Audit Committee Report 25 / 28 / Statement on Risk Management and Internal Control. Responsibility Statement by the Board of Directors 31 /

Transcription

1 ANNUAL REPORT 2017 For Financial ncia ial Year Ended 31 October 2017

2 CONTENTS 02 / 03 / 04 / 06 / 10 / Corporate Information Group Corporate Structure Management Discussion And Analysis Directors Profile Corporate Governance Statement 25 / 28 / 31 / 32 / 94 / Audit Committee Report Statement on Risk Management and Internal Control Responsibility Statement by the Board of Directors Financial Statements List of Properties 95 / 98 / 102 / Statistics of Shareholdings Notice of Fifteenth Annual General Meeting Location Map to AGM Form of Proxy

3 02 ADVENTA BERHAD ( M) CORPORATE INFORMATION BOARD OF DIRECTORS EDMOND CHEAH SWEE LENG Chairman Senior Independent Non-Executive Director LOW CHIN GUAN Managing Director KWEK SIEW LENG Executive Director TOH SENG THONG Independent Non-Executive Director DATO DR. NORRAESAH BINTI HAJI MOHAMAD Independent Non-Executive Director AUDIT COMMITTEE TOH SENG THONG Chairman EDMOND CHEAH SWEE LENG Members DATO DR. NORRAESAH BINTI HAJI MOHAMAD Members NOMINATION COMMITTEE EDMOND CHEAH SWEE LENG Chairman TOH SENG THONG Member REMUNERATION COMMITTEE EDMOND CHEAH SWEE LENG Chairman LOW CHIN GUAN Members TOH SENG THONG Members COMPANY SECRETARY CHUA SIEW CHUAN (MAICSA ) LIM LIH CHAU (LS ) REGISTERED OFFICE 21, Jalan Tandang 51/205A, Seksyen 51, Petaling Jaya, Selangor Darul Ehsan Tel : Fax : SHARE REGISTRAR Securities Services (Holdings) Sdn. Bhd. Level 7, Menara Milenium Jalan Damanlela Pusat Bandar Damansara Damansara Heights Kuala Lumpur Tel : Fax : PRINCIPAL BANKERS OCBC Bank (Malaysia) Berhad HSBC Bank (Malaysia) Berhad EXTERNAL AUDITORS Ernst & Young Unit 10D-J, Level 10 Menara Zenith, Jalan Putra Square Kuantan Pahang, Malaysia INTERNAL AUDITORS PKF Advisory Sdn Bhd Level 33, Menara 1MK Kompleks 1 Mont Kiara No. 1, Jalan Kiara, Mont Kiara Kuala Lumpur STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad

4 ANNUAL REPORT GROUP CORPORATE STRUCTURE ADVENTA BERHAD ( M) 100% SUN HEALTHCARE (M) SDN. BHD. 100% ELECTRON BEAM SDN. BHD. 100% LUCENXIA (M) SDN. BHD. 100% LUCENXIA LANKA (PRIVATE) LIMITED 100% PTM PROGRESS TRADING & MARKETING SDN. BHD.

5 04 ADVENTA BERHAD ( M) MANAGEMENT DISCUSSION AND ANALYSIS DEAR VALUED SHAREHOLDERS, On behalf of the Board of Directors, I would like to thank you for your continuous trust and support for the company. Our Company is quite different from many others, with special business in the healthcare sectors and of different underlying potentials. It may be just another investment but I know that you see it differently. Our mission to bring better and more affordable healthcare to the Asia Pacific Region is made possible by your continued confidence to the company. OVERVIEW The Group s business comprises of three segments, namely distribution of healthcare products, sterilization and home dialysis. Marking a year of stiff challenges, including slowdown in some markets, the Company did well. Current hospital supplies and distribution grew better than last year and the sterilization business show continuous solid growth and high sustainability. THE PERFORMANCE For the current financial year, the group recorded revenue of RM 44.2 million for year ended 2017 as compared to RM 39.9 million registered in the preceding year. This represent an increase of 4.3 million or 10.8%. Distribution of healthcare products and sterilization segment has generated RM5.4 million profit after tax for the group. We continue to invest in R & D, business development and personnel training in our home-dialysis business.

6 ANNUAL REPORT MANAGEMENT DISCUSSION AND ANALYSIS Our unique business of home peritoneal dialysis provider is maturing from an incubation period, with high clinical success which should translate into commercial revenue as it scales up. There remain some supplies constraints which may hamper growth temporarily in the first half of 2018 but actions have been taken to overcome the short situation. However, the Board is positive and optimistic that this business has extreme potential. With regional and global renal health on the decline, driven by obesity that is increasingly a lifestyle acceptance, there is a demanding need for renal failure treatments. Lucenxia has shown the capability of providing good, reliable and effective home dialysis treatment at affordable cost. With the track record in Malaysia, we are working on providing similar services overseas. LIQUIDITY The Board strongly believes in the growth potential of our three businesses and specifically that of home-dialysis market, which it believe to have good potential regionally. As we plan for scaling up our home dialysis business, which typically service new intakes for renal failure dialysis treatment in any country we venture into, there will be needs for capital expenditure and working capital. The Board has decided to raise funds from our shareholders, announced on 17 January 2018, for this and other expansions in our businesses. THE OPERATIONS The Group has seen solid improvements in execution and growth, expanding in the respective sectors when economic conditions of the region are weak or at best, sustaining. Our sterilization business is poised for repeated strong organic growth. New investments are planned for other sterilization services. This investment strategy will position the company to be a respectable player regionally in terms of capability and volume. We see opportunities in extending a full service to all sterilization needs. The high growth in healthcare distribution is indicative of the right direction the company has taken, with focus on products and operation solutions that provide greater values to the customers. Our range expansion into Operating Room products is showing momentum for new products and wider choices. We shall continue to scale up in reach and range to serve our corporate customers better. Moving with the changing trends in consumerism, our on-line Business to Consumer sales portal will be enhanced with higher functionality and ease of use, offering consumers and professionals easy access to high end medical products and home health consumables. POSITIONED FOR SUSTAINABLE SUCCESS The big question is not whether the home dialysis will take off but when. Despite many efforts to bring forward several projects in the country and overseas, we learned that the process of nationwide approvals does take time and cannot be hurried. The silver lining is that during that time we are able to plan better and organize stronger for the commercial launches. Hence it is not time wasted. We are taking all steps to achieve higher customer satisfaction and trust. The good news is that the company has successfully provided patients with full treatment in all areas of the country, from urban to rural to the remote. Customer ratings are high. The outstanding performances by the Company s nursing and technical team is invaluable to this achievement. As this is a long-term treatment provision to the patients, our integrity and customers trust will lead us to sustainable and continuous growth. In our hospital supplies distribution, we are now prepared to include pharmaceutical products with the completion of the climatic controlled warehousing facility by March This will add another revenue stream and it leverages on the existing deliveries to the hospitals for consumables, which lower costs significantly. With lower costs, we are able to compete strongly in this segment. Global medical devices manufacturing is moving more to the Asian countries, in particular South East Asia. That s where the market is expecting the strongest growth. Our sterilization business is supplementary to medical device manufacturing. This allows Electron Beam Sdn Bhd to achieve consistent growth for the last three years and to plan for capacity expansion again. The Company is also planning to add on different sterilization services to complement the radiation mode we offer now. This strategy shall be implemented during second half of ACKNOWLEDGEMENT AND APPRECIATION I would like to thank you on behalf of the full Board, for supporting our ambitious goals, our leadership and for being patient with our transformational home dialysis business. We would like to take this opportunity to express our gratitude and thanks to the management and staff of the group for their commitment. Our dedication to deliver value and quality to our customers shall always be our culture. Low Chin Guan CEO

7 06 ADVENTA BERHAD ( M) DIRECTORS PROFILE Dato Dr. Norraesah Binti Haji Mohamad Edmond Cheah Swee Leng Toh Seng Thong Kwek Siew Leng Low Chin Guan

8 ANNUAL REPORT DIRECTORS PROFILE EDMOND CHEAH SWEE LENG Chairman, Senior Independent Non-Executive Director Malaysian, male Mr. Edmond Cheah Swee Leng, aged 63, a Malaysian, was appointed to the Board of Adventa Berhad on 9 August 2004 and is presently the Chairman of the Company. His last re-election as a director was on 28 March He is a member of the Audit Committee and Chairman of the Remuneration Committee and Nomination Committee. He is a Chartered Accountant by profession and a member of the Malaysian Institute of Accountants and Association of Chartered Accountants, England and Wales. He is also a Certified Financial Planner. His professional experience has been in the fields of audit, merchant banking, corporate & financial advising, portfolio & investment management, unit trust management and financial planning. His career started with a professional accounting firm in London where he was an Audit Manager. He was the manager in charge of Portfolio Investment in a merchant bank in Malaysia and subsequently in charge of the corporate and planning division in a public listed company. Mr. Cheah was the Chief Executive Officer/Executive Director and a member of the Investment Committee of Public Mutual Fund Berhad, the largest private unit trust management company in Malaysia. He was also a council member and Chairman of the Secretariat of the Federation of Investment Managers Malaysia (FIMM), and is a former Task Force Member on Islamic Finance for Labuan International Offshore Financial Centre (LOFSA), and a former member on the Securities Market Consultation Panel in Bursa Malaysia Securities Berhad. He attended all four (4) Board Meetings held during the financial year ended 31 October Mr. Cheah sits on the Board of Nylex Malaysia Berhad, Ancom Berhad and Ancom Logictics Berhad, all of which are listed on Bursa Malaysia Securities Berhad. He is also an Investment Committee Member and Director of MAAKL Mutual Berhad. LOW CHIN GUAN Managing Director, Key Senior Management Malaysian, male Mr. Low Chin Guan, aged 58, a Malaysian, was appointed to the Board of Adventa Berhad on 12 April 2004 and is presently the Managing Director of the Company. His last re-election as a director was on 29 March He is also a member of the Remuneration Committee. He graduated as a Civil Engineer from the University of Manchester Institute of Science and Technology (UMIST), United Kingdom. Mr. Low founded the initial subsidiary of the Group in He has years of experience in project management, operations of manufacturing and assembly plants, financial control, strategic planning and marketing. In 2004, he formed Adventa Berhad to hold the various companies and manufacturing facilities under a single group management. He now leads the Group in the areas of strategic planning, business development, investments, acquisitions and key personnel recruitment. He is also actively involved in product development, particularly in technological directions. He attended all four (4) Board Meetings held during the financial year ended 31 October Mr. Low is the brother of Ms. Low Lea Kwan, who is substantial shareholder of the Company. He does not have any family relationship with any other director nor any conflict of interest in any business arrangement involving the Company, except as disclosed in the Financial Statements.

9 08 ADVENTA BERHAD ( M) DIRECTORS PROFILE KWEK SIEW LENG Executive Director, Key Senior Management Malaysian, female Ms. Kwek Siew Leng, aged 51, was appointed to the Board of Adventa Berhad on 12 April 2004 and is presently an Executive Director of the Company. Her last re-election as a director was on 28 March She is an Associate Member of the Chartered Institute of Management Accountants (CIMA) and a Chartered Accountant with the Malaysian Institute of Accountants (MIA). She has senior operations experience in audit and accounting prior to joining the Adventa Bhd group. Her prior employment in public practice includes stints in statutory and regulatory reporting, financial planning, budgeting and forecasting, taxation, managerial skills as well as system development in various fields. She joined one of the Company s subsidiaries as Finance Manager in 2002 and assumed the position of Group Finance Manager of Adventa Berhad in She was subsequently promoted to Finance Director in She is now responsible for the overall management and operations of the accounts and finance departments. She attended three (3) out of four (4) Board Meetings held during the financial year ended 31 October TOH SENG THONG Independent Non-Executive Director Malaysian, male Mr. Toh Seng Thong, aged 59, a Malaysian, was appointed to the Board of Adventa Berhad on 10 May His last re-election as a director was on 29 March He is the Chairman of the Audit Committee and a member of the Remuneration Committee and Nomination Committee. He graduated with a Bachelor of Commerce (Accounting) degree from the University of Canterbury, New Zealand in He is a Chartered Accountant by profession and a member of the Malaysian Institute of Accountants, Malaysian Institute of Certified Public Accountants, New Zealand Institute of Chartered Accountants, a Fellow member of the Malaysian Institute of Taxation and an Associate member of the Harvard Business School Alumni Club of Malaysia. Mr Toh has over 28 years experience in auditing, taxation and corporate advisory and financial advisory as a practicing Chartered Accountant of Malaysia. He started his own practice under Messrs S T Toh & Co in He attended all four (4) Board Meetings held during the financial year ended 31 October He sits on the Board of Latitude Tree Holdings Berhad and Malaysian Genomics Resource Centre Berhad, companies listed on Bursa Malaysia Securities Berhad.

10 ANNUAL REPORT DIRECTORS PROFILE DATO DR. NORRAESAH BINTI HAJI MOHAMAD Independent Non-Executive Director Malaysian, female Dato Dr. Norraesah Binti Haji Mohamad, aged 69, a Malaysian, was appointed to the Board of Adventa Berhad on 8 November 2005 as an Independent Non-Executive Director of the Company. Her last re-election as a director was on 21 April She is also a member of the Audit Committee. Dato Dr. Norraesah is a graduate with a Bachelor of Arts (Hons) Economics from University of Malaya, a Masters in International Economics Relations from International Institute of Public Administration, France and Masters in International Economics and Finance from the University of Paris Pantheon-Sorbonne, France. She further obtained a PhD (Economic Science) International Economics and International Finance from the same university in France. She has more than 45 years of working experience in banking, consultancy and international trade and commerce. From 1972 to 1985, she worked with the International Trade Division of the Ministry of Trade and Industry and the Ministry of Finance before joining the corporate sector. From 1988 to 1990, Dato Dr. Norraesah was the Communications Manager of ESSO Production Malaysia Inc. and subsequently assumed the position of Managing Director with a consultant firm providing financial advisory services. She was also appointed as Chief Representative of Credit Lyonnais Bank in Malaysia and was the Chairman of Bank Rakyat from 2000 to She was appointed as a Senator from October 2005 to February She is a recipient of several state awards and was conferred the Chevalier de La Region d Honneur from the French Government in She attended all four (4) Board Meetings held during the financial year ended 31 October She is currently the Chairman of the world Islamic Businesswomen Network of the World Islamic Economic forum ( WIFE ) and also sits on the board of My E.G. Services Berhad, Malaysian Genomics Resource Centre Berhad, Excel Force MSC Berhad and Pecca Group Berhad, all listed on Bursa Malaysia Securities Berhad.

11 10 ADVENTA BERHAD ( M) CORPORATE GOVERNANCE STATEMENT The Board of Directors ( the Board ) is committed to its policy of managing the affairs of the Group with transparency, integrity and accountability by ensuring that a sound framework of best corporate practices is in place at all levels of the Group s business and thus discharging its principal responsibility towards protecting and enhancing long-term shareholders value and investors interest. The Board is pleased to report to the Shareholders that the best practices of good corporate governance having regard to the Recommendations stated under each Principle in the Malaysian Code on Corporate Governance ( MCCG ) 2012 have generally been practiced within the Group throughout the financial year ended 31 October ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT 1.1 Board Composition The Board consists of five (5) members, of which two (2) are Executive Directors and three (3) are Independent Directors, thus fulfilling the Main Market Listing Requirements ( MMLR ) which stipulates that at least one-third of the Board should comprise Independent Directors. The Board is of the opinion that its composition reflects a balance of Executive and Non-Executive Directors, such that the interests of not only the Company, but also its stakeholders and the general public are upheld in the formulation and adoption of business strategies. Collectively, the Directors combine their diverse commercial, regulatory, industry and financial experience to add value to the Board as a whole. There is also a clear division of responsibilities between the Chairman, who is a Senior Independent Director, and the Managing Director to ensure that the Board remains balanced at all times. The profiles of the members of the Board are set out in the relevant section of this Annual Report. 1.2 Duties and Responsibilities of the Board The Board has primary responsibility for the governance and management of the Group and fiduciary responsibility for the financial health of the Group. The Group acknowledges the importance of having an effective Board to lead and control the Group. The principal responsibilities of the Board include: a) Reviewing and adopting a strategic plan for the Group The Board provides insights and guidance to the Managing Director and Management to achieve corporate objectives of the Group. The Board reviews the strategic business plan presented by the Managing Director and Management. b) Overseeing the conduct of the Company s business to evaluate whether the business is being properly managed The Managing Director is accountable to the Board to ensure effective implementation of the Group s business plan and policies approved by the Board as well as to manage the daily conduct of the business to ensure its smooth operation. At each meeting, the Managing Director will report to the Board a summary report on the performance and activities of the Group including specific proposals for capital expenditure and acquisitions, if any. The role and responsibility of the Managing Director is distinct, separate and clearly defined. The Managing Director, assisted by the Directors, has overall responsibility in working towards achieving strategic goal and objectives for the Company together with the implementation of the Company s policies, corporate strategies and decisions. All Board members participate fully in decisions on key issues involving the Company. The Executive Directors are responsible for implementing the policies and decisions of the Board and managing the day to day operations. Together with Independent Non-Executive Directors, they ensure that strategies are fully discussed and examined, taking into account the long-term interests of the various stakeholders including shareholders, employees, customers, suppliers and the community. The Non-Executive Directors play an important role in providing unbiased and independent judgment to ensure a balance and impartial Board decision-making process. The Board has designated Mr Edmond Cheah Swee Leng, who is also the Chairman of the Board, as the Senior Independent Non-Executive Director to whom any concerns may be conveyed.

12 ANNUAL REPORT CORPORATE GOVERNANCE STATEMENT ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT 1.2 Duties and Responsibilities of the Board c) Identifying principal risks and ensure the implementation of appropriate systems to manage these risks The oversight of the Group s risk management process is the responsibility of the Managing Director who is assisted by the Head of Department of the respective operating companies. The Company has established a Risk Management Committee whom together with the Audit Committee, are responsible for ensuring more effective and efficient identification, evaluation, management and reporting of Group s risks. Details on the function of Risk Management Committee are set out in the Statement on Risk Management and Internal Control on pages 28 to 30 of this Annual Report. d) Succession planning, including appointing, training, fixing the compensation of and where appropriate, replacing Executive Directors and Management The Board noted the importance of succession planning to the Group. The possibility of replacing Executive Directors and Management will be addressed when circumstances required. e) Developing and implementing an investor relations programme or shareholder communications policy for the Group The Company s website, incorporates an Investor Relations section which provide all relevant information on the Company and accessible by the public. The information available in the website includes Financial Reports, Company s announcements as well the corporate and governance structure of the Company. f) Reviewing the adequacy and the integrity of the Group s internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines The Board acknowledges the importance of establishing a sound system of internal control. A Risk Management Framework has been established to manage risks and to safeguard shareholders investment and the Group s assets. Details on the framework are set out in the Statement on Risk Management and Internal Control on pages 28 to 30 of this Annual Report. g) Determining the remuneration of Non-Executive Directors, with the individuals concerned abstaining from discussions of their own remuneration The determination of remuneration packages of Non-Executive Directors, including Non-Executive Chairman will be a matter to be decided by the Board as a whole with the Director concerned abstaining from deliberations and voting on decision in respect of his individual remuneration package. The Board recommends the Directors fees payable to Non-Executive Directors on a yearly basis to the shareholders for approval at the Annual General Meeting ( AGM ). h) Ensuring that the Group adheres to high standards of ethics and corporate behaviour The Group has established and adopted a Code of Business Conducts and Ethics for Directors and employees ( the Code ). The Code has been circulated to all employees of the Group and each employee is contractually bound to abide by the Code. Refer Note 1.3 below for summary of the Code for Directors. To ensure the effective discharge of its functions and responsibilities, the Board has established and delegated certain power and responsibilities to the Board Committees which have been set up, namely the Audit Committee, Nomination Committee and Remuneration Committee. The Board Committees are entrusted with specific powers and responsibilities to oversee the relevant matters, in accordance with their respective Terms of References and operating procedures and the Board receives reports of their proceedings and deliberations. The Chairman of the respective committees will report to the Board the outcome of these meetings and such reports are incorporated into the Board papers. These committees were formed in order to ensure an optimum structure for efficient and effective decision-making in the organisation.

