NOTES TO THE FINANCIAL STATEMENTS

Transcription

1 NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 January GROUP The comprises the Company and its subsidiaries disclosed in Note 7.1 to the financial statements. 2. GENERAL The Company was incorporated in Malaysia as a public company limited by shares. All its issued shares are listed on the Main Board of Bursa Malaysia Securities. It is resident in Malaysia with its registered office situated at Suite 729, 7th Floor, Sun Kompleks, Jalan Bukit Bintang, Kuala Lumpur. 3. OPERATIONS Principal activities The principal activity of the Company is investment holding. The principal activities of its subsidiaries are disclosed in Note 7.1 to the financial statements. There have been no significant change in the nature of the principal activities of the Company and its subsidiaries during the financial year, other than those disclosed in their respective financial statements. Place of business The principal place where the business activities of the Company are carried out is situated at No. 175, Jalan Usaha 3, Taman Perindustrian Air Keroh, Melaka. 4. PREPARATION OF FINANCIAL STATEMENTS The financial statements of the and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards ("MFRS"), International Financial Reporting Standards ("IFRS") and the requirements of the Companies Act 2016 in Malaysia. All the amounts in the financial statements are stated in Ringgit Malaysia ("") unless otherwise stated. The consolidated financial statements of the for the previous financial year are presented using the values from the consolidated financial statements of the acquiree group, Mintye Industries Bhd. as if the internal reorganisation, as disclosed in Note 27, had been effected throughout the current and previous financial years. Any resulting difference between the cost of acquisition and aggregate carrying value of assets and liabilities of the acquiree group is recognised directly to equity. 5. SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted by the and the Company, which have been applied consistently to the periods presented in these financial statements unless otherwise stated, are stated in paragraphs 5.1 to 5.23 below: 5.1 Basis of measurement The financial statements of the and the Company are prepared under the historical cost convention unless otherwise indicated. 57

2 5.2 Significant accounting estimates and judgements The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected Judgements made in applying accounting policies There are no significant areas of critical judgement in applying accounting policies that have any significant effect on the amount recognised in the financial statements Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: (i) Depreciation and amortisation of property, plant and equipment The depreciable costs of property, plant and equipment are allocated on a straight line basis over their expected useful lives. Management estimates the useful lives of these assets to be within 4 to 78 years. Changes in the expected level of usage and technological developments could impact the economic useful lives and residual value of these assets. (ii) Deferred tax assets Deferred tax assets are recognised for deductible temporary differences, carryforward of unused tax losses and carryforward of unused tax credits. Significant management judgement is required to determine the likely timing and level of future taxable profits available against which the deferred tax assets can be utilised. (iii) Net realisable value of inventories The management reviews for damaged, slow-moving and obsolete inventories. This review requires judgements and estimates. Possible changes in these estimates could result in revision to the valuation of inventories. (iv) Impairment of loans and receivables The assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience of assets with similar credit risk characteristics. 58

3 5.3 Adoption of new and revised financial reporting standards The accounting policies adopted by the and the Company are consistent with those adopted in the previous financial year except for the adoption of the following new MFRSs, Amendments to MFRSs and IC interpretations with effect from the financial year beginning on or after 1 February 2016: Amendments to MFRSs (Annual Improvements Cycle) Amendments to MFRS 10, MFRS 12 and MFRS 128 (Investment Entities: Applying the Consolidation Exception) Amendments to MFRS 11 (Accounting for Acquisitions of Interest in Joint Operations) Amendments to MFRS 14 (Regulatory Deferral Accounts) Amendments to MFRS 101 (Disclosure Initiatives) Amendments to MFRS 116 and MFRS 138 (Clarification of Acceptable Methods of Depreciation and Amortisation) Amendments to MFRS 116 and MFRS 141 (Agriculture: Bearer Plants) Amendments to MFRS 127 (Equity Method in Separate Financial Statements) The adoption of the above standards, amendments and interpretations did not have significant impact on the financial statements of the and the Company. 5.4 Standards issued but not yet effective The and the Company will be applying the following standards, amendments and their associated interpretations that have been issued in the respective financial period as set out below: Effective for financial periods beginning on or after Amendments to MFRS 107 (Disclosure Initiatives) 1 Jan 2017 Amendments to MFRS 112 (Recognition of Deferred Tax Assets 1 Jan 2017 for Unrealised Losses) Amendments to MFRS 12 (Annual Improvement to MFRSs Cycle) 1 Jan 2017 MFRS 9: Financial Instruments 1 Jan 2018 Amendments to MFRS 15 (Revenue from Contracts with Customers) 1 Jan 2018 Clarification to MFRS 15 (Revenue from Contracts with Customers) 1 Jan 2018 IC Interpretation 22 (Foreign Currency Transaction and Advanced Consideration) 1 Jan 2018 Amendments to MFRS 1 (Annual Improvements to MFRSs Cycle) 1 Jan 2018 Amendments to MFRS 2 (Classification and Measurement of Share-based 1 Jan 2018 Payment Transactions) Amendments to MFRS 4 (Applying MFRS 9 with MFRS 4) 1 Jan 2018 Amendments to MFRS 128 (Annual Improvements to MFRSs Cycle) 1 Jan 2018 Amendments to MFRS 140 (Transfer of Investment Property) 1 Jan 2018 Amendments to MFRS 16 (Leases) 1 Jan 2019 Amendments to MFRS 10 and MFRS 128 (Sale or Contribution of Assets (To be between an Investor and its Associate or Joint Venture) Confirmed) 59

