BUILDING MOMENTUM. Momentum is the key to motivation and success. We focus on building it everyday. PRINSIPTEK CORPORATION BERHAD ( H)

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2 BUILDING MOMENTUM Momentum is the key to motivation and success. We focus on building it everyday. 02 PRINSIPTEK CORPORATION BERHAD ( H)

3 CONTENTS 4 CORPORATE INFORMATION 5 MANAGEMENT DISCUSSION AND ANALYSIS 12 Sustainability Statement 15 CORPORATE STRUCTURE AND PRINCIPAL ACTIVITIES 16 FIVE YEARS FINANCIAL HIGHLIGHTS 17 BOARD OF DIRECTORS 18 PROFILE OF BOARD OF DIRECTORS 21 PROFILE OF KEY SENIOR MANAGEMENT 22 CORPORATE GOVERNANCE OVERVIEW STATEMENT 34 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL 36 AUDIT COMMITTEE REPORT 38 FINANCIAL STATEMENTS 106 STATEMENT OF DIRECTORS RESPONSIBILITY 107 OTHER COMPLIANCE INFORMATION 108 LIST OF PROPERTIES 109 ANALYSIS OF SHAREHOLDINGS 111 ANALYSIS OF WARRANTHOLDINGS 113 NOTICE OF ANNUAL GENERAL MEETING PROXY FORM ANNUAL ANNUAL REPORT REPORT

4 OUR VISION TRUSTED FOR CONSTRUCTION & DEVELOPMENT EXCELLENCE TOWARDS BETTER LIVING AND SOCIETY NEEDS OUR MISSION TO BUILD AND DEVELOP PROPERTIES TOWARDS CLIENTS NEEDS & EXPECTATIONS FOR CONTINUOUS CLIENTS SUPPORT 2 PRINSIPTEK CORPORATION BERHAD ( H)

5 Team Operating Principles (CARES) 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. ANNUAL REPORT

6 Corporate Information BOARD OF DIRECTORS Independent Non-Executive Chairman Tan Sri Dato Seri Mohamad Noor Abdul Rahim Managing Director Dato Foo Chu Jong Executive Director Foo Chu Pak Independent Non-Executive Director To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain Md. Ishak Bin Bakri (Appointed on 3 August 2017) AUDIT COMMITTEE Chairman Md. Ishak Bin Bakri Members Tan Sri Dato Seri Mohamad Noor Abdul Rahim To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain NOMINATION COMMITTEE Chairman Tan Sri Dato Seri Mohamad Noor Abdul Rahim Members To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain Md. Ishak Bin Bakri REMUNERATION COMMITTEE Chairman To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain Members Tan Sri Dato Seri Mohamad Noor Abdul Rahim Md. Ishak Bin Bakri SHARE REGISTRARS Mega Corporate Services Sdn Bhd Level 15-2 Bangunan Faber Imperial Court Jalan Sultan Ismail Kuala Lumpur, Malaysia Tel : Fax : AUDITORS Morison Anuarul Azizan Chew 18 Jalan Pinggir 1/64 Jalan Kolam Air Off Jalan Sultan Azlan Shah (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 4 PRINSIPTEK CORPORATION BERHAD ( H)

7 Management Discussion and Analysis The following Management Discussion and Analysis ( MD&A ) on the operating performance and financial condition of Prinsiptek Corporation Berhad ( Prinsiptek, PCB, the Company, we, us, or our ) and its subsidiaries ( Group ) for the 18-month period ended 30 June 2018 should be read in conjunction with the Audited Financial Statements for the period ended 30 June 2018 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. BUSINESS OVERVIEW PCB was incorporated in year 2002 and was listed on the Second Board of Bursa Malaysia Securities Berhad ( Bursa ) on 10 December 2003 via the reverse takeover of L&M Corporation (M) Bhd, before subsequently being transferred to the Main Market of Bursa on 5 July The Group has a total of 15 companies, the principal activities of which are mainly construction and property development. The Group started with one of its largest and longest established subsidiaries, namely Prinsiptek (M) Sdn Bhd ( PST ), which was incorporated on 18 October 1990 to undertake building and construction activities. PST has grown over the years and is now a Class A and Grade G7 registered contractor with the Sijil Perolehan Kerja Kerajaan and the Construction Industry Development Board respectively, allowing PST to bid and undertake construction projects of unlimited value. Furthermore, PST has expanded its business into other related fields such as Turnkey Contractor, Property Developer and Trading House for Construction Raw Materials. VISION, MISSION AND VALUES Our vision is to be a Group trusted for construction and development excellence for better living and society needs. We achieve this by building and developing properties towards clients needs and expectations for continuous clients support. In Prinsiptek, we emphasise and stress on the core principles covering initiatives to communicate with purpose thereby encouraging openness, honest opinions, creativity and innovation; appreciate and recognise contributions by individuals; engender respect and care amongst all team members, develop effective collaboration with shared responsibility within the working team, and build a spirited work environment within the Group. PRINCIPAL ACTIVITIES OF OUR GROUP CONSTRUCTION The construction segment refers to activities of constructing residential properties (landed and high-rise), transportation hubs, infrastructure works, etc. based on contracts entered with principals. This segment is operated through the following Prinsiptek s direct and indirect subsidiaries: Name of subsidiary Country of incorporation Prinsiptek s interest Prinsiptek (M) Sdn Bhd/ PST Malaysia 100% Esa Pile Sdn Bhd Malaysia 100% through PST Prinsiptek Thai Limited Thailand 60% through PIL ANNUAL REPORT

8 Management Discussion and Analysis (cont d) Our completed and current ongoing construction projects are as follows: Project Project description Completed Penang Sentral Kuala Terengganu Complex Transportation hub for long and short distance buses, taxis, ferries and trains Build and maintain a 10-storey Recreation Centre (which contains shop lots, parking spaces, bowling alley and cineplex) in Embong Fatimah, Mukim Bandar, Kuala Terengganu On-going Shah Alam Section 13 Affordable homes Rawang Affordable homes Jalan Dato Senu 3 3 blocks of serviced apartments, totalling 444 units in Persiaran Akuatik, Section 13, Shah Alam 1 block of affordable homes, totalling 200 units in Bandar Kundang, Daerah Gombak 1 block of 44 storey apartment, totalling 1,068 units in Jalan Dato Senu 3, Mukim Setapak, Wilayah Persekutuan Kuala Lumpur We are committed to be a value-driven contractor not only in our projects but also in all our undertakings. Clients needs have always been our priority, where we innovate and redefine the art of constructing, by creating an integrated construction. PROPERTY DEVELOPMENT The property development segment refers to the full spectrum of activities related to development of properties from land acquisition to handover of completed property units to purchasers. This segment is operated through Prinsiptek s direct and indirect subsidiaries as follows: Name of company Country of incorporation Prinsiptek s interest Tanah Perangsang Sdn Bhd ( TPSB ) Malaysia 100% Antara Murni Development Sdn Bhd Malaysia 70% Prinsiptek Properties Sdn Bhd Malaysia 100% Prinsiptek International Limited ( PIL ) Thailand 91% Jeram Perwira Sdn Bhd Malaysia 100% through TPSB Pentaland Sdn Bhd Malaysia 100% through TPSB NBL Land Development Sdn Bhd Malaysia 100% through GSSB 1 1 GSSB refers to Gabungan Sanjung Sdn Bhd, an investment holding company and a wholly owned subsidiary of PCB Our completed and current ongoing property projects are as follows: Project Project description Completed D Cube Modern 184 units of double-story townhouse and 12 units of 3-storey commercial building in Moo 6, Townhome Chaingraknoi Subdistrict, Bangpain District, Phranakomsriayuttaya Chaingraknoi, Thailand On-going Puncak 7 1 block, totalling 211 condominium units in Section 13, Shah Alam D Cube Modern 164 units of double-story townhouse and 38 units of 3-storey commercial building in Moo 6, Townhome Chaingraknoi Subdistrict, Bangpain District, Phranakomsriayuttaya Chaingraknoi, Thailand 6 PRINSIPTEK CORPORATION BERHAD ( H)

