5, Non-Current Assets Held for Sale and Discontinued Operations (Annual Improvements Cycle) Amendments to FRS 7, Financial Instruments: Disclosures (Annual-Improvements Cycle) Amendments to FRS 10, FRS 12 and FRS 128, Investment Entities: Applying the Consolidation Exception Amendments to FRS 11, Accounting for Acquisitions of Interests in Joint Operations Amendments to FRS 101, Disclosure Initiative Amendments to FRS 116 and FRS 138, Clarification of Acceptable Methods of Depreciation and Amortisation Amendment to FRS 119, Employee Benefits (Annual-Improvements Cycle) Amendments to FRS 127, Equity Method in Separate Financial Statements Amendment to FRS 134, Interim Financial Reporting (Annual Improvements Cycle) The above amendments to accounting standards effective during the financial year do not have any significant impact to the financial results and position of the.

46 44 PRINSIPTEK CORPORATION BERHAD ( H) NOTES TO THE FINANCIAL STATEMENTS (Cont d) 2. Basis of Preparation and Significant Accounting Policies (cont d) 2.1 Basis of preparation (cont d) Accounting standards and amendments to accounting standards that are applicable for the in the following periods but are not yet effective: Annual periods beginning on/after 1 January 2017 Amendments to FRS 107 Statement of Cash Flows: Disclosure Initiative The Amendments require entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including changes from cash flows and non-cash changes. The disclosure requirement could be satisfied in various ways, and one method is by providing reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities. Amendments to FRS 112 Income Taxes: Recognition of Deferred Tax for Unrealised Losses The Amendments clarify that decreases in value of a debt instrument measured at fair value for which the tax base remains at its original cost give rise to a deductible temporary difference. The estimate of probable future taxable profits may include recovery of some of an entity s assets for more than their carrying amounts if sufficient evidence exists that it is probable the entity will achieve this. An example is when an entity holds a fixed-rate debt instrument (measured at fair value) and expects to collect all the contractual cash flows. The Amendments also clarify that deductible temporary differences should be compared with the entity s future taxable profits excluding tax deductions resulting from the reversal of those deductible temporary differences when an entity evaluates whether it has sufficient future taxable profits. In addition, when an entity assesses whether taxable profits will be available, it should consider tax law restrictions with regards to the utilisation of the deduction. Annual periods beginning on/after 1 January 2018 Amendments to FRS 2 Classification and Measurement of Share-Based Payment Transactions The Amendments provides specific guidance on how to account for the following situations: the effects of vesting and non-vesting conditions on the measurement of cash-settled share-based payments; share-based payment transactions with a net settlement feature for withholding tax obligations; and a modification to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled. FRS 9 Financial Instruments This Standard addresses the classification, measurement and recognition of financial assets and financial liabilities. Classification determines how financial assets and financial liabilities are accounted for in financial statements and, in particular, how they are measured on an ongoing basis. The Standard introduces an approach for classification of financial assets which is driven by cash flow characteristics and the business model in which an asset is held. The new model also results in a single impairment model being applied to all financial instruments, thereby removing a source of complexity associated with previous accounting requirements. If a financial asset is a simple debt instrument and the objective of the entity s business model within which it is held is to collect its contractual cash flows, the financial asset is measured at amortised cost. In contrast, if that asset is held in a business model the objective of which is achieved by both collecting contractual cash flows and selling financial assets, then the financial asset is measured at fair value in the balance sheet, and amortised cost information is provided through profit or loss. If the business model is neither of these, then fair value information is increasingly important, so it is provided both in the profit or loss and in the balance sheet.

47 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS (Cont d) 2. Basis of Preparation and Significant Accounting Policies (cont d) 2.1 Basis of preparation (cont d) Annual periods beginning on/after 1 January 2018 (cont d) FRS 9 Financial Instruments (cont d) The Standard introduces a new, expected-loss impairment model that will require more timely recognition of expected credit losses. Specifically, it requires entities to account for expected credit losses from when financial instruments are first recognised and to recognise full lifetime expected losses on a more timely basis. The model requires an entity to recognise expected credit losses at all times and to update the amount of expected credit losses recognised at each reporting date to reflect changes in the credit risk of financial instruments. This model is forward-looking and it eliminates the threshold for the recognition of expected credit losses, so that it is no longer necessary for a trigger event to have occurred before credit losses are recognised. In addition, the Standard introduces a substantially-reformed model for hedge accounting, with enhanced disclosures about risk management activity. The new model represents a significant overhaul of hedge accounting that aligns the accounting treatment with risk management activities, enabling entities to better reflect these activities in their financial statements. As a result of these changes, users of the financial statements will be provided with better information about risk management and the effect of hedge accounting on the financial statements. Effective date yet to be determined by the Malaysian Accounting Standards Board Amendments to FRS 10 Consolidated Financial Statements and FRS 128 Investments in Associates and Joint Ventures The Amendments address an acknowledged inconsistency between the requirements in FRS 10 and those in FRS 128, in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the Amendments is that a full gain or loss is recognised when a transaction involves a business (whether it is housed in a subsidiary or not), as defined in FRS 3. A partial gain or loss is recognised when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary. The is in the process of assessing the impact of FRS 9 in the year of initial application. Aside from the above mentioned, the adoption of the accounting standards and amendments to accounting standards are not expected to have any significant impact to the financial statements of the. 2.2 Summary of Significant Accounting Policies (a) Basis of consolidation The consolidated financial statements include the financial statements of the Company and all its subsidiary companies through equity accounting, which are made up to the end of the financial year. In the Company s separate financial statements and investments in subsidiary companies are stated at cost less impairment losses in accordance with Note 2.2(d). On disposal of these investments, the difference between the net disposal proceeds and the carrying amount is recognised in the profit or loss attributable to the parent. (i) Subsidiary companies Subsidiary companies are those companies in which the has long term equity interest and has the power, directly or indirectly, to govern the financial and operating policies so as to obtain benefits from its activities, generally accompanying a shareholding of more than one half of the voting rights.

48 46 PRINSIPTEK CORPORATION BERHAD ( H) NOTES TO THE FINANCIAL STATEMENTS (Cont d) 2. Basis of Preparation and Significant Accounting Policies (cont d) 2.2 Summary of Significant Accounting Policies (cont d) (a) Basis of consolidation (cont d) (i) Subsidiary companies (cont d) The acquisition method of accounting is used to account for the acquisition of subsidiary companies. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed attributable to the acquirer in a business combination are measured initially at their fair values on the date of acquisition. Acquisition related costs incurred are expensed and included in the administration expenses. The difference between the acquisition cost and the fair values of the subsidiary companies net assets is reflected as goodwill or reserve on consolidation as appropriate. The accounting policy on goodwill on acquisition of subsidiary companies is set out in Note 2.2(c). Reserve on consolidation is recognised immediately in profit or loss attributable to the parent. Subsidiary companies are consolidated from the date on which control is transferred to the to the date on which that control ceases. If the business combination is achieved in stages, the s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date and the resulting gain or loss, if any, is recognised in profit or loss. Any contingent consideration to be transferred by the will be recognised at fair value at the acquisition date. Subsequent changes in the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with FRS139 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted for within equity. In instances where the contingent consideration does not fall within the scope of FRS139, it is measured in accordance with the appropriate FRS. (ii) Transactions eliminated on consolidation Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. For each business combination, non-controlling interest in the acquiree are measured at fair value or at the proportionate share of the acquiree s identifiable net assets at the date of acquisition. Noncontrolling interest are allocated at their share of the profit or loss and each component of other comprehensive income and are presented within equity in the consolidated statement of financial position, separately from the equity of the owners of the parent. Losses are attributed to the noncontrolling interest even if that results in a deficit balance. (iii) Changes in composition A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the 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 as an associate, joint venture or financial asset; - Recognises any surplus or deficit in profit or loss; - Reclassifies the s share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate.

49 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS (Cont d) 2. Basis of Preparation and Significant Accounting Policies (cont d) 2.2 Summary of Significant Accounting Policies (cont d) (a) Basis of consolidation (cont d) (iv) Non-controlling interest Non-controlling interests are presented separately in the consolidated income statement and within the equity in the statement of financial position, separately from equity holders of the Company. For each business combination, the will elect to measure the amount of non-controlling interest either at fair value or at the non-controlling interest s proportionate share of the subsidiary company s identifiable net assets. The non-controlling interest s portion of total comprehensive income is attributable to non-controlling interest, even if this results in the non-controlling interest having a deficit balance. Non-controlling interests that constitute a present ownership interests that entitles their holders to a proportionate share of the entity s net assets in the event of liquidation are measured at either the fair value or the present ownership instruments proportionate share of the acquiree s identifiable net assets. All other components of non-controlling interests should be measured at fair value on acquisition date. The choice of measurement basis is made on a transaction-by-transaction basis. (b) Property, plant and equipment (i) Recognition and measurement Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. The policy of recognition and measurement of impairment losses is in accordance with Note 2.2 (d). (ii) Components of costs Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment is based on the quoted market prices for similar items. When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. (iii) Subsequent costs The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the statement of comprehensive income as incurred. (iv) Depreciation Depreciation is recognised in the statement of comprehensive income on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Freehold land is not depreciated. Leasehold land is amortised on a straight-line basis over the period of the lease period which take effect from the date the individual titles are issued.

50 48 PRINSIPTEK CORPORATION BERHAD ( H) NOTES TO THE FINANCIAL STATEMENTS (Cont d) 2. Basis of Preparation and Significant Accounting Policies (cont d) 2.2 Summary of Significant Accounting Policies (cont d) (b) Property, plant and equipment (cont d) (iv) Depreciation (cont d) The estimated useful lives for the current and comparative periods are as follows: Buildings Computers Furniture and fittings Tools and instruments Motor vehicles Office and electrical equipment Plant and machinery Renovation 50 years 3-10 years 5-20 years 10 years 5 years 5-10 years 5-10 years 10 years The depreciable amount is determined after deducting the residual value. Depreciation methods, useful lives and residual values are reassessed at each financial year end. Upon disposal of an asset, the difference between the net disposal proceeds and the carrying amount of the assets is charged or credited to the statement of comprehensive income. On disposal of a revalued asset, the attributable revaluation surplus remaining in the revaluation reserve is transferred to distribution reserve. (c) Goodwill or reserve arising on consolidation Goodwill or reserve arising on consolidation represents the difference between the cost of the acquisition over the fair value of the net identifiable assets of subsidiary companies acquired at the date of acquisition. The excess of the cost of acquisition over the fair value of the s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the consolidated profit or loss. Following the initial recognition, goodwill is measured at cost less accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment annually or more frequently when there is objective evidence that the carrying value may be impaired, in accordance with Note 2.2(d). Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. Gains or losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. (d) Impairment of non-financial assets The carrying amounts of assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset s recoverable amount is estimated. The recoverable amount is estimated at each reporting date or more frequently when indications of impairment are identified. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount unless the asset is carried at a revalued amount, in which case the impairment loss is recognised directly against any revaluation surplus for the asset to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same asset. A cash-generating unit is the smallest identifiable asset group that generates cash flows that are largely independent from other assets and groups. Impairment losses are recognised in the profit or loss in the period in which it arises. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the unit (groups of units) and then to reduce the carrying amount of the other assets in the unit (groups of units) on a pro-rata basis.