4 The adoption of the above mentioned standards, amendments and their associated interpretations in the respective financial period when they become effective is not expected to have any significant impact on the financial statements of the and of the Company that may change the classification and measurement of financial assets. The and the Company do not intend to adopt this standard early and the extent of the impact has not been determined. There are no standards early adopted by the and the Company. 5.5 Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied for like transactions and events in similar circumstances. The Company controls an investee if and only if the Company has all the following: Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); Exposure, or rights, to variable returns from its investment with the investee; and The ability to use its power over the investee to affect its returns. Subsidiaries are consolidated when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full. Changes in the s ownership interests in subsidiaries that do not result in the losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. The resulting difference is recognised directly in equity and attributed to owners of the Company. When the loses control of a subsidiary, a gain or loss calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets and liabilities of the subsidiary and any non-controlling interest, is recognised in profit or loss. The subsidiary s cumulative gain or loss which has been recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss or where applicable, transferred directly to retained profits. The fair value of any investment retained in the former subsidiary at the date control is lost is regarded as the cost on initial recognition of the investment. Business combination (i) Acquisition method Acquisition of subsidiaries under business combination are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. The elects on a transaction-by-transaction basis whether to 60

5 measure the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree s identifiable net assets. Transaction costs incurred are expensed and included in administrative expenses. Any contingent consideration to be transferred by the acquirer 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 MFRS 139 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 MFRS 139, it is measured in accordance with the appropriate MFRS. When the acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. If the business combination is achieved in stages, the acquisition date fair value of the acquirer s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss. (ii) Pooling of interest method Business combination under the pooling of interest method are accounted for as follows: The results of entities are presented as if the combination occurred from the beginning of the earliest period presented in the financial statements; The assets, liabilities and reserves of the entities are recorded at their pre-combination carrying amounts or existing carrying amounts from the perspective of the common control shareholder at the date of the transfer. No adjustments are made to reflect fair values, or recognise any new assets or liabilities, at the date of the combination that would otherwise be done under the acquisition method; and No new goodwill is recognised as a result of the combination. The only good will that is recognised is the existing goodwill relating to the combining entities. Any difference between the consideration paid/transferred and the equity acquired is reflected within equity as merger reserve or deficit. 5.6 Investments in subsidiaries Subsidiaries are entities, including structured entities, controlled by the Company. Control exist when the is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Potential voting rights are considered when assessing control only when such rights are substantive. The considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the 61