9 Management Discussion and Analysis (cont d) TRADING The trading segment refers to activities of buying and selling of building materials for own projects use. This segment is operated through Prinsiptek s indirect wholly-owned subsidiary, namely LKD Trading Sdn Bhd. GROUP FINANCIAL PERFORMANCE On 16 November 2017, the Company announced its change of financial year end from 31 December to 30 June. Thus, the financial statements are made up for an eighteen (18)-month period from 1 January 2017 to 30 June 2018 as compared to the preceding financial year ended 31 December 2016 which was for a 12-month period. In view of the change in financial year end, any comparison of financial performance should take into consideration the different duration covered by both the reporting periods under this MD&A. The Group s financial performance for the financial period under review (i.e. 18 months ended 30 June 2018) as compared to the financial performance for the preceding financial year (i.e. 12 months ended 31 December 2016) is presented below: Revenue (RM 000) Profit before tax (RM 000) 250, , , , ,083 55,937 (26.9%) 8,000 6,000 4,000 7,961 7, (0.2%) 100,000 2, FYE 2016 FYP 2018 FYE 2016 FYP 2018 The significant decline in revenue of RM55.9 million (26.9%) for the period under review as compared with the preceding year was largely attributed to the completion or near completion of major ongoing construction projects during the last financial year. Despite the significant decline in revenue, the Profit Before Tax ( PBT ) for the Group only recorded a slight decrease from RM8.0 million to RM7.9 million due to higher profit margin projects and additional variation orders being recognised in the period. ANNUAL REPORT

10 Management Discussion and Analysis (cont d) SEGMENTAL PERFORMANCE Financial performance of the Group, by segment (excluding inter-segment sales), is as follows: Revenue FYP 2018 (18 months ended 30 June 2018) FYE 2016 Contribution Contribution (RM 000) percentage (%) (RM 000) percentage (%) Construction 71, , Property development 58, , Trading and others 22, , Total 152, , Profit before tax - PBT/ (Loss before tax - LBT) Construction 5, , Property development 2, , Trading and others (354) (4) (55) 0 Total 7, , PBT Margin FYP 2018 (18 months ended 30 June 2018) FYE 2016 PBT /(LBT) PBT/(LBT) margin (%) margin (%) Construction Property development Trading and others (1.6) (0.2) Overall CONSTRUCTION Construction remained the main revenue contributor to the Group, despite significant reduction, from 70% to 47%. The construction segment recorded a 51% decrease in revenue, dropping from RM144.7 million in the preceding financial year to RM71.2 million for the financial period under review. The decline was mainly due to stages of projects (i.e. projects were mainly at the initial start-up phase and completion phase) coupled with implementing value engineering in progress. The PBT margin was higher at 8% for the period under review as compared to 3% recorded for the preceding financial year. The higher PBT margin (despite decrease in revenue) was mainly attributed to the recognition of higher profit margin projects and additional variation orders. As at 30 June 2018, the Group remains committed and focused in its core business where it recorded a construction order book amounting to RM485.9 million, being projects that will continue to contribute towards the Group s revenue in the forthcoming year. 8 PRINSIPTEK CORPORATION BERHAD ( H)

11 Management Discussion and Analysis (cont d) PROPERTY DEVELOPMENT Property development remained the second largest revenue contributor to the Group, which showed an increase from 16% composition in the preceding financial year to 39% for the financial period under review. The increase of 78% in revenue, from RM33.1 million to RM58.8 million was due to the recognition of progress billing of our residential project as development activities proceeded in Phase 1 at Section 7, Shah Alam and sustained demand for the mixed development properties at Ayutthaya, Bangkok Thailand. The PBT margin was lower at 4.6% for the period under review as compared to 11.1% recorded for the preceding financial year, largely due to project mix and the lower profit margin phases being recognised (from the phases launched and sold, and higher sales of residential units, which has lower profit margin than commercial units, as compared to previous year where there are higher sales of commercial units) during the financial period under review. The residential project, Phase 1 in Section 7, Shah Alam was completed on 11 July 2018, consisting of 211 condominium units with a Gross Development Value ( GDV ) of RM108.8 million, of which 95% of the units have been sold to-date. Moving forward, to sustain its profitability, the Group will continue to sell the remaining completed residential units and plan to launch its joint venture projects to develop 208 SOHO units at Serdang Perdana with GDV of approximately RM50.0 million and 2 blocks of hotel and service apartments at Batu Ferringghi, Penang with GDV of approximately RM85.0 million. TRADING AND OTHERS Contribution from trading and others to the Group remained the same at 14%. However, this segment recorded a decrease in revenue of 27%, from RM30.2 million for the preceding financial year to RM22.1 million for the financial period under review. Demand for building materials has decreased in tandem with the overall decline in the construction segment as trading activities support mainly the projects of construction division. As a result, the pre-tax loss increased from RM0.1 million to RM0.4 million largely due to fixed operating expenses. SIGNIFICANT RISKS TO THE GROUP The Group has identified the following three (3) key business risks faced in its operations: Delay in project completion This risk refers to the inability to deliver or complete projects according to timelines, potentially incurring Liquidated Ascertained Damages (LAD) claims and reputational risks to the Group. To mitigate this exposure, the Group has taken, amongst others, the following measures: 1) Close monitoring of any impending or potential delays and thereafter communicate with contractors or subcontractors on catch-up plans (property development division specific); 2) Comply with Contract provisions and timely apply for Extension of Time ( EOT ) from project Architect on any potential delays (construction division specific); and 3) Conduct frequent meetings to discuss and resolve operational issues, including discrepancies in drawings, documents and ambiguous instructions. Increasing cost of construction This refers to the hike in construction cost, comprising, inter-alia, cost of materials, labour and consultants fees and, if not properly managed, may lead to erosion of project profit margin. To address this, the Group has adopted the following initiatives to avert cost overrun: 1) Use of more economical materials without compromising on the quality and specifications; 2) Award sub-contractors within 6 months upon receiving letter of award from principals; and 3) Carry out value engineering in respect of construction method and adopt advanced technologies, where possible, to reduce work force and time required. ANNUAL REPORT

12 Management Discussion and Analysis (cont d) Liquidity risk This refers to difficulties in meeting financial obligations, which arise mainly from mismatch in maturity of financial assets and liabilities. This exposure may lead to reputational damage and reduction in customers, contractors and consultants confidence in the Group. To mitigate this, the Group has adopted the following measures: 1) Close monitoring of payment due dates and hasten timely collections, including prior communication with customers and creditors on scheduled payments; and 2) Frequent cash flow updates to monitor short and long-term inflow and outflow of funds. OTHER CORPORATE HIGHLIGHTS CAPITAL COMMITMENT Non-cancellable operating lease commitments of the Group (i.e. future minimum rentals payables) are as follows: As at 30 As at 31 June 2018 December 2016 (RM 000) (RM 000) Within one year 71 1,264 Between one and two years Total 165 1,423 The significant reduction in capital commitment of rental payables was due to lower number of on-going projects with lease of machinery and equipment included in the work awarded to subcontractors for on-going projects. MATERIAL LITIGATION The Material litigation is still on going and the status of material litigation are disclosed in note to the financial statements. SUSTAINABILITY AND PROFITABLE GROWTH The Group 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 innovative 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 Group as the construction company of choice for our clients. While striving for growth, we continue to focus on realising operational efficiencies while improving standards in our processes and internal controls. Our committed team of employees help to drive these efficiencies as we constantly realise economies of scale to drive profitability growth. We will maintain our focus on properties, both in the domestic and overseas markets while building 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 a sturdy legal framework. 10 PRINSIPTEK CORPORATION BERHAD ( H)