51 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS (Cont d) 2. Basis of Preparation and Significant Accounting Policies (cont d) 2.2 Summary of Significant Accounting Policies (cont d) (d) Impairment of non-financial assets (cont d) The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows 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. An impairment loss for an asset other than goodwill is reversed if, and 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. The carrying amount of an asset other than goodwill is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognised in profit or loss, unless the asset is carried at revalued amount, in which case, such reversal is treated as a revaluation increase. (e) Land held for property development Land held for property development consists of land held for future development activities where no significant development has been undertaken or where development activities are not expected to be completed within normal operating cycle. Such land is classified as non-current assets and is stated at cost less any accumulated impairment losses. The policy of recognition and measurement of impairment losses is in accordance with Note 2.2(d). Land held for property development is reclassified as current assets when the development activities have been commenced and where it can be demonstrated that the development activities can be completed within the normal operating cycle. Cost associated with the acquisition of land includes the purchase price of the land, professional fees, stamp duties, commissions, conversion fees and other relevant levies. (f) Property development costs Property development costs comprise all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities. Property development costs not recognised as an expense are recognised as an asset, which measured at the lower of cost and net realisable value. Property development costs shall be classified as non-current asset where no development activities have been carried out or where development activities are not expected to be completed within the normal operating cycle. Property development costs shall be reclassified to current assets when the development activities have been commenced and expected to be completed within the normal operating cycle. When the financial outcome of development activity can be reliably estimated, property development revenue and expenses are recognised in the profit or loss by using the stage of completion. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs. When the financial outcome of a development activity cannot be reliably estimated, property development revenue is recognised only to the extent of property development costs incurred that is probable will be recoverable, and property development costs on units sold are recognised as an expense in the period in which they are incurred.

52 50 PRINSIPTEK CORPORATION BERHAD ( H) NOTES TO THE FINANCIAL STATEMENTS (Cont d) 2. Basis of Preparation and Significant Accounting Policies (cont d) 2.2 Summary of Significant Accounting Policies (cont d) (f) Property development costs (cont d) When the revenue recognised in the profit or loss exceed billings to purchaser, the balance is shown as accrued billings under current assets. When the billings to purchaser exceed the revenue recognised in the profit or loss, the balance is shown as progress billings under current liabilities. Any expected loss on a development project including costs to be incurred over the defects liability period shall be recognised as an expense immediately. (g) Construction contracts Construction contracts are stated at cost plus attributable profits less applicable progress billings and allowances for foreseeable losses, if any. When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognised as revenue and expenses respectively by reference to the stage of completion of the contract activities at the reporting date. The stage of completion is determined by the surveys of work performed and completion of a physical proportion of the contract work. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that it is probable will be recoverable and contract costs are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. The aggregate of the costs incurred and the profit/loss recognised on each contract is compared against the progress billings up to the period end. Where costs incurred and recognised profits (less recognised losses) exceed progress billings, the balance is shown as amount owing by customers on contracts. Where progress billings exceed costs incurred plus recognised profits (less recognised losses), the balance is shown as amount owing to customers on contracts. (h) Inventories Inventories represent cost of unsold completed development units/properties that have been completed which is determined on specific identification basis. The inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimate of the selling price in the ordinary course of business, less the selling expenses. (i) Cash and cash equivalents Cash and cash equivalents consist of cash in hand, bank balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in value. For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits, if any. (j) Leases and hire purchase A lease is recognised as a finance lease if it transfers substantially to the and the Company all the risks and rewards incident to ownership. All other leases are treated as operating leases. Assets acquired by way of hire purchase and finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum hire purchase and lease payments at the inception of the hire purchase and lease, less accumulated depreciation and impairment losses. The corresponding liability is included in the statement of financial position as liabilities. In calculating the present value of the minimum hire purchase and lease payments, the discount factor used is the interest rate implicit in the hire purchase and lease, when it is practical to determine; otherwise, the s and the Company s incremental borrowing rate is used.

53 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS (Cont d) 2. Basis of Preparation and Significant Accounting Policies (cont d) 2.2 Summary of Significant Accounting Policies (cont d) (j) Leases and hire purchase (cont d) Hire purchase and lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total hire purchase and leasing commitments and the fair value of the assets acquired, are recognised as an expense in the statement of comprehensive income over the term of the relevant hire purchase and lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period. The depreciation policy for assets acquired under hire purchase and finance lease is consistent with that for depreciable property, plant and equipment which are owned. Lease rental under operating lease is charged to the statement of comprehensive income on a straight line basis over the term of the relevant lease. (k) Borrowings Interest bearing bank borrowings are recorded at the amount of proceeds received, net of transaction costs incurred. (l) Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. When the borrowings are made specifically for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalisation is the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of funds drawdown from that borrowing facility. When the borrowings are made generally, and used for the purpose of obtaining a qualifying asset, the borrowing costs eligible for capitalisation are determined by applying a capitalisation rate which is the weighted of the borrowing costs applicable to the s and the Company s borrowings that are outstanding during the financial year, other than borrowings made specifically for the purpose of acquiring another qualifying asset. Borrowing costs which are not eligible for capitalisation are recognised as an expense in the profit or loss in the period in which they are incurred. (m) Provision for liabilities Provisions for liabilities are recognised when the and the Company have a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

54 52 PRINSIPTEK CORPORATION BERHAD ( H) NOTES TO THE FINANCIAL STATEMENTS (Cont d) 2. Basis of Preparation and Significant Accounting Policies (cont d) 2.2 Summary of Significant Accounting Policies (cont d) (n) Contingent liabilities and contingent asset A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one (1) or more uncertain future events beyond the control of the or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The does not recognise a contingent liability but discloses its existence in the financial statements. A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one (1) or more uncertain future events beyond the control of the. The does not recognise contingent assets but disclosed its existence where inflows of economic benefits are probable, but not virtually certain. In the acquisition of subsidiaries by the under business combinations, contingent liabilities assumed are measured initially at their fair values at the acquisition dates. (o) Equity instruments Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared. The transaction costs of an equity transaction are accounted for as a deduction from equity, net of tax. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided. (p) Functional and presentation currency (i) (ii) The individual financial statements of each entity in the group are presented in the currency of primary economic environment in which the entity operates ( the functional currency ). The consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the Company s functional and presentation currency. Foreign currency transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit or loss. Non-monetary items initially denominated in foreign currencies, which are carried at historical cost are translated using historical rate as of the date of acquisition and non-monetary items which are carried at fair value are translated using the exchange rate that existed when the values were determined. (iii) Foreign operations The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (1) assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position; (2) income and expenses for each profit or loss are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and (3) all resulting exchange differences are recognised as a separate component of equity.

55 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS (Cont d) 2. Basis of Preparation and Significant Accounting Policies (cont d) 2.2 Summary of Significant Accounting Policies (cont d) (p) Functional and presentation currency (cont d) (iii) Foreign operations (cont d) On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of borrowings, are taken to shareholders equity. When a foreign operation is sold, such exchange differences are recognised in the profit or loss as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of foreign subsidiary companies are treated as assets and liabilities and translated at the rates of exchange ruling at the transaction dates. (q) Financial assets Financial assets are recognised in the statement of financial position when the and the Company have become a party to the contractual provisions of the instruments. The classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this at every reporting date except for financial assets at fair value through profit or loss. (i) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets that are designated or held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are classified as held for trading unless they are designated as hedges. Assets in this category are classified as current assets. Financial assets at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in the profit or loss. After initial recognition, financial assets at fair value through profit or loss are subsequently measured at fair value. (ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are unquoted in an active market. They arise when the provides money, goods or services directly to a debtor with no intention of trading the receivable. Loans and receivables in the statements of financial position consist of trade and other receivables, fixed deposits and inter-company loans and advances. These 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 assets. Subsequent to initial recognition, loans and receivables are carried 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. (iii) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the s management has positive intention and ability to hold to maturity. Subsequent to initial recognition, held-to-maturity investments are carried 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.

56 54 PRINSIPTEK CORPORATION BERHAD ( H) NOTES TO THE FINANCIAL STATEMENTS (Cont d) 2. Basis of Preparation and Significant Accounting Policies (cont d) 2.2 Summary of Significant Accounting Policies (cont d) (q) Financial assets (cont d) (iv) Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting date. Investments are initially recognised at fair value plus transaction costs that are directly attributable to their acquisitions. Investment in equity instruments whose fair value cannot be reliably measured are valued at cost less impairment loss. After initial recognition, available-for-sale financial assets are subsequently measured at fair value. Any gains and 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. A financial asset is derecognised where 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. Gains or losses arising from changes in the fair value of the financial assets at fair value through profit or loss category are presented in the profit or loss in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the profit or loss as part of other operating income when the s right to receive payments is established. (r) Impairment of financial assets A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. For an equity instrument, a significant or prolonged declined in fair value below its cost is also considered objective evidence of impairment. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised costs, the reversal is recognised in profit or loss.

57 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS (Cont d) 2. Basis of Preparation and Significant Accounting Policies (cont d) 2.2 Summary of Significant Accounting Policies (cont d) (s) Financial liabilities Short-term borrowings, trade and other payables are classified as financial liabilities in the statement of financial position as there is a contractual obligation to make cash payments to another entity and is contractually obliged to settle the liabilities in cash. Financial liabilities are initially recognised at fair value plus transaction costs, and are subsequently measured at amortised cost using the effective interest method, except when the designates the liabilities at fair value through profit or loss. Financial liabilities are designated at fair value through profit or loss when: (i) (ii) (iii) they are acquired or incurred for the purpose of selling or repurchasing in the near term; the designation eliminates or significantly reduces measurement or recognition inconsistencies that would otherwise arise from measuring financial liabilities or recognising gains or losses on them; or the financial liability contains an embedded derivative that would need to be separately recorded. A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. (t) Revenue recognition (i) Construction contracts Revenue from work done on construction contracts is recognised based on the percentage of completion method. The stage of completion is determined by the surveys of work performed and completion of a physical proportion of the contract work. (ii) Property development Revenue derived from property development activities is recognised based on the percentage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs. Any expected loss on a development project including costs to be incurred over the defects liability period shall be recognised as an expense immediately. (iii) Goods sold and services rendered Revenue from sales of goods is recognised when significant risk and rewards have been transferred to the buyer, net of discounts, if any. (iv) Dividend income Dividend income is recognised when a shareholder s right to receive payment is established.