6 current ability to direct the activities of the investee that significantly affect the investee's return. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Investments in subsidiaries which are eliminated on consolidation are stated at cost less impairment loss. Upon loss of control of a subsidiary, difference between the net disposal proceeds and the carrying amount of the subsidiary disposed is included in profit or loss. 5.7 Non-controlling interests Non-controlling interests represent equity interests in subsidiaries that are not owned, directly or indirectly through other subsidiaries, by the Company. Non-controlling interests are measured at the equity holders' share of the fair values of the identifiable assets and liabilities of the subsidiaries. 5.8 Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and impairment loss, where applicable. All these assets are depreciated and amortised at rates calculated to write off the cost of each asset to its residual value on a straight line basis over their expected useful lives. The principal annual rates used for this purpose are as follows: % Per annum Factory and buildings 2-10 Freehold apartment 2 Plant, machinery and equipment 10 Motor vehicles 20 Teaching material, office equipment, furniture and fittings Leasehold land are depreciated over the terms of the respective leases ranging from 68 to 96 years from the date of their acquisition. Leasehold land refer to lands with unexpired lease periods of fifty (50) years or more determined at the reporting date. The depreciation basis and useful lives are reviewed at each reporting date to ensure that the basis, period and amount of depreciation are consistent with previous estimates and expected pattern of consumption of future economic benefits embodied in the assets. Upon disposal of an item of property, plant and equipment, the difference between the net disposal proceeds and the carrying amount of the asset is included in profit or loss. 5.9 Capital work-in-progress Capital work-in-progress is stated at cost less impairment loss, if applicable and is not depreciated. Capital work-in-progress is transferred to property, plant and equipment when it is ready for its intended use. 62

7 5.10 Financial instruments A financial instrument is recognised in the statement of financial position when, and only when, the and the Company become a party to the contractual provisions of the instrument. A financial instrument is recognised initially at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument. Subsequent measurement of the financial instruments in the statement of financial position reflects the designation of the financial instruments. The and the Company determine the classification of their financial instruments at initial recognition as follows: Financial assets Financial assets are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale ("AFS") financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The 's financial assets include AFS investments and loans and receivables, which include trade and other receivables and cash and cash equivalents. (i) AFS investments AFS category comprises investment in equity and debt securities instruments that are not held for trading or designated as at fair value through profit or loss. Subsequent to initial measurement, AFS investments are measured at fair value, unless the fair value cannot be measured reliably, in which case it shall be measured at cost. Any gains or losses arising from changes in fair value are recognised in other comprehensive income, except for impairment losses and foreign exchange gains and losses on monetary items which are recognised in profit or loss, until the investment is derecognised, at which time the cumulative gain or loss previously recognised in other comprehensive income will be reclassified into profit or loss. (ii) Loans and receivables Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current. Subsequent to initial measurement, loans and receivables are measured at amortised cost using effective interest method, except for short-term receivables when the recognition of interest would be immaterial. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. 63

8 (iii) Cash and cash equivalent Cash and cash equivalents comprise cash in hand, bank balances and short-term deposits with Malaysian licensed banks which are unsecured and readily convertible to cash with no significant risk of changes in value below the amounts stated in the financial statements. For the purposes of the statements of cash flows, the amount is presented after deducting bank overdrafts, if any. A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of consideration received and any cumulative gain or loss that had been recognised in other comprehensive income are recognised in profit or loss. Financial liabilities Financial liabilities are classified as financial liabilities at fair value through profit or loss, financial liabilities measured at amortised cost, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are subsequently measured at amortised cost using the effective interest method other than those categorised as fair value through profit or loss which are subsequently measured at their fair values with the gain or loss recognised in the profit or loss. A financial liability is derecognised when the obligation specified in the contract is discharged or cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. The 's and the Company's financial liabilities include trade and other payables and are carried at amortised cost Impairment of financial assets All financial assets, except for those measured at fair value through profit or loss and investments in subsidiaries, are subject to review for impairment. The and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired. (i) AFS investments To determine whether there is objective evidence that an impairment loss on AFS investments has been incurred, the and the Company consider factors such as the disappearance of an active market for that financial asset because of financial difficulties, significant changes with an adverse effect that have taken place in the technological, market, economic or legal environment in which the issuer operates, and a significant or prolonged decline in the fair value of an investment below its cost. When a decline in the fair value of an AFS investment has been recognised directly in equity and there is objective evidence that the asset is impaired, the cumulative loss that has been recognised directly in equity shall be removed from equity and recognised in profit or loss even though the asset has not been derecognised. The amount of cumulative loss to be removed shall be the difference between the acquisition cost and current fair value, less any impairment loss on that asset previously recognised in profit or loss. 64