13 Management Discussion and Analysis (cont d) OUTLOOK AND PROSPECTS The financial period under review was a period that faced macroeconomic difficulties and unpredictable markets, which coincided with a period of investment and development growth for the Group. We enter financial year 2019 with a committed and driven management team and established business development prospects. Financial year 2019 is expected to be another challenging year for the local property sector. Headwinds include weak consumer sentiments, rising cost of living, low-income growth, high household debts and a relatively high loan rejection rate by banks due to sustained stringent borrowing criteria. 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. With the existing balance order book in the Construction Division, the progressive recognition of sales from the Property Development Division and the potential new construction projects, the Board is positive in sustaining the Group s performance for the coming financial year. The Group will continue to adopt a prudent approach in its investments and focus on its core activities to enhance and strengthen operating synergies among its group of companies. SUMMARY Despite a challenging market environment due to difficult macroeconomic conditions, the Company remains committed to creating value for our shareholders in the long term. This will go a long way towards strengthening our reputation in the marketplace, reflecting Prinsiptek as the respected and trusted organisation, and position the Group for future growth. ANNUAL REPORT

14 Sustainability Statement The Board of Prinsiptek is pleased to present this General Sustainability Statement ( Statement ) which sets out what the Board considers as material sustainability risks and opportunities (collectively known as Material Sustainability Matters ) to the Group s operations and how these Material Sustainability Matters are managed. This Statement is prepared in accordance with the Main Market Listing Requirements, taking into consideration the Sustainability Reporting Guide and its accompanying Toolkits, issued by Bursa Malaysia Securities Berhad ( Bursa ). This Statement underlines the Group s commitment towards ensuring that its business operations are carried out sustainably and responsibly, taking cognisance of the economic, environmental and social implications it is exposed to. The scope of this Statement is determined based on revenue contribution to the Group s results, hence encompassing the Construction and Property Division of its Malaysian business segment. Sustainability Governance Structure While the Board is primarily responsible for the Group s sustainability practices and performance, the Management team, comprising Executive Directors and Senior Management, led by the Managing Director (the Management ), is tasked to assist the Board in managing sustainability-related matters. The Management now plays a more enhanced role as it is entrusted with the responsibilities to incorporate sustainability considerations in the Group s business and management of economic, environmental and social risks, in addition to its hitherto role of establishing and maintaining the Group s risk management framework processes, and monitoring and managing the Group s key risks and risk management plans. The Management s role in sustainability comprises the following: (a) (b) (c) (d) establishment of the Group s sustainability framework; review of the adequacy of sustainability initiatives and processes; ensuring effectiveness of the process in identifying, managing and reporting Material Sustainability Matters; and monitoring and overseeing all sustainable strategies and initiatives of the Group. The Management assists the Board in incorporating sustainability considerations in the Group s corporate strategy as well as in its day-to-day operations. The Management is supported by personnel with years of hands-on experience, who report to the Management yearly and also at any time deemed necessary, on the assessment of the Group s sustainability framework and processes, and Material Sustainability Matters identified from time to time, including how these matters are being managed. The Management will thereafter report the same to the Board, on a quarterly basis in the Board meeting. Material Sustainability Matters During the financial period and up to the date of this Statement, the Group has engaged an external consultant to facilitate an internal workshop session for the Group to identify sustainability matters which are material to the Group s business, focusing on both the Construction and Property Divisions. The workshop was participated by key senior management personnel, who are also members of the Management, setting out the Group s Material Sustainability Matters detailed below in thematic aspects of Economic, Environmental and Social. Economic To embed business sustainability in the economic aspect, the Group places the quality of its products and timeliness in delivery as its top priorities. The Group believes that delivery of value in its works enhances key customers confidence in the brand the Group holds, and thus is able to attract, retain and grow the Group s customer base. Accordingly, the Group puts in significant efforts to ensure its construction and property development projects are delivered in accordance with the agreed and promised standard and quality within agreed timelines. In order to maintain the quality of its products, the Group s main subsidiary, Prinsiptek (M) Sdn Bhd, has established standard operating procedures ( SOP ) for Project QLASSIC Inspection and CIS 7: QLASSIC - Quality Assessment System for Building Construction Works in accordance, and certified, with ISO 9001:2015 Quality Management Systems. Both the Group s Construction and Property Divisions conduct stringent quality checks at all stages of construction and upon completion of their projects to ensure works at the various stages are executed in accordance with specification, including testing and commissioning of utilities, external and internal fittings, and aesthetic appeal that are packaged in the comfort of a secure and well-built home. Additionally, the Group has adopted a stringent procurement process, where procurement of materials and services are controlled via tender board procedures, to ensure conformance to specified requirements and timely delivery of performance. 12 PRINSIPTEK CORPORATION BERHAD ( H)

15 Sustainability Statement (cont d) The Group also emphasises on timely delivery of its projects, which helps to garner customers trust in the Group s construction works and development projects. Nevertheless, projects may sometimes face challenges of various kinds which affect the progress of project implementation, e.g. changes in technical designs, unfavourable weather conditions, non-availability of workers, etc. In this regard, the Group endeavours to minimise losses which may be incurred if such challenges are not adequately addressed, for example the Group has deployed the Industrialised Building System ( IBS ) as an imperative to achieve better construction quality and productivity, mitigate risks associated with safety and health, alleviate issues on skilled workers and dependence on manual foreign labour. The continued use of the IBS has enabled the Group to achieve better construction quality, hasten the speed of construction and minimise on-site duration. Furthermore, the Group has, during the financial period under review, completed the construction of Penang Sentral, a transportation hub. Penang Sentral is expected to play an important role in streamlining transportation in the State, as it will be the hub for long and short distance buses, taxis, ferries and trains. It offers connectivity, investment opportunities, business and tourist convenience. The Group endeavours to create a positive impact by supporting procurement of products and services from locally established business entities in line with the Government s efforts to spur the economy through local buying. Environmental Conscious of the need to conserve the environment as it goes about its daily operations at the workplace, the Group, at the construction site, takes measures to reduce and manage construction wastes in a responsible manner by ensuring its appointed licensed contractors to do the same. Besides installing silt traps to minimise site pollution, wastes generated from project sites are either recycled for reuse or transported to designated disposal sites timely to minimise disruption to the daily lives of the community. This includes recycling scrap iron at the recycling centre and majority of concrete wastes being reused as a road base. To preserve its natural surroundings and minimising pollution of air, water and noise in the development projects, the Group has also engaged environmental specialist services to carry out pre-development environmental impact assessment ( EIA ) prior to land clearing and/ or development. To conserve natural resources, the Group designs its high-rise developments with rainwater harvesting facilities, where rainwater collected is channelled mainly for use in common areas, such as landscaping and general cleaning. To reduce energy consumption, the Group has integrated the considerations into its design, e.g. by using low-energy LED lightings in all its new buildings. The Group is also diligent in the selection of building materials, placing emphasis on environmentally friendly building materials, such as sanitary ware and concrete. In order to demonstrate environmental responsibilities, the Group s main subsidiary, Prinsiptek (M) Sdn Bhd, has obtained, and complied with, the ISO14001:2015 Environmental Management Standards certification requirements in the conduct of its business. At its Head Office, the Group practices energy saving initiatives through various ways to conserve resources, such as: switching off electricity when not in use (including placing reminder stickers next to switches); reusing envelopes for internal mailing; using video or tele-conferencing to minimise travelling between sites or countries; reducing colour printing of internal documents; and minimising printing and encouraging dual-sided printing, whenever permissible (e.g. double-sided printing or printing on recycled paper) to reduce paper usage, etc. ANNUAL REPORT