58 56 PRINSIPTEK CORPORATION BERHAD ( H) NOTES TO THE FINANCIAL STATEMENTS (Cont d) 2. Basis of Preparation and Significant Accounting Policies (cont d) 2.2 Summary of Significant Accounting Policies (cont d) (u) Employee benefits (i) Short term employee benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Company and its subsidiary companies. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensation absences. Short term non-accumulating compensated absences such as sick and medical leave are recognised when the absences occur. The expected cost of accumulating compensated absences is measured as additional amount expected to be paid as a result of the unused entitlement that has accumulated at the reporting date. (ii) Defined contribution plans As required by law, companies in Malaysia make contributions to the Employees Provident Fund ( EPF ). Such contributions are recognised as an expense in the statement of comprehensive income as incurred. (v) Income taxes Income tax on the profit or loss for the financial year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the financial year and is measured using the tax rates that have been enacted at the reporting date. Deferred tax is recognised on the liability method for all temporary differences between the carrying amount of assets or liabilities in the statement of financial position and its tax base at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax asset and liability is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantively enacted by the reporting date. The carrying amount of a deferred tax asset is reviewed at each reporting date and is reduced to the extent that it becomes probable that sufficient future taxable profit will be available. Deferred tax is recognised in the statement of comprehensive income, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity. (w) Segment reporting For management purposes, the is organised into operating segment based on their business activities. An operating segment s operating results are reviewed regularly by the chief operating decision maker, who will make decisions to allocate resources to the segments and assess the segment performance. (x) Warrant reserve Proceeds from the issuance of warrants, net of issue costs, are credited to warrants reserve which is nondistributable. Warrants reserve is transferred to the share premium account upon the exercise of warrants and the warrants reserve in relation to the unexercised warrants at the expiry of the warrants will be transferred to retained earnings.

59 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS (Cont d) 2. Basis of Preparation and Significant Accounting Policies (cont d) 2.3 Significant accounting estimates and judgements Estimates, assumptions concerning the future and judgements are made in the preparation of the financial statements. They affect the application of the s accounting policies, reported amounts of assets, liabilities, income and expenses, and disclosures made. They are assessed on an on-going basis and are based on historical experience and other relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. The key assumptions concerning the future and other key sources of estimation or 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 set out below: (i) Depreciation of property, plant and equipment The costs of property, plant and equipment are depreciated on a straight-line basis over the useful lives of the property, plant and equipment. Management estimates the useful lives of the property, plant and equipment as disclosed in Note 2.2(b)(iv). These are common life expectancies applied in the industries. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. (ii) Estimation of fair value of properties In the absence of current prices in an active market for similar properties, the and the Company considers information from a variety of sources, including: (a) (b) current prices in an active market for properties of a different nature, condition or location, adjusted to reflect those differences; or recent prices of similar properties based on less active market, with adjustments to reflect any changes in economic conditions since the date of the transactions that occurred at those prices. (iii) Impairment of non financial assets The assesses whether there are any indicators of impairment for all non-financial assets at each reporting date. When such indicators exist, recoverable amounts of the cash-generating unit are determined based on the value-in-use calculation. These calculations require the estimation of the expected future cash flows from the cash generating unit and a suitable discount rate is applied in order to calculate the present value of those cash flows. (iv) Impairment of goodwill on consolidation The determines whether goodwill is impaired at least on an annual basis, in accordance with the accounting policy disclosed in Note 2.2(d). This requires an estimation of the value in use of the cashgenerating units to which the goodwill is allocated. Estimating the value in use requires the to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amounts of the s goodwill on consolidation at 31 December 2016 are disclosed in Note 6 to the financial statements.

60 58 PRINSIPTEK CORPORATION BERHAD ( H) NOTES TO THE FINANCIAL STATEMENTS (Cont d) 2. Basis of Preparation and Significant Accounting Policies (cont d) 2.3 Significant accounting estimates and judgements (cont d) (v) Construction contracts The and the Company recognise contract revenue and expenses in the statement of comprehensive income by using the stage of completion method. The stage of completion is determined by the surveys of work performed and completion of a physical proportion of the contract work. Significant judgement is required in determining the stage of completion, the extent of the contract costs incurred, the estimated total contracts revenue and costs, as well as the recoverability of the constructions projects. In making the judgement, the and the Company evaluate based on past experience and by relying on the work of specialists. (vi) Income taxes There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. Significant judgement is involved especially in determining tax base allowances and deductibility of certain expenses in determining the -wide provision for income taxes. The and the Company recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. (vii) Classification of financial assets The classifies financial assets as held-to-maturity investments when it has a positive intention and ability to hold the investment to maturity. Management exercises judgement based on the s financial risk management policy to determine whether the financial assets are to be classified as held-to-maturity. (viii) Impairment of trade and other receivables An impairment loss is recognised when there is objective evidence that a financial asset is impaired. Management specifically reviews its loan and receivables financial assets and analyses historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in the customer payment terms when making a judgement to evaluate the adequacy of the allowance for impairment losses. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. If the expectation is different from the estimation, such difference will impact the carrying value of receivables.

61 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS (Cont d) 3. Property, Plant and Equipment Freehold and Furniture O office and leasehold and Tools and Motor electrical Plant and land Buildings Computers fittings instruments vehicles equipment machinery Renovation Total RM RM RM RM RM RM RM RM Cost At 1 January ,139,500 1,987,610 1,290, , ,700 2,764, ,580 15,628,620 72,842 25,654,093 Additions - - 2, ,000 14, ,431 Disposals - - (58,095) (182,457) (79,800) (304,182) (67,195) (6,176,724) - (6,868,453) Written-off - - (149,023) (421,336) (151,852) - (222,190) (1,668,837) - (2,613,238) Exchange differences - - 2,755 1,191-8, , ,836 At 31 December ,139,500 1,987,610 1,089, ,797 24,048 2,554, ,677 7,906,884 72,842 16,411,669 Accumulated depreciation At 1 January ,103 1,263, ,979 91,006 2,099, ,988 8,205,457 51,367 13,067,506 Charge for the financial year - 42,644 13,294 23,935 6, ,711 14, ,320 1,166 1,412,056 Disposals - - (48,999) (82,808) (27,244) (171,963) (38,149) (3,261,066) - (3,630,229) Written-off - - (148,973) (260,941) (53,731) - (126,993) (1,273,229) - (1,863,867) Exchange differences - - 2,451 1,211-8, , ,864 At 31 December ,747 1,081, ,376 16,553 2,330, ,885 4,709,848 52,533 9,121,330 Carrying amount At 31 December ,139,500 1,561,863 7,511 78,421 7, ,412 54,792 3,197,036 20,309 7,290,339

62 60 PRINSIPTEK CORPORATION BERHAD ( H) NOTES TO THE FINANCIAL STATEMENTS (Cont d) 3. Property, Plant and Equipment (cont d) Freehold and Furniture O office and leasehold and Tools and Motor electrical Plant and land Buildings Computers fittings instruments vehicles equipment machinery Renovation Total RM RM RM RM RM RM RM RM Cost At 1 January ,139,500 1,987,610 1,421,290 1,077, ,969 3,656, ,727 15,014,607 72,842 26,432,807 Additions ,416 34,650 8, ,807 6,800 1,899,178-2,113,959 Disposals - - (2,077) - (3,800) (1,061,410) (4,800) (1,084,450) - (2,156,537) Written-off - - (147,274) (174,811) (28,577) - (221,599) (346,680) - (918,941) Exchange differences - - 6,499 11,810-17,079 1, , ,805 At 31 December ,139,500 1,987,610 1,290, , ,700 2,764, ,580 15,628,620 72,842 25,654,093 Accumulated depreciation At 1 January ,459 1,380, ,317 75,508 2,684, ,057 5,670,245 49,079 11,323,200 Charge for the financial year - 42,644 24,898 65,475 26, ,877 49,806 2,962,384 2,288 3,623,207 Disposals - - (2,077) - (1,108) (1,050,926) (2,160) (219,717) - (1,275,988) Written-off - - (144,710) (157,574) (10,229) - (118,170) (344,866) - (775,549) Exchange differences - - 4,929 11,761-17,080 1, , ,636 At 31 December ,103 1,263, ,979 91,006 2,099, ,988 8,205,457 51,367 13,067,506 Carrying amount At 31 December ,139,500 1,604,507 26, , , , ,592 7,423,163 21,475 12,586,587

63 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS (Cont d) 3. Property, Plant and Equipment (cont d) Company computers Total Cost At 1 January ,500 14,500 Written off (14,500) (14,500) At 31 December Accumulated depreciation At 1 January ,499 14,499 Written off (14,499) (14,499) At 31 December Carrying amount At 31 December Cost At 1 January 2015/31 December ,500 14,500 Accumulated depreciation At 1 January 2015/31 December ,499 14,499 Carrying amount At 31 December (a) The freehold land and buildings of the with a carrying amount of RM1,983,260 and RM622,982 (2015: RM1,983,260 and RM643,707) respectively have been pledged to licensed banks as security for credit facilities granted to a subsidiary company as disclosed in Note 17 to the financial statements. (b) (c) (d) The leasehold land of the of RM156,240 (2015: RM156,240) has been pledged to licensed banks as security for credit facilities granted to a subsidiary company as disclosed in Note 17 to the financial statements. Included in the property, plant and equipment of the is plant and machinery and motor vehicles acquired under hire purchase with carrying amount of Nil and RM30,606 (2015: RM1,734,581 and RM257,962) respectively. The amortisation of the leasehold land will take effect from the date of the individual titles are issued.

64 62 PRINSIPTEK CORPORATION BERHAD ( H) NOTES TO THE FINANCIAL STATEMENTS (Cont d) 4. Land and Property Development Costs Non- Current Development costs At 1 January 81,501,375 64,425,006 Additions during the financial year 2,497,436 17,076,369 Transfer to current assets (4,101,271) - At 31 December 79,897,540 81,501,375 Current Freehold land, at cost At 1 January 40,451,761 38,070,491 Exchange difference 1,151,689 2,381,270 Less: Completed project (4,681,068) - At 31 December 36,922,382 40,451,761 Development costs At 1 January 39,193,462 23,639,649 Additions during the financial year 64,406,079 21,864,205 Transferred to inventories - - Exchange difference 545,310 1,462,052 Less: Completed project (28,380,963) (7,772,444) At 31 December 75,763,887 39,193,462 Total cost recognised 112,686,268 79,645,223 Less: Costs recognised in the income statement At 1 January - - Recognised during the financial year 28,380,963 7,772,444 At 31 December 28,380,963 7,772,444 Less: Completed project (5,837,997) (7,772,444) 22,542,966-90,143,302 79,645,223

65 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS (Cont d) 4. Land and Property Development Costs (cont d) (a) (b) Certain subsidiary company entered into privatisation or joint venture agreements with the landowners to develop several pieces of leasehold land and freehold land solely at the cost of the subsidiary companies and based on the agreements, the subsidiary companies are required to pay a consideration of 35% (2015: 22% to 35%) of the total projected gross sales value of the development to the landowners in the manner specified in the agreements. A subsidiary company entered into a joint venture agreement with a landowner to develop several parcel of land solely at the cost of the subsidiary company and based on the agreement, the landowner is entitled to certain units of properties erected thereon free from all encumbrances. (c) The freehold land and leasehold land of the with total carrying amount of RM 15,000,000 (2015: RM27,410,048) have been pledged to licensed banks as security for credit facilities granted to subsidiary companies as disclosed in Note 17 to the financial statements. (d) Included in the property development costs for the financial year is as follows: note Finance costs 23 4,103,139 3,990,584 Staff costs 27 91,030 40, Investment in Subsidiary Companies (a) Investment in subsidiary companies company Unquoted shares, at cost In Malaysia 47,093,284 47,093,284 Outside Malaysia 1,724,084 1,724,084 48,817,368 48,817,368 Less: Strike off (1,928,533) - 46,888,835 48,817,368 Less: impairment loss Addition (1,928,533) (1,928,533) Reversal 1,928, (1,928,533) 46,888,835 46,888,835