9 If in a subsequent period, the fair value of an AFS investment increases and the increase can be related objectively to an event occurring after the impairment was recognised, the impairment loss is reversed. For an AFS debt investment, the amount of reversal is recognised in profit or loss; for an AFS equity investment, the amount of reversal is recognised in other comprehensive income not through profit or loss. Where an impairment loss has been incurred on an AFS investment carried at cost, the amount of impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss is not reversed. (ii) Loans and receivables To determine whether there is objective evidence that an impairment loss on loans and receivables has been incurred, the and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, and observable changes in national or local economic conditions that correlate with defaults in receivables. Where there is objective evidence of impairment, the amount of impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the asset's original effective interest rate. The impairment loss is recognised in profit or loss. The carrying amount of the asset is reduced by the impairment loss directly for all loans and receivables with the exception of trade receivables and intragroup debts, where the carrying amount is reduced through the use of an allowance account. When a trade receivable or intragroup debt becomes uncollectible, it is written off against the allowance account. If in a subsequent period, the amount of impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss Impairment of other assets The assesses at each reporting date whether there is an indication that an asset, except for inventories and deferred tax assets, may be impaired. For the purpose of impairment testing, recoverable amount is determined on an individual asset basis unless the asset does not generate cash inflows that are largely independent of those from other assets. If this is the case, the recoverable amount is determined for the cash-generating unit ("CGU") to which the asset belongs. 65

10 If the recoverable amount of the asset or CGU is estimated to be less than its carrying amount, the carrying amount of the asset or CGU is reduced to its recoverable amount. The difference between the carrying amount and recoverable amount is recognised as an impairment loss in the profit or loss except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation. An impairment loss for an asset 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 this asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase Inventories Inventories are measured at the lower of cost and net realisable value. Cost incurred in bringing the following inventories to their present location and condition is determined as follows: Raw materials and consumables Work-in-progress and finished products - Purchase cost on a first-in, first-out basis - Cost of materials, direct labour and proportion of production overheads based on normal level of activity Net realisable value represents the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale Provisions Provisions 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 the end of each reporting period 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 Contingent liabilities When the and the Company have a present obligation as a result of a past event where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote. 66

11 5.16 Revenue Revenue is recognised in the financial statements as follows: Manufacturing and trading Net invoiced value of sales to customers upon the transfer of significant risk and rewards of ownership of the goods to customers; Investments Rental income on accrual basis; Dividend income (gross) is accrued when the shareholders' right to receive payment is established; and Others Interest income from short-term deposits on accrual basis and sundry income on receipt basis Employee benefits (a) Short-term employee benefits Salaries, social security contributions, paid annual leave, paid sick leave, bonuses and other benefits are recognised as expenses in the year in which the associated services are rendered to the Company by employees. (b) Defined contribution plan The employees of the are not unionised. The Company makes statutory contributions for employees to the Employees Provident Fund. The contributions are charged as an expense to profit or loss in the financial year to which they relate Borrowing costs Borrowing costs that are directly attributable to the acquisition, construction, production or preparation of assets until they are ready for their intended use or sale are capitalised as part of the cost of those assets. Other borrowing costs are recognised as expenses in the period in which they are incurred Taxation Current Income tax for the financial year is provided on taxable profit at current statutory rate. Deferred Accounting profit and taxable profit differ due to, in addition to expenses not deductible, taxable and deductible temporary differences between accounting and tax bases of assets and liabilities. Deferred tax liabilities in respect of income tax payable in future financial years are recognised for all taxable temporary differences. Deferred tax assets in respect of income tax recoverable in future financial years for deductible temporary differences, carryforward of unused tax losses and carryforward of unused tax credits are recognised to the extent that it is probable future taxable profit will be available against which they can be utilised. 67

12 Goods and Service Tax Revenues, expenses and assets are recognised net of the amount of goods and service tax except: (i) Where the goods and service tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the goods and service tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and (ii) Receivables and payables that are stated with the amount of goods and service tax included Share capital Ordinary shares are recorded at the nominal value and proceeds in excess of the nominal value of shares issued, if any, are accounted for as share premium. Both ordinary shares and share premium are classified as equity. Cost incurred directly attributable to the issuance of the shares are accounted for as a deduction from share premium, otherwise it is charged to profit or loss Dividends Dividends on ordinary shares are accounted for in the statement of changes in equity as an appropriation of accumulated profits in the financial year in which they are declared or approved by shareholders at general meeting Foreign currency conversion Foreign currency transactions are converted into Ringgit Malaysia at rates of exchange ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies at the end of the reporting date are translated at the approximate exchange rates ruling at the end of the reporting date. Exchange differences are recognised in profit or loss. The principal rates used in the translation of foreign currency monetary assets and liabilities are as follows: Australian Dollar Bruneian Dollar 1.00 N/A 2.86 European Currency Japanese Yen Singapore Dollar United States Dollar Segment reporting An operating segment is a component of the that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses relating to transactions with other components of the, about which separate financial information is available that is reviewed regularly by the 's Managing Director in deciding how to allocate resources to the segment and in assessing its performance. Segment reporting is presented for enhanced evaluation of the nature and financial effects of the business activities in which the engages and the economic environments in which it operates. Financial information is reported on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments. 68