16 Sustainability Statement (cont d) Social The Group prioritises the interest and welfare of its employees and workers as it considers them to be its most valuable assets, with particularly strong emphasis placed on Occupational Safety and Health ( OSH ) System. The Group provides employees and workers with relevant personal protective equipment and periodic safety trainings to instil awareness on safety and health matters. The Group, with the assistance of the Occupational Health and Safety Committee ( OSHC ), has established relevant policies guiding all health and safety practices for the Group s operations, with added focus at construction sites. OSHC meetings are held periodically to report and discuss any safety and health related risks, including formulation of action plans, if required. The Group has an experienced and qualified Health and Safety Officer whom performs periodic checks and monitors employees and workers adherence to the Group s safety practices and relevant guidelines. The Health and Safety Officer issues Non- Conformance Report and works together with the on-site Project Manager in addressing any OSH concerns. To further demonstrate the Group s commitment towards safety and health, its main subsidiary, Prinsiptek (M) Sdn Bhd s, is an OHSAS18001:2007 and MS1722: Occupational Health and Safety Management System compliance and certified company. The Group is mindful of the need to constantly upskill its workforce and treat its employees fairly by providing equal opportunities to all its personnel. For the financial period under review, the Group invested about 136 learning hours in developing employees functional development, leadership as well as soft skills training. The Group s philanthropy on donations and contributions to the local communities, as a means of giving back to society, remains unabated and for the financial period under review, the Group has donated to Montfort Youth Training Centre in conjunction with 11th Monfort Charity Golf 2017 and Kuala Lumpur Rotary Charity Foundation for the Rotary Children s Charity Dinner. In addition, the Group also offered industrial training opportunities to four (4) undergraduates from universities, to assist them in gaining hands-on experience in their respective fields. Building a sustainable future Notwithstanding the Material Sustainability Matters disclosed in this Statement, the Group also considers other aspects of sustainability risks and opportunities and has invested resources and efforts in managing these sustainability matters. The Board is of the view that the existing sustainability practices adopted are adequate and pertinent to steer the Group s sustainable growth. Nonetheless, it will consider the need to implement other sustainability practices, as appropriate, from time-to-time, to augment existing ones as the Board monitors the sustainability performance of the Group s operations on an ongoing basis. 14 PRINSIPTEK CORPORATION BERHAD ( H)

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

18 Five Years Financial Highlights Revenue (RM 000) Profit Before Tax (RM 000) Profit For The Period/Year (RM 000) 500, , , ,603 8,000 7,000 6,000 7,947 7,961 7,329 5,797 7,000 6,000 5,000 5,478 5,040 6, , , , , ,285 5,000 4,000 3,000 3,937 4,000 3,000 2,368 3, ,000 2,000 2,000 1,000 1, Profit Attributable to Owners Of the Company (RM 000) Net Earnings Per Share (Sen) 6,000 5, ,000 4,333 4,642 4, , , ,000 1, , Basic Diluted 16 PRINSIPTEK CORPORATION BERHAD ( H)

19 Board of Directors Front Row (from left) Tan Sri Dato Seri Mohamad Noor Abdul Rahim Independent Non-Executive Chairman Dato Foo Chu Jong Managing Director Back Row (from left) Md. Ishak Bin Bakri Independent Non-Executive Director To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain Independent Non-Executive Director Foo Chu Pak Executive Director ANNUAL REPORT

20 Profile of Board of Directors Board Committee Membership Chairman of Nomination Committee Member of Audit Committee Member of Remuneration Committee Directorship in other Public Companies Mitrajaya Holdings Berhad Pinehill Pacific Berhad TSR Capital Berhad Tan Sri Dato Seri Mohamad Noor was appointed to the Board on 4 December Tan Sri Dato Seri Mohamad Noor graduated with a Bachelor of Arts (Hons) from University of Malaya. TAN SRI DATO SERI MOHAMAD NOOR ABDUL RAHIM Independent Non-Executive Chairman Tan Sri Dato Seri Mohamad Noor has held various positions in the government sector. He was the Secretary General of the Ministry of Home Affairs, the Secretary General of the Ministry of Domestic Trade and Consumer Affairs, State Secretary of Penang, State Financial Officer of Perak, Director-General of the City Hall Kuala Lumpur and was the Under-Secretary for both the Ministry of Defence and Ministry of Finance. He retired from the Malaysian Government Civil Service in 2000, after serving for 33 years. Age: 73 Gender: Male Nationality: Malaysian Board Committee Membership None Directorship in other Public Companies None Dato Foo Chu Jong was appointed to the Board on 21 November He graduated with a Bachelor of Civil Engineering (Honors) from the Summit University of Louisiana and a Master s Degree in Business Administration from Honolulu University of Hawaii. DATO FOO CHU JONG Managing Director Age: 60 Gender: Male Nationality: Malaysian Dato Foo started his career in the construction industry in the early eighties. He is the founder of the wholly-owned subsdiary of Prinsiptek Corporation Berhad ( PCB ), namely Prinsiptek (M) Sdn Bhd ( PST ). His 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. Dato Foo is a major shareholder of PCB. 18 PRINSIPTEK CORPORATION BERHAD ( H)

21 Profile of Board of Directors (cont d) Board Committee(s) Chairman of Remuneration Committee Member of Audit Committee Member of Nomination Committee Directorship in other Public Companies Concrete Engineering Products Berhad To Puan Seri Hajjah Nur Rahmah was appointed to the Board on 20 August She was an Executive Director of Skoga Redimix Sdn Bhd from 1985 to Currently, she is an Executive Director of Cempaka Anugerah Sdn Bhd, a franchisee of Noor Arfa Batik Sdn Bhd. She has vast experience in the field of marketing, administration, management and strategic planning. TO PUAN SERI HAJJAH NUR RAHMAH BINTI HJ MOHD ZAIN Independent Non-Executive Director Age: 63 Gender: Female Nationality: Malaysian Board Committee Membership Chairman of Audit Committee Member of Nomination Committee Member of Remuneration Committee Directorship in other Public Companies None Mr. Md. Ishak Bin Bakri was appointed to the Board on 3 August He holds a Bachelor of Accountancy from MARA Institute of Technology and a member of the Malaysian Institute of Accountants (MIA). He has more than 38 years of experience in accounting, finance and administration. He started his working career with Perbadanan Kemajuan Negeri Selangor ( PKNS ) in 1976 and had since held various positions. He was formerly the Assistant Chief Accountant of PKNS from August 2013 to November MD. ISHAK BIN BAKRI Independent Non-Executive Director Age: 62 Gender: Male Nationality: Malaysian ANNUAL REPORT

22 Profile of Board of Directors (cont d) Board Committee Membership None Directorship in other Public Companies None Mr. Foo Chu Pak was appointed to the Board on 21 November Mr. Foo graduated with a Bachelor of Civil Engineering (Honors) from the Summit University of Louisiana and a Master s Degree in Business Administration from Honolulu University of Hawaii. Mr. Foo has more than 35 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 and office tower. FOO CHU PAK Executive Director Mr. Foo is a major shareholder of PCB. Age: 58 Gender: Male Nationality: Malaysian 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. None of the Directors has been imposed of any public sanction or penalty by the relevant regulatory bodies during the financial period. The attendance of the Directors at Board Meetings held during the financial period ended 30 June 2018 is disclosed in the Corporate Governance Overview Statement. 20 PRINSIPTEK CORPORATION BERHAD ( H)

23 PROFILE OF KEY SENIOR MANAGEMENT Ms Tan Phaik Chin serves as General Manager of Contract Department. She is responsible to oversee contract, tender, planning and purchasing matters on the development and construction projects of the Company. She graduated with a Degree (Hons) in Quantity Surveying from University of Ulster, United Kingdom in She is a registered Quantity Surveyor and a member of Royal Institution of Surveyors Malaysia. She joined the Company in August 2016 and has more than 28 years of experience in property, building and construction industry. She has no family relationship with any Directors and/or major shareholders of the Company. She has no conflict of interest with the Company. TAN PHAIK CHIN General Manager, Contract Department She has not been convicted of any offences within the past five (5) years except for traffic offences, if any, and has not been imposed of any public sanction or penalty by the relevant regulatory bodies during the financial period. Age: 53 Gender: Female Nationality: Malaysian ANNUAL REPORT