66 64 PRINSIPTEK CORPORATION BERHAD ( H) NOTES TO THE FINANCIAL STATEMENTS (Cont d) 5. Investment in Subsidiary Companies (cont d) (b) The subsidiary companies and shareholdings therein are as follows: country of Effective name of company incorporation interest Principal activities % % Direct holding: Prinsiptek (M) Sdn. Bhd. Malaysia Construction works Sekinchan Jaya Sdn. Bhd. Malaysia Dormant Tanah Perangsang Sdn. Bhd. Malaysia Property development and investment holding Gabungan Sanjung Sdn. Bhd. Malaysia Investment holding Antara Murni Development Sdn. Bhd. Malaysia Property Development Prinsiptek Bina Sdn. Bhd. Brunei - 70 Dormant Magnificent Degree Sdn. Bhd. Malaysia Provision of project management and secretarial services Prinsiptek Properties Sdn. Bhd. Malaysia Property development * Prinsiptek International Limited ^ Thailand Property development and investment holding indirect holding: Subsidiary companies of Prinsiptek (M) Sdn. Bhd.: Esa Pile Sdn. Bhd. Malaysia Construction works LKD Trading Sdn. Bhd. Malaysia Trading of building materials PST Concrete Sdn. Bhd. Malaysia Dormant Subsidiary companies of Tanah Perangsang Sdn. Bhd.: Jeram Perwira Sdn. Bhd. Malaysia Property development Pentaland Sdn. Bhd. Malaysia Property development and investment holding Solidvest Properties Sdn. Bhd. Malaysia Investment holding Subsidiary company of Gabungan Sanjung Sdn. Bhd.: NBL Land Development Sdn. Bhd. Malaysia Property development

67 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS (Cont d) 5. Investment in Subsidiary Companies (cont d) (b) The subsidiary companies and shareholdings therein are as follows: (cont d) country of Effective name of company incorporation interest Principal activities % % indirect holding: (cont d) Subsidiary company of Prinsiptek International Limited: * Prinsiptek Thai Limited ^ Thailand Construction works * Subsidiary companies audited by Morison CKS Company Limited, another member firm of Morison International. ^ Subsidiary company not audited by Morison Anuarul Azizan Chew. (c) Changes in equity interest in Prinsiptek Bina Sdn. Bhd., PST Concrete Sdn. Bhd. and Sekinchan Jaya Sdn. Bhd. On 6 January 2016, the received notification from Registrar of Companies Division, Ministry of Finance, Brunei Darussalam on the approval of application of strike-off filed by Prinsiptek Bina Sdn. Bhd. On 13 June 2016, the received notification from Companies Commission of Malaysia pursuant to Section 308 of the Companies Act, 1965 on the struck off of PST Concrete Sdn. Bhd. and Sekinchan Jaya Sdn. Bhd. The struck off of Prinsiptek Bina Sdn. Bhd., PST Concrete Sdn. Bhd. and Sekinchan Jaya Sdn. Bhd. do not have any significant effects on the financial results of the. 6. Intangible Assets Goodwill on consolidation At 1 January/31 December 8,260,819 8,260,819 (a) Impairment test for intangible assets Goodwill on consolidation has been allocated for impairment testing purposes to the individual entities which is also the cash-generating units ( CGUs ) identified. (b) Key assumptions used to determine recoverable amount The recoverable amount of a CGU is determined based on value in use calculations using cash flow projections based on financial budgets approved by the Directors covering a five-year period. A pre-tax discount rate of 5.00% (6.70%) per annum was applied to the cash flow projections, after taking into consideration the s cost of borrowings, the expected rate of return and various risk relating to the CGU. With regards to the assessment of value-in-use of the respective CGU, management believes that no reasonable possible chance in the key assumption would cause the carrying values of the units to materially exceed the recoverable amount.

68 66 PRINSIPTEK CORPORATION BERHAD ( H) NOTES TO THE FINANCIAL STATEMENTS (Cont d) 7. Trade Receivables Trade receivables 57,152,623 86,781,576 Retention sum on contracts 21,327,490 16,336,328 78,480, ,117,904 Analysis as: Non-current asset 8,953,765 7,503,093 Current asset 69,526,348 95,614,811 78,480, ,117,904 The s normal trade credit terms range from 21 to 90 days (2015: 21 to 90 days). Other credit terms are assessed and approved on a case by case basis. The ageing analysis is as follows: Neither past due nor impaired 54,777,810 60,431,959 1 to 30 days past due but not impaired 2,827,289 11,140, to 60 days past due but not impaired 5,897,031 2,134, to 90 days past due but not impaired 33, , to 120 days past due but not impaired 31,398 1,445,482 More than 121 days past due but not impaired 14,913,477 27,621,391 23,702,303 42,685,945 78,480, ,117,904 Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the. These debtors are mostly long term customers with no history of default in payments. The s trade receivables that are past due at the reporting date but not impaired relate mainly to customers who have never defaulted on payments but are slow paymasters, hence, periodically monitored.

69 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS (Cont d) 8. Other Receivables company Other receivables 18,451,306 30,153,392 2,460,181 2,460,181 Deposits 2,929,476 2,909, Prepayments 877, , ,258,056 33,870,312 2,460,181 2,460,181 Less: Impairment loss (906,124) (906,124) ,351,932 32,964,188 2,460,181 2,460,181 Analysis as: Non-current asset 5,668,075 7,877, Current asset 15,683,857 25,086,728 2,460,181 2,460,181 21,351,932 32,964,188 2,460,181 2,460,181 Movement of the impairment loss as follows: company At 1 January/31 December 906, , Other receivables that are individually impaired at the end of the reporting period relates to a debtor that has financial difficulties and defaulted on payments. These receivables are not secured by any collateral. 9. Inventories At cost Unsold unit of completed property 6,538,489 6,497,343

70 68 PRINSIPTEK CORPORATION BERHAD ( H) NOTES TO THE FINANCIAL STATEMENTS (Cont d) 10. Amount Owing by/(to) Customers on Contracts Aggregate costs incurred to date 779,292,907 1,119,289,873 Add: Attributable profits 23,748, ,253, ,041,788 1,219,543,182 Less: Progress billings (727,690,211) (1,157,734,709) 75,351,577 61,808,473 Represented by: Amount owing by customers on contracts 76,453,681 77,679,437 Amount owing to customers on contracts (1,102,104) (15,870,964) 75,351,577 61,808,473 Retention sum included in the progress billings 21,327,490 16,059,170 Included in the cost incurred during the financial year are the following: note Hire of machinery 43, ,820 Depreciation of property, plant and equipment 224,951 2,361,744 Finance costs 23 1,893,313 1,750,500 Rental of premises 1,600 47,048 Lease rental 1,199,658 1,808,337 Staff costs ,203 1,417, Amount Owing by/(to) Subsidiary Companies (a) Amount owing by subsidiary companies This represents unsecured, interest free advances which are repayable on demand. (b) Amount owing to subsidiary companies This represents unsecured, interest free advances which are repayable on demand. 12. Cash Held Under Housing Development Account Cash held under the Housing Development Account represents monies received from purchasers of residential properties less payments or withdrawals in accordance with the Housing Development (Control and Licensing) Act, 1966.

71 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS (Cont d) 13. Fixed Deposits with Licensed Banks The fixed deposits of the and of the Company have been pledged to licensed banks as securities for banking facilities granted to the Company and certain subsidiary companies as disclosed in Note 17 to the financial statements. The interest rates of deposits during the financial year range from 1.55% to 3.50% (2015: 2.81% to 3.11%) per annum and the maturities of deposits are 30 days to 5 years (2015: 30 days to 5 years) respectively. 14. Trade Payables Trade payables 51,220,134 65,805,404 Retention sum on contracts 27,010,990 21,799,667 78,231,124 87,605,071 Analysed as: Current 64,785,612 74,841,470 Non-current 13,445,512 12,763,601 78,231,124 87,605,071 Included in the trade payables of the is an amount of RM 7,161,063 (2015: RM7,722,745) owing to the landowners as disclosed in Note 4 to the financial statements. The normal trade credit terms granted to the and the Company range from 30 to 90 days (2015: 30 to 90 days). 15. Other Payables company Other payables - Third parties 9,287,377 30,949,589 15, Related party 10,155 1,778 7,356 7,314 9,297,532 30,951,367 23,059 7,314 Accruals 2,375,280 2,670,020 39,300 41,300 Deposits 921, , ,594,589 34,095,737 62,359 48,614

72 70 PRINSIPTEK CORPORATION BERHAD ( H) NOTES TO THE FINANCIAL STATEMENTS (Cont d) 16. Hire Purchase Payables (a) Minimum hire purchase payments Within one year 38, ,523 Between one and five years - 38,399 38, ,922 Less: Future finance charges (269) (14,835) Present value of hire purchase liabilities 38, ,087 (b) Present value of hire purchase liabilities Within one year 38, ,957 Between one and five years - 38,130 38, ,087 Analysed as: Repayable within twelve months 38, ,957 Repayable after twelve months - 38,130 38, ,087 Interest of hire purchase is charged at rates between 2.37% and 2.45% (2015: 2.37% and 3.00%) per annum.

73 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS (Cont d) 17. Bank Borrowings Secured Project loans - 3,147,226 Bank overdrafts 34,694,956 19,084,268 Bankers acceptance 8,623,000 12,574,000 Fixed loans 2,014,297 2,067,039 Term loan 33,000,000 35,319,409 Commodity Murabahah Term Financing 17,184,642 25,346,321 Total bank borrowings 95,516,895 97,538,263 Analysed as: Repayable within twelve months Secured Project loans - 3,147,226 Bank overdrafts 34,694,956 19,084,268 Bankers acceptance 8,623,000 12,574,000 Fixed loans 59,644 54,268 Term loan 4,950,000 2,319,409 Commodity Murabahah Term Financing 10,863,864 8,054,244 59,191,464 45,233,415 Repayable after twelve months Secured Fixed loans 1,954,654 2,012,771 Term loan 28,050,000 33,000,000 Commodity Murabahah Term Financing 6,320,777 17,292,077 36,325,431 52,304,848 95,516,895 97,538,263 The above credit facilities obtained from licensed banks are secured by the following: (a) (b) (c) (d) charge over the freehold land and buildings of subsidiary companies as disclosed in Note 3 to the financial statements; charge over the leasehold land of subsidiary companies as disclosed in Note 3 and Note 4 to the financial statements; pledge of fixed deposits of the as disclosed in Note 13 to the financial statements; and charge over the freehold land of landowner as disclosed in Note 4 to the financial statements. The secured fixed loans are repayable by monthly instalments over 20 to 25 years (2015: 20 to 25 years).