13 12 ADVENTA BERHAD ( M) CORPORATE GOVERNANCE STATEMENT ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT 1.3 Directors Code of Business Conducts and Ethics Code of Ethics The Board has adopted a Code of Conduct for the Directors of the Company, which covers a wide range of business practices and procedures. The Code of Conduct describes the standards of business conduct and ethical behaviour for Directors in the performance and exercise of their responsibilities as Directors of the Company or when representing the Company. The Code of Conduct sets out basic principles to guide all the Directors of the Company and its subsidiaries, on the appropriate standards of conduct and ethical behavior for Directors. It covers the following areas: Whistle Blowing As part of the Company s continuous efforts to ensure that good corporate governance practices are being adopted, the Company has established Whistle Blowing Policy to provide a clear line of communication and reporting of concerns for employees at all levels. 1.4 Strategies Promoting Sustainability The Group recognizes the importance of sustainability and its increasing impact to the business. The Group is committed to understanding and implementing sustainable practices and exploring the benefits to the business whilst attempting to achieve the right balance between the needs of the wider community the requirements of shareholders and stakeholders and economic success. The Board has adopted a sustainable Environmental, Social and Corporate Governance ( ESG ) Policy for the Group. In promoting the Company s ESG, the Company aims to:- (a) (b) (c) Conduct every aspect of our business with honesty, integrity and openness, respecting human rights and the interests of our employees, customers and third parties; Respect the legitimate interests of third parties with whom we have dealings in the course of our business; and Maintain the highest standards of integrity. The Company engages with the local community at a range of levels and its relationships with the various members of the local community are very important to the Company and are an essential part in the growth of the Company s business. In line with the Company s core values, the Company seeks to play a part in promoting socially inclusive policies and our community approach incorporates the following elements: those services; promoting opportunities to disadvantaged and vulnerable groups; both cash and kind.

14 ANNUAL REPORT CORPORATE GOVERNANCE STATEMENT ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT 1.4 Strategies Promoting Sustainability As the Company strives to achieve continual improvement in environmental performance, the Company is committed to:- to climate change; and 1.5 Access to Information and Advice The Board has full and timely access to information concerning the Company and the Group. The Board is provided with the relevant agenda and board papers in sufficient time, at least 7 days, prior to the meetings to enable them to obtain further explanation and clarification to facilitate informed decision-making. The Board papers include reports on the Group s financial, operational and corporate development. The Board has unrestricted access to all information within the Company, whether as a full board or in their individual capacity, which is necessary for discharge of its responsibilities and may obtain independent professional advice at the Company s expense in furtherance of their duties. 1.6 Qualified and Competent Company Secretaries Every Director has ready and unrestricted access to the advice and the services of the Company Secretaries in ensuring the effective functioning of the Board. The Company Secretaries ensure that Board Policies and procedures are both followed and reviewed regularly, and are legally responsible to ensure that each Director is made aware of and provided with guidance as to his/her duties, responsibilities and powers. The Board also are regularly updated and advised by the Company Secretaries on new statutory and regulatory requirements, and the resultant implications to the Company and Directors in relation to their duties and responsibilities. They are also responsible for ensuring the Group s compliance with the relevant statutory and regulatory requirements. The Board ensures that the Company Secretaries appointed have relevant experience and skills. The responsibilities carried out by the Company Secretaries include: Bursa Securities ) electronically via the LINK; relevant documents under the direction and instruction of the Board of Directors; AGM/Extraordinary General Meeting ( EGM ) of shareholders; various Statutes, in particular, the Companies Act 2016, the Listing Requirements of Bursa Securities and in general, such other matters relating to secretarial practice. 1.7 Board Charter The Board has adopted a Board Charter which provides guiding principles for the Board to achieve the vision and mission of the Company and serves as a reference point for the Board s activities. In the Board Charter, the Board has established a formal schedule of matters reserved to the Board for its deliberation and decision in order to enhance the delineation of roles between the Board and management. The Board will periodically review this Board Charter from time to time to ensure it remains consistent with the Board s objectives and responsibilities and any new regulations that may have an impact on the discharge of the Board s responsibilities. The Board Charter is available in the Company s website.

15 14 ADVENTA BERHAD ( M) CORPORATE GOVERNANCE STATEMENT STRENGTHEN COMPOSITION OF THE BOARD 2.1 Nomination Committee The Board has established a Nomination Committee, consisting of two (2) Directors who are Independent Non-Executive Directors of the Company. The principal objectives of the Nomination Committee in line with its Terms of Reference are: Company on an on-going basis. The Nomination Committee oversees matters relating to the nomination of new Directors, annually reviews the required mix of skills, experience, independence, assessment of Independent Directors, reviews succession plans and boardroom diversity, oversees training courses for Directors and other requisite qualities of Directors and also conducts an annual assessment of the effectiveness of the Board as a whole, its Committees and the contribution of each individual Director. The members of the Nomination Committee during the financial year are as follows:- Chairman : Mr. Edmond Cheah Swee Leng Member : Mr. Toh Seng Thong The Nomination Committee may meet at least once a year or more frequently as deemed necessary. During the financial year ended 31 October 2017, the Committee had on 19 September 2017 held one (1) meeting and details of attendance of each committee member are as follows:- Name of Directors Position No. of meetings attended/held % Mr. Edmond Cheah Swee Leng Chairman 1/1 100 Mr. Toh Seng Thong Member 1/ Develop, maintain and review criteria for recruitment processes and annual assessment of Directors Appointment Process The Board, through the Nomination Committee s annual appraisal, believes that the current composition of the Board brings the required mix of skills and core competencies required for the Board to discharge its duties effectively. The Nomination Committee is also responsible for making recommendations to the Board on the suitability of candidates nominated for appointment to the Board and Board Committees. A formal and transparent procedure for appointment of directors is set out in the Terms of Reference of the Nomination Committee. The decision as to who should be appointed is the responsibility of the full Board after considering the recommendations of the Committee. The Company Secretaries will ensure that all appointments are properly made; all the necessary information is obtained as well as all legal and regulatory obligations are met. Appointments of Chairman and members of the Board or Board Committee are based on recommendations put forth by the Nomination Committee. The Nomination Committee shall, prior to the appointment by the Board, evaluate the balance and composition including mix of skills, independence, experience and diversity (including diversity in gender, ethnicity and age) of the Board.

16 ANNUAL REPORT CORPORATE GOVERNANCE STATEMENT STRENGTHEN COMPOSITION OF THE BOARD 2.2 Develop, maintain and review criteria for recruitment processes and annual assessment of Directors Appointment Process In making recommendation of suitable candidates, the Committee shall consider the following:- (i) (ii) (iii) (iv) (v) skills, knowledge and expertise, experience; time commitment and contribution; honesty, integrity, professional conduct and business ethics/practices; specialized knowledge in line with the Company s strategy; and number of directorships in other companies and other external obligations which may affect his/her commitment. For the position of independent non-executive directors, the Nomination Committee shall evaluate the candidate, at a minimum, with reference to the definition of Independent Director as stipulated by the MMLR of Bursa Securities. Re-election of Directors Any Director appointed during the year is required under the Company s Articles of Association to retire and seek re-election by the shareholders at the following AGM immediately after their appointment. The Articles also require that one-third of the Directors including the Managing Director retire by rotation and seek re-election at each AGM and that each Director shall submit himself/herself for re-election at least once in every three (3) years. The Directors to retire from office at the forthcoming AGM are Mr. Toh Seng Thong and Dato Dr. Norraesah Binti Haji Mohamad. Board Evaluation The Board regularly evaluates its performance and the governance processes that support the Board s work with the aim of improving individual contributions, effectiveness of the Board and its committees and the Group s performance. The effectiveness of the Board is assessed in the areas of Board mix, composition and governance, quality of monitoring and decision-making as well as Board responsibilities. The effectiveness of the committees of the Board are assessed in terms of composition and governance, skills and competencies, and duties and responsibilities in accordance with their respective Terms of Reference. The evaluation process also involved a self and peer review, where the Directors will assess their own performance and that of their fellow Directors. During the financial year under review, the Nomination Committee had reviewed:- the effectiveness of the board as a whole and of the committees of the Board and the contribution and performance of each individual Director; the independence of the independent Directors; and the Directors who are subject to retirement by rotation at the forthcoming AGM, and are eligible for re-election. Board Diversity The Board acknowledges the need to enhance Board diversity, as it is essential to the functioning of the Board and indicates good governance practices. The Board endeavours to undertake diversification in terms of experience, skills, expertise, competencies, gender, ethnicity and age to enable the Company to maximise its business and governance performance. The Board is presently of the view that there is no necessity yet to fix a specific gender diversity policy as the Board has three (3) male and two (2) female directors. The appointment of any Director(s) should be based on their merit, qualification and working experience.

17 16 ADVENTA BERHAD ( M) CORPORATE GOVERNANCE STATEMENT STRENGTHEN COMPOSITION OF THE BOARD 2.3 Remuneration Policies and Procedures Remuneration Committee The members of the Remuneration Committee consist of two (2) Non-Executive Directors and one (1) Executive Director and meet as and when required. The principal function of the Remuneration Committee is to assist the Board in their responsibilities in assessing the remuneration packages of the Executive Directors. The Remuneration Committee oversees matters relating to the review and assessment of the remuneration packages of the executive directors in all forms, with or without other independent professional advice or other outside advice, ensure the levels of remuneration be sufficiently attractive and be able to retain directors needed to run the Company successfully, structure the component parts of remuneration so as to link rewards to corporate and individual performance and to assess the needs of the Company for talent at Board level at a particular time. The members of the Remuneration Committee shall comprise wholly or mainly of Non-Executive Directors. The current members of the Remuneration Committee are:- Chairman : Mr. Edmond Cheah Swee Leng Members : Mr. Toh Seng Thong Mr. Low Chin Guan The Remuneration Committee may meet at least once a year or more frequently as deemed necessary. During the financial year ended 31 October 2017, the Committee had on 19 September 2017 held one (1) meeting and details of attendance of each Committee member is as follows:- Name of Directors Position No. of meetings attended/held % Mr. Edmond Cheah Swee Leng Chairman 1/1 100 Mr. Toh Seng Thong Member 1/1 100 Mr. Low Chin Guan Member 1/1 100 During the financial year under review, the Remuneration Committee has deliberated on the remuneration packages of the Executive Director and Managing Director. Directors Remuneration The objective of the Company s policy on Directors remuneration is to ensure that the level of remuneration is sufficient to attract and retain high profile Directors with a wealth of industry experience. The details of the total remuneration of the Executive Directors and Non-Executive Directors of the Company (both the Company and the Group) for the financial year are as follows:- Company Other Category Fees Salaries Emoluments Total (RM) (RM) (RM) (RM) Executive Directors 57, ,000 72, ,569 Non-Executive Directors 192, ,456

18 ANNUAL REPORT CORPORATE GOVERNANCE STATEMENT STRENGTHEN COMPOSITION OF THE BOARD 2.3 Remuneration Policies and Procedures Directors Remuneration Group Other Category Fees Salaries Emoluments Total (RM) (RM) (RM) (RM) Executive Directors 57, , , ,361 Non-Executive Directors 192, ,456 The number of Directors whose total remuneration falls within the following bands is as follows:- Company Range of Remuneration Executive Directors Non-Executive Directors RM50,001 RM100,000-3 RM100,001 RM150, RM350,001 RM400, Group Range of Remuneration Executive Directors Non-Executive Directors RM50,001 RM100,000-3 RM100,001 RM150, RM200,001 RM250, RM500,001 RM550, Audit Committee The Audit Committee s composition, duties & responsibilities, terms of reference and activities are set out on pages 25 to 27 of this Annual Report. REINFORCE INDEPENDENCE 3.1 Annual Assessment of Independence The Board recognises the importance of independence and objectivity in the decision-making process. The Independent Directors bring their respective knowledge and experience and provide independent judgement to the Board. The Board is committed in ensuring that Independent Directors are capable and willing to make decisions in the best interests of the Company and the shareholders free from interest or influence and are independent of the Management. The Independent Directors namely, Mr Edmond Cheah Swee Leng, Mr Toh Seng Thong and Dato Dr. Norraesah Binti Haji Mohamad fulfilled the criteria of Independence as prescribed under the MMLR. The key criteria for the appointment of an Independent Director is one who is not a member of the management (a Non-Executive Director) and who is free of any business or other relationship which could interfere with the exercise of independent judgement or the ability to act in the best interests of the Company. The Board composition complies with the MMLR of Bursa Securities which requires that at least two (2) Directors or one-third (1/3) of the Board of the Company, whichever is the higher, to be Independent Directors.

19 18 ADVENTA BERHAD ( M) CORPORATE GOVERNANCE STATEMENT REINFORCE INDEPENDENCE 3.2 Tenure of Independent Directors Retention of Independent Non-Executive Directors The Board recognises Practice 4.2 of the MCCG that the tenure of an Independent Director does not exceed a cumulative term limit of nine (9) years. Upon completion of the nine (9) years, an Independent Director may continue to serve on the board as a Non-Independent Director. If the Board intends to retain an Independent Director beyond nine (9) years, it should justify and seek annual shareholders approval. If the Board continues to retain the Independent Director after the twelfth (12) year, the Board should seek annual shareholders approval through a two-tier voting process. Dato Dr Norraesah Binti Haji Mohamad, an Independent Non-Executive Director who is also a member of Audit Committee, was appointed to the Board on 8 November 2005 and as such her tenure of service has exceeded a cumulative term of nine (9) years and would exceed twelve (12) years in year The Board has reviewed and recommended that Dato Dr Norraesah Binti Haji Mohamad shall continue to act as an Independent Non-Executive Director. Mr Toh Seng Thong and Mr Edmond Cheah Swee Leng, Independent Non-Executive Directors who are also members of Nomination Committee, Remuneration Committee and Audit Committee, were appointed to the Board on 10 May 2004 and 9 August 2004 respectively, and as such their tenure of service has exceeded a cumulative term of nine (9) years and more than twelve (12) years. The Board has reviewed and recommended that Mr Toh Seng Thong and Mr Edmond Cheah Swee Leng shall continue to act as an Independent Non-Executive Director. In order to adhere to Practice 4.2 of MCCG, the Board will seek approval from the shareholders of the Company through a two-tier voting process at the forthcoming AGM to retain Dato Dr Norraesah Binti Haji Mohamad, Mr Toh Seng Thong and Mr Edmond Cheah Swee Leng, as Independent Non-Executive Directors based on the following justifications: voice to the Board and contributed in preventing Board domination by any single party; the Company; and Independent Non-Executive Director of the Company. 3.3 Separation of position of the Chairman and Managing Director The Board composition is in compliance with Paragraph 15.02(1) of the MMLR of Bursa Securities and Recommendation 3.4 of the MCCG 2012, wherein it states that the positions of Chairman and Chief Executive Officer (in this case, the Managing Director) should be held by different individuals, and the Chairman must be a nonexecutive member of the Board. There is a clear division of responsibility between the Chairman and the Managing Director to ensure that there is a balance of power and authority. The Chairman leads the Board and facilitates its work. He engages directly with the Managing Director to understand and oversee the strategy implementation and performance delivery. He is responsible for ensuring the processes of the Board are effective in carrying out its duties and responsibilities, including the timely provision of sufficient relevant information on financial and non-financial matters. The Chairman, in conjunction with the Managing Director and Company Secretary, sets agendas for the meetings of the Board that focus in strategic direction and performance of the Group. The Managing Director is responsible for the day to day management of the Group s operations and business as well as implementation of the Board s policies and decisions.

20 ANNUAL REPORT CORPORATE GOVERNANCE STATEMENT REINFORCE INDEPENDENCE 3.4 Board Composition and Balance The Board has five (5) members comprising:- Two (2) Executive Directors including one (1) Managing Director and three (3) Non-Executive Directors, including one (1) Senior Independent Non-Executive Chairman. The Board members have a wide range of business, financial and technical experience. The mixed skills and experiences are vital for the successful direction of the Group. A brief profile of each Director is presented on pages 6 to 9 of this Annual Report. FOSTER COMMITMENT 4.1 Time Commitment The Board meets on a quarterly basis and additionally as required. The general agenda of the meetings includes discussion over minutes of previous meetings, quarterly financial results of the Group and any other issues requiring the Board s deliberation and approval. The agenda for each Board meeting is circulated to all the Directors for their perusal prior to the convening of each meeting to enable Directors to obtain further clarifications/explanations prior to the meeting to ensure smooth proceeding of each meeting. The proceedings and resolutions reached at each Board meeting are minuted and signed by Chairman of the meeting. Besides Board meetings, the Board exercises control on matters that require Board s deliberation and approval through circulation of Directors Resolutions. The Board had on 22 December 2016, 28 March 2017, 22 June 2017 and 19 September 2017 held four (4) meetings during the financial year. Record of each Director s meeting attendance during the year under review is set out below:- Name of Directors No. of meetings attended/held % Mr. Edmond Cheah Swee Leng 4/4 100 Mr. Low Chin Guan 4/4 100 Ms. Kwek Siew Leng 3/4 75 Mr. Toh Seng Thong 4/4 100 Dato Dr. Norraesah Binti Haji Mohamad 4/4 100 Time Commitment and Protocol for accepting new directorships The Board is satisfied with the level of time commitment extended by the Directors in fulfilling their roles and responsibilities as Directors of the Company. This is evidenced by the attendance record of the Directors at Board meetings. Directors are expected to have the relevant expertise in order to contribute positively to the Company s performance and to give sufficient time and attention to carry out their responsibilities to the Company and Group. The Board obtains this commitment from its new members at the time of appointment. The Board has established policies and procedures where a Director should notify the Chairman officially, before accepting any new directorship from any other company and the notification shall set out the expectation and an indication of time commitment that will be spent on the new appointment. This is so that Directors are able to devote sufficient time commitment to their roles and responsibilities as Directors of the Company. Any Board member shall not hold more than five (5) directorships in listed companies at any one time.

21 20 ADVENTA BERHAD ( M) CORPORATE GOVERNANCE STATEMENT FOSTER COMMITMENT 4.2 Directors Training All the Board members have attended the Mandatory Accreditation Programme as required by the MMLR. The Board has assumed the onus of determining and overseeing the training needs of the Directors. The Directors are mindful of the need for continuous training to keep abreast of the relevant changes in laws, regulations and the business environment to effectively discharge their responsibilities and are encouraged to attend forums, training and seminars in accordance with their respective needs in discharging their duties as Directors. The Company Secretaries will also provide updates to the Directors from time to time on relevant guidelines and statutory and regulatory requirements. During the financial year under review, the Directors attended the following training:- Malaysian Institute of Accountants UPHOLD INTERGRITY IN FINANCIAL REPORTING 5.1 Compliance with Applicable Financial Reporting Standards In presenting the annual audited financial statements and quarterly announcement of results to shareholders, the Directors aim to present a balanced and understandable assessment of the Group s position and prospects. The Audit Committee assists the Board by reviewing the information to be disclosed in the financial statements, to ensure completeness, accuracy, adequacy and compliance with applicable financial reporting standards. The composition and meetings, summary of work of the Audit Committee and summary of activities of the Audit Committee can be found in the Audit Committee Report on pages 25 to 27 of this Annual Report. The Statement of Directors Responsibility in respect of the Audited Financial Statements pursuant to paragraph 15.26(a) of the MMLR and pursuant to the Statement of Directors Responsibility of the Companies Act 2016 is set out on page 31 of this Annual Report. 5.2 Assessment of suitability and independence of external auditors Through the Audit Committee, the Company has established a transparent and appropriate relationship with the Group s External Auditors. From time to time, the Auditors highlighted to the Audit Committee and the Board on matters that require the Board s attention. The External Auditors provide mainly audit-related services to the Company. Due to the familiarity of the Company, the External Auditors also undertake certain non-audit services such as regulatory reviews and reporting and other services. The Company has always maintained a transparent relationship with its External Auditors in seeking professional advice and ensuring compliance with applicable approved financial reporting standards in Malaysia. A summary of the activities of the Audit Committee during the year is set out in the Audit Committee Report on pages 25 to 27 of this Annual Report. The Audit Committee had also obtained a written assurance from the External Auditors confirming their independence throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and be presented for shareholders approval at the forthcoming AGM.