24 CORPORATE GOVERNANCE OVERVIEW STATEMENT The Board of Directors ( Board ) of Prinsiptek Corporation Berhad ( PCB or the Company ) is committed to adopting and continuously practicing good Corporate Governance with the objective of protecting and enhancing shareholders value, and the financial performance of the Group. The Board is pleased to set out below the manner in which the Group has applied the three (3) main principles in the Malaysian Code on Corporate Governance ( MCCG ) known as Board Leadership and Effectiveness (Principle A), Effective Audit and Risk Management (Principle B) and Integrity in Corporate Reporting and Meaningful Relationship with Stakeholders (Principle C) and the application of the Main Market Listing Requirements ( MMLR ) of Bursa Malaysia Securities Berhad throughout the financial period ended 30 June PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS 1. BOARD RESPONSIBILITIES 1.0 Every company is headed by a board, which assumes responsibility for the company s leadership and is collectively responsible for meeting the objectives and goals of the company. 1.1 The Group is led and controlled by an effective and experienced 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 Group and regularly meets to review corporate strategies, resolve operational matters and monitor financial performance of the Group. The Board leads the Group and is responsible for the stewardship of the Group s strategic direction and development. In addition, the Board s responsibilities include reviewing the overall objective, business plan, corporate proposals, key policies, control and operations of the Group, identifying risks and ensuring the existence of adequate internal controls to assess 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. The Board assumes the following key responsibilities: a) Promote good corporate governance culture within the Company which reinforces ethical, prudent and professional behaviour. b) Review, challenge and decide on Management s proposals for the Company, and monitor its implementation by Management. c) Review and approve corporate plan for the Group which includes the corporate strategy and strategic plan for the Group. d) Ensure that the strategic plan of the Company supports long-term value creation and includes strategies on economic, environmental and social consideration underpinning sustainability. e) Review and approve strategic initiatives including corporate business restructuring. f) Supervise and assess Management s performance to determine whether the business is being properly managed. g) Ensure that there is a sound framework for internal controls and risk management. h) Understand principal risks of the Company s business and recognise that business decisions involve the taking of appropriate risks. i) Ensure that senior management has the necessary skills and experience, and there are measures in place to provide for the orderly succession planning of the Board and senior management. 22 PRINSIPTEK CORPORATION BERHAD ( H)

25 CORPORATE GOVERNANCE OVERVIEW STATEMENT (cont d) PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (cont d) 1. BOARD RESPONSIBILITIES (cont d) j) Ensure that the Company has in place procedures to enable effective communication with stakeholders. k) Ensure the integrity of the Company s financial and non-financial reporting. l) Review the adequacy and integrity of the Group s internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines. m) Review and approve the financial statements which include the Audited Financial Statements and quarterly reports, dividend policy, credit facilities from financial institutions and guarantees. The full roles and responsibilities of the Board are mentioned in the Board Charter which is made available for reference at Company Website at The Chairman represents the Board to the shareholders. The Chairman is responsible for the leadership of the Board and controls the orderly and effective functioning of the Board. The Chairman ensures the integrity and effectiveness of the governance processes of the Board and shall consult with the Board promptly over any matter that gives him cause for major concern. Some of the specific responsibilities of the Chairman include: - a) Provides leadership for the Board so that the Board can perform its responsibilities effectively; b) Sets the agenda for the Board meetings and ensures that Board members receive complete and accurate information in a timely manner; c) Leads Board meetings and discussions; d) Encourages active participation and allows dissenting views to be freely expressed; e) Manages the interface between Board and Management; f) Oversees the Board in the effective discharge of its fiduciary duties; g) Presides at Board and general meetings of the Company and ensures that all relevant issues are on the agenda with the assistance of the Senior Management and Company Secretary; h) Manages Board communications and Board effectiveness and effective supervision over the MD; i) Facilitates good decision-making during Board and shareholders meetings; j) Provides reasonable time for discussion of complex and contentions issues, and ensures all discussions include the collective views of all Board members; k) Ensures Board proceedings are in compliance with good conduct and best practices; l) As Group s official spokesperson. The roles and responsibilities of Chairman are mentioned in the Company s Board Charter which is made available for reference at Company s website at The roles and responsibilities of the Chairman and the Group Managing Director are distinct and separate to ensure that there is a balance of power and authority. The Chairman, being Independent Non-Executive, heads the Board and is responsible for the leadership, effectiveness, conduct and governance of the Board whereas the Group Managing Director overseas and manages the day-to-day operations of the Group and undertakes executive decision-making and implementation of policies and decisions. ANNUAL REPORT

26 CORPORATE GOVERNANCE OVERVIEW STATEMENT (cont d) PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (cont d) 1. BOARD RESPONSIBILITIES (cont d) 1.4 The Directors have the unrestricted access to the advice and services of the Company Secretary to enable them to discharge their duties effectively. The Board is regularly updated and advised by the Company Secretary on new regulatory requirements and directives from time to time. The Company Secretary is a qualified Chartered Secretary, under the prescribed body as permitted by Companies Act The appointment and removal of the Company Secretary is under the purview of the Board of Directors. The roles and responsibilities of the Company Secretary shall include, but are not limited to the following: a) Advising the Board on its roles and responsibilities; b) Advising the Directors on corporate disclosures and compliance with Company and securities regulations and listing requirements including: disclosure of interests in securities; disclosure of any conflict of interest in a transaction involving the Group; prohibition of dealing in securities; and restrictions on disclosure of price-sensitive information. c) Managing processes pertaining to the annual shareholders meeting; d) Monitoring corporate governance development and assist the Board in applying governance practices to meet the Board s needs and stakeholders expectations; and e) Serving as a focal point for stakeholders communication and engagement on corporate governance issues. The Board is satisfied with the professionalism and competency of the Company Secretaries shown in their advices and support provided to the Board and its Committees. 1.5 The Board should have access to all information pertaining to the Company in a timely manner for the discharge of its duties effectively. The agenda and papers for meetings are circulated to the Directors at least five (5) business days prior to the meetings to enable Directors to prepare for the meetings. At Board meetings, the Management presents the papers and consultants may be invited to provide further insight. The Company practices early planning of meetings schedule so that the Directors are able to provide the required time commitment to attend meetings. As such, the Board of directors and other committee meetings schedule were prearranged in the final quarter of 2017 where the tentative dates were tabled at the Board of Directors meeting. The Directors have full and unrestricted access to all information pertaining to the Company s business and affairs so as to enable them to discharge their responsibilities. A record of the Board s deliberation of issues discussed and conclusion reached are recorded in the minutes of the meeting by the company secretary. After the meeting, the minutes are circulated to the Board and Board Committee members in a timely manner. The Board, whether as a full Board or in their individual capacity, has the right to engage independent professional advice, if necessary, at the Group s expense. In addition, all Directors have access to the advice and services of the Company Secretary, who is responsible for ensuring that the Board meeting procedures and applicable rules and regulations are adhered to. 2.0 There is demarcation of responsibilities between the board, board committees and management. There is clarity in the authority of the board, its committees and individual directors. The Board is guided by a Board Charter which sets out the principles governing the Board of Directors of the Company and adopts the principles of good governance and practice in accordance with applicable laws, rules and regulations in Malaysia. The Board Charter also sets out the respective roles and responsibilities of the Board, board committees, individual directors and managements; and issues and decisions reserved for the Board. The Board will periodically review the Board Charter and make any changes whenever necessary. The Board Charter is published on the Company s corporate website at The Board Charter was last reviewed on 24 May PRINSIPTEK CORPORATION BERHAD ( H)

