jasa kita berhad ( m)

Transcription

1 jasa kita berhad ( m) ANnual report 2017

2 CONTENTS 02 Notice of Annual General Meeting 05 Corporate Information 06 Corporate Structure 07 Group Financial Highligths 08 Management Discussion And Analysis 11 Directors Profile 14 Corporate Governance Report 30 Audit Committee Report 32 Statement on Risk Management & Internal Control 35 Financial Statements 102 Analysis of Shareholdings 105 Group Properties Proxy Form

3 jasa kita berhad ( m) Notice of Annual General Meeting NOTICE IS HEREBY GIVEN THAT the Twenty-Fifth Annual General Meeting of the shareholders of the Company will be held at Bukit Kiara Equestrian and Country Resort, Dewan Berjaya, Jalan Bukit Kiara, Off Jalan Damansara, Kuala Lumpur on Wednesday, 20 September 2017 at a.m. for the purpose of considering and, if thought fit, passing the following resolutions:- AGENDA 1. To receive the Audited Financial Statements of the Group and the Company for the financial year ended 31 March 2017 together with the Reports of the Directors and Auditors thereon. Please refer Explanatory Note A 2. To approve the payment of the following Directors fees:- (a) RM42,000 for the financial year ended 31 March (b) RM63,000 for the period from 1 April 2017 until the next Annual General Meeting of the Company. Ordinary Resolution 1 Ordinary Resolution 2 3. To re-elect the following Directors who retire in accordance with Article 83 of the Company s Articles of Association:- (a) (b) (c) Mr Woo Hin Weng; Mr Tang Tat Chun; and Mr Lian Teng Hai. Ordinary Resolution 3 Ordinary Resolution 4 Ordinary Resolution 5 4. To re-appoint the following persons as Directors of the Company:- (a) (b) Tan Sri Dato Tan Hua Choon; and Maj Gen Dato Osman Bin Mohd Zain (Rtd). Ordinary Resolution 6 Ordinary Resolution 7 5. To re-appoint Messrs PKF as Auditors of the Company and to authorise the Directors to fix their remuneration. Ordinary Resolution 8 6. As Special Business To consider and, if thought fit, to pass with or without modifications, the following resolution as an Ordinary Resolution:- PROPOSED RETENTION OF INDEPENDENT NON-EXECUTIVE DIRECTOR THAT subject to the passing of Ordinary Resolution 7 above, Maj Gen Dato Osman Bin Mohd Zain (Rtd), a Director who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine years, be retained as an Independent Non-Executive Director of the Company. Ordinary Resolution 9 2

4 Annual Report 2017 Notice of Annual General Meeting 7. To transact any other business for which due notice shall have been given in accordance with the Companies Act, By Order of the Board Chong Siew Duan (MAICSA No ) Secretary Kuala Lumpur Date: 28 July 2017 Notes: 1. A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies (but not more than two) to attend and vote instead of him. A proxy may but need not be a member of the Company. Where a member appoints two proxies to attend the same meeting, the member shall specify the proportion of his shareholding to be represented by each proxy, failing which the appointment(s) shall be invalid. 2. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it shall be entitled to appoint not more than two (2) proxies in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. Where a member of the Company is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, which holds ordinary shares in the Company for multiple beneficial owners in one securities account ( omnibus account ), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. Where an authorised nominee or an exempt authorised nominee appoints proxies, the proportion of shareholdings to be represented by each proxy must be specified in the instrument appointing the proxies. 3. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under the corporation s common seal or under the hand of an officer or attorney duly authorised. The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll. 4. The Proxy Form shall be deposited with the Company s Share Registrars, Symphony Share Registrars Sdn Bhd at Level 6, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, Petaling Jaya, Selangor Darul Ehsan, not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof. 5. Depositors whose names appear in the Record of Depositors on a date not less than three (3) market days before the general meeting shall be entitled to attend and vote at the Annual General Meeting, or appoint a proxy to attend, speak and vote on his behalf. 3

5 jasa kita berhad ( m) Notice of Annual General Meeting Explanatory Notes on Ordinary and Special businesses 1. Audited Financial Statements (Explanatory Note A) This Agenda item is meant for discussion only as under the provisions of Section 340(1)(a) of the Companies Act, 2016, the audited financial statements do not require formal approval of members and hence, this item will not be put forward for voting. 2. Proposed Ordinary Resolution 2 : Payment of Directors fees The proposed Ordinary Resolution 2 is to facilitate the payment of Directors fees after each month of completed service of the Non-Executive Directors for the period commencing from 1 April 2017 until the next Annual General Meeting ( AGM ) of the Company, assuming that all the Non-Executive Directors will hold office until the next AGM. In the event that the Directors fees proposed is insufficient (e.g. due to enlarged board size), approval will be sought at the next AGM for additional fees to meet the shortfall. 3. Proposed Ordinary Resolutions 6 and 7 : Re-appointment of Directors At the 24th AGM of the Company held on 29 September 2016, Tan Sri Dato Tan Hua Choon ( Tan Sri Dato Tan ) and Maj Gen Dato Osman bin Mohd Zain (Rtd) ( Dato Osman ), who are above the age of 70 years were re-appointed pursuant to Section 129(6) of the Companies Act, 1965 to hold office until the conclusion of the 25th AGM of the Company. The term of office of Tan Sri Dato Tan and Dato Osman will end at the conclusion of the 25th AGM of the Company. They have offered themselves for re-appointment. With the enforcement of the Companies Act, 2016 on 31 January 2017, the Companies Act, 1965 is repealed. Pursuant to the Companies Act, 2016, there is no maximum age limit for directors. The proposed ordinary resolutions 6 and 7, if passed, will enable Tan Sri Dato Tan and Dato Osman to continue in office from the date of this AGM onwards. 4. Proposed Ordinary Resolution 9 : Proposed retention of Independent Non-Executive Director In line with the Malaysian Code on Corporate Governance, the Nomination Committee has assessed the independence of Maj Gen Dato Osman Bin Mohd Zain (Rtd), who has served as Independent Non-Executive Director of the Company for a cumulative term of more than nine years, and recommended him to continue to act as an Independent Non-Executive Director of the Company. The justifications of the Board of Directors for recommending and supporting the resolution for his continuing in office as Independent Director is set out on page 23 under the Corporate Governance Report in the Company s 2017 Annual Report. Voting by Poll Pursuant to Paragraph 8.29A of the main market of Bursa Malaysia Securities Berhad s Listing Requirements, all resolutions set out in this notice are to be voted by poll. 4

6 Annual Report 2017 Corporate Information BOARD OF DIRECTORS Tan Sri Dato Tan Hua Choon (Executive Chairman) Maj Gen Dato Osman Bin Mohd Zain (Rtd) (Independent Non-Executive Director) Dato Sri Tan Han Chuan (Executive Director) Ong Bing Yap (Executive Director) Datin Tan Ching Ching (Executive Director) Woo Hin Weng (Executive Director) Tang Tat Chun (Non-Independent Non-Executive Director) Lian Teng Hai (Independent Non-Executive Director) Minhat bin Mion (Independent Non-Executive Director) AUDIT COMMITTEE Maj Gen Dato Osman Bin Mohd Zain (Rtd) (Chairman) Lian Teng Hai Tang Tat Chun (MIA member) NOMINATION COMMITTEE Maj Gen Dato Osman Bin Mohd Zain (Rtd) Minhat Bin Mion Lian Teng Hai REMUNERATION COMMITTEE Tan Sri Dato Tan Hua Choon Maj Gen Dato Osman Bin Mohd Zain (Rtd) Minhat bin Mion SENIOR INDEPENDENT NON-EXECUTIVE DIRECTOR Maj Gen Dato Osman Bin Mohd Zain (Rtd) Fax : (603) COMPANY SECRETARY Chong Siew Duan (MAICSA No ) PRINCIPAL BANKERS HSBC Bank Malaysia Berhad Public Bank Berhad Malayan Banking Berhad REGISTRARs Symphony Share Registrars Sdn Bhd Level 6, Symphony House Pusat Dagangan Dana 1 Jalan PJU 1A/ Petaling Jaya Selangor Darul Ehsan Tel : (603) (Helpdesk) Fax : (603) / ssr.helpdesk@symphony.com.my AUDITORS Messrs PKF Chartered Accountants Level 33, Menara 1MK Kompleks 1 Mont Kiara No.1, Jalan Kiara, Mont Kiara Kuala Lumpur Tel : (603) Fax : (603) REGISTERED OFFICE No. 8, 3rd Floor Jalan Segambut Kuala Lumpur Tel : (603) Fax : (603) website : enquiries@jasakita.com.my STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad Stock Name : JASKITA Stock Code :

7 jasa kita berhad ( m) Corporate Structure jasa kita berhad ( m) 100% JASA KITA ENGINEERING SDN BHD 100% JASA KITA WAREHOUSING SERVICE SDN BHD 100% JKB DEVELOPMENT SDN BHD (Formerly known as Purton Engineering (M) Sdn Bhd) 100% JKB MANAGEMENT SDN BHD 100% JASA KITA TRADING SDN BHD 51% JASAHALCO (INT.) SDN BHD 100% JASA KITA AUTO SDN BHD 6

8 Annual Report 2017 Group Financial Highlights for the financial years ended 31 March RM 000 RM 000 RM 000 RM 000 RM 000 Revenue 36,318 43,472 64,517 58,698 62,704 Profit/(Loss) Before Tax 434 (169) 7,185 5,342 8,471 Profit/(Loss) After Tax attributable to Owners of The Company (220) (705) 5,048 3,674 6,098 Dividend - net 5,844 1,349 1,349 1,686 1,686 Shareholders Fund 85,455 91,519 93,572 89,872 87,749 Earnings/(Loss) Per Share attributable to Owners of the Company (sen) (0.05) (0.16) Net Assets Per Share (RM) Dividend rate (%) Revenue (RM 000) PROFIT/(LOSS) BEFORE TAX (RM 000) 70,000 12,000 60,000 50,000 40,000 30,000 20,000 10, ,704 58,698 64,517 43,472 36,318 10,000 8,000 6,000 4,000 2,000 0 (2,000) ,471 5,342 7,185 (169) NET ASSETS PER SHARE (RM) SHAREHOLDERS FUND (RM 000) , , ,000 40,000 20,000 87,749 89,872 93,572 91,519 85,

9 jasa kita berhad ( m) Management Discussion and Analysis Overview The Group is principally involved in the trading and distribution of industrial tools and equipment, namely electric power tools, electric motors, mechanic s hand and air tools. It has also during the financial year under review started the business of distributing automotive batteries locally. As a trading concern, the Group is constantly on the look-out for new products to offer to the market, through its established customer network and capitalising on its almost 40 years experience in the business of distributing and trading of related industrial products. The Group will continue to work with its principals in the development of new markets for its products and in meeting the needs of its users. In addition to sourcing for quality products at competitive pricing levels, the Group intends to promote its products through both traditional and non-traditional channels as well as intensify its marketing campaigns in support of further growth. Greater coverage of market and geographical segments with potential is envisaged going forward. Recruitment of committed and well-trained personnel who are suitably remunerated in line with their performances will be another focus in the development of human resources required to realise the Group s objectives. Efforts to further engage the Group s customers and dealers in achieving the common aims of one another will also be strengthened as will endeavours to recover and rebuild the Group s revenue base through, among others, expansion of its marketing network. Financial Review Revenue for the year contracted 16% to RM36.3 million from that for the year before. The drop was largely ascribed to lower turnover recorded by the power tools division consequent upon the change in distribution-channel model by the Makita principal. Gross profit - impacted too by reduced margins - fell likewise to RM8.4 million from RM10.9 million a year ago. Nevertheless, the Group was able to post a profit before tax of RM433,625 as compared to a loss before tax of RM168,798 for the previous year due to a paring down of operating expenses and lower provisioning for impairment losses in respect of trade receivables and inventories. Total shareholders fund amounting to RM85.4 million as at 31 March 2017 was lower than that at the beginning of the financial year as a result of dividend payments made as well as declared totaling RM5.8 million during the year. Cash and bank deposits (prior to payment of the first interim dividend subsequent to the financial year-end) rose by RM1.6 million following a reduction in working capital. Operations Review Power Tools The revenue of the power tools division had contracted from RM28 million to RM18 million representing a drop of 35% compared to the previous financial year. The Group encountered a challenging year where the principal for Makita tools had appointed the Group s top contributing customers as additional distributors in Peninsular Malaysia. This has resulted in the Group s loss of sales by RM4.5 million in this financial year. This practice by the principal had also diverted the Group s other customers purchase to the newly appointed distributors. In addition, the price war among the new distributors also pulled down the margins of the division to the lowest in the entire business operation years. 8

10 Annual Report 2017 Management Discussion and Analysis Competitors spending huge amount of investment in media advertising promoting their lower price products also contributed to the revenue contraction of this division. To mitigate the loss of revenue, the Group secured a new sole distributorship from Chervon China for Devon Power Tool brand in Malaysia, which was launched in August In order for the Group to move back to an uptrend curve, several plans including representing new brands and new strategies in the current distribution channel will be implemented in the coming financial year. Electric Motors The division had achieved a 5.3% increase in revenue which was equivalent to RM6.351 million. Unfortunately, the gross profit of the division had reduced by 7.3%. This is due to the depreciation of the Ringgit which resulted in higher cost of good for the division. Besides, the clearance of old and slow moving stock contributed to the lower margin. The division will continue to gradually deplete and reduce its stock to support its customers in line with the industry standard. The division has enlarged its customer base by some 35% in order to reduce dependence on some OEM customers. This is part of the new distribution strategy from the division to diversify the business foundation base for better business opportunity in the coming years. Hand Tools The division recorded a remarkable year with revenue of RM6.4 million or 13% increase over the previous year which is the highest in the past four years. The gross margin improved compared to the previous financial year with the support from the principal on the cost of goods and promotional activities. Bonded Warehouse Revenue of warehouse services division also showed an increase over the previous year, but its growth is restricted by the availability of rental space. Focusing on customers with better margin is part of our main objective. We will also explore increasing space in our effort to boost the revenue and assuring the division with a stable income and profit. Automotive Battery Automotive Battery division was established in June 2016 exclusively selling GP batteries. The direction of this division is focusing on retailers such as automotive accessory shops, tyre shops, mechanic / workshops, second-hand car dealers, etc. The division has opened up to ninety new accounts since its commencement of operations. The division is continuing to recruit new sales representatives to improve the coverage in the Klang Valley area with the focus on retailers sales and van sales. 9

11 jasa kita berhad ( m) Management Discussion and Analysis Anticipated or Known Risks Having lost the sole distributing right for Makita power tools, we have taken measures to reduce the risk associated with over reliance on any particular brand by promoting multiple brands distribution. Inventory risk is managed through proper planning and monitoring. Also, industrial products do not deteriorate nor become obsolete easily. Credit risks arise from the granting of substantial credits to certain customers who are involved in big engineering projects. The Group manages its exposure to credit risks through credit approvals, credit limits and monitoring procedures. Exposure to foreign currency risk, which may affect our profit margin, arise from purchases of goods overseas denominated in foreign currencies. These risks are kept to an acceptable level through the constant monitoring of movement of the exchange rates and taking timely and appropriate measures in line with our business requirements. Forward-looking Statement The Group experienced a set back due to loss of exclusive distribution rights for Makita electric hand tools, however, the Management has replaced the loss by taking up Metabo and Devon brands of electric hand tools. Metabo is a world renowned brand of electric hand tools made in Germany. It is a premium product while the Chinese made Devon will be positioned to compete with lower priced tools. These brands have good potential and we shall use them to recapture our loss of revenue in the industrial segment. Various programmes had been scheduled to promote the brands. Metabo was launched on 8 April 2017 where over 100 dealers participated in the event. We also participated at the annual Metaltech exhibition to extensively promote all our brands, including Metabo, Sata, Kuani, Devon, Feima, Excel and others. Moving forward, instead of distributing a single brand of electric hand tools, we shall work on multi branding to meet the market demand. Meanwhile, our battery division which commenced last year has improved in sales gradually. We adopt STR (Sales To Retailer) networking strategy. Through this, we believe that not only will we be better positioned in the market but also improve our margins. Warehousing business has been very stable, this enable us to improve our profit by selecting preferred customers. We are in discussion with online sales partner to cater to their deliveries requirements. We hope to eventually tap into the online logistics business. 10

12 Annual Report 2017 Directors Profile Tan Sri Dato Tan Hua Choon Male, aged 76, Malaysian Executive Chairman Tan Sri Dato Tan was appointed as Chairman and Managing Director of the Company on 4 January 1993 and became a member of the Remuneration Committee on 18 March Subsequent to his resignation as Managing Director on 16 March 2002, he was appointed as the Executive Chairman of the Company on 29 March Tan Sri Dato Tan is a self-made businessman with vast experience in various fields and industries. He has been involved in a wide range of businesses, which include manufacturing, marketing, banking, shipping, property development and trading. Tan Sri Dato Tan has also built-up investments in numerous public listed companies and is the Chairman of FCW Holdings Berhad, JKG Land Berhad, Goh Ban Huat Berhad and Marco Holdings Berhad. He was also Chairman of GPA Holdings Berhad from 2000 to May Maj Gen Dato Osman Bin Mohd Zain (Rtd) Male, aged 84, Malaysian Independent Non-Executive Director Dato Osman was appointed to the Board of the Company on 4 January 1993 and has been the Chairman of the Audit Committee of the Company since He was also appointed to the Nomination Committee and Remuneration Committee of the Company on 18 March 2002 and 29 March 2002 respectively. Dato Osman joined the Malaysian Army as a Cadet Officer in He graduated from the Royal Military Academy Sandhurst, England in 1956 and retired in November 1988 with the rank of Major General. He also attended the Australian Army Staff College in In 1980, he attended the Indian National Defence College and in the same year obtained a Master s Degree in Military Science from the Allahabad University, India. Soon after his retirement from the Army, he joined the private sector. As at the date of this report, he does not hold any directorship in other public companies. Ong Bing Yap Male, aged 67, Malaysian Executive Director Mr Ong was appointed to the Board of the Company on 9 December 1992 and had served as a member of the Audit Committee from 1994 to 2 January Mr Ong holds a Diploma in Education from the Technical Teachers Training College. Besides having a few years of experience in teaching, he has accumulated many years of experience in the industrial engineering industry since joining the Jasa Kita Group of Companies in 1978 as well as experience in the telecommunication industry since joining the FCW Group of Companies in He was also the Director of Ideal United Bintang Berhad from 2003 to April Dato Sri Tan Han Chuan Male, aged 50, Malaysian Executive Director Dato Sri Tan was appointed to the Board of the Company on 4 January He holds a Bachelor of Science Degree in Business Administration, majoring in Finance and Operations from Boston University, U.S.A. He joined Jasa Kita Trading Sdn Bhd, a wholly-owned subsidiary company of Jasa Kita Berhad, in 1991 and has since been involved in the management of the Jasa Kita Group. He is the Director of JKG Land Berhad and Goh Ban Huat Berhad. He was the Director of GPA Holdings Berhad from 2013 to May