22 ANNUAL REPORT CORPORATE GOVERNANCE STATEMENT RECOGNISE AND MANAGE RISKS 6.1 Sound framework to manage risks The Board has ultimate responsibility for reviewing the Company s risks, approving the risk management framework and policy and overseeing the Company s strategic risk management and internal control framework. The Company has in place an on-going process for identifying, evaluating and managing significant risks that may affect the achievement of the business objective of the Group. The Board through the Audit Committee and Risk Management Committee reviews the key risks identified on a regular basis to ensure proper management of risks and that measures are taken to mitigate any weaknesses in the control environment. In addition, the Company developed its Risk Management Policy and Procedure Document with an embedded Enterprise Risk Management ( ERM ) framework. The ERM framework is designed to:- establish the context for an embedded ERM framework within the Group; formalize the ERM functions across the Group; sensitize staff more strongly to risk identification, measurement, control, ongoing monitoring, responsibilities and accountabilities; coordinate and standardize the understanding and application of ERM within the Group; and prove compliance by the Board of the Company with its organizational obligations and duties of care and diligence in accordance with the Code via a structured documentation system. The Risk Management Committee comprises the following members:- Chairperson : Ms. Kwek Siew Leng Members : Mr. Choy Wah Wei Mr. Oh Tiang Hoe The key features of the Risk Management framework together with details of the Company s internal control system and framework are set out in the Statement of Risk Management and Internal Control of the Company on pages 28 to 30 of this Annual Report. 6.2 Internal Audit Function The Board has established an internal audit function within the Company, which is led by the out-sourced Internal Auditors, PKF Advisory Sdn. Bhd., who reports directly to the Audit Committee. Details of the internal audit function and activities as set out in the Audit Committee Report of this Annual Report. ENSURE TIMELY AND HIGH QUALITY DISCLOSURE 7.1 Corporate Disclosure Policy Information Disclosure The Board has in place a policy to ensure disclosure of information is in accordance with the disclosure requirements under the MMLR and other applicable laws.

23 22 ADVENTA BERHAD ( M) CORPORATE GOVERNANCE STATEMENT ENSURE TIMELY AND HIGH QUALITY DISCLOSURE 7.2 Leverage on Information Technology for Effective Dissemination of Information The Group maintains a website at where shareholders as well as members of the public are invited to access the latest information on the Group. Alternatively, they may obtain the Group s latest Annual Report and announcements via the Bursa Securities website at The Company will upload the internal corporate policies in the Corporate Governance section at the Company s website in due course. Information is disseminated via the Company s annual reports, circulars to shareholders, quarterly financial results, press releases and various announcements made from time to time. The Policy on Corporate Communications and Disclosure adopted by the Company is to ensure that the Company has in place efficient procedures for the management of information which at the same time, will promote accountability in relation to the disclosure of material information as well as to build good investor relations with the investing public that inspires trust and confidence. Shareholders and other interested parties may contact the Executive Director of the Company, to address any concerns by writing or via telephone or facsimile as follows:- Address : Adventa Berhad No 21, Jalan Tandang, 51/205A, Seksyen 51, Petaling Jaya Selangor, Malaysia Tel : Fax : Website : STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS 8.1 Encourage Shareholder Participation at General Meetings The Board fully recognises the rights of shareholders and encourages them to exercise of their rights at the Company s AGM. The AGM remains the principal forum for dialogue with shareholders where they may seek clarifications on the Company s business and reports. Shareholders are encouraged to meet and communicate with the Board at the AGM and to vote on all resolutions. The Board will respond to any question raised during the meeting. Notice of the AGM, annual reports and circular are sent out with sufficient notice before the date of the meeting to enable the shareholders to have full information about the meeting to facilitate informed decision-making. The explanatory notes on the proposed resolutions under Special Business are given to help the shareholders vote on the resolutions. 8.2 Poll Voting Pursuant to the MMLR of Bursa Securities, 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.

24 ANNUAL REPORT CORPORATE GOVERNANCE STATEMENT STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS 8.3 Communication with Shareholders and Investors The Company recognises the importance of keeping shareholders and investors informed of the Group s business and corporate developments. The AGM and EGM remains the principal forum for dialogue with shareholders where they may seek clarifications on the Group s businesses. Shareholders are given reasonable time to ask questions pertaining to issues in the Annual Report, corporate developments on the business of the Group and resolutions proposed and to vote on all resolutions proposed. Shareholders are encouraged to meet and communicate with the Board at the AGM and to vote on all resolutions. Those unable to attend are allowed to appoint proxies to attend and vote on their behalf. During the meeting, the Managing Director and the Executive Director are prepared to provide responses to queries and to receive feedback from the shareholders. External Auditors are also present to provide their professional and independent clarification on issues of concern raised by the shareholders, if any. The shareholders are kept abreast of all important developments concerning the Group through regular and timely dissemination of information via quarterly financial announcements through Bursa Securities website, distribution of annual report and various other announcements made during the year. These will enable the shareholders, investors and members of public to have an overview of the Group s performance and hence, will enable them to make any informed investment decision relating to the Group. The Company s website, provides an avenue for information, such as dedicated sections on corporate information, including financial information and announcements. The website is continuously updated to ensure that the information contained within is correct. OTHER INFORMATION PURSUANT TO THE MAIN MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD 9.1 Utilisation of Proceeds The Company did not raise any fund through any corporate proposal during the financial year. 9.2 Recurrent Related Party Transactions of Revenue Nature At the AGM held on 28 March 2017, the Company obtained a Shareholders Mandate to allow the Group to enter into recurrent related party transactions of a revenue or trading nature. In accordance with Section of Practice Note 12 of the Bursa Securities Berhad Listing Requirements, the detail of recurrent related party transactions conducted pursuant to the Shareholders Mandate are disclosed as follows: Related Party Interest Director/ Interested Major Shareholder Nature of Transaction Value of Transactions from 28 March 2017 up to 30 January 2018 (RM 000) Aspion Group Mr Low Chin Guan (a) Purchases of gloves from the Aspion Group 14,457 (b) (c) Provision of sterilisation and warehouse and handling services to the Aspion Group 8,770 Sales of non-gloves products to the Aspion Group 80

25 24 ADVENTA BERHAD ( M) CORPORATE GOVERNANCE STATEMENT OTHER INFORMATION PURSUANT TO THE MAIN MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD 9.3 Audit and Non-Audit Fees The audit and non-audit fees paid by the Group to external auditors or company affiliated to the external auditor s firm for the financial year ended 31 October 2017 are as follows:- Company (RM) Group (RM) Audit services rendered 60, ,000 Non-audit services rendered 5,000 35,000 Total 65, , Material Contracts Involving Directors and Major Shareholders There were no material contracts entered into by the Company and its subsidiaries involving the Company s Directors and/or major shareholders interests, either still subsisting at the end of the financial year ended 31 October 2017, or which were entered into since the end of the previous financial year.

26 ANNUAL REPORT AUDIT COMMITTEE REPORT The Board of Directors of the Company ( the Board ) is pleased to present the report of the Audit Committee ( AC ) for the financial year ended 31 October COMPOSITION AND MEETINGS The Board shall appoint the AC members from amongst themselves, comprising no fewer than three (3) non-executive directors. The majority of the AC members shall be independent directors. In this respect, the Board adopts the definition of independent director as defined under Bursa Malaysia Securities Berhad s Main Market Listing Requirements. All members of the AC shall be financially literate and at least one (1) member of the AC must:- (a) (b) (c) be a member of the Malaysian Institute of Accountants ( MIA ); or if he is not a member of the MIA, he must have at least three (3) years of working experience and: i) he must have passed the examinations specified in Part I of the First Schedule of the Accountants Act 1967; or ii) he must be a member of one of the associations of accountants specified in Part II of the First Schedule of the Accountants Act 1967; or fulfill such other requirements as prescribed or approved by Bursa Securities. No alternate director of the Board shall be appointed as a member of the AC. The term of office and performance of the AC and each of its members shall be reviewed by the Nomination Committee annually to determine whether such AC and members have carried out their duties in accordance with their terms of reference. During the financial year ended 31 October 2017, the AC conducted a total of four (4) meetings. The composition of the AC and the attendance of the respective members at the meetings during the financial year ended 31 October 2017 are disclosed as follows:- Name Designation Directorship Attendance Mr. Toh Seng Thong Chairman 4/4 Mr. Edmond Cheah Swee Leng Member 4/4 Dato Dr. Norraesah binti Haji Mohamad Member 4/4 The terms of reference of the Committee is available for reference on the Company s website at SUMMARY OF WORK OF THE AUDIT COMMITTEE 1. OVERSIGHT OF THE FINANCIAL REPORTING PROCESS During the financial year ended 31 October 2017, the AC carried out its duties as set out on its Terms of Reference. The AC discharged its oversight role by carrying out the following activities during the financial year: (a) Reviewed and discussed the interim and year-end financial statements, prior to recommendations to the Board. The key areas of focus are the following:

27 26 ADVENTA BERHAD ( M) AUDIT COMMITTEE REPORT SUMMARY OF WORK OF THE AUDIT COMMITTEE 1. OVERSIGHT OF THE FINANCIAL REPORTING PROCESS (b) The dates the AC met during the financial year to deliberate on financial reporting matters as detailed below:- Date of meetings Financial Reporting Statements Reviewed 22 December 2016 Unaudited quarterly report on consolidated results of the Company and its Group of Companies for the Fourth quarter ended 31 October March 2017 Unaudited quarterly report on consolidated results of the Company and its Group of Companies for the First quarter ended 31 January June 2017 Unaudited quarterly report on consolidated results of the Company and its Group of Companies for the Second quarter ended 30 April September 2017 Unaudited quarterly report on consolidated results of the Company and its Group of Companies for the Third quarter ended 31 July OVERSIGHT OF EXTERNAL AUDIT FUNCTION During the financial year, the AC:- (a) (b) (c) Reviewed with the External Auditors, their audit plan including non-audit services for the financial year ended 31 October 2017, outlining the audit scope, methodology and timetable, audit materiality, area of focus, fraud considerations and the risk of management override and also the new and revised auditors reporting standards. Discussed and considered the significant accounting adjustments, auditing issues and management letter arising from the interim audit as well as the final audit with the External Auditors. The AC also had a private discussion with the External Auditors on 22 December 2016 and 19 September 2017 without the presence of the Management to review on issues relating to financial controls and operational efficiencies of the Company and its subsidiaries. Evaluated the performance of the External Auditors for the financial year ended 31 October 2017 covering areas such as External Auditor capacity, quality processes, audit team, audit scope, audit communication, audit governance and independence as well as the audit fees of the External Auditors. impair their independence. 3. OVERSIGHT OF THE INTERNAL CONTROL AND RISK MANAGEMENT AUDIT FUNCTION In discharging its duties and responsibilities, the AC is supported by an independent and adequately resources internal audit function. The internal audit function is outsourced to PKF Advisory Sdn. Bhd. ( Internal Auditors ), an independent professional services firm which assesses the adequacy, efficiency and effectiveness of the Group s internal control and risk management system. During the financial year ended 31 October 2017, the internal audit function carried out audits in accordance with the internal audit plan approved by the AC. The results of the internal audit reviews and the recommendations for enhancement of existing controls were duly presented to the AC. The AC has full access to the Internal Auditors and has received reports on audits performed.

28 ANNUAL REPORT AUDIT COMMITTEE REPORT SUMMARY OF WORK OF THE AUDIT COMMITTEE 3. OVERSIGHT OF THE INTERNAL CONTROL AND RISK MANAGEMENT AUDIT FUNCTION The internal audits were performed using a risk based approach and focused on:- (a) (b) (c) reviewing identified high risk areas for compliance with established policies, procedures, rules, guidelines, laws and regulations; evaluating the adequacy of controls for safeguarding assets; and identifying business risks which have not been appropriately addressed. During the financial year under review, the AC performed the following activities: (a) (b) (c) (d) (e) (f) Reviewed and approved the Internal Audit Plan prepared by Internal Auditors for the financial year ended 31 October 2017 to ensure there is adequate scope and comprehensive coverage over the activities of the subsidiaries in the Group and that all the risk areas are audited annually. Reviewed the internal audit reports relating to Fixed Asset and Inventory Function of the Group. Reviewed the audit findings and recommendations to improve any weaknesses or non-compliance, and the respective Management s response thereon, and monitored the implementation recommendations and action plans. Reviewed the Risk Management Report prepared by the Management, requested for more information and proposed amendments to the content to better address risk management best practices. Sought and obtain periodic updates from Internal Auditors on the status of implementation of post-audit recommendations from previous, as well as current, internal audit cycles. Met with the internal auditors on 19 September 2017 without the presence of the any executive Board members and management of the Group. The professional fees incurred for the internal audit function in respect of financial year ended 31 October 2017 amounted to RM15, OTHER ACTIVITIES 4.1 Recurrent Related Party Transactions ( RRPTs ) During the financial year, the following activities were carried out by the AC in relation to RRPTs:- (a) (b) (c) Reviewed and recommended to the Board for approval on any material related party transactions and recurrent related party transactions arising; Reviewed related party transactions and the adequacy of the Group s procedures and processes in identifying, monitoring, reporting and reviewing related party transactions in a timely and orderly manner; and Reviewed the draft Circular to Shareholders in relation to the Proposed Renewal of Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature and recommended the same for Board s approval. 4.2 Annual Report The AC reviewed and recommended the Audit Committee Report and Statement on Risk Management and Internal Control in respect of the financial year ended 31 October 2017 to the Board for consideration and approval for inclusion in the Annual Report. BOARD S CONCLUSION The Board is satisfied that the AC and its members have carried out their functions, duties and responsibilities in accordance with the Terms of Reference of the AC and there were no material misstatements, frauds and deficiencies in the systems of internal control not addressed by the management.

29 28 ADVENTA BERHAD ( M) STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL INTRODUCTION Pursuant to Paragraph 15.26(b) of the Main Market Listing Requirements ( MMLR ) of Bursa Malaysia Securities Berhad ( Bursa Securities ) and the Principles and Best Practices provisions relating to internal control provided in the Malaysian Code on Corporate Governance 2012, the Board of Directors ( the Board ) of listed issuers are required to include in their Annual Report a Statement on the state of its Risk Management and Internal Control. The following Statement on Risk Management and Internal Control has also been prepared in accordance with the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers. BOARD RESPONSIBILITIES The Board affirms its overall responsibility for the Group s system of internal control which includes the establishment of an appropriate control environment and risk management framework as well as reviewing its adequacy and integrity. Due to the limitations that are inherent in any internal control system, the Group s system of internal control can only manage rather than eliminate the risk of failure to achieve business objectives and therefore can only provide reasonable and not absolute assurance against material misstatement, loss or fraud. Notwithstanding this, the Board requires that the procedures and controls in place are subject to regular review as part of an ongoing process for identifying, evaluating and managing the significant risks faced by the Group. The Board has received assurance from the Managing Director, Finance Director and the management team of the Group that the Group s risk management and internal control systems have been operating adequately and effectively, in all material aspects, during the financial year under review and up to the date of this Statement. The Board has extended the responsibilities of the Audit Committee ( AC ) to include the role of reviewing and monitoring the effectiveness of the Group s internal control system. The AC receives assurance reports from the Internal Auditors on findings from audits carried out at operating units, and the External Auditors on areas for improvement identified during the course of statutory audit. The Reports of the AC is set out on pages 25 to 27 of the Annual Report. RISK MANAGEMENT FRAMEWORK The oversight of the Group s risk management process is the responsibility of the Managing Director who is assisted by the heads of department of the respective operating companies. During the year, the Group monitored significant risks and risk mitigation strategies on an ongoing basis through its management at the Risk Management Committee ( RMC ) meetings and Board meetings. Under the purview of the RMC, the respective heads of each operating subsidiary and department of the Group are empowered with the responsibility of managing their respective operations. Its functions include, inter alia: In view of a constantly changing environment and competitive landscape, the Board is committed in maintaining a system of internal control that comprises the following environment, key processes and monitoring systems: with key processes within a changing business and operating environment; control procedures as well as any internal control issues identified by the Internal and External Auditors. This also involves identifying alternative controls to reduce risk identified; and non-financial impacts to the business risk identified and with the assistance of the RMC formulate and develop action plan to address the risk with timeline. annually.

30 ANNUAL REPORT STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL RISK MANAGEMENT FRAMEWORK Within the Enterprise Risk Management ( ERM ) framework, risks and control measures are documented and compiled by the RMC to represent the risk profile of the operating companies which in turn are consolidated to form the risk profile of the Group. Risk profiles are reviewed and updated on a yearly basis. Meetings are held at least once a year in which the updated risk profile will be deliberated by the AC before reporting to the Board. During the financial year under review, the Group has continued with its ERM efforts. The risk profile of the Group was reviewed and updated to reflect the current conditions. INTERNAL AUDIT The internal audit function adopts a risk-based approach and prepares its strategies and plans for AC s approval prior to execution of internal audit assessments. Internal audit reviews the internal controls in the key activities of the Group s businesses. The internal audit team from PKF Advisory Sdn. Bhd. ( PKF ), the independent consulting firm to which the internal audit function has been outsourced, assesses the adequacy and effectiveness of the internal control system based on the scope of work approved by the AC and reports to the AC on its findings and recommendations for improvement. The Internal Auditor also reviews the extent to which its recommendations have been accepted and implemented by the Management. The AC reviews internal audit reports and management responses thereto and ensures significant findings especially control deficiencies are adequately addressed and rectified by the Management of the operating units concern. The AC reviews internal control matters and update the Board on significant issues for the Board s attention and action. The Internal Auditors, which report directly to the AC, conducts reviews on the adequacy and effectiveness of the Group s system of internal controls that the management has put in place. These audits review the internal controls in the key activities of the Group s business based on a 3-year detailed internal audit plan approved by the AC. Based on these audits, the Internal Auditors provide the Committee with annual reports highlighting observations, recommendations and management action plans to improve the system of internal control. During the financial year ended 31 October 2017, the Audit Committee with the assistance of the external professional consulting firm, PKF, reviewed the adequacy and integrity of the Group s internal control systems relating to the following processes:- OTHER KEY ELEMENTS OF INTERNAL CONTROL Apart from risk management and internal audit, the Group s system of internal controls comprises the following key elements:- to minimise operating risks; which monitor the Group s performance. REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS The External Auditors have performed limited procedures on this Statement on Risk Management and Internal Control for the inclusion in the Annual Report of the Company for the financial year ended 31 October 2017 in accordance with Malaysian Approved Standard on Assurance Engagements, ISAE 3000 (Revised), Assurance Engagement other than Audits or Reviews of Historical Information and RPG 5 (Revised), Guidance for Auditors on Engagements to Report on the Statement on Risk Management and Internal Controls. Their work performed are restricted to the requirements by Paragraph of the MMLR of Bursa Securities.