27 CORPORATE GOVERNANCE OVERVIEW STATEMENT (cont d) PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (cont d) 1. BOARD RESPONSIBILITIES (cont d) 3.0 The Board is committed to promoting good business conduct and maintaining a healthy corporate culture that engenders integrity, transparency and fairness. The board, management, employees and other stakeholders are clear on what is considered acceptable behaviour and practice in the company. The Board of Directors believes in the importance of instilling ethical values in the Group which will enable the Group to maximise its long-term stakeholders value with sustainable social, environmental and governance development by conducting business in ethical and responsible manners. The Board of Directors has Directors Code of Conduct and Ethics as recommended by the MCCG. The said Code establish a standard of ethical behaviour for the directors to uphold such as the spirit of responsibility and social responsibility in line with the legislation, regulations and guidelines for administrating the Company. The Company has also adopted Whistleblowing policy to safeguard the Company s interest and also to protect the whistleblower interest. The oversight of the whistleblowing function is under the purview of the Chairman who shall ensure that all reported violations are properly investigated. The Chairman is also responsible for reviewing the effectiveness of the actions taken in response to all concern raised. The Directors Code of Conduct and Ethics and Whistleblowing Policy was a part of the Company s Board Charter which can be viewed at the Company s website at The Directors Code of Conduct and Ethics was last reviewed on 24 May 2018 and Whistleblowing Policy was approved by the board on 24 May BOARD COMPOSITION 4.0 Board decisions are made objectively in the best interests of the company taking into account diverse perspectives and insights. 4.1 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 18 to 20 of this Annual Report. The combination of different professionals with different background, experience and skills contribute a balance Board composition. 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. 4.2 The Board noted the MCCG recommends that the tenure of an independent director should not exceed a cumulative term of nine years. Upon completion of the nine years, an independent director may continue to serve on the Board as a non-independent director. In the event the Board intends to retain an independent director beyond nine years, it should justify and seek for annual shareholders approval while for the director whose to retained as independent director after the twelfth years, the Board should seek annual shareholders approval through a two-tier voting process. At the forthcoming AGM of the Company, the Board with the recommendation of the Nomination Committee will seek shareholders approval to retain the designation of To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain and Tan Sri Dato Seri Mohamad Noor Abdul Rahim who have served the Company for more than nine and twelve years respectively. 4.3 The Board is of the view that the ability of long serving Independent Director to remain independent and to discharge their duties with integrity and competency should not be measured solely by tenure of service. Their long service should not affect their independence as they are independent minded and they continue to provide the necessary checks and balances in the best interest of the Company. The Board and its Nomination Committee will continue to assess the independence of the above two independent Directors from time to time to determine their suitability to continue as independent Directors in the Board. ANNUAL REPORT

28 CORPORATE GOVERNANCE OVERVIEW STATEMENT (cont d) PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (cont d) 2. BOARD COMPOSITION (cont d) 4.4 The appointment of any additional Director and Senior Management are made as and when it is deemed necessary by the existing Board upon recommendation from the Nomination Committee. 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 Group s business and operation premises and meetings with Senior Management will be arranged for new Directors to facilitate their understanding of the Group. 4.5 The Board acknowledges the recommendation of MCCG and recognises the importance of boardroom diversity. However, the Board is of the view that the suitability of a candidate for the Board is dependent on the candidate s competency, skills, experience, expertise, character, time commitment, integrity and other qualities in meeting the needs of the Company, regardless of gender. Currently, the Board has one (1) female Director on Board. 4.6 The Board used a variety of approach and sources to ensure that it can identify the most suitable candidates. Currently the appointment of candidates for non-executive director position were sourced from recommendation made by the existing board member, management or major shareholders. 4.7 The Nomination Committee, chaired by Independent Non-Executive Director, consists exclusively of Independent Non-Executive Directors. The main duties of the Nomination Committee are to: a) To examine the size of the Board with a view to determine the number of Directors on the Board in relation to its effectiveness and ensure that at every annual general meeting, one-third of the Directors for the time being shall retire from office. A retiring Director shall be eligible for re-election. Every Director, including the Managing Director, shall be subject to retirement at least once in every 3 years. b) To undertake an annual review of the present size, structure and composition of the Board and Board Committees as well as the required mix of skills, experience and competency required and make recommendations to the Board with regard to any adjustments that are deemed necessary. c) To evaluate and review annually the effectiveness of the Board as a whole, the various Committees and each individual Director s contribution to the effectiveness on the process of the Board. d) To identifying and make recommendation to the Board on new candidates for appointment to the Board or to fill board vacancies as and when they arise. The roles and responsibilities of Nomination Committee are mentioned in the terms of reference for Nomination Committee which is made available for reference at Company s website at 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. 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. 26 PRINSIPTEK CORPORATION BERHAD ( H)

29 CORPORATE GOVERNANCE OVERVIEW STATEMENT (cont d) PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (cont d) 2. BOARD COMPOSITION (cont d) Details of training programmes attended by members of the Board in respect of the financial period ended 30 June 2018 are as follows: Name of Directors Training programme attended Date (a) Tan Sri Dato Seri Mohamad Noor Abdul Rahim MINDA PowerTalk on Perception Meets and Reality Malaysian Family Owned Business (FOBs) [MINDA] Highlights of New Companies Act 2016: Changes & Its Implications [ASIAN ACADEMY FOR CORPORATE ADMINISTRATION SDN BHD] 09/05/ /09/2017 Corporate Governance Briefing Sessions : MCCG Reporting & Corporate Governance Guide [BURSA MALAYSIA] 16/03/2018 (b) To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain Advocacy Session on Corporate Disclosure for Directors and Principal Officers of Listed Issuers [BURSA MALAYSIA] 27/09/2017 (c) Md. Ishak Bin Bakri Mandatory Accreditation Programme [THE ICLIF LEADERSHIP AND GOVERNANCE CENTRE] 28-29/09/2017 (d) Dato Foo Chu Jong FIABCI Malaysia Morning Talk 2017: Good Feng Shui: The Secrets for Greater Wealth, Prosperity & Nobility [FIABCI- MALAYSIA] 04/01/2017 Laws and Regulations Governing Buying and Selling Properties in Malaysia: Practice and Procedure [GOODCONSULT SDN BHD] 10/01/2017 Product Talk with PropertyGuru: What Does 2017 Hold For Malaysia s Property Sector? [REDHA YOUTH] 11/01/2017 FIABCI Malaysia Morning Talk 2017: Northern Region Property Market Update [FIABCI-MALAYSIA] 05/04/2017 FIABCI Malaysia Morning Talk 2017: Sabah Property Market Updates [FIABCI-MALAYSIA] 03/05/2017 MINDA PowerTalk on Perception Meets and Reality Malaysian Family Owned Business (FOBs) [MINDA] 09/05/2017 FIABCI Malaysia Morning Talk 2017: Income Tax and GST Challenges in Real Estate Perspective [FIABCI-MALAYSIA] 06/09/2017 FIABCI Malaysia Morning Talk 2017: Updates on Recent Legal Issues Relating to Real Estate [FIABCI-MALAYSIA] 04/10/2017 FIABCI Malaysia Morning Talk 2017: Impact of Budget 2018 in Real Estate Industry [FIABCI-MALAYSIA] 01/11/2017 (e) Foo Chu Pak Pengurusan Kewangan Kontraktor Pembinaan [CAMGRAD PROCAPITAL SDN BHD] 26/09/2017 ANNUAL REPORT

30 CORPORATE GOVERNANCE OVERVIEW STATEMENT (cont d) PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (cont d) 2. BOARD COMPOSITION (cont d) During the period, 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. Time Commitment Seven (7) Board meetings were held during the financial period ended 30 June 2018 and the attendances of the Directors at the Board meetings were as follows: Name of Directors Meeting Attendance Tan Sri Dato Seri Mohamad Noor Abdul Rahim 7/7 To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain 5/7 Md. Ishak Bin Bakri 4/4 (Appointed on 3 August 2017) Dato Foo Chu Jong 7/7 Foo Chu Pak 6/7 Datin Paduka Low Siew Moi 2/2 (Resigned on 8 May 2017) Financial Reporting The Board takes responsibility to ensure that financial statements are prepared in accordance with the regulatory requirements and applicable approved accounting standards in Malaysia. The Board deliberates on the financial statements and ensure that the Group has presented a true and fair view of the state affairs of the Group and the Company. The Audit Committee assists the Board by scrutinising the information to be disclosed. The Group s financial statements are presented in pages 38 to 105 of this Annual Report. 28 PRINSIPTEK CORPORATION BERHAD ( H)