13 jasa kita berhad ( m) Directors Profile Datin Tan Ching Ching Female, aged 46, Malaysian Executive Director Datin Tan was appointed to the Board of the Company on 8 October She holds a Bachelor of Science, Combined Studies Degree, majoring in Accounting and minoring in Law from DeMonfort University, Leicester, U.K. and a Master s Degree in Business Administration majoring in Finance from University of Hull, U.K. She was appointed a Director of Jasa Kita Trading Sdn Bhd, a wholly-owned subsidiary company of Jasa Kita Berhad, in June 1993 and has since been involved in the management of the Jasa Kita Berhad Group. She is also a Director of JKG Land Berhad. Woo Hin Weng Male, aged 59, Malaysian Executive Director Mr Woo was appointed to the Board of the Company on 9 December He was a member of the Audit Committee since 2 January 2002 until his resignation from the Audit Committee on 31 January On 23 July 1990, he joined Jasa Kita Engineering Sdn Bhd, a wholly-owned subsidiary company of Jasa Kita Berhad, as the Financial Controller. He is a member of the Malaysian Institute of Accountants and a Fellow member of the Chartered Association of Certified Accountants. Prior to joining the Company, he has held senior positions in accounting and finance. He is also a Director of Marco Holdings Berhad. Lian Teng Hai Male, aged 63, Malaysian Independent Non-Executive Director Mr Lian was appointed to the Board of the Company as well as member of Audit Committee and Nomination Committee on 30 October He holds a Diploma in Marketing from the Chartered Institute of Marketing, United Kingdom. Mr Lian has 43 years of experience in several industries covering industrial products distribution, fast moving consumer goods, printing and photo imaging, timepieces and vehicle fleet management. He previously held various positions within Jasa Kita Engineering Sdn Bhd, a company involved in the manufacturing, assembling and distribution of electric motors, power tools and other industrial equipment from 1975 to He joined The East Asiatic Co (M) Berhad in 1988 where his last position was General Manager of Technical Marketing Division and Consumer Product Division in From 1992 to 1996, Mr Lian was an Executive Director of Marco Corporation (M) Sdn Bhd, a company specializing in distribution and chain store retailing of timepieces. Mr Lian was formerly an Independent Director and Chairman of the Audit Committee of Marco Holdings Berhad ( ) and GPA Holdings Berhad ( ). Mr Lian is also an honorary advisor to the Malaysia Watch Trade Association since Mr Lian was appointed to the Board of DKSH Holdings (Malaysia) Berhad on 26 February 2015 as a Non- Independent Executive Director. He is presently the Regional Vice President of Fast Moving Consumer Goods, Malaysia and Singapore, responsible for the sales, distribution and supply chain of fast moving consumer goods, telecommunication products and the operation of food retail chain stores. He is also responsible for Business Development and Key Client Management in the position as the Regional Vice President of South East Asia, DKSH Consumer Goods. He also sits on the board of various subsidiaries of DKSH Holdings (Malaysia) Berhad. 12

14 Annual Report 2017 Directors Profile Minhat Bin Mion Male, aged 70, Malaysian Independent Non-Executive Director En Minhat was appointed to the Board of the Company and as a member of Remuneration Committee on 6 August He was also appointed as a member of the Nomination Committee on 20 May He holds a Bachelor of Arts (Honours) degree from Universiti Malaya in 1972 and a post-graduate Diploma in Management Science from Institut Tadbiran Awam Negara (INTAN) in En Minhat had served in the Malaysian civil service from 1972 to 1991 in the administrative and diplomatic services. During his tenure as a civil servant, he served at the Kuala Lipis Land Office, Ministry of Defence, INTAN, Public Service Department, Ministry of Works, and Ministry of Health. His last position was as Under Secretary in the Prime Minister s Department. Since 1992, he had conducted his own business concentrating on the travel, tourism and construction industries. At the date of this report, he does not hold any directorship in other public companies. Tang Tat Chun Male, aged 52, Malaysian Non-Independent Non-Executive Director Mr Tang was appointed to the Board and the Audit Committee of the Company on 31 January He holds a Bachelor of Business (majoring in Accounting) from Melbourne, Australia and he is also a member of CPA Australia and the Malaysian Institute of Accountants. He commenced his career with Ernst & Young (Singapore office) and has held senior positions in internal audit units of several public listed companies involved in industries such as manufacturing, trading, property development and telecommunication. Presently, Mr Tang is the Executive Director-Finance of Goh Ban Huat Berhad. He is also a Director of FCW Holdings Berhad. ADDITIONAL INFORMATION ON MEMBERS OF THE BOARD Family Relationship Tan Sri Dato Tan Hua Choon is the father of Dato Sri Tan Han Chuan and Datin Tan Ching Ching. Tan Sri Dato Tan Hua Choon and Dato Sri Tan Han Chuan are also major shareholders of the Company. Save for Tan Sri Dato Tan Hua Choon, Dato Sri Tan Han Chuan and Datin Tan Ching Ching, there is no other family relationship among the Board Members and the major shareholders of the Company. Conflict of Interest None of the Directors have any conflict of interest with the Company. Conviction of Offences None of the Board Members have convictions for offences within the past five years (other than traffic offences, if any), nor any public sanction or penalty imposed by relevant regulatory bodies during the financial year. 13

15 jasa kita berhad ( m) CORPORATE GOVERNANCE REPORT The Board of Directors ( Board ) of Jasa Kita Berhad ( the Company ) recognizes the importance of good corporate governance and is committed to practice good corporate governance throughout the Group. Such commitment is based on the belief that a strong culture of good corporate governance practices is fundamental towards enhancing long term shareholders value, increasing investors confidence and protecting stakeholders interests. The Board will continuously evaluate the status of the Group s corporate governance practices and procedures with a view to adopt and implement the best practices in so far as they are relevant to the Group, bearing in mind the nature of the Group s businesses and the size of its business operations. The Board is pleased to disclose below how the Group has applied the principles set out in the Malaysian Code on Corporate Governance ( the Code ) to its particular circumstances, having regard to the recommendations stated under each principle for the year ended 31 March 2017 ( FY 2017 ). PRINCIPLE 1 - ESTABLISH CLEAR ROLES AND RESPONSIBILITIES The Board has overall responsibility for the management of business and affairs of the Group. Accordingly, the corporate governance framework of the Group was established with clear roles and responsibilities to enable the Board to provide strategic guidance of direction for the Group and effective oversight of the management of the Group s business and affairs. 1.1 Establish clear functions reserved for the Board and those delegated to Management The Board as a whole is responsible for setting and reviewing of goals and strategic directions, overseeing the process and effectiveness of risk management and control environment of the Group and to facilitate the Board and Management s accountabilities towards overall well-being of the Group. There is a clear division of responsibilities at the helm of the Company to ensure a balance of authority and power. Under the present structure of the Board, Tan Sri Dato Tan Hua Choon as the Executive Chairman ensures the effectiveness of Board policies and guides the Executive Directors in the oversight of management. The Executive Directors lead the executive management and are responsible for the day-to-day operations and implementation of Board policies and decisions. Decisions made by the Board are communicated through the Executive Directors to the senior management team. The Management is accountable for the execution of the expressed policies and attainment of the Group s expressed corporate objectives. In discharging its duties and responsibilities, the Board has a schedule of matters specifically reserved for its deliberation, such as approval of major operational and management matters which include business strategies, operational policies and controls, investment policies, acquisition and disposal of material assets, financial statements and policies as well as human resource issues. The schedule ensures that the direction and control of the Group are in the hands of the Board. The Board comprises members with a wide range of experience in industrial engineering, management, marketing, trading, administration, finance and accounting. The combination of skills and experience of the Directors set forth a synergy of strength in charting the direction of the Group. The profiles of the members of the Board are set out in pages 11 to 13 of this Annual Report. 14

16 Annual Report 2017 CORPORATE GOVERNANCE REPORT The presence of Independent Non-Executive Directors fulfills a pivotal role in corporate governance accountability, as they provide unbiased and independent views and advice in ensuring that the strategies proposed by the management are fully deliberated and examined in the long-term interests of the Group, as well as the shareholders, employees, customers, suppliers and the many communities in which the Group conducts its business. The Board of Directors regularly reviews the strategic direction of the Company and the progress and performance of the Company s operations, taking into account changes in the business and political environment and risk factors such as level of competition. The Board, in carrying out its stewardship responsibility has delegated certain responsibilities to the Audit Committee, Nomination Committee and Remuneration Committee. All committees have clearly defined terms of reference. The Chairman of the various committees will report to the Board the outcomes of the committee meetings. The Management especially the departmental heads are accountable to the Board and to fulfill their responsibility through the provision of reports, briefings and presentations on a regular basis and attending Board of Directors Meeting by invitation. 1.2 Board s Roles and Responsibilities The Board has established clear roles and responsibilities in discharging its fiduciary duties and leadership functions. The principal functions and responsibilities of the Board include the following:- (i) Reviewing and adopting strategic business plans for the Group The Board plays a pivotal role in reviewing and approving Management strategies and plans designed to pursue business objectives and ensuring that they continue to remain prudent in the context of the objectives of the business, the economic environment, available resources and reasonable achievability of results. The Board reviews and constructively challenges the Management s views/assumptions in ensuring the best decisions are made after having considered all relevant aspects. The Board deliberates annually the strategic plan proposed by the Management including the annual capital, revenue and profit budget for the ensuing year. This will ensure that the plans correspond with the overall business objectives established and continue to be appropriate in the context of the business opportunities being pursued. To ensure the achievement of the Group s overall strategic objectives, targets set are cascaded down to the respective divisions and management personnel. Quarterly review of the financial performance as well as of the budget was conducted by the Board whereby comparison of approved targets against the Company s actual performance was made. This ensures that the financial performance and the business of the Company are properly monitored and managed. The Board via the Executive Directors review the sustainability of the strategic direction of the respective divisions to ensure the Group achieves the targets in line with the business landscape. The Board reviews the Company s funding requirements and finance matters on a continuing basis including reviewing the capital and solvency positions of the Group and approving major financing arrangements. Based on the annual evaluation for the financial year under review, the Board has reviewed the Company s strategic and financial plan as well as monitored its implementation procedures in achieving the Company s objectives. 15

17 jasa kita berhad ( m) CORPORATE GOVERNANCE REPORT (ii) Overseeing the conduct of the Group s businesses The Group s financial results, including comparison of actual financial performance of key business units against budgeted financial performance, are presented by the Management to the Board at its meetings for review. In addition, key business indicators, such as, key customers ageing analysis, inventory ageing analysis and advertising & promotional expenses, are tabled to the Audit Committee for their review and subsequent reporting to the Board. Upon identification of key business and financial issues by the Management and the Board members, such issues are deliberated by the Board to ensure that the issues in question are properly managed and adequately addressed. (iii) Identifying principal risks and ensuring the implementation of appropriate internal controls and mitigation measures The Board is kept informed on the emergence and changes of the key risks faced by the Group and the steps taken to manage these risks by the Executive Directors and the Management during scheduled meetings. Members of the Board and the Management maintain constant communication among themselves to discuss strategic and operational risks and to formulate and implement proper action plans to manage the risks identified. Further explanation on such processes are disclosed in the Statement on Risk Management and Internal Control on pages 32 to 34. (iv) Reviewing the mix of skills and competencies of the Board and senior management and to ensure sufficient succession planning of senior management team is put in place On annual basis, the Nomination Committee is tasked with duty to assess the performance of the individual directors (including the Executive Directors) to ensure all the directors possess essential skills and knowledge to discharge their responsibilities as the directors of the Group. In addition, the Remuneration Committee meet on annual basis to review the remuneration package of the executive directors to ensure that the remuneration package commensurate with the performance and contribution of the Executive Directors. Results of the review by both the Nomination and Remuneration Committees are tabled to the Board for notation. The Group has in place informal practices of succession planning whereby competent and suitably qualified second-in-line staffs are identified by the Chairman of the Board and/or Executive Directors for the key functions within the Group. The development of the second-inline staffs is managed through on-the-job training and guidance as well as external trainings to close the competency gap required. (v) Overseeing the development and implementation of a shareholder communications policy The Company continuously maintains its commitment to pursuing high standards of corporate disclosure through the dissemination of accurate, consistent, transparent and timely information to its stakeholders. The Company maintains a website at ( the website of the Company ) which can be conveniently accessed by the shareholders and the general public. The Group s website is updated from time to time to provide the latest information about the Group, including corporate announcements and quarterly announcements of the Group s results. 16

18 Annual Report 2017 CORPORATE GOVERNANCE REPORT (vi) Reviewing the adequacy and the integrity of the management information and internal control systems of the Group The internal audit functions of the Group are outsourced to an internal audit firm concentrating on internal business processes and focusing on the distributor management system. The internal audit personnel review the systems of internal control of the Group and distributor management system based on their respective internal audit plans and report their findings to the Audit Committee. 1.3 Code of Conduct The Code of Conduct adopted by the Group describes the standards of business conduct and ethical behavior for Directors and/or employees of the Group in the performance and exercise of their duties and responsibilities. The Code of Conduct is made available on the Company s website, The Company facilitates the mechanism of whistle-blowing by which a worker or stakeholder can report or disclose to the Company s Senior Independent Non-Executive Director pertaining to concerns about any unethical behavior, malpractice or illegal act that is taking place/has taken place in the Company or subsidiary companies. 1.4 Sustainability of Business The Company recognises the importance of sustainability and its increasing relevance to the Group s businesses. The Company is committed to carry out business operations in a manner that will create minimum impact on the environment and the community while creating value for the stakeholders via our Corporate Social Responsibility activities, details of which are provided on page 29 of this annual report. 1.5 Access to information and advice The Board recognizes that its decision making process is largely dependent on the quality of information furnished. All Directors have unrestricted access to information of the Group on an on-going basis. The Board has access to the Senior Management to seek clarification and understanding for information relating to the Group s business affairs to enable the Board to discharge their duties effectively to arrive at informed decisions. Where necessary, the Board may engage independent professional advisers at the Group s expense on specialised issues to enable them to discharge their duties proficiently. Any Director seeking independent advice must first discuss the request with the Chairman of the Board who will facilitate obtaining such advice and, where appropriate, disseminate the advice to all Directors. It is expected that any significant issues affecting the Group are communicated to the Chairman of the Board, Executive Directors, Group Financial Controller or Company Secretary. Senior Management staff or professional advisers appointed by the Company to advise the Company on its corporate proposals may be invited if necessary to attend the Board meetings and to provide the Board with explanation and clarifications to facilitate informed decision making on any matters including the approval of the annual company plans, major acquisitions or disposal of a business or assets and changes to management and control structure of the Group, such as key policies and authority limits. 17

19 jasa kita berhad ( m) CORPORATE GOVERNANCE REPORT All Directors are provided with an agenda and a set of Board papers prior to the Board meetings or Committee meetings seven days prior to the meeting(s) or any other time frame agreed with the Board when necessary, to enable them to peruse the papers and if necessary, to obtain the necessary information or explanations and where necessary, to seek any clarification before or during the meeting. Board papers are comprehensively prepared to cover many aspects of matters being considered, enabling the Board to look at both quantitative and qualitative factors when dealing with any item on the agenda so that informed decisions can be made. Amongst the topics tabled at Board Meetings are the Group s financial performance, business plans and proposals, quarterly result announcements, proposed policies and procedures, operational issues and updates on statutory regulations and requirements affecting the Group. 1.6 Qualified and competent Company Secretary The Board has direct access to the advice and services of the Company Secretary especially relating to procedural and regulatory requirements. The Company Secretary plays significant role in supporting the Board for ensuring that all governance matters and Board procedures are followed and that applicable laws and regulations are complied with. These include obligations of Directors relating to disclosure of interests and disclosure of any conflicts of interest in transactions with the Group. The Company Secretary also facilitates the communication of key decisions and policies between the Board, Board Committees and senior management. In ensuring the uniformity of the Board s conduct and effective Boardroom practices throughout the Group, the Company Secretary has oversight on the overall corporate secretarial functions of the Group. The Company Secretary with Chartered Secretaries qualifications is qualified to act as chartered secretary under the Companies Act, Board Charter The Board is guided by its Board Charter which provides guidance to the Board in relation to the Board s role, duties, responsibilities and authorities which are in line with the principles of good corporate governance. The Board Charter serves as a source of reference for Board members, and the same is accessible to the public on the Company s corporate website. The Board will review the Board Charter from time to time and update the content in accordance with the needs of the Company to ensure its effectiveness and consistency with the Board s objectives and corporate vision. The Board Charter was reviewed by the Board on 21 February PRINCIPLE 2 - STRENGTHEN THE BOARD S COMPOSITION The Company is headed by an effective Board with nine members, comprising an Executive Chairman, four Executive Directors and four Non-Executive Directors, three of whom are independent. Hence, the Company has fully complied with the provisions of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( MMLR ) for independent non-executive directors to make up at least one third of the Board membership and for a director who is qualified under paragraph (1)(c) of the MMLR to sit on the Audit Committee. The Executive Chairman and two executive members of the Board are family members. 18