31 30 ADVENTA BERHAD ( M) STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL OPINION OF THE BOARD The improvement of the system of internal control is an ongoing process and the Board maintains an ongoing commitment to strengthening the Group s internal control and risk management environment and processes. Based on the internal processes which have been put into place by the Management, as well as the activities carried out by and subsequent reports of the outsourced Internal Audit function, the Board is of the view that the Group s system of internal control and risk management is sufficiently sound and adequate to safeguard the shareholders investments and Group s assets for the financial year under review. The Board has received assurance from the Managing Director and Finance Director that the Group s internal control and risk management system is operating adequately and effectively at the operating companies. This statement is made in accordance with a resolution of the Board of Directors dated 12 February 2018 and has been duly reviewed by the external auditors, pursuant to Paragraph of Bursa Malaysia Securities. Based on their review, the External Auditors have reported that nothing has come to their attention that cause them to believe that the Statement on Risk Management and Internal Control intended to be included in the Annual Report of the Company is not prepared, in all material respects, in accordance with the disclosures required by paragraph 41 and 42 of the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers to be set out, nor is factually inaccurate.

32 ANNUAL REPORT RESPONSIBILITY STATEMENT BY THE BOARD OF DIRECTORS In preparing the annual financial statements of the Group and of the Company, the Directors are collectively responsible to ensure that these financial statements have been prepared to give 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 flows of the Group and the Company in accordance with applicable approved accounting standards in Malaysia, the provisions of the Companies Act 2016 and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. In preparing the financial statements for the financial year ended 31 October 2017 set out on pages 43 to 93 of this Annual Report, the Directors have applied appropriate accounting policies on a consistent basis and made judgments and estimates that are reasonable and prudent. The Directors have responsibility for ensuring that proper accounting records are kept which disclose with reasonable accuracy the financial position of the Group and the Company and which enable them to ensure that the financial statements comply with the Companies Act The Directors have overall responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities. This statement is made in accordance with a resolution of the Board of Directors dated 12 February 2018.

33 FINANCIAL STATEMENTS 33 / Directors Report 44 / Statements of Financial Position 37 / Statement by Directors 45 / Statements of Changes in Equity 37 / Statutory Declaration 46 / Statements of Cash Flows 38 / Independent Auditors Report 48 / Notes to the Financial Statements 43 / Statements of Comprehensive Income

34 ANNUAL REPORT DIRECTORS REPORT The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 October PRINCIPAL ACTIVITIES The principal activity of the Company is investment holding. The principal activities and other information of the subsidiaries are described in Note 15 to the financial statements. RESULTS Group RM Company RM Profit/(loss) net of tax 141,060 (146,030) There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements. In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature. DIVIDENDS No dividend has been paid or declared by the Company since the end of previous financial year. The directors do not recommend the payment of any dividend for the current financial year. DIRECTORS The names of the directors of the Company in office since the beginning of the financial year to the date of this report are: Low Chin Guan # Kwek Siew Leng # Toh Seng Thong * Edmond Cheah Swee Leng * Dato Dr. Norraesah Binti Haji Mohamad * * Being a member of the Audit Committee # Being a director of one or more subsidiaries The names of the directors of the subsidiaries of the Company since the beginning of the financial year to the date of this report, not including those directors listed above are: Sun Healthcare (M) Sdn. Bhd. Low Lea Kwan (appointed on 16 November 2016) Daniel Peh Soon Teik (resigned on 16 November 2016) Lucenxia (M) Sdn. Bhd. Choy Wah Wei

35 34 ADVENTA BERHAD ( M) DIRECTORS REPORT DIRECTORS BENEFITS Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salary of a full-time employee of the Company and its related corporation as shown in Note 10 to the financial statements) by reason of a contract made by the Company or a related corporation with a director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in Note 26(b) to the financial statements. DIRECTORS INTEREST According to the register of directors shareholdings, the interests of directors in office at the end of the financial year in shares in the Company and its related corporations during the financial year were as follows: Number of ordinary shares Acquired Sold Direct interest Low Chin Guan 58,446, ,446,552 Kwek Siew Leng 1,000, ,000,000 Toh Seng Thong 200, ,000 Edmond Cheah Swee Leng 140, ,000 Dato Dr. Norraesah Binti Haji Mohamad 140, ,000 Indirect interest Low Chin Guan # 7,960, ,960,960 # By virtue of shareholdings by his family members Low Chin Guan by virtue of his interest in shares of the Company is also deemed interested in shares of all the Company s subsidiaries to the extent the Company has an interest. INDEMNITIES TO DIRECTORS AND OFFICERS At the date of this report, no indemnity was given to or insurance effected for any directors and officers of the Company. INDEMNIFICATION OF AUDITORS To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit engagement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial year. SUBSIDIARIES The auditors report of a subsidiary, Lucenxia (M) Sdn. Bhd., is qualified. The auditors were unable to obtain sufficient appropriate audit evidence to substantiate the key assumptions used in the subsidiary s computation of its value-in-use relating to the product development costs of the subsidiary amounting to RM27,087,966 as part of its assessment of the impairment of its product development costs.

36 ANNUAL REPORT DIRECTORS REPORT OTHER STATUTORY INFORMATION (a) Before the statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the directors took reasonable steps: (i) (ii) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that there were no known bad debts and that adequate provision had been made for doubtful debts; and to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise. (b) At the date of this report, the directors are not aware of any circumstances which would render: (i) (ii) it necessary to write off any bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and the Company inadequate to any substantial extent; and the values attributed to the current assets in the financial statements of the Group and of the Company misleading. (c) (d) (e) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading. At the date of this report, there does not exist: (i) (ii) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or any contingent liability of the Group or of the Company which has arisen since the end of the financial year. (f) In the opinion of the directors: (i) (ii) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; and no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.

37 36 ADVENTA BERHAD ( M) DIRECTORS REPORT SUBSEQUENT EVENT Details of subsequent event are disclosed in the Note 32 to the financial statements. AUDITORS AND AUDITORS REMUNERATION The auditors, Ernst & Young, have expressed their willingness to continue in office. Auditors remuneration are disclosed in Note 8 to the financial statements. Signed on behalf of the Board in accordance with a resolution of the directors dated 11 February LOW CHIN GUAN KWEK SIEW LENG

38 ANNUAL REPORT STATEMENT BY DIRECTORS Pursuant to Section 251(2) of the Companies Act 2016 We, Low Chin Guan and Kwek Siew Leng, being two of the directors of Adventa Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 43 to 93 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of 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 October 2017 and of their financial performance and cash flows for the year then ended. Signed on behalf of the Board in accordance with a resolution of the directors dated 11 February LOW CHIN GUAN KWEK SIEW LENG STATUTORY DECLARATION Pursuant to Section 251(1)(b) of the Companies Act 2016 I, Kwek Siew Leng, being the director primarily responsible for the financial management of Adventa Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 43 to 93 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 abovenamed Kwek Siew Leng at Petaling Jaya in the state of Selangor Darul Ehsan on 11 February 2018 KWEK SIEW LENG Before me,

39 38 ADVENTA BERHAD ( M) INDEPENDENT AUDITORS REPORT to the members of Adventa Berhad (Incorporated in Malaysia) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Qualified Opinion We have audited the financial statements of Adventa Berhad, which comprise the statements of financial position as at 31 October 2017 of the Group and of the Company, and statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 43 to 93. In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion section of our report, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 October 2017, and of their financial performance and their cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. Basis for Qualified Opinion As disclosed in Note 14 to the financial statements, the carrying amount of intangible assets of the Group consists of product development costs of RM27,087,966 and goodwill of RM193,169 relating to a subsidiary of the Company in respect of its home dialysis products and services. The Company s cost of investment in the said subsidiary as at 31 October 2017 amounted to RM31,500,000, which was mainly represented by the aforementioned intangible assets. The Group estimated the recoverable amount of this intangible asset based on value-in-use ( VIU ). Estimating the VIU involved estimating the future cash inflows and outflows that will be derived from the intangible assets and discounting them at an appropriate rate. The VIU is prepared based on the assumptions that are judgmental as disclosed in Note 3.2(c), Note 3.2(d) and Note 14 to the financial statements. Based on the VIU, the directors are of the opinion that the recoverable amount of the intangible assets is higher than the carrying amount as at 31 October We were unable to obtain sufficient appropriate audit evidence to substantiate the assumptions applied on revenue growth, the achievability of which is dependent on the occurrence of one or more uncertain future events beyond the control of the Group. Consequently, we were unable to determine whether any adjustments to the Group s intangible assets and the Company s cost of investment in the subsidiary were necessary. We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion. Independence and other ethical responsibilities 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. 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 of the Group as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Basis for Qualified Opinion section, we have determined the matters described below to be the key audit matters to be communicated in our report. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditors responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis of our audit opinion on the accompanying financial statements.

40 ANNUAL REPORT REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS cont d Key audit matters cont d Intangible asset impairment test of goodwill INDEPENDENT AUDITORS REPORT to the members of Adventa Berhad (Incorporated in Malaysia) (Please refer to Note 2.10, Note 3.2(b) and Note 14 to the financial statements with respect to the summary of significant accounting policies, significant accounting judgements and estimates and the disclosure of intangible asset - goodwill, respectively). As at 31 October 2017, the carrying amount of goodwill relating to sterilization provider segment recognised by the Group amounted to RM4,769,154. The Group is required to perform annual impairment test of cash generating units ( CGUs ) or groups of CGUs to which goodwill has been allocated. The Group estimated the recoverable amount of its CGUs or groups of CGUs to which the goodwill is allocated based on VIU. Estimating the VIU of CGUs or groups of CGUs involves estimating the future cash inflows and outflows that will be derived from the CGUs or groups of CGUs, and discounting them at an appropriate rate. Due to the significance of the amount and the complexity and subjectivity involved in the annual impairment test, we consider this impairment test to be an area of audit focus. Specifically, we focus on the evaluation of the assumptions on revenue growth and pre-tax discount rates. In addressing this area of focus, we performed, amongst others, the following procedures: (a) (b) (c) (d) obtained an understanding of the relevant internal control over estimating the recoverable amount of the CGUs or groups of CGUs. assessed and considered the historical accuracy of management s financial performance and results (and the resulting cash flows) for the CGUs in previous years; performed sensitivity analysis around key drivers of the cash flow forecasts, including revenue growth, long term growth rates, and discount rate for the CGUs; evaluated the appropriateness of the discount rate. This included an assessment of the specific inputs to the discount rate, including the risk-free rate, equity risk premium and beta, along with gearing and cost of debt. Such inputs were benchmarked either against risk rates in specific international markets in which the Group operates or equivalent data for peer companies. We also evaluated the adequacy of the Group s disclosures of each key assumption on which the Group has based its cash flow projections. Key assumptions are those to which the recoverable amount is most sensitive, as disclosed in Note 14 to the financial statements. Revenue recognition (Please refer to Note 2.21 and Note 4 to the financial statements with respect to the summary of significant accounting policies and the disclosure of revenue). The Group recognised revenue from sale of goods amounting to RM 44,235,939 during the financial year ended 31 October Given the magnitude and high volume of transactions which may give rise to higher risk of material misstatements relating to the timing and amount of revenue recognised, we have identified the revenue recognition to be an area of audit focus. Specifically, we focused our audit efforts to assess the possibility of overstatement of revenue.

41 40 ADVENTA BERHAD ( M) INDEPENDENT AUDITORS REPORT to the members of Adventa Berhad (Incorporated in Malaysia) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS cont d Key audit matters cont d Revenue recognition cont d In addressing this area of audit of audit, we performed, among others, the following procedures: (a) (b) (c) (d) obtained an understanding of the Group s relevant internal controls and tested the controls over timing and amount of revenue recognised. read the terms of significant sales contracts to evaluate the management assessment of the point of revenue recognition. inspected documents which evidenced the delivery of goods to customers. focused on testing the recording of the sales transactions near year end, including credit notes issued after year end to assess whether the sales transactions were recorded in the correct accounting period. Information other than the financial statements and auditors report thereon The directors of the Company are responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements of the 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. 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 other 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 this other information, we are required to report that fact. As described in the Basis for Qualified Opinion section above, we were unable to obtain sufficient appropriate audit evidence about the carrying amount of Adventa Berhad s intangible assets and investment in subsidiary of home dialysis products and services segment as at 31 October Accordingly, we are unable to conclude whether or not the other information is materially misstated with respect to this matter. 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.

42 ANNUAL REPORT REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS cont d Auditors responsibilities for the audit of the financial statements INDEPENDENT AUDITORS REPORT to the members of Adventa Berhad (Incorporated in Malaysia) 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. 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 complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial statements of the 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.

43 42 ADVENTA BERHAD ( M) INDEPENDENT AUDITORS REPORT to the members of Adventa Berhad (Incorporated in Malaysia) REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In accordance with the requirements of the Companies Act 2016 in Malaysia, we report that in our opinion, the accounting and other records for the matter as described in the Basis for Qualified Opinion section have not been properly kept by the Company in accordance with the provisions of the Act. 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. ERNST & YOUNG AF: 0039 Chartered Accountants SANDRA SEGARAN A/L MUNIANDY@KRISHNAN 02882/01/2019 J Chartered Accountant Kuantan, Pahang Darul Makmur, Malaysia 11 February 2018

44 ANNUAL REPORT STATEMENTS OF COMPREHENSIVE INCOME for the Financial Year ended 31 October 2017 Group Company Note RM RM RM RM Revenue 4 44,235,939 39,930, Cost of sales 5 (28,132,295) (25,318,396) - - Gross profit 16,103,644 14,612, Other income 6 360, , ,930 1,500,025 Other items of expense Administrative expenses (5,909,968) (4,948,192) (942,242) (1,393,366) Selling and marketing expenses (3,606,743) (3,118,499) - - Other operating expenses (4,136,856) (3,253,893) (45,407) (27,218) Finance costs 7 (1,282,150) (1,587,892) - - Profit/(loss) before tax 8 1,528,134 2,397,771 (147,719) 79,441 Income tax expense/(benefit) 11 (1,387,074) (1,713,621) 1,689 (52,020) Profit/(loss) net of tax, representing total comprehensive income/(loss) for the year 141, ,150 (146,030) 27,421 Profit/(loss) attributable to: Owners of the parent 141, ,150 (146,030) 27,421 Total comprehensive income/(loss) attributable to: Owners of the parent 141, ,150 (146,030) 27,421 Earnings per share attributable to owners of the parent (sen per share) Basic The accompanying accounting policies and explanatory information form an integral part of the financial statements.

45 44 ADVENTA BERHAD ( M) STATEMENTS OF FINANCIAL POSITION As at 31 October 2017 Group Company Note RM RM RM RM Restated Assets Non-current assets Property, plant and equipment 13 49,045,513 53,595,035 2,641 3,787 Intangible assets 14 32,105,159 31,592, Investment in subsidiaries ,056,726 23,056,726 Amounts due from subsidiaries ,429,596 Deferred tax assets , , , ,434 81,729,793 85,685,232 68,285,735 50,716,543 Current assets Inventories 18 14,721,743 15,318, Trade and other receivables 19 21,130,499 12,378,887 1,100 - Other current assets , , ,058 3,733 Tax recoverable 85,776 4,145 36,832 4,145 Cash and bank balances 21 10,215,262 21,001,608 24,670 18,192,894 47,005,962 49,528, ,660 18,200,772 Total assets 128,735, ,213,488 68,654,395 68,917,315 Equity and liabilities Current liabilities Trade and other payables 22 11,439,247 12,976, , ,542 Loans and borrowings 23 11,475,960 9,403, Income tax payables 110, , ,025,410 22,501, , ,542 Non-current liabilities Loans and borrowings 23 23,398,901 31,531, Deferred tax liabilities 17 1,063,781 73, ,462,682 31,604, Total liabilities 47,488,092 54,106, , ,542 Net assets 81,247,663 81,106,603 68,535,743 68,681,773 Equity attributable to owners of the parent Share capital 24 58,304,809 53,475,020 58,304,809 53,475,020 Share premium 24-4,829,789-4,829,789 Retained earnings 25 22,942,854 22,801,794 10,230,934 10,376,964 Total equity 81,247,663 81,106,603 68,535,743 68,681,773 Total equity and liabilities 128,735, ,213,488 68,654,395 68,917,315 The accompanying accounting policies and explanatory information form an integral part of the financial statements.

46 ANNUAL REPORT STATEMENTS OF CHANGES IN EQUITY for the Financial Year ended 31 October 2017 Attributable to owners of the parent Non-distributable Share premium (Note 24) Distributable Retained earnings (Note 25) Share capital Total equity (Note 24) RM RM RM RM 2017 Group Opening balance at 1 November ,106,603 53,475,020 4,829,789 22,801,794 Transfer on 31 January ,829,789 (4,829,789) - Total comprehensive income 141, ,060 Closing balance at 31 October ,247,663 58,304,809-22,942, Group Opening balance at 1 November ,422,453 53,475,020 4,829,789 22,117,644 Total comprehensive income 684, ,150 Closing balance at 31 October ,106,603 53,475,020 4,829,789 22,801, Company Opening balance at 1 November ,681,773 53,475,020 4,829,789 10,376,964 Transfer on 31 January ,829,789 (4,829,789) - Total comprehensive loss (146,030) - - (146,030) Closing balance at 31 October ,535,743 58,304,809-10,230, Company Opening balance at 1 November ,654,352 53,475,020 4,829,789 10,349,543 Total comprehensive income 27, ,421 Closing balance at 31 October ,681,773 53,475,020 4,829,789 10,376,964 The accompanying accounting policies and explanatory information form an integral part of the financial statements.

47 46 ADVENTA BERHAD ( M) STATEMENTS OF CASH FLOWS for the Financial Year ended 31 October 2017 Group Company Note RM RM RM RM Operating activities Profit/(loss) before tax 1,528,134 2,397,771 (147,719) 79,441 Adjustments for: Depreciation of property, plant and equipment 8 1,842,801 1,892,458 1,557 1,860 Gain on disposal of property, plant and equipment 6 (3,745) Amortisation of development costs 8 1,296, , Impairment loss on trade receivables 8 68,062 1, Inventories written down 8 69,449 24, Interest income 6 (285,575) (605,851) (839,930) (1,500,025) Interest expense 7 1,282,150 1,587, Net (gain)/loss on unrealised foreign exchange 8 (1,020) 145, Total adjustments 4,268,290 3,909,495 (838,373) (1,498,165) Operating cash flows before changes in working capital 5,796,424 6,307,266 (986,092) (1,418,724) Changes in working capital Increase/(decrease) in inventories 526,937 (3,760,740) - - (Increase)/decrease in trade and other receivables (4,361,496) 5,517,659 27,429,596 (2,232,810) (Increase)/decrease in other current assets (27,194) (437,883) (303,425) 4,721 (Decrease)/increase in trade and other payables (1,534,893) (1,923,206) (116,890) 44,144 Total changes in working capital (5,396,646) (604,170) 27,009,281 (2,183,945) Cash flows from/(used in) operations 399,778 5,703,096 26,023,189 (3,602,669) Interest paid (1,282,150) (1,587,892) - - Income taxes refunded 16,129-16,130 - Income taxes paid (587,918) (200,623) (47,062) (43,738) Net cash flows (used in)/from operating activities (1,454,161) 3,914,581 25,992,257 (3,646,407)

48 ANNUAL REPORT STATEMENTS OF CASH FLOWS for the Financial Year ended 31 October 2017 Group Company Note RM RM RM RM Investing activities Interest received 285, , ,930 1,500,025 Additional investment in subsidiaries (45,000,000) - Payment for development costs 14 (1,808,564) (3,696,965) - - Proceeds from disposal of property, plant and equipment 106, Purchase of property, plant and equipment 13 (1,854,006) (4,311,747) (411) (1,425) Net cash flows (used in)/from investing activities (3,270,995) (7,402,861) (44,160,481) 1,498,600 Financing activities Drawdown of loans and borrowings 2,424,000 11,260, Repayment of loans and borrowings (8,484,225) (8,856,975) - - Net cash flows (used in)/from financing activities (6,060,225) 2,403, Net decrease in cash and cash equivalents (10,785,381) (1,084,776) (18,168,224) (2,147,807) Effect of exchange rate changes on cash and cash equivalents (965) (35,821) - - Cash and cash equivalents at 1 November 21,001,608 22,122,205 18,192,894 20,340,701 Cash and cash equivalents at 31 October (Note 21) 10,215,262 21,001,608 24,670 18,192,894 The accompanying accounting policies and explanatory information form an integral part of the financial statements.