13 6. PROPERTY, PLANT AND EQUIPMENT Teaching material, office Capital Leasehold Plant, equipment, work Leasehold factory Freehold machinery Motor furniture in land and buildings apartment and equipment vehicles and fittings progress Total 6.1 Cost As at 1 February ,024,336 18,205, ,275 58,596,641 3,538,825 2,614, ,071 98,502,226 Additions 1, ,304 1,417, ,852 3,064,868 4,879,890 Disposals (126,655) (140,831) (267,486) Written off (1,838,669) (138,570) (1,977,239) Reclassification 72, ,193 (216,290) 1,504,315 2,900 (1,507,215) As at 31 January 2016/ February ,096,433 18,351,868 53,985 58,363,936 4,815,010 2,646,435 1,809, ,137,391 Additions 3, , ,620 94,652 2,036,716 2,447,409 Disposals (642,496) (642,496) Written off (250) (1,104,335) (558,493) (1,663,078) Reclassification 1,056,911 1,944, ,775 (3,332,342) As at 31 January ,096,433 19,412,369 53,985 59,372,838 4,316,134 2,513, , ,279,226 Accumulated depreciation As at 1 February ,306,356 11,723,527 30,689 49,159,244 3,083,876 2,260,516 68,564,208 Charge for the financial year 232, ,332 1,080 1,932, , ,253 3,397,642 Disposals (126,652) (122,053) (248,705) Written off (1,700,459) (137,581) (1,838,040) Reclassification 1,767 (1,767) 69

14 Teaching material,office Capital Leasehold Plant, equipment, work Leasehold factory Freehold machinery Motor furniture in land and buildings apartment and equipment vehicles and fittings progress Total 6.1 As at January 2016/1 February ,539,186 12,362,626 30,002 49,264,488 3,391,615 2,287,188 69,875,105 Charge for the financial year 232, ,617 1,080 1,716, , ,621 3,235,864 Disposals (580,161) (580,161) Written off (108) (1,067,140) (557,787) (1,625,035) As at 31 January ,772,016 13,035,135 31,082 49,913,855 3,209,663 1,944,022 70,905,773 Net carrying amount As at 31 January ,557,247 5,989,242 23,983 9,099,448 1,423, ,247 1,809,724 31,262,286 As at 31 January ,324,417 6,337,234 22,903 9,458,983 1,106, , ,098 30,373, Capital commitments: Authorised and contracted Plant, machine and equipment 356,929 Factory building 1,188,226 70

15 7. SUBSIDIARIES 7.1 General information Effective equity interest held Name Principal activities % % Mintye Industries Bhd. 100 Manufacture of automotive and industrial friction materials, namely brake linings, dics brake pads and bonded brake shoes Subsidiaries of Mintye Industries Bhd. Mintye Metal Products Sheet metal stamping and Sdn. Bhd. fabrication of automotive and other component parts Mintye Marketing Trading of friction materials, Sdn. Bhd. brake fluid and other autumotive parts Mintye Chemicals Blending and packaging of Sdn. Bhd. brake fluid. The Company had ceased its operations since the financial year ended 31 January 2013 Young Aces Technical Provision of automotive technical Centre Sdn. Bhd. training services and other related ("YATC") other related businesses Mintye Properties Property investment and Sdn Bhd development ECM Autoparts Trading of automotive accessories Sdn. Bhd. and autoparts ( EMC ) All the subsidiaries were incorporated in Malaysia. 71