31 CORPORATE GOVERNANCE OVERVIEW STATEMENT (cont d) PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (cont d) 2. BOARD COMPOSITION (cont d) 5.0 Stakeholders are able to form an opinion on the overall effectiveness of the board and individual directors. The Company conducts an annual assessment to evaluate the effectiveness of the Board and the Board committee as well as the performance of each individual director through the Nomination Committee. The Nomination Committee consist of the following members during the financial period ended 30 June 2018:- 1. Tan Sri Dato Seri Mohamad Noor Abdul Rahim Chairman (Independent Non-Executive Chairman of the Board) 2. To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain Member (Independent Non-Executive Director) 3. Md. Ishak Bin Bakri Member (Independent Non-Executive Director) (Appointed on 3 August 2017) 4. Datin Paduka Low Siew Moi (Independent Non-Executive Director) (Resigned on 8 May 2017) The Nomination Committee Shall meet at least once a year to carry out the activities as enshrined in its terms of reference, or more frequently as the need arises, at the discretion of the Chairman of the Nomination Committee. The Nomination Committee has full access to any form of independent professional advices and information, advice and services of the Company Secretary, if and when required, in carrying out its functions. The Company Secretary shall record, prepare and circulate the minutes of the meetings of the Nomination Committee and ensure that the minutes are properly kept and produced for inspection if required. 3. REMUNERATION 6.0 The level and composition of remuneration of directors and senior management take into account the company s desire to attract and retain the right talent in the board and senior management to drive the company s long-term objectives. The remuneration policies and decisions are made through a transparent and independent process. The Remuneration Committee consist of the following members during the financial period ended 30 June 2018:- 1. To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain - Chairman (Independent Non-Executive Director) 2. Tan Sri Dato Seri Mohamad Noor Abdul Rahim Member (Independent Non-Executive Chairman of the Board) 3. Md. Ishak Bin Bakri - Member (Independent Non-Executive Director) (Appointed on 3 August 2017) 4. Datin Paduka Low Siew Moi (Independent Non-Executive Director) (Resigned on 8 May 2017) ANNUAL REPORT

32 CORPORATE GOVERNANCE OVERVIEW STATEMENT (cont d) PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (cont d) 3. REMUNERATION (cont d) 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 and senior management. The determination of remuneration packages of non-executives 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 details of terms of reference of Remuneration Committee are available for reference at the Company s website at Stakeholders are able to assess whether the remuneration of directors and senior management is commensurate with their individual performance, taking into consideration the company s performance. The Directors remuneration package is linked to the experience, scope of duty and responsibility, seniority, performance and industrial practices. The remuneration of Executive Directors consists of basic salary, among others bonus, whereas the Non-Executive Directors receive fixed director fees. Details of the Directors remuneration in aggregate for financial period ended 30 June 2018 are tabulated as below: Company Executive Director Fees Salary Bonus Benefit-in-kind Total RM RM RM RM RM Dato Foo Chu Jong Foo Chu Pak Non-Executive Director Tan Sri Dato Seri Mohamad Noor Abdul Rahim 72, ,000 To Puan Seri Hajjah Nur Rahmah binti Hj Mohd Zain 54, ,000 Md. Ishak Bin Bakri 32, ,806 (Appointed on 3 August 2017) Datin Paduka Low Siew Moi 12, ,000 (Resigned on 8 May 2017) 30 PRINSIPTEK CORPORATION BERHAD ( H)

33 CORPORATE GOVERNANCE OVERVIEW STATEMENT (cont d) PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (cont d) 3. REMUNERATION (cont d) Group Executive Director Fees Salary Bonus Benefit-in-kind Total RM RM RM RM RM Dato Foo Chu Jong - 770,643 64, , ,875 Foo Chu Pak - 485,928 34,447 63, ,072 Non-Executive Director Tan Sri Dato Seri Mohamad Noor Abdul Rahim To Puan Seri Hajjah Nur Rahmah binti Hj Mohd Zain Md. Ishak Bin Bakri (Appointed on 3 August 2017) Datin Paduka Low Siew Moi (Resigned on 8 May 2017) The payment of Directors fees will be subjected to the shareholders approval at the AGM. The Company has sought mandate from shareholders at the previous AGM to pay Directors fee and any benefits to Directors up to a certain threshold. The Remuneration Committee reviews and recommends an appropriate remuneration package to retain and attract calibre directors to discharge their duty with integrity, to grow and lead the Company. In determining the Group s senior management personnel, the Board takes into consideration the determining factors recommended by MCCG including their remunerations, responsibilities, skills, expertise and contributions to the Group s performance. On the disclosure of the remuneration of the Group s senior management staff, the Company is of the view that it would not be in its interest to make such disclosure on a named basis of each senior management staff s remuneration earned because of the competitive nature of the human resource market and to support the Group s efforts to attract and retain executive talent. The profile of the Senior Management Personnel are set out in page 21 of this Annual report. ANNUAL REPORT

34 CORPORATE GOVERNANCE OVERVIEW STATEMENT (cont d) PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT 1. AUDIT COMMITTEE 8.0 There is an effective and independent audit committee. The board is able to objectively review the audit and risk management committee s findings and recommendations. The company s financial statement is a reliable source of information. The Audit Committee ( AC ) is relied upon by the Board to, amongst others, provide advice in the areas of financial reporting, external audit, internal control process, review of related party transactions as well as conflict of interest situations. The AC also undertakes to provide oversight on the risk management processes/ framework of the Group. The AC is chaired by an Independent Director and consists wholly of Independent Directors. The AC has full access to both the internal and external auditors who, in turn, have access at all times to the Chairman of the AC. The role of the AC and the number of meetings held during the financial year as well as the attendance record of each member are set out in the AC Report in the Annual Report. The details of the Terms or Reference of the AC are available for reference at the Company s website at www. prinsiptek.com. The AC met the external auditors three times during the period under review without the presence of the Executive Directors and Management to exchange independent views on matters which require the Committee attention. The External Auditors confirmed that they have been independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirement for the financial period ended 30 June Being satisfied with the External Auditors performance, technical competency and audit independence, the AC recommended to the Board to put forth a proposal for the re-appointment of External Auditors for the financial year ending 2019 at the forthcoming AGM. Details of the activities carried out by the AC for the financial period ended 30 June 2018 are set out in the AC Report in the Annual Report. 2. RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORK 9.0 Company makes informed decisions about the level of risk they want to take and implement necessary controls to pursue their objectives. The board is provided with reasonable assurance that adverse impact arising from a foreseeable future event or situation on the company s objectives is mitigated and managed. The Board has overall responsibility for maintaining a sound system of internal control and risk management that provide a reasonable assurance of effective and efficient operations, and compliance with the relevant laws and regulations as well as with internal procedures and guidelines. The Statement on Risk Management and Internal Control as disclosed in this Annual Report provides an overview of the risk management and internal control framework adopted by the Company for the current financial period Company has an effective governance, risk management and internal control framework and stakeholders are able to assess the effectiveness of such a framework. The Group has outsourced its internal audit function to an independent firm. The internal audit function covers all material controls including financial, operational and risk management functions. 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 Group, 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 Group. In addition 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 34 to 35 of this Annual Report provides an overview of the state of internal controls within the Group. 32 PRINSIPTEK CORPORATION BERHAD ( H)