49 48 ADVENTA BERHAD ( M) NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October CORPORATE INFORMATION Adventa Berhad ( the Company ) is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at No. 21, Jalan Tandang 51/205A, Seksyen 51, Petaling Jaya, Selangor Darul Ehsan. The principal activity of the Company is investment holding. The principal activities and other information of the subsidiaries are described in Note SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 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 requirements of the Companies Act 2016 in Malaysia. On 15 September 2016, the Companies Act 2016 ( New Act ) was enacted and it replaces the Companies Act, 1965 in Malaysia with the New Act with effect from 31 January The key changes of the New Act are disclosed in Note The financial statements have been prepared on a historical cost basis except as disclosed in the accounting policies below and are presented in Ringgit Malaysia ( RM ). 2.2 Changes in accounting policies The accounting policies adopted are consistent with those of the previous financial year except as follows: On 1 November 2016, the Group and the Company adopted the following new and amended MFRSs and IC Interpretation mandatory for annual financial periods beginning on or after 1 November Description Effective for annual periods beginning on or after Annual Improvements to MFRS Cycle 1 January 2016 Amendments to MFRS 116 and MFRS 138: Clarification of Acceptable Methods of Depreciation and Amortisation 1 January 2016 Amendments to MFRS 116 and MFRS 141: Agriculture: Bearer Plants 1 January 2016 Amendments to MFRS 11: Accounting for Acquisitions of Interests in Joint Operations 1 January 2016 Amendments to MFRS 127: Equity Method in Separate Financial Statements 1 January 2016 Amendments to MFRS 101: Disclosure Initiatives 1 January 2016 Amendments to MFRS 10, MFRS 12 and MFRS 128: Investment Entities: Applying the Consolidation Exception 1 January 2016 MFRS 14: Regulatory Deferral Accounts 1 January 2016

50 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont d 2.2 Changes in accounting policies cont d The adoption of the above standards do not have a material impact on the financial statements of the Group and the Company. Amendments to MFRS 101: Disclosure Initiatives The amendments to MFRS 101 include narrow-focus improvements in the following five areas: - Materiality - Disaggregation and subtotals - Notes structure - Disclosure of accounting policies - Presentation of items of other comprehensive income arising from equity accounted investments These amendments do not have a material impact on the Group s and the Company s financial statements. Annual Improvements to MFRS Cycle The Annual Improvements to MFRSs Cycle include a number of amendments to various MFRSs, which are summarised below. These amendments do not have a significant impact on the Group s and the Company s financial statements. Standards MFRS 7 Financial Instruments: Disclosures Descriptions The amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement in a financial asset. An entity must assess the nature of the fee and arrangement against the guidance for continuing involvement in MFRS 7 in order to assess whether the disclosures are required. In addition, the amendment also clarifies that the disclosures in respect of offsetting of financial assets and financial liabilities are not required in the condensed interim financial report. This amendment is applied retrospectively. MFRS 119 Employee Benefits MFRS 134 Interim Financial Reporting The amendment to MFRS 119 clarifies that market depth of high quality corporate bonds is assessed based on the currency in which the obligation is denominated, rather than the country where the obligation is located. When there is no deep market for high quality corporate bonds in that currency, government bond rates must be used. This amendment is applied prospectively. The amendment states that the required interim disclosures must either be in the interim financial statements or incorporated by cross-reference between the interim financial statements and wherever they are included within the greater interim financial report (e.g., in the management commentary or risk report). The other information within the interim financial report must be available to users on the same terms as the interim financial statements and at the same time. This amendment is applied retrospectively.

51 50 ADVENTA BERHAD ( M) NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont d 2.3 Standards and interpretations issued but not yet effective The standards and interpretations that are issued but not yet effective up to the date of issuance of the Group s and the Company s financial statements are disclosed below. The Group and the Company intend to adopt these standards, if applicable, when they become effective. Description Effective for annual periods beginning on or after Amendments to MFRS 107: Disclosures Initiatives 1 January 2017 Amendments to MFRS 112: Recognition of Deferred Tax for Unrealised Losses 1 January 2017 Annual Improvements to MFRSs Cycle (i) Amendments to MFRS 12 Disclosure of Interests in Other Entities 1 January 2017 (ii) Amendments to MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards 1 January 2018 (iii) Amendments to MFRS 128 Investment in Associates and Joint Ventures 1 January 2018 Amendments to MFRS 4: Applying MFRS 9 Financial Instruments with MFRS 4 Insurance Contracts 1 January 2018 Amendments to MFRS 140: Transfer of Investment Property 1 January 2018 IC Interpretation 22: Foreign Currency Transactions and Advance Consideration 1 January 2018 Amendments to MFRS 2: Classification and Measurement of Share-based Payment Transactions 1 January 2018 MFRS 15: Revenue from Contracts with Customers 1 January 2018 MFRS 15: Clarification to MFRS 15 1 January 2018 MFRS 9: Financial Instruments 1 January 2018 MFRS 16: Leases 1 January 2019 IC Interpretation 23: Uncertainty over Income Tax Treatments 1 January 2019 MFRS 17: Insurance Contracts 1 January 2021 Amendments to MFRS 9: Prepayment Features with Negative Compensation 1 January 2019 Amendments to MFRS 128: Long-term Interest in Associates and Joint Ventures 1 January 2019 Annual Improvements to MFRSs Cycle (i) Amendments to MFRS 3 Business Combination 1 January 2019 (ii) Amendments to MFRS 11 Joint Arrangements 1 January 2019 (iii) Amendments to MFRS 112 Income Taxes 1 January 2019 (iv) Amendments to MFRS 123 Borrowing Costs 1 January 2019 Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Deferred The directors expect that the adoption of the above standards and interpretations will have no material impact on the financial statements in the period of initial application other than for Amendments to MFRS 107: Disclosure Initiatives, MFRS 15: Revenue from Contracts with Customers, MFRS 16: Leases and MFRS 9: Financial Instruments. The Group and the Company are still in the process of assessing the financial impact of MFRS 107, MFRS 112, MFRS 15, MFRS 9 and MFRS 16.

52 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont d 2.3 Standards and interpretations issued but not yet effective cont d Amendments to MFRS107: Disclosures Initiatives The amendments to MFRS 107: Disclosures Initiatives requires an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. On initial application of this amendment, entities are not required to provide comparative information for preceeding periods. These amendments are effective for annual periods beginning on or after 1 January 2017, with early application permitted. Application of amendments will result in additional disclosures to be provided by the Group and the Company. Amendments to MFRS 112: Recognition of Deferred Tax for Unrealised Losses The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount. Entities are required to apply the amendments retrospectively. However, on initial application of the amendments, the change in the opening equity of the earliest comparative period may be recognised in opening retained earnings (or in another component of equity, as appropriate), without allocating the change between retained earnings and other components of equity. Entities applying this relief must disclose that fact. These amendments are effective for annual periods beginning on or after 1 January 2017 with early application permitted. If an entity applies this amendments for an earlier period, it must disclose that fact. These amendments are not expected to have any impact on the Group and on the Company. MFRS 15 Revenue from Contracts with Customers MFRS 15 establishes a new five-step model that will apply to revenue arising from contracts with customers. MFRS 15 will supersede the current revenue recognition guidance including MFRS 118 Revenue, MFRS 111 Construction Contracts and the related interpretations when it becomes effective. The core principle of MFRS 15 is that an entity should recognise revenue which depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Under MFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e when control of the goods or services underlying the particular performance obligation is transferred to the customer. Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2018 with early adoption permitted. The Group is currently assessing the impact of MFRS 15 and plans to adopt the new standard on the required effective date. MFRS 9 Financial Instruments MFRS 9: Financial Instruments replaces MFRS 139: Financial Instruments: Recognition and Measurement. This standard introduces new requirements for classification and measurement, impairment and hedge accounting. MFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory. The adoption of MFRS 9 will have an effect on the classification and measurement of the Group s financial assets. The Group is currently assessing the impact of MFRS 9 and plans to adopt the new standard on the required effective date.

53 52 ADVENTA BERHAD ( M) NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont d 2.3 Standards and interpretations issued but not yet effective cont d MFRS 16 Leases MFRS 16 will replace MFRS 117 Leases, IC Interpretation 4 Determining whether an Arrangement contains a Lease, IC Interpretation 115 Operating Lease-Incentives and IC Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. MFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under MFRS 117. At the commencement date of a lease, a lessee will recognise a liability to make lease payments and an asset representing the right to use the underlying asset during the lease term. Lessees will be required to recognise interest expense on the lease liability and the depreciation expense on the right-of-use asset. Lessor accounting under MFRS 16 is substantially the same as the accounting under MFRS 117. Lessors will continue to classify all leases using the same classification principle as in MFRS 117 and distinguish between two types of leases: operating and finance leases. MFRS 16 is effective for annual periods beginning on or after 1 January Early application is permitted but not before an entity applies MFRS 15. A lessee can choose to apply the standard using either a full retrospective or a modified retrospective approach. The Group and the Company are currently assessing the impact of MFRS 16 and plan to adopt the new standards on the required effective date. 2.4 Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and of its subsidiaries as at the reporting date. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has: - Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); - Exposure, or rights, to variable returns from its involvement with the investee; and - The ability to use its power over the investee to affect its returns. When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: - The contractual arrangement with the other vote holders of the investee; - Rights arising from other contractual arrangements; and - The Group s voting rights and potential voting rights. The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary.

54 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont d 2.4 Basis of consolidation cont d Subsidiaries are consolidated when the Group obtains control over the subsidiaries and ceases when the Group loses control of the subsidiaries. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full. Losses within a subsidiary are attributed to the non-controlling interests even if that results in a deficit balance. Changes in the Group s ownership interest in subsidiaries that do not result in the Group losing control over the subsidiaries is accounted for as equity transactions. The carrying amounts of the Group s interest and the noncontrolling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. The resulting difference is recognised directly in equity and attributed to owners of the Company. When the Group loses control of a subsidiary, a gain or loss calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets and liabilities of the subsidiary and any non-controlling interest, is recognised in profit or loss. The subsidiary s cumulative gain or loss which has been recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss or where applicable, transferred directly to retained earnings. The fair value of any investment retained in the former subsidiary at the date control is lost is regarded as the cost on initial recognition of the investment. 2.5 Business combinations and goodwill Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree s identifiable net assets. Acquisition-related costs are expensed as incurred and included in administrative expenses. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. If the business combination is achieved in stages, any previously held equity interest is re-measured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss. It is then considered in the determination of goodwill. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes in the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with MFRS 139: Financial Instruments: Recognition and Measurement ( MFRS 139 ) in profit or loss. If the contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted for within equity. In instances where the contingent consideration does not fall within the scope of MFRS 139, it is measured in accordance with the appropriate MFRS. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

55 54 ADVENTA BERHAD ( M) NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont d 2.5 Business combinations and goodwill cont d Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained. 2.6 Foreign currencies (a) Functional and presentation currency The Group s and the Company s financial statements are presented in Ringgit Malaysia which is also the Company s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. (b) Transactions and balances Transactions in foreign currencies are initially recorded by the Group s entities at the functional currency spot rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. Differences arising on settlement or translation of monetary items are recognised in profit or loss with the exception of monetary items that are designated as part of the hedge of the Group s net investment of a foreign operation. These are recognised in other comprehensive income until the net investment is disposed of, at which time, the cumulative amount is reclassified to profit or loss. Tax charges and credits attributable to exchange differences on those monetary items are also recorded in other comprehensive income. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in other comprehensive income or profit or loss are also recognised in other comprehensive income or profit or loss, respectively). Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the spot rate of exchange at the reporting date. 2.7 Property, plant and equipment Property, plant and equipment are stated at cost, net of accumulated depreciation and/or accumulated impairment losses, if any. Such cost includes the cost of replacing component parts of the property, plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of property, plant and equipment are required to be replaced at intervals, the Group and the Company derecognise the replaced part, and recognise the new part with its own associated useful life and depreciation. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the 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.

56 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont d 2.7 Property, plant and equipment cont d Long term leasehold land is depreciated over the period of the respective leases that range from 41 to 89 years. Depreciation of other property, plant and equipment is computed on a straight-line basis over the estimated useful lives of the assets as follows: - Buildings : years - Plant and equipment : 5 to 30 years - Motor vehicles : 10 years - Office equipment, furniture and fittings and renovation : 5 to 10 years The carrying values or property, plant and equipment are reviewed for impairment when event or changes in circumstances indicate that the carrying value may not be recoverable. The residual values, 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. 2.8 Intangible assets Intangible assets acquired separately are measured initially at cost. Following initial acquisition, intangible assets are measured at cost less any accumulated amortisation and accumulated impairment losses. Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at least at 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 amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation 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 amortised. The useful life of an intangible asset with an 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. Development costs Research costs are expensed as incurred. Development costs arising from development expenditures on an individual project are recognised when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete and the ability to measure reliably the expenditures during development. Development costs have a finite useful life of 20 years and are amortised over the period of expected sales from the related project on a straight line basis.

57 56 ADVENTA BERHAD ( M) NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont d 2.9 Investment in subsidiaries A subsidiary is an entity over which the Group has all the following: i) Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); ii) Exposure, or rights, to variable returns from its investment with the investee; and iii) The ability to use its power over the investee to affect its returns. In the Company s separate financial statements, investment in subsidiaries are accounted for at cost less accumulated impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss 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 )). 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. Goodwill is tested for impairment annually at reporting date and when circumstances indicate that the carrying value may be impaired. Impairment is determined by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods. For assets other than goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the recoverable amount of the asset or CGU is estimated. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss Inventories Inventories are stated at lower of cost and net realisable value. Costs incurred in bringing inventories to their present location and condition are accounted for as purchase costs on a weighted average basis. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

58 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont d 2.12 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, loans and receivables, held-to-maturity investments and available-for-sale financial assets. The Group and the Company do not have any held-to-maturity and available-for-sale financial assets. (a) Financial assets at fair value through profit or loss 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. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term. Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other losses or other income. Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that is held primarily for trading purposes are presented as current whereas financial assets that is not held primarily for trading purposes are presented as current or non-current based on the settlement date. (b) Loans and receivables Financial assets 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.

59 58 ADVENTA BERHAD ( M) NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont d 2.12 Financial assets cont d (c) Impairment of financial assets At each reporting date, an assessment is made as to whether there is objective evidence that a financial asset or a group of financial assets is impaired. An impairment exists if one or more events that has occurred since the initial recognition of the asset (an incurred loss event ), has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. (i) Financial assets carried at amortised cost For financial assets carried at amortised cost, an assessment is made as to whether impairment exists individually (for financial assets that are individually significant) or collectively (for financial assets that are not individually significant). If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a group of financial assets with similar credit risk characteristics and collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment. The amount of any impairment loss identified is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the loss is recognised in statement of profit or loss. Interest income (recorded as finance income in the statement of profit or loss) continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Group and the Company. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a write-off is later recovered, the recovery is credited to finance costs in the statements of profit or loss Cash and short-term deposits Cash and short-term deposits in the statements of financial position comprise cash at banks and on hand and short-term deposits with a maturity of three months or less. For the purposes of the statements of cash flows, cash and cash equivalents consist of cash and short-term deposits, net of any outstanding bank overdrafts.

60 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont d 2.14 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, within the scope of MFRS 139, 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 either financial liabilities at fair value through profit or loss or other financial liabilities. The Group and the Company have classified its financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments. Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. Borrowing is recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowing is classified as current liabilities unless the Group and the Company have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process Provisions Provisions are recognised when there is a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When it is expected that some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statements of profit or loss net of any reimbursement Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds Leases The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date. The arrangement is assessed for whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement. (a) As lessee Finance leases that transfer substantially all the risks and benefits incidental to ownership of the leased item to the Group or to the Company, are capitalised at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in profit or loss.

61 60 ADVENTA BERHAD ( M) NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont d 2.17 Leases cont d (a) As lessee cont d A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that ownership will be obtained by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term. Operating lease payments are recognised as an operating expense in the profit or loss on a straight-line basis over the lease term. (b) As lessor 2.18 Income taxes Leases in which the Group or the Company do not transfer substantially all the risks and benefits of ownership of an asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned. (a) 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. (b) Deferred tax Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised for all temporary differences, except: - where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and at the time of transaction, affects neither the accounting profit nor taxable profit or loss; and - in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences and carry forward of unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax losses can be utilised, except: - where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and - in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

62 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont d 2.18 Income taxes cont d (b) Deferred tax cont d The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. 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 transaction either in other comprehensive income or directly in equity. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. (c) Goods and Services Tax ( GST ) The net amount of GST, being the difference between output and input of GST, payable to or receivable from the respective authorities at the reporting date, is included in trade and other payables or trade and other receivables in the statements of financial position Share capital and share issuance expenses 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 equity instruments and are recorded at the proceeds received, net of directly attributable incremental transaction costs Fair value measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: - In the principal market for the asset or liability; or - In the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible to by the Group or by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available, are used to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

63 62 ADVENTA BERHAD ( M) NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont d 2.20 Fair value measurement cont d All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group and the Company determine whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest Level input that is significant to the fair value measurement as a whole) at the end of each reporting period. Policies and procedures are determined by senior management for both recurring fair value measurement and for non-recurring measurement. External valuers are involved for valuation of significant assets and significant liabilities. Involvement of external valuers is decided by senior management. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. The senior management decides, after discussions with the external valuers, which valuation techniques and inputs to use for each case. At each reporting date, the senior management analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed according to the accounting policies of the Group and of the Company. For this analysis, the senior management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents. The senior management, in conjunction with the external valuers, also compares the changes in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable. For the purpose of fair value disclosures, classes of assets and liabilities are determined based on the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The Company and its subsidiaries assess their revenue arrangements against specific criteria in order to determine if the Company and its subsidiaries are acting as principal or agent. The Group and its subsidiaries have concluded that they are acting as a principal in all of its revenue arrangements. The following specific recognition criteria must also be met before revenue is recognised: (a) Sale of goods Revenue from sale of goods is recognised upon the transfer of significant risks and rewards of ownership to the customer. 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.

64 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont d 2.21 Revenue recognition cont d (b) Management fees Management fees are recognised when services are rendered. (c) Interest income For all financial instruments measured at amortised cost and interest bearing financial assets classified as available for sale, interest income or expense is recorded using the effective interest rate ( EIR ), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in finance income in the profit or loss. (d) Rental income Rental income is recognised on an accrual basis. (e) Warehouse handling services Revenue from service rendered is recognised when rendering of services has been completed. (f) Revenue from lease and sale of goods and services Revenue from lease of machinery to customers and sale of consumables parts and services Employee benefits (a) Short term benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees. 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. Short term non-accumulating compensated absences such as sick leave are recognised when the absences occur. (b) Defined contribution plans The Group and the Company make contributions to the Employees Provident Fund in Malaysia, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed Cash dividend and non-cash distribution to equity holders of the parent The Company recognises a liability to make cash or non-cash distributions to equity holders of the parent when the distribution is authorised and the distribution is no longer at the discretion of the Company. A distribution is authorised when it is approved by the shareholders and a corresponding amount is recognised directly in equity. Non-cash distributions are measured at the fair value of the assets to be distributed with fair value re-measurement recognised directly in equity. Upon distribution of non-cash assets, any difference between the carrying amount of the liability and the carrying amount of the assets distributed is recognised in the statements of profit or loss.