16 Company Investments in subsidiaries Unquoted shares, at cost 60,800, Adverse financial position of subsidiaries of Mintye Industries Bhd. Deficit in Net current liabilities shareholders' equity YATC (3,226,038) (2,557,996) (2,752,156) (2,016,579) ECM (3,003,832) (3,365,980) (2,810,561) (3,171,833) (6,229,870) (5,923,976) (5,562,717) (5,188,412) As the financial statements of these subsidiaries were prepared on the basis that the subsidiary was a going concern, the validity of the basis was dependent on the continued financial support from the immediate holding company, Mintye Industries Bhd., and the subsidiary attainning profitable operations and sufficient cash inflows to meet its liabilities as and when they fall due. The immediate holding company, Mintye Industries Bhd., has indicated in writing that it is their present intention to provide continuing financial support to maintain the continued operations of these subsidiaries and to enable these subsidiaries to meet their obligations as and when they fall due. 72

17 8. AVAILABLE-FOR-SALE INVESTMENTS Shares quoted in Malaysia Carrying amount As at beginning of financial year 7,018,288 7,718,190 Additions 69, ,148 Disposals (150,207) Fair value gain/(loss) during the financial year 860,448 (1,129,843) As at end of financial year 7,948,671 7,018,288 Market value As at end of financial year 7,948,671 7,018,288 Shares unquoted in Malaysia Carrying amount As at beginning and end of the financial year 2,500 2,500 Unit trust in Malaysia Carrying amount As at beginning of the financial year 34,136 Additions 3,510,000 Dividends reinvested 24,136 Disposals (3,500,000) Withdarwal (34,136) As at end of the financial year 34,146 Total available-for sale investments 7,951,171 7,054,924 73

18 9. DEFERRED TAX (LIABILITIES)/ASSETS As at beginning of financial year (1,364,085) (1,488,187) Transfer (from)/to profit or loss (Note 14) Income base For the current year (215,059) 54,134 Over/(Under)-provision in prior years 31,021 (10,356) Change of statutory tax rate 54,060 Reserve base For the current year 25,212 26,264 (158,826) 124,102 As at end of financial year* (1,522,911) (1,364,085) * Presented in the statements of financial position as below as they relate to taxable entities for which no group relief is available: Deferred tax assets 253, ,029 Deferred tax liabilities (1,776,352) (1,612,114) (1,522,911) (1,364,085) 9.2 The components of the deferred taxation are as follows: Future tax benefits arising from: Unabsorbed tax losses and capital allowances carried forward 193, ,000 Unrealised loss on foreign exchange 2,760 Unrealised profit from intragroup transactions 57,371 59, , ,029 Future tax benefits arising from: Revaluation surplus net of related financial depreciation (654,354) (679,567) Capital allowance claims available lower than financial depreciation charge (860,387) (880,455) Unrealised gain on foreign exchange (261,611) (52,092) (1,776,352) (1,612,114) (1,522,911) (1,364,085) 74

19 10. INVENTORIES Stated at cost Held for Manufacture Raw materials 14,370,996 14,065,417 Packing materials and loose tools 1,333,308 1,335,824 Spare parts 618, ,279 Work-in-progress 3,779,192 2,886,503 20,101,998 18,869,023 Sale Finished products 11,496,791 10,268,131 31,598,789 29,137,154 Recognised in profit and loss: Inventories recognised as cost of sales 29,633,237 31,174, TRADE RECEIVABLES Gross receivables Other trade receivables 9,530,668 10,419,926 Allowance for impairment As at beginning of financial year 156,770 37,821 Charge during the financial year 137,012 Reversal during the financial year (126,560) (18,063) As at end of financial year 30, ,770 Net receivables As at end of financial year 9,500,458 10,263,156 The amount of gross receivables is stated after writing off bad debts of: 2,878 75

20 Curency exposure profile: Ringgit Malaysia 7,188,342 7,665,308 Australian Dollar 325, ,447 Brunei Dollar 18,613 Japanese Yen 16,618 8,166 Singapore Dollar 110, ,803 United States Dollar 1,889,488 2,299,589 9,530,668 10,419, Average credit settlement terms during the financial year: Days Days Local trade receivables Foreign trade receivables OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS Company Interest receivable 70, ,516 Utility deposits 92, ,281 2,000 Advances paid to suppliers 798, ,379 Other prepayments 216, ,474 Other receivables 646,928 1,082,078 2,613 1,824,548 2,643,728 4,613 Allowance for impairment As at beginning of financial year 48,721 (Reversal)/Charge during the financial year (18,721) 48,721 As at end of financial year 30,000 48,721 Net receivables As at end of financial year 1,794,548 2,595,007 4,613 Currency exposure profile: Ringgit Malaysia 1,260,135 1,872,298 4,613 Euro 238,536 United States Dollar 325, ,430 1,824,548 2,643,728 4,613 76