20 Annual Report 2017 CORPORATE GOVERNANCE REPORT The composition of the Board is deemed fairly balanced to complement itself in providing the industryspecific knowledge, technical, and commercial experience. This balance enables the Board to provide clear and effective leadership to the Company and to bring informed and independent judgment to various aspects of the Group s strategies and performance. 2.1 Nomination Committee The Nomination Committee was established by the Board on 18 March 2002 comprising exclusively Independent Non-Executive Directors. The present members of the Nomination Committee are:- (a) (b) (c) Maj Gen Dato Osman Bin Mohd Zain (Rtd); Mr Lian Teng Hai; and En Minhat bin Mion The main responsibilities of the Nomination Committee are stipulated in the Terms of Reference of the Nomination Committee which include recommending suitable new nominees for appointment as Directors to the Board and to fill the seats on Board Committees wherever necessary for the Board s consideration and reviewing annually the Board s required mix of skills, experience and other qualities including core competencies which non-executive directors should bring to the Board. The Board had put in place a formal process for the assessment on the effectiveness of the Board as a whole, the Board Committees, contribution of each individual director, assessment of the independence of the independent director(s) who has served the Company for more than nine years as well as assessment of the term of office and performance of the Audit Committee and each of its members, and the assessment is done on an annual basis by the Nomination Committee. Board Diversity The Board acknowledges the importance of Board diversity, including gender, ethnicity, background and age, and strives for an effective and balanced board. Furthermore, the Board also recognizes the contribution that women can bring to the Board and the group and will give due consideration to the matter. The Board is of the view that while promoting boardroom diversity is essential, the normal selection criteria based on an effective blend of competencies, skills, extensive experience and knowledge to strengthen the Board should remain a policy. The Company does not set any specific target for boardroom diversity but has actively worked towards achieving the appropriate boardroom diversity. 2.2 Develop, maintain and review criteria for recruitment and annual assessment of Directors Nomination and recruitment process Appointment of new Directors to the Board is recommended to the Nomination Committee for consideration and approval by the Board in accordance to the Procedure for Nomination and Selection of Candidates for Directorship developed by the Nomination Committee and approved by the Board. It is the policy of the Board that candidates with sufficient and relevant knowledge, skills and competency are sought to serve as members of the Board to effectively discharge its responsibilities and duties and contribute to the governance of the Group. The criteria for selection of directors involve assessment of, amongst others, the candidate s personal and professional ethics and integrity, objectivity and potential conflicts of interest, understanding of the duties and responsibilities of a director of a listed entity, interpersonal skills, knowledge of the industry or work experience, and relevant academic and/or professional qualifications. 19

21 jasa kita berhad ( m) CORPORATE GOVERNANCE REPORT The process for the nomination and selection of a Director per the policy involves identification of potential candidates for consideration, evaluation of suitability of candidates based on agreed upon criteria for experience, knowledge and skill, meeting up with candidate and background check, before final deliberation by Nomination Committee. The Nomination Committee will recommend the candidates to be approved and appointed by the Board. The Company Secretary will ensure that all appointments are properly made, all the necessary information is obtained as well as all legal and regulatory obligations are met. Re-election of Directors The Company s Articles of Association provide that one third of the Directors or, if their number is not a multiple of three, then the number nearest to one-third shall retire from office and be eligible for re-election at every annual general meeting of the Company. All Directors shall retire from office at least once in every three years but shall be eligible for re-election. Newly appointed Directors shall hold office until the next annual general meeting and shall be eligible for re-election, but shall not be taken into account in determining the number of Directors who are to retire by rotation at such meeting. Annual Assessment The Nomination Committee meets as and when required. The Nomination Committee met two times during the FY 2017 and all the members attended the meeting. The activities undertaken by the Committee were as follows: (i) (ii) Reviewed the Board structure, size and composition, and was satisfied with the review given the size of the Group and its business operations. Reviewed and evaluated the effectiveness of the Board as a whole, the Board Committees, the contribution of each of the individual Director, the independence of the independent director who has served the Company for more than nine years as well as assessment of the term of office and performance of the Audit Committee and each of its members based on the criteria set out in the annual assessment form. The effectiveness of the Board and the Board Committees were assessed in the areas of the Board s size and structure, Board s mix of skills, experience and qualities, effectiveness and frequency of meetings. The assessment of individual directors was carried out under board dynamics and participation, competency and capability, contributions towards business development and growth, exercise of independent judgement and objectivity with integrity. The performance of each Non-Executive Director was also carefully considered, including whether the person could devote sufficient time to the role. This process also examines the ability of each Board or Committee member to give input at meetings and to demonstrate a high level of professionalism and integrity in the decision-making process. The Nomination Committee was satisfied with the experiences, contributions, competencies and skill mix of the Directors to enable the Board and the Board Committees to discharge their respective duties and responsibilities effectively, as well as with the independence of the Independent Directors. (iii) Evaluated the balance of skills, knowledge and experience of the Board to ensure balance of power and authority, and a clear division of responsibilities at the head of the Company. 20

22 Annual Report 2017 CORPORATE GOVERNANCE REPORT (iv) Reviewed and approved the amendments to the Terms of Reference for the Nomination Committee before recommending to the Board for endorsement. The amendments included, among others, the additional function of the Nomination Committee, i.e. to review on an annual basis the term of office and performance of the Audit Committee and each of its members in carrying out his or her duties, in line with the amendments to the MMLR. All assessments and evaluations carried out by the Nomination Committee are properly documented. 2.3 Remuneration Committee and Remuneration Policies and Procedures The Remuneration Committee was established by the Board on 18 March 2002 and comprises mainly Non-Executive Directors. The present members of the Remuneration Committee are:- (a) (b) (c) Tan Sri Dato Tan Hua Choon; Maj Gen Dato Osman Bin Mohd Zain (Rtd); and En Minhat bin Mion The Remuneration Committee s main responsibility is to review and recommend to the Board the framework of Executive Directors remuneration, in particular, the remuneration package for the Executive Directors in all its forms, drawing from outside advice where necessary and fees payable to the Non-Executive Directors. The Board as a whole determines the remuneration package of Non-Executive Directors. The respective Directors shall abstain from deliberations in respect of their own remuneration packages. The Remuneration Committee met once during FY 2017 with full attendance of its members. The level and make-up of remuneration The Board endeavours to ensure that the levels of remuneration offered for directors are sufficient to attract and retain people needed to run the Group successfully. In the case of Executive Directors, the component parts of remuneration are structured to link rewards to corporate and individual performance while ensuring that the level of remuneration commensurate with the market, the experience and the level of responsibilities undertaken. The Executive Directors are not paid any director s fee. In the case of Non-Executive Directors, the level of fees reflects the contribution and level of responsibilities undertaken by the particular non-executives concerned. Procedure The Board had adopted a standard policy to assist the Remuneration Committee in carrying out its duties within its terms of reference. Under the policy, the Remuneration Committee reviews and formulates the remuneration packages of the Executive Directors and makes suitable recommendations thereon to the Board for approval. The fees of the Non-Executive Directors, which are subjected to the shareholders approval, are the ultimate responsibility of the Board after considering the recommendation of the Remuneration Committee. The Directors do not participate in discussion on their own remuneration. 21

23 jasa kita berhad ( m) CORPORATE GOVERNANCE REPORT Disclosure on Directors Remuneration Details of Directors remuneration paid to the Directors of the Group and the Company during FY 2017 are as follows:- (i) Aggregate remuneration of Directors categorised into the following components:- Executive Directors (RM) Company Non- Executive Directors (RM) Executive Directors (RM) Group Non- Executive Directors (RM) Type of Remuneration Fees 42,000 66,000 Salaries 1,173,600 Bonuses 107,800 E.P.F. (Employer s portion) 134,616 Total 42,000 1,416,016 66,000 The number of Directors whose remuneration fall within the following bands are:- Company Group Number of Directors Number of Directors Non- Non- Band (RM) Executive Executive Executive Executive 1 50, , , , , , , , , , , , ,000 2 Total Note:- For security and confidentiality reasons, the details of the Directors remuneration are not shown with reference to Directors individually. The Board is of the view that the transparency and accountability aspect of the corporate governance on Directors remuneration are appropriately served by the band disclosure made. The Board recommends the Directors fees payable for the financial year ended 31 March 2017 which are subject to the shareholders approval at the forthcoming annual general meeting. 22

24 Annual Report 2017 CORPORATE GOVERNANCE REPORT PRINCIPLE 3 - REINFORCE INDEPENDENCE 3.1 Annual assessment of Independence The existence of Independent Directors on the Board itself does not ensure absolute unbiased judgment as it can be compromised by familiarity with the other Board members. In this connection, the Board has undertaken an annual assessment of the independence of the Independent Directors via disclosed interests and the criterias for assessing their independence were developed by the Nomination Committee and adopted by the Board. The current Independent Directors of the Company have fulfilled the criteria of independence as prescribed under Chapter 1 of the MMLR. The Board does not have term limit for its Independent Directors and is of the view that the independence of the Independent Director should not be determined by their tenure of service. The Board is confident that the Independent Directors themselves, having provided all the relevant confirmation on their independence, will be able to determine if they can continue to being independent and provide objective judgement on Board deliberations and decision making. 3.2 Tenure of Independent Director One of the recommendations of the Code states that the tenure of an independent director should not exceed a cumulative term of nine years. However, in line with the Code, the Nomination Committee has assessed the independence of Maj Gen Dato Osman Bin Mohd Zain (Rtd), who has served as Independent Non-Executive Director of the Company for more than nine years, and upon its recommendation, the Board of Directors has recommended for the said person to continue to act as Independent Non-Executive Director based on the following justifications:- (i) (ii) (iii) he continues to fulfill the criteria under the definition of Independent Director as stated in the MMLR; his length of service on the Board of more than nine years does not in any way interfere with his exercise of objective judgment or his ability to act in the best interests of the Company and Group. In fact, having been with the Company for more than nine years, he is familiar with the Group s business operations and has devoted sufficient time and commitment to his role and responsibility as an Independent Director for informed and balanced decision making; and he has exercised due care during his tenure as Independent Director of the Company and has discharged his duty with reasonable skill and competence, bringing independent judgment and depth into the Board s decision making in the interest of the Company and its subsidiaries. 3.3 Separation of the positions of the Chairman and the Executive Directors The Code recommends that the board of directors of a public listed company should comprise of majority of independent directors where the chairman of the board is not an independent director. The Board of Directors of the Company, whose Chairman is holding an executive position, is of the opinion that the element of independence which currently exists is adequate to provide assurance that there is balance of power and authority on the Board. 23

25 jasa kita berhad ( m) CORPORATE GOVERNANCE REPORT Notwithstanding the above, the roles of the Executive Chairman and Executive Directors of the Company are held by separate persons with individual duties. Each of them has their respective defined duties and authority, thus ensuring that a balance of power is maintained for independent decision-making. The Executive Chairman is primarily responsible for the leadership of the Board and ensuring the effectiveness of the Board while the Executive Directors manage the business and operations and implement the Board s decisions. PRINCIPLE 4 - FOSTER COMMITMENT 4.1 Time commitment by Directors The Directors are expected to devote sufficient time to carry out their roles and responsibilities for the Group. In this regard, all Directors are required to notify the Chairman of the Board prior to accepting any new directorship and if there is any conflict of interest and time commitment arising from the appointment. The Board meets at least twice officially in a financial year and additional meetings are held as and when necessary with due notice of issues to be discussed given to each director. The Company Secretary attends to all Board Meetings. Informal meetings and consultation among the Directors are also held frequently and freely to share knowledge and expertise. For FY 2017, two scheduled Board Meetings were held and the attendance record of each Board member at the Board Meetings are set out below:- Name of Directors Status % of Attendance Tan Sri Dato Tan Hua Choon Executive Chairman 100 Maj Gen Dato Osman Bin Mohd Zain (Rtd) Independent 100 Non-Executive Director Dato Sri Tan Han Chuan Executive Director 100 Ong Bing Yap Executive Director 100 Datin Tan Ching Ching Executive Director 100 Woo Hin Weng Executive Director 100 Lian Teng Hai Independent 100 Non-Executive Director Minhat bin Mion Independent 100 Non-Executive Director Tang Tat Chun Non-Independent 100 Non-Executive Director 24

26 Annual Report 2017 CORPORATE GOVERNANCE REPORT All proceedings of Board Meetings which included decisions made and all issues discussed by the Board in arriving at the decisions were properly recorded in minutes of meetings. Draft minutes of meetings of the Board were circulated to the Directors for confirmation prior to the minutes being signed by the chairman of the meetings. The Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of the Company. The Directors are aware of the maximum number of directorships rule set by Bursa Malaysia and all the Directors of the Company comply with the rule of holding not more than five directorships in public listed companies. 4.2 Directors Training All the Directors have completed the Mandatory Accreditation Programme conducted by Bursatra Sdn Bhd, an affiliate company of Bursa Malaysia Securities Berhad. The Board acknowledges that continuous training is important to broaden the Directors perspective and to keep them abreast with regulatory and corporate governance developments. A brief induction of the Group will be provided to newly appointed Directors to acquaint themselves with the Group s business operations and practices. During the FY 2017, the Directors have attended some talks/seminars/training courses which covered the following topics:- Future of Auditor Reporting The Game Changer for Boardroom; Ring the Bell for Gender Equality; Advocacy Sessions on Management Discussion & Analysis for CEO and CFO; How to Leverage on AGMs for Better Engagement with Shareholders; Anti-corruption & Integrity Foundation of Corporate Sustainability; The Strategy, the Leadership, the Stakeholders and the Board; Updates of the 2015 & 2016 MFRS-Preparing MFRS-compliant Financial Statement in 2015, 2016 and thereafter; MIA International Accountants Conference 2016; Companies Act 2016-Key Insights and Implication for Directors, Auditors/Accountants & Company Secretaries; Issues & updates on GST Treatment for Retail/Wholesale Sector; Transfer pricing in Malaysia; Market Manipulation and Securities Fraud; and The Cybersecurity Threat and How Board should mitigate the Risks. In addition, the Board is regularly updated on the latest updates on MMLR and other regulatory requirements relating to the discharge of Directors duties and responsibilities. PRINCIPLE 5 - UPHOLD INTEGRITY IN FINANCIAL REPORTING 5.1 Compliance with the Applicable Financial Reporting Standards The Board is responsible for ensuring that the financial quarter results and the annual financial statements of the Group present a balanced and fair assessment of the Group s position and prospects. The Audit Committee assists the Board in reviewing the Group s financial quarter results to ensure correctness and adequacy prior to the Board s adoption for release to Bursa via BURSA LINK. The Statement explaining the Directors responsibility for preparing the annual financial statements is set out on page 29 of this annual report. 25

27 jasa kita berhad ( m) CORPORATE GOVERNANCE REPORT 5.2 Assessment of Suitability and Independence of External Auditors The Group has always maintained a transparent relationship with its Auditors in seeking their professional advice towards ensuring compliance with the relevant accounting standards. The key features underlying the relationship between the Audit Committee and the external auditors are set out in the Audit Committee s terms of reference. The Audit Committee reviews and monitors the suitability and independence of the External Auditors. The Audit Committee considered the suitability and independence of the External Auditors during the discussion of the Group Audit Plan. The Audit Committee considered several factors including the adequacy of experience and resources of the firm and professional staff assigned to the audit and the level of non-audit services to be rendered by the External Auditors to the Group for the financial year under review. Open communication and interaction are engaged by both the Management together with the audit engagement team through discussions, which demonstrated their independence, objectivity and professionalism. In the course of the audit, the External Auditors will also highlight to the Audit Committee on matters that require the Audit Committee s or the Board s attention together with the recommended corrective actions thereof. The Management is responsible for ensuring that all these corrective actions are undertaken within an appropriate time frame. At the same time, the Audit Committee further undertook an annual assessment of the quality of audit which encompassed the performance of the external auditors, and the quality of their communications with the Audit Committee and the Company, based on feedback obtained from the Company personnel who had substantial contact with the external audit team throughout the year. The Board is aware of the potential conflict of interest situation that may arise if the Company s External Auditors are engaged to provide non-audit services to the Group. In order to mitigate this risk, proper consultation with the External Auditors and Audit Committee will be made to ensure there is no conflict of interest situation prior to any appointment. The Audit Committee procured a confirmation from the External Auditors via the Audit Plan that they were and had been independent throughout the conduct of the audit engagement in accordance with their firm s requirements and with the terms of relevant professional and regulatory requirements, and was thus satisfied with the suitability of the External Auditors based on the quality of services and sufficiency of resources they provided to the Group. The External Auditors also provided a confirmation that they have reviewed the non-audit services provided to the Group during the year and that to the best of their knowledge, the non-audit services did not impair their independence. The External Auditors are invited to attend the annual general meetings of the Company and are available to answer the shareholders enquiries on the conduct of the statutory audit and the preparation and contents of their audit report. 26

28 Annual Report 2017 CORPORATE GOVERNANCE REPORT PRINCIPLE 6 - RECOGNISE AND MANAGE RISKS 6.1 Sound Framework to Manage Risks The risk management and internal control system is regularly updated by the Management and relevant recommendations are made to the Audit Committee and the Board for approval. The Group continually reviews its internal control processes and procedures to ensure it maintains a sound system of internal controls to safeguard its assets and the shareholders investments as far as possible. Details on the risk management and internal control system of the Group are set out in the Statement on Risk Management and Internal Control of this Annual Report. 6.2 Internal Audit Function The Group has outsourced the internal audit function to a professional service firm which is independent of the activities and operations of the Group. The outsourced internal auditors report directly to the Audit Committee. Details on the internal audit function are set out in the Audit Committee Report and the Statement on Risk Management and Internal Control of this Annual Report. PRINCIPLE 7 - ENSURE TIMELY AND HIGH QUALITY DISCLOSURE 7.1 Appropriate Corporate Disclosure Policies and Procedures The Board takes cognisance of the need for the Group to comply with the applicable laws and regulations pertaining to corporate disclosures, handling of material information as well as maintenance of confidentiality, and will act accordingly. 7.2 Leverage on Information Technology for Effective Dissemination of Information Shareholders, investors and the general public are able to obtain information of the Group and its services from the Company s website, In addition to the Company s compliance with the continuing disclosure obligations contained in the MMLR, shareholders are kept informed of the Group s progress through the provision of the financial quarter results, the Annual Report and via annual general meetings. PRINCIPLE 8 - STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS 8.1 Shareholders participation at general meeting The Board has always been of the view that the annual general meeting serves as the primary means of communicating with the shareholders. At each of the annual general meeting, the Board presents the financial performance of the Group and provides shareholders with an opportunity to put their questions in person. The members of the Board together with the external auditors are available to respond to the shareholders questions during the meeting. An Extraordinary General Meeting (EGM) is held as and when shareholders approvals are required on specific matters. Notices of meetings of the Company are always circulated to the shareholders within a reasonable and sufficient timeframe before the date(s) of meeting(s). 27