65 64 ADVENTA BERHAD ( M) NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont d 2.24 Contingencies A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group. Contingent liabilities and assets are not recognised in the statements of financial position of the Group and of the Company Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount is reported in the statements of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously Related parties A related party is defined as follows: a) A person or a close member of that person s family is related to the Group and the Company if that person: i) has control or joint control over the Company; ii) iii) has significant influence over the Company; or is a member of the key management personnel of the Company or of a parent of the Company. b) An entity is related to the Group and the Company if any of the following conditions applies: i) the entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others); ii) iii) iv) one entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member); both entities are joint ventures of the same third party; one entity is a joint venture of a third entity and the other entity is an associate of the third entity; v) the entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity related to the Company. If the Company is itself such a plan, the sponsoring employers are also related to the Company; vi) vii) the entity is controlled or jointly controlled by a person identified in (a); or a person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

66 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont d 2.27 Segment reporting For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review 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 Note 31, including the factors used to identify the reportable segments and the measurement basis of segment information Significant changes in regulatory requirements Companies Act 2016 Amongst the key changes introduced in the New Act which will affect the financial statements of the Group and the Company upon the commencement of the New Act on 31 January 2017 are: - the removal of the authorised share capital; and - the ordinary shares of the Group and the Company will cease to have par or nominal value. The adoption of the New Act has no financial impact on the Group and the Company for the current financial year ended 31 October The effects of adoption are mainly on the disclosures to the financial statements of the Group and the Company. 3. SIGNIFICANT ACCOUNTING JUDGEMENT AND ESTIMATES The preparation of the Group s and the Company s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future. 3.1 Judgments made in applying accounting policies There were no significant judgements made in applying the accounting policies of the Group and the Company which may have significant effects on the amounts recognised in the financial statements. 3.2 Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: (a) Useful lives of plant and equipment The cost of plant and equipment of the Group is depreciated on a straight-line basis over the assets estimated economic useful lives. Management estimates the useful lives of these plant and machinery to be up to 30 years. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. The carrying amounts of the Group s plant and equipment at 31 October 2017 were RM17,790,551 (2016: RM21,562,641) (Note 13).

67 66 ADVENTA BERHAD ( M) NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October SIGNIFICANT ACCOUNTING JUDGEMENT AND ESTIMATES cont d 3.2 Key sources of estimation uncertainty cont d (b) Impairment of goodwill The Group is required to perform an annual impairment test of cash generating units ( CGUs ) or groups of CGUs to which goodwill has been allocated. The Group estimated the recoverable amount of its CGUs or groups of CGUs to which the goodwill is allocated based on the higher of an assets fair value less costs to sell and its value in use. Estimating a value in use amount requires management to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of goodwill as at 31 October 2017 was RM5,017,193 (2016: RM5,017,193)(Note 14). (c) Impairment of development costs The Group assesses whether there are any indicators of impairment for development costs at each reporting date. Development costs are tested for impairment when there are indicators that the carrying amounts may not be recoverable. Impairment exists when the carrying amount of an assets or cash generating unit exceeds its recoverable amount, which is the higher of its value in use and its fair value less costs to sell. Estimating a value in use amount requires management to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of development costs was RM27,087,966 (2016: RM26,575,570) for the Group as at 31 October The development costs are related to development of home dialysis machines including patient care management system. (d) Amortisation of development costs The cost for development costs is amortised on a straight line basis over its useful life. The management estimates the useful life of development costs to be 20 years. This is a common life expectancy in the healthcare industry. Changes in the technology could impact the economic useful life of these assets. Therefore, the future amortisation charges could be revised. The carrying value of the Group s amortisation charges at the reporting date is disclosed in Note 14. (e) Deferred tax assets Deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilised. This involves judgement regarding the future financial performance of the particular entity in which the deferred tax assets has been recognised based upon the likely timing and level of future taxable profits together with future tax planning strategies. The carrying amount of the Group s and the Company s deferred tax assets as at 31 October 2017 was RM579,121 (2016: RM497,434) and RM226,368 (2016: RM226,434) respectively.

68 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October REVENUE Group Company RM RM RM RM Sale of goods, net of discounts 44,235,939 39,843, Warehouse handling services - 87, ,235,939 39,930, COST OF SALES Cost of sales represents cost of inventories sold. 6. OTHER INCOME Group Company RM RM RM RM Interest income 285, , ,930 1,500,025 Realised gain on foreign exchange 24,747 68, Sundry income 37,826 17, Unrealised gain on foreign exchange 8,314 1, Gain of disposal of property, plant and equipments 3, , , ,930 1,500, FINANCE COSTS Group Company RM RM RM RM Interest expense on: - Bank overdraft 26,146 59, Bank loans 735, , Obligations under finance leases 8,079 12, Revolving credits 512,785 1,032, ,282,150 1,587,

69 68 ADVENTA BERHAD ( M) NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October PROFIT/(LOSS) BEFORE TAX The following amounts have been included in arriving at profit/(loss) before tax: Group Company RM RM RM RM Auditors remuneration - Statutory audit 130, ,000 65,000 60,000 Depreciation of property, plant and equipment (Note 13) 1,842,801 1,892,458 1,557 1,860 Amortisation of development costs (Note 14) 1,296, , Inventories written down 69,449 24, Impairment loss on trade receivables (Note 19) 68,062 1, Non-executive directors remuneration excluding benefits-in-kind (Note 10) 192, , , ,456 Employee benefits expenses (Note 9) 6,191,600 4,988, ,485 1,225,009 (Gain)/loss on foreign exchange, net (16,115) 78, Realised (15,095) (66,886) Unrealised (1,020) 145, Rental expenses 295, , EMPLOYEE BENEFITS EXPENSES Group Company RM RM RM RM Salaries and wages 5,342,314 4,318, ,669 1,079,895 Contributions to defined contribution plan 645, ,661 79, ,792 Social security contributions 55,080 38, ,328 Other benefits 148, ,082 8,412 1,994 6,191,600 4,988, ,485 1,225,009 Included in employee benefits expenses of the Group and of the Company are executive directors remuneration amounting to RM945,361 (2016: RM1,057,398) and RM505,569 (2016: RM788,598) respectively as further disclosed in Note 10.

70 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October DIRECTORS REMUNERATION Group Company RM RM RM RM Executive directors remuneration (Note 9): Fees 57,024 57,024 57,024 57,024 Other emoluments 888,337 1,000, , , ,361 1,057, , ,598 Non-executive directors remuneration (Note 8): Fees 192, , , ,456 Total directors remuneration 1,137,817 1,249, , ,054 The details of remuneration of directors of the Company are analysed as follows: Group Company RM RM RM RM Executive: Salaries and other emoluments 813, , , ,024 Contributions to defined contribution plan 130, ,460 71, ,660 Social security contributions 2, , ,361 1,057, , ,598 Non-executive: Fees 192, , , ,456 Total 1,137,817 1,249, , ,054 The number of directors of the Company whose total remuneration during the financial year fell within the following bands is analysed below: Number of directors Executive directors: RM100,001 - RM150, RM200,001 - RM250,000-1 RM350,001 - RM400, RM500,001 - RM600,000-1 Non-executive directors: RM50,001 - RM100,

71 70 ADVENTA BERHAD ( M) NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October INCOME TAX EXPENSE/(BENEFIT) Statement of comprehensive income: Group Company RM RM RM RM Current year tax 490, ,540-50,625 (Over)/under provision in prior years (12,069) 4,183 (1,755) 1, , ,723 (1,755) 51,733 Deferred income tax (Note 17): Relating to origination and reversal of temporary differences 911,938 1,398, (Over)/under provision in prior years (3,116) (17,244) ,822 1,380, Income tax expense/(benefit) recognised in profit or loss 1,387,074 1,713,621 (1,689) 52,020 Reconciliation between tax expense and accounting profit/(loss) The reconciliation between tax expense and the product of accounting profit/(loss) multiplied by the applicable corporate tax rate for the years ended 31 October 2017 and 2016 are as follows: RM RM Restated Group Profit before tax 1,528,134 2,397,771 Income tax at Malaysian statutory tax rate of 24% (2016: 24%) 366, ,465 Effect of income not subject to tax (3,018) - Effect of expenses not deductible for tax purposes 449, ,916 Deferred tax assets recognised on unabsorbed capital allowances and unused tax losses (257,283) - Deferred tax asset not recognised on unabsorbed capital allowances and unused tax losses 846, ,301 Over provision of deferred tax in prior years (3,116) (17,244) (Over)/under provision of income tax in prior years (12,069) 4,183 Income tax expense recognised in profit or loss 1,387,074 1,713,621 Company (Loss)/profit before tax (147,719) 79,441 Income tax at Malaysian statutory tax rate of 24% (2016: 24%) (35,453) 19,066 Effect of expenses not deductible for tax purposes 35,453 31,846 Under provision of deferred tax in prior years 66 - (Over)/under provision of income tax in prior years (1,755) 1,108 Income tax (benefit)/expense recognised in profit or loss (1,689) 52,020

72 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October INCOME TAX EXPENSE/(BENEFIT) cont d Domestic current income tax is calculated at the statutory tax rate of 24% (2016: 24%) of the estimated assessable profit for the financial year. 12. EARNINGS PER SHARE (a) Basic Basic earnings per share amounts are calculated by dividing profit, net of tax, attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the financial year. The following tables reflect the profit and share data used in the computation of basic earnings per share for the years ended 31 October: Group RM RM Profit net of tax attributable to owner of the parent used in the computation of basic earnings per share 141, ,150 Number of shares Number of shares Weighted average number of ordinary shares for basic earnings per share computation 152,785, ,785,770 sen per share sen per share Basic earnings per share: (b) Diluted No diluted earnings per share were presented as there were no potential dilutive ordinary shares oustanding as at 31 October 2017.

73 72 ADVENTA BERHAD ( M) NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October PROPERTY, PLANT AND EQUIPMENT Group Long term leasehold land Buildings Plant and equipment Other assets* Total RM RM RM RM RM Cost (Restated) At 1 November ,996,760 23,316,575 22,930,328 2,012,451 59,256,114 Additions - 17,798 4,122, ,566 4,311,747 At 31 October 2016 and 1 November ,996,760 23,334,373 27,052,711 2,184,017 63,567,861 Additions - - 1,481, ,862 1,854,006 Disposal (142,673) (142,673) Reversal - - (4,522,641) - (4,522,641) At 31 October ,996,760 23,334,373 24,011,214 2,414,206 60,756,553 Accumulated depreciation (Restated) At 1 November ,773 2,149,299 4,629, ,384 8,080,368 Charge for the year (Note 8) 41, , , ,466 1,892,458 At 31 October 2016 and 1 November ,029 2,837,877 5,490, ,850 9,972,826 Charge for the year (Note 8) 228, , , ,833 1,842,801 Disposal (40,418) (40,418) Reversal - - (64,169) - (64,169) At 31 October ,785 3,339,327 6,220,663 1,223,265 11,711,040 Net carrying amount At 31 October ,297,731 20,496,496 21,562,641 1,238,167 53,595,035 At 31 October ,068,975 19,995,046 17,790,551 1,190,941 49,045,513 * Other assets comprise of motor vehicles, office equipment, furniture and fittings and renovation.

74 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October PROPERTY, PLANT AND EQUIPMENT cont d Company Office equipment, furniture and fittings RM Cost At 1 November ,948 Additions 1,425 At 31 October 2016 and 1 November ,373 Additions 411 At 31 October ,784 Accumulated depreciation At 1 November ,726 Charge for the year (Note 8) 1,860 At 31 October 2016 and 1 November ,586 Charge for the year (Note 8) 1,557 At 31 October ,143 Net carrying amount At 31 October ,787 At 31 October ,641 (a) The carrying amounts of property, plant and equipment held under hire purchase arrangements are as follows: Group RM RM Motor vehicles 146, ,404 (b) The net carrying amounts of property, plant and equipment pledged as securities for loans and borrowings (Note 23) are as follows: Group RM RM Restated Long term leasehold land 10,068,975 10,297,731 Buildings 6,561,948 6,735,762 16,630,923 17,033,493

75 74 ADVENTA BERHAD ( M) NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October INTANGIBLE ASSETS Goodwill Group Development costs Total RM RM RM Cost At 1 November ,017,193 23,742,717 28,759,910 Addition in internal development - 3,696,965 3,696,965 At 31 October 2016 and 1 November ,017,193 27,439,682 32,456,875 Addition in internal development - 1,808,564 1,808,564 As at 31 October ,017,193 29,248,246 34,265,439 Accumulated amortisation At 1 November 2015/ , ,112 Charge for the year (Note 8) - 1,296,168 1,296,168 As at 31 October ,160,280 2,160,280 Net carrying amount As at 31 October ,017,193 26,575,570 31,592,763 As at 31 October ,017,193 27,087,966 32,105,159 Development costs Development costs relate to development of home dialysis machines including patient care management system and amortised over a period of 20 years. Amortisation expense The amortisation of development costs is included in other operating expenses line item in the statement of comprehensive income. Impairment testing of goodwill Goodwill arising from business combinations has been allocated to three individual cash-generating units ( CGUs ) for impairment testing as follows: - Healthcare products - Home dialysis products and services - Sterilisation provider The carrying amounts of goodwill allocated to each cash-generating unit ( CGU ) are as follows: Group RM RM Healthcare products 54,870 54,870 Home dialysis products and services 193, ,169 Sterilisation provider 4,769,154 4,769,154 5,017,193 5,017,193

76 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October INTANGIBLE ASSETS cont d Impairment testing of goodwill cont d The recoverable amounts of three CGUs have been determined based on value in use calculations using cash flow projections from financial budgets approved by management covering a five-year period for Sun Healthcare (M) Sdn. Bhd., Electron Beam Sdn. Bhd. and Lucenxia (M) Sdn. Bhd. The pre-tax discount rates (per annum) applied to the cash flow projections: Pre-tax discount rates Healthcare products 6.60% 6.60% Sterilisation provider 6.85% 6.60% Home dialysis products and services 6.85% 6.60% The calculations of value in use for the CGUs are most sensitive to the following assumptions: Pre-tax discount rates - Discount rates reflect the current market assessment of the risks specific to each CGU. This is the benchmark used by management to assess operating performance and to evaluate future investment proposals. Impairment testing of product development cost The recoverable amounts of the product development costs of RM27,087,966 have been determined based on value in use calculations using cash flow projections from financial budgets approved by management covering a five-year period for Lucenxia (M) Sdn. Bhd. The key parameters used in the preparation of the cash flow projections are: Average 5 years growth in revenue 442% Discount rate 6.85% 15. INVESTMENT IN SUBSIDIARIES Unquoted shares, at cost Company RM RM As at 1 November 23,056,726 23,056,726 Additional investment in subsidiaries 45,000,000 - As at 31 October 68,056,726 23,056,726

77 76 ADVENTA BERHAD ( M) NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October INVESTMENT IN SUBSIDIARIES cont d Details of subsidiaries Names of subsidiaries Country of incorporation Principal activities Proportion of ownership interest Sun Healthcare (M) Sdn. Bhd. ( SH ) Malaysia Distribution of medical and healthcare equipment and appliances 100% 100% Electron Beam Sdn. Bhd. ( EB ) Malaysia Providing industrial and commercial sterilisation, warehousing and handling services 100% 100% Lucenxia (M) Sdn. Bhd. ( LCX ) Malaysia Provision of home dialysis products for the treatment of end stage renal disease and its related services 100% 100% PTM Progress Trading & Marketing Sdn. Bhd. ( PTM ) Malaysia Provision of storage and warehousing services 100% 100% Held through Lucenxia (M) Sdn. Bhd. ( LCX ) Lucenxia Lanka (Private) Limited ( Lucenxia Lanka ) Sri Lanka Dormant 100% - A new subsidiary has been incorporated in Sri Lanka, namely, Lucenxia Lanka (Private) Limited ( Lucenxia Lanka ) (Company No.: PV ) on 24 May 2017 with an issued and paid-up capital of 1 ordinary share of LKR10/- each. Lucenxia Lanka is a wholly-owned subsidiary of LCX where LCX is a wholly-owned subsidiary of the Company. Following the incorporation, Lucenxia Lanka has become an indirect wholly-owned subsidiary of the Company. The rationale for the incorporation of Lucenxia Lanka is to undertake healthcare business and has yet to commence its operations during the financial year. The above incorporation of the new subsidiary is not expected to have any material effect on the earnings or net assets of Group for the financial year ended 31 October 2017.

78 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October AMOUNTS DUE FROM SUBSIDIARIES The amounts due from subsidiaries were unsecured, interest bearing range from 3.25% to 4.00% (2016: 3.25% to 4.00%) per annum and are not expected to be repayable within twelve months from the reporting date. 17. DEFERRED TAX Group Company RM RM RM RM Restated Restated At beginning of year 424,162 1,805, , ,721 Recognised in profit or loss (Note 11) (908,822) (1,380,898) (66) (287) At end of year (484,660) 424, , ,434 Presented after appropriate offsetting as follows: Deferred tax assets 579, , , ,434 Deferred tax liabilities (1,063,781) (73,272) - - (484,660) 424, , ,434 The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows: Deferred tax liabilities of the Group: Property, plant and equipment RM At 1 November 2015 (4,896,274) Recognised in profit or loss 191,130 At 31 October 2016 (4,705,144) Recognised in profit or loss (168,506) At 31 October 2017 (4,873,650)

79 78 ADVENTA BERHAD ( M) NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October DEFERRED TAX cont d Deferred tax assets of the Group: Unutilised reinvestment allowances Unutilised tax losses and unabsorbed capital allowances Others Total RM RM RM RM At 1 November ,248,049 1,495,645 (42,360) 6,701,334 Recognised in profit or loss (537,109) (1,077,279) 42,360 (1,572,028) At 31 October ,710, ,366-5,129,306 Recognised in profit or loss (1,085,985) 307,128 38,541 (740,316) At 31 October ,624, ,494 38,541 4,388,990 Deferred tax (liabilities)/assets of the Company: Property, plant and equipment Unutilised tax losses and unabsorbed capital allowances Total RM RM RM At 1 November 2015 (1,013) 227, ,721 Recognised in profit or loss 104 (391) (287) At 31 October 2016 (909) 227, ,434 Recognised in profit or loss - (66) (66) At 31 October 2017 (909) 227, , INVENTORIES Group RM RM Cost Trading goods 13,358,812 14,119,844 Spare parts 1,362,931 1,198,285 14,721,743 15,318,129

80 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October TRADE AND OTHER RECEIVABLES Group Company RM RM RM RM Current Trade receivables Third parties 14,908,859 10,350, Less: Allowance for impairment (third parties) (396,871) (328,809) - - Trade receivables, net 14,511,988 10,021, Other receivables Other receivables 6,154,911 1,853, Goods and service tax receivables 254, , Deposits 208, , ,618,511 2,357,130 1,100-21,130,499 12,378,887 1,100 - Total trade and other receivables 21,130,499 12,378,887 1,100 - Less: Included within other receivables Goods and services tax receivables (254,786) (318,884) - - Add: Cash and bank balances (Note 21) 10,215,262 21,001,608 24,670 18,192,894 Total loans and receivables 31,090,975 33,061,611 25,770 18,192,894 (a) Trade receivables The Group s normal trade credit term ranges from 30 to 120 days (2016: 30 to 120 days). Other credit terms are assessed and approved on a case-by-case basis. They are recognised at their original invoice amounts which represent their fair values on initial recognition. Ageing analysis of trade receivables Group RM RM Neither past due nor impaired 7,495,567 5,866,245 1 to 30 days past due not impaired 2,373, , to 60 days past due not impaired 999, , to 90 days past due not impaired 278, ,286 More than 91 days past due not impaired 3,364,256 2,462,028 7,016,421 4,155,512 Impaired 396, ,809 14,908,859 10,350,566

81 80 ADVENTA BERHAD ( M) NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October TRADE AND OTHER RECEIVABLES cont d (a) Trade receivables cont d Receivables that are neither past due nor impaired Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group. None of the Group s trade receivables that are neither past due nor impaired have been renegotiated during the financial year. Receivables that are past due but not impaired The Group has trade receivables amounting to RM7,016,421 (2016: RM4,155,512) that are past due at the reporting date but not impaired. These receivables are unsecured in nature. Based on past experience and no adverse information to date, the Directors of the Company are of the opinion that no provision for impairment is necessary in respect of these balances as there has not been a significant change in the credit quality and the balances are still considered fully recoverable. Receivables that are impaired Movement in allowance accounts: Group RM RM At 1 November 328, ,662 Charge for the year (Note 8) 68,062 1,147 At 31 October 396, ,809 Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancement. (b) Related party balances Amounts due from subsidiaries and companies in which certain directors have interest are unsecured, noninterest bearing and are repayable upon demand. 20. OTHER CURRENT ASSETS Group Company RM RM RM RM Prepaid operating expenses 442, , ,058 3,733 Advances to suppliers of trading inventories 410, , , , ,058 3,733

82 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October CASH AND CASH EQUIVALENTS Group Company RM RM RM RM Cash and bank balances 10,215,262 21,001,608 24,670 18,192, TRADE AND OTHER PAYABLES Group Company RM RM RM RM Trade payables Third parties 1,817,818 1,790, Due to companies in which certain directors have interest 6,173,255 7,987, ,991,073 9,778, Other payables Other payables 1,485,983 1,605,662 23,810 2,613 Accruals 1,962,191 1,592,750 94, ,929 3,448,174 3,198, , ,542 11,439,247 12,976, , ,542 Total trade and other payables 11,439,247 12,976, , ,542 Add: Loans and borrowings (Note 23) 34,874,861 40,935, Total financial liabilities carried at amortised cost 46,314,108 53,911, , ,542 (a) Trade payables Trade payables are non-interest bearing and the normal trade credit terms granted to the Group range from 30 to 120 days (2016: 30 to 120 days). (b) Other payables Other payables are non-interest bearing and the normal trade credit terms granted to the Group range from 30 to 120 days (2016: 30 to 120 days). (c) Related party balances Amounts due to subsidiaries and companies in which certain directors have interest are non-interest bearing and are repayable on demand. The amounts are unsecured and are to be settled in cash.