21 13. RELATED PARTIES, TRANSACTIONS AND ACCOUNTS 13.1 General information The related parties, transactions, accounts and their relationships with the Company are as follows: Companies in which two Directors of the Company, Yeo Kim Swee and Yeo Kim Soon and their connected persons are having or deemed to have controlling interests: Bin Lee Sdn. Bhd. Minsoon Credit Corporation (M) Sdn. Bhd. Minsoon Developers Sdn. Bhd. Minsoon Motors Sdn. Bhd. Maxistop Pty. Ltd. ( MPL ) Maxistop Friction Materials (Shanghai) Co. Ltd. ( MFMS ) Company in which a director of the Company, Yeo Kim Swee, has a substantial direct interest: Time Ventures Sdn. Bhd. All the companies mentioned were incorporated in Malaysia except for MPL and MFMS which were incorporated in Australia and China respectively Revenue/(expense) transactions with related parties: Printing (19,340) (27,846) Purchase of motor vehicles (1,153,420) Upkeep of motor vehicles (11,109) (5,515) The related party transactions of the have been entered into in the normal course of business and have been established under terms that are no less favourable than those arranged with independent third parties Accounts outstanding Included under: Trade payables (Note 16.1) 1,753 2,119 77

22 14. TAXATION 14.1 Income tax Tax expense for financial year As at beginning of financial year 353,212 (939,901) Payments (1,671,951) (1,513,124) Refund 49,526 1,130,885 (1,269,213) (1,322,140) Current For the current year 882,382 1,685, ,382 1,685,084 Under/(Over)-provision in prior years 31,342 (9,732) 31,342 (9,732) 913,724 1,675,352 As at end of financial year* (355,489) 353,212 Deferred Transfer to/(from) deferred taxation (Note 9) Based on income For the current year 215,059 (54,134) (Over)/Under-provision in prior years (31,021) 10,356 Change of statutory tax rate (54,060) Based on reserves For the current year (25,212) (26,264) 158,826 (124,102) Total tax expense for the financial year (Note 14.3) 1,072,550 1,551,250 78

23 * Presented in the statements of financial position as below as they relate to taxable entities for which no group relief is available: Tax recoverable (424,960) (90,637) Tax payable 69, ,849 (355,489) 353, Company Income tax As at beginning, movement during and end of financial year 14.3 Components of income tax expense Current income tax expense 882,382 1,685,084 Deferred taxation relating to the origination and reversal of temporary differences 189,847 (80,398) (Note 14.4) 1,072,229 1,604,686 Changes of statutory tax rate (54,060) Under-provision (net) in previous financial year (Note 14.1) 1,072,550 1,551, Relationship between the accounting profit and income tax expense Accounting profit before taxation 3,521,021 5,953,018 Tax expense at the current statutory rate of 24% (2016: 24%) 845,045 1,428,724 Tax effects of expenses/(income) that are not deductible/(taxable) and (double deductible) in determining taxable profit: Depreciation charge for non-qualifying assets 223, ,971 Double deductions accorded for certain expenses (83,790) (72,229) Profit on disposal of available-for-sale investments (2,537) Profit on disposal of non-qualifying assets (4,721) Tax exempt dividends (56,628) (52,706) Others 109,352 87,786 1,037,785 1,577,288 79

24 Deferred tax assets are not recognised on certain tax losses as it is not probable that future taxable profit will be available against which they can be utilised 34,444 67,073 Previously unrecognised tax losses utilised (283) Previously unrecognised capital allowance now utilised (39,392) Tax expense for the current financial year (Note 14.3) 1,072,229 1,604,686 % % Average effective tax rate on accounting profit CASH AND BANK BALANCES Company Deposits placed with Malaysian licensed banks 11,655,230 16,640, ,000 Cash on hand and at banks 23,553,343 20,493,320 6,518 Cash and bank balances 35,208,573 37,133, ,518 Less: Deposits placed with maturity more than 3 months (9,140,000) (8,340,000) Cash and cash equivalents 26,068,573 28,793, ,518 The effective interest rate of the and Company's deposits placed with financial institutions as at the end of the reporting period ranged from 3.15% to 4.60% (2016: 2.20% to 4.55%) and 3.10% (2016: Nil) respectively. 80