29 jasa kita berhad ( m) CORPORATE GOVERNANCE REPORT Shareholders are encouraged to attend and participate in the annual general meeting where the Board presents the performance and progress of the business of the Group during the particular financial year as contained in the Annual Report. They are given the opportunity to seek clarifications on the Group s performance, business activities and prospects as well as to communicate their expectations and concerns of the Group wherein, the Directors, the Group Financial Controller and the External Auditors are available to respond to queries and to provide explanation on any issue raised thereat. A press conference is usually held immediately after the annual general meeting or EGM whereat the Board members inform the media of the resolutions passed, and answer questions posed on the Group s operations and plans. In addition, the shareholders may also address their concerns, if any, to Maj Gen Dato Osman Bin Mohd Zain (Rtd), the senior independent non-executive director of the Company, via fax no or by mail to the Company s registered office Poll Voting In line with paragraph 8.29A of the MMLR, any resolution set out in the notice of any general meeting, or in any notice of resolution which may properly be moved and is intended to be moved at any general meeting, must be voted by poll. Hence, voting for all the resolutions as set out in the forthcoming and future general meetings will be conducted as such. An independent scrutineer will be appointed to validate the votes cast at the general meetings Effective communication and proactive engagements with shareholders The Group recognises the need to inform the shareholders of all significant developments concerning the Group on a timely basis, with strict adherence to the Bursa Securities Listing Requirements. Shareholders are kept informed of all major developments within the Group by way of announcements via the Bursa Link, the Company s Annual Reports, website and other circulars to shareholders with an overview of the Group s financial and operational performance. OTHER INFORMATION (a) Material Contracts There were no material contracts entered into by the Company and its subsidiaries which involved Directors and major shareholders interests since the previous financial year ended 31 March (b) Audit and Non-audit fees The fees incurred for services rendered to the Company and its subsidiaries by the Company s external auditors, or a firm affiliated to the external auditors for FY 2017 were as follows:- Group (RM 000) Company (RM 000) Audit Fees Non-Audit Fees

30 Annual Report 2017 CORPORATE GOVERNANCE REPORT CORPORATE SOCIAL RESPONSIBILITY In pursuing the objectives of fulfilling its responsibilities towards various stakeholders, the Group does not neglect its role as a caring and conscientious corporation with regard to matters and concerns relating to the society at large, of which it is an integral part. Environment The Group places importance on environmental protection by ensuring that its business operations and processes do not violate rules and regulations pertaining to environmental safety and protection. It strives wherever possible to follow practices that are generally regarded as contributing to the sustainability and preservation of the natural environment. Community Contributing and providing aid to charitable organizations and for socially uplifting causes is an ongoing effort by the Group to help in the relief of the less fortunate members of the community, regardless of race or religion. Workplace Believing that employees are among its most valuable assets, the Group takes much pains in ensuring that their interests and welfare are looked after. Enhancement of work skills, provision of a safe and productive work environment, promotion of staff relations, offering of fair and competitive staff remuneration, organizing of various recreational activities and relevant training for its employees constitute a part of the Group s appreciation to all its management and staff for their invaluable services and contributions to the attainment of common goals and objectives. Marketplace Ethical and fair practices form the basis of the Group s dealings with all its business partners, suppliers, dealers and customers. It aims at maintaining a good, loyal and strong relationship with all market players, for the mutual benefit of all. DIRECTORS RESPONSIBILITIES STATEMENT The Directors are required by the Companies Act, 2016 ( the Act ) to prepare financial statements for each financial year which gives a true and fair view of the state of affairs of the Group and the Company at the end of the financial year and the results and cash flow of the Group and of the Company for the financial year. In complying with these requirements, the Directors are responsible for ensuring that adequate accounting records are maintained, appropriate accounting policies consistently applied and supported by reasonable and prudent judgment and estimates. The Directors also ensure that all applicable accounting standards have been complied with and confirm that the financial statements have been prepared on the going concern basis. In addition, the Directors take reasonable steps to safeguard the assets of the Group. 29

31 jasa kita berhad ( m) AUDIT COMMITTEE REPORT 1. COMPOSITION The Audit Committee comprises the following members:- Chairman Maj Gen Dato Osman Bin Mohd Zain (Rtd) - Independent Non-Executive Director Members Mr Lian Teng Hai - Independent Non-Executive Director Mr Tang Tat Chun (MIA member) - Non-Independent Non-Executive Director 2. MEETINGS OF THE AUDIT COMMITTEE During the financial year ended 31 March 2017, the Audit Committee had four meetings and the attendance records of each member at these meetings are as follows:- Audit Committee Members Maj Gen Dato Osman Bin Mohd Zain (Rtd) Dates of Meetings % of 19/05/ /08/ /11/ /02/2017 Attendance 100 Mr Lian Teng Hai 100 Mr Tang Tat Chun present The Group s Internal Audit Consultants and some non-member Directors attended the meetings by invitation. The external auditors also attended two of the four scheduled meetings whereby they held discussion with the Audit Committee without the presence of executive board members and the management. The minutes of each Audit Committee Meeting were documented and distributed to all members of the Board. 3. SUMMARY OF ACTIVITIES During the financial year ended 31 March, 2017, the activities of the Audit Committee included, among others, the following:- (a) (b) (c) reviewed the unaudited interim report on the consolidated results of the Group on a quarterly basis and made suitable recommendation to the Board of Directors for adoption prior to their release to Bursa; reviewed the Group s financial performance by division/product for the quarter and year-todate against the budget and the performance for the preceeding year s corresponding quarter and year-to-date respectively; reviewed the external auditors reports on audit findings and the accounting issues arising from the audit before appropriate audit adjustments were made to the Group s financial statements; 30

32 Annual Report 2017 AUDIT COMMITTEE REPORT (d) (e) (f) (g) discussed with the external auditors, the Group Audit Plan which set out the auditors responsibilities and approach to auditing the financial statements of the Group for financial year 2017; reviewed the budget of the Group for the new financial year; reviewed new policies and operating procedures recommended for the Group; reviewed the internal audit reports which covered the following areas:- Credit Control Management; Business Risk Profile V; and Internal Audit Plan and IT Management and considered the findings and recommendations of the internal audit consultants on the Group s operations and ensuring shortcomings, if any, were adequately addressed by the Management; (h) reviewed the External Audit Planning Memorandum for the period ended 31 March 2017; (i) (j) (k) (l) discussed with the external auditors, the impact of the new accounting standard issued by the Malaysian Accounting Standards Board on the Group s financial statements; reviewed the Group audit fees proposed by the external auditors prior to the Board of Directors approval; reviewed with the internal audit consultant, external auditors and the management, the adequacy of the existing policies, procedures and systems of internal control of the Group; and considered matters relating to corporate governance in compliance with the Main Market Listing Requirements and the Malaysian Code on Corporate Governance. 4. INTERNAL AUDIT FUNCTION The Group outsources its internal audit function to a consultant company that reports directly to the Audit Committee. The costs incurred for the internal audit function in respect of the financial year ended 31 March 2017 was RM89,490. The internal audit consultant provides independent and reasonable assurance that the Group s systems of internal controls are adequate and continue to operate satisfactorily and effectively. The internal audit consultants provide the Audit Committee with independent and objective reports on the state of internal controls of the Group, the extent of compliance with the established policies, procedures and relevant statutory requirements, the extent the Group s assets are accounted for and safeguarded, and improvements to operations, processes and control systems. A summary of the activities performed by the internal audit consultants during the financial year 2017 is set out in the Statement on Risk Management & Internal Control on pages 32 and 34 of this Annual Report. 31

33 jasa kita berhad ( m) Statement on Risk Management & Internal Control Introduction In compliance with Paragraph 15.26(b) of Bursa Securities Main Market Listing Requirements and the Statement on Risk Management & Internal Control - Guidelines for Directors of Public Listed Issuers, the Board is committed in maintaining a sound system of risk management and internal control in conduct of its business operations and pleased to present the Statement on Risk Management and Internal Control which outlines the nature and scope of risk management and internal control of the Group during the financial year ended 31 March The Board s Responsibility The Board recognises its overall responsibility for the adequacy and effectiveness of the risk management framework and system of internal controls within the Group. The Board, through its Audit Committee, reviews the adequacy and effectiveness of the risk management and internal control system in relation to the internal audits conducted by an independent assurance provider during the financial year under review. The audit observations, together with management response and proposed action plans are presented to the Audit Committee on a quarterly basis. In addition, the review of the internal audit reports is part of the agenda of the Board meeting. However, the Board is equally aware that such systems and processes are designed to manage the Group s risks within an acceptable risk appetite, rather than eliminate the risk of failure to achieve the policies, goals and objectives of the Group. In this regard, the risk management framework and internal control system can only provide reasonable assurance, and not absolute assurance against material misstatement of financial information and records or against financial losses or fraud. Risk Management Framework The overall risk management practice of the Group involves an ongoing process designed to identify the principal risks to the achievement of the Group s policies, goals and objectives and to evaluate the nature and extent of those risks so as to proactively manage them efficiently, effectively and economically. The Group adopts an enterprise risk management approach and all the active businesses of the companies within the Group are considered and categorized in accordance with their main functional activities. Responsibility of risk management and control is delegated to the appropriate levels of management within the Group. This process has been in place for the financial year under review and up to the date of approval of the annual report and financial statements. The main features of the risk management process are as follows:- (a) Establish the context of risk in relation to the Group s risk appetite The amount of risk, on a broader level, acceptable to the Group in pursuing the various business objectives is determined by the senior management. (b) Risk identification in relation to the objectives of every business function The risks are identified through a series of interviews and discussions with the risk owners, i.e. key personnel and management of the Group. The risk identification process includes consideration of both internal and external environment factors. External environmental factors include economic and political changes, changes in the behavior of competitors, new regulations or legislation and technological developments. Internal factors include changes in key personnel, introduction of new or revision of existing policies and procedures. 32

34 Annual Report 2017 Statement on Risk Management & Internal Control (c) Assess the potential impact and likelihood of the risks identified and hence their risk levels The impact of the risk is rated on a scale of A to E (A to indicate the lowest impact and the E to indicate the highest impact). Whereas the likelihood of a risk is rated on a scale of 1 to 5 (1 to indicate lowest probability and 5 indicate the highest probability). The risk level shall be rated low, medium and high according to the Risk Analysis Matrix. The risks are also classified into four categories according to their potential impact on the Group:- Business Risks Strategic Risks Operational Risks Financial Risks (d) Ongoing monitor and review risk mitigating measures, risk levels and emerging risks All the identified risks and mitigating measures are documented into a Business Risk Profile. The Business Risk Profile of the Group is updated on an ongoing basis and approved by the Board. The Business Risk Profile serves as a tool for the heads of department/business unit for managing key risks applicable to their areas of business. All key risks and issues are regularly reviewed and resolved by the Management team at regular meeting. Through these mechanisms, key risks identified in the Business Risk Profile are assessed in a timely manner and control procedures are re-evaluated accordingly in order to ensure that the key risks are mitigated to an acceptable level. The Internal Audit Function reviews the effectiveness and adequacy of control procedures adopted by the company on a regular basis in mitigating the key risks identified in the Business Risk Profile. Any weaknesses noted during the audit review are reported to the Audit Committee. Through these mechanisms, the Audit Committee can be assured that the key risks of the company are regularly reviewed and appropriately managed to an acceptable level. System of Internal Controls The key elements of the Group s system of internal controls that the Board has established in reviewing the adequacy and effectiveness of the risk management and internal control system are as follows:- The Group has an appropriate organizational structure for planning, executing, controlling and monitoring business operations in order to achieve the Group s business objectives. Lines of responsibility and delegations of authority are clearly defined. To ensure the uniformity and consistency of practices and controls within the Group, Standard Operating Procedures have been formalized and documented for the key business processes. The Standard Operating Procedures are subjected to review and improvement alongside the internal audit review of the selected area of operations. Clearly defined authorization levels for all aspects of the business. These authorization levels are properly formalized in the Group s Standard Operating Procedures. 33

35 jasa kita berhad ( m) Statement on Risk Management & Internal Control Business units prepare an annual budget and present it to the Board for approval. Any variances of actual performance against budget are monitored and reported on a monthly basis to Management and quarterly to the Board. Appropriate actions are devised to address any areas of concerns arising from the regular review. Financial results are prepared and presented to the Board and Audit Committee on quarterly basis for effective monitoring and decision making. Capital expenditures and investment options are subject to review and approval from the Board. The Group engages the services of an internal audit function which provides independent assurance on the effectiveness of the Company s system of internal controls and advising Management on areas for further improvements. The Audit Committee meets at least four times a year. The Committee meets with the internal auditors and external auditors regularly to review their reports. The Audit Committee reviews the actions taken to rectify the findings in a timely manner, and to evaluate the effectiveness and adequacy of the Group s internal control systems. Through the establishment of sound internal control, which includes monitoring reporting systems, the Board reports that the existing system of internal controls is satisfactory. No material losses have occurred during the financial year under review as a result of weakness in internal control. The Board together with management continue to take measures to strengthen the control environment. Assurance from Management In accordance with the Statement on Risk Management & Internal Control Guidelines for Directors of Listed issuers, the Board has received assurance from the Executive Directors that to the best of their knowledge the risk management and internal control system of the Group are operating effectively and adequately, in all material respects, based on the risk management and internal control described above. Review of the statement by external auditors As required by Paragraph of the Bursa Malaysia Securities Berhad Main Market Listing Requirements, the External Auditors have reviewed this Statement on Risk Management & Internal Control. The External Auditors have reported to the Board that nothing has come to their attention that causes them to believe that this Statement is inconsistent with their understanding of the process the Board has adopted in the review of the adequacy and integrity of internal control system and risk management of the Group. 34

36 FINANCIAL STATEMENTS 36 Directors Report 41 Statement by Directors 41 Statutory Declaration 42 Independent Auditors Report 47 Statements of Profit or Loss and Other Comprehensive Income 48 Statements of Financial Position 50 Statements of Changes in Equity 51 Statements of Cash Flows 53 Notes to the Financial Statements

37 jasa kita berhad ( m) DIRECTORS REPORT The Directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 March Principal activities The principal activity of the Company is investment holding. The principal activities of the subsidiaries are disclosed in Note 11 to the financial statements. There has been no significant change in the nature of these activities during the financial year. Results Group RM Company RM (Loss)/Profit for the financial year (222,122) 7,278,971 Attributable to:- Owners of the Company (219,584) 7,278,971 Non-controlling interests (2,538) (222,122) 7,278,971 Reserves and provisions There were no material transfers to or from reserves and provisions during the financial year other than those disclosed in the financial statements. Dividends Since the end of the previous financial year, the Company paid a final tax exempt dividend of 0.3 sen per Ordinary Share totaling RM1,348,650 in respect of the financial year ended 31 March 2016, on 19 October The Directors recommend a first interim single tier dividend of 1 sen per Ordinary Share totaling RM4,495,500 in respect of the financial year ended 31 March 2017 and was paid on 12 April The Directors do not recommend any final dividend payment in respect of the current financial year. 36

38 Annual Report 2017 DIRECTORS REPORT Directors The directors of the Company in office during the financial year and during the period from the end of the financial year to the date of this report are:- Tan Sri Dato Tan Hua Choon Maj Gen (Rtd) Dato Osman bin Mohd Zain Dato Sri Tan Han Chuan Ong Bing Yap Woo Hin Weng Datin Tan Ching Ching Minhat Bin Mion Lian Teng Hai Tang Tat Chun The names of the directors of the Company s subsidiaries since the beginning of the financial year to the date of this report, excluding those who are already listed above are:- Dato Thor Poh Seng Lew You Chin Ian Redfren Forbes Directors interests in shares According to the register of directors shareholdings, the interest of directors in office at the end of the financial year in shares in the Company and its related incorporations during the financial year were as follows:- Number of ordinary shares Balance Balance as at as at Bought Sold The Company Direct Interest:- Tan Sri Dato Tan Hua Choon 143,347, ,347,680 Dato Sri Tan Han Chuan 37,958,900 37,958,900 Indirect Interest:- Tan Sri Dato Tan Hua Choon 37,958,900 37,958,900 Subsidiary - Jasahalco (Int.) Sdn. Bhd. Direct Interest:- Ong Bing Yap 15,000 15,000 37

39 jasa kita berhad ( m) DIRECTORS REPORT Directors interests in shares (cont D) By virtue of Tan Sri Dato Tan Hua Choon s and Dato Sri Tan Han Chuan s interest in the shares of the Company, Tan Sri Dato Tan Hua Choon and Dato Sri Tan Han Chuan are also deemed to be interested in the shares of all the subsidiaries to the extent the Company has an interest, in accordance with Section 8 of the Companies Act None of the other directors in office at the end of the financial year had any interest in the Ordinary Shares of the Company and related corporations during the financial year. Directors benefits Since the end of the previous financial year, no director of the Company has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the directors as shown in the financial statements) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest other then disclosed in Note 23 to the financial statements. There were no arrangements during or at the end of the financial year which had the object of enabling the directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. Director remuneration Directors remuneration is disclosed in Note 5 to the financial statements. Indemnity to directors and officers No indemnities have been given or insurance premium paid, during or since the end of the financial year, for any person who is or has been the director or officer of the Group and the Company. Issue of shares and debentures There were no changes in the share capital of the Company during the financial year. On 31 January 2017, however, the Companies Act, 2016 in Malaysia became effective and rendered the par value regime no longer applicable. This has resulted in the Company s share capital no longer have a par value and the authorised share capital no longer relevant at the date of this report. There were no debentures issued during the financial year. Options granted over unissued shares No options were granted by the Company to any parties during the financial year to take up unissued shares of the Company. 38

40 Annual Report 2017 DIRECTORS REPORT Other statutory information Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that:- (i) (ii) proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and have satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and any current assets which were unlikely to be realised in the ordinary course of business have been written down to an amount which they might be expected so to realise. At the date of this report, the Directors are not aware of any circumstances:- (i) (ii) (iii) (iv) which would render the amount written off for bad debts or the amount of the provision for doubtful debts inadequate to any substantial extent; or which would render the value attributed to current assets in the financial statements of the Group and of the Company misleading; or which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate; or not otherwise dealt with in this report or the financial statements, which would render any amount stated in the financial statements of the Group and of the Company misleading. At the date of this report, there does not exist:- (i) (ii) any charge on the assets of the Group and of the Company that has arisen since the end of the financial year and which secures the liabilities of any other person; or any contingent liability in respect of the Group and of the Company that has arisen since the end of the financial year. No contingent liability or other liability of the Group and of the Company has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may affect the ability of the Group and of the Company to meet their obligations as and when they fall due. In the opinion of the Directors, the results of the operations of the Group and of the Company for the financial year ended 31 March 2017 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of the financial year and the date of this report. Significant event during the financial year Details of significant event during the financial year are disclosed in Note 30 to the financial statements. 39