74 72 PRINSIPTEK CORPORATION BERHAD ( H) NOTES TO THE FINANCIAL STATEMENTS (Cont d) 17. Bank Borrowings (cont d) Maturity of borrowings is as follows: Within one year 59,191,464 45,233,415 Between one and two years 16,283,384 22,299,120 Between two and five years 18,357,122 28,239,237 More than five years 1,684,925 1,766,491 95,516,895 97,538,263 Range of interest rates is as follows: % % Project loans Bank overdrafts Bankers acceptance Fixed loans Term loan Commodity Murabahah Term Financing Share Capital Ordinary shares of RM0.10 each: /Company Number of Ordinary Shares RM Authorised At 1 January/31 December 1,000,000,000 1,000,000, ,000, ,000,000 Issued and fully paid At 1 January/31 December 316,956, ,956,860 31,695,686 31,695, Share Premium The share premium is not distributable by way of cash dividend but may be utilised in the manner as set out in Section 60(3) of the Companies Act, 1965 in Malaysia.

75 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS (Cont d) 20. Reserves company Non-distributable Exchange reserve 9,137,832 7,176, Warrant reserve 24,088,721 24,088,721 24,088,721 24,088,721 Capital reserve 58,030,476 58,030,476 45,880,476 45,880,476 91,257,029 89,295,909 69,969,197 69,969,197 (a) Exchange reserve The exchange reserve represents exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the s presentation currency. (b) Warrant reserve On 17 November 2014, the Company issued 126,782,744 Five (5) years Free Warrants 2014/2019 ( Warrants ) pursuant to a renounceable rights issue of two warrants for every three rights shares of RM0.10 each held in the Company. During the financial year, none of the Warrants were exercised. As at 31 December 2016, there was a total of 126,782,744 unexercised Warrants. The main features of the Warrants are as follows: The Warrants which are issued with the Rights Shares are immediately detached upon issuance and will be separately traded. The Warrant will be issued in registered form and constituted by the Deed Poll. Each Warrant entitles the registered holder, at any time during the Exercise Price, subject to adjustments in accordance with the provisions of the Deed Poll. The Warrants shall be exercisable at any time within five (5) years commencing from and including the date issue of the Warrants. The Exercise Price of the Warrants is fixed at RM0.10, after taking into consideration the theoretical exrights price of the Company Shares at the Price Fixing Date, subject to the exercise price not being less than the par value. The Exercise Price and/or number of unexercised Warrants may be adjusted by the Board, in consultation with the professional advisers and certified by the auditors, in the event of alteration to the share capital of the Company, including but not limited to consolidation or subdivision or conversion, issuance, capital distribution or issue of shares or convertible securities or any other events in accordance with the provisions of the Deed Poll. The new ordinary shares to be issued upon the exercise of the Warrants 2014/2019 shall, upon allotment and issue, rank pari passu in all respects with the existing issued and fully paid-up ordinary shares except that such new ordinary shares shall not be entitled to any dividends, rights, allotments and/or other distributions, the entitlement date of which is prior to the date of the allotment of the new ordinary shares arising from the exercise of the Warrants 2014/2019. (c) Capital reserve Capital reserve represents a transfer from retained profits arising from bonus issue of shares in subsidiary companies and the credit arising from par value reduction set off against the accumulated losses in the company. The capital reserve will be eliminated upon the disposal of the subsidiary companies.

76 74 PRINSIPTEK CORPORATION BERHAD ( H) NOTES TO THE FINANCIAL STATEMENTS (Cont d) 21. Deferred Tax Liabilities At 1 January 939, ,323 Recognised in profit or loss (181,912) 274,081 Under/(Over) provision in prior years 340,977 (23,518) At 31 December 1,098, ,886 The components and movements of deferred tax liabilities of the are as follows: accelerated capital allowances At 1 January ,886 Recognised in profit or loss (181,912) Under provision in prior years 340,977 At 31 December ,098,951 At 1 January ,323 Recognised in profit or loss 274,081 Over provision in prior years (23,518) At 31 December ,886 Deferred tax assets have not been recognised in respect of the following temporary differences: Unutilised tax losses 70,960 11,878,672 The unutilised tax losses are available indefinitely for offset against future taxable profits of the companies in which those items arose, for which no deferred tax asset is recognised due to uncertainty of its recoverability.

77 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS (Cont d) 22. Revenue company Construction contracts 150,026, ,116, Property development 27,789,786 49,104, Trading 30,203,039 24,064, Dividend income received/receivable from subsidiary company - - 2,000, , ,019, ,285,183 2,000, , Finance Costs note Finance costs on: Bank overdrafts 1,518, ,236 Bankers acceptance and bank guarantees 876, ,914 Fixed and project loans, Murabahah Commercial Papers, term loans 4,678,830 4,755,952 Letter of credits - 9 Hire purchase 14,575 94,966 Financial liabilities - trade payables 2,815,577 2,811,885 Others - 1,262,449 9,904,117 10,637,411 Less: Finance costs capitalized in qualifying assets Property development costs 4 (4,103,139) (3,990,584) Amount owing by/(to) customers on contracts 11 (1,893,313) (1,750,500) (5,996,452) (5,741,084) 3,907,665 4,896,327 Borrowing costs capitalised in the qualifying assets during the financial year arose on the general borrowing pool and have been calculated by applying capitalisation rates range from 4.26% to 8.10% (2015: 4.11% to 9.15%) per annum.

78 76 PRINSIPTEK CORPORATION BERHAD ( H) NOTES TO THE FINANCIAL STATEMENTS (Cont d) 24. Profit before Taxation Profit before taxation is derived after charging/(crediting): company Auditors remuneration: - current year 99,632 98,364 17,000 19,000 - over provision in prior year (980) - (980) - Depreciation of property, plant and equipment: - charged to statement of comprehensive income 1,187,105 1,261, capitalised to amount owing by/(to) customer on contracts 224,951 2,361, Company s Directors: - fees 120, , , ,000 - salaries and other emoluments 839, , EPF 100, , Rental of equipment 31,680 31, Rental of premises 83, , Property, plant and equipment written-off 749, , Bad debt written off 1,150, , Gain on disposal of property, plant and equipment (1,004,891) (276,643) - - Loss on strike off of a subsidiary company 129,290 - Fair value loss/(gain) on: - loan and receivables 1,126, , financial liabilities (1,142,707) (731,352) - - Dividend income - - (2,000,000) (500,000) Income from hire of plant and machinery - (375,950) - - Interest income (2,818,591) (3,459,572) - (80,725) 25. Taxation company Tax expenses for the financial year: - Current tax provision Malaysia income tax 1,909,046 1,109,619-18,487 Foreign tax 888, , ,797,061 1,215,458-18,487 - (Over)/Under provision in prior years (35,453) 103,465 (828) - 2,761,608 1,318,923 (828) 18,487 Deferred tax - Relating to origination and reversal of temporary differences (181,912) 313, Effect of changes in tax rate - (39,003) Over provision in prior years 340,977 (23,518) , , Taxation for the financial year 2,920,673 1,569,486 (828) 18,487

79 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS (Cont d) 25. Taxation (cont d) Malaysia income tax is calculated at the Malaysian statutory tax rate of 24% (2015: 25%) of the estimated assessable profit for the financial year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the and the Company is as follows: company Profit before taxation 7,960,583 3,937,244 1,689, ,347 Taxation at Malaysian statutory tax rate of 24% (2015: 25%) 1,910, , ,487 68,337 Different tax rates in other countries (295,123) (175,679) - - Expenses not deductible for tax purposes 998, ,427 74,513 17,775 Income not subject to tax - (265,998) (480,000) (67,625) Deferred tax assets not recognised Under/(Over) provision of current taxation in prior years (35,453) 103,456 (828) - Effect of changes in tax rate - (39,003) - - Under/(Over) provision of deferred tax in prior years 340,977 (23,518) - - Tax expense for the financial year 2,920,673 1,569,486 (828) 18, Earnings Per Share (a) Basic earnings per share The earnings per share has been calculated based on the consolidated profit for the financial year attributable to equity holders and the weighted average number of ordinary shares in issue during the financial year: Profit for the financial year attributable to the equity holders of the Company 4,332,642 1,874,331 Weighted average number of shares in issue 316,956, ,956,860 Basic earnings per share (sen)

80 78 PRINSIPTEK CORPORATION BERHAD ( H) NOTES TO THE FINANCIAL STATEMENTS (Cont d) 26. Earnings Per Share (cont d) (b) Fully diluted earnings per share Fully diluted earnings per share has been calculated based on the adjusted consolidated profit for the financial year attributable to equity holders and the adjusted weighted average number of ordinary shares issued and issuable: Weighted number of ordinary shares in issue 316,956, ,956,860 Adjusted for: Assumed exercise of Warrants at no consideration 126,782, ,782, ,739, ,739,604 Fully diluted earnings per share (sen) Staff Costs note RM Staff costs (excluding Directors) comprise: - charged to profit or loss 2,704,315 2,914,872 - capitalised in land and property development cost 4 91,003 40,005 - capitalised in amount owing by/(to) customers on contracts ,203 1,417,663 Total staff costs for the financial year 3,124,521 4,372,540 Included in the total staff costs above are contributions made to the Employees Provident Fund under a defined contribution plan for the amounting to RM 270,311 (2015: RM399,074). 28. Financial Instruments (a) Financial risk management objectives and policies The s and the Company s financial risk management policy is to ensure that adequate financial resources are available for the development of the s and the Company s operations whilst managing its financial risks, including interest rate risk, market risk, credit risk, liquidity and cash flow risk. The and the Company operate within clearly defined guidelines that are approved by the Board and the s policy is not to engage in speculative transactions. (b) Foreign currency exchange risk The Company is exposed to foreign currency risk on inter-company loans and advances and borrowings that are denominated in a currency other than Ringgit Malaysia. The currency giving rise to this risk is primarily Thailand Baht and United States Dollar. The maintains a natural hedge that minimises the foreign exchange exposure by matching foreign currency income with foreign currency costs.