25 16. TRADE PAYABLES Trade debt owing to related party (Note 13.3) 1,753 2,119 Other trade payables 2,971,995 2,703,564 2,973,748 2,705, Currency exposure profile: Ringgit Malaysia 2,814,215 1,668,595 United States Dollar 159,533 1,037,088 2,973,748 2,705, OTHER PAYABLES AND ACCRUALS Company Advances received from customers 634, ,627 Rental deposits 57, ,200 Other payables 265, ,497 Accruals 578,833 1,185,866 33,180 1,536,224 2,542,190 33,180 Currency exposure profile: Ringgit Malaysia 901,314 1,584,266 33,180 United States Dollar 634, ,924 1,536,224 2,542,190 33, SHAREHOLDERS' EQUITY 18.1 Equity represents shareholders' ownership interest in the and the Company. It is comprised of: Issued share capital contribution; and Reserves including fair value reserves and accumulated profits made by the and the Company up to the end of the financial year. employed in the business operations of the and the Company as disclosed below: 81

26 Company Share capital Ordinary shares Authorised share capital At 31 January 100,000,000 Issued and fully paid: As at beginning of financial year/ date of incorporation 60,800,000 60,800,000 2 Arising from internal organisation 2 60,800,000 As at end of the financial year 60,800,002 60,800,000 60,800,002 The new Companies Act, 2016, which came into operation on 31 January 2017, abolished the concept of authorised share capital and par value of share capital. There was only one class of issued paid-up shares. All these shares rank pari passu in respect of distribution of dividends, repayment of capital, voting and other rights, privileges, conditions and restrictions in accordance with the Memorandum and Articles of Association of the Company. Company Reserves Non-distributable Fair value reserves 1,980,113 1,119,665 Distributable Accumulated profits (Notes 30) 46,609,265 47,194, ,949 48,589,378 48,313, ,949 Fair value reserves Fair value reserves comprise the cumulative net changes in the fair value of available-for-sale investments until the investments are derecognised or impaired Net assets The equity attributable to owners of the Company, movements of which are shown in the statements of changes in equity, are represented by the net assets of the after deducting non-controlling interests and of the Company as disclosed in the statements of financial position as at the end of the financial year as follow: Company Net assets attributable to owners of the Company 109,389, ,113,825 61,277,951 Per ordinary share

27 Earnings Profit attributable to owners of the Company 2,455,105 4,400,135 Sen Sen Per ordinary share Basic Diluted N/A N/A Basic earnings per share is calculated by dividing the profit for the financial year attributable to owners of the Company by the number of ordinary shares in issue during the financial year. Diluted earnings per share is not applicable as the Company does not have any dilutive potential on ordinary shares. and Company Dividends Dividends paid and recognised in the financial statements are as follows: In respect of the financial year ended 31 January 2016 First and final single tier dividend of 5% per ordinary share paid on 21 July ,040,000 In respect of the financial year ended 31 January 2015 First and final single tier dividend of 3% per ordinary share paid on 6 August ,824,000 3,040,000 1,824,000 Sen Sen Amount of dividend per ordinary share of Gross Net Non-controlling interests Shares in subsidiaries As at beginning and end of financial year 320, ,004 Share of reserves and profits As at beginning of financial year 1,046,848 1,045,215 Current profits net of losses (6,634) 1,633 As at end of financial year 1,040,214 1,046,848 Total 1,360,218 1,366,852 83

28 19. CONTINGENT LIABILITIES Unsecured Bankers guarantees for Issuance of employment permits 105, ,500 Electricity supplies 445, ,000 Gas 77,704 66, , , REVENUE Company to Activities Manufacturing and trading Sales 47,391,678 50,513,996 Provision of automotive technical training services Technical training, registration and others 763,140 1,500 Dividend received from subsidiary 608,000 48,154,818 50,515, , OTHER INCOME Statutory disclosure items: Rental income from land and buildings 99,737 Expenses relating to rental income (7,925) 91,812 84