41 jasa kita berhad ( m) DIRECTORS REPORT Auditors The auditors remuneration is disclosed in Note 4 to the financial statements. The auditors, Messrs PKF, have indicated their willingness to continue in office. Signed on behalf of the Directors in accordance with a resolution of the Board, TAN SRI DATO TAN HUA CHOON ONG BING YAP Kuala Lumpur 7 July

42 Annual Report 2017 STATEMENT BY DIRECTORS PURSUANT TO SECTION 251 (2) OF THE COMPANIES ACT, 2016 IN MALAYSIA In the opinion of the Directors, the accompanying financial statements as set out on pages 47 to 101 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the Companies Act, 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 March 2017 and of their financial performance and their cash flows for the financial year ended on that date. The supplementary information as set out in Note 29 to the financial statements is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants ( MIA Guidance ) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with MIA Guidance and the directive of Bursa Malaysia Securities Berhad. Signed on behalf of the Board in accordance with a resolution of the Directors, TAN SRI DATO TAN HUA CHOON ONG BING YAP Kuala Lumpur 7 July 2017 STATUTORY DECLARATION PURSUANT TO SECTION 251 (1)(b) OF THE COMPANIES ACT, 2016 IN MALAYSIA I, WOO HIN WENG, being the director primarily responsible for the financial management of JASA KITA BERHAD, do solemnly and sincerely declare that to the best of my knowledge and belief, the accompanying financial statements as set out on pages 47 to 101 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, Subscribed and solemnly declared by ) the above named at Kuala Lumpur in ) Wilayah Persekutuan on 7July 2017 ) woo HIN WENG Before me, KAPT. (B) JASNI BIN YUSOFF (W465) COMMISSIONER FOR OATHS Kuala Lumpur, Malaysia 41

43 jasa kita berhad ( m) INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF JASA KITA BERHAD and its subsidiaries Report on the Audit of the Financial Statements Opinion We have audited the financial statements of JASA KITA BERHAD, which comprise the Statements of Financial Position as at 31 March 2017 of the Group and of the Company, and the Statements of Profit or Loss and Other Comprehensive Income, Statements of Changes in Equity and Statements of Cash Flows of the Group and of the Company for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 47 to 101. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 March 2017, and of their financial performance and their cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia. Basis for Opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants ( By- Laws ) and the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants ( IESBA Code ), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current year. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Valuation of trade receivables (Refer to notes 1(d)(vi), 2(f), 2(j), 13 and 27 to the financial statements) We identified the valuation of trade receivables as an area of focus in the audit as there is significant judgement involved in the assessment of credit risk exposures and collectability of receivables, and the Group made judgments over events or changes in circumstances that indicate that trade receivables may be impaired and the estimation of the quantum of such impairment. Trade receivables are monitored individually by the Group and impairment is assessed based on management s knowledge of factors surrounding each individual debtor account. An impairment of RM661,177 was made against total trade receivable balances of RM11,690,079 as at the financial year end. 42

44 Annual Report 2017 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF JASA KITA BERHAD and its subsidiaries Key Audit Matters (Cont d) Valuation of trade receivables (Cont d) As part of our audit to test Management s assessment of the recoverability of the Group s receivables, our procedures included:- (a) (b) (c) (d) Review of the Directors assessment of the basis of impairment used and evaluate evidence of impairment where available. Review of subsequent collections of major account receivable balances to determine the validity and collectability of receivables as at year end. Review impairment provided for balances where events or changes in circumstances indicate that the carrying amounts may not be recoverable. Testing on the impairment listing to check whether the Group s policy on impairment is applied consistently. Valuation and existence of inventories (Refer to the notes 1(d)(iv), 2(k) and 12 to the financial statements) Inventory balances as at the financial year end amounted to RM15.6 million, representing approximately 17% of total assets. Inventories constitute mainly hand tools, power tools, batteries, motors and spare parts for the purposes of trade and are measured at the lower of cost and net realisable value ( NRV ). The cost of inventories is measured based on weighted average cost, and includes expenditure incurred in acquiring the inventories, conversion costs and other costs incurred in bringing them to their existing location and condition. Management estimates inventories written down based on an assessment of inventories that have not been sold for more than 3 years. Changes to the assumptions could result in a material change in the carrying value of inventories and the associated movements recorded in the statement of profit or loss and other comprehensive income. As part of our audit, we performed the following procedures:- (a) (b) (c) (d) Reviewed management s assessment on the slow moving inventories. Performed costing verification to assess whether costing system is appropriate and accurate. Tested that inventories are stated at lower of cost and net realisable value. Observed year end physical count of inventories to test the accuracy of the quantities reported in the stock listing. Information Other than the Financial Statements and Auditors Report Thereon The Directors of the Company are responsible for the other information. The other information comprise the Management Discussion and Analysis, Audit Committee Report, Corporate Governance Report, Statement on Risk Management and Internal Control and Directors Report, but does not include the financial statements of the Group and of the Company and our auditors report thereon. Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not express any form of assurance conclusion thereon. 43

45 jasa kita berhad ( m) INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF JASA KITA BERHAD and its subsidiaries Information Other than the Financial Statements and Auditors Report Thereon (Cont d) In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information and, in doing so, consider whether the information is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Statements The directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error. In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the Group s and the Company s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so. Auditors Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:- Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group s and the Company s internal control. 44

46 Annual Report 2017 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF JASA KITA BERHAD and its subsidiaries Auditors Responsibilities for the Audit of the Financial Statements (Cont d) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors. Conclude on the appropriateness of the Directors use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group s or the Company s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Group or the Company to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have compiled with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Company for the current year and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act, 2016 ( the Act ) in Malaysia, we also report the following: (a) (b) (c) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries have been properly kept in accordance with the provisions of the Act. We are satisfied that the accounts of the subsidiaries that have been consolidated with the Company s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes. The audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section 266(3) of the Act. 45

47 jasa kita berhad ( m) INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF JASA KITA BERHAD and its subsidiaries Other Reporting Responsibilities The supplementary information set out in Note 29 to the financial statements is disclosed to meet the requirements of Bursa Malaysia Securities Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants ( MIA Guidance ) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the directive of Bursa Malaysia Securities Berhad. Other Matters This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act, 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. PKF AF 0911 CHARTERED ACCOUNTANTS BRIAN WONG WYE PONG 02610/04/2019 J CHARTERED ACCOUNTANT Kuala Lumpur 7 July

48 Annual Report 2017 STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 MARCH 2017 Group Company Note RM RM RM RM Revenue 3 36,318,104 43,471,580 6,800,000 Cost of sales (27,914,050) (32,562,802) Gross profit 8,404,054 10,908,778 6,800,000 Other income 2,831,866 1,557, , ,207 Administrative expenses (449,159) (451,933) (85,798) (67,216) Other operating expenses (10,353,136) (12,183,317) (80,068) (79,471) Profit/(Loss) before tax 4 433,625 (168,798) 7,431, ,520 Tax expense 6 (655,747) (536,862) (152,648) (155,412) (Loss)/Profit and other comprehensive (loss)/income for the financial year (222,122) (705,660) 7,278, ,108 Loss and other comprehensive loss for the financial year attributable to:- Owners of the Company (219,584) (704,752) Non-controlling interests (2,538) (908) (222,122) (705,660) Basic loss attributable to owners of the Company per ordinary share (sen) 7 (0.05) (0.16) The accompanying notes form an integral part of the financial statements. 47

49 jasa kita berhad ( m) STATEMENTS OF FINANCIAL POSITION AS AT 31 MARCH 2017 ASSETS Non-current assets Group Company Note RM RM RM RM Property, plant and equipment 8 10,602,746 10,720,390 Investment property 9 4,501,931 4,561,931 Intangible asset , ,909 Investment in subsidiaries 11 24,229,999 24,229,999 Current assets 15,554,796 15,776,230 24,229,999 24,229,999 Inventories 12 15,577,225 19,643,802 Trade receivables 13 11,028,902 11,924,234 Non-trade receivables, deposits and prepayments 14 1,773,927 1,237, , ,281 Investment securities 15 5,387,152 5,220,101 5,387,152 5,220,101 Dividend receivable 6,800,000 Deposits with licensed banks 16 29,682,468 33,899,276 18,382,468 19,399,276 Cash and bank balances 12,396,331 6,553, , ,793 Tax recoverable 1,367, ,678 77,213,469 79,407,166 30,914,722 24,961,451 TOTAL ASSETS 92,768,265 95,183,396 55,144,721 49,191,450 The accompanying notes form an integral part of the financial statements. 48

50 Annual Report 2017 STATEMENTS OF FINANCIAL POSITION AS AT 31 MARCH 2017 Group Company Note RM RM RM RM EQUITY AND LIABILITIES Share capital 17 44,955,000 44,955,000 44,955,000 44,955,000 Retained earnings 18 40,499,981 46,563,715 5,648,890 4,214,069 Equity attributable to owners of the Company 85,454,981 91,518,715 50,603,890 49,169,069 Non-controlling interest (129,229) (126,691) TOTAL EQUITY 85,325,752 91,392,024 50,603,890 49,169,069 Non-current liability Deferred tax liabilities 19 88,310 48,515 Current liabilities Trade payables 20 1,924,637 2,580,518 Non-trade payables and accruals ,066 1,162,339 25,000 18,000 Dividend payable 4,495,500 4,495,500 Tax payable 20,331 4,381 7,354,203 3,742,857 4,540,831 22,381 TOTAL LIABILITIES 7,442,513 3,791,372 4,540,831 22,381 TOTAL EQUITY AND LIABILITIES 92,768,265 95,183,396 55,144,721 49,191,450 The accompanying notes form an integral part of the financial statements. 49

51 jasa kita berhad ( m) STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 MARCH 2017 Attributable to owners of the Company Distributable Non- Share Retained controlling Total Note capital earnings Total interest equity RM RM RM RM RM Group At 1 April ,955,000 48,617,117 93,572,117 (125,783) 93,446,334 Loss and other comprehensive loss for the financial year (704,752) (704,752) (908) (705,660) Dividend 22 (1,348,650) (1,348,650) (1,348,650) At 31 March ,955,000 46,563,715 91,518,715 (126,691) 91,392,024 Loss and other comprehensive loss for the financial year (219,584) (219,584) (2,538) (222,122) Dividend 22 (5,844,150) (5,844,150) (5,844,150) At 31 March ,955,000 40,499,981 85,454,981 (129,229) 85,325,752 Company At 1 April ,955,000 4,925,611 49,880,611 Profit and other comprehensive income for the financial year 637, ,108 Dividend 22 (1,348,650) (1,348,650) At 31 March ,955,000 4,214,069 49,169,069 Profit and other comprehensive income for the financial year 7,278,971 7,278,971 Dividend 22 (5,844,150) (5,844,150) At 31 March ,955,000 5,648,890 50,603,890 The accompanying notes form an integral part of the financial statements. 50

52 Annual Report 2017 STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2017 Cash flows from operating activities Group Company RM RM RM RM Profit/(Loss) before tax 433,625 (168,798) 7,431, ,520 Adjustments for:- Bad debts written off 16,633 Depreciation of property, plant and equipment 513, ,328 Depreciation of investment property 60,000 60,000 Depreciation of intangible assets 55,130 50,519 Dividend income (6,800,000) (Reversal of)/impairment loss on trade receivables (949,055) 861,041 (Reversal of inventories written down)/inventories written down (117,930) 781,277 (Utilisation of)/provision for unutilised leaves 1,459 (1,880) Distribution income from investment securities (167,051) (176,830) (167,051) (176,830) Interest income (1,255,020) (1,085,281) (630,434) (672,377) Reversal on impairment loss on investment in subsidiary (90,000) Gain on disposal of property, plant and equipment (7,350) (22,424) Unrealised foreign exchange loss/(gain) 2,930 (14,081) Operating (loss)/profit before working capital changes (1,412,876) 911,871 (165,866) (146,687) Decrease in inventories 4,184,507 6,117,890 Decrease/(Increase) in receivables 1,415,964 6,383, ,531 (18,825) (Decrease)/increase in payables (885,613) (4,546,691) 7,000 Cash generated from/(used in) operations 3,301,982 8,866,378 (2,335) (165,512) Tax refund 8,971 25,706 Tax paid (1,063,709) (1,971,710) (136,698) (240,477) Net cash from/(used in) operating activities 2,247,244 6,920,374 (139,033) (405,989) The accompanying notes form an integral part of the financial statements. 51

53 jasa kita berhad ( m) STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2017 Cash flows from investing activities Group Company Note RM RM RM RM Proceeds from disposal of property, plant and equipment 120,363 22,424 Purchase of property, plant and equipment (509,122) (571,593) Purchase of intangible asset (11,340) (73,478) (Decrease)/Increase in fixed deposits 1,016,808 (41,887) 1,016,808 (41,887) Interest received 1,127,189 1,085, , ,377 Net cash from investing activities 1,743, ,747 1,519, ,490 Cash flows from financing activities Repayment from subsidiaries 966,101 Dividends paid (1,348,650) (1,348,650) (1,348,650) (1,348,650) Net cash used in financing activities (1,348,650) (1,348,650) (1,348,650) (382,549) Net increase/(decrease) in cash and cash equivalents 2,642,492 5,992,471 31,728 (158,048) Cash and cash equivalents at 1 April 2016/ ,053,839 19,061,368 4,169,793 4,327,841 Cash and cash equivalents at 31 March (i) 27,696,331 25,053,839 4,201,521 4,169,793 (i) Cash and cash equivalents Cash and cash equivalents comprise the following:- Group Company RM RM RM RM Cash and bank balances 12,396,331 6,553, , ,793 Deposits with licensed banks (Note 16) 15,300,000 18,500,000 4,000,000 4,000,000 27,696,331 25,053,839 4,201,521 4,169,793 The accompanying notes form an integral part of the financial statements. 52

54 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Basis of preparation The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards ( MFRS ), International Financial Reporting Standards and the Companies Act, 2016 in Malaysia. The accompanying financial statements have been prepared assuming that the Group and the Company will continue as going concerns which contemplates the realisation of assets and settlement of liabilities in the normal course of business. These financial statements are presented in the Ringgit Malaysia ( RM ), which is the Company s functional and presentation currency. (a) Standards issued and effective On 1 April 2016, the Company has also adopted the following new and amended MFRS which are mandatory for annual financial periods beginning on or after 1 April Description Effective for annual periods beginning on or after Annual improvements to MFRSs cycle - Amendments to MFRS 5, Non-Current Assets Held for sales and Discontinued Operations - Amendments to MFRS 7, Financial Instruments: Disclosures - Amendments to MFRS 119, Employee Benefits - Amendments to MFRS 134, Interim Financial Reporting 1 January January January January 2016 MFRS 14, Regulator Deferral Accounts 1 January 2016 Amendments to MFRS 11, Joint Arrangements: Accounting for Acquisitions of Interests in Joint Operations 1 January 2016 Amendments to MFRS 101, Presentation of Financial Statements: Disclosure Initiative 1 January 2016 Amendments to MFRS 116, Property, Plant and Equipment and MFRS 138, Intangible Assets: Clarification of Acceptable Methods of Depreciation and Amortisation 1 January 2016 Amendments to MFRS 116, Property, Plant and Equipment and MFRS 141, Agriculture: Bearer plants 1 January 2016 Amendments to MFRS 127, Separate Financial Statements: Equity Method in Separate Financial Statements 1 January 2016 Amendments to MFRS 10, Consolidated Financial Statements, MFRS 12, Disclosure of Interests in Other Entities and MFRS 128, Investments in Associates and Joint Ventures: Investments Entities-Applying the Consolidation Exception 1 January 2016 Amendments to MFRS 138, Intangible Assets: Clarification of Acceptable Methods of Depreciation and Amortisation 1 January 2016 The Directors expect that the adoption of the new and amended MFRSs above will have no impact on the financial statements of the Company. 53

55 jasa kita berhad ( m) NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Basis of preparation (b) Standards issued but not yet effective The Company has not adopted the following standards and interpretations that have been issued but not yet effective:- Description Effective for annual periods beginning on or after Annual improvements to MFRSs cycle - Amendments to MRFS 1, First-time Adoption of Malaysian Financial Reporting Standards 1 January Amendments to MFRS 12, Disclosure of Interests in Other Entities 1 January Amendments to MFRS 128, Investments in Associates and Joint Ventures 1 January 2018 Amendments to MFRS 2, Share-based Payment: Classification and Measurement of Share-based Payment Transactions 1 January 2018 Amendments to MFRS 4, Insurance Contracts: Applying MFRS 9 Financial Instrument with MFRS 4 Insurance Contracts 1 January 2018 MFRS 9, Financial Instruments 1 January 2018 MFRS 15, Revenue from Contracts with Customers 1 January 2018 Clarifications to MFRS 15, Revenue from Contracts with Customers 1 January 2018 MFRS 16, Leases 1 January 2019 Amendments to MFRS 10, Consolidated Financial Statements and MFRS 128 Investments in Associates and Joint Ventures: Sales or Contribution of Assets between an investor and its Associates or Joint Ventures Deferred Amendments to MFRS 107, Statement of Cash Flows: Disclosure Initiative 1 January 2017 Amendments to MFRS 112, Income Taxes: Recognition of Deferred Tax Assets for Unrealised Losses 1 January 2017 Amendments to MFRS 140, Investment Property: Transfers of Investment property 1 January 2018 IC Interpretation 22, Foreign Currency Transactions and Advance Consideration 1 January