81 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS (Cont d) 28. Financial Instruments (cont d) (b) Foreign currency exchange risk (cont d) The net unhedged financial assets and financial liabilities of the Company that are not denominated in their functional currencies are as follows: Financial Assets/(Liabilities) Held in Non-Functional Currency ringgit United States Malaysia Dollar Total Functional Currency 2016 bank borrowing Thailand Baht bank borrowing Thailand Baht - (2,319,603) (2,319,603) company 2016 amount owing by subsidiary company Thailand Baht 43,207,693-43,207, amount owing by subsidiary company Thailand Baht 44,180,836-44,180,836 Currency risk sensitivity analysis The following table shows the sensitivity of the s profit net of tax to a reasonably possible change in United States Dollar ( USD ) exchange rate against the functional currency of a subsidiary company, with all other variables remain constant USD/THB -strengthened 3% - (69,582) -weakened 3 % - 69,582

82 80 PRINSIPTEK CORPORATION BERHAD ( H) NOTES TO THE FINANCIAL STATEMENTS (Cont d) 28. Financial Instruments (cont d) (c) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The s and the Company s exposure to the risk of changes in market interest rates relates primarily to the s and the Company s long-term debt obligations with floating interest rates. The and the Company finance its operation through operating cash flows and borrowings. Interest rate exposure arises from the s and the Company s borrowings and deposits. The and the Company seek to achieve the desired interest rate profile by maintaining a prudent mix of fixed and floating rate borrowings. Exposure to interest rate risk The interest rate profile of the s and the Company s significant interest-bearing financial instruments, based on carrying amounts as at the end of the financial year are as follows: Fixed rate instruments company Amount owing by subsidiary companies ,207,693 44,180,836 Fixed deposits with licensed banks 6,266,864 9,673, Hire purchase payables (38,130) (761,087) - - 6,228,734 8,912,035 43,207,693 44,180,836 Floating rate instruments Bank borrowings 95,516,895 97,538, Interest rate risk sensitivity analysis A change of 50 basis points ( bp ) in interest rates at the end of the reporting period would have increase/ (decrease) profit net of tax by the amounts shown below, assuming all other variables remain constant Profit net of tax 50 bp increase 61,714 41, bp decrease (61,714) (41,700) (d) Credit risk Exposure to credit risk The and the Company s exposure to credit risk arises mainly from receivables. Receivables are monitored on an ongoing basis via s management reporting procedures and action will be taken for long outstanding debts. Credit risk concentration profile At reporting date, there were no significant concentrations of credit risk. The maximum exposure to credit risk associated with recognised financial assets is the carrying amount shown in the statement of financial position.

83 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS (Cont d) 28. Financial Instruments (cont d) (d) Credit risk (cont d) Credit risk concentration profile (cont d) The determines concentrations of credit risk by monitoring the country and industry sector profiles of its trade receivables on an ongoing basis as follows: By country: Malaysia 78,480, ,117,904 By industry sectors: Construction 66,720,780 61,619,896 Property development 1,014,943 9,911,246 Trading and others 10,744,390 31,586,762 78,480, ,117,904 (e) Liquidity and cash flow risk The and the Company actively manage its debt maturity profile, operating cash flows and maintain a flexible and cost effective borrowing structure to ensure that all refinancing, repayment and funding needs are met. The and the Company also maintain a certain level of cash and cash convertible investments to meet its working capital requirements. Maturity analysis The table below summarises the maturity profile of the s and the Company s financial liabilities as at the end of the reporting period based on contractual undiscounted repayment obligations. on demand or within One to five Over five one year years years Total 2016 Trade payables 64,785,612 13,445,512-78,231,124 Other payables 10,219, ,219,309 Hire purchase payables 38, ,130 Bank borrowings 59,191,464 34,640,506 1,684,925 95,516, ,234,515 48,086,018 1,684, ,005, Trade payables 74,841,470 12,763,601-87,605,071 Other payables 31,425, ,425,717 Hire purchase payables 722,957 38, ,087 Bank borrowings 45,233,415 50,538,357 1,766,491 97,538, ,223,559 63,340,088 1,766, ,330,138

84 82 PRINSIPTEK CORPORATION BERHAD ( H) NOTES TO THE FINANCIAL STATEMENTS (Cont d) 28. Financial Instruments (cont d) (e) Liquidity and cash flow risk (cont d) Maturity analysis (cont d) on demand or within one One to five year years Total company 2016 Other payables 23,059-23,059 Amount owing to subsidiary companies 4,075,000-4,075,000 4,098,059 4,098, Other payables 7,314-7,314 Amount owing to subsidiary companies 8,601,176-8,601,176 8,608,490-8,608,490 (f) Fair values of financial instruments Fair value of financial assets and liabilities are as follows: Financial assets Trade receivables (non-current) 8,953,765 7,503,093 Financial liabilities Trade payables (non-current) 13,445,512 12,763,601 Hire purchase payables (non-current) - 38,130 Bank borrowings (non-current) 36,325,431 52,304,848 (i) (ii) (iii) (iv) The carrying amounts of cash and cash equivalents, current portion of trade and other receivables, inter-company loans and advances, current portion of trade and other payables, short term borrowings approximated their fair values at the reporting date due to the relatively short term nature of these financial instruments. The fair value of long term bank borrowings and long term hire purchase payables carried on the statement of financial position are estimated using valuation technique under the hierarchy level 2 mentioned below whereby the expected future cash flows are discounted at the market interest rate for similar types of borrowings. The fair value of long term trade receivables and long term trade payables are estimated using valuation technique under the hierarchy level 2 mentioned below whereby the expected future cash flows are discounted at market incremental lending rate for similar types of lending at the reporting date. The aggregate fair value of the other financial assets and liabilities carried on the statement of financial position approximates its carrying value and the and the Company does not anticipate the carrying amounts recorded at the reporting date to be significantly different from the values that would eventually be settled.

85 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS (Cont d) 28. Financial Instruments (cont d) (f) Fair values of financial instruments (cont d) Fair value hierarchy The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: Level 2: Level 3: quoted (unadjusted) prices in active markets for identical assets or liabilities other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data Financial liabilities subject to offsetting, enforceable netting arrangement: Gross amount of Net amount recognised of financial financial liabilities Gross assets presented amount of set off in in the recognised the statements statements financial of financial of financial liabilities position position 2016 Financial liabilities at amortised cost 41,960,038 38,285,434 3,674, Financial liabilities at amortised cost 39,923,918 35,989,067 3,934,851 A subsidiary company s financial liability and financial asset with a landowner as disclosed in Note 4(a) to the financial statements and based on supplementary letter dated 23 June 2012, there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. Consequently, the said financial asset is set off against the financial liability resulting in the presentation of a net financial liability of RM3,674,604 (2015: RM3,934,851) in the statements of financial position.

86 84 PRINSIPTEK CORPORATION BERHAD ( H) NOTES TO THE FINANCIAL STATEMENTS (Cont d) 29. Contingent Liabilities company Secured guarantees given: - as performance and advance guarantees 26,051,807 28,681, to trade suppliers 2,358,000 2,245, ,409,807 30,926, Unsecured corporate guarantees given: - as performance guarantees 7,611,155 7,611,155 7,611,155 7,611,155 - to trade suppliers - - 1,512,642 5,352,514 - to licensed banks ,544, ,147,697 7,611,155 7,611, ,667, ,111,366 36,020,962 38,537, ,667, ,111, Non-Cancellable Operating Lease Commitments Future minimum rentals payables: Within one year 1,264, ,096 Between one and two years 159, ,557 1,423,469 1,067,653 Operating lease payments represents rentals payable by the for use of the scaffolding and machinery. Leases are fixed for a term of two to three years. 31. Segment Information - Segment information is primarily presented in respect of the s business segment which is based on the s management and internal reporting structure. Management monitors the operating results of its business segment separately for the purposes of making decision about resource allocation and performance assessment. (a) Business segments The main business segments of the comprise the following: Construction Property Development Trading and others Construction works. Development of residential and commercial properties. Trading in building materials, provision of project management and secretarial services and investment holding.

87 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS (Cont d) 31. Segment Information (cont d) (a) Business segments (cont d) Property Trading construction Development and others Elimination Total 2016 Revenue External sales 150,026,755 27,789,786 30,203, ,019,580 Inter-segment sales 9,945,165 5,302,391 7,492,773 (22,740,329) - 159,971,920 33,092,177 37,695,812 (22,740,329) 208,019,580 Results Segment results 4,659,799 4,219, ,556-9,049,657 Interest expense (1,646,088) (2,036,120) (225,457) - (3,907,665) Interest income 1,319,789 1,498, ,818,591 Profit before taxation 7,960,583 Taxation (2,920,673) Profit for the financial year 5,039,910 Assets Segment assets 169,886, ,112,286 18,391, ,389,524 Unallocated assets 6,323,265 Consolidated total assets 376,712,789 Liabilities Segment liabilities 60,322,551 13,079,931 18,563,465-91,965,947 Unallocated liabilities 97,409,794 Consolidated total liabilities 189,375,741 Other information Capital expenditure 98,105 4, ,431 Depreciation of property, plant and equipment 1,275,806 4, ,862 (217,585) 1,412,056 Non-cash expenses other than depreciation and amortisation 4,911, ,911,963

88 86 PRINSIPTEK CORPORATION BERHAD ( H) NOTES TO THE FINANCIAL STATEMENTS (Cont d) 31. Segment Information (cont d) (a) Business segments (cont d) Property Trading construction Development and others Elimination Total 2015 revenue External sales 166,116,264 49,104,526 24,064, ,285,183 Inter-segment sales 25,424,266 5,177,950 5,008,760 (35,610,976) - 191,540,530 54,282,476 29,073,153 (35,610,976) 239,285,183 Results Segment results 3,966,201 1,732,620 (324,822) - 5,373,999 Interest expense (4,896,327) Interest income 3,459,572 Profit before taxation 3,937,244 Taxation (1,569,486) Profit for the financial year 2,367,758 Assets Segment assets 182,969, ,148,680 59,139, ,257,852 Unallocated assets 10,086,374 Consolidated total assets 418,344,226 Liabilities Segment liabilities 95,629,131 19,071,740 23,631, ,332,859 Unallocated liabilities 98,886,233 Consolidated total liabilities 237,219,092 Other information Capital expenditure 2,113, ,113,959 Depreciation of property, plant and equipment 3,482,613 4, ,277-3,623,207 Non-cash expenses other than depreciation and amortisation 3,155, ,155,312 All the inter-segment transactions were carried out on normal commercial basis and in the ordinary course of business.

89 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS (Cont d) 31. Segment Information (cont d) (a) Business segments (cont d) (i) Unallocated assets consist of the following: Fixed deposits with licensed banks 6,266,864 9,673,122 Tax recoverable 56, ,252 6,323,265 10,086,374 (ii) Unallocated liabilities consist of the following: Bank borrowings 95,516,895 97,538,263 Tax payable 793, ,084 Deferred tax liabilities 1,098, ,886 97,409,794 98,886,233 (iii) Other significant non-cash expenses consist of the following: Fair value loss on: - loan and receivables 1,126, ,688 Interest expense on financial liabilities - 2,811,885 Property, plant and equipment written off 749, ,392 Bad debts written off on loan and receivables 1,150, ,128 Loss on strike off of a subsidiary company 129,290 -

90 88 PRINSIPTEK CORPORATION BERHAD ( H) NOTES TO THE FINANCIAL STATEMENTS (Cont d) 31. Segment Information (cont d) (b) Geographical information (i) Revenue by geographical location of customers Malaysia 193,822, ,812,684 Thailand 14,196,847 10,472, ,019, ,285,183 (ii) Non-current assets by geographical location of assets are as follows: Malaysia 110,007, ,495,974 Thailand 62, , ,070, ,729,334 (c) Information about major customers Revenue from 3 (2015: 2) major customers amounting to RM 130,102,769 (2015: RM92,653,044), arising from the construction segment. 32. Related Party Disclosures (a) In addition to the transactions detailed elsewhere in the financial statements, the and the Company had the following transactions with related parties during the financial year: * Professional fees payable to Perunding CMF Sdn. Bhd. 79,500 - Company * Dividend received from a subsidiary company 2,000, ,000 * The Directors are of the opinion that all the transactions above 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 obtainable in transactions with unrelated parties.