35 CORPORATE GOVERNANCE OVERVIEW STATEMENT (cont d) PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT (cont d) 2. RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORK (cont d) The release of material information will be made publicly via Bursa Securities. Members of the public can also obtain the full financial results and the Company s announcements from the Bursa Securities website. The Company s website at is regularly updated and provides relevant information on the Company which is accessible to the public to make informed investment decision. PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS 1. COMMUNICATION WITH STAKEHOLDERS 11.0 There is continuous communication between the company and stakeholders to facilitate mutual understanding of each other s objectives and expectations. Stakeholders are able to make informed decisions with respect to the business of the company, its policies on governance, the environment and social responsibility. The Company values dialogues with the investors and is constantly striving to improve the communication with the public. The Board believes that an effective investor relation is essential in enhancing shareholders value and therefore ensures that shareholders are kept well informed of major development of the Company. Such information is disseminated via the Company s Annual Report, various disclosures and announcements to Bursa Securities and the Company s web site The AGM is the principal forum for dialogue between the Company and the shareholders. The Board provides the opportunity for shareholders to raise questions pertaining to issues in the financial performance and business plan of the Group. The Board takes the opportunity to present a comprehensive review of the progress and performance of the Company and provides answers to the questions raised by the shareholders during the general meeting. 2. CONDUCT OF GENERAL MEETINGS 12.0 Shareholders are able to participate, engage the board and senior management effectively and make informed voting decisions at general meetings. The Group is of the view that General Meetings are important platforms to engage with its shareholders as well as to address their concerns. The Group encourage shareholders to attend and participate in the AGM by providing adequate advance notice and holding the AGM at venue where is easily accessible. The resolution of the General Meetings is conducted via poll voting. The key element of the Company s dialogue with its shareholders is the opportunity to gather views of, and answer questions from, both the individual and institutional investors on all aspects relevant to the Company at the AGM. In line with the Board Charter, the Company will send the Notice of the AGM and related circular to its shareholders at least twenty-eight (28) days before the meeting. At the AGM, shareholders are encouraged to ask questions both about the resolutions being proposed or about the Group s operations in general to seek more information. Where it is not possible to provide immediate answers, the Chairman will undertake to furnish the shareholders with a written answer after the AGM. COMPLIANCE STATEMENT Saved as disclosed above, the Board is satisfied that throughout the financial period ended 30 June 2018, the Company has applied the principles and recommendations of the corporate governance set out in MCCG, where necessary and appropriate. This Statement is made at the Board of Directors Meeting held on 25 September ANNUAL REPORT

36 STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL INTRODUCTION The Board of Directors ( Board ) is responsible for the adequacy and effectiveness of the Group s risk management and internal control system. The Board recognises the importance of good corporate governance and is committed in maintaining a sound system of internal controls to safeguard shareholders interest and the Group s assets. In doing so, the Board acknowledges its responsibility to identify major risks faced by the Group 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 Risk Management and Internal Control which outlines the nature and scope of internal controls of the Group during the period 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 Risk management and 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 Group 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 Group 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 Group 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 Group 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 Group 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 Group. 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 Group within the Group 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 Group 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 Group as well as any obstacles in achieving the Group s strategic business plans. The Management has also adopted the open discussion approach in the day-to-day running of the Group. 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 Group has incorporated various key elements into its system of internal controls in order to safeguard shareholders interest and the Group s assets by: 1) giving authority to the Board Committee members to investigate and report on any areas of improvement for the betterment of the Group; 2) 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; 34 PRINSIPTEK CORPORATION BERHAD ( H)

37 STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL (cont d) 3) 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; 4) delegating necessary authority to the Managing Director in order for him to play a major role as the link between the Board and Senior Management in implementing the Board s expectation of effective system of internal controls and managing the Group s various operations; 5) 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; 6) 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; 7) 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; 8) 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 Group to an appropriate level acceptable to the Board; and 9) reviewing and updating the Group Policies and Procedures on regular basis which set out guideline and expected standards for the Group 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 Group 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 period ended 30 June 2018 amounted to RM42, 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 period 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 Group: (i) (ii) (iii) (iv) (v) (vi) Tendering & Contract Management and Project Safety & Security Management for Construction Division; Follow-up Review on Tendering & Contract Management and Project Safety & Security Management for Construction Division; Billing & Collection and Construction Quality & Complaint Management for Property Development Division; Follow-up Review on Billing & Collection and Construction Quality & Complaint Management for Property Development Division; Follow-up Review for Human Resource Management and Payroll Function; 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 Group 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 Group. Consequently, the Board maintains an ongoing commitment to further strengthen the control environment within the Group. ANNUAL REPORT

38 AUDIT COMMITTEE REPORT COMPOSITION Md. Ishak Bin Bakri - Chairman (Independent Non-Executive Director) (Appointed on 3 August 2017) Tan Sri Dato Seri Mohamad Noor Abdul Rahim - Member (Independent Non-Executive Chairman of the Board) To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain Member (Independent Non-Executive Director) Datin Paduka Low Siew Moi Member (Independent Non-Executive Director) (Resigned on 8 May 2017) TERMS OF REFERENCE The Terms of Reference of the Audit Committee are available on the Company s website at under the Corporate Governance Section. The Terms of Reference of the Audit Committee was reviewed on 24 May MEETINGS AND ATTENDANCE The Audit Committee held seven (7) meetings during the financial period ended 30 June The details of attendance are tabled below:- AC Members Number of Meetings Attended Md. Ishak Bin Bakri 4/4 Tan Sri Dato Seri Mohamad Noor Abdul Rahim 7/7 To Puan Seri Hajjah Nur Rahmah Binti Hj Mohd Zain 5/7 Datin Paduka Low Siew Moi 2/2 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. SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE During the financial period, the activities undertaken by the Audit Committee are summarized as follows: a) Reviewed the external auditor s scope of work and audit plan for the financial period. Prior to the audit fieldwork, representatives from the external auditor presented their audit approach and plan to the Audit Committee; b) Reviewed and assessed the performance, suitability and independence of external auditors and recommended for its reappointment and remuneration to the Board; c) Met with external auditor three times during the financial period without the presence of the Executive Directors and Management to discuss the areas of the audit concern; d) Reviewed the audited financial statements of the Group and recommended to the Board for its consideration and approval; e) Reviewed the internal audit plan, process and reports on the audit findings, recommendations and management s response. Discuss with the management and ensure appropriate actions were taken to improve the system of internal control based on recommended actions identified in the internal audit reports; 36 PRINSIPTEK CORPORATION BERHAD ( H)

39 AUDIT COMMITTEE REPORT (cont d) SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE (cont d) f) Reviewed the quarterly financial results and announcements of the Group and making relevant recommendations to the Board for approval; g) Reviewed the related party transactions entered into by the Group, conflict of interest situations and report the same to the Board; h) Reviewed the Statement on Risk Management and Internal Control and its recommendation to the Board for inclusion in the Annual Report; and i) Reviewed the Audit Committee Report for inclusion in the Annual Report. INTERNAL AUDIT FUNCTION AND SUMMARY OF ACTIVITIES The internal audit function for the Group has been outsourced to an external consultant, Baker Tilly Monteiro Heng Governance Sdn Bhd who has performed an independent review of the Group s various areas during the financial period ended 30 June The Internal Auditors of the Group 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 reviews and approves the internal audit plan and the scope of internal audit covering the relevant areas within the Group from time to time. The core areas reviewed by the internal auditors during the financial period ended 30 June 2018 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 Group that may result in material losses incurred by the Group for the financial period. ANNUAL REPORT

40 FINANCIAL STATEMENT 39 DIRECTORS REPORT 43 STATEMENT BY DIRECTORS 43 STATUTORY DECLARATION 44 INDEPENDENT AUDITORS REPORT 48 STATEMENTS OF FINANCIAL POSITION 49 STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 50 STATEMENTS OF CHANGES IN EQUITY 53 STATEMENTS OF CASH FLOWS 56 NOTES TO THE FINANCIAL STATEMENTS