56 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Basis of preparation (b) Standards issued but not yet effective (Cont d) The initial application of the abovementioned accounting standards, amendments or interpretations are not expected to have any material impact to the financial statements of the Company except as mentioned below:- MFRS 15 Revenue from Contracts with Customers MFRS 15 replaces the guidance in MFRS 111, Construction Contracts, MFRS 118, Revenue, IC Interpretation 13, Customer Loyalty Programmes, IC Interpretation 15, Agreements for Construction of Real Estate, IC Interpretation 18, Transfers of Assets from Customers and IC Interpretation 131, Revenue - Barter Transactions Involving Advertising Services. Upon adoption of MFRS 15, it is expected that the timing of revenue recognition might different as compared with the current practices. The adoption of MFRS 15 will result in a change in accounting policy. The Company is currently assessing the financial impact of adopting MFRS 15. MFRS 9 Financial Instruments MFRS 9 replaces the guidance in MFRS 139, Financial Instruments: Recognition and Measurement on the classification and measurement of financial assets. Upon adoption of MFRS 9, financial assets will be measured at either fair value or amortised cost. It is expected that the Company s investment in unquoted shares will be measured at fair value through other comprehensive income. The adoption of MFRS 9 will result in a change in accounting policy. The Company is currently assessing the financial impact of adopting MFRS 9. (c) Basis of measurement The financial statements have been prepared on the historical cost basis other than as disclosed in Note 2 to the financial statements. (d) Critical accounting estimates and judgements Estimates and judgements are continually evaluated by the Directors and management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and judgements that affect the application of the Group s and of the Company s accounting policies and disclosures, and have a significant risk of causing a material adjustment to the carrying amounts of assets, liabilities, income and expenses are discussed below:- (i) Income Taxes There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimate. The Group recognises tax liabilities based on its understanding of the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the year in which such determination is made. 55

57 jasa kita berhad ( m) NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Basis of preparation (d) Critical accounting estimates and judgements (Cont d) (ii) Depreciation of Property, Plant and Equipment The estimates for the residual values, useful lives and related depreciation charges for property, plant and equipment are based on commercial factors which could change significantly as a result of technical innovations and competitors actions in response to the market conditions. The Group anticipates that the residual values of its property, plant and equipment will be insignificant. As a result, residual values are not being taken into consideration for the computation of the depreciable amount. Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. (iii) Impairment of Non-financial Assets When the recoverable amount of an asset is determined based on the estimate of the value in use of the cash generating unit to which the asset is allocated, the management is required to make an estimate of the expected future cash flows from the cash generating unit and also to apply a suitable discount rate in order to determine the present value of those cash flows. (iv) Allowance for Inventories Reviews are made periodically by management on damaged, obsolete and slow moving inventories. These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories. (v) Fair Value Estimates for Certain Financial Assets and Liabilities The Group carries certain financial assets and liabilities at fair value, which requires extensive use of accounting estimates and judgement. While significant components of fair value measurement were determined using verifiable objective evidence, the amount of changes in fair value would differ if the Group uses different valuation methodologies. Any changes in fair value of these assets and liabilities would affect profit and/or equity. (vi) Impairment of Trade and Non-trade Receivables An impairment loss is recognised when there is objective evidence that a financial asset is impaired. Management specifically reviews its loan and receivables financial assets and analyses historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in the customer payment terms when making a judgment to evaluate the adequacy of the allowance for impairment losses. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. If the expectation is different from the estimation, such difference will impact the carrying value of receivables. 56

58 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Basis of preparation (d) Critical accounting estimates and judgements (Cont d) (vii) Deferred Tax Assets and Liabilities Deferred tax implications arising from the changes in corporate income tax rates are measured with reference to the estimated realisation and settlement of temporary differences in the future periods in which the tax rates are expected to apply, based on the tax rates enacted or substantively enacted at the statements of financial position date. While management s estimates on the realisation and settlement of temporary differences are based on the available information at the statements of financial position date, changes in business strategy, future operating performance and other factors could potentially impact on the actual timing and amount of temporary differences realised and settled. Any difference between the actual amount and the estimated amount would be recognised in the profit or loss in the period in which actual realisation and settlement occurs. (viii) Classification of Leasehold Land The classification of leasehold land as a finance lease or an operating lease requires the use of judgement in determining the extent to which risks and rewards incidental to its ownership lie. Despite the fact that there will be no transfer of ownership by the end of the lease term and that the lease term does not constitute the major part of the indefinite economic life of the land, management considered that the present value of the minimum lease payments approximated to the fair value of the land at the inception of the lease. Accordingly, management judged that the Group has acquired substantially all the risks and rewards incidental to the ownership of the land through a finance lease. (ix) Classification between Investment Properties and Owner Occupied Properties The Group and the Company determine whether a property qualifies as an investment property, and has developed criteria in making that judgement. Investment property is a property held to earn rentals or for capital appreciation or both. Therefore, the Company consider whether a property generates cash flows largely independent of the other assets held by the Group and the Company. Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods or services or for administrative purposes. If these portions could be sold separately (or leased out separately under a finance lease), the Group and the Company account for the portions separately. If the portions could not be sold separately, the property is an investment property only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes. Judgement is made on an individual property basis to determine whether ancillary services are so significant that a property does not qualify as investment property. 57

59 jasa kita berhad ( m) NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Basis of preparation (d) Critical accounting estimates and judgements (Cont d) (x) Provision for Liabilities Provision for liabilities are based on management s judgement on the likelihood of liabilities crystallising and best estimates on the amounts required to settle the liabilities arising from legal and constructive obligations. A change in circumstances which could cause estimates to change include changes in market trends and conditions, regulatory environment, employees behaviours and other factors that may change the amount of provisions in the statement of financial position. The difference between the actual amount and the estimated amount would be recognised in the profit or loss in the period in which the change occurs. 2. Summary of significant accounting policies (a) Basis of consolidation (i) Subsidiary Subsidiaries are entities, including structured entities, controlled by the Group. The Group controls an entity when the Group is exposed to, 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. The Group considers it has de-facto power over an investee when, despite not having the majority of voting rights, it has the current ability in circumstances where the size of the Group s voting rights relative to the size and dispersion of holdings of other shareholders to direct the activities of the investee that significantly affect the investee s return. Potential voting rights are considered when assessing control only when such rights are substantive. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Business combinations are accounted for using the acquisition method on the acquisition date. The consideration transferred includes the fair value of assets transferred, equity interest issued by the Group and liabilities assumed. Identifiable assets acquired, liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-byacquisition basis, either at fair value or at the non-controlling interest s proportionate share of the recognised amounts of the acquiree s identifiable net assets. Acquisition-related costs are recognised in the profit or loss as incurred. 58

60 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Summary of significant accounting policies (Cont d) (a) Basis of consolidation (Cont d) (i) Subsidiary (Cont d) The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recognised as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in profit or loss. (ii) Accounting for business combinations The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. A subsidiary is consolidated from the date of acquisition, being the date on which the Group obtains control, and continues to be consolidated until the date that such control ceases. 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 to like transactions and events in similar circumstances. Acquisitions of subsidiaries are accounted for by applying the acquisition method. Acquisitions on or after 1 January 2011 For acquisitions on or after 1 January 2011, the Group measures goodwill at the acquisition date as:- The fair value of the consideration transferred; plus The recognised amount of any non-controlling interests in the acquiree; plus If the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less The net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed. When excess is negative, a bargain purchase gain is recognised immediately in profit or loss. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss. Cost related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred. 59

61 jasa kita berhad ( m) NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Summary of significant accounting policies (Cont d) (a) Basis of consolidation (Cont d) (ii) Accounting for business combinations (Cont d) Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or loss. When share-based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree s employees (acquiree s awards) and relate to past services, then all or a portion of the amount of the acquirer s replacement awards is included in measuring the consideration transferred in the business combination. This determination is based on the market-based value of the replacement awards compared with the market-based value of the acquiree s awards and the extent to which the replacement awards relate to past and / or future service. Acquisitions before 1 January 2011 As part of its transition to MFRSs, the Group elected not to restate those business combinations that occurred before the date of transition to MFRSs, i.e. 1 January Goodwill arising from acquisitions before 1 January 2011 has been carried forward from the previous FRS framework as at the date of transition. Acquisitions between 1 January 2006 to 1 January 2011 Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised in other comprehensive income. The cost of a business combination is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the business combination. Any excess of the cost of business combination over the Group s share in the net fair value of the acquired subsidiary s identifiable assets, liabilities and contingent liabilities is recorded as goodwill on the statement of financial position. Any excess of the Group s share in the net fair value of the acquired subsidiary s identifiable assets, liabilities and contingent liabilities over the cost of business combination is recognised as income in profit or loss on the date of acquisition. When the Group acquires a business, embedded derivatives separated from the host contract by the acquiree are reassessed on acquisition unless the business combination results in a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required under the contract. 60

62 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Summary of significant accounting policies (Cont d) (a) Basis of consolidation (Cont d) (iii) Non-controlling interests Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Non-controlling interests in the results of the Group is presented in the consolidated statement of profit or loss and other comprehensive income as an allocation of the profit and loss and the other comprehensive income for the year between non-controlling interests and the owners of the Company. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so caused the non-controlling interests to have a deficit balance. (iv) Transactions with Non-controlling interests Transactions with non-controlling interests are accounted for using the entity concept method, whereby, transactions with non-controlling interests are accounted for as transactions with owners. On acquisition of non-controlling interest, the difference between the consideration and the Group s share of the net assets acquired is recognised directly in equity. Gain or loss on disposal to non-controlling interests is recognised directly in equity. (v) Loss of control Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in the profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as equity accounted investee or as an available-for-sale financial asset depending on the level of influence retained. (vi) Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity accounted associates are eliminated against the investment to the extent of the Group s interest in the associates and jointly controlled entities. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. 61

63 jasa kita berhad ( m) NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Summary of significant accounting policies (Cont d) (b) Foreign currencies (i) Functional and presentation currency The individual financial statements of the Group and of the Company are measured using the currency of the primary economic environment in which the entity operates ( the functional currency ). The financial statements are presented in Ringgit Malaysia ( RM ), which are the Group s and the Company s functional currency. (ii) Foreign currency transactions Transactions in foreign currencies are measured in the respective functional currencies of the Group and of the Company and its subsidiaries are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined. Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group s and of the Company s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group and of the Company on disposal of the foreign operation. Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity. The principal exchange rates for every unit of foreign currency ruling used at reporting date are as follows: RM RM 1 United States Dollar Chinese Yuan Renminbi Singapore Dollar

64 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Summary of significant accounting policies (Cont d) (c) Revenue Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and to the Company and the revenue can be reliably measured. (i) Sale of goods Revenue from sale of goods is measured at the fair value of the consideration received or receivable, net of returns and provisions, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be reliably estimated, and there is no continuing measurement involvement with the goods. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods. (ii) Revenue from services Revenue from services provided is recognised net of service tax and discount, where applicable, as and when the services are performed. (iii) Dividend income Dividend income is recognised when the shareholder s right to receive payment is established. (iv) Rental income Rental income is recognised when the right to receive payment is established. (v) Interest income Interest income is recognised on an accrual basis, based on effective yield on the investment. (d) Employee benefits expense (i) Short term benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the financial year in which the associated services are rendered by employees of the Group and of the Company. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur. 63

65 jasa kita berhad ( m) NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Summary of significant accounting policies (Cont d) (d) Employee benefits expense (Cont d) (ii) Defined contribution plans The Group s and the Company s contribution to defined contribution plans are charged to the profit or loss in the period to which they relate. Once the contributions have been paid, the Group and the Company has no further liability in respect of the defined contribution plans. (e) Tax expense (i) Current tax Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity. (ii) Deferred tax Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax liabilities are recognised for all taxable temporary differences other than those that arise from goodwill or excess of the acquirer s interest in the net fair value of the acquiree s identifiable assets, liabilities and contingent liabilities over the business combination costs or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. The carrying amounts of deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred tax assets to be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantively enacted at the end of the reporting period. 64

66 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Summary of significant accounting policies (Cont d) (e) Tax expense (Cont d) (ii) Deferred tax (Cont d) Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred income taxes relate to the same taxation authority. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transactions either in other comprehensive income or directly in equity and deferred tax arising from a business combination is included in the resulting goodwill or excess of the acquirer s interest in the net fair value of the acquiree s identifiable assets, liabilities and contingent liabilities over the business combination costs. (f) Impairment (i) Impairment of financial assets The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group 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 the Group s and the Company s 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 default on receivables. If any such evidence exists, 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 financial asset s original effective interest rate. The impairment loss is recognised in profit or loss. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account. If in a subsequent period, the amount of the 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. 65

67 jasa kita berhad ( m) NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Summary of significant accounting policies (Cont d) (f) Impairment (ii) Impairment of non-financial assets The Group and the Company assess at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group and the Company make an estimate of the asset s recoverable amount. An asset s recoverable amount is the higher of an asset s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units ( CGU s )). In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis. Impairment losses are recognised in 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 assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed 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. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal 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. Impairment loss on goodwill is not reversed in a subsequent period. (g) Property, plant and equipment All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and to the Company and the cost of the item can be measured reliably. 66

68 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Summary of significant accounting policies (Cont d) (g) Property, plant and equipment (Cont d) Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group and the Company recognise such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the property, plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred. Freehold land has an indefinite useful life and therefore is not depreciated. Capital work in progress is not depreciated as these assets are not available for use. Depreciation will commence on these assets when they are ready for their intended use. Depreciation of other property, plant and equipment is provided for on a straight line basis, at the following annual rates:- Buildings 2% Plant and machinery 10% - 20% Motor vehicles 20% Office and factory equipment 20% Furniture, fixtures and fittings 10% Renovations 10% Computers 10% /3% The carrying amount of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The residual value, useful life and depreciation method are reviewed at each financial year end, and adjusted prospectively, if appropriate. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss in the year the asset is derecognised. (h) Investment properties Investment properties, which are properties held to earn rentals and/ or for capital appreciation (including property under construction for such purposes), are measured initially at its cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and any accumulated impairment losses. Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. 67

69 jasa kita berhad ( m) NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Summary of significant accounting policies (Cont d) (h) Investment properties (Cont d) Any gain or loss on the retirement or disposal of an investment property is recognised in profit of loss in the year of retirement or disposal. The estimated useful lives, residual values and depreciation method of investment properties are reviewed at each year end, with the effect of any changes in estimates accounted for prospectively. Depreciation of investment property is provided for on a straight line basis, at the following annual rates:- Leasehold land 99 years (i) Intangible assets Intangible assets acquired separately are measured initially at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition, intangible assets are measured at cost less any accumulated depreciation and accumulated impairment losses. Intangible assets with finite useful lives are depreciated over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The depreciation period and the depreciation method are reviewed at least each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the depreciation period or method, as appropriate, and are treated as changes in accounting estimates. The depreciation expense on intangible assets with finite lives is recognised in profit or loss. Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually, or more frequently if the events and circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. Such intangible assets are not depreciated. The useful life of an intangible asset with and indefinite useful life is reviewed annually to determine whether the useful life assessment continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised. Intangible assets of the Group and the Company relate to software which are depreciated over 5 to 10 years. 68

70 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Summary of significant accounting policies (Cont d) (j) Financial assets Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs. The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss and loans and receivables. (i) Financial assets at fair value through profit or loss ( FVTPL ) Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value, without any deduction for transaction costs it may incur on sale or other disposal. Changes in fair value are recognised in profit or loss. Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that are held primarily for trading purposes are presented as current whereas financial assets that are not held primarily for trading purposes are presented as current or non-current based on the settlement date. (ii) Loans and receivables Financial assets that are non-derivative with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. 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. 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 the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the Company commit to purchase or sell the asset. 69

71 jasa kita berhad ( m) NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Summary of significant accounting policies (Cont d) (k) Inventories Inventories are stated at the lower of cost and net realisable value. The cost of inventories is measured based on weighted average cost formula, and includes expenditure incurred in acquiring the inventories, conversion costs and other costs incurred in bringing them to their existing location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and estimated costs necessary to make the sale. (l) Cash and cash equivalents Cash and cash equivalents comprise cash at bank and on hand, demand deposits and fixed deposits with licensed banks at maturities not more than 3 months, short term and highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. (m) Financial liabilities Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. Financial liabilities are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as other financial liabilities. The Group s and the Company s other financial liabilities include trade and non-trade payables and accruals. Trade and non-trade payables and accruals are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss. (n) Provisions A provision is recognised if, as a result of a past event, the Group and the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost. 70

72 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Summary of significant accounting policies (Cont d) (o) Equity instrument An equity instrument is any contract that evidences a residual interest in the assets of the Group and of the Company after deducting all of its liabilities. Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared. (p) Segment reporting For management purposes, the Group is organised into operating segments based on their products and services. The management of the Company regularly reviews the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in the Note 26 to the financial statements, including the factors used to identify the reportable segments and the measurement basis of segment information. (q) Contingencies (i) Contingent liabilities Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is not recognised in the statements of financial position and is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability outflow of economic benefits is remote. (ii) Contingent assets Where it is not possible that there is an inflow of economic benefits, or the account cannot be estimated reliably, the asset is not recognised in the statements of financial position and it disclosed as contingent asset, unless the probability of inflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent assets unless the probability of inflow of economic benefits is remote. 71

73 jasa kita berhad ( m) NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Revenue The revenue of the Group and of the Company consists of the following:- Group Company RM RM RM RM Sale of goods 32,366,423 39,820,131 Rental and logistics related services income 3,531,681 3,321,449 Rental income from investment properties 420, ,000 Dividend 6,800,000 36,318,104 43,471,580 6,800,000 72

74 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Profit/(Loss) before tax Group Company RM RM RM RM Profit/(Loss) before tax are arrived after charging/(crediting):- Auditors remuneration:- - statutory audit 61,500 55,500 22,000 18,000 - (over)/under provision (3,000) 3,000 - non-statutory audit 5,000 18,000 3,000 3,000 Bad debts written off 16,633 Depreciation of property, plant and equipment 513, ,328 Depreciation of investment property 60,000 60,000 Depreciation of intangible assets 55,130 50,519 Directors fees 66,000 66,000 42,000 42,000 Employees benefits (Note 5(a)) 7,467,061 7,797,084 Insurance compensation (21,071) (Gain)/Loss on foreign exchange - realised (78,821) (90,403) - unrealised 2,930 (14,081) Reversal of impairment loss on investment in subsidiary (90,000) (Reversal of)/impairment loss on trade receivables (949,055) 861,041 Distribution income from investment securities (167,051) (176,830) (167,051) (176,830) Interest income (1,255,020) (1,085,281) (630,434) (672,377) (Reversal of inventories written down)/ Inventories written down (117,930) 781,277 Gain on disposal of property, plant and equipment (7,350) (22,424) (Utilisation of)/provision for unutilised leaves 1,459 (1,880) Rental of premises:- - office 312, ,486 - warehouse 1,080,000 1,080,000 Rental income (162,920) (117,170) 73