91 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS (Cont d) 32. Related Party Disclosures (cont d) (b) Information regarding compensation of key management personnel is as follows: Short-term employee benefits 1,060,327 1,081, Capital Management The objective of the on capital management is to ensure that it maintains a strong credit rating and safeguard the s ability to continue as a going concern, so as to support its business, maintain the market confidence and maximise shareholder value. The monitors the capital using gearing ratio, which is net debt divided by total capital plus net debt. The s policy is to keep the gearing ratio between 50% and 100%. company Trade and other payables 90,825, ,700,808 62,359 48,614 Amount owing to a subsidiary company - - 4,075,000 8,601,176 Hire purchase payables 38, , Bank borrowings 95,516,895 97,538, Less: cash and cash equivalents (8,240,173) (15,678,098) (37,482) (252,287) Net debt 178,140, ,322,060 4,099,877 8,397,503 Equity attributable to equity holders of the Company 185,608, ,314, ,781, ,091,142 Total equity plus net debt 363,748, ,636, ,881, ,488,645 Gearing ratio 48.97% 53.3% 3.51% 7.0% There were no changes to the s approach to capital management during the financial year. 34. Date of Authorisation for Issue The financial statements of the and of the Company for the financial year ended 31 December 2016 were authorised for issue in accordance with a resolution of the Board of Directors on 28 March 2017.

92 90 PRINSIPTEK CORPORATION BERHAD ( H) NOTES TO THE FINANCIAL STATEMENTS (Cont d) Realised and Unrealised Profits/Losses (Supplementary Information) The breakdown of the retained profits of the and of the Company as of 31 December into realised and unrealised amounts is as follows: Total retained profits Realised 95,248,970 88,031,210 Unrealised (1,098,951) (939,886) 94,150,019 87,091,324 Less: Consolidation adjustments (40,046,708) (37,320,655) Total retained profits as per consolidated statement of financial position 54,103,311 49,770,669 company Total accumulated profit Realised 2,564, ,235 Unrealised - - Total retained profit as per statement of financial position 2,564, ,235 The above disclosure of realised and unrealised profits or losses is made solely for complying with the disclosure requirements stipulated in the directive of Bursa Malaysia Securities Berhad and is not made for any other purposes.

93 ANNUAL REPORT STATEMENT OF DIRECTORS RESPONSIBILITY IN RESPECT OF THE AUDITED FINANCIAL STATEMENTS The Directors are required by the Companies Act 2016 to prepare financial statements for each year which give a true and fair view of the state of affairs of the and of the Company at the end of the financial year and of their results and cash flows for the financial year. In preparing the financial statements, the Directors have:- adopted suitable accounting policies and applied them consistently; made judgments and estimates that are prudent and reasonable; and ensured applicable approved accounting standards in Malaysia and the provisions of the Companies Act 2016 have been followed. The Directors are responsible for ensuring that the Company keeps proper accounting records which disclose with reasonable accuracy at any time the financial position of the and of the Company and which enable them to ensure that the financial statements comply with the applicable approved accounting standards in Malaysia and the provisions of the Companies Act The Directors have overall responsibility for taking such steps that are reasonably open to them to safeguard the assets of the and the Company to prevent and detect fraud and other irregularities.

94 92 PRINSIPTEK CORPORATION BERHAD ( H) OTHER COMPLIANCE INFORMATION 1. Material Contracts Neither the Company nor its subsidiaries entered into any material contracts involving its directors and major shareholders interest during the Financial Year 2016.

95 ANNUAL REPORT LIST OF PROPERTIES as at 31 December 2016 Location Description/ Existing Use Area (Sq. Feet) Tenure & Expiry Date Net Book Value (RM 000) Age of Building (Years) Year of Acquisition PT Nos and 3743 H.S. (D) 9104 and 9105 Mukim Damansara Daerah Petaling Selangor Darul Ehsan 3-storey shop offices 4,047 Freehold Lot No Geran No Mukim Batu Daerah Gombak Selangor Darul Ehsan Land under development 406,197 Freehold 1, Parcel Nos. C-G-62, Master Title No. H.S. (D) , PT Mukim Petaling, District of Petaling, State of Selangor Ground floor of a 4-storey shop apartment 1,350 Title has not been issued by the State Authority Chanod Title No , , , 62681, ,62727, Land No , , , 3502, , 3549, Chingrak Noi Sub-district, Bangpa In District, Phranakorn Sri Ayuthaya Province, Thailand Land under development 262,748 Freehold 11,

96 94 PRINSIPTEK CORPORATION BERHAD ( H) ANALYSIS OF SHAREHOLDINGS as at 31 March 2017 Issued share capital Class of share Voting rights : RM31,695, : Ordinary shares : 1 vote per share on a poll DISTRIBUTION OF SHAREHOLDINGS no. of total Category of Shareholders shareholders % Shareholdings % Less than 100 1, , to 1, , ,001 to 10, ,144, ,001 to 100,000 1, ,237, ,001 to less than 5% of issue shares ,778, % and above of issued shares ,451, Total 3, ,956, SUBSTANTIAL SHAREHOLDERS (as per the Company s Register of Substantial Shareholders) No. of Shares Held Name Direct % indirect % Dato Foo Chu Jong 36,974, ,476,562 (1) Foo Chu Pak ,476,562 (1) Daya Setempat Sdn Bhd 102,476, (1) Deemed interest through shareholdings in Daya Setempat Sdn Bhd by virtue of Section 8 of the Companies Act DIRECTORS SHAREHOLDINGS (as per the Company s Register of Directors Shareholdings) No. of Shares Held Name Direct % indirect % Tan Sri Dato Seri Mohamad Noor Abdul Rahim Datin Paduka Low Siew Moi To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain Dato Foo Chu Jong 36,974, ,476,562 (1) Foo Chu Pak ,476,562 (1) (1) Deemed interest through shareholdings in Daya Setempat Sdn Bhd by virtue of Section 8 of the Companies Act None of the Directors of the Company holds any share either directly or indirectly in the Company s subsidiaries except for the interest held through the Company.

97 ANNUAL REPORT ANALYSIS OF SHAREHOLDINGS as at 31 March 2017 (Cont d) THIRTY (30) LARGEST SHAREHOLDERS no. of Name shares Held % 1 RHB Nominees (Tempatan) Sdn Bhd OSK Capital Sdn Bhd for Daya Setempat Sdn Bhd 102,476, RHB Nominees (Tempatan) Sdn Bhd OSK Capital Sdn Bhd for Foo Chu Jong 36,974, Permai Villa Sdn Bhd 6,798, RHB Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Ooi Gim Eng 5,925, Alliancegroup Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Chia Yu San 5,114, Yeo Ky Lin Elizabeth 2,985, Pan Lee Chin 2,740, Citigroup Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Wong Puay Chen 2,450, Kenanga Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Tan Bee Yook 2,326, UOB Kay Hian Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Angkasa Aman Sdn Bhd 1,980, Kenanga Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Yeap Yeap Poh Chim 1,800, Caroline Tsau Kah Mun 1,770, Khor Keng Khaw Ah Soay 1,723, Sia Yiok Seh 1,632, Maybank Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Yeo Ju Hong 1,630, Liw Chong Liong 1,500, Ong Yoong Nyock 1,500, RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Francis Chia Mong Tet 1,457, Lee Swong Koi 1,337, RHB Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Lim Jit Chow 1,218, Hoon Ly Mei 1,150, Geoffrey Lim Fung Keong 1,140, Maybank Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Tan Chin Hooi 1,100, Tan Bian Kiat 1,049, RHB Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Pang Swee Chien 1,012, Ker Chwee Geok 1,000, Heng Ah Lik 958, TA Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Poon Soi Tai 900, Cimsec Nominees (Tempatan) Sdn Bhd CIMB Bank for Tee Chee Chiang 900, RHB Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Mok Sook Lian 900, Total 195,451,

98 96 PRINSIPTEK CORPORATION BERHAD ( H) ANALYSIS OF WARRANTHOLDINGS as at 31 March 2017 No. of Warrants in issue : 126,782,744 Exercise price of the Warrants : RM0.10 Expiry date of the Warrants : 16 November 2019 DISTRIBUTION OF WARRANTHOLDINGS no. of total Category of Warrantholders Warrantholders % Warrantholdings % Less than , to 1, , ,001 to 10, ,251, ,001 to 100, ,927, ,001 to less than 5% of issued warrants ,779, % and above of issued warrants ,780, Total ,782, SUBSTANTIAL WARRANTHOLDERS No. of Warrants Held Name Direct % indirect % Dato Foo Chu Jong 14,789, ,990,624 (1) Foo Chu Pak ,990,624 (1) Daya Setempat Sdn Bhd 40,990, (1) Deemed interest through warrantholdings in Daya Setempat Sdn Bhd by virtue of Section 8 of the Companies Act DIRECTORS WARRANTHOLDINGS No. of Warrants Held Name Direct % indirect % Tan Sri Dato Seri Mohamad Noor Abdul Rahim Datin Paduka Low Siew Moi To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain Dato Foo Chu Jong 14,789, ,990,624 (1) Foo Chu Pak ,990,624 (1) (1) Deemed interest through warrantholdings in Daya Setempat Sdn Bhd by virtue of Section 8 of the Companies Act 2016.