83 82 ADVENTA BERHAD ( M) NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October LOANS AND BORROWINGS Group Maturity RM RM Current Secured: Obligations under finance leases (Note 27(a)) ,823 73,828 Bankers acceptances at 4.61% per annum , ,000 Bank loans: - RM loan at BFR +1.75% per annum , ,000 - RM loan at BFR +1.50% per annum ,000,000 5,000,000 - RM loan at BFR +1.25% per annum ,833, RM loan at BFR -1.5% per annum ,336,804 3,106,643 11,475,960 9,403,471 Non-current Secured: Obligations under finance leases (Note 27(a)) ,872 91,533 Bank loans: - RM loan at BFR +1.75% per annum ,200,000 9,000,000 - RM loan at BFR +1.25% per annum ,166,667 10,000,000 - RM loan at BFR -1.5% per annum ,009,362 12,440,082 23,398,901 31,531,615 Total borrowings Obligations under finance leases (Note 27(a)) 54, ,361 Bankers acceptances at 4.61% per annum 474, ,000 Bank loans: - RM loan at BFR +1.75% per annum 9,000,000 9,800,000 - RM loan at BFR +1.50% per annum 5,000,000 5,000,000 - RM loan at BFR +1.25% per annum 8,000,000 10,000,000 - RM loan at BFR -1.5% per annum 12,346,166 15,546,725 34,874,861 40,935,086 The remaining maturities of the loans and borrowings are as follows: Group RM RM On demand or not later than 1 year 11,475,960 9,403,471 Later than 1 year and not later than 2 years 5,761,603 5,400,677 Later than 2 years and not later than 5 years 17,637,298 22,740,064 Later than 5 years - 3,390,874 34,874,861 40,935,086

84 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October LOANS AND BORROWINGS cont d The interest rates (per annum) at the reporting date for borrowings, excluding obligations under finance lease, were as follows: Group % % RM loan at BFR +1.75% per annum RM loan at BFR +1.50% per annum RM loan at BFR +1.25% per annum RM loan at BFR -1.5% per annum * BFR: Base Financing Rate The banking facilities and term loans are secured by the following: (a) (b) legal charge over certain assets of the Group as disclosed in Note 13; and corporate guarantees by the Company. 24. SHARE CAPITAL Number of shares Group and Company Monetary value RM Number of shares Monetary value RM Issued and fully paid Ordinary shares: At 1 November 2015/ ,785,770 53,475, ,785,770 58,304,809 Transfer of share premium on 31 January ,829, At 31 October 152,785,770 58,304, ,785,770 58,304,809 Share premium Group and Company RM RM At 1 November 4,829,789 4,829,789 Transfer on 31 January 2017 (4,829,789) - At 31 October - 4,829,789 Under the Companies Act 2016 in Malaysia which came into effect on 31 January 2017, the concept of authorised share capital no longer exists.

85 84 ADVENTA BERHAD ( M) NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October SHARE CAPITAL cont d In accordance with Section 74 of the Companies Act 2016, the Group s and the Company s ordinary shares no longer have a par or nominal value with effect from 31 January Pursuant to Section 618(2) of the Companies Act 2016, the amount standing to the credit of the Company s share premium became part of the Company s share capital. There is no impact on the number of ordinary shares in issue or the relative entitlement of any of the members of the Company. The holders of ordinary shares are entitled to receive dividends as and when declared from time to time by the Company. All ordinary shares carry one vote per shares without restrictions and rank equally with regard to the Company s residual assets. 25. RETAINED EARNINGS The Company may distribute dividends out of its entire retained earnings as at 31 October 2017 and 31 October 2016 under the single tier system. 26. RELATED PARTY TRANSACTIONS (a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the following transactions with related parties during the financial year: RM RM Group Related parties*: Purchases of goods 12,812,529 14,217,341 Sales of goods 8,410,554 7,186,747 Company Interest charged to subsidiaries 579, ,983 * Related parties are companies in which certain directors have interests. The directors are of the opinion that all the transactions above have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from those obtainable in transactions with unrelated parties. (b) Compensation of key management personnel The remuneration of directors and other members of key management during the year was as follows: Group Company RM RM RM RM Short-term employee benefits 1,007,617 1,104, , ,394 Defined contribution plan 130, ,460 71, ,660 1,137,817 1,249, , ,054

86 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October RELATED PARTY TRANSACTIONS cont d Included in the total remuneration of key management personnel are: Group Company RM RM RM RM Directors remuneration (Note 10) 1,137,817 1,249, , , COMMITMENTS (a) Finance lease commitments Group RM RM Minimum lease payments: Not later than 1 year 34,003 81,696 Later than 1 year and not later than 2 years 19,056 66,716 Later than 2 years and not later than 5 years 4,717 29,225 Total minimum future payments 57, ,637 Future finance charges (3,081) (12,276) 54, ,361 Present value of payments: Not later than 1 year 31,823 73,828 Later than 1 year and not later than 2 years 18,200 63,248 Later than 2 years and not later than 5 years 4,672 28,285 54, ,361 Analysed as: Due within 12 months (Note 23) 31,823 73,828 Due after 12 months (Note 23) 22,872 91,533 54, ,361 The finance lease liabilities bore interest at the reporting date of between 3.23% % (2016: 3.20% %) per annum. (b) Operating lease commitments - as lessor One of the subsidiaries, Lucenxia (M) Sdn. Bhd. has entered into commercial leases on its machinery. The lease terms are upon agreement between Lucenxia (M) Sdn. Bhd. and its customer and it is cancellable upon agreement within 30 days notice. No contingent rent was recognised as income during the year.

87 86 ADVENTA BERHAD ( M) NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October FAIR VALUE OF FINANCIAL INSTRUMENTS Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value: Trade and other receivables (current) 19 Trade and other payables (current) 22 Loans and borrowings (current) 23 Loans and borrowings (non-current) 23 The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date. The carrying amounts of the current portion of loans and borrowings are reasonable approximations of fair values due to the insignificant impact of discounting. The fair values of loans and borrowings are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date. Note 29. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES Financial liabilities, comprise loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Group s and the Company s operations and to provide guarantees to support its operations. Financial assets include trade and other receivables and cash and short-term deposits that derive directly from its operations. The Group is exposed to market risk, interest risk, foreign currency risk, credit risk and liquidity risk. The Group s senior management oversees the management of these risks and ensures that the Group s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Group s policies and risk objectives. All derivative activities for risk management purposes are carried out by senior management who have the appropriate skills, experience and supervision. It is the Group s policy that no trading in derivatives for speculative purposes may be undertaken. The Group does not apply hedge accounting. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below. (a) Market risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises interest rate risk and foreign exchange currency risk. Financial instruments affected by market risk include deposits, loans and borrowings. (b) Interest rate risk Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. As the Group and the Company have no significant interestbearing financial assets, the Group s and the Company s income and operating cash flows are substantially independent of changes in market interest rates.

88 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES cont d (c) 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 Dollars ( USD ), Euro ( EUR ), Singapore Dollars ( SGD ), Pound Sterling ( GBP ), and Chinese Yuan Renminbi ( RMB ). Such transactions are kept to an acceptable level. Material foreign currency transaction exposures are hedged, mainly with derivative financial instruments such as forward foreign exchange contracts. The net unhedged financial assets/(liabilities) of the Group that are not denominated in their functional currencies are as follows: RM RM USD 301, ,705 EUR 60,015 13,970 SGD 819,203 1,104,253 GBP (84,123) (15,803) RMB (70,831) (102,677) 1,025,375 1,130,448 Sensitivity analysis for foreign currency risk The following table demonstrates the sensitivity of the Group s profit net of tax to a reasonably possible change in the USD, EUR, SGD, GBP and RMB exchange rates against the respective functional currencies of the Group entities, with all other variables held constant. Group RM RM Profit net of tax USD/RM - strengthened 5% 23,699 6,535 - weakened 5% (23,699) (6,535) EUR/RM - strengthened 5% 3, weakened 5% (3,006) (698) SGD/RM - strengthened 5% 40,859 55,213 - weakened 5% (40,859) (55,213) GBP/RM - strengthened 5% (4,211) (790) - weakened 5% 4, RMB/RM - strengthened 5% (3,618) (5,134) - weakened 5% 3,618 5,134

89 88 ADVENTA BERHAD ( M) NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES cont d (d) Credit risk Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Exposure to credit risk relates to operating activities (primarily trade receivables) and from financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. (i) Trade receivables Customer credit risk is managed according to established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed and approved by the directors who sets out the individual credit limits. Outstanding customer receivables are regularly monitored and financial standings of major customers are continuously reviewed. At the reporting date, approximately 82% (2016: 74%) of the Group s gross trade receivables were due from 7 (2016: 7) major customers. An impairment analysis is performed at each reporting date on an individual basis and in addition, minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on actual incurred historical data. The Group does not hold collateral as security. Exposure to credit risk At the reporting date, the Group s and the Company s maximum exposure to credit risk is represented by: - The carrying amount of each class of financial assets recognised in the statements of financial position. - A nominal amount of RM37,623,000 (2016: RM41,088,000) relating to a bank guarantee provided by the Company to financial institutions for credit facilities granted to subsidiaries. Financial assets that are neither past due nor impaired Information regarding trade and other receivables that are neither past due nor impaired is disclosed in Note 19. Financial assets that are either past due or impaired Information regarding trade and other receivables that are either past due or impaired is disclosed in Note 19. (ii) Cash and short-term deposits Cash is normally maintained at minimum levels and surplus cash are placed as short-term deposits with licensed banks and financial institutions. Such funds are reviewed by the Directors on a monthly basis and amounts placed as short-term deposits may be revised throughout the year. This is to minimise the concentration of risks and therefore mitigate financial loss through potential counterparty s failure to make payments. Deposits with banks that are neither past due nor impaired are placed with or entered into with reputable financial institutions with no history of default.

90 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES cont d (e) Liquidity risk Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group s and the Company s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group s and the Company s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities. The Group and the Company manage their debt maturity profile, operating cash flows and the availability of funding so as to ensure that refinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group and the Company maintain sufficient levels of cash to meet its working capital requirements. In addition, the Group and the Company strive to maintain available banking facilities at a reasonable level to its overall debt position. Analysis of financial instruments by remaining contractual maturities The table below summarises the maturity profile of the Group s and the Company s liabilities at the reporting date based on contractual undiscounted repayment obligations. On demand or within one year One to five years 2017 Over five years Total RM RM RM RM Group Financial liabilities: Trade and other payables 11,439, ,439,247 Loans and borrowings 12,483,355 19,700,724 6,294,363 38,478,442 Total undiscounted financial liabilities 23,922,602 19,700,724 6,294,363 49,917,689 Company Financial liabilities: Trade and other payables 118, ,652 Total undiscounted financial liabilities 118, ,652 On demand or within one year One to five years 2016 Over five years Total RM RM RM RM Group Financial liabilities: Trade and other payables 12,976, ,976,419 Loans and borrowings 10,483,734 18,951,908 14,024,197 43,459,839 Total undiscounted financial liabilities 23,460,153 18,951,908 14,024,197 56,436,258 Company Financial liabilities: Trade and other payables 235, ,542 Total undiscounted financial liabilities 235, ,542

91 90 ADVENTA BERHAD ( M) NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October 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 Group 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 years ended 31 October 2017 and 31 October The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group includes within net debt, loans and borrowings, trade and other payables, less cash and bank balances. Capital represents equity attributable to the owners of the parent. Group Company Note RM RM RM RM Trade and other payables 22 11,439,247 12,976, , ,542 Loans and borrowings 23 34,874,861 40,935, Less: Cash and bank balances 21 (10,215,262) (21,001,608) (24,670) (18,192,894) Net debt 36,098,846 32,909,897 93,982 (17,957,352) Equity attributable to the owners of the parent, representing total capital 81,247,663 81,106,603 68,535,743 68,681,773 Capital and net debt 117,346, ,016,500 68,629,725 50,724,421 Gearing ratio 31% 29% SEGMENT INFORMATION For management purposes, the Group is organised into business units based on their products and services, and has four reportable operating segments as follows: I. The healthcare products segment is a manufacturer, distributor and trader of healthcare products. II. III. IV. The sterilisation provider is a provider of industrial and commercial sterilisation services, warehousing and handling services. The home dialysis products and services is a provider of home dialysis products for the treatment of end stage renal disease and its related services. The corporate segment is involved in Group-level corporate services, treasury functions and provision of management services to subsidiaries. Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments. 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 which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. Group financing (including finance costs) and income taxes are managed on a group basis and are not allocated to operating segments. Transfer prices between operating segments are on an arm s length basis in a manner similar to transactions with third parties.

92 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October SEGMENT INFORMATION cont d Healthcare products Sterilisation provider Home dialysis products and services Corporate Adjustments and eliminations Per consolidated financial statements RM RM RM RM RM RM RM RM RM RM Note RM RM Revenue: External customers 29,698,366 27,324,669 13,636,511 12,615, , , (130,216) 44,235,939 39,930,973 Inter-segment , , (933,765) (877,415) A - - Total revenue 29,698,366 27,324,669 14,570,276 13,492, , , (933,765) (1,007,631) 44,235,939 39,930,973 Results: Interest income 5,595 5,082 15,137 5,250 4,742 1, ,930 1,500,025 (579,829) (905,983) 285, ,851 Depreciation 227, ,009 1,571,786 1,545,073 42, ,516 1,555 1, ,842,801 1,892,458 Amortisation ,296, , ,296, ,112 Segment profit/ (loss) 644, ,094 5,914,156 5,096,159 (4,883,000) (3,277,644) (147,719) 79,441 - (379,279) B 1,528,134 2,397,771 Assets: Additions to noncurrent assets 18,771 81,788 1,225, ,037 2,417,796 5,787, ,425 - (21,670) 3,662,570 6,120,311 Segment assets 30,765,809 29,885,721 58,414,171 54,905,678 35,860,240 32,247,140 68,654,395 70,848,498 (64,958,860) (52,673,549) C 128,735, ,213,488 Segment liabilities 10,168,757 27,782,084 24,319,472 32,487,654 14,148,007 25,651, ,652 2,166,725 (1,266,796) (33,981,485) D 47,488,092 54,106,885

93 92 ADVENTA BERHAD ( M) NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October SEGMENT INFORMATION cont d A B Inter-segment revenues are eliminated on consolidation. The following items are deducted from segment profit to arrive at Profit before tax presented in the consolidated statement of comprehensive income: RM RM Profit from inter-segment sales - (379,279) C The following items are deducted from segment assets to arrive at total assets reported in the consolidated statement of financial position: RM RM Inter-segment assets (64,958,860) (52,673,549) D The following items are deducted from segment liabilities to arrive at total liabilities reported in the consolidated statement of financial position: RM RM Inter-segment liabilities (1,266,796) (33,981,485) Geographical information Revenue and non-current assets information based on the geographical location of customers and assets respectively are as follows: Revenue Non-current assets RM RM RM RM Restated Malaysia 44,235,939 39,309,742 81,729,793 85,685,232 Pakistan - 621, ,235,939 39,930,973 81,729,793 85,685,232 Non-current assets information presented above consist of the following items as presented in the consolidated statement of financial position: RM RM Property, plant and equipment 49,045,513 53,595,035 Intangible assets 32,105,159 31,592,763 Deferred tax assets 579, ,434 81,729,793 85,685,232

94 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS for the Financial Year ended 31 October EVENT OCCURING AFTER THE REPORTING DATE On 17 January 2018, the Company has announced at Bursa Malaysia to undertake a proposed renounceable rights issue of 91,671,462 new Adventa Shares ( Rights Share(s) ) on the basis of three (3) Rights Shares for every five (5) existing Adventa shares together with 45,835,731 free detachable warrants ( Warrant(s) ), on the basis of one (1) Warrant for every two (2) Right Shares subscribed. The indicative issue price is RM0.55 and the indicative warrant exercise price is RM0.65 over a period of five (5) years. 33. COMPARATIVES Certain comparative figures have been reclassified to conform with current year s presentation. 34. AUTHORISATION OF FINANCIAL STATEMENTS FOR ISSUE The financial statements for the year ended 31 October 2017 were authorised for issue in accordance with a resolution of the directors on 11 February 2018.

95 94 ADVENTA BERHAD ( M) LIST OF PROPERTIES for the year ended 31 October 2017 Address/Location Description/Use Land Area (square metres) Tenure Age of Building No. of Years Carrying Value as at RM 000 Date of Revaluation or Acquisition Electron Beam Sdn. Bhd. Lot PT HSD Mukim of Klang District of Klang Selangor Sterilisation plant, warehouse and office 17, years leasehold expiring on , July 2012 PTM Progress Trading & Marketing Sdn. Bhd. Lot PT17 HSM 9655 Mukim of Sungai Buluh District of Petaling Selangor Warehouse 8, years leasehold expiring on , December 2014

96 ANNUAL REPORT STATISTICS OF SHAREHOLDINGS as at 30 January 2018 Class of Shares : Ordinary Shares On a poll : One vote per Ordinary Share Total number of issued shares : 152,785,770 Ordinary Shares ANALYSIS OF SHAREHOLDINGS A. DISTRIBUTION OF SHAREHOLDINGS Range of Shareholdings Number of Shareholders % Number of Shares % , , , ,001-10,000 1, ,268, , , ,597, ,001 to less than 5% of issued shares ,551, % and above of issued shares ,999, Total 2, ,785, B. SUBSTANTIAL SHAREHOLDERS (as shown in the Register of Substantial Shareholders) Direct Indirect No. Name No. of Shares % No. of Shares % 1. Low Chin Guan 58,446, (1) 7,960, Wong Koon Wong Kwan Mooi - - (2) 66,407, Low Lea Kwan 7,960, (3) 58,446, Lembaga Tabung Haji 14,335, (1) Deemed interested by virtue of the family relationship between Mr. Low Chin Guan and Ms. Low Lea Kwan, who is his sister. (2) Deemed interested by virtue of the family relationship between Madam Wong Koon Wong Kwan Mooi and Mr. Low Chin Guan, who is her son and Ms. Low Lea Kwan, who is her daughter. (3) Deemed interested by virtue of the family relationship between Ms. Low Lea Kwan and Mr. Low Chin Guan, who is her brother.