75 jasa kita berhad ( m) NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Employees benefits (a) Staff costs (excluding non-executive Directors) Group Company RM RM RM RM Salaries, wages, overtime and bonus 6,159,940 6,407,129 Contribution to defined contribution plan 761, ,786 Social security contributions 63,030 55,458 (Utilisation of)/ Provision for unutilised leaves 1,459 (1,880) Other costs 481, ,591 7,467,061 7,797,084 The total number of employees, inclusive of Executive Directors of the Group at the end of the financial year was 103 (2016: 106). Included in employee benefits expense of the Group are Executive Directors remuneration excluding benefit-in-kind amounting to RM1,416,016 (2016: RM1,803,368) as disclosed in Note 5(b) to the financial statements. (b) Directors remuneration Group Company RM RM RM RM Executive:- Salaries and other emoluments 1,173,600 1,173,600 Bonus 107, ,550 Contribution to defined contribution plans 134, ,218 Benefit in kind 19,981 27,950 1,435,997 1,831,318 Non-executive:- Fees 66,000 66,000 42,000 42,000 74

76 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Employees benefits Analysis excluding benefits-in-kind:- Group Company RM RM RM RM Total executive Directors remuneration excluding benefits-in-kind 1,416,016 1,803,368 Total non-executive Directors fees 66,000 66,000 42,000 42,000 Total Directors remuneration excluding benefits-in-kind 1,482,016 1,869,368 42,000 42,000 The number of Directors of the Group whose total remuneration during the financial year fell within the following bands is analysed as follows:- Numbers of Directors RM RM Executive Directors:- RM200,001 - RM250,000 1 RM250,001 - RM300, RM300,001 - RM350, RM350,001 - RM400,000 1 RM400,001 - RM450, Non-executive Directors:- Below RM50, Tax expense Group Company RM RM RM RM Current tax expense - current 598, , , ,234 - under/(over) provision in prior year 16,976 (92,282) 3,188 10, , , , ,412 Deferred tax (Note 19) - current year 39, , , , , ,412 75

77 jasa kita berhad ( m) NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Tax expense (CONT D) Reconciliation of effective tax rates Group Company RM RM RM RM Profit/(Loss) before tax 433,625 (168,798) 7,431, ,520 Tax at statutory tax rate at of 24% 104,070 (40,511) 1,783, ,205 Non-deductible expenses 217, ,925 37,963 19,068 Deferred tax asset not recognised 363, ,611 Non-taxable income (40,090) (42,439) (1,672,092) (64,039) Effect of changes in tax rate 2,600 Utilisation of unutilised tax losses brought forward (66,042) 644, , , ,234 Under/(Over) provision of current tax in prior years 16,976 (92,282) 3,188 10,178 Over provision of deferred tax in prior years (5,629) 655, , , ,412 The Group has unutilised tax losses and unclaimed capital allowance amounting to RM2,655,128 and RM161,031 respectively. (2016: RM816,634 and RMNil respectively) available for offset against future taxable profits arose, for which no deferred tax is recognised due to uncertainty of its recoverability. 7. Loss per share The basic loss per share amount is calculated by dividing the (loss)/profit for the year attributable to owners of the parent by the number of ordinary shares in issue during the financial year. Group RM RM Loss attributable to owners of the parent (219,584) (704,752) Number of ordinary shares in issue 449,550, ,550,000 Basic loss attributable to owners of the Company per ordinary share (sen) (0.05) (0.16) There are no diluted loss per share disclosed as there were no dilutive potential ordinary shares. 76

78 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Property, plant and equipment Office and Furniture, Capital Freehold Plant and Motor factory fixtures work in land Buildings machinery vehicles equipment and fittings Renovations Computers progress Total RM RM RM RM RM RM RM RM RM RM Group 2017 Cost At 1 April ,638,140 3,606,026 1,470,969 2,178,245 1,525,631 1,131,459 1,740, ,953 17,915,010 Additions 175,830 11,076 25,465 59,141 43, , ,122 Disposals (47,600) (141,266) (188,866) At 31 March ,638,140 3,606,026 1,599,199 2,036,979 1,536,707 1,156,924 1,799, , ,200 18,235,266 Accumulated depreciation At 1 April , ,308 1,997,302 1,319, ,633 1,050, ,547 7,194,620 Charge for the year 67, ,204 25,001 44,567 61, ,497 43, ,753 Disposals (47,600) (28,253) (75,853) At 31 March ,271 1,034,912 1,994,050 1,363, ,088 1,190, ,779 7,632,520 Carrying amount At 31 March ,638,140 2,981, ,287 42, , , , , ,200 10,602,746 77

79 jasa kita berhad ( m) NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Property, plant and equipment Office and Furniture, Freehold Plant and Motor factory fixtures and land Buildings machinery vehicles equipment fittings Renovations Computers Total RM RM RM RM RM RM RM RM RM Group 2016 Cost At 1 April ,638,140 3,606,026 1,376,062 2,143,365 1,484,698 1,093,459 1,636, ,199 17,843,976 Additions 149, ,615 44,778 68, ,560 58, ,593 Disposals (54,897) (110,735) (3,845) (30,670) (300,412) (500,559) At 31 March ,638,140 3,606,026 1,470,969 2,178,245 1,525,631 1,131,459 1,740, ,953 17,915,010 Accumulated depreciation At 1 April , ,195 1,946,861 1,277, , , ,340 7,066,851 Charge for the year 67, , ,176 45,224 59, ,304 37, ,328 Disposals (54,897) (110,735) (3,845) (30,670) (300,412) (500,559) At 31 March , ,308 1,997,302 1,319, ,633 1,050, ,547 7,194,620 Carrying amount At 31 March ,638,140 3,049, , , , , , ,406 10,720,390 78

80 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Property, plant and equipment The cost of fully depreciated property,plant and equipment still in use are as follow:- Group RM RM Plant and machinery 522, ,057 Motor vehicles 1,927,401 1,362,433 Office and factory equipment 1,082,752 1,058,227 Furniture,fixtures and fittings 532, ,363 Renovations 473, ,813 Computers 434, ,938 4,974,122 4,289, Investment property Group RM RM Long term leasehold land Cost At 31 March 5,161,931 5,161,931 Accumulated depreciation At 1 April 2016/ , ,000 Charge for the year 60,000 60,000 At 31 March 660, ,000 Carrying amount At 31 March 4,501,931 4,561,931 Fair value 32,355,938 32,355,938 Investment property comprises industrial land intended to generate rental income. 79

81 jasa kita berhad ( m) NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Intangible asset Group RM RM Computer software Cost At 1 April 2016/ , ,950 Addition 11,340 73,478 At 31 March 555, ,428 Accumulated depreciation At 1 April 2016/ ,519 Charge for the year 55,130 50,519 At 31 March 105,649 50,519 Carrying amount At 31 March 450, ,909 Intangible assets represent costs incurred for the acquisition and commissioning of computer software. 11. Investment in subsidiaries Company RM RM Unquoted shares, at cost At 1 April 2016/ ,229,999 16,279,999 Addition 7,950,000 At 31 March 24,229,999 24,229,999 On 29 March 2016, a subsidiary, Jasa Kita Engineering Sdn. Bhd., transferred 7,950,000 Redeemable Non-Convertible Non-Cumulative Preference Shares ( RNCNCPS ) of RM0.01 each amounting to RM7,950,000 in the share capital of a related company, JKB Development Sdn. Bhd. (formerly known as Purton Engineering (M) Sdn. Bhd.) at an issue price of RM1.00 per RNCNCPS to the Company by way of setting off an amount due to holding company of RM7,950,

82 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Investment in subsidiaries Details of the subsidiaries are as follows:- Name of subsidiaries Country of incorporation Percentage of equity held (%) Principal activities Jasa Kita Trading Sdn. Bhd. Malaysia Sale and distribution of power tools and other industrial equipments Jasa Kita Engineering Sdn. Bhd. JKB Management Services Sdn. Bhd. Malaysia Trading in electric motors, and provision of related engineering services Malaysia Management services Jasa Kita Warehousing Service Sdn. Bhd. JKB Development Sdn. Bhd. (formerly known as Purton Engineering (M) Sdn. Bhd.) Malaysia Logistics related services Malaysia Property Investment Subsidiary of Jasa Kita Trading Sdn. Bhd. Jasahalco (Int.) Sdn. Bhd.* Malaysia Sale and distribution of engineering equipments All subsidiaries are audited by PKF. * The Auditors Report on the financial statements of this subsidiary for the financial year ended 31 March 2017 includes an unmodified opinion with an emphasis of matter on going concern. 81

83 jasa kita berhad ( m) NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Inventories Group RM RM At cost Finished goods 13,566,436 17,344,945 Goods in transit 339, ,042 13,905,999 17,811,987 At net realisable value Finished goods 1,671,226 1,831,815 15,577,225 19,643,802 Recognised in profit or loss Inventories recognised as cost of sales 25,484,305 30,214,005 Write-down to net realisable value 781,277 Reversal of inventories written down (117,930) 13. Trade receivables Group RM RM Trade receivables 11,690,079 13,534,466 Less: Impairment At 1 April 2016/2015 (1,610,232) (749,191) Addition (861,041) Reversal 949,055 At 31 March (661,177) (1,610,232) 11,028,902 11,924,234 The Group s normal trade credit terms are 60 days to 90 days (2016: 60 days to 90 days). Other credit terms are assessed and approved on a case-by-case basis. Included in trade receivables is an amount due from a related party by virtue of a director s interest in shares in the company, amounting to RMNil (2016: 39,200). 82

84 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Non-trade receivables, deposits and prepayments Group Company RM RM RM RM Non-trade receivables 1,176, , , ,586 Goods and services tax receivables 95, ,787 Deposits 434, ,684 Prepayments 67,080 91,148 15,750 16,695 1,773,927 1,237, , ,281 Included in non-trade receivables is an amount due from a related party by virtue of directors interest in shares in the company, amounting to RM2,557 (2016: RM11,043). 15. Investment securities Group and Company RM RM At fair value Quoted unit trusts in Malaysia with a fund management company 5,387,152 5,220, Deposits with licensed banks The Group s and the Company s deposits with licensed banks at the end of the financial year bear interest at rates ranging from 2.15% to 3.90% (2016: 3.10% to 4.00%) per annum and have an average maturity of 9 to 180 days (2016: 30 to 180 days). Group Company RM RM RM RM Less than 3 months 15,300,000 18,500,000 4,000,000 4,000,000 More than 3 months 14,382,468 15,399,276 14,382,468 15,399,276 29,682,468 33,899,276 18,382,468 19,399,276 83

85 jasa kita berhad ( m) NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Share capital Group and Company Number of Ordinary Shares RM RM Ordinary Share Authorised At 1 April/31 March n/a 500,000,000* n/a 50,000,000 Issued and fully paid At 1 April/31 March 449,550, ,550,000* 44,955,000 44,955,000 * Par value of RM0.10 each On 31 January 2017, the Companies Act, 2016 in Malaysia became effective and rendered the par value regime no longer applicable. This has resulted in the Company s share capital no longer have a par value and the authorised share capital no longer relevant at the date of this report. 18. Retained earnings Under the single tier system introduced by the Finance Act 2007 which came into effect from the year of assessment 2008, dividends paid under this system are tax exempt in the hands of shareholders. As such, the whole retained earnings can be distributed to shareholders as tax exempt dividends. 19. Deferred tax liabilities Group RM RM At 1 April 2016/ ,515 (143,566) Recognised in profit or loss (Note 6) 39, ,081 At 31 March 88,310 48,515 84

86 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Deferred tax liabilities (CONT D) The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows:- Property, plant Unrealised and equipment forex Total RM RM RM Deferred tax liabilities of the Group At 1 April ,659 5, ,928 Recognised in profit or loss 73,579 (1,058) 72,521 At 31 March ,238 4, ,449 At 1 April , ,313 Recognised in profit or loss (11,654) 5,269 (6,385) At 31 March ,659 5, ,928 Impairment Provision on Allowance for of trade unutilised impairment of Unutilised receivables leave inventories tax losses Total RM RM RM RM RM Deferred tax assets of the Group At 1 April 2016 (68,483) (5,640) (16,806) (32,484) (123,413) Recognised in profit or loss (69,675) (164) 4,629 32,484 (32,726) At 31 March 2017 (138,158) (5,804) (12,177) (156,139) At 1 April 2015 (138,166) (35,908) (61,875) (85,930) (321,879) Recognised in profit or loss 69,683 30,268 45,069 53, ,466 At 31 March 2016 (68,483) (5,640) (16,806) (32,484) (123,413) 85

87 jasa kita berhad ( m) NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Deferred tax liabilities (CONT D) The amounts of temporary differences for which no deferred tax assets have been recognised as they may not be used to offset taxable profits of the other subsidiaries in the Group and they arose in subsidiaries that have a recent history of losses, are as follows (stated at gross):- Group RM RM Impairment of trade receivables 61, ,592 Provision on unutilised leave 158, ,131 Inventories written down 1,591,415 1,760,081 Unrealised foreign exchange 5,248 Unutilised tax losses 2,655, ,631 4,466,711 2,952, Trade payables The normal trade credit terms granted to the Group and Company range from 30 to 90 days (2016: 30 to 90 days). 21. Non-trade payables and accruals Group Company RM RM RM RM Non-trade payables 438, ,245 2,000 Goods and services tax payables 56, ,097 Accruals 256, ,368 23,000 18,000 Provision for unutilised leaves 183, , ,066 1,162,339 25,000 18,000 Included in non-trade payables is an amount due to a director amounting to RM2,000 (2016: RMNil). 86

88 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Dividend Gross Amount of dividend dividend per share (net of tax) Sen RM Date of payment 2017 In respect of the financial year 2017 First dividend ,495, April 2017 In respect of the financial year 2016 Final dividend ,348, October ,844, In respect of the financial year 2015 Final dividend ,348,650 8 October Significant related party transactions The Group and the Company have related party transactions and balances with the following companies:- Group Name of companies With related parties:- Type of transaction 2017 RM Transaction value 2016 RM Balance outstanding from/(to) as at 31 March 2017 RM 2016 RM Best Auction Sdn. Bhd. Rental income (420,000) (334,200) 39,200 GBH Land Sdn. Bhd. Rental income (17,500) Questeam Sdn. Bhd. Rental income (74,170) (47,520) Keladi Maju Berhad Rental income (21,000) (19,200) JKG Central Park Sdn. Bhd. Rental income (46,750) (13,750) Spanco Sdn. Bhd Payment on behalf 2,557 11,043 2,557 11,043 GP Autobat Sdn. Bhd. Purchases Royalty paid 801,863 11,128 (179,744) 87

89 jasa kita berhad ( m) NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Significant related party transactions Group Name of companies With subsidiaries companies:- Jasa Kita Warehousing Service Sdn. Bhd. Type of transaction 2017 RM Transaction value 2016 RM Balance outstanding from/(to) as at 31 March 2017 RM 2016 RM Repayment (27,854) Jasa Kita Trading Sdn. Bhd. Advances Repayment of advances Refund of advances 14,898 (276,521) (300,000) Jasa Kita Engineering Sdn. Bhd. Advances Repayment of advances Issuance of preference shares 14,898 (991,522) (7,950,000) The related parties are deemed related to the Company by virtue of a Director s interest in shares in these companies. The Directors are of the opinion that the terms and conditions and prices of the above transactions are not materially different from that obtainable in transactions with unrelated parties. 24. Commitments Operating lease rental receivable - the Group as lessor. The future minimum lease payments receivable under non-cancellable operating leases are as follows:- Group RM RM Not later than one year 156, ,745 Between two to five years 12,300 57, , ,265 88

90 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Commitments The future minimum rental commitments of more than one year under non-cancellable leases are summarised below:- Group RM RM Not later than one year 1,226,728 1,350,084 Between two to five years 484,800 1,897,528 1,711,528 3,247,612 Group RM RM Approved and contracted for:- Purchase of property, plant and equipment 305, Contingent liability - unsecured Group RM RM Bank guarantee given to third party 2,503,000 2,503, Segment information (a) Business segments The Group is organised into three major business segments:- (i) (ii) (iii) Distribution and trading of electric motors, power tools, engineering and other industrial equipments; Logistics related services; and Investment holding. Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss for the financial year, in certain respects as set out below, is measured differently from operating profit or loss in the consolidated financial statements. 89

91 jasa kita berhad ( m) NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Segment information (a) Business segments (Cont d) logistics Investment Distribution related holding and trading services Others Eliminations Notes Consolidated RM RM RM RM RM RM Group 31 March 2017 Revenue External sales 32,366,423 3,531, ,000 36,318,104 Inter-segment revenue 6,800, ,600 (7,433,600) Total revenue 6,800,000 32,366,423 3,531,681 1,053,600 (7,433,600) 36,318,104 Results Segment results 7,431,619 (1,547,526) 583, ,609 (6,456,000) 433,625 Tax expense (152,648) (96,285) (155,441) (251,373) (655,747) Loss for the year (222,122) Segment assets 55,124,390 99,170,512 5,418,785 57,058,105 (124,003,527) A 92,768,265 Segment liabilities 4,520,500 10,275, , ,528 (7,934,033) B 7,442,513 Other information Capital expenditure 422,117 98, ,462 Depreciation of property, plant and equipment, investment property and intangible asset 304, , ,862 (344,000) 628,883 90

92 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Segment information (a) Business segments (Cont d) logistics Investment Distribution related holding and trading services Others Eliminations Notes Consolidated RM RM RM RM RM RM Group 31 March 2016 Revenue External sales 39,820,131 3,321, ,000 43,471,580 Inter-segment revenue 562,200 (562,200) Total revenue 39,820,131 3,321, ,200 (562,200) 43,471,580 Results Segment results 792,520 (1,866,157) 437, , ,000 (168,798) Tax expense (155,412) (118,105) (65,070) (198,275) (536,862) Profit for the year (705,660) Segment assets 49,187, ,580,526 5,241,518 56,848,513 (117,674,230) A 95,183,396 Segment liabilities 18,000 4,241, , ,172 (1,260,736) B 3,791,372 Other information Capital expenditure 337, ,326 30, ,071 Depreciation of property, plant and equipment and investment property 440, , ,427 (344,000) 738,847 91

93 jasa kita berhad ( m) NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Segment information (a) Business segments (Cont d) A. The following items are added to segment assets to arrive at total assets reported in the statements of financial position: RM RM Group Tax recoverable 1,367, ,678 B. The following items are added to segment liabilities to arrive at total liabilities reported in the statements of financial position: RM RM Group Deferred tax liability 88,310 48,515 (b) Major customers Revenue from one (2016: Nil) major customer, with revenue equal to or more than 10% of the Group s revenue, amounted to approximately RM3,762,484 (2016: RMNil) arising from sales in the Distribution and Trading segment. 27. Financial instruments Categories of financial instruments The table below provides an analysis on categories of financial instruments:- (a) (b) (c) Fair value through profit or loss ( FVTPL ); and Loans and receivables ( L&R ); and Other financial liabilities measured at amortised cost ( FL ). 92