99 ANNUAL REPORT ANALYSIS OF WARRANTHOLDINGS as at 31 March 2017 (Cont d) THIRTY (30) LARGEST WARRANTHOLDERS no. of Name Warrants Held % 1 RHB Nominees (Tempatan) Sdn Bhd OSK Capital Sdn Bhd for Daya Setempat Sdn Bhd 40,990, RHB Nominees (Tempatan) Sdn Bhd OSK Capital Sdn Bhd for Foo Chu Jong 14,789, Alliancegroup Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Chia Yu San 2,045, SJ Sec Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Francis Ho Ik Sing 1,793, Lim Cheng Ten 1,679, Pan Lee Chin 1,336, Chaang Kok Leong 1,200, RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Francis Chia Mong Tet 1,033, Khoo Sek Pin 1,015, Lime Securities Sdn Bhd 1,000, Maybank Nominees (Tempatan) Sdn Bhd Dominic Ong Sheng Yew 1,000, Cho Han Woon 1,000, Lyncher Wung Wei Fong 960, Permai Villa Sdn Bhd 864, Tan Kok Keat 840, Liew Yoon Khooi 830, Geoffrey Lim Fung Keong 800, Tan Kok Keat 800, Dominic Ong Sheng Yew 800, Kek Tian Kek Tong Chor 756, UOB Kay Hian Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Angkasa Aman Sdn Bhd 747, Cheong Ah San 601, Chaang Kok Meng 600, Cimsec Nominees (Tempatan) Sdn Bhd CIMB Bank for Tan Jee Yien 600, Maybank Securities Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Heng Poh Suan 580, Wang Suan Ean 579, Mohd Annuar Choon Bin Abdullah 578, Caroline Tsau Kah Mun 570, Khor Keng Ah Soay 557, Tan Yaw Kiang 528, Total 81,478,

100 98 PRINSIPTEK CORPORATION BERHAD ( H) NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN THAT the Fifteenth (15th) Annual General Meeting ( AGM ) of Prinsiptek Corporation Berhad ( Company ) will be held at the Latitude 1.01º, Level 1, Hotel Armada Petaling Jaya, Lorong Utara C, Section 52, Petaling Jaya, Selangor Darul Ehsan on Thursday, 25 May 2017 at a.m. for the following purposes: As Ordinary Business 1. To receive the Audited Financial Statements for the financial year ended 31 December 2016 together with the Reports of the Directors and Auditors thereon. 2. To approve the payment of Directors fees of RM120, for the financial year ended 31 December To approve the payment of Directors fees and benefits up to RM360, from 1 January 2017 until the next AGM of the Company. 4. To re-elect Mr. Foo Chu Pak who retires pursuant to Article 84 of the Company s Articles of Association. 5. To re-appoint Tan Sri Dato Seri Mohamad Noor Abdul Rahim as Director. 6. To re-appoint Messrs Morison Anuarul Azizan Chew as Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration. Resolution 1 Resolution 2 Resolution 3 Resolution 4 Resolution 5 As Special Business To consider, and if thought fit, to pass with or without modifications, the following ordinary resolutions: 7. Retention of Independent Directors (i) (ii) THAT subject to the passing of Ordinary Resolution 4, Tan Sri Dato Seri Mohamad Noor Abdul Rahim who has served the Board for more than 9 years be retained as Independent Non-Executive Chairman of the Company. THAT To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain who has served the Board for 9 years be retained as Independent Non-Executive Director of the Company. Resolution 6 Resolution 7 8. Authority to Issue Shares Resolution 8 THAT pursuant to Section 75 and 76 of the Companies Act 2016 ( Act ), and subject to the approvals from the relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue shares in the Company from time to time and upon such terms and conditions and for such purposes and to such persons as the Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares to be issued does not exceed 10% of the issued share capital of the Company at the time of submission to the authority AND THAT the Directors be and are also hereby empowered to obtain the approval from the Bursa Malaysia Securities Berhad for the listing of and quotation for the additional shares so issued AND THAT such authority shall continue in force until the conclusion of the next AGM of the Company. 9. To transact any other business which may properly be transacted at an AGM for which due notice shall have been given. By Order of the Board PRINSIPTEK CORPORATION BERHAD LIM SECK WAH (MAICSA ) GOH BOON-UI (MIA 24019) Company Secretaries Selangor Darul Ehsan Dated : 27 April 2017

101 ANNUAL REPORT NOTICE OF ANNUAL GENERAL MEETING (Cont d) General Meeting Record of Depositors For the purpose of determining a member who shall be entitled to attend the 15th AGM, the Company shall request the Record of Depositors as at 19 May Only a depositor whose name appears on the Record of Depositors as at 19 May 2017 shall be entitled to attend, speak and vote at this meeting or appoint proxy/proxies to attend, speak and vote in his stead. Appointment of Proxy 1. A member may appoint up to two (2) proxies who need not be members of the Company to attend and vote at the same meeting. Where a member appoints two (2) proxies, the appointment shall be invalid unless he/she specifies the proportions of his/her holdings to be represented by each proxy. 2. Where a member is an Authorised Nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said securities account. 3. 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 ), the Exempt Authorised Nominee may appoint any number of proxy (no limit) in respect of each omnibus account it holds. 4. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorized in writing or if such appointor is a corporation, under either its common seal or the hand of its officer or attorney duly authorized. The instrument duly completed shall be deposited at the Company s registered office not less than forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting. The completed instrument appointing a proxy once deposited will not preclude the member from attending and voting in person at the general meeting should the member subsequently wish to do so. Explanatory Notes 1. Resolution 4 Tan Sri Dato Seri Mohamad Noor Abdul Rahim, who is above the age of 70, was re-appointed as Director of the Company pursuant to S129(6) of the Companies Act 1965 (since repealed) at the Company s last AGM to hold office until the conclusion of this AGM. The proposed Ordinary Resolution 4, if passed, will enable Tan Sri Dato Seri Mohamad Noor Abdul Rahim to continue as a director of the Company. As the Companies Act 2016, which came into force on 31 January 2017, had removed the age limit for directors, Tan Sri Dato Seri Mohamad Noor Abdul Rahim, after this reappointment, shall only be subject to retirement by rotation at future AGM in accordance with the Articles of Association of the Company. 2. Resolution 6 and 7 The Board of Directors has vide the Nomination Committee conducted an assessment of independence of the following directors who have served as Independent Non-Executive Directors for a cumulative term of nine years or more and recommended them to continue to act as Independent Non-Executive Directors based on the following justification: - i) Tan Sri Dato Seri Mohamad Noor Abdul Rahim ii) To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain Notes:- Justifications:- a) They fulfil the criteria under the definition of Independent directors as stated in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and therefore would be able to function as a check and balance and bring element of objectivity to the Board of Directors; b) They have devoted sufficient time and attention to their professional obligation informed and balance decision making; c) They have vast experience in a diverse range of business and therefore would be able to provide constructive opinion; d) They exercise independent judgement and have the ability to act in the best interest of the Company; e) They have continued to exercise their independence and due care during their tenure as the independent Non-Executive Directors of the Company and carried out their professional duties in the best interest of the Company and Shareholders. 3. Resolution 8 The proposed Resolution 8, if passed, will empower the Directors to issue shares up to 10% of the total number of issued shares of the Company at any one time during the validity of the authority granted for such purposes as they may consider being in the best interest of the Company. This authority, unless revoked or varied at a general meeting, will expire at the next AGM of the Company. The general mandate sought to grant authority to Directors to issue shares is a renewal of the mandate that was approved by the shareholders at the 14th AGM held on 26 May The renewal of the general mandate is to provide flexibility to the Company to issue new shares without the need to convene a separate general meeting to obtain shareholders approval so as to avoid incurring additional cost and time. The purpose of this general mandate is for possible fund raising exercises including but not limited to further placement of shares for purpose of funding current and/or future investment projects, working capital and/or acquisitions. Up to the date of this Notice, the Company did not issue any shares pursuant to the mandate granted to the Directors at the 14 th AGM.

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103 PROXY FORM No. of shares held PRINSIPTEK CORPORATION BERHAD ( H) CDS Account No. I/We of (Full name in block letters) NRIC/Company No. being a member/members of Prinsiptek Corporation Berhad ( Company ), hereby appoint: Full Name (in Block) NRIC / Passport No. % of shareholdings Address *and/or Full Name (in Block) NRIC / Passport No. % of shareholdings Address or failing him/her, the Chairman of the Meeting, as my/our proxy to vote for me/us on my/our behalf at the Fifteenth Annual General Meeting of the Company ( Meeting ) to be held at the Latitude 1.01º, Level 1, Hotel Armada Petaling Jaya, Lorong Utara C, Section 52, Petaling Jaya, Selangor Darul Ehsan on Thursday, 25 May 2017 at a.m. and any adjournment thereof, in the manners as indicated below: No. Resolutions FOR AGAINST 1. To approve the payment of Directors fees of RM120, for the financial year ended 31 December To approve the payment of Directors fees and benefits up to RM360, from 1 January 2017 until the next AGM of the Company To re-elect Mr. Foo Chu Pak who retires pursuant to Article 84 of the Company s Article of Association. To re-appoint Tan Sri Dato Seri Mohamad Noor Abdul Rahim as Director. To re-appoint Messrs Morison Anuarul Azizan Chew as the Auditors of the Company. To retain Tan Sri Dato Seri Mohamad Noor Abdul Rahim as Independent Non-Executive Chairman. 7. To retain To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain as Independent Non Executive Director. 8. To authorise the Directors to issue shares pursuant to the Companies Act [Please indicate with an X or in the spaces above as to how you wish your votes to be cast. If no specific direction as to voting is given, your proxy will vote or abstain from voting at his/her discretion.] All votings will be conducted by way of poll. Dated this day of, 2017 Signature / Common Seal of Shareholder NOTES: General Meeting Record of Depositors For the purpose of determining a member who shall be entitled to attend the 15th AGM, the Company shall request the Record of Depositors as at 19 May Only a depositor whose name appears on the Record of Depositors as at 19 May 2017 shall be entitled to attend, speak and vote at this meeting or appoint proxy/proxies to attend, speak and vote in his stead. 1. A member may appoint up to two (2) proxies who need not be members of the Company to attend and vote at the same meeting. Where a member appoints two (2) proxies, the appointment shall be invalid unless he/she specifies the proportions of his/her holdings to be represented by each proxy. 2. Where a member is an Authorised Nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said securities account 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 ), the Exempt Authorised Nominee may appoint any number of proxy (no limit) in respect of each omnibus account it holds. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorized in writing or if such appointor is a corporation, under either its common seal or the hand of its officer or attorney duly authorized. The instrument duly completed shall be deposited at the Company s registered office not less than forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting. The completed instrument appointing a proxy once deposited will not preclude the member from attending and voting in person at the general meeting should the member subsequently wish to do so.

104 Fold this flap for sealing 2nd fold here STAMP THE COMPANY SECRETARIES PRINSIPTEK CORPORATION BERHAD No. 83 & 85, Jalan SS15/4C Subang Jaya Selangor Darul Ehsan, Malaysia 1st fold here

105 DEVELOPER: NBL LAND DEVELOPMENT SDN. BHD. ( U). ADDRESS: 83 & 85, Jalan SS 15/4C, Subang Jaya, Selangor Darul Ehsan, Malaysia. DEVELOPER LICENSE: / /01786(L) VALIDITY PERIOD : 05/05/ /05/2017 LAND TENURE: LEASEHOLD ADVERTISEMENT PERMIT: / /01786(P) VALIDITY PERIOD: 05/05/ /05/2017 ENCUMBRANCES: MAYBANK ISLAMIC BERHAD BUILDING PLAN APPROVING AUTHORITY: MAJLIS BANDARAYA SHAH ALAM BUILDING PLAN REFERENCE: MBSA/BGN/BB/600-1(PS)/SEK 7/ EXPECTED DATE OF COMPLETION: SEPTEMBER 2017 TOTAL UNITS: (CONDOMINIUM) 211 UNITS, (SUPER LINK) 17 UNITS TYPE OF PROPERTY: CONDOMINIUM PRICE: (Min) RM 739, (Max) RM 1,319, SUPER LINK PRICE: (Min) RM 3,442, (Max) RM 3,606, Last Date of Lease: 26/08/2097 Restrictions of ownership: The land cannot be Transferred, leased mortagaged the consent of the State Authority.