97 96 ADVENTA BERHAD ( M) STATISTICS OF SHAREHOLDINGS as at 30 January 2018 C. DIRECTORS SHAREHOLDINGS (as shown in the Register of Directors Shareholdings) Direct Indirect No. Name No. of Shares % No. of Shares % 1. Low Chin Guan 58,446, (1) 7,960, Kwek Siew Leng 1,000, Toh Seng Thong 200, Edmond Cheah Swee Leng 140, Dato Dr. Norraesah binti Haji Mohamad 140, (1) Deemed interested by virtue of the family relationship between Mr. Low Chin Guan and Ms. Low Lea Kwan, who is his sister. Mr. Low Chin Guan, by virtue of his total direct and indirect interests of 66,407,512 shares in the Company, and pursuant to Section 8(4)(c) of the Companies Act 2016, is deemed interested in the shares in all of the Company s subsidiary companies to the extent that the Company has interests. D. THIRTY (30) LARGEST SECURITIES ACCOUNT HOLDERS No. Shareholders Number of Shares % 1. Low Chin Guan 44,446, HSBC Nominees (Asing) Sdn Bhd 15,461, Exempt an for Clearstream Banking S.A. 3. Lembaga Tabung Haji 14,335, AllianceGroup Nominees (Tempatan) Sdn Bhd 14,000, Pledged Securities Account for Low Chin Guan 5. Low Lea Kwan 7,756, Aphesus Limited 7,635, Sin Tong Meng 3,432, Public Nominees (Tempatan) Sdn Bhd 1,888, Pledged Securities Account for Wong Yoke Wong Nyok Fing (JRC) 9. CIMSEC Nominees (Tempatan) Sdn Bhd 1,457, CIMB Bank for Lai Kim Fook (MY0637) 10. Wong Yoke Wong Nyok Fing 1,193, Kenanga Nominees (Tempatan) Sdn Bhd 1,163, Pledged Securities Account for Mak Tian Meng 12. CIMSEC Nominees (Tempatan) Sdn Bhd 1,156, CIMB Bank for Mak Tian Meng (MY0343) 13. TA Nominees (Tempatan) Sdn Bhd 1,065, Pledged Securities Account for Lau Kooi See 14. Amanahraya Trustees Berhad 1,000, Amanah Saham Sarawak 15. Kwek Siew Leng 1,000, Wee Ye Yee 880, Theang Koh Keng 629, TASEC Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Sin Tong Meng 594,

98 ANNUAL REPORT STATISTICS OF SHAREHOLDINGS as at 30 January 2018 D. THIRTY (30) LARGEST SECURITIES ACCOUNT HOLDERS cont d No. Shareholders Number of Shares % 19. Liew Chuan Hau 580, Lee Kok Hin 546, Foo Chooh Leong 460, Wee Ye Yee 438, Wong Yoke Wong Nyok Fing 410, M.Baaden bin Asasmulia 400, Kenanga Nominees (Tempatan) Sdn Bhd 394, Pledged Securities Account for Tan See Seng (009) 26. Chong Jit Seng 386, Loo Chee Lain 370, Ma Suat Hoon 338, Chen, Chiu-Chin 325, Maybank Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Yeo Guo Bin 315, ,057,

99 98 ADVENTA BERHAD ( M) NOTICE OF FIFTEENTH ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN that the Fifteenth Annual General Meeting of the Company will be held at 21, Jalan Tandang 51/205A, Seksyen 51, Petaling Jaya, Selangor Darul Ehsan on Thursday, 29 March 2018 at 10:00 a.m. for the following purposes:- AGENDA 1. To receive the Audited Financial Statements for the financial year ended 31 October 2017 together with the Reports of the Directors and the Auditors thereon. [Please refer to Explanatory Note (i)] 2. To approve the payment of Directors fees and benefits for the financial year ended 31 October (Resolution 1) 3. To approve the payment of Directors fees and benefits for the financial year ending 31 October (Resolution 2) 4. To re-elect the following Directors who retire pursuant to Article 114 of the Company s Articles of Association and being eligible, have offered themselves for re-election:- (a) (b) Mr. Toh Seng Thong; and Dato Dr. Norraesah Binti Haji Mohamad. (Resolution 3) (Resolution 4) 5. To re-appoint Messrs. Ernst & Young as Auditors of the Company until the conclusion of the next Annual General Meeting and to authorise the Directors to fix their remuneration. (Resolution 5) 6. As Special Business To consider and, if thought fit, to pass the following Ordinary Resolutions:- ORDINARY RESOLUTION 1 - RETENTION OF INDEPENDENT NON-EXECUTIVE DIRECTORS (i) (ii) (iii) THAT subject to the passing of Resolution 2, approval be and is hereby given to Mr. Toh Seng Thong who has served as an Independent Director of the Company for a cumulative term of more than nine (9) years, to continue to act as an Independent Non-Executive Director of the Company. THAT subject to the passing of Resolution 3, approval be and is hereby given to Dato Dr. Norraesah Binti Haji Mohamad who has served as an Independent Director of the Company for a cumulative term of more than nine (9) years, to continue to act as an Independent Non- Executive Director of the Company. THAT approval be and is hereby given to Mr. Edmond Cheah Swee Leng who has served as an Independent Director of the Company for a cumulative term of more than nine (9) years, to continue to act as an Independent Non-Executive Director of the Company. (Resolution 6) (Resolution 7) (Resolution 8) ORDINARY RESOLUTION 2 - AUTHORITY TO ISSUE SHARES PURSUANT TO THE COMPANIES ACT 2016 (Resolution 9) THAT subject always to the Companies Act 2016 ( the Act ), the Articles of Association of the Company and the approvals from Bursa Malaysia Securities Berhad ( Bursa Securities ) and any other relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered pursuant to the Act, to issue and allot shares in the capital of the Company from time to time at such price and upon such terms and conditions, for such purposes and to such person or persons whomsoever the Directors may in their absolute discretion deem fit provided always that the aggregate number of shares issued pursuant to this resolution does not exceed ten percent (10%) of the total number of issued shares of the Company for the time being; AND THAT the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Securities; AND FURTHER THAT such authority shall commence immediately upon the passing of this resolution and continue to be in force until the conclusion of the next Annual General Meeting of the Company.

100 ANNUAL REPORT NOTICE OF FIFTEENTH ANNUAL GENERAL MEETING ORDINARY RESOLUTION 3 - PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (Resolution 10) THAT approval be and is hereby given to Adventa Berhad Group ( the Group ) to enter into and to give effect to specified recurrent related party transactions of a revenue or trading nature with the Related Parties as stated in Part A Section 1.5 of the Circular to Shareholders dated 28 February 2018, which are necessary for its day-to-day operations, to be entered into by the Group on the basis that this transaction is entered into on terms which are not more favorable to the Related Party involved than generally available to the public and are not detrimental to the minority shareholders of the Company (hereinafter referred to as the Proposed Renewal of Shareholders Mandate ); THAT the Proposed Renewal of Shareholders Mandate is subject to annual renewal. In this respect, any authority conferred by the Proposed Renewal of Shareholders Mandate, shall only continue to be in force until:- (a) (b) (c) the conclusion of the next Annual General Meeting ( AGM ) of the Company following the general meeting at which the Proposed Renewal of Shareholders Mandate was passed, at which time it will lapse, unless by resolution passed at the general meeting, the authority is renewed; or the expiration of the period within which the AGM after that date is required to be held pursuant to Section 340(2) of the Companies Act 2016 (but shall not extend to such extension as may be allowed pursuant to Section 340(4) of the Companies Act 2016); or revoked or varied by resolution passed by the shareholders of the Company in general meeting, whichever is the earlier; AND THAT the Directors and/or any of them be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) to give effect to the Proposed Renewal of Shareholders Mandate. ORDINARY RESOLUTION 4 - PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY OF UP TO 10% OF THE TOTAL NUMBER OF ISSUED SHARES OF ADVENTA BERHAD ( PROPOSED RENEWAL OF AUTHORITY FOR SHARE BUY-BACK ) (Resolution 11) THAT, subject to the compliance with Sections 112, 113 and 127 of the Companies Act 2016 and all other applicable laws, rules and regulations, approval be and is hereby given to the Company, to purchase such amount of ordinary shares in the Company ( Shares ) as may be determined by the Directors of the Company from time to time through Bursa Malaysia Securities Berhad ( Bursa Securities ) as the Directors may deem fit and expedient in the interest of the Company provided that the aggregate number of Shares to be purchased and held pursuant to this resolution does not exceed 10% of the existing total number of issued shares of the Company including the Shares previously purchased and retained as treasury shares (if any), upon such terms and conditions as set out in Part B of the Statement to the Shareholders dated 28 February AND THAT such authority shall commence immediately upon the passing of this ordinary resolution and until the conclusion of the next Annual General Meeting of the Company or the expiry of the period within which the next Annual General Meeting is required by law to be held unless revoked or varied by ordinary resolution in the general meeting of the Company but so as not to prejudice the completion of a purchase made before such expiry date, in any event in accordance with the provisions of the Main Market Listing Requirements of Bursa Securities and any other relevant authorities.

101 100 ADVENTA BERHAD ( M) NOTICE OF FIFTEENTH ANNUAL GENERAL MEETING AND THAT the maximum amount of funds to be utilised for the purpose of the Proposed Renewal of Authority for Share Buy-Back shall not exceed the Company s retained profits based on the latest audited financial statements and/or the latest management accounts of the Company (where applicable) available at the time of the purchase(s). AND THAT authority be and is hereby given to the Directors of the Company to decide in their absolute discretion to retain the Shares in the Company so purchased by the Company as treasury shares and/or to cancel them and/or to resell them and/or to distribute them as share dividends in such manner as may be permitted and prescribed by the provisions of the Main Market Listing Requirements of Bursa Securities and any other relevant authorities. AND THAT authority be and is hereby given to the Directors of the Company to take all such steps as are necessary to enter into any agreements, arrangements and guarantees with any party or parties to implement, finalise and give full effect to the aforesaid with full powers to assent to any conditions, modifications, variations and/or amendments (if any) as may be imposed by the relevant authorities and to do all such acts and things as the Directors may deem fit and expedient in the interests of the Company. 7. To transact any other ordinary business of which due notice has been given. By Order of the Board CHUA SIEW CHUAN (MAICSA ) LIM LIH CHAU (LS ) Company Secretaries Kuala Lumpur Dated: 28 February 2018 Notes: 1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 23 March 2018 ( General Meeting Record of Depositors ) shall be eligible to attend the Meeting. 2. A member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same meeting and where two (2) proxies are appointed, a member shall specify the proportion of his holdings to be represented by each proxy, failing which the appointment shall be invalid provided that where a member of the Company is an authorised nominee as defined in accordance with the provisions of the Securities Industry (Central Depositories) Act 1991, it may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. 3. There shall be no restriction as to the qualification of the proxy. A proxy appointed to attend and vote at the Meeting shall have the same rights as the member to participate, speak and vote at the Meeting. 4. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly appointed under a power of attorney or if such appointer is a corporation, either under its common seal or under the hand of an officer or attorney duly appointed under a Power of Attorney. 5. Where a member of the Company is an exempt authorised nominee 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. 6. The instrument appointing a proxy must be deposited at Securities Services (Holdings) Sdn. Bhd., Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, Kuala Lumpur not less than 48 hours before the time for holding the Meeting or at any adjournment thereof.

102 ANNUAL REPORT NOTICE OF FIFTEENTH ANNUAL GENERAL MEETING Explanatory Notes to Ordinary and Special Business: i) Item 1 of the Agenda This Agenda item is meant for discussion only, as the provision of Section 340(1) of the Companies Act 2016 does not require a formal approval of the shareholders for the Audited Financial Statements. Hence, this Agenda item is not put forward for voting. ii) Resolution 2 - Payment of Directors fees and benefits for the financial year ending 31 October 2018 In compliance with Section 230(1) of the Companies Act 2016, the Company is requesting shareholders approval for the payment of Directors fees and benefits for the financial year ending 31 October iii) Ordinary Resolution 1 - Retention of Independent Non-Executive Directors The Nomination Committee had assessed the independence of Mr. Toh Seng Thong, Dato Dr. Norraesah Binti Haji Mohamad and Mr. Edmond Cheah Swee Leng, who have served on the Board as Independent Non-Executive Directors of the Company for a cumulative term of more than nine (9) years. The Board has recommended that the approval of the shareholders be sought to re-appoint Mr. Toh Seng Thong, Dato Dr. Norraesah Binti Haji Mohamad and Mr. Edmond Cheah Swee Leng as Independent Non- Executive Directors based on the following justification:- had fulfilled the criteria under the definition of Independent Director pursuant to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad; had ensured effective check and balance in the proceedings of the Board and the Board Committees; had actively participated in the Board deliberations, provided objectivity in decision making and an independent voice to the Board and contributed in preventing Board domination by any single party; had devoted sufficient time and attention to their responsibilities as an Independent Non-Executive Director of the Company; and had exercised their due care in the interest of the Company and shareholders during their tenure as an Independent Non- Executive Director of the Company. iv) Ordinary Resolution 2 - Authority to issue shares pursuant to the Companies Act 2016 The Company wishes to renew the mandate on the authority to issue shares pursuant to the Companies Act 2016 at the Fifteenth Annual General Meeting of the Company (hereinafter referred to as the General Mandate ). The Company had been granted a general mandate by its shareholders at the Fourteenth Annual General Meeting of the Company held on 28 March 2017 ( the Previous Mandate ). As at the date of this notice, the Previous Mandate granted by the shareholders had not been utilised and hence no proceeds were raised therefrom. The General Mandate will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares, for the purpose of funding future investment project(s), working capital and/or acquisition(s). v) Ordinary Resolution 3 - Proposed Renewal of Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature The proposed adoption of the Ordinary Resolution in respect of the Proposed Renewal of Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature is intended to facilitate transactions in the normal course of business of the Group which are transacted from time to time with the specified classes of related parties, provided that they are carried out on an arm s length basis and on the Group s normal commercial terms and are not prejudicial to the shareholders on terms not more favourable to the related parties than those generally available to the public and are not to the detriment of the minority shareholders. vi) Ordinary Resolution 4 - Proposed Renewal of Authority for Share Buy-Back The proposed adoption of the Ordinary Resolution in respect of the Proposed Renewal of Authority for Share Buy-Back is to renew the authority granted by the shareholders of the Company at the Fourteenth Annual General Meeting held on 28 March The proposed renewal will allow your Directors to exercise the power of the Company to purchase not more than 10% of the total number of issued shares of the Company any time within the time period stipulated in Bursa Malaysia Securities Berhad Main Market Listing Requirements.

103 102 ADVENTA BERHAD ( M) LOCATION MAP TO AGM Kuala Lumpur Federal Highway SPRINT Highway NKVE Tropicana Jalan PP Narayanan (Jln 222) P1 Green Packet Jalan 217 Jalan Templer Jalan 215 EON Jalan 213 Top Mart Assunta Hospital Jalan Kilang 51/206 21, Jalan Tandang 51/205A, Seksyen 51, Petaling Jaya, Selangor Darul Ehsan Federal Highway Nestle Jalan Kilang 51/205 Jalan 204B Jalan 204A MML Jalan 203 GDEX Jalan Tandang Campbell Soup Jalan Penchala Pantai Baru Highway Subang, Shah Alam & Klang KESAS LDP Puchong

104 (Incorporated in Malaysia) Number of Shares Held CDS Account No. Form of Proxy *I/We of being a Member of ADVENTA BERHAD, do hereby appoint of or failing him/her of (Full Name In Capital Letters) (Full Address) (Full Name In Capital Letters) (Full Address) (Full Name In Capital Letters) (Full Address) or failing him/her, the CHAIRMAN OF THE MEETING, as *my/our proxy to attend and vote for *me/us and on *my/our behalf at the Fifteenth Annual General Meeting of the Company to be held at 21, Jalan Tandang 51/205A, Seksyen 51, Petaling Jaya, Selangor Darul Ehsan on Thursday, 29 March 2018 at 10:00 a.m. and at any adjournment thereof. Please indicate with an X in the space provided below how you wish your votes to be cast. If no specific direction as to voting is given, the Proxy will vote or abstain from voting at his discretion. Item Agenda 1. To receive the Audited Financial Statements for the financial year ended 31 October 2017 together with the Reports of the Directors and the Auditors thereon Resolution For Against 2. To approve the payment of Directors fees and benefits for the financial year ended 1 31 October To approve the payment of Directors fees and benefits for the financial year 2 ending 31 October To re-elect the Director, Mr. Toh Seng Thong who retires pursuant to Article 114 of 3 the Company s Articles of Association. 5. To re-elect the Director, Dato Dr. Norraesah Binti Haji Mohamad who retires 4 pursuant to Article 114 of the Company s Articles of Association. 6. To re-appoint Messrs. Ernst & Young as Auditors of the Company until the conclusion of the next Annual General Meeting and to authorise the Directors to fix their remuneration. 5 Special Business 7. To retain Mr. Toh Seng Thong as an Independent Non-Executive Director of the 6 Company. 8. To retain Dato Dr. Norraesah Binti Haji Mohamad as an Independent Non- 7 Executive Director of the Company. 9. To retain Mr. Edmond Cheah Swee Leng as an Independent Non-Executive 8 Director of the Company. 10. Authority to issue shares pursuant to the Companies Act Proposed Renewal of Shareholders Mandate for Recurrent Related Party 10 Transactions of a Revenue or Trading Nature. 12. Proposed Renewal of Authority for Share Buy-Back. 11 * Strike out whichever not applicable. As witness my/our hand this day of 2018 Signature of Member/Common Seal Notes: 1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 23 March 2018 ( General Meeting Record of Depositors ) shall be eligible to attend the Meeting. 2. A member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same meeting and where two (2) proxies are appointed, a member shall specify the proportion of his holdings to be represented by each proxy, failing which the appointment shall be invalid provided that where a member of the Company is an authorised nominee as defined in accordance with the provisions of the Securities Industry (Central Depositories) Act 1991, it may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. 3. There shall be no restriction as to the qualification of the proxy. A proxy appointed to attend and vote at the Meeting shall have the same rights as the member to participate, speak and vote at the Meeting. 4. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly appointed under a power of attorney or if such appointer is a corporation, either under its common seal or under the hand of an officer or attorney duly appointed under a Power of Attorney. 5. Where a member of the Company is an exempt authorised nominee 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. 6. The instrument appointing a proxy must be deposited at Securities Services (Holdings) Sdn. Bhd., Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, Kuala Lumpur not less than 48 hours before the time for holding the Meeting or at any adjournment thereof.

105 Fold This Flap For Sealing Then Fold Here AFFIX STAMP The Secretary ADVENTA BERHAD ( M) c/o Securities Services (Holdings) Sdn. Bhd. Level 7, Menara Milenium Jalan Damanlela Pusat Bandar Damansara Damansara Heights Kuala Lumpur 1st Fold Here

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