94 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Financial instruments Categories of financial instruments (Cont d) Carrying amount FVTPl l&r FL RM RM RM RM Group 2017 Financial assets Trade receivables 11,028,902 11,028,902 Non-trade receivables, deposits and prepayments (exclude prepayment) 1,706,847 1,706,847 Investment securities 5,387,152 5,387,152 Deposit with licensed banks 29,682,468 29,682,468 Cash and bank balances 12,396,331 12,396,331 60,201,700 5,387,152 54,814,548 Financial liabilities Trade payables 1,924,637 1,924,637 Non-trade payables and accruals 934, ,066 2,858,703 2,858,703 Group 2016 Financial assets Trade receivables 11,924,234 11,924,234 Non-trade receivables, deposits and prepayments (exclude prepayment) 1,146,088 1,146,088 Investment securities 5,220,101 5,220,101 Deposit with licensed banks 33,899,276 33,899,276 Cash and bank balances 6,553,839 6,553,839 58,743,538 5,220,101 53,523,437 Financial liabilities Trade payables 2,580,518 2,580,518 Non-trade payables and accruals 1,162,339 1,162,339 3,742,857 3,742,857 93

95 jasa kita berhad ( m) NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Financial instruments Categories of financial instruments (Cont d) Carrying amount FVTPl l&r FL RM RM RM RM Company 2017 Financial assets Non-trade receivables, deposits and prepayments (exclude prepayment) 127, ,831 Investment securities 5,387,152 5,387,152 Deposit with licensed banks 18,382,468 18,382,468 Cash and bank balances 201, ,521 24,098,972 5,387,152 18,711,820 Financial liabilities Non-trade payables and accruals 25,000 25,000 Company 2016 Financial assets Non-trade receivables, deposits and prepayments (exclude prepayment) 155, ,586 Investment securities 5,220,101 5,220,101 Deposit with licensed banks 19,399,276 19,399,276 Cash and bank balances 169, ,793 24,944,756 5,220,101 19,724,655 Financial liabilities Non-trade payables and accruals 18,000 18,000 94

96 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Financial instruments Financial risk management objectives and policies The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, interest rate risk, foreign currency risk and liquidity risk. The Group s and the Company s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group s and of the Company s businesses whilst managing its credit risk, interest rate risk, foreign currency risk and liquidity risk. The following sections provide details regarding the Group s and the Company s exposure to the above mentioned financial risks and the objectives, policies and processes for the management of these risks. Credit risk The Group s and the Company s exposure to credit risk, or the risk of counterparties defaulting, arises mainly from trade and other receivables. The Group and the Company manages its exposure to credit risk by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis. For other financial assets, the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties. The Group and the Company establish an allowance for impairment that represents its estimate of incurred losses in respect of the trade and non-trade receivables as appropriate. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. Impairment is estimated by management based on prior experience and the current economic environment. Credit risk concentration profile The Group s major concentration of credit risk relates to the amounts owing by nineteen (19) (2016: nineteen (19)) individual customers which constituted approximately 52% (2016: 50%) of its trade receivables. Exposure to credit risk As the Group and the Company do not hold any collateral, the maximum exposure to credit risk is represented by the carrying amount of the financial assets as at the end of the reporting period. 95

97 jasa kita berhad ( m) NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Financial instruments Credit risk (Cont d) Ageing analysis The ageing analysis of the Group trade receivables, as at reporting date is as follows:- Gross Individual Carrying Amount Impairment Value RM RM RM Group 2017 Not past due:- 8,843,719 8,843,719 Past due:- - less than 3 months 1,070,728 1,070,728 - more than 3 months 1,775,632 (661,177) 1,114,455 11,690,079 (661,177) 11,028, Not past due :- 10,357,875 10,357,875 Past due:- - less than 3 months 1,570,658 (4,299) 1,566,359 - more than 3 months 1,605,933 (1,605,933) 13,534,466 (1,610,232) 11,924,234 At the end of the reporting period, trade receivables that are individually impaired were those in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancement. Trade receivables that are neither past due nor impaired A significant portion of trade receivables that are neither past due nor impaired are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the trade receivables. Trade receivables that are past due but not impaired Any receivables having significant balances past due or more than 90 days, which are deemed to have higher credit risk, are monitored individually. The Group believes that no impairment allowance is necessary in respect of these trade receivables. They are substantially companies with good collection track record and no recent history of default. 96

98 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Financial instruments Interest rate risk The Group s and the Company s, primary interest rate risk relates to interest earned from deposits with licensed banks. The information on maturity dates and effective interest rate of financial assets are disclosed in their respective notes. Interest rate risk sensitivity analysis The following table details the sensitivity analysis to a reasonably possible change in the interest rates as at the end of the reporting period, with all other variables held constant: Group Company Increase/ Increase/ Increase/ Increase/ (Decrease) (Decrease) (Decrease) (Decrease) RM RM RM RM Effects on profit after taxation Increase of 10 basis points ( bp ) 22,559 25,763 13,971 14,743 Decrease of 10 basis points ( bp ) (22,559) (25,763) (13,971) (14,743) Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group is exposed to transactional currency risk primarily through sales and purchases that are denominated in a currency other than the functional currency of the operations to which they relate. The currencies giving rise to this risk are primarily United States Dollar and Singapore Dollar. Foreign currency denominated assets and liabilities together with expected cash flows from highly probable sales and purchases give rise to foreign exchange exposures. Foreign exchange exposures in transactional currencies other than functional currencies of the operating entities are kept to an acceptable level. 97

99 jasa kita berhad ( m) NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Financial instruments Foreign currency risk (Cont d) The net unhedged financial assets and financial liabilities of the Group that are not denominated in their functional currencies are as follows:- United States Singapore Dollar Dollar (USD) (SGD) Others RM RM RM Group 2017 Cash and bank balances 6,628 4,013 1,131 Trade receivables 314,871 Non-trade receivables 822, Trade payables (116,022) (290,862) Net exposure 1,027,977 4,013 (288,830) 2016 Cash and bank balances 4,535 1,966 12,769 Non-trade receivables 96,343 Trade payables (444,849) Net exposure 100,878 1,966 (432,080) Foreign currency risk sensitivity analysis The following table details the sensitivity analysis to a reasonably possible change in the foreign currencies as at the end of the reporting period, with all other variables held constant: Increase/ Increase/ (Decrease) (Decrease) RM RM Group Effects on profit after taxation:- USD / RM Strengthen by 5% (2016: 5%) 39,063 3,833 Weaken by 5% (2016: 5%) (39,063) (3,833) SGD / RM Strengthen by 5% (2016: 5%) Weaken by 5% (2016: 5%) (152) (74) OTHERS / RM Strengthen by 5% (2016: 5%) (10,976) (16,419) Weaken by 5% (2015: 5%) 10,976 16,419 98

100 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Financial instruments Liquidity risk The Group and the Company monitor and maintain a level of cash and cash equivalents deemed adequate by management to finance the Group s and the Company s operations and to mitigate the effects of fluctuations in cash flows. Fair values The financial assets and financial liabilities maturing within the next 12 months approximated fair values due to the relatively short term maturity of the financial instruments. Fair value hierarchy The table below analyses financial instrument carried at fair value, by valuation method. The different levels have been defined as follows:- Level 1: Level 2: Level 3: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Inputs other than quoted prices included within Level 1 that are observable for assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Input for the assets or liabilities that are not based on observable market data (unobservable inputs). Group and Company Level 2 RM 2017 FVTPL financial asset 5,387, FVTPL financial asset 5,220, Capital management The primary objective of the Group s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the year. 99

101 jasa kita berhad ( m) NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Capital management The Group did not have any interest bearing borrowings. The profit made principally is retained to fund the business activities. There was no change in the Group s approach to capital management during the year. Under the requirement of Bursa Malaysia Practice Note 17, the Group is required to maintain a consolidated shareholder s equity equal to or not less than the 25% of the issued and paid up capital (including treasury shares). The Group has complied with this requirement. 29. Supplementary financial information on the breakdown of realised and unrealised profit or loss The breakdown of the retained earnings of the Group and of the Company as at the financial year end into realised and unrealised, pursuant to paragraphs 2.06 and 2.23 of Bursa Malaysia Securities Berhad Listing Requirements, are as follows:- Group Company RM RM RM RM Total retained earnings of the Company and its subsidiaries - Realised 40,542,706 46,741,715 5,648,890 4,214,069 - Unrealised (42,725) (178,000) Retained earnings as per financial statements 40,499,981 46,563,715 5,648,890 4,214,069 The determination of realised and unrealised profits is based on the Guidance of Special Matter No.1. Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants. 30. Significant event during the financial year On 31 January 2017, the Companies Act, 2016 ( the Act ) in Malaysia became effective and rendered the par value regime no longer applicable. This has resulted in the Company s and the subsidiaries share capital no longer having par value and the authorised share capital no longer relevant at the date of the report. The Act abolishes the concept of par and nominal value in shares. Effectively, this renders the share premium account of a subsidiary, JKB Development Sdn. Bhd., to be no longer relevant. Instead the amount standing in the share premium account will be recognised as part of the company s share capital. 100

102 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH Significant event during the financial year Under Section 74 of the Act, all shares issued by companies before or upon the commencement of the Act shall have no par or nominal value. However, as at the date of this report, JKB Development Sdn. Bhd. has not rectified the terms and conditions of its Redeemable Non-Convertible Non- Cumulative Preference Shares ( RNCNCPS ) to be in accordance with requirements of the Act. RNCNCPS are not subject to fair value measurement as the redemption period has not been determined by JKB Development Sdn. Bhd. The above transaction has no impact to the Group s financial statements. 31. General information The Company is a public limited company that is incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The principal activity of the Company is investment holding. The principal activities of the subsidiaries are disclosed in Note 11 to the financial statements. There has been no significant change in the nature of these activities during the financial year. The registered office and the principal place of business of the Company are located at No. 8, 3rd Floor, Jalan Segambut, Kuala Lumpur. The financial statements were approved and authorised for issue by the Board of Directors on 7 July

103 jasa kita berhad ( m) analysis of shareholdings AS AT 12 July 2017 A. SHARE CAPITAL Total Number of Issued Shares : 449,550,000 Class of Shares : Ordinary Shares Voting Rights : One vote for each ordinary share held B. DISTRIBUTION OF SHAREHOLDINGS No. of Total % of Holdings Holders Holdings Holdings Less than , , ,001-10, ,341, , ,000 1,790 69,569, ,001 to less than 5% of issued shares ,267, % and above of issued shares 2 181,306, , ,550, C. SUBSTANTIAL SHAREHOLDERS (As per the Register of Substantial Shareholders of the Company) Direct Interest No. of % of Name of Shareholders Shares Holdings 1. Tan Sri Dato Tan Hua Choon 143,347, Dato Sri Tan Han Chuan 37,958, D. DIRECTORS SHAREHOLDING (As per the Register of Directors Shareholdings of the Company) Direct Interest Deemed Interest No. of % of No. of % of Name of Directors Shares Holdings Shares Holdings 1. Tan Sri Dato Tan Hua Choon 143,347, ,958,900 * Dato Sri Tan Han Chuan 37,958, * Deemed interested in the shareholdings of his child. 102

104 Annual Report 2017 analysis of shareholdings E. THIRTY LARGEST REGISTERED SHAREHOLDERS Name of Shareholders No. of Shares % of Holdings 1. Tan Sri Dato Tan Hua Choon 143,347, Dato Sri Tan Han Chuan 37,958, Ong Har Hong 20,396, Chew Huat Heng 19,460, Wong Chee Choon 17,789, Affin Hwang Nominees (Tempatan) Sdn Bhd Pledged securities account for Lim Eng Huat 17,756, Sin Len Moi 6,612, CIMSEC Nominees (Tempatan) Sdn Bhd Pledged securities account for Lau Sie Kuong 5,826, Sin Kek Yong 3,560, Yayasan Islam Terengganu 3,172, Bernadette Margaret Lau 2,235, Lim Guek Ching 2,230, Public Nominees (Tempatan) Sdn Bhd Pledged securities account for Lim Kong Hwee 2,224, Yeow Geok Tiang 1,600, Citigroup Nominees (Tempatan) Sdn Bhd Pledged securities account for Tan Ek Thiam 1,550,

105 jasa kita berhad ( m) analysis of shareholdings E. THIRTY LARGEST REGISTERED SHAREHOLDERS (cont D) Name of Shareholders No. of Shares % of Holdings 16. Yeat Siaw Ping 1,500, Lim Wee Chin 1,454, Ng Chai Yong 1,357, Alliancegroup Nominees (Tempatan) Sdn Bhd Pledged securities account for Yun Sii King 1,300, Leow Hong Yen 1,200, Lew Yuen Lew Ah Kee 1,200, Man Chan Man Foh 1,200, Tey Tee Tai 1,200, Alliancegroup Nominees (Tempatan) Sdn Bhd Pledged securities account for Kuek Choon Heng 1,100, Alliancegroup Nominees (Tempatan) Sdn Bhd Pledged securities account for Choo Soon Teck 1,100, Public Nominees (Tempatan) Sdn Bhd Pledged securities account for Lim Kong Hwee 1,100, Soosilah A/P Krishnan 1,050, Ong Kok Seng 1,000, Ong Poh Lan 1,000, Cher Tiew Seng 975,

106 Annual Report 2017 GROUP PROPERTIES AS AT 31 MARCH 2017 Location Description Existing use Tenure/ Approximate age of building Net book value as at (RM) Date of Acquisition HSM 1406 Lot PT 5692 Tempat Jalan Genting Kelang Mukim Setapak Daerah Kuala Lumpur Negeri Wilayah Persekutuan bearing postal address Lot 4, Jalan 6 Kawasan Perusahaan Setapak Kuala Lumpur Industrial Land (Area : 14,314 sq. m.) Vacant Leasehold 99 years (11/11/ /11/2093) 4,501,931 November 1994 Geran Lot 38010, Geran Lot 38011, Geran Lot and Geran Lot Mukim Batu, Daerah Gombak Negeri Selangor Darul Ehsan bearing postal address Lot 10245, 9 th Mile Jalan Batu Caves Selangor Darul Ehsan Industrial Land & Building (Area : 14,086 sq.m.) Factory Freehold / 7 years 6,984,795 July 1993 GM 1754 Lot 1201 Seksyen 83, Tempat BT 3 Jalan Ipoh Bandar Kuala Lumpur Daerah Kuala Lumpur Negeri Wilayah Persekutuan bearing postal address 24G-3 rd Floor Jalan Segambut Kuala Lumpur Land and Building (Area : 149 sq. m.) 4-storey shop offices Freehold / 29 years 817,550 April 1998 GM 1755 Lot 1202 Seksyen 83 Tempat BT 3 Jalan Ipoh Bandar Kuala Lumpur Daerah Kuala Lumpur Negeri Wilayah Persekutuan bearing postal address 22G-3 rd Floor Jalan Segambut Kuala Lumpur Land and Building (Area : 149 sq. m.) 4-storey shop offices Freehold / 29 years 817,550 April

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108 JASA KITA BERHAD (Company No M) PROXY FORM I/We... NRIC No./Co. No... (full name in block letters) of... (full address) being a member of JASA KITA BERHAD hereby appoint (1)... (full name in block letters)... NRIC No... (full name in block letters) of... (full address) representing... percentage (%) of my/our shareholdings in the Company and/or failing him/her (2)... NRIC No... (full name in block letters) of... (full address) representing percentage (%) of my/our shareholdings in the Company AND/OR failing him/her/ them, the Chairman of the Meeting as my/our proxy/proxies to vote for me/us on my/our behalf, at the Twenty-Fifth Annual General Meeting of the shareholders of the Company to be held at Bukit Kiara Equestrian and Country Resort, Dewan Berjaya, Jalan Bukit Kiara, Off Jalan Damansara, Kuala Lumpur on Wednesday, 20 September 2017 at a.m. or any adjournment thereof in the manner as indicated below:- RESOLUTIONS FOR AGAINST Ordinary Resolution 1 Ordinary Resolution 2 Ordinary Resolution 3 Ordinary Resolution 4 Ordinary Resolution 5 Ordinary Resolution 6 Ordinary Resolution 7 Ordinary Resolution 8 Ordinary Resolution 9 (Please indicate with an X in the space provided how you wish your vote to be cast for each resolution as set out in the Notice of Meeting. If no voting instructions are given, the proxy may vote as he/she thinks fit or abstain from voting) No. of shares held CDS Account No. Signature(s)/Common Seal Signed this day of 2017 Notes: 1. A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies (but not more than two) to attend and vote instead of him. A proxy may but need not be a member of the Company. Where a member appoints two proxies to attend the same meeting, the member shall specify the proportion of his shareholding to be represented by each proxy, failing which the appointment(s) shall be invalid. 2. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it shall be entitled to appoint not more than two (2) proxies in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. Where a member of the Company is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, which holds ordinary shares in the Company for multiple beneficial owners in one securities account ( omnibus account ), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. Where an authorised nominee or an exempt authorised nominee appoints proxies, the proportion of shareholdings to be represented by each proxy must be specified in the instrument appointing the proxies. 3. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under the corporation s common seal or under the hand of an officer or attorney duly authorised. The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll. 4. The Proxy Form shall be deposited with the Company s Share Registrars, Symphony Share Registrars Sdn Bhd at Level 6, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, Petaling Jaya, Selangor Darul Ehsan, not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof. 5. Depositors whose names appear in the Record of Depositors on a date not less than three (3) market days before the general meeting shall be entitled to attend and vote at the Annual General Meeting, or appoint a proxy to attend, speak and vote on his behalf.

109 Fold this flap for sealing Then fold here AFFIX STAMP JASA KITA BERHAD (Company No M) c/o Symphony Share Registrars Sdn Bhd Level 6, Symphony House Pusat Dagangan Dana 1 Jalan PJU 1A/ Petaling Jaya Selangor Darul Ehsan 1st fold here

110 jasa kita berhad ( m) No.8, 3rd Floor, Jalan Segambut, Kuala Lumpur, Malaysia, Tel: Fax: