Академический Документы
Профессиональный Документы
Культура Документы
No. 3-5, Block D2, Jalan PJU 1/39, Dataran Prima, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia
Tel : 603-7880 2222 Fax : 603-7880 3913 Email : sales@grand-flo.com
Malacca Office
11-1, Jalan BU5, Taman Bacang Utama, Bacang, 75350 Melaka, Malaysia
Tel : 606-281 7806 Fax : 606-281 7827
Seremban Office
219, 1st Floor, Jalan S2 B10, Uptown Avenue, Seremban 2, 70300 Seremban, Negeri Sembilan, Malaysia
Tel : 606-601 7221 Fax : 606-601 1083
Penang Office
G-9-2 & 3, Lorong Bayan Indah 1, Bay Avenue, Queensbay, Sg. Nibong, 11900 Penang, Malaysia
Tel : 604-645 6991 Fax : 604-645 6993 Email : adminpg@grand-flo.com
AN N U AL RE P OR T 2 01 8
Innoceria Sdn. Bhd.
Business With
Long Sustainable
Stability Term Growth
2018 ANNUAL
REPORT
To enhance community and
business with innovation,
solution and technology.
VISION
MISSION
1. To be the partner of choice and trusted
adviser in Enterprise Data Collection and
Collation System (“EDCCS”).
2. To create quality developments for
residential, commercial and industrial
purposes for the betterment of the
communities and businesses.
CORE
VALUES
• Team Cooperation
• Customer Satisfaction
• Integrity
• Reliability
• Commitment
• Innovation
• Positive Attitude
• Loyalty
Contents
Corporate Profile 2
Corporate Information 4
Corporate Structure 5
Financial Highlights 6
Management Discussion and Analysis 8
Board of Directors 13
Directors’ Profile 14
Senior Management Team 18
Sustainability Statement 20
Corporate Governance Overview Statement 26
Audit Committee Report 39
Statement on Risk Management and I nternal Control 42
Additional Compliance Information 45
Statement of Directors’ Responsibility 47
Financial Contents 48
Analysis of Shareholdings 172
List of Properties 175
Notice of Annual General Meeting 176
Proxy Form
RATIONALE
CORPORATE
PROFILE
FOR OVER TWO DECADES, GRAND-FLO BERHAD
( “ G R A N D - F L O ” ) H A S B E E N E S TA B L I S H I N G
S U C C E S S F U L D ATA M A N A G E M E N T A N D
COLLABORATION SOLUTIONS FOR CORPORATIONS
RANGING FROM FAST MOVING CONSUMER
GOODS BUSINESSES TO FINANCIAL INSTITUTIONS,
E D U C AT I O N O R G A N I S AT I O N S A N D E V E N
MULTINATIONAL ESTABLISHMENTS.
03
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
We have been empowering businesses to manage and collaborate their data efficiently no matter where its origins
or capacity frequencies.
Our Enterprise Data Collection and Collation System (“EDCCS”) division is in providing comprehensive tracking
solutions, to businesses across all industrial sectors. Our One Stop EDCCS Solution Centre takes care of all your retail
data tracking and management needs, ranging from hardware, middleware, software to media and consumables such
as barcode ribbons and labels. Our home-grown ManageSuiteTM application solution is also an emerging product
in the market. A comprehensive range of precision tools, ManageSuiteTM has proven to increase efficiency, harvest
market intelligence and facilitate sales force mobility while minimizing potential errors to almost zero. Complemented
with any barcode products, ManageSuiteTM enable users to manage and track assets in warehouses, retail outlets
and office buildings. With ManageSuiteTM, many businesses have experienced transformation in their operations
that leads to unlocking the full potential of their business growth.
Grand-Flo ventured into the property development in mid-2013, and the completion of 50.0004% acquisition of
Innoceria Sdn. Bhd. on 12 August 2014 marked the Group’s effective diversification its business operations to include
Property Development. Both projects are located in Mainland Penang, capturing the high-growth opportunities in
Northern Peninsular, namely Vortex Business Park and The Glades.
Vortex Business Park, a commercial development located in the industrial hub of Batu Kawan, is well-placed to
capture the demand for strategically-based commercial properties. This development is in close proximity to the
Penang Second Bridge which gives easy access to Penang Island, as well as the North South Expressway which
facilitates transport to the rest of Peninsular Malaysia.
The Glades features luxury residences in Bukit Mertajam. This development is targeted to those who seek a more
tranquil neighbourhood, replete with a modern club house adhering to their lifestyle demands.
With notable infrastructure developments announced to take place in Penang over the next few years, the Property
Development division is expected to reap positive returns going forward.
04
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
CORPORATE INFORMATION
BOARD OF DIRECTORS
Tan Sri Azlan Bin Mohd Zainol Independent Non-Executive Chairman
Tan Bak Hong Group Managing Director / Group President
Chuah Chew Hai Executive Director
Cheng Ping Liong Executive Director
Tan Chuan Hock Non-Independent Non-Executive Director
Cheong Kee Yoong Senior Independent Non-Executive Director
Yu Chee Sing Independent Non-Executive Director
Lee Eng Eow Independent Non-Executive Director
Joyce Wong Ai May Independent Non-Executive Director
CORPORATE STRUCTURE
100% 100%
52%
Malaysia
FINANCIAL HIGHLIGHTS
FINANCIAL ANALYSIS
AS AT 31 DECEMBER
2014 2015 2016 2017 2018
Gearing (Net of Cash) (times) 0.16 0.09 0.04 0.00 0.00
Cash and bank balances
(including fixed deposits
and overdrafts) (RM’000) 11,153 13,687 14,150 31,994 25,082
07
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
NET PROFIT/(LOSS)
ATTRIBUTABLE TO OWNERS
REVENUE (RM’000) OF THE COMPANY (RM’000)
2014 2014
85,633 6,673
2015 2015
120,523 11,931
2016 2016
120,278 (9,724)
2017 2017
104,050 13,189
2018 2018
82,091 5,550
EQUITY
ATTRIBUTABLE TO OWNERS
TOTAL ASSETS (RM’000) OF THE COMPANY (RM’000)
2014 2014
167,394 101,130
2015 2015
223,708 123,527
2016 2016
205,798 110,036
2017 2017
191,702 122,988
2018 2018
172,252 112,281
2014 2014
0.16 11,153
2015 2015
0.09 13,687
2016 2016
0.04 14,150
2017 2017
0.00 31,994
2018 2018
0.00 25,082
08
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Dear Shareholders,
Bank Negara Malaysia reports that the Malaysian economy registered a total gross domestic product (“GDP”) for the year
2018 of 4.7%, compared to a 5.9% growth in 2017. Private sector activity remained the driver for growth, while a rebound
in exports of goods and services contributed towards the positive growth of net exports. The services sector was supported
by continued strength in consumer spending, particularly in the retail segment. Growth in the manufacturing sector remained
driven by the electronics and electrical and consumer related clusters. The Department of Statistics Malaysia added that
the 4.7% year-on-year in the fourth quarter of 2018 was the strongest growth rate since the first quarter of the year.
Penang Property Talk commented that 2018 was another slow year for Penang housing market, with no significant
improvement in market sentiment. While the data published by National Property Information Centre (“NAPIC”) indicated a
slight increase of 4% in residential property transaction volume, the average transacted price for the residential segments
saw a slight drop of 3% from first quarter to third quarter of year 2018.
The year of 2018 had indeed been a challenging year for Grand-Flo, with both divisions striving hard to remain resilient in
its business performance and lean in cost management.
For the financial year ended 31 December 2018 (“FYE 2018”), the Group achieved profit after tax of RM5.4 million and
net profit attributable to shareholders of RM5.6 million. This resulted in earnings per share of 1.17 sen for the FYE 2018.
On behalf of the Board of Directors and management, we hereby present to you the Company’s Annual Report and Audited
Financial Statements for the FYE 2018.
RECENT DEVELOPMENTS
At the Extraordinary General Meeting held on 25 June 2018, Grand-Flo obtained its shareholders’ approval for:-
And, Grand-Flo had further announced on 6 July 2018, that the acquisition was duly completed and ISB from then is a
wholly-owned subsidiary of Grand-Flo.
The inclusion of construction business and construction related activities will be beneficial for the Group in the long term
as we will be able to offer full-range of services in property development and construction. Grandcon currently holds
a Construction Industry Development Board (“CIDB”) Grade 7 License which enables Grandcon to perform building
construction, civil engineering construction and mechanical and electrical projects of any contract value in Malaysia.
09
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Financial Performance
The consolidated revenue of Grand-Flo for the FYE 2018 of RM82.1 million were lower by RM22.0 million or 21.1%
compared to RM104.1 million for the previous financial year ended 2017 (“FYE 2017”). The decrease in the Group’s revenue
was mainly due to lower sales in the Property Development division. Of the total consolidated revenue of RM82.1 million,
EDCCS division contributed 88.1% while Property Development division 11.9%.
Despite being a relatively challenging and slow year, Grand-Flo recorded consolidated profit after taxation of RM5.4 million
for the FYE 2018, down by 62.5% from the loss after taxation of RM14.5 million in the FYE 2017.
• Net revenue for the EDCCS division was RM72.3 million in the FYE 2018, a decrease of RM1.6 million, or 2.1%,
compared to RM73.9 million for the FYE 2017. The decrease was contributed by the overseas operations. Profit
after taxation were RM5.4 million in the FYE 2018, compared to RM11.7 million for the FYE 2017.
Included in the FYE 2018 profit after taxation was a fair value gain from revaluing an amount owing to a director arose
from a conditional share acquisition agreement entered with a director, amounting to RM1.0 million. Comparatively,
included in the FYE 2017 profit after taxation were :-
(i) gain on disposal of associated company in Thailand, Simat Technologies Public Company Limited of RM12.3
million; and
(ii) loss on disposal of Grand-Flo’s Penang labels production business, Kopacklabels (PG) Sdn. Bhd., of RM0.5
million and the goodwill impairment associated with its disposal of RM0.7 million.
Had the one-off items been excluded, the FYE 2018 profit after taxation would have been RM4.4 million as compared
to RM0.6 million for the FYE 2017.
• In the Property Development division, net sales were RM9.8 million in the FYE 2018, a decrease of RM20.4 million
or 67.6%, compared to RM30.2 million in the FYE 2017. The soft market condition for the property sector which had
impacted the top-line also caused the swing from profit after taxation of RM2.8 million in FYE 2017 to a small loss
after taxation of RM0.1 million for the FYE 2018.
Financial condition and liquidity of the Group remained healthy. Grand-Flo had always been cash flow focused in its
operations. The Group generated net cash flow of RM22.7 million from its operating activities as compared to RM4.1
million in the previous financial year due mainly to improved net working capital inflow. The cash used in investing activities
of RM13.0 million was primarily for redemption of preference shares from non-controlling interests and acquisition of
ownership interest of a subsidiary from non-controlling interest. And, net cash used in financing activities of RM15.2 million
was mainly attributed to the repayment of bank borrowings and advances of RM11.2 million and payment of FYE 2017
final single-tier dividend of RM2.8 million.
The management also made regular reviews on the inventory level, as well as turnover days for inventories, receivables
and payables.
EDCCS
The Malaysia region of the EDCCS segment recorded steady revenue of RM62.4 million in the FYE 2018 as compared to
RM62.0 million in the FYE 2017, mainly from the retail, government-linked companies and logistics industries. The overseas
operations, however, saw a decrease in revenue of approximately RM1.9 million. Overall, the EDCCS division achieved
a profit after taxation of RM4.4 million (net of one-off gain) for the FYE 2018, attributed mainly to the higher sales margin
from its sales mix.
The EDCCS research and development team continues its efforts for the provision of asset management solutions for the
future by making full use of its expertise, including the use of Radio-Frequency Identification (“RFID”) technology. Our 1st
completed RFID project was the latest version of the asset tracking system.
10
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
In FYE 2017, we had reported that we had successfully converted our proprietary solution, ManageSuiteTM, to be executable
across various operating systems. This year, the team had moved on to the development of ManageSales data management
system, which emphasises on amongst others, comprehensive security for data, data integrity and interactive queries.
Also, the team had completed the development of three smart applications on Android platform. We believe that this
breakthrough into Android will allow more flexibility and wider coverage at a lower cost for our customers.
Grand-Flo believes that it has to continuously explore the potentials of the EDCCS technology in order to continue serving
the demands of both existing and new clientele in manufacturing, retail and fast-moving consumer goods sectors, and to
reiterate Grand-Flo’s reputation as a full-service and integrated tracking solutions player in this market.
Property Development
The soft market condition for property sector continues to haunt the Group’s Property Development division. The weak
revenue and results in the FYE 2018 was due to low new sales. The continued strategic marketing and advertising, including
participation in various roadshows, easy ownership scheme, various promotions, and engagement in social media, did
not give us the awaited results. In view of the overall economic condition in Malaysia, the Group did not venture into new
development projects during the financial year under review.
With the view that property sector will recover soon, in the meantime, Grand-Flo is looking into possibility of joint development
for affordable homes with land owners at strategic locations. The Group also hopes that the diversification into construction
business, which is complementary to the existing Property Development division, will be an additional revenue stream to
enhance its earning base in the near future.
‘The Glades’
Capital Expenditure
Grand-Flo had invested substantially in solution development by EDCCS division in the early stages of setup and currently
only needs to undergo regular technology refreshes to cater to customer requirements. And, the Property Development
division had been looking into prospective joint developments and/or acquisition of land.
For the FYE 2018, EDCCS incurred approximately RM1.1 million for solutions upgrade, maintenance and replacement
purposes whilst the property division was evaluating joint development and land acquisition proposals.
Gearing
Grand-Flo’s gearing ratio remained nil as at 31 December 2018, since the last financial year ended 31 December 2017. This
was achieved by settlement of term loans with the sale proceeds from disposals of associated company and subsidiary
during the FYE 2017.
Dividend
The Group has always recognised dividend pay-out as one of the important elements in enhancing its shareholder value
and in view of the FYE 2018 results, the Board of Directors is pleased to propose a final single tier dividend of 0.50 sen
per share. Grand-Flo believes in creating long-term shareholder value by paying regular dividends thereby preserving the
value of their shareholdings.
Business Risks
The Group identified the following anticipated or known risks that may have a material effect on our operations i.e. operational
and financial performance risks and liquidity risks. Analysis of other financial risks such as credit risk, liquidity risk, foreign
currency risk as well as interest rate risk are discussed in Note 46 to the financial statements.
Moving further into the digital era, we expect competition to increase and could erode our market position or pricing power.
With the rapid development of technologies, especially from the foreign players, our EDCCS division is also subject to
inherent risk of technological obsolescence. As such, we seek to minimise these risks by actively and continuously pursuing
technological advancements to keep abreast with the latest technology direction, adopting industry best practices and
forming strategic business alliance with key technology providers to address the increasingly sophisticated needs of our
customers.
Any adverse developments in economic and regulatory condition could materially affect our Group’s involvement in
the property development and construction industry. Budget 2019 introduced several measures that are expected to
dampen the property sector. Real Property Gains Tax (“RPGT”) rates increased by 5% with effect from 1 January 2019,
for companies, Malaysian individuals and foreigners disposing of real properties held for more than five years. And, stamp
duties for property transfers valued more than RM1 million will be increased from 3% to 4%. The Group seeks to limit the
impact by monitoring and adapting business strategies in response to the change.
Forward Statement
Grand-Flo remains committed to driving shareholder’s value with revenue growth, operating leverage, cash flow generation,
and efficient capital deployment. We strive to optimise our capital structure to enable prioritised investments in the business
and land acquisitions as a source of generating solid future operating cash flows.
Moving into 2019, EDCCS business being well-equipped with its technological advancement, would be well-positioned
to compete in both the core markets and adjacent growth areas. Not only do we have a broad spectrum of products and
services portfolio, we also explore change requests with our customers which will benefit both parties, where our customers
gets their request done and we get to enhance our products with that same feature.
12
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
A recent market research by MarketsandMarkets™ reveals that Asia Pacific region is expected to be the fastest-growing
market for RFID and barcode printers during the forecast period of 2017-2022. Transition toward organised retailing and
smart manufacturing are some of the factors expected to drive the growth of the RFID and barcode printer market, and
our EDCCS division is already ready to capture this new segment.
On the property front, Grand-Flo remains optimistic that the division will achieve better results in 2019 despite outlook that
property market is unlikely to see a broad spectrum recovery. We believe that during slow market, we have to highlight the
unique features in our projects as compared to others, so that our products are more attractive and remain competitive.
The stamp duty exemption on instrument of transfer for a first-time house buyer purchasing a house priced between
RM300,001 and RM1 million for six months period ending 30 June 2019 would be an additional boost to our marketing
strategy for ‘The Glades’. The Glades took this opportunity to launch a new show house in February 2019 which ended
with good response turnout and secured sales.
2019 OUTLOOK
The Ministry of Finance (“MoF”) has forecasted a growth rate of 4.9% for Malaysia in 2019, supported by sound domestic
demand. According to MoF’s report, the private sector expenditure is expected to remain as the key driver of the Malaysia’s
economic growth, cushioning the effect of lower public sector spending in 2018 and 2019. On the supply side, growth is
expected to be driven by the services and manufacturing sectors. The services sector is projected to remain firm supported
by consumption and domestic tourism activities, as well as strong demand for information and communications technology,
transport and finance. The MoF also projected that the manufacturing sector will record steady growth in tandem with
developments in the global semiconductor industry.
In 2019, MoF expects the construction sector to improve marginally following an increase in new planned supply in the
affordable homes and industrial segments.
Speaking to media during the CBRE | WTW 2019 Asia Pacific Real Estate Market Outlook Report, its managing director
expressed that the property and real estate market for Malaysia in 2019 will remain challenging across all property sectors.
Industrial properties, however, remain as a bright spot amidst the sluggish property outlook in 2019. Property overhang
amounted to about 30,000 units in 2018 with take up rates for unsold units of high-rise residential and high-end products
are extremely slow.
In light of the various market outlook, we at Grand-Flo, aim to capture the opportunities presented in the economy growth
expansion potentially in the services and manufacturing sectors to grow our EDCCS division and the supply of affordable
homes and industrial properties to grow our Property Development division.
CONCLUSION
We wish to thank all of our stakeholders, including our shareholders, Board of Directors, management, employees,
customers, suppliers, business associates, communities and regulators, for your unwavering support.
BOARD OF DIRECTORS
01 02 03
04 05 06
07 08 09
DIRECTORS’ PROFILE
Tan Sri Azlan Bin Mohd Zainol, a Tan Bak Hong, a Malaysian, male, aged Electronic System Sdn. Bhd. was
Malaysian, male, aged 69, is the 56, is the Group Managing Director/ incorporated in 1996 as he believed that
Independent Non-Executive Chairman Group President of the Company the business should move forward and
of the Company and was appointed to and was appointed to the Board on 1 develop its own in-house proprietary
the Board on 8 September 2017. December 2003. He graduated with a solutions to offer complete Auto-ID
Bachelor in Engineering (Mechanical) system solutions to further enhance its
Tan Sri Azlan is a Fellow of the Institute from University of Malaya in 1988 services and earnings base.
of Chartered Accountants in England and possesses more than 30 years of
and Wales, a Fellow Chartered Banker experience in the field of automation He is the key person responsible for the
of the Asian Institute of Chartered and tracking solutions business. strategic planning, development and
Bankers, a member of Malaysian overall management of the Company
Institute of Accountants and a member Upon graduation, he started his career and its subsidiaries (“the Group”).
of the Malaysian Institute of Certified as a Sales and Application Engineer Under his leadership, the Group
Public Accountants. with an engineering firm where he had achieved several milestones
was mainly involved in the sales of including its expansion into Thailand,
Tan Sri Azlan was previously the Chief system design and responsible for Vietnam, Hong Kong and China. He
Executive Officer of the Employees the installation and commissioning was key in steering the Group in its
Provident Fund Board until his of industrial automation projects. expansion plans through organic
retirement in April 2013. Tan Sri Azlan In 1989, he founded Grand-Flo growth, mergers and acquisitions
has more than 30 years of experience Engineering Sdn. Bhd. (“GFE”), and recently, inclusion of property
in the financial sector, having served which was principally involved in fluid development into the Group.
as the Managing Director of AmBank power and motion control business
Berhad and prior to that, as the and distribution of hydraulic and Mr. Tan currently sits on the board of
Managing Director of AmFinance pneumatic industrial products. several private limited companies and
Berhad. he is a committee member of Digital
During this period, he envisioned the Economy of Associated Chinese
Tan Sri Azlan’s other directorships in promising potential for the automated Chamber of Commerce & Industry
public companies include RHB Bank identification system (“Auto-ID”) Malaysia.
Berhad (Chairman), RHB Investment solutions business in Malaysia as most
Bank Berhad (Chairman), Malaysian business processes in Malaysia were
Resources Corporation Berhad then, heavily dependent upon manual
(Chairman), Eco World International data collection which was laborious
Berhad (Chairman), Kuala Lumpur and error prone. Hence, in 1994, with
Kepong Berhad, RHB Capital Berhad good business foresight and business
(in Member’s Voluntary Liquidation) and knowledge, he founded the Auto-ID
Rashid Hussain Berhad (in Member’s business together with Mr. Tan Bak
Voluntary Liquidation). Tan Sri Azlan Leng and the management of GFE as
is also the Chairman of Financial part of the expansion of product line
Reporting Foundation, Chairman/ in GFE. In view of the rapid expansion
Trustee of Yayasan Astro Kasih and a of the Auto-ID business, Grand-Flo
Trustee of OSK Foundation.
15
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Chuah Chew Hai, a Malaysian, male, Cheng Ping Liong, a Malaysian, male, Tan Chuan Hock, a Malaysian, male,
aged 56, is an Executive Director of aged 54, is an Executive Director of aged 58, is a Non-Independent Non-
the Company and was appointed to the Company and was appointed to Executive Director and was appointed
the Board on 25 May 2015. He has the Board on 29 September 2006. to the Board on 2 October 2004. He
more than 30 years of experience He graduated with a Bachelor of is the member of the Remuneration
in the construction and property Business Administration in Finance Committee, Audit Committee and
development industry. Together from University of Iowa, United Nomination Committee.
with his spouse, Ms. Chong Poh States of America in 1988. His first
Yoong, they founded Metrio group employment was with RES Malaysia He is the Executive Proprietor and
of companies (“Metrio Group”) in Sdn. Bhd. where he held the position also the Founder of William C.H.
October 2002, which are principally of Trainee Programmer from 1989 to Tan & Associates, a Chartered
involved in property development. 1990. In 1990, he was promoted to the Accountants firm. He is a member of
position of an Analyst Programmer and Malaysian Institute of Accountants,
Prior to Metrio Group, he was with this was followed by his ascension to Malaysian Institute of Taxation and is
ABT Construction Sdn. Bhd. from the position of System Analyst in 1991. a Fellow Member of the Association
1986 to 1988 as a quantity surveyor. During the years 1992 to 1995, he took of Chartered Certified Accountants.
He joined Wah Bee Construction on the role of a Technical Manager He has more than 30 years of
Engineering Sdn. Bhd. in 1989 as a in RES Malaysia Sdn. Bhd.. It was experience particularly in financial
quantity surveyor. in 1995 when he, together with En. reporting, auditing, taxation and
Othman bin Bakri jointly incorporated planning, company secretarial as
From 1991 to 1992, he was a Grand-Flo Spritvest Sdn. Bhd.. He well as corporate management and
Construction Manager in Oriental spearheads Grand-Flo Spritvest Sdn. advisory services.
Max Sdn. Bhd.. He then joined Panther Bhd.’s Research & Development
Construction from 1993 to 2002 as a initiatives and plays a pivotal role in He holds directorships in several
partner where he was responsible for the conceptualisation of the enterprise l i m i t e d c o m p a n i e s . P re s e n t l y,
managing its operations and oversaw data capture solution, namely Direct his directorships in other public
the tendering of projects, resource Store Delivery. He is actively involved companies includes Careplus Group
planning and costing. in the formation of strategic alliances Berhad, EITA Resources Berhad and
with business and technology partners LKL International Berhad.
His extensive experience and for the company as well as formulating
knowledge in construction and the company’s business strategies.
development industry has driven In August 2007, Mr. Cheng was
Metrio Group to become a leading appointed the Chief Executive Officer
property developer in the northern of the integrated company between
region of Peninsular Malaysia. Grand-Flo Electronic System Sdn.
Bhd. and Grand-Flo Spritvest Sdn.
Mr. Chuah is the Head of Property Bhd.. He is also a Director of several
Development Division of Grand-Flo private limited companies.
Group. He is also a Director of several
private limited companies.
16
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Cheong Kee Yoong, a Malaysian, Yu Chee Sing, a Malaysian, male, aged Lee Eng Eow, a Malaysian, male,
male, aged 51, is an Independent Non- 56, is an Independent Non-Executive aged 45, is an Independent Non-
Executive Director of the Company. Director of the Company and was Executive Director of the Company
He was appointed to the Board on appointed to the Board on 2 October and was appointed to the Board
30 June 2008 and subsequently 2004. He is a member of the Audit on 15 November 2017. Mr. Lee is
appointed as Senior Independent Committee, Nomination Committee the Chairman of the Remuneration
Director of the Company on 24 April and Remuneration Committee of the Committee and a member of the
2014. Currently he is the Chairman of Company. He obtained a Bachelor Audit Committee of Grand-Flo. He
both Audit Committee and Nomination Degree in Civil Engineering from graduated from Deakin University,
Committee. He is also the Chief University of Malaya in 1988, and has Melbourne, Australia with a Bachelor
Financial Officer of Southern Acids (M) more than 29 years of experience in of Commerce in 1996 and he is a
Berhad, a company listed on the Main the construction and development Fellow CPA of Australia, a member of
Market of Bursa Malaysia Securities industry. Upon graduation, he started Malaysian Institute of Accountants,
Berhad. his career as an Engineer in Design Member of Chartered Accountant of
Deco Sdn. Bhd.. Subsequently, he Institute of Commercial and Industrial
A graduate of the Association of joined Syarikat Murni Utara Sdn. Accountants Malaysia and ASEAN
Chartered Certified Accountants Bhd. as a Project Manager in 1992. Chartered Professional Accountants.
and a member of Malaysian Institute He left the company in 1995 and He has more than 20 years of
of Accountants, he has more than joined Lintasan Baru Sdn. Bhd. as a experience in internal and external
20 years of working experience Project Coordinator. In 2001, he joined audits, tax planning and advisory
particularly in corporate planning, Dimensi Baru Sdn. Bhd. as a Project services.
fund raising, treasury management, Director and had since accomplished
investors relation activities, tax many construction and development He commenced his career in 1997
planning, financial management and projects. as a graduate assistant within the
risk management in various industries assurance division of Deloitte Malaysia
and mainly attached to the corporate In 2007, he expanded his forte for more than 14 years. He has also
office of public listed companies. i n p ro p e r t y d e v e l o p m e n t a n d worked for mid-tier audit firms as an
construction through his appointment audit principal in Singapore, Kuala
as Director of Delta Elegance Sdn. Lumpur, Seberang Jaya and Penang
Bhd., a property development for a period of more than 5 years
company and was instrumental in before setting up his own consultancy
the development of a housing estate firm.
located in Kuala Lumpur.
He is the founder and also a Director of
He is also a Director of several private RI Tax Consultancy Sdn. Bhd..
limited companies.
17
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Ong Soo Heng, a Malaysian, male, Tan Bak Leng, a Malaysian, male, Yap Li Li, a Malaysian, female, aged
aged 49, is our Development Manager aged 54, is our General Manager who 52, formerly an Executive Director
who oversees property management oversees our business operations in of the Company and was appointed
including the coordination and the northern region of West Malaysia. as Director, Corporate on 1 January
monitoring of the progress of the He obtained a Diploma in Electronics 2018. She served as Vice President,
property development activities from Engineering from the French Singapore Operations in Grand-Flo Electronic
the planning stage up to hand-over. Institute in 1988. Prior to venturing System Sdn. Bhd. and later on,
Mr. Ong obtained his Bachelor Degree into sales profession in 1991, he Grand-Flo Berhad from 1 April 1996.
in Civil Engineering in 1996 from was attached to an electronics She obtained a Bachelor of Arts
Universiti Teknologi Malaysia and hardware company, which was (Economics) Degree from University of
Master in Business Administration involved in providing audio electronics Malaya in 1990. Upon graduation, she
from Universiti Utara Malaysia in 2010. and computer monitors. He was joined a distribution company in charge
responsible for project coordination of marketing operations and later,
He has 23 years of experience in the between the production and Research moved on to join a well-established
property industry. He started his career & Development before the production insurance company primarily for the
as a Project Engineer with Sunissa Sdn. roll out of any new products. In 1991, role of agency development and
Bhd., responsible for designing and he joined DCP Malaysia Sdn. Bhd. and management which encompassed
building operations, later as a Project was mainly responsible for the sales sales achievements for her team.
Manager with Aroma Development development of the Auto-ID products
Sdn. Bhd. where he is responsible to in the northern region of Malaysia. In 1996, she joined Grand-Flo
liaise with authorities and consultants Engineering Supply & Service Sdn.
and project management. Prior to In 1996, he co-founded the integrated Bhd. (now known as Grand-Flo
joining Innoceria Sdn. Bhd. in 2014, Enterprise Data Collection and Engineering Sdn. Bhd.) primarily
Mr. Ong was a Development Manager Collation System (“EDCCS”) solutions to streamline the operations of the
attached to Metrio Development Sdn. business together with Mr. Tan Bak hydraulic engineering business and
Bhd.. He is well versed in all aspects Hong in Grand-Flo Electronic System also, to prepare the Group for further
of property development including Sdn. Bhd.. Subsequently, he assisted expansion into Auto-ID system as a
procurement of land, authorities’ our Group in developing and launching new business division. Since then,
approval, planning, construction and our first customised in-house EDCCS she had been actively involved in
development. solution “Asset Tracking System” in the growth and rapid expansion of
2001. He was previously our Executive the Auto-ID business division. She
Director before he resigned from our was later appointed as a Director
Board on 16 June 2011. However, and later, attached to the corporate
he is still responsible for overseeing office of the Group. She had been
the day-to-day business operations instrumental in the Group’s strategic
in our Penang branch. He leads expansion and development plans
and manages a group of sales and including its mergers and acquisitions
technical personnel to provide the exercises. She possesses more than
professional support and services to 19 years of experience in the roles
the end-users in the region. of management, corporate planning
and business expansion. Madam Yap
He is the sibling of Mr. Tan Bak Hong. currently sits on the board of several
private limited companies.
Ong Liang Chai, a Malaysian, male, Liu Si Ca, a Hong Kong resident, male, Au Sheau Yen, a Malaysian, male, aged
aged 61, is the Head of Division, aged 55, is our General Manager who 55, is our Chief Financial Controller. He
Professional Services. He oversees oversees our business operations in completed his undergraduate school
the three key functions in Grand-Flo Hong Kong and the People’s Republic majoring in accounting from the
Spritvest Sdn. Bhd.; namely Solutions, of China. He graduated with a degree University of Montevallo, Alabama,
Helpdesk Support and Technical from Seneca College of Applied Arts USA in 1987 with a Bachelor of
Support. He firmly believes in first and Technology in Toronto Canada Business Administration. He has more
doing the right things before doing the with a focus on Computer Engineering than 10 years of audit experience
things right. In doing the right things, in 1989. He has extensive experience including audit of MNCs since
he is bent on getting an insight into in the Information Technology and graduation before moving on to
the problem and finding its root cause Auto-ID industry. the Fast-Moving Consumer Goods
before devising a solution that will fix industry where he was involved in
the problem indefinitely. The solutions Prior to joining Grand-Flo (HK) Limited, corporate exercises. He subsequently
are invariably characterised as being he was Systems Consultant attached joined Grand-Flo Spritvest Sdn. Bhd. in
practical, efficient, reliable and to Intermec Technologies Corporation, 2005 as its Financial Controller. Grand-
maintainable. He was instrumental in USA, a manufacturer of bar coding Flo Spritvest Sdn. Bhd. however was
overcoming many challenges of using equipment. With the same company, acquired by Grand-Flo Berhad in
the RFID technology in production he advanced to Senior Systems 2006 hence he was overseeing the
tracking for the automotive assembly Consultant and was posted to HK to accounting and reporting functions
industry. His present position as support the Asian region. of our Group. He is currently the Chief
Division Head ensures that the Financial Controller of the Group.
company, Grand-Flo Spritvest Sdn. In 2001, he joined Grand-Flo (HK)
Bhd. delivers excellent solutions Limited which is principally involved in
coupled with continuous services and the provision of supply chain solutions
support to give the customer peace of and other related computer services in
mind in their investments in systems Hong Kong and the People’s Republic
and technology. of China. With his extensive experience
in Auto-ID systems, he led the Grand-
He has more than 36 years of Flo (HK) Limited in the provision of
experience with good exposure across data tracking hardware and integration
multiple industries. He obtained the software into a comprehensive suite of
Master of Science in Technology supply chain solutions and services
Management from Staffordshire that cater to the manufacturing,
University, United Kingdom in 2005. In warehousing, transportation and retail
2012, he became a Certified Coaching sectors.
& Mentoring Professional and started
the performance-enhancing culture
in Grand-Flo Spritvest Sdn. Bhd..
He continues to coach several key
personnel in the organisation to bring
out the best in them and mentors
them to produce accelerated results
and growth.
Notes:
1. None of the Senior Management Team except Mr. Tan Bak Leng and Madam
Yap Li Li, have any family relationships with any Directors and/or major
shareholders of the Company.
2. None of the Senior Management Team have any conflict of interest with the
Company.
3. None of the Senior Management Team have been convicted of any offences
within the past five (5) years or been imposed any public sanction or penalty
by relevant regulatory bodies during the financial year ended 31 December
2018.
20
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
SUSTAINABILITY STATEMENT
Grand-Flo Berhad (“Grand-Flo” or “the Group”) recognises that the stability and growth of our business is interconnected
with the sustainability of the economies, the natural environment, workplace and the communities in which we operate
and vice versa. Guided by our core values, we are committed to being responsible and making a positive contribution to
society and the environment we operate in.
This Sustainability Statement covers the financial year from 1 January 2018 to 31 December 2018 (“FYE 2018”) in this
Annual Report. This statement focuses on the Group’s material sustainability risks and opportunities, and is prepared in
accordance with Part III, Practice Note 9 of Main Market Listing Requirements (“Listing Requirements”) of Bursa Malaysia
Securities Berhad (“Bursa Securities”) on Sustainability Statement.
The Group strives to balance commercial focus with sustainability factors. To this end, the Group is committed to continuously
engage its stakeholders and report on the efforts to address the issues that matter to them.
OUR VISION
OUR MISSION
1. To be the partner of choice and trusted adviser in Enterprise Data Collection and Collation System (“EDCCS”).
2. To create quality developments for residential, commercial and industrial purposes for the betterment of the communities
and businesses.
Team Cooperation Teamwork is the collective talents of many individuals performing together in
harmony to achieve a common purpose. Teamwork divides the tasks but multiplies
the success.
Customer Satisfaction To provide quality products and services at competitive prices to our customers
at all times.
Reliability We can be relied upon to continuously improve, expand and seek new business
opportunities.
Positive Attitude We must motivate ourselves and our people to realise our vision by applying our
core values and achieving our mission.
Loyalty Securing capital, enhance strategic partnership and nurture our human capital.
21
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
GOVERNANCE STRUCTURE
Grand-Flo does not have a specific Sustainability Committee at the Board of Directors (“Board”) level. The Group Managing
Director/ Group President (“GMD/GP”) plays the role of the Chief Sustainability Officer, reporting directly to the Board on
any sustainability matters from time to time. The Board sets the strategy and oversees the integration of sustainability
initiatives across the Group. The Executive Directors and Senior Management Team then identify, evaluate, monitor and
manage the implementation of the corporation’s sustainability approach, and track the progress, as part of the overall
management’s operational task.
Grand-Flo is still evaluating the sustainability governance structure below. Board and Senior Management Team wants to
ensure participation of key staff and identified stakeholders, in order to embrace the vision of sustainability in its entirety.
The Sustainability Working Committee’s duties would include collating information, collecting feedback from stakeholders,
driving initiatives and addressing issues.
This report focuses on 2 major key operating operations, i.e. EDCCS and Property Development in Malaysia. Emphasis is
placed on these operations as they contribute 88% to the Group’s revenue for FYE 2018. Other overseas operations do
not have significant impact to the Group’s operations in terms of economic, environmental and social elements.
REPORTING PERIOD
This report covers the period from 1 January 2018 to 31 December 2018. There are no significant restatements of data
compared to prior years.
IDENTIFICATION OF STAKEHOLDERS
Although we have not conducted a specific exercise to identify and prioritise our stakeholders in a structured manner,
Grand-Flo had so far identified the following stakeholders in the course of our business operations. We believed that
as we moved further along our sustainability journey, more stakeholders would be identified in order to obtain a more
comprehensive and constructive feedback on sustainability matters through stakeholders’ engagement. Our sustainability
approach takes into consideration the impact of our activities to stakeholders and their concerns.
22
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Frequency of
Stakeholders Engagement Channel Engagement Stakeholders’ Concerns
Grand-Flo had reviewed various sources from which relevant sustainability issues can be identified, which includes
management reports, internal analysis and stakeholder feedbacks. From the reviews, Grand-Flo had identified the following
material sustainability matters, which corresponds to the economic, environmental and social elements as follows:
We are still in the process of improving our materiality assessment to include a materiality matrix. The materiality matrix
will show the priority of each sustainability matter with respect to their relative importance to our business operations and
stakeholder groups.
23
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Financial sustainability
Grand-Flo strives to build long term value for our stakeholders by maintaining stable business environment, consistent
financial performance and prudent cashflow management. Market environment continued to be challenging, especially for
the Property Development division. Group revenue had dropped further in the FYE 2018, as compared to the financial year
ended 31 December 2017 (“FYE 2017”) and 31 December 2016 (“FYE 2016”). However, the Group managed to maintain
profitable in FYE 2018 – attributed mainly to the lean operations of the EDCCS division.
Financial stability is the key focus of the Board. The GMD/GP, Division Heads including Finance team form the steering
team to ensure the Group sets reasonable forecasts and achieves its financial goals. The steering team had scrutinised
the sales performance and forecasts every quarter to ensure that necessary actions are carried out on a timely manner.
For more insight on the financial performance of the Group, please refer to the Management Discussion and Analysis and
Financial Highlights.
Acknowledging the importance of good business ethics and corporate governance with the objective of upholding
transparency, accountability and integrity, Grand-Flo applies and complies with the principles in corporate governance as
set out in the Malaysian Code on Corporate Governance 2017 pursuant to the Listing Requirements of the Bursa Securities.
In the EDCCS division, we established ourselves as a market leader locally with proven track records and with the support
of our product business partners and many loyal customers, we are certain to maintain this status. This is certainly true
as we have the responsibility to ensure strict and continuous compliance to our business partners’ stringent and high
international standards of world renowned brands in EDCCS. In FYE 2018, the EDCCS division had secured 120 new
customers which had contributed to 6.4% of the EDCCS division revenue.
Customer satisfaction and feedback were also identified among the important
material sustainability matters across all divisions. Knowing what customers expect
from us makes it easier for us to strengthen and market our products and services,
and hence strengthen our reputation in the long term.
For our Property Development division, we continued to participate in various roadshows at Tesco Alma, Aeon Alma and
Queensbay Mall. Although we have not conducted any formal customer satisfaction surveys, our marketing team had
always welcomed feedbacks which would provide us with insights into customer expectations that enabled us to develop
and deliver better products and services.
In FYE 2018, our Property Development division had also launched easy ownership schemes with the hope to assist keen
buyers to own our property at attractive price rebates.
24
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
We make it a priority to ensure compliance and strict adherence to environmental requirements and authorities guidelines,
especially in all our development sites. In line with our efforts to comply with the regulatory requirements, we practice
close engagement with relevant authorities and our contractors to ensure clear mutual understanding of the requirements.
In line with the regulations governing scheduled waste, we store scheduled waste at a designated place and only a
scheduled waste handler licensed by Department of Environment is allowed to handle the transportation and disposal
of the scheduled waste. We have yet to put in place any means to measure the total weight of both scheduled and non-
scheduled waste generated by Property Development division, but we are in the process of exploring available approaches
with our contractors.
Usage of aluminium form work, in replacement of the conventional timber form work would reduce the carbon foot print.
Environment-friendly
Grand-Flo is committed to operate its business in a responsible and environmentally friendly manner. Reducing, reusing
and recycling papers, switching off lights and air-conditioners when they are not in use and usage of energy efficient bulbs
are among some of the conservation measures taken by the Group.
It is our Group’s policy to practice zero burning throughout the development projects. This will save the environment from
pollution.
“We must motivate ourselves and our people to realise our vision by applying our core values and work towards our mission.”
– This has been part of our workplace charter, as we recognised our employees as strength and valuable assets of the
Group. Grand-Flo continues to maintain a positive workplace culture where our employees are able to perform at their best
to deliver sustained high performance. We encourage two-way communication between employees and their superiors
to ensure share of thoughts and also work grievances, in order to improve work processes and working environment.
Although trainings, both technical and soft skills, are still based on individual needs, the management reckons that a yearly
structured training calendar would be important to address the training and development needs for all levels of staff, in
order to develop the talent pool for progression and succession planning for business continuity for the years to come.
The Group is committed to ensure matter of importance to the welfare of the employees are taken care of. Some of our
employee welfare, including medical allowances, hospitalisation and life insurance, travelling and transport allowances,
parental leaves, are reviewed annually to ensure that the benefits schemes meet employees’ needs. The Sports Club
organises various activities for the employees to promote work-life balance and social communication among colleagues.
It is an annual agenda at our Annual Dinner to acknowledge and present long service awards to staff who has shown their
loyalty, dedication and contribution over the years. In FYE 2018, 2 employees received the 20 years’ service award, while
9 others received the 10 years’ service award.
The number and rate of employee turnover are always monitored and discussed in our management meetings.
25
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
s
> 10 years s
> 10 years
< 3 years < 3 years
27% 30%
31% 31%
s
6-10 years 3-5 years s
6-10 years 3-5 years
%
25% 17
17% %
22% 17
17%
Our initiative to practice sustainability extends beyond the boundaries of the Company through contribution and support
to the local communities, especially in education. In 2018, our contribution includes:
• Donation to Vaidurya Buddhist Lodge to help the poor and under privileged students
• Donation to Tzu Chi for helping the needy
The Board of Directors (“Board”) of Grand-Flo Berhad (“Grand-Flo” or “Company”) acknowledges the importance
of establishing and maintaining good corporate governance within the Company and its subsidiaries (“Group”)
and is committed to ensure the principles and recommendations of the Malaysian Code of Corporate Governance
2017 (“MCCG”) and the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa
Securities”) are practiced.
The Corporate Governance Overview Statement augmented with a Corporate Governance Report (“CG Report”),
based on a prescribed format as enumerated in Paragraph 15.25(2) of the MMLR so as to provide a detailed
articulation on the application of the Group’s corporate governance practices vis-à-vis the MCCG throughout the
financial year ended 31 December 2018 (“FYE 2018”). The CG Report is available at the Group’s website at www.
grand-flo.com, as well as via an announcement on the website of Bursa Securities.
The Board leads and has effective controls over the Group whereby collective decision and/or close monitoring
are conducted on issues relating to strategy, performance, resources, standards of conduct and financial
matters.
The Board directs the Group’s risk assessment, strategic planning, succession planning and financial and
operational management to ensure that obligations to shareholders and other stakeholders are understood
and met. The Board provides the leadership necessary to enable the Group’s business objectives to be met
within the framework of risk management and internal controls as described in this Statement.
The Group is led and managed by effective and experienced Board comprising members with a wide range
of experience and qualifications.
In order to ensure the effective discharge of its fiduciary duties and execution of specific responsibilities, the
Board has established Board Committees as follows to assist the Board in the running of the Group:-
a. Audit Committee;
b. Nomination Committee; and
c. Remuneration Committee
Each Committee operates in accordance with clearly defined Terms of Reference. These Committees are
authorised by the Board to deal with and to deliberate on matters delegated to them within their respective
Terms of Reference and report to the Board on their proceedings and deliberation together with its
recommendations to the Board for approval.
1.2 Chairman
The Chairman holds a Non-Executive position and is primarily responsible for matters pertaining to the Board
and the overall conduct of the Group. The Chairman is committed to good corporate governance practices
and has been leading the Board towards high performing culture.
27
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The Chairman of the Board is primarily responsible for the leadership, effectiveness, conduct and governance
of the Board while the GMD/GP has overall responsibility for the day-to-day management of the business
and implementation of the Board’s policies and decisions.
The Board is supported by a suitably qualified and competent Company Secretary. The Company Secretary
is a member of the Malaysian Association of Company Secretaries and is holding a professional certificate as
qualified Company Secretary under the Malaysian Companies Act 2016. The Company Secretary possesses
over 25 years of experience in corporate secretarial practices and is supported by a team of competent
company secretarial personnel.
The Company Secretary had and will continue to keep herself abreast on matters concerning company law,
corporate governance, and other pertinent matters, and with changes in the same regulatory environment,
through continuous training and industry updates.
Overall, the Board is satisfied with the performance and support rendered by the Company Secretary to the
Board in the discharge of her duties and functions.
From time to time, whenever the Board requires relevant information updates from any members of the
Management team, the relevant member of the Management team is invited to attend Board meetings to
furnish explanation and comments on the relevant agenda item(s) tabled at the Board meetings or to provide
clarification on issues that may be raised by the Board or any Director.
28
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The notices and board papers of meetings are prepared and circulated to the Directors and/or Board
Committees at least five (5) working days prior to the scheduled Board meetings. This is to ensure that the
Directors have sufficient preparation time and information to make an informed decision at each meeting.
The Company Secretary attends all the Board and Board Committees’ meetings and ensures the deliberations
and decision of matters discussed at the Board and Board Committees’ meeting are duly recorded and well
documented in the minutes of meetings and maintained accordingly at the registered office of the Company,
and produced for inspection, if required.
The Board and the Board Committees receive timely and up-to-date information and the Company Secretary
ensures a balanced flow of information is disseminated for decisions to be made on an informed basis and
for the effective discharge of the Board’s responsibilities, such as regularly updates and advices on new
regulations, guidelines or directives issued by Bursa Securities, Securities Commission of Malaysia and any
other relevant regulatory authorities.
The Directors, collectively or individually, may seek independent professional advice and information in the
furtherance of their duties at the Company’s expenses, if so required.
The Company has formalised and adopted a Board Charter which sets out the functions, authority, roles and
responsibilities of the Board as well as the various internal processes and principles governing the Board.
The Board Charter also serves as a source of reference and primary induction literature, providing insights
to new Board members.
The Board Charter would be periodically reviewed and updated in accordance with the needs of the Company
and any new regulations that may have an impact on the discharge of the Board’s responsibilities. The Board
Charter is available at the Company’s website at www.grand-flo.com.
The Group is committed to achieving and monitoring high standards of behaviour at work. The Board adhered
strictly to the Code of Ethics and Conduct for the Directors in discharging its oversight role effectively. The
Code of Ethics and Conduct requires all Directors to observe high ethical business standards, and to apply
these values to all aspects of the Group’s business and professional practice and to act in a good faith in the
best interests of the Group and its shareholders.
The Code of Ethics and Conduct is available at the Company’s website at www.grand-flo.com.
The Board has put in place a Whistle Blowing Policy that fosters an environment in which integrity and ethical
behaviour are maintained through protocols which allow for the exposure of any violations or improper conduct
or wrongdoing within the Group.
The Whistle Blowing Policy provides an avenue for employees to report any misconduct, breach or suspected
breach of any law or regulation, including business principles and the Group’s policies and guidelines, in a
safe and confidential manner.
Currently, the Board has nine (9) members as set out in the table below, which comprises a majority of
Independent Directors of the Board. This is in compliance with the Paragraph 15.02 of the MMLR, which
stipulates that the Company must ensure that at least two (2) Directors or 1/3 of the Board, whichever is the
higher, are Independent Directors and the Practice 4.1 of the MCCG, as follows:-
Name Designation
1. Tan Sri Azlan Bin Mohd Zainol Independent Non-Executive Chairman
2. Tan Bak Hong Group Managing Director/Group President
3. Chuah Chew Hai Executive Director
4. Cheng Ping Liong Executive Director
5. Tan Chuan Hock Non-Independent Non-Executive Director
6. Cheong Kee Yoong Senior Independent Non-Executive Director
7. Yu Chee Sing Independent Non-Executive Director
8. Lee Eng Eow Independent Non-Executive Director
9. Joyce Wong Ai May Independent Non-Executive Director
The Board members have diverse backgrounds and experiences in various fields. Collectively, they bring a
broad range of skills, experience and knowledge to manage the Group’s business.
The Board believes that the Independent Directors’ continued contribution, especially their invaluable
knowledge of the Group and its operations gained through the years, will provide stability and benefits to the
Board and the Company as a whole. The caliber, qualification, experience and personal qualities, and more
importantly, the Director’s integrity and objectivity in discharging their responsibilities in the best interest of
the Company, predominantly determines the ability of the Director to serve effectively as an Independent
Director.
Nevertheless, in line with Recommendation 3.3 of the MCCG as well as taking cognisance of Practice 4.2
of MCCG, the Board will seek the approval of the shareholders of the Company at the forthcoming Annual
General Meeting (“AGM”) to support the Board’s decision to retain them as Independent Directors based on
the following justifications, save for Mr. Yu Chee Sing who has served for more than twelve (12) years shall
seek approval via two-tier voting process:-
(a) They have fulfilled the criteria under the definition of Independent Director as stated in the MMLR and
will thus be able to function as a check and balance and bring an element of objectivity to the Board.
(b) Their vast experience in the finance and corporate industries will enhance the Board’s diverse set of
experience, expertise and independent judgement.
(c) They have been with the Company for more than nine years and has good knowledge of the Company’s
business operations.
30
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
(d) They have devoted sufficient time and attention to their professional obligations for informed and
balanced decision making.
(e) They have exercised due care during their tenure as Independent Non-Executive Directors of the
Company and carried out their professional duties in the best interest of the Company and its
shareholders.
The Company has not adopted a policy which limits the tenure of its Independent Directors to nine (9)
years. Notwithstanding that, the assessment of independence of Independent Non-Executive Directors was
conducted annually via Annual Evaluation of Independence of Director to ensure that they were independent
of management and free from any business or other relationship which could materially interfere with the
exercise of their independent judgement or the ability to act in the best interests of the Company.
The shareholders’ approval was obtained at the last AGM for the re-appointment of Mr. Cheong Kee Yoong
and Mr. Yu Chee Sing respectively. However, pursuant to Practice Note 4.2 of the MCCG, Mr. Yu Chee Sing
shall seek for annual shareholders’ approval for his re-appointment through a two-tier voting process.
Appointment to the Board are reviewed by the Nomination Committee (“NC”) and made via a formal,
rigorous and transparent process, premised on meritocracy and taking into account objective criteria such as
qualification, skills, experience, professionalism, integrity and diversity needed on the Board in the context of
the Group’s strategic direction. In the case of Independent Directors, the NC assesses the candidate’s ability
to bring the element of detached impartiality and objective judgement to the Board deliberation.
4.5 Gender Diversity
The Company has adopted a Gender Diversity Policy on 22 November 2018 which provides a framework for
the Company to improve its gender diversity at Board level.
The Board, with the assistance of the NC regularly assesses the optimum size, required mix of skills,
experience, independence and diversity required collectively for the Board to effectively fulfill its role. The
NC acknowledges the need for gender diversity for good governance practices and to enhance the efficient
functioning of the Board. The Board currently has one (1) female Board Member which is represented by Ms.
Joyce Wong Ai May, who was appointed to the Board on 22 December 2017.
The NC is comprised of three (3) members, majority of whom are Independent Non-Executive Directors
and they are responsible to make independent recommendations for new appointments to the Board. The
composition of the NC is as follows:-
Name Designation
1. Cheong Kee Yoong Chairman, Senior Independent Non-Executive Director
2. Tan Chuan Hock Member, Non-Independent Non-Executive Director
3. Yu Chee Sing Member, Independent Non-Executive Director
The NC is responsible for identifying and recommending suitable candidates for Board membership and
also assessing the performance of the individual Directors. The Board would have the final decision on the
appointment. This process is to ensure the Board membership are determined by the relevant skills, talents
and experience in order to support the strategic direction and needs of the Group.
31
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The activities undertaken by the NC during the FYE 2018 are as follows:-
• Evaluated the balance of skills, knowledge and experience of the Board. Carried out the assessment
and rating of each Director’s performances against the criteria as set out in the annual assessment
form. The performance of Non-Executive Directors was also carefully considered, including whether
he could devote sufficient time to the role.
• Undertaken an effectiveness evaluation exercise of the Board and its Committees as a whole with the
objective of assessing its effectiveness.
• Reviewed and recommended to the Board the re-election of Mr. Cheong Kee Yoong and Mr. Chuah
Chew Hai who retired pursuant to Clause 104 of the Company’s Constitution at the last AGM held on
25 June 2018.
• Reviewed and recommended to the Board the re-election of Tan Sri Azlan Bin Mohd Zainol, Mr. Lee Eng
Eow and Ms. Joyce Wong Ai May who retired pursuant to Clause 110 of the Company’s Constitution
at the last AGM held on 25 June 2018.
• Reviewed and assessed the independence of the Independent Directors of the Company.
• Reviewed and evaluated the independence of Independent Directors who have served the Board for
a cumulative term of more than nine (9) years pursuant to MCCG.
• Reviewed and considered the appointment of new Independent Directors to the Board.
In accordance with the Company’s Constitution, at least one-third (1/3) of the Directors are required to retire
from office by rotation annually and shall be eligible for re-election at each AGM. All Directors appointed by
the Board shall also be subject to re-election by the shareholders at the AGM following their appointment.
The Board has, through the NC, conducted annual evaluation to determine the effectiveness of the Board,
its Board Committees and each individual Director in the FYE 2018. The process was carried out by sending
the following customised assessment forms to Directors:-
The assessment criteria that based on the key performance indicators covers the financial performance
and business operations, strategic, operations management and business plans, product development,
conformance and compliance, stakeholders’ relation, succession planning, attendance, preparation and
contribution to the committee meetings.
The Board schedules at least four (4) meetings in a year with the Board of Directors’ and Committees’ meetings
scheduled well in advance to facilitate the Directors in planning ahead and to ensure that the dates of the
Board and Board Committees meetings are booked in their respective schedules. Additional meetings are
convened when urgent and important decisions need to be made between scheduled meetings.
32
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The attendance record of the Directors at Board and Board Committees’ meetings is set out as below:-
The Board has on a continuous basis, evaluate and assess the training needs of each Director to keep them
abreast with the state of economy, technological advances, regulatory updates, management strategies and
development in various aspects of the business environment to enhance the Board’s skills and knowledge
in discharging its responsibilities.
34
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The Board has in place a formal Remuneration Policy for Directors and Senior Management. The Remuneration
Policy establishes a formal and transparent procedure for developing a structure for the remuneration of
Directors and Senior Management of the Company with the objective of supporting and driving business
strategy and the long-term interests of the Company.
The remuneration is reviewed by the Remuneration Committee on an annual basis prior to making its
recommendations to the Board for approval. In its review, the RC considers various factors including the
Directors’ fiduciary duties, time commitments and expertise expected from them and the Company’s
performance.
Name Designation
1. Lee Eng Eow Chairman, Independent Non-Executive Director
2. Tan Chuan Hock Member, Non-Independent Non-Executive Director
3. Yu Chee Sing Member, Independent Non-Executive Director
The RC is principally responsible for the development and review of the remuneration packages of the GMD/
GP and Executive Directors including Board Members, where necessary, and subsequently furnishes their
recommendations to the Board for adoption. The RC plays an essential role in overseeing the quality of
the remuneration for Directors by ensuring the remuneration decisions remunerate the Directors fairly and
responsibly, and that it reflects the commitment of the Director concerned.
The RC also recommends the Directors’ fees and/or benefits payable to Non-Executive Directors, which are
deliberated and decided at the Board before it is presented at the AGM for shareholders’ approval.
35
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The details of the remuneration of the Directors of the Company received from the Company and the Group
during the FYE 2018 are as follows:-
The Company
Benefits Meeting
Fees Salaries in Kind Allowance Bonus Others Total
Name of Directors RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Tan Sri Azlan Bin Mohd Zainol 60 – – 1 – – 61
Tan Bak Hong – 441 – – 420 131 992
Chuah Chew Hai – – – – – – –
Cheng Ping Liong – – – – – – –
Tan Chuan Hock 60 – – 1 – – 61
Cheong Kee Yoong 48 – – 1 – – 49
Yu Chee Sing 42 – – 1 – – 43
Lee Eng Eow 42 – – 1 – – 43
Joyce Wong Ai May 43 – – 1 – – 44
Yap Li Li – 15 – – – 6 21
(Resigned on 31.01.2018)
TOTAL 295 456 – 6 420 137 1,314
The Group
Benefits Meeting
Fees Salaries in Kind Allowance Bonus Others Total
Name of Directors RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Tan Sri Azlan Bin Mohd Zainol 60 – – 1 – – 61
Tan Bak Hong – 561 – – 420 149 1,130
Chuah Chew Hai – 441 – – – 55 496
Cheng Ping Liong – 441 – – 400 171 1,012
Tan Chuan Hock 60 – – 1 – – 61
Cheong Kee Yoong 48 – – 1 – – 49
Yu Chee Sing 90 24 – 1 – 4 119
Lee Eng Eow 42 – – 1 – – 43
Joyce Wong Ai May 43 – – 1 – – 44
Yap Li Li – 15 – – – 6 21
(Resigned on 31.01.2018)
TOTAL 343 1,482 – 6 820 385 3,036
36
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The aggregate remuneration and benefits paid to the Senior Management of the Group for the FYE 2018 are
as follows:-
Due to confidentiality and sensitivity of the remuneration packages of Senior Management as well as security
concerns, the Board opts not to disclose the Senior Management’s remuneration components on named
basis in the bands of RM50,000.
The Board is of the view that the disclosure of the Senior Management’s remuneration components would
not be in the best interest of the Company given that the competitive human resources environment as such
disclosure may give rise to recruitment and talent retention issues.
The Board is of the view that the disclosure of the Senior Management’s aggregated remuneration on unnamed
basis in the bands of RM50,000 in the Annual Report 2018 is adequate.
The AC is relied upon by the Board to, amongst others, provide advice in the areas of financial reporting,
external audit, internal control environment and internal audit process, review of related party transactions as
well as conflict of interest situations. The AC also undertakes to provide oversight on the risk management
framework of the Group.
The AC is chaired by the Senior Independent Director who is distinct from the Chairman of the Board. All
members of the AC are financially literate, whilst the Chairman of the AC is a member of the Malaysian Institute
of Accountants.
The term of office and performance of the AC and its members are reviewed by the NC annually to determine
whether such AC and members have carried out their duties in accordance with the Terms of Reference of
the AC.
Currently, none of the members of the AC of the Company were former key audit partners. The AC has in
place a policy that requires a former key partner to observe a cooling-off period of at least two (2) years before
being appointed as a member of the AC. The policy had been codified in the Terms of Reference of AC of
the Company.
The Group has established a transparent and appropriate relationship with the Internal Auditors and External
Auditors which facilitate the Group to seek professional advice on matters relating to compliance and corporate
governance. The internal audit function of the Group is outsourced to third party. Similar to the External
Auditors, Internal Auditors too have direct reporting access to the AC to ensure that issues highlighted are
addressed independently, objectively and impartially without any undue influence from the Management.
37
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The Board has established the Internal and External Auditors Assessment Policy together with Annual
Performance Evaluation Form respectively. The said Policy aims to outline the guidelines and procedures for
AC to review, assess and monitor the performance, suitability and independence of the Internal and External
Auditors respectively.
In recognising the importance of risk management and internal controls, the Board has established a structured
risk management framework to identify, evaluate, control, monitor and report the principal business risks
faced by the Group on an on-going basis. Risk management is embedded in the Group’s operations and
management systems. The key features of the risk management framework are set out in the Statement on
Risk Management and Internal Control included in this Annual Report 2018.
The Board has established internal control policies and procedures which are monitored to ensure that such
policies and procedures are implemented and effectively carried out by the Management team. The Group
has in place an Information Technology Policy that outlines the processes that should be followed to create
policies, best practices, standards and the use of the supporting information technologies. The Board is
mindful of the legal implications if technology systems or information are misused in a manner which may be
found to breach laws and regulations.
Guided by the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers,
the Board performs reviews on an annual basis covering not only financial, but operational and compliance
controls and risk management systems, in all material aspects. Details on the Statement on Risk Management
and Internal Control are set out in this Annual Report 2018.
The Group’s Internal Audit Function is outsourced to a professional service firm to assist the Board in
maintaining a system of internal control to safeguard shareholders’ investment and the Group’s assets. The
internal audit findings and investigations of business units of the Group will be reported directly to the AC.
The information on the Group’s risk management and internal control is presented in the Statement of Risk
Management and Internal Control in this Annual Report 2018.
The Corporate Disclosure Policy was formalised to promote comprehensive, accurate and timely disclosures
pertaining to the Company and the Group to regulators, shareholders and stakeholders.
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 notice of Fifteenth AGM of the Company was given to the shareholders at least twenty-eight (28) days
before the AGM which gives shareholders sufficient time to prepare themselves to attend the AGM or to
appoint proxy to attend and vote on their behalf.
All resolutions set out in the notice of the AGM were put to vote by poll and the votes casted were validated
by an independent scrutineer appointed by the Company. The outcome of all resolutions proposed at the
general meetings is announced to Bursa Securities at the end of the meeting day.
At the AGM, the shareholders are encouraged to participate in discussing the resolutions proposed or on future
developments of the Group’s operations in general. The Board, the Management team and the Company’s
External Auditors, were present to answer the questions raised and provide clarification as requested by the
shareholders.
All the Directors were present at the Fifteenth AGM held on 25 June 2018 and responded to queries raised
by the shareholders.
The Board has deliberated, reviewed and approved this Statement. The Board considers and is satisfied that to the
best of its knowledge the Company has fulfilled its obligations under the MCCG, the relevant chapters of the MMLR
of Bursa Securities on corporate governance and all applicable laws and regulations throughout the FYE 2018.
39
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
A. OBJECTIVES
The primary objective of the Audit Committee (“AC” or “the Committee”) is to assist the Board of Directors (“the
Board”) in discharging its statutory duties and responsibilities, among others, providing an additional assurance
to the Board by giving an objective and independent review of financial, operational and administrative
controls and procedures, establishing and maintaining internal controls and reinforce the independence of
the Company’s External Auditors, thereby ensuring that the Auditors have free reign in the audit process.
Name Designation
Cheong Kee Yoong, Chairman Senior Independent Non-Executive Director
Tan Chuan Hock, Member Non-Independent Non-Executive Director
Yu Chee Sing, Member Independent Non-Executive Director
Lee Eng Eow, Member Independent Non-Executive Director
The Company has complied with Paragraph 15.09 of the Main Market Listing Requirements (“Listing
Requirements”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) which requires all members of the
AC to be Non-Executive Directors with a majority of them being Independent Directors.
The authorities and duties of the Committee are clearly governed by the Terms of Reference of the Committee.
The Terms of Reference of the Committee can be accessed from the corporate website of the Company at
www.grand-flo.com.
C. SUMMARY OF ACTIVITIES OF THE COMMITTEE DURING THE FINANCIAL YEAR ENDED 31 DECEMBER
2018
During the financial year under review, the Committee convened five (5) meetings and the attendance of
Committee members at meetings are set out as follows:
The presence of the External Auditors and/or the Internal Auditors at the Committee meetings can be requested
if required by the Committee. Other members of the Board and officers of the Company and the Group may
attend the meeting (specific to the relevant meeting and to the matters being discussed) upon the invitation
of the Committee.
40
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The summary of the works undertaken by the Committee during the financial year ended 31 December 2018,
amongst others, included the following:-
1. In overseeing the Company’s financial reporting, reviewed the four (4) quarterly financial results and
annual audited financial statements of the Group and the Company including the announcements
pertaining thereto. Discussion focused particularly on any changes in accounting policies and practices,
significant adjustments arising from the audit and compliance with accounting standards and other
legal requirements before recommending to the Board for approval and release of the announcements
to Bursa Securities.
2. Reviewed the External Auditors’ Audit Planning Memorandum for the financial year ended 31 December
2018 covering the audit objectives and approach, audit plan, key audit areas and relevant technical
pronouncements and accounting standards.
3. Reviewed with the External Auditors, the annual audited financial statements of the Group and the
Company and issues arising from the audit of the financial statements highlighted by the External
Auditors.
4. Considered and recommended the re-appointment of Messrs. Grant Thornton Malaysia as the External
Auditors and their audit fee to the Board for consideration based on the competency, efficiency and
transparency as demonstrated by the External Auditors during their audit.
5. Reviewed with the Internal Auditors, the internal audit plan, work done and reports, for the internal
audit function and considered the findings of internal audit investigations and management responses
thereon, and ensure that appropriate actions were taken in addressing the issues reported by the Internal
Auditors.
6. Reviewed the related party transactions and/or recurrent related party transactions that transpired
within the Group to ensure that the transactions entered into were at arm’s length basis and on normal
commercial terms.
7. Reviewed the Corporate Governance Overview Statement, Audit Committee Report, Statement on
Risk Management and Internal Control and Additional Compliance Information to ensure adherence to
legal and regulatory requirement before recommending to the Board for approval for inclusion in the
Company’s Annual Report.
8. Self-appraised the performance of the Committee for the financial year ended 31 December 2017 and
submit the evaluation to the Nomination Committee for assessment.
The Board has entrusted the Committee to review the effectiveness of the Group’s system of internal control
and integrity of management reporting system on behalf of the Board. The internal audit function is outsourced
to an independent professional services firm to provide objective evaluation of risks and controls in the audited
activities to ensure a sound system of internal controls. Internal audit reports are presented, together with
Management’s response and proposed action plans to the Committee on a quarterly basis.
The Internal Auditors undertake internal audit functions based on the operational, compliance and risk-based
audit plan approved by the Committee. The risk-based audit plans covers the review of the key operational
and financial activities including the efficacy of risk management practices, efficiency and effectiveness of
operational controls and compliance with relevant laws and regulations. Scheduled audits are carried out
on various subsidiaries of the Company in accordance to the approved Internal Audit Plan. A risk-based
methodology is adopted to evaluate the adequacy and effectiveness of the risk management, financial,
operational and governance processes.
41
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
For the financial year ended 31 December 2018, the following internal audit reviews had been carried out by
the Internal Auditors:-
The fee incurred during the financial year in relation to the internal audit function is RM36,000.
The internal audits conducted did not reveal any weakness which would result in material losses, contingencies
or uncertainties that would require disclosure in the Annual Report.
For the financial year ended 31 December 2018, the Committee noted that the internal audit function is
independent and Internal Auditors have performed their audit assignments with impartiality, proficiency and
due professional care.
42
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
INTRODUCTION
The Board of Directors of Grand-Flo Berhad (“Board”) is committed towards maintaining a sound system of internal
control and risk management and is pleased to provide this Statement on Risk Management and Internal Control
(“Statement”) which outlines the scope and nature of internal controls and risk management of Grand-Flo Berhad
and its subsidiaries (“the Group”) for the financial year ended 31 December 2018.
For the purpose of disclosure, this Statement is prepared pursuant to Paragraph 15.26(b) of the Main Market Listing
Requirements of Bursa Malaysia Securities Berhad, Malaysian Code on Corporate Governance and Statement on
Risk Management & Internal Control: Guidelines for Directors of Listed Issuers.
BOARD RESPONSIBILITY
The Board recognises that a sound system of internal control and risk management is an integral part of good
corporate governance. The Board is committed and acknowledges its overall responsibility to maintain a sound
system of internal control and risk management as well as for reviewing its adequacy and effectiveness to safeguard
the shareholders’ investments and Group’s assets.
The Board and the Management team are responsible and accountable for the establishment of internal controls for
the Group. The risk management and internal control systems and processes are subjected to regular evaluations
on their adequacy and effectiveness by the Management team and the AC. This process has been in place for the
financial year under review and up to the date of approval of this Statement for inclusion in the Annual Report of
the Company.
The system of internal control and risk management covers not only financial controls but operational, risk and
compliance controls as well. These systems are designed to manage, rather than eliminate, the risk of failure arising
from non-achievement of the Group’s policies, goals and objectives. Such systems provide reasonable, rather than
absolute, assurance against material misstatement or loss.
The Board has an ongoing process for identifying, evaluating and managing significant risks faced by the Group.
The process of identifying, evaluating and managing the significant risks are embedded in the various work processes
and procedures in the Group. The Board and the Management team have put in place certain risk management
guidelines, control measures and processes for the Group to identify, evaluate and manage the significant risks.
This includes formal risk management policy and risk management framework which sets out the fundamentals
of risk and risk management, roles and responsibilities of management and employees in managing risks and the
process for identifying, evaluating and managing risks.
The Board has delegated tasks of monitoring the internal control and risk management systems to the Management
team. The systems of internal control and risk management are subjected to regular evaluations on their adequacy
and effectiveness by the Management team. Any significant risks and mitigating responses are communicated to
the Board through the AC to ensure their continuing relevance and compliance with current/applicable laws and
regulations. The AC assists the Board to review the adequacy and effectiveness of the systems of internal control
and risk management in the Group and ensures that appropriate methods and procedures are used to obtain the
level of assurance required by the Board.
43
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The Board is satisfied that, during the financial year under review and up to the date of approval of this Statement for
inclusion in the Annual Report of the Company, there is an ongoing process of identifying, evaluating and managing
significant risks faced by the Group.
The Board is of the view that the existing system of internal controls is sound and adequate to safeguard the Group’s
operations and assets at the existing level of operations of the Group.
The Group’s system of internal control does not apply to associated companies where the Group does not have
full management control over these entities. However, the Group’s interest is served through representatives of the
Board of the respective associated companies.
The Board recognises that the development of risk management and internal control systems is an ongoing process.
Therefore, the Board will continue to strengthen the systems of internal control and risk management.
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 Baker Tilly Monteiro Heng Governance Sdn. Bhd. (“Internal Auditors”), 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 Auditors develop its audit plan in accordance with accepted
auditing practices in which addresses critical business processes, identified risks and internal control gaps, assessed
the adequacy and effectiveness of the existing state of internal control of the Group and recommended possible
improvements to the internal control process. This is to provide reasonable assurance that such systems continue to
operate satisfactorily and effectively within the Group. The audit plan is presented to AC of the Company for approval.
Follow-up visits were also carried out to ensure weaknesses identified have been or are being addressed. Periodic
audit reports and status reports on follow up management action plans were tabled to the AC for review on quarterly
basis.
Please refer to the AC Report pages 39 to 41 of the Annual Report on the internal audit activities undertaken in the
financial year ended 31 December 2018.
For the financial year ended 31 December 2018, the total costs incurred for the outsourced internal audit function
is RM36,000.
44
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Apart from risk management and internal audit, the Group’s internal control system comprises the following key
elements:-
• Clearly defined organisational structure with clear lines of delegation of responsibility and level of authorisation
for all aspects of the business have been laid down and communicated throughout the Group.
• Experienced and competent staffs are placed in areas of responsibility to support and continuously monitor
the effectiveness of the Group’s system of internal control.
• Regular meetings are held to discuss on the overall Group and operating subsidiaries’ operational matters
and to resolve key operational, financial, human resource and other related issues.
• Timely generation of financial and operations reports for Management review.
• Regular internal audit reviews are carried out to identify any area of improvement, besides compliance with
internal practices, guidelines and objectives. The internal audits were performed in accordance with accepted
auditing practices in reviewing effectiveness and efficiency of operations, reliability of financial reporting and
compliance with applicable laws and regulations.
• The AC reviews the quarterly and annual financial statements and results announcements and recommended
to the Board for approval.
• Budget is reviewed and approved by the Management of each subsidiary before consolidation into the Group’s
budget for the Board’s review.
• Regular visits to operating subsidiaries by members of the Board and senior management whenever
appropriate.
As required by Paragraph 15.23 of Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the
External Auditors have reviewed this Statement and reported to the Board that nothing has come to their attention
that causes them to believe that this Statement is inconsistent with their understanding of the process adopted by
the Board in reviewing the adequacy and integrity of the Group’s internal control system.
The Board has received assurance from the Group Managing Director/Group President and Chief Financial Controller
that the Group’s risk management and internal control, in all material aspects, were operating adequately and
effectively. For the financial year under review, there were no material control failures or adverse compliance events
that have directly resulted in any material loss to the Group as a whole.
45
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
For the financial year ended 31 December 2018, the amounts of audit and non-audit fees paid or payable by the
Company and the Group to the External Auditors are as follows:-
Company Group
(RM) (RM)
On 10 April 2018, Grand-Flo entered into a conditional Share Sale Agreement with Chuah Chew Hai (“CCH”), a
Director and major Shareholder of Grand-Flo, for the acquisition of the remaining 49.9996% equity interest in
Innoceria Sdn. Bhd., consisting of 124,999 ordinary shares held by CCH, for a cash consideration of RM21.9 million
(“Proposed Acquisition”). Upon the completion of the Proposed Acquisition on 6 July 2018, Innoceria Sdn. Bhd.
has become a wholly-owned subsidiary of Grand-Flo.
Save as disclosed above, the Company and its subsidiaries have not entered into any material contracts subsisting
at the end of the financial year or entered into since the end of the previous financial year, which involved the interest
of the Directors and major shareholders other than contracts entered into in the ordinary course of business.
There were no proceeds raised from corporate proposals during the financial year under review.
At the Annual General Meeting (“AGM”) of the Company held on 25 June 2018, the Company had obtained
shareholders’ mandate to allow the Company and its subsidiaries to enter into recurrent related party transactions
(“RRPTs”) of a revenue or trading nature which are necessary for the day to day operations of the Group and in the
ordinary course of business with the related parties.
The aforesaid mandate will lapse at the conclusion of the forthcoming Sixteenth AGM of the Company.
46
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
In accordance with Paragraph 3.1.5 of Practice Note 12 of the Main Market Listing Requirements of Bursa Malaysia
Securities Berhad, details of the RRPTs conducted during the financial year under review pursuant to the aforesaid
shareholders’ mandate are as follows:
Actual value
of transaction
from 1 January
2018 up to 31
Transacting December 2018 Interested related
company Related party Nature of transaction RM’000 party
Innoceria Metrio Property development project 203 Chuah Chew Hai, an
Sdn. Bhd. Development sales management fee charged Executive Director
(“ISB”) Sdn. Bhd. by Metrio to ISB in respect of: of Grand-Flo and a
(“Metrio”) (i) Project Management - Director of ISB is also
planning, conceptual layout a Director and major
& design, construction shareholder of Metrio.
supervision & management, Chong Poh Yoong,
authority submission and the spouse of Chuah
approval obtainment; and Chew Hai and being
(ii) Sales & Marketing a person connected
Management - market to a Director, is also
survey, sales & marketing a Director and major
plan & strategy, exhibition & shareholder of Metrio.
road show, customer service
and administrative support.
Jalur Bina Metrio Property development project 68 Chuah Chew Hai, an
Sdn. Bhd. sales management fee charged Executive Director
(“JBSB”) by Metrio to JBSB in respect of: of Grand-Flo and a
(i) Project Management - Director of JBSB is
planning, conceptual layout also a Director and
& design, construction major shareholder of
supervision & management, Metrio. Chong Poh
authority submission and Yoong, the spouse
approval obtainment; and of Chuah Chew Hai
(ii) Sales & Marketing and being a person
Management - market connected to a
survey, sales & marketing Director, is also a
plan & strategy, exhibition & Director and major
road show, customer service shareholder of Metrio.
and administrative support.
Grand-Flo Radiant Global Sales and purchases of 730 Tan Chuan Hock, a
Spritvest ADC Sdn. Bhd. computer related products and Non-Independent
Sdn. Bhd. (“Radiant”) services. Non-Executive
(“GFSSB”) Director of Grand-Flo
is a substantial
shareholder of
Radiant.
47
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The Board of Directors of the Company are fully accountable to ensure that the financial statements are drawn up
in accordance with Companies Act 2016 (“Act”) and the applicable approved accounting standards prescribed by
Malaysian Accounting Standards Board so as to give a true and fair view of the state of affairs of the Company and
its subsidiaries (“the Group”) as at 31 December 2018 and of the results and cash flows of the Company and the
Group for the financial year then ended.
In the preparation of the financial statements for the financial year ended 31 December 2018, the Board has taken
the following measures:-
a. applied relevant and appropriate accounting policies consistently and in accordance with applicable approved
accounting standards;
b. made judgments and estimates that are prudent and reasonable; and
c. used the going concern basis for the preparation of the financial statements.
The Board has ensured that the quarterly reports and annual audited financial statements of the Group are released
to Bursa Malaysia Securities Berhad in a timely manner in order to keep our investing public informed of the Group’s
latest performance and developments.
The Board has also ensured that the Group maintains proper accounting records in accordance with the Act. The
Board also has the overall responsibility in 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.
Financial
Contents
Directors’ Report 49
Statement by Directors and Statutory Declaration 55
Independent Auditors’ Report 56
Statements of Financial Position 61
Statements of Profit or Loss and
Other Comprehensive Income 63
Statements of Changes in Equity 65
Statements of Cash Flows 68
Notes to the Financial Statements 72
49
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
DIRECTORS’ REPORT
The Directors have pleasure in submitting their report together with the audited financial statements of the Group
and of the Company for the financial year ended 31 December 2018.
PRINCIPAL ACTIVITIES
The principal activities of the Company are the provision of information technology solutions and investment
holding. The principal activities of the subsidiaries and associates are disclosed in Note 5 and Note 6 to the financial
statements respectively.
There have been no significant changes in the nature of these activities of the Company and its subsidiaries during
the financial year.
FINANCIAL RESULTS
Group Company
RM RM
Net profit for the financial year 5,444,475 10,046,109
Attributable to:-
Owners of the company 5,550,249
Non-controlling interest (105,774)
5,444,475
DIVIDENDS
The amount of dividend paid and declared since the end of the last financial year was as follows:
RM
In respect of financial year ended 31 December 2017:
Final single tier dividend of 0.60 sen per ordinary share, paid on 25 July 2018 2,837,057
The Director recommend a final single tier dividend of 0.50 sen per share in respect of the current financial year
for shareholders’ approval at the forthcoming Annual General Meeting. The current financial statements do not
reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as
an appropriation of retained earnings in the financial year ending 31 December 2019.
There were no material transfers to or from reserves or provisions during the financial year other than as disclosed
in the financial statements.
50
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
DIRECTORS
The name of the Directors of the Company and of the subsidiaries in office during the financial year and during the
period commencing from the end of the financial year to the date of this report are:-
Company:-
Tan Sri Azlan Bin Mohd Zainol
Tan Bak Hong
Chuah Chew Hai
Cheng Ping Liong
Tan Chuan Hock
Cheong Kee Yoong
Yu Chee Sing
Lee Eng Eow
Joyce Wong Ai May
Subsidiaries:-
Grand-Flo Electronic System Sdn. Bhd. and Grand-Flo Capital Sdn. Bhd.
Tan Bak Hong
Tan Bak Leng
Grand-Flo Spritvest Sdn. Bhd. and Grand-Flo Data Centrix Sdn. Bhd.
Cheng Ping Liong
Tan Bak Hong
Tan Bak Leng
DIRECTORS’ INTERESTS
According to the Register of Directors’ Shareholdings required to be kept pursuant to Section 59 of the Companies
Act 2016, the interests and deemed interests in the ordinary shares of the Company and its related corporations
of those who were Directors as at year end (including the interests of the spouses or children of the Directors who
themselves are not Directors of the Company) are as follows:-
The Company
Direct interests:-
Tan Bak Hong 21,168,636 255,200 – 21,423,836
Cheng Ping Liong 8,861,734 – – 8,861,734
Tan Chuan Hock 12,600,000 – (12,600,000) –
Chuah Chew Hai 86,765,000 – – 86,765,000
Deemed interests:-
Tan Bak Hong 1 25,233,852 – – 25,233,852
Tan Chuan Hock 2 12,000,000 12,600,000 – 24,600,000
Chuah Chew Hai 3 412,165 – – 412,165
1
Deemed interested by virtue of his spouse, Ms. Yap Li Li’s interest in the Company and by virtue of his and his
spouse, Ms. Yap Li Li’s interests in Grand-Flo Corporation Sdn. Bhd.
2
Deemed interested by virtue of his interest in AI Capital Sdn. Bhd.
3
Deemed interested by virtue of his spouse, Ms. Chong Poh Yoong’s interest in the Company
Save for the above, none of the other Directors in office at the end of the financial year had any interest in shares
of the Company or its related corporations during the financial year.
DIRECTORS’ REMUNERATION
During the financial year, the fees and other benefits received and receivable by the Directors of the Company are
as follows:-
Incurred Incurred
by the by the
Company Subsidiaries Group
RM RM RM
Directors’ fees 295,129 60,000 355,129
Directors’ remuneration 1,016,340 2,492,311 3,508,651
Indemnity given or insurance
effected for Officers 11,500 – 11,500
During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the
object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares
in, or debentures of, the Company or any other body corporate.
52
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
There were no changes in the issued and fully paid share capital of the Company during the financial year.
TREASURY SHARES
During the financial year ended 31 December 2018, the Company repurchased 4,298,000 of its issued ordinary
shares from the open market for total consideration paid, including transaction costs of RM887,762. The average
price paid for the shares repurchased was approximately RM0.21 per share and was financed by internally generated
funds. The shares repurchased are being held as treasury shares and treated in accordance with the requirements
of Section 127(6) of Companies Act 2016.
As at 31 December 2018, the Company held 12,268,000 treasury shares out of total 483,115,711 issued ordinary
shares. Further relevant details are disclosed in Note 22 to the financial statements.
The amount of indemnity coverage and insurance premium paid for Officers of the Company during the financial
year amounted to RM10,000,000 and RM11,500 respectively.
Before the financial statements of the Group and of the Company were made out, the Directors took reasonable
steps:-
(a) 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 bad debts to be written off and
adequate provision had been made for doubtful debts; and
(b) to ensure that any current assets which were unlikely to be realised in the ordinary course of business including
their values as shown in the accounting records of the Group and of the Company have been written down
to an amount which they might be expected so to realise.
At the date of this report, the Directors are not aware of any circumstances:-
(a) which would render 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 of the Company inadequate to any substantial extent; or
(b) which would render the values attributed to current assets in the financial statements of the Group and of
the Company misleading; or
(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the
Group and of the Company misleading or inappropriate; or
(d) not otherwise dealt with in this report or the financial statements which would render any amount stated in
the financial statements misleading.
53
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
(a) any charge on the assets of the Group and of the Company which has arisen since the end of the financial
year which secures the liability of any other person; or
(b) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.
(a) no contingent liability 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
and the Company to meet their obligations as and when they fall due;
(b) the results of 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; and
(c) there has not arisen in the interval between the end of the financial year and the date of this report any item,
transaction or event of a material and unusual nature likely to affect substantially the results of the operations
of the Group and the Company for the current financial year in which this report is made.
The significant events during the financial year are disclosed in Note 49 to the financial statements.
The events after the reporting period are disclosed in Note 50 to the financial statements.
54
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
AUDITORS
The total amount of fees paid to or receivable by the Auditors, Messrs Grant Thornton Malaysia, as remuneration
for their services as auditors of the Company and its subsidiaries for the financial year ended 31 December 2018
amounted to RM21,000 and RM82,000 respectively.
There was no indemnity given to or insurance effected for the auditors of the Company.
The Auditors, Messrs Grant Thornton Malaysia have expressed their willingness to continue in office.
Signed on behalf of the Board of Directors in accordance with a resolution of the Board of Directors.
...................................................................... )
TAN BAK HONG )
)
)
)
)
)
)
) DIRECTORS
)
)
)
)
)
)
)
...................................................................... )
CHENG PING LIONG )
Kuala Lumpur
11 April 2019
55
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
STATEMENT BY DIRECTORS
In the opinion of the Directors, the financial statements set out on pages 61 to 171 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 December 2018 and of their financial performance and cash flows for the financial year
then ended.
Signed on behalf of the Board of Directors in accordance with a resolution of the Board of Directors.
............................................................. ............................................................
TAN BAK HONG CHENG PING LIONG
Kuala Lumpur
11 April 2019
STATUTORY DECLARATION
Pursuant to Section 251(1)(b) of the Companies Act 2016
I, Tan Bak Hong, being the Director primarily responsible for the financial management of Grand-Flo Berhad, do
solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on
pages 61 to 171 are correct and I make this solemn declaration conscientiously believing the same to be true and
by virtue of the Statutory Declarations Act, 1960.
Before me:
Opinion
We have audited the financial statements of Grand-Flo Berhad, which comprise the statements of financial position of
the Group and of the Company as at 31 December 2018, and the statements of profit or loss and other comprehensive
income, statements of changes in equity and statements of cash flows of the Group and of the Company for the
financial year then ended, and notes to the financial statements, including a summary of significant accounting
policies, as set out on pages 61 to 171.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group
and of the Company as at 31 December 2018, and of their financial performance and cash flows for the financial
year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting
Standards and the requirements of the Companies Act 2016 in Malaysia.
We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards
on Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for
the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
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 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 and of the Company as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
The risk
The Group has a material amount of trade receivables amounting to RM10,460,455 as disclosed in Note 46(a)(i) to
the financial statements whereby the amount is past due but not impaired. The key associate risk is recoverability of
billed trade receivables as management judgement is required in assessing the adequacy of allowance for expected
credit losses by considering the expected recoverability of the outstanding trade receivables.
Our response
We have challenged management’s assumptions in providing allowance for expected credit losses of trade
receivables. Our procedures includes reviewing the ageing of trade receivables, testing the integrity of ageing,
reviewing by recalculating the due date for a number of invoices and assessed the recoverability of outstanding
receivables through examination of subsequent cash receipts. We have also tested the operating effectiveness of
the relevant control procedures that management has in place.
57
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Inventories valuation
The risk
The Group holds significant amount of inventories for finished goods amounting to RM3,524,536 as disclosed in
Note 12 to the financial statements which are subject to a risk that the inventories might become slow-moving or
obsolete and rendering them not saleable or can only be sold for selling prices that are less than the carrying value.
Judgement is required to access the appropriate level of provision for items which may be ultimately sold below cost.
Our response
We have tested the methodology for calculating the allowances, challenged the appropriateness and consistency of
judgements and assumptions, considered the nature and suitability of historical data used in estimating the underlying
allowances. We have compared the allowance with actual historical results by the ageing profile and expiry date of
inventory, the process for identifying specific problem inventories and historical loss rates. We have attended physical
inventories count in warehouses and tested samples that the quantities and value have been correctly calculated
and reflected in the accounting records. We have also enquired the management the judgement taken and the
basis of allowance provided regarding obsolete inventories which have been adjusted in the accounting records.
The risk
The Group recorded revenue of property development amounting to RM9,764,856 for the financial year ended 31
December 2018 as disclosed in Note 34 to the financial statements. There are significant accounting judgements
involved in determining the stage of completion, the timing of revenue recognition and the calculation under the
percentage-of-completion method made by management in applying the Group’s revenue recognition policies
entered into by the Group.
Our response
We have performed a range of audit procedures which included obtaining a sample of contracts, reviewing for
change orders, retrospectively reviewing estimated profit and costs to complete and enquiring key personnel
regarding adjustments for job costing and potential contract losses. We have also performed testing procedures
over routine sales transactions.
The risk
The Group holds goodwill on consolidation of RM33,447,524, as disclosed in Note 9 to the financial statements.
The carrying values of goodwill on consolidation are dependent on future cash flows of the underlying cash-
generating units (“CGUs”) and there is risk that if these cash flows do not meet management’s expectations the
assets will be impaired. This risk increases in periods when the Group’s trading performance and projections do
not meet prior expectations.
The impairment review performed by management contains a number of significant judgements and estimates
including CGU identification, operating profit forecasts, cash conversion, perpetuity growth rates and discount
rates. Changes in these assumptions can result in materially different impairment charges or available headroom.
58
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Our response
Our procedures includes assessing the reasonableness of the key assumption applied by the Group in determining
the recoverable amount of the above CGUs. In particular, we have evaluated the appropriateness and consistency
of the underlying assumptions in determining the cash flows forecast and projections, specifically revenue growth
discount factor and margin assumptions. We have considered the historical forecast accuracy, compared forecast
cash flows to those currently being achieve by the CGUs. We have also assessed the future cash flows projection
to known or probable changes in the business environment.
There is no key audit matter to be communicated in respect of the audit of the financial statements of the Company.
Information Other than the Financial Statements and Auditors’ Report Thereon
The Directors of the Company are responsible for the other information. The other information comprise the
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. We have nothing to report in this regard.
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.
59
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
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.
60
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
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.
In accordance with the requirements of the Companies Act 2016 in Malaysia, we report that the subsidiaries of
which we have not acted as auditors, are disclosed in Note 5 to the financial statements.
Other Matters
1. As stated in Note 2.4.1 to the Financial Statements, Grand-Flo Berhad, adopted Malaysian Financial
Reporting Standards on 1 January 2018 with transition date of 1 January 2017. The standards were applied
retrospectively by the Directors to the comparative information in these financial statements, including the
statements of financial position as at 31 December 2017 and 1 January 2017, and the statements of profit
or loss and other comprehensive income, statements of changes in equity and statements of cash flows for
the year ended 31 December 2017 and related disclosures. We were not engaged to report on the MFRS
transition comparative information and it is unaudited. Our responsibilities as part of our audit of the financial
statements of the Company for the financial year ended 31 December 2018 have in these circumstances,
included obtaining sufficient appropriate audit evidence that the opening balances as at 1 January 2018 do
not contain misstatements that materially affect the financial position as at 31 December 2018 and financial
performance and cash flows for the financial year then ended.
2. 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.
............................................................. ............................................................
GRANT THORNTON MALAYSIA LIAN TIAN KWEE
(NO. AF: 0737) (NO.: 02943/05/2019 J)
CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANT
Kuala Lumpur
11 April 2019
61
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Group Company
Note 31.12.2018 31.12.2017 1.1.2017 31.12.2018 31.12.2017 1.1.2017
RM RM RM RM RM RM
ASSETS
Non-current assets
Property, plant and equipment 4 8,029,753 8,350,022 13,306,846 31,245 33,303 36,527
Investment in subsidiaries 5 – – – 69,904,596 56,004,741 62,561,046
Investment in associates 6 1,859,744 1,355,925 12,347,419 – – 5,265,943
Other investment 7 14,384 14,794 15,204 – – –
Development costs 8 – – 1,813,059 – – 1,813,059
Goodwill on consolidation 9 33,447,524 33,447,524 34,126,122 – – –
Deferred tax assets 10 9,863 – 339,000 – – 339,000
Current assets
Inventory properties 11 39,382,551 47,854,767 81,272,845 – – –
Inventories 12 39,351,743 28,271,678 6,010,694 – – –
Contract assets 13 – 3,781,856 11,216,282 – – –
Trade receivables 14 17,473,121 29,503,333 22,284,852 – – –
Other receivables 15 2,501,998 4,590,170 2,880,249 81,756 1,360,134 2,350
Amount due from Directors 16 – – 3,563,019 – – –
Amount due from subsidiaries 17 – – – 48,417,022 26,842,174 24,070,776
Amount due from related parties 18 1,990,843 36,227 134,405 – – –
Tax recoverable 2,047,610 1,441,276 777,654 45,689 100,673 98,033
Dividend receivable 1,060,831 1,060,831 1,060,831 – – –
Fixed deposits with licensed banks 19 15,438,851 21,137,792 1,693,174 7,756,957 18,082,922 169,000
Cash and bank balances 20 9,643,022 10,856,409 12,956,623 93,111 1,626,094 340,801
Group Company
Note 31.12.2018 31.12.2017 1.1.2017 31.12.2018 31.12.2017 1.1.2017
RM RM RM RM RM RM
LIABILITIES
Non-current liabilities
Finance lease liabilities 26 3,751 31,825 215,919 – – –
Term loans 27 646,667 1,791,725 8,093,774 – – 5,250,000
Contract liabilities 28 14,664 – – – – –
Deferred tax liabilities 10 36,333 27,849 1,091,691 – – –
Amount due to a Director 16 13,405,624 – – 13,405,624 – –
Current liabilities
Trade payables 29 18,794,885 14,866,983 26,587,772 – – –
Contract liabilities 28 1,855,365 – – – – –
Other payables 30 2,833,970 4,032,025 4,444,048 575,175 711,617 2,214,823
Amount due to a Director 16 4,650,435 4,870,961 8,000 4,488,450 – –
Amount due to a subsidiary 31 – – – – 1,798,587 354,643
Amount due to related parties 32 1,171,162 987,773 2,002,632 – – –
Finance lease liabilities 26 25,421 107,777 134,997 – – –
Borrowings 33 126,240 4,378,776 10,765,097 – – 2,250,000
Tax payable 629,859 190,695 387,515 – – –
Total equity and liabilities 172,251,838 191,702,604 205,798,278 126,330,376 104,050,041 94,696,535
Group Company
Note 2018 2017 2018 2017
RM RM RM RM
Net profit for the financial year 5,444,475 14,521,177 10,046,109 17,421,580
– 858,446 – –
Exchange translation differences 114,912 (586,868) – –
Group Company
Note 2018 2017 2018 2017
RM RM RM RM
Group
Balance at 1 January 2017 48,311,571 14,538,275 (1,497,290) 6,160,852 1,109,451 1,391,694 40,021,750 110,036,303 42,030,530 152,066,833
Redemption of redeemable
non-covertible preference shares – – – – – – – – (5,616,000) (5,616,000)
Total transactions with owners – – (508,812) (2,422,776) – – 2,422,776 (508,812) (5,934,561) (6,443,373)
Balance at 31 December 2017 62,849,846 – (2,006,102) 4,596,522 1,109,451 804,826 55,633,196 122,987,739 37,428,476 160,416,215
For the Financial Year Ended 31 December 2018
STATEMENTS OF CHANGES IN EQUITY
ANNUAL REPORT 2018
GRAND-FLO BERHAD (607392-W)
65
Attributable to owners of the parent
66
Non-distributable Distributable
Foreign
exchange Non-
Share Share Treasury Revaluation Other fluctuation Retained controlling Total
Note capital premium shares reserve reserves reserve earnings Total interest equity
ANNUAL REPORT 2018
RM RM RM RM RM RM RM RM RM RM
previously stated 62,849,846 – (2,006,102) 4,596,522 1,109,451 804,826 55,633,196 122,987,739 37,428,476 160,416,215
Balance at 1 January 2018, restated 62,849,846 – (2,006,102) 4,596,522 1,109,451 804,826 55,459,875 122,814,418 37,428,476 160,242,894
Redemption of redeemable
non-covertible preference shares – – – – – – – – (12,120,000) (12,120,000)
Acquisition of ownership
interest of a subsidiary from
non-controlling interest 5 – – – – – – (12,473,793) (12,473,793) (9,426,207) (21,900,000)
Balance at 31 December 2018 62,849,846 - (2,893,864) 4,596,522 1,109,451 919,738 45,699,274 112,280,967 15,776,495 128,057,462
67
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Non-Distributable Distributable
Share Share Treasury Retained
Note capital premium shares earnings Total
RM RM RM RM RM
Company
Group Company
2018 2017 2018 2017
RM RM RM RM
Group Company
2018 2017 2018 2017
RM RM RM RM
Group Company
2018 2017 2018 2017
Note RM RM RM RM
Cash and cash equivalents included in the statements of cash flows comprise the following:-
Group Company
2018 2017 2018 2017
RM RM RM RM
1. GENERAL INFORMATION
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 Third
Floor, No. 77, 79 & 81, Jalan SS 21/60, Damansara Utama, 47400 Petaling Jaya, Selangor Darul Ehsan. The
principal place of business of the Company is located at No. 3-5, Block D2, Jalan PJU 1/39, Dataran Prima,
47301 Petaling Jaya, Selangor Darul Ehsan.
The principal activities of the Company are the provision of information technology solutions and investment
holding. The principal activities of the subsidiaries and associates are disclosed in Note 5 and Note 6 to the
financial statements respectively.
There have been no significant changes in the nature of these activities of the Company and its subsidiaries
during the financial year.
The financial statements were authorised for issue by the Board of Directors in accordance with a resolution
of the Board of Directors passed on 11 April 2019.
2. 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 (“IFRS”)
and the requirements of the Companies Act 2016 in Malaysia.
Historical cost is generally based on the fair value of the consideration given in exchange for goods
and services.
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.
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 market 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.
73
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximising the use of relevant observable inputs and minimising
the use of unobservable inputs.
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 their 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 their fair value
measurement is directly or indirectly observable.
- Level 3 – Valuation techniques for which the lowest level input that is significant to their fair value
measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the
Group determines whether transfers have occurred between levels in the hierarchy by re-assessing
categorisation (based on the lowest level input that is significant to their fair value measurement as a
whole) at the end of each reporting period.
In the previous years, the financial statements of the Group and of the Company were prepared
in accordance with Financial Reporting Standards (“FRS”) issued by Malaysian Accounting
Standards Board (“MASB”).
These are the Group’s and the Company’s first financial statements prepared in accordance with
MFRS and MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards has been
applied.
The accounting policies set out in Note 3 to the financial statements have been applied in
preparing the financial statements of the Group and of the Company for the financial year ended
31 December 2018, the comparative information presented in these financial statements for the
financial year ended 31 December 2017 and in the preparation of the opening MFRS statements
of financial position at 1 January 2017 (the date of transition to MFRS).
The transition to MFRS does not have financial impact to the opening statements of financial
position of the Group and of the Company as at 1 January 2017.
74
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The Group and the Company have consistently applied the accounting policies set out in Note
3 to all periods presented in these financial statements.
At the beginning of the current financial year, the Group and the Company adopted new standards/
amendments/improvements to MFRSs which are mandatory for the financial periods beginning
on or after 1 January 2018.
Initial application of the new standards/amendments/improvements to the standards did not have
material impact to the financial statements, except for:-
MFRS 9 Financial Instruments replaces MFRS 139 Financial Instruments: Recognition and
Measurement for annual periods beginning on or after 1 January 2018, bringing together all three
aspects of the accounting for financial instruments: classification and measurement, impairment,
and hedge accounting.
The Group and the Company applied MFRS 9 prospectively, with an initial application date of
1 January 2018. The Group and the Company have not restated the comparative information,
which continues to be reported under MFRS 139. Differences arising from the adoption of MFRS
9 have been recognised directly in retained earnings and other components of equity.
Under MFRS 9, debt instruments are subsequently measured at fair value through profit or
loss, amortised cost, or fair value through other comprehensive income. The classification
is based on two criteria: the Group’s and the Company’s business model for managing the
assets; and whether the instruments’ contractual cash flows represent ‘solely payments of
principal and interest’ on the principal amount outstanding.
The assessment of the Group’s and the Company’s business model were made as of the
date of initial application, 1 January 2018. The assessment of whether contractual cash
flows on debt instruments are solely comprised of principal and interest was made based
on the facts and circumstances as at the initial recognition of the assets.
The classification and measurement requirements of MFRS 9 did not have a significant
impact to the Group and the Company. The Group and the Company continued measuring
at fair value all financial assets previously held at fair value under MFRS 139. The following
are the changes in the classification of the Group’s and of the Company’s financial assets:-
Initial application of the new standards/amendments/improvements to the standards did not have
material impact to the financial statements, except for (cont’d):-
The Group and the Company have not designated any financial liabilities as at fair value
through profit or loss. There are no changes in classification and measurement for the
Group’s and the Company’s financial liabilities.
In summary, upon the adoption of MFRS 9, the Group and the Company had the following
required or elected reclassification as at 1 January 2018.
MFRS 139
Measurement category
Available-for-sale
Other investment 14,794 14,794 –
MFRS 9 measurement
category
Amortised cost
Company
RM RM
47,868,540 47,868,540
76
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Initial application of the new standards/amendments/improvements to the standards did not have
material impact to the financial statements, except for (cont’d):-
MFRS 15 supercedes MFRS 111 Construction Contracts, MFRS 118 Revenue and related
Intepretations and it applies, with limited exceptions, to all revenue arising from contracts
with customers. MFRS 15 establishes a five-step model to account for revenue arising from
contracts with customers and requires that revenue be recognised at an amount that reflects
the consideration to which an entity expects to be entitled in exchange for transferring goods or
services to a customer.
MFRS 15 requires entities to exercise judgement, taking into consideration all of the relevant facts
and circumstances when applying each step of the model to contracts with their customers. The
standard also specifies the accounting for the incremental costs of obtaining a contract and the
costs directly related to fulfilling a contract. In addition, the standard requires extensive disclosures.
The Group adopted MFRS 15 using the modified retrospective method of adoption with the date
of initial application of 1 January 2018. Under this method, the standard can be applied either to
all contracts at the date of initial application or only to contracts that are not completed at this
date. The Group elected to apply the standard to all contracts as at 1 January 2018.
The cumulative effect of initially applying MFRS 15 is recognised at the date of initial application
as an adjustment to the opening balance of retained earnings. Therefore, the comparative
information was not restated and continues to be reported under MFRS 111, MFRS 118 and
related interpretations.
Increase/
(decrease)
Group RM
Non-current liability
Contract liabilities 4,958
Current liability
Contract liabilities 168,363
(173,321)
77
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Initial application of the new standards/amendments/improvements to the standards did not have
material impact to the financial statements, except for (cont’d):-
Set out below, are the amounts by which each financial statement line item is affected as at and
for the year ended 31 December 2018 as a result of the adoption of MFRS 15. The adoption of
MFRS 15 did not have a material impact on other comprehensive income or the Group’s operating,
investing and financing cash flows. The first column shows amounts prepared under MFRS 15 and
the second column shows what the amounts would have been had MFRS 15 not been adopted:-
Statements of profit or loss and other comprehensive income for the financial year ended
31 December 2018
Current asset
Other receivables 494,933 – 494,933
Equity
Retained earnings 45,697,834 45,325,130 372,704
Non-current liability
Contract liabilities 14,664 – 14,664
Current liability
Contract liabilities 107,565 – 107,565
Initial application of the new standards/amendments/improvements to the standards did not have
material impact to the financial statements, except for (cont’d):-
The nature of the adjustments as at 1 January 2018 and the reasons for the significant changes
in the statements of financial position as at 31 December 2018 and the statements of profit or
loss for the financial year ended 31 December 2018 are described below:-
The Group involves in repair and services within the information technology segment.
These services are sold either on their own in contracts with the customers or non-contract
customer with the provision of information technology solutions to a customer. The Group
recognises service revenue when it is probable that the economic benefits will flow to the
seller and the amount of revenue and cost incurred in respect of transaction can be measured
reliably. Contract liabilities increased by RM173,321 with a corresponding increased in
retained earnings by the same amount as at 1 January 2018.
At the date of authorisation of these financial statements, certain new standards, amendments and
interpretations to existing standards have been published by the Malaysian Accounting Standards
Board but are not yet effective, and have not been adopted early by the Group and the Company.
Management anticipates that all of the relevant pronouncements will be adopted in the Group’s
and the Company’s accounting policies for the first period beginning after the effective date of the
pronouncement.
New standards, amendments and interpretations that are expected to have financial impact on the
Group’s and the Company’s financial statements are provided below. Certain other new standards and
interpretations have been issued, but are not expected to have a material impact on the Group’s and
the Company’s financial statements.
MFRS 16 Leases
MFRS 16 was issued in January 2016 and it replaces MFRS 117 Leases, IC Interpretation 4 Determining
whether an Arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 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. The standard includes two recognition exemptions for lessees – leases of ’low-value’ assets
(e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less).
At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e.,
the lease liability) and an asset representing the right to use the underlying asset during the lease term
(i.e., the right-of-use asset). Lessees will be required to separately recognise the interest expense on
the lease liability and the depreciation expense on the right-of-use asset.
79
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Lessees will be also required to remeasure the lease liability upon the occurrence of certain events
(e.g., a change in the lease term, a change in future lease payments resulting from a change in an
index or rate used to determine those payments). The lessee will generally recognise the amount of
the remeasurement of the lease liability as an adjustment to the right-of-use asset.
Lessor accounting under MFRS 16 is substantially unchanged from today’s 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, which is effective for annual periods beginning on or after 1 January 2019, requires lessees
and lessors to make more extensive disclosures than under MFRS 117.
Transition to MFRS 16
The Group plans to adopt MFRS 16 retrospectively to each prior reporting period presented. The Group
will elect to apply the standard to contracts that were previously identified as leases applying MFRS
117 and IC Interpretation 4. The Group will therefore not apply the standard to contracts that were not
previously identified as containing a lease applying MFRS 117 and IC Interpretation 4.
The Group will elect to use the exemptions proposed by the standard on lease contracts for which the
lease terms ends within 12 months as of the date of initial application, and lease contracts for which
the underlying asset is of low value. The Group has leases of certain office equipment (i.e., personal
computers, printing and photocopying machines) that are considered of low value.
During 2018, the Group has performed a detailed impact assessment of MFRS 16. In summary the
impact of MFRS 16 adoption is expected to be, as follows:-
Increase/
(decrease)
Group RM
Asset
Property, plant and equipment (right-of-use assets) 33,405
Liability
Lease liabilities 34,278
Impact on the statements of profit or loss and other comprehensive income for the financial year
ended 31 December 2018:-
Increase/
(decrease)
Group RM
Depreciation expense (Include in administrative expenses) 23,718
Operating lease expense (Included in administrative expenses) (24,600)
Finance costs 1,755
Due to the adoption of MFRS 16, the Group’s operating profit will improve, while its interest expense
will increase. This is due to the change in the accounting for expenses of leases that were classified
as operating leases under MFRS 117.
Estimates, assumptions concerning the future and judgements are made in the preparation of the
financial statements. They affect the application of the Group’s accounting policies and reported
amounts of assets, liabilities, income and expenses, and disclosures made. Estimates and underlying
assumptions are assessed on an on-going basis and are based on experience and relevant factors,
including expectations of future events that are believed to be reasonable under the circumstances.
The actual results may differ from the judgements, estimates and assumptions made by management,
and will seldom equal the estimated results.
Information about significant judgements, estimates and assumptions that have the most significant
effect on recognition and measurement of assets, liabilities, income and expenses are discussed
below.
The Group measures its land and buildings at revalued amount with changes in fair value being
recognised in other comprehensive income. The Group engaged independent valuation specialists
to determine fair values as at 31 December 2017.
The carrying amount of the land and buildings at the end of the reporting period, and the relevant
revaluation bases, are disclosed in Note 4 to the financial statements.
81
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Information about significant judgements, estimates and assumptions that have the most significant
effect on recognition and measurement of assets, liabilities, income and expenses are discussed
below (cont’d).
Management estimates the useful lives of the property, plant and equipment to be within 2 to 86
years and reviews the useful lives of depreciable assets at the end each of the reporting period.
At 31 December 2018, management assesses that the useful lives represent the expected utility
of the assets to the Group. Actual results, however, may vary due to change in the expected level
of usage and technological developments, which resulting the adjustment to the Group’s assets.
The carrying amount of the Group’s property, plant and equipment at the end of the reporting
period is disclosed in Note 4 to the financial statements.
Impairment of goodwill
Impairment loss is recognised for the amount by which the asset’s or cash-generating unit
(“CGU”)’s carrying amount exceeds its recoverable amount. To determine the recoverable
amount, management estimates expected future cash flows from each CGU and determines a
suitable interest rate in order to calculate the present value of those cash flows. In the process of
measuring expected future cash flows, management makes assumptions about future operating
results. These assumptions relate to future events and circumstances. The actual result may vary,
and may cause significant adjustments to the Group’s assets within the next financial year.
Further details of the carrying values, key assumptions applied in the impairment assessment of
goodwill and sensitivity analysis to changes in the assumptions are disclosed in Note 9 to the
financial statements.
The Group carried out impairment tests where there are indications of impairment based on a
variety of estimation including value-in-use of CGU to which the property, plant and equipment
are allocated. Estimating the value-in-use requires the Group to make an estimate of the expected
future cash flows from CGU and also to choose a suitable discount rate in order to calculate
present value of those cash flows.
Inventories
Inventories are measured at the lower of cost and net realisable value. In estimating net realisable
values, management takes into account the most reliable evidence available at the times the
estimates are made. The Group’s core business is subject to economical and technology changes
which may cause selling prices to change rapidly, and the Group’s profit to change.
The carrying amount of the Group’s inventories at the end of the reporting period is disclosed in
Note 12 to the financial statements.
82
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Management uses valuation techniques in measuring the fair value of financial instruments
where active market quotes are not available. Details of the assumptions used are given in the
notes regarding financial assets and liabilities. In applying the valuation techniques management
makes maximum use of market inputs, and uses estimates and assumptions that are, as far
as possible, consistent with observable data that market participants would use in pricing the
instrument. Where applicable data is not observable, management uses its best estimate about
the assumptions that market participants would make. These estimates may vary from the actual
prices that would be achieved in an arm’s length transaction at the end of the reporting period.
The Group uses a provision matrix to calculate ECLs for trade receivables. The provision rates
are based on days past due for groupings of various customer segments that have similar loss
patterns (i.e., by geography, product type, customer type and rating, and coverage by letters of
credit and other forms of credit insurance).
The provision matrix is initially based on the Group’s historical observed default rates. The
Group will calibrate the matrix to adjust the historical credit loss experience with forward-looking
information. For instance, if forecast economic conditions (i.e., gross domestic product) are
expected to deteriorate over the next year which can lead to an increased number of defaults
in the property development and Enterprise Data Collection and Collation System, the historical
default rates are adjusted. At every reporting date, the historical observed default rates are updated
and changes in the forward-looking estimates are analysed.
The assessment of the correlation between historical observed default rates, forecast economic
conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in
circumstances and of forecast economic conditions. The Group’s historical credit loss experience
and forecast of economic conditions may also not be representative of customer’s actual default
in the future. The information about the ECLs on the Group’s trade receivables is disclosed in
Note 46(a)(i) to the financial statements.
Deferred tax assets are recognised for all deductible temporary differences, unutilised tax losses,
unabsorbed capital allowances and unused tax credits to the extent that it is probable that taxable
profit will be available against which all the deductible temporary differences, unutilised tax
losses and unabsorbed capital allowances can be utilised. Significant management judgement
is required to determine the amount of deferred tax assets that can be recognised, based upon
the likely timing and level of future taxable profits together with future tax planning strategies.
The assessment of the probability of future taxable income in which deferred tax assets can be
utilised is based on the Group’s latest approved budget forecast, which is adjusted for significant
non-taxable income and expenses and specific limits to the use of any unused tax loss or
credit. The tax rules in the numerous jurisdictions in which the Group operates are also carefully
taken into consideration. If a positive forecast of taxable income indicates the probable use of a
deferred tax asset, especially when it can be utilised without a time limit that deferred tax asset is
usually recognised in full. The recognition of deferred tax assets that are subject to certain legal
or economic limits or uncertainties is assessed individually by management based on specific
facts and circumstances.
Development costs
To distinguish any research-type project phase from the development phase, it is the Group’s
accounting policy to also require a detailed forecast of sales or cost savings expected to be
generated by the intangible asset. The forecast is incorporated into the Group’s overall budget
forecast as the capitalisation of development costs commences. This ensures that managerial
accounting, impairment testing procedures and accounting for internally-generated intangible
assets is based on the same data.
The Group’s management also monitors whether the recognition requirements for development
costs continue to be met. This is necessary as the economic success of any product development
is uncertain and may be subject to future technical problems after the time of recognition.
Property development revenue
The Group recognises property development revenue and expenses in the statement of profit or
loss and other comprehensive income by using the stage of completion method. The stage of
completion is determined by the proportion that property development costs incurred for work
performed to date bear to the estimated total property development costs. Significant judgement
is required in determining the stage of completion, the extent of the property development costs
incurred, the estimated total property development revenue and costs, as well as the recoverability
of the property development costs. In making the judgement, the Group evaluates based on past
experience and by relying on the work of specialists.
The carrying amounts of assets and liabilities of the Group arising from property development
activities are disclosed in Note 11 to the financial statements.
84
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The following are significant management judgement in applying the accounting policies of the
Group that have the most significant effect on the financial statements.
The Group applied the following judgements that significantly affect the determination of the
amount and timing of revenue from contracts with customers:-
The Group provides repair and maintenance services that are sold on their own in contracts with
the customers or non-contract customer with the provision of information technology solutions to
a customer. The repair and maintenance services are a promise to transfer services in the future.
The Group concluded that revenue for repair and maintenance services is to be recognised over
time because the customer simultaneously receives and consumes the benefits provided by the
Group. The fact that another entity would not need to re-perform the repair and maintenance
that the Group has provided to date demonstrates that the customer simultaneously receives
and consumes the benefits of the Group’s performance as it performs.
The Group determined that the input method is the best method in measuring progress of the
repair and maintenance services because there is a direct relationship between the Group’s effort
and the transfer of service to the customer.
Leases
In applying the classification of leases in MFRS 117, management considers some of its leases of
motor vehicle as finance lease arrangements. The lease transaction is not always conclusive, and
management uses judgement in determining whether the lease is a finance lease arrangement
that transfers substantially all the risks and rewards incidental to ownership, whether the lease
term is for the major part of the economic life of the asset even if title is not transferred and others
in accordance with MFRS 117 Leases.
The Group and the Company apply the significant accounting policies as summarised below, consistently
throughout all periods presented in the financial statements.
3.1 Consolidation
3.1.1 Subsidiaries
Subsidiaries are entities, including structured entities, controlled by the Group. Control exists when
the Group is exposed, or has rights, to variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the entity. Potential voting rights are
considered when assessing control only when such rights are substantive. Besides, the Group
considers it has de facto power over an investee when, despite not having the majority of voting
rights, it has the current ability to direct the activities of the investee that significantly affect the
investee’s return.
85
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Investment in subsidiaries is stated at cost less any impairment losses in the Group’s financial
position, unless the investment is held for sale or distribution. The cost of investments includes
transaction costs.
Upon the disposal of investment in a subsidiary, the difference between the net disposal proceeds
and its carrying amount is included in profit or loss.
The Group financial statements consolidate the audited financial statements of the Company
and all of its subsidiaries, which have been prepared in accordance with the Group’s accounting
policies. Amounts reported in the financial statements of subsidiaries have been adjusted where
necessary to ensure consistency with the accounting policies adopted by the Group. The financial
statements of the Company and its subsidiaries are all drawn up to the same reporting date.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions
between entities of the Group (profits or losses resulting from intragroup transactions that are
recognised in asset, such as inventory and property, plant and equipment) are eliminated in full
in preparing the consolidated financial statements. Intragroup losses may indicate an impairment
that requires recognition in the consolidated financial statements. Temporary differences arising
from the elimination of profits and losses resulting from intragroup transactions will be treated in
accordance to Note 3.19.2 of the financial statements.
Subsidiaries are consolidated from the date on which control is transferred to the Group and are
no longer consolidated from the date that control ceases.
Changes in the Company owners’ ownership interest in a subsidiary that do not result in a loss
of control are accounted for as equity transactions. In such circumstances, the carrying amounts
of the controlling and non-controlling interests are adjusted to reflect the changes in their relative
interests in the subsidiary. Any difference between the amount by which the non-controlling
interest is adjusted and the fair value of the consideration paid or received is recognised directly
in equity and attributed to owners of the parent.
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 interest in the acquiree. For each business
combination, the Group elects whether it measures the non-controlling interest in the acquiree
either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition
costs incurred are expensed 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, the acquisition date fair value of the acquirer’s
previously held equity interest in the acquiree is remeasured to fair value at the acquisition date
through profit or loss.
86
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
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 9 either
in profit or loss or as a change to other comprehensive income. If the contingent consideration
is classified as equity, it will not be remeasured. Subsequent settlement is accounted for within
equity. In instances where the contingent consideration does not fall within the scope of MFRS
9, 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 the 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 CGUs that are expected to benefit from the
combination, irrespective of whether other assets or liabilities of the acquiree are assigned to
those units.
Where goodwill forms part of a CGU and part of the operation within that unit is disposed of,
the goodwill associated with the operation disposed of is included in the carrying amount of the
operation when determining the gain or loss on disposal of the operation. Goodwill disposed of
in this circumstance is measured based on the relative values of the operation disposed of and
the portion of the CGU retained.
Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of
the subsidiary, any non-controlling interests and the other components of equity related to the
subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss.
If the Group retains any interest in the previous subsidiary, then such interest is measured at fair
value at the date that control is lost. Subsequently it is accounted for as an equity accounted
investee or as a designated fair value through profit or loss financial asset depending on the level
of influence retained.
Non-controlling interests at the end of the reporting period, being the equity in a subsidiary
not attributable directly or indirectly to the equity holders of the Company, are presented in the
consolidated statement of financial position and statement of changes in equity within equity,
separately from equity attributable to the owners of the Company. Non-controlling interests in
the results of the Group is presented in the consolidated statement of profit or loss and other
comprehensive income as an allocation of the profit or loss and the comprehensive income for
the year between non-controlling interests and the owners of the Company.
Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling
interests even if that results in a deficit balance.
87
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
3.1.6 Associates
Associates are entities in which the Group has significant influence, but no control, over their
financial and operating policies.
The Group’s investments in its associates are accounted for using the equity method. Under
the equity method, investment in an associate is carried in the statement of financial position
at cost plus post acquisition changes in the Group’s share of net assets of the associate since
the acquisition date. Goodwill relating to the associate is included in the carrying amount of the
investment and is neither amortised nor individually tested for impairment.
The share of the result of an associate is reflected in profit or loss. Any change in other
comprehensive income of those investees is presented as part of the Group’s other comprehensive
income. In addition, where there has been a change recognised directly in the equity of an
associate, the Group recognises its share of any changes and discloses this, when applicable,
in the statement of changes in equity. Unrealised gains and losses resulting from transactions
between the Group and the associate are eliminated to the extent of the interest in the associate.
The aggregate of the Group’s share of profit or loss of an associate is shown on the face of the
statement of profit or loss and other comprehensive income outside operating profit and represents
profit or loss after tax and non-controlling interests in the subsidiaries of the associate.
When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that
interest including any long-term investment is reduced to zero, and the recognition of further losses
is discontinued except to the extent that the Group has an obligation or has made payments on
behalf of the associate.
The financial statements of the associates are prepared as of the same reporting period as the
Group. Where necessary, adjustments are made to bring the accounting policies of the associates
in line with those of the Group.
After application of the equity method, the Group determines whether it is necessary to recognise
an additional impairment loss on the Group’s investments in its associates. The Group determines
at each end of the reporting period whether there is any objective evidence that the investments
in the associates is impaired. If there is such evidence, the Group calculates the amount of
impairment as the difference between the recoverable amount of the associates and their carrying
value, then recognises the amount in the “share of profit of investments accounted for using the
equity method” in profit or loss.
Upon loss of significant influence over the associate, the Group measures and recognises any
retained investment at its fair value. Any difference between the carrying amount of the associate
upon loss of significant influence and the fair value of the retained investment and proceeds from
disposal is recognised in profit or loss.
When the Group’s interest in an associate decreases but does not result in a loss of significant
influence, any retained interest is not re-measured. Any gain or loss arising from the decrease
in interest is recognised in profit or loss. Any gains or losses previously recognised in other
comprehensive income are also reclassified proportionately to the profit or loss if that gain or
loss would be required to be reclassified to profit or loss on the disposal of the related assets or
liabilities.
88
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
3.1.6 Associates(cont’d)
In the Company’s separate financial statements, investments in associates are stated at cost
less impairment losses. On disposal of such investments, the difference between net disposal
proceeds and their carrying amounts is included in profit or loss.
The Company’s consolidated financial statements are presented in RM, which is also the parent
company’s functional currency.
Transactions in foreign currencies are initially recorded at the functional currency rates prevailing
at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional
currency spot rate of exchange ruling at the reporting date.
All differences are taken to the profit or loss with the exception of all monetary items that forms
part of a net investment in a foreign operation. These are recognised in other comprehensive
income until the disposal of the net investment, at which time they are 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 as 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 in translation of non-monetary items
is recognised in line with the gain or loss of the item that gave rise to the translation difference
(translation differences on items whose gain or loss is recognised in other comprehensive income
or profit or loss is also recognised in other comprehensive income or profit or loss respectively).
The assets and liabilities of operations denominated in functional currencies other than RM,
including goodwill and fair value adjustments arising on acquisition, are translated to RM at
exchange rates at the end of the reporting period, except for goodwill and fair value adjustments
arising from business combination before 1 January 2011 which are treated as assets and liabilities
of the Group. The income and expenses of foreign operations are translated to RM at exchange
rates at the date of the transactions.
Foreign currency differences are recognised in other comprehensive income and accumulated in
the foreign exchange fluctuation reserve in equity. However, if the operation is a non-wholly-owned
subsidiary, then the relevant proportionate share of the translation difference is allocated to the
non-controlling interests. When a foreign operation is disposed of such that control, significant
influence or joint control is lost, the cumulative amount in the foreign currency translation reserve
related to that foreign operation is reclassified to profit or loss as part of the profit or loss on
disposal.
89
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation,
the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When
the Group disposes of only part of its investment in an associate or joint venture that includes a
foreign operation while retaining significant influence or joint control, the relevant proportion of
the cumulative amount is reclassified to profit or loss.
In the consolidated financial statements, when settlement of a monetary item receivable from
or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign
exchange gains and losses arising from such a monetary item are considered to form part of a
net investment in a foreign operation and are recognised in other comprehensive income, and
are presented in foreign currency translation reserve in equity.
Property, plant and equipment are initially stated at cost. The cost of an item of property, plant and
equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated
with the item will flow to the Group and the cost of the item can be measured reliably.
All property, plant and equipment, except for land and building, are subsequently stated at cost less
accumulated depreciation and less any impairment losses. When significant parts of property, plant
and equipment are required to be replaced in intervals, the Group recognises such costs as individual
assets with specific useful lives and depreciation, respectively. All other repair and maintenance costs
are recognised in profit or loss as incurred.
Land is shown at fair values, based on valuations by external independent valuers, less subsequent
accumulated depreciation on buildings and any accumulated impairment losses. Valuations are
performed with sufficient regularity, usually every five years, to ensure that the carrying amount does
not differ materially from the fair value of the land and buildings at the end of the reporting period.
As at the date of revaluation, accumulated depreciation, if any, is eliminated against the gross carrying
amount of the asset and the net amount is restated to the revalued amount of the asset. Any revaluation
surplus arising upon appraisal of land is recognised in other comprehensive income and credited to
the revaluation reserve in equity. To the extent that any revaluation decrease or impairment loss has
previously been recognised in profit or loss, a revaluation increase is credited to profit or loss with the
remaining part of the increase recognised in other comprehensive income. Downward revaluations of
land are recognised upon appraisal or impairment testing, with the decrease being charged to other
comprehensive income to the extent of any revaluation surplus in equity relating to this asset and any
remaining decrease recognised in profit or loss. Any revaluation surplus remaining in equity on disposal
of the asset is transferred to other comprehensive income.
Buildings that are leasehold property are also included in property, plant and equipment if they are
held under a finance lease. Such assets are depreciated over their expected useful lives (determined
by reference to comparable owned assets) or over the term of the lease, if shorter.
Depreciation is recognised on the straight line method in order to write off the cost or valuation of each
asset over its estimated useful life. Freehold land with an infinite life is not depreciated. Leasehold land
is amortised over the lease term of 86 years.
90
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Buildings 2%
Computers 20% - 60%
Renovation 8% - 20%
Motor vehicles 20%
Factory/office furniture and equipment 8% - 25%
Plant and machinery 10%
Restoration cost relating to an item of the property, plant and equipment is capitalised only if such
expenditure is expected to increase the future benefits from the existing property, plant and equipment
beyond its previously assessed standard of performance.
The residual values, useful life and depreciation method are reviewed for impairment when events or
changes in circumstances indicate that the carrying amount may not be recoverable, or at least annually
to ensure that the amount, method and period of depreciation are consistent with previous estimates
and expected pattern of consumption of future economic benefits embodied in the items of property,
plant and equipment.
Property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected from its use or disposal. Gains or losses on the disposal of property, plant and equipment are
determined as the difference between the disposal proceeds and the carrying amount of the assets are
recognised in profit or loss in the financial year in which the asset is derecognised.
Development properties consists of land or such portions on which significant development work have
been undertaken and are stated at cost and where applicable attributable profit less progress billings.
Cost includes land acquisition cost, professional fees, stamp duties, commissions, conversion fee,
other levies, borrowing costs and development expenditure.
Accumulation of cost in property development projects does not cease even where the estimated future
realisable revenues are lower than the carrying value of the projects.
When the outcome of a developments project cannot be estimated reliably, revenue is recognised only
to the extent of development costs incurred that it is probable will be recoverable.
Profit is recognised on the development units sold, for which sales agreements have been concluded,
using the percentage of completion of a physical proportion of the development works.
Where property is under development and agreement has been reached to sell such property when
construction is complete, the Directors consider whether the contract comprises a contract to construct
a property or a contract for the sale of a completed property.
Where a contract is judged to be for the construction of a property, revenue is recognised using the
percentage of completion method as construction progresses.
91
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Where the contract is judged to be for the sale of a completed property, revenue is recognised when
the significant risks and rewards of ownership of the real estate have been transferred to the buyer. If,
however, the legal terms of the contract are such that the construction represents the continuous transfer
of work-in-progress to the purchaser, the percentage of completion method of revenue recognition is
applied and revenue is recognised as work progresses. Continuous transfer of work-in-progress is
applied when:-
(a) The buyer controls the work-in-progress, typically when the land on which the development is
taking place is owned by the final customer, and
(b) All significant risks and rewards of ownership of the work-in-progress in its present state are
transferred to the buyer as construction progresses, typically when buyer cannot put the incomplete
property back to the Group.
In such conditions, the percentage of work completed is measured based on the costs incurred up
until the end of the reporting period as a proportion of total costs expected to be incurred.
Property development costs not recognised as an expense is recognised as an asset and is stated at
the lower of costs and net realisable value.
The excess of revenue recognised in the profit or loss over billings to purchasers is classified as accrued
billings and the excess of billings to purchasers over revenue recognised in the profit or loss is classified
as progress billings.
3.5 Goodwill
Goodwill represents the excess of the cost of acquisition over the Group’s interest in the fair value of
the identifiable assets, liabilities and contingent liabilities of a subsidiary, associate and jointly controlled
entities at the date of acquisition.
Goodwill arising on the acquisition of subsidiaries is presented separately in the Consolidated Statement
of Financial Position while goodwill arising on the acquisition of associate is included within the carrying
amount of investment in associate.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.
Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances
indicate that the carrying values may be impaired.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group’s CGUs, or groups of CGUs, that are expected to
benefit from the synergies of the combination.
A CGU (or group of CGUs) to which goodwill has been allocated is tested for impairment annually and,
whenever there is an indication that the unit may be impaired, by comparing the carrying amount of
the unit, including goodwill, with the recoverable amount of the unit. Where the recoverable amount
of the CGU (or group of CGUs) is less than the carrying amount, an impairment loss is recognised in
profit or loss.
An impairment loss recognised for goodwill should not be reversed in subsequent period. Gains and
losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
92
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Where goodwill forms part of a CGU (or group of CGUs) and part of the operations within that unit is
disposed off, the goodwill associated with the operations disposed off is included in the carrying amount
of the operations when determining the gain or loss on disposal of the operations. Goodwill disposed
off in these circumstances is measured based on the relative fair values of the operations disposed off
and portion of the CGU retained.
3.6 Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the
arrangement at the inception of the lease. The arrangement is, or contains, a lease if 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, even if that right is not explicitly specific in an arrangement.
Group as a lessee
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers
substantially all the risks and rewards incidental to ownership to the Group is classified as a finance
lease.
Finance leases are capitalised at the commencement of the lease at the inception date 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 the statement of profit or loss.
A leased assets is depreciated over the useful life of the asset. However, if there is no reasonable
certainty that the Group will obtain ownership 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.
An operating lease is a lease other than a finance lease. Operating lease payments are recognised as
an operating expense in the statement of profit or loss on a straight-line basis over the lease term.
Management applies judgement in considering the substance of a lease agreement and whether
it transfers substantially all the risks and rewards incidental to ownership of the leased asset.
Key factors considered include the length of the lease term in relation to the economic life of the
asset, the present value of the minimum lease payments in relation to the asset’s fair value, and
whether the Group obtains ownership of the asset at the end of the lease term.
For lease of land and buildings, the minimum lease payments are first allocated to each component
based on the relative fair values of the respective lease interests. Each component is then evaluated
separately for possible treatment as a finance lease, taking into consideration the fact the land
normally has an indefinite economic life.
All other leases are treated as operating leases. Where the Group is a lessee, payments on
operating lease agreements are recognised as an expense on a straight-line basis over the lease
term. Associated costs, such as maintenance and insurance are expensed as incurred.
93
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Financial assets and financial liabilities are recognised when the Group becomes a party to the
contractual provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the financial
asset expire, or when the financial asset and substantially all the risks and rewards are transferred.
A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Except for those trade receivables that do not contain a significant financing component and are
measured at the transaction price in accordance with MFRS 15, all financial assets are initially
measured at fair value adjusted for transaction costs (where applicable).
Financial assets, other than those designated and effective as hedging instruments, are classified
into the following categories:-
In the periods presented, the Company does not have any financial assets categorised as FVOCI.
(a) the entity’s business model for managing the financial asset
(b) the contractual cash flow characteristics of the financial asset
All income and expenses relating to financial assets that are recognised in profit or loss are
presented within finance costs, finance income or other financial items, except for impairment of
trade receivables which is presented within other expenses.
Financial assets are measured at amortised cost if the assets meet the following conditions (and
are not designated as FVTPL):-
(a) they are held within a business model whose objective is to hold the financial assets and
collect its contractual cash flows
(b) the contractual terms of the financial assets give rise to cash flows that are solely payments
of principal and interest on the principal amount outstanding
After initial recognition, these are measured at amortised cost using the effective interest method.
Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash
equivalents, trade and most other receivables fall into this category of financial instruments as
well as listed bonds that were previously classified as held-to-maturity under MFRS 139.
94
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold
to collect and sell’ are categorised at FVTPL. Further, irrespective of business model financial assets
whose contractual cash flows are not solely payments of principal and interest are accounted for
at FVTPL. All derivative financial instruments fall into this category, except for those designated
and effective as hedging instruments, for which the hedge accounting requirements apply.
Assets in this category are measured at fair value with gains or losses recognised in profit or loss.
The fair values of financial assets in this category are determined by reference to active market
transactions or using a valuation technique where no active market exists.
For the purpose of subsequent measurement, financial assets other than those designated and
effective as hedging instruments are classified into the following categories upon initial recognition:-
The category determines subsequent measurement and whether any resulting income and expense
is recognised in profit or loss or in other comprehensive income.
All financial assets except for those at fair value through profit or loss are subject to review for
impairment at least at each end of the reporting period. Financial assets are impaired when there
is any objective evidence that a financial asset or a group of financial assets is impaired. Different
criteria to determine impairment are applied for each category of financial assets.
A financial asset or part of it is derecognised when, and only when the contractual rights to the
cash flows from the financial asset expire or the financial asset is transferred to another party
without retaining control or substantially all risks and rewards of the asset. On derecognition of
a financial asset, the difference between the carrying amount and the sum of the consideration
received (including any new asset obtained less any new liability assumed) and any cumulative
gain or loss that had been recognised in equity is recognised in the profit or loss.
As of reporting date, the Group and the Company carries only loans and receivables and available-
for-sale financial assets on their statement of financial position.
Loans and receivables are classified as current assets, except for those having maturity dates
later than 12 months after the end of the reporting period which are classified as non-current.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are either designated
to this category or do not qualify for inclusion in any of the other categories of financial assets.
The Group’s available-for-sale financial assets include listed securities, debentures and the equity
instruments.
Available-for-sale financial assets are measured at fair value subsequent to the initial recognition.
Gains and losses are recognised in other comprehensive income and reported within the available-
for-sale reserve within equity, except for impairment loss and foreign exchange differences
on monetary assets, which are recognised in profit or loss. When the asset is disposed of or
is determined to be impaired, the cumulative gain or loss recognised in other comprehensive
income is reclassified from the equity reserve to profit or loss and presented as a reclassification
adjustment within other comprehensive income.
Interest calculated using the effective interest method and dividends are recognised in profit or
loss. Dividends on an available-for-sale equity are recognised in profit or loss when the Group’s
and the Company’s right to receive payment is established.
Investment in equity instruments that do not have a quoted market price in an active market and
whose fair value cannot be reliably measured are measured at cost less impairment loss.
Available-for-sale financial assets are classified as non-current assets unless they are expected
to be realised within 12 months after the end of the reporting period.
MFRS 9’s impairment requirements use more forward-looking information to recognise expected
credit losses – the ‘expected credit loss (“ECL”) model’. This replaces MFRS 139’s ‘incurred loss
model’. Instruments within the scope of the new requirements included loans and other debt-
type financial assets measured at amortised cost and FVOCI, trade receivables, contract assets
recognised and measured under MFRS 15 and loan commitments and some financial guarantee
contracts (for the issuer) that are not measured at FVTPL.
Recognition of credit losses is no longer dependent on the Group first identifying a credit loss
event. Instead the Group considers a broader range of information when assessing credit risk
and measuring expected credit losses, including past events, current conditions, reasonable
and supportable forecasts that affect the expected collectability of the future cash flows of the
instrument.
96
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
(a) financial instruments that have not deteriorated significantly in credit quality since initial
recognition or that have low credit risk (‘Stage 1’); and
(b) financial instruments that have deteriorated significantly in credit quality since initial
recognition and whose credit risk is not low (‘Stage 2’).
‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting
date.
‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected
credit losses’ are recognised for the second category.
The Group makes use of a simplified approach in accounting for trade receivables and other
receivables and records the loss allowance as lifetime expected credit losses. These are the
expected shortfalls in contractual cash flows, considering the potential for default at any point
during the life of the financial instrument. In calculating, the Group uses its historical experience,
external indicators and forward-looking information to calculate the expected credit losses using
a provision matrix.
The Group assess impairment of trade receivables on a collective basis as they possess shared
credit risk characteristics they have been grouped based on the days past due. The detailed
analysis of impairment requirements of MFRS 9 are disclosed in Note 14 and Note 15 to the
financial statements.
The Group assesses at each reporting date whether there is any objective evidence that a financial
asset or a group of financial assets is impaired. A financial asset or a group of financial assets
is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of
one or more events that has occurred after the initial recognition of the asset (an incurred “loss
event”) and that 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 where observable date indicate that there is a
measurable decrease in the estimated future cash flows, such as changes in arrears or economic
conditions that correlate with defaults.
97
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
For financial assets carried at amortised cost, the Group first assesses whether objective evidence
of impairment exists individually for financial assets that are individually significant, or collectively
for financial assets that are not individually significant. If the Group determines that no objective
evidence of impairment exists for an individually assessed financial asset, whether significant or
not, it includes the asset in a group of financial assets with similar credit risk characteristics and
collectively assesses them for impairment. Assets that are individually assessed for impairment
and for which an impairment loss is, or continue to be, recognised are not included in a collective
assessment of impairment.
If there is objective evidence that an impairment loss has been incurred, the amount of the loss is
measured as the difference between the assets 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. If a loan has a variable interest rate, the discount rate for measuring any
impairment loss is the current effective interest rate.
The carrying amount of the asset is reduced through the use of an allowance account and the
amount of the loss is recognised in the profit or loss. Interest income 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. The interest income is recorded
as part of finance income in the profit or 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. 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 future write-off is later recovered, the recovery is credited to finance costs
in the profit or loss.
For available-for-sale financial assets, the Group assesses at each reporting period whether there
is objective evidence that an investment or a group of investment is impaired.
In the case of equity investments classified as available-for-sale, objective evidence would include
a significant or prolonged decline in the fair value of the investment below its cost. “Significant”
is evaluated against the original cost of the investment and “prolonged” against the period in
which the fair value has been below its original cost. Where there is evidence of impairment, the
cumulative loss – measured as the difference between the acquisition cost and the current fair
value, less any impairment loss on that investment previously recognised in the profit or loss –
is removed from other comprehensive income and recognised in the profit or loss. Impairment
losses on equity investments are not reversed through profit or loss; increases in their fair value
after impairments are recognised directly in other comprehensive income.
98
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Future interest income continues to be accrued based on the reduced carrying amount of the asset,
using the rate of interest used to discount the future cash flows for the purpose of measuring the
impairment loss. The interest income is recorded as part of finance income. If, in a subsequent
year, the fair value of a debt instrument increases and the increase can be objectively related to
an event occurring after the impairment loss was recognised in the profit or loss, the impairment
loss is reversed through profit or loss.
As the accounting for financial liabilities remains largely the same under MFRS 9 compared to
MFRS 139, the Group’s financial liabilities were not impacted by the adoption of MFRS 9. However,
for completeness, the accounting policy is disclosed below.
The Group’s financial liabilities include borrowings, trade and other payables, amount due to
Directors, amount due to subsidiaries, amount due to related parties, finance lease liabilities and
borrowings.
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction
costs unless the Group designated a financial liability at FVTPL.
Subsequently, financial liabilities are measured at amortised cost using the effective interest
method except for derivatives and financial liabilities designated at FVTPL, which are carried
subsequently at fair value with gains or losses recognised in profit or loss (other than derivative
financial instruments that are designated and effective as hedging instruments).
All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported
in profit or loss are included within finance costs or finance income.
99
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The Group assesses at each reporting date whether there is an indication that an asset may be
impaired. If any indication exists, or when annual impairment testing for an asset is required, the
Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher
of an asset’s or CGU’s fair value less costs to sell and its value in use and is determined for an
individual asset, unless the asset does not generate cash inflows that are largely independent
of those from other assets or groups of assets. Where the carrying amount of an asset or CGU
exceeds its recoverable amount, the asset is considered impaired and is written down to its
recoverable amount. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset. In determining fair value less costs
to sell, recent market transactions are taken into account, if available. If no such transactions
can be identified, an appropriate valuation model is used. These calculations are corroborated
by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair
value indicators.
The Group bases its impairment calculation on detailed budgets and forecast calculations which
are prepared separately for each of the Company’s CGUs to which the individual assets are
allocated. These budgets and forecast calculations are generally covering a period of five years.
For longer periods, a long term growth rate is calculated and applied to project future cash flows
after the fifth year.
For assets excluding goodwill, an assessment is made at each reporting date as to whether
there is any indication that previously recognised impairment losses may no longer exist or may
have decreased. If such indication exists, the Group estimates the asset’s or CGU’s recoverable
amount. 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 asset in prior years. Such reversal
is recognised in the profit or loss unless the asset is carried at a revalued amount, in which case
the reversal is treated as a revaluation increase.
Goodwill is tested for impairment annually as at the end of each reporting period, and when
circumstances indicate that the carrying value may be impaired. Impairment is determined for
goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the
goodwill relates. Where the recoverable amount of the CGU is less than their carrying amount,
an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in
future periods.
Intangible assets with indefinite useful lives are tested for impairment annually as at the end of each
reporting period, either individually or at the CGU level, as appropriate and when circumstances
indicate that the carrying value may be impaired.
100
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
All research costs are recognised in profit or loss as incurred. Expenditure incurred on projects to develop
new products is capitalised and deferred only when the Group or the Company 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 the project and the ability to measure reliably the
expenditure during the development. Product development expenditure which do not meet these criteria
are expensed off when incurred.
Development costs, considered to have finite useful lives, are stated at cost less any impairment losses
and are amortised using the straight-line basis over the commercial lives of the underlying products
not exceeding five years. Impairment is assessed whenever there is an indication of impairment and
the amortisation period and method are also reviewed at least once at each reporting date.
3.10 Inventories
Inventories other than inventory properties comprises raw materials, work-in-progress, finished
goods are stated at the lower of cost and net realisable value.
Cost of raw material is determined on a weighted average basis. Cost of finished goods and
work-in-progress include design cost, raw material, direct labour and an appropriate proportion
of production overheads (based on normal operating capacity).
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.
Property acquired or being constructed for sale in the ordinary course of business, rather than
to be held for rental or capital appreciation, is held as inventory and is measured at the lower
of cost and net realisable value.
Cost includes freehold land and rights for land, amounts paid to contractors for construction,
borrowing costs, planning and design costs, costs of site preparation, professional fees for legal
services, property transfer taxes, construction overheads and other related costs.
Net realisable value is the estimated selling price in the ordinary course of the business, based
on market prices at the reporting date and discounted for the time value of money if material,
less costs to completion and the estimated costs necessary to make the sale.
Cash and cash equivalents comprise cash on hand, bank balances, short term demand deposits, bank
overdraft and highly liquid investments which are readily convertible to known amount of cash and
which are subject to an insignificant risk of changes in value.
Bank overdrafts are shown in current liabilities in the statements of financial position.
For the purpose of the statements of financial position, cash and cash equivalents restricted to be used
to settle a liability of 12 months or more after the reporting date are classified as non-current asset.
101
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
An equity instrument is any contract that evidences a residual interest in the assets of the Group and
the Company after deducting all of its liabilities. Ordinary shares are equity instruments.
The revaluation reserve within equity comprises gains and losses due to the revaluation of property,
plant and equipment. Foreign currency translation differences arising on the translation of the Group’s
foreign entities are included in the foreign exchange fluctuation reserve. Gains and losses on certain
financial instruments are included in reserves for available-for-sale financial assets and cash-flow hedges
respectively.
The distribution of non-cash assets to owners is recognised as dividend payable when the dividend
was approved by shareholders. The dividend payable is measured at the fair value of the shares to be
distributed. At the end of the financial year and on the settlement date, the Group reviews the carrying
amount of the dividend payable, with any changes in the fair value of the dividend payable recognised
in equity. When the Group settles the dividend payable, the difference between the carrying amount of
the dividend distributed and the carrying amount of the dividend payable is recognised as a separate
line item in profit or loss.
Retained earnings include all current and prior period retained profits.
Dividends on ordinary shares are accounted for in shareholder’s equity as an appropriation of retained
earnings.
All transactions with owners of the parent are recorded separately within equity.
When issued share of the Company are repurchased, the consideration paid, including directly
attributable costs is presented as a change in equity. Repurchased shares that have not been cancelled
are classified as treasury shares and presented as a deduction from equity. No gain or loss is recognised
in profit or loss on the sale, reissuance or cancellation of treasury shares.
When treasury shares are distributed as share dividends, the cost of the treasury shares is applied in
the reduction of the distributable reserves.
When treasury shares are reissued by resale, the difference between the sale consideration net of
directly attributable costs and the carrying amount of the treasury shares is shown as a movement in
equity.
3.14 Provisions
Provisions are recognised when there is a present obligation, legal or constructive, as a result of a past
event, when 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. Provisions
are not recognised for future operating losses.
Any reimbursement that the Group can be virtually certain to collect from a third party with respect to
the obligation is recognised as separate asset. However, this asset may not exceed the amount of the
related provision.
102
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Provisions are reviewed at each end of the reporting period and adjusted to reflect the current best
estimate. If it is no longer probable that an outflow of economic resources will be required to settle the
obligation, the provision is reversed. Where the effect of the time of money is material, provisions are
discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability.
When discounting is used, the increase in the provision due to the passage of time is recognised as a
finance cost.
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset
are capitalised during the period of time that is necessary to complete and prepare the asset for its
intended use or sale. Capitalisation of borrowing costs commences when the activities to prepare the
asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred.
Borrowing costs are capitalised until the assets are substantially completed for their intended use or
sale.
Other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist
of interest and other costs that the Group and the Company incurred in connection with the borrowing
of funds.
Interest-bearing borrowings are recorded at the amount of proceeds received, net of transaction costs
incurred.
Wages, salaries, bonuses and social security contributions are recognised as an expense in
the financial year in which the associated services are rendered by employees of the Group.
Short term accumulating compensated absences such as paid annual leave are recognised
when services are rendered by employees that increase their entitlement to future compensated
absences, and short term non-accumulating compensated absences such as sick leave are
recognised when the absences occur.
A provision is made for the estimated liability for leave as a result of services rendered by
employees up to the end of the reporting period.
Defined contribution plans are post-employment benefit plans under which the Group pays fixed
contributions into independent entities of funds and will have no legal or constructive obligation
to pay further contribution if any of the funds do not hold sufficient assets to pay all employee
benefits relating to employee services in the current and preceding financial years.
Such contributions are recognised as an expense in the profit or loss as incurred. As required by
law, companies in Malaysia make such contributions to the Employees Provident Fund (“EPF”).
Some of the Group’s foreign subsidiaries also make contributions to their respective countries’
statutory pension schemes.
103
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The Group is in the business of providing information technology solutions specialising in automated
data collection resources, mobile computing and property development. Revenue from contracts with
customers is recognised when control of the goods or services are transferred to the customer at an
amount that reflects the consideration to which the Group expects to be entitled in exchange for those
goods or services.
The disclosures of significant accounting judgements, estimates and assumptions relating to revenue
from contracts with customers are disclosed in Note 2.6.2 to the financial statements.
Revenue from sale of goods is recognised upon delivery of products and customers’ acceptance
and after eliminating sales within the Group.
Revenue invoiced where risks and ownership on sales of goods have not been transferred or
services have not been rendered at reporting date is recognised as deferred revenue.
Revenue is recognised on the percentage of completion method. The stage of completion for
each project is measured by a certificate issued by an architect based on the physical completion
of the work performed in proportion to the total development. Anticipated losses are recognised
in full immediately in profit or loss.
Interest income is recognised in profit or loss as it accrues, taking into account the
effective yield on the asset.
104
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit
or loss except to the extent that it relates to a business combination or items recognised directly in
equity or other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year,
using tax rates enacted or substantively enacted by the end of the reporting period, and any
adjustment to tax payable in respect of previous years.
Current tax is recognised in the statement of financial position as a liability (or an asset) to the
extent that it is unpaid (or refundable).
Deferred tax is recognised using the liability method, providing for temporary differences between
the carrying amounts of assets and liabilities in the statement of financial position and their
tax bases. Deferred tax is not recognised for the temporary differences arising from the initial
recognition of goodwill, the initial recognition of assets and liabilities in a transaction that is not
a business combination and that affects neither accounting nor taxable profit or loss. Deferred
tax is measured at the tax rates that are expected to be applied to the temporary differences
when they reverse, based on the laws that have been enacted or substantively enacted by the
end of the reporting period.
105
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The amount of deferred tax recognised is measured based on the expected manner of realisation
or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or
substantively enacted at the reporting date. The amount of deferred tax recognised is measured
using the tax rates that would apply on sale of those assets at their carrying value at the reporting
date unless the property is depreciable and is held with the objective to consume substantially
all of the economic benefits embodied in the property over time, rather than through sale.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current
tax liabilities and assets, and they relate to income taxes levied by the same tax authority on
the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities
and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits
will be available against which the temporary difference can be utilised. Deferred tax assets are
reviewed at the end of each reporting period and are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
Goods and Services Tax (“GST”) is a consumption tax based on value-added concept. GST is
imposed on goods and services at every production and distribution stage in the supply chain
including importation of goods and services, at the applicable tax rate of 6%. Input GST that
the Company paid on purchases of business inputs can be deducted from output GST.
Revenues, expenses and assets are recognised net of the amount of GST except:-
- Where the GST incurred in a purchase of assets or services is not recoverable from the
authority, in which case the GST is recognised as part of the cost of acquisition of the
assets or as part of the expense item as applicable; and
- Receivables and payables that are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as
part of receivables or payables in the statements of financial position.
The Malaysian Government has zero rated the GST effective from 1 June 2018. This mean the
GST rate on the supplies of goods or services or on the importation of goods has been revised
from 6% to 0%.
The GST has been replaced with the Sales and Services Tax effective from 1 September 2018.
The rate for sales tax is fixed at 5% or 10%, while the rate for services tax is fixed at 6%.
106
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Expenses and assets are recognised net of the amount of sales tax, except:-
(a) when the sales tax incurred on a purchase of assets or services is not recoverable from
the taxation authority, in which case, the sales tax is recognised as part of the cost of
acquisition of the asset or as part of the expense item, as applicable
(b) when receivables and payables are stated with the amount of sales tax included
The net amount of sales tax recoverable from, or payable to, the taxation authority is included
as part of receivables or payables in the statement of financial position.
An operating segment is a component of the Group that engages in business activities from which it
may earn revenues and incur expenses, including revenue and expenses that relate to transactions
with any of the Group’s other components. All operating segments’ operating results are reviewed
regularly by the chief operating decision maker to make decisions about resources to be allocated to
the segment and to assess its performance, and for which discrete financial information is available.
3.21 Contingencies
Where it is not probable that an inflow or an outflow of economic benefits will be required, or the amount
cannot be estimated reliably, the asset or the obligation is not recognised in the statements of financial
position and is disclosed as a contingent asset or contingent liability, unless the probability of inflow or
outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed
by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent
assets or contingent liabilities unless the probability of inflow or outflow of economic benefits is remote.
A related party is a person or entity that is related to the Group. A related party transaction is a transfer
of resources, services or obligations between the Group and its related party, regardless of whether a
price is charged.
(a) A person or a close member of that person’s family is related to the Group if that person:-
(b) An entity is related to the Group if any of the following conditions applies:-
(i) the entity and the Group are members of the same group.
(ii) one entity is an associate or joint venture of the other entity.
(iii) both entities are joint ventures of the same third party.
(iv) 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 benefits of employees of either the
Group or an entity related to the Group.
(vi) the entity is controlled or jointly-controlled by a person identified in (a) above.
(vii) a person identified in (a)(ii) above has significant influence over the Group or is a member
of the key management personnel of the entity.
(viii) the entity, or any member of a group of which it is a party, provides key management
personnel services to the Group or to the parent of the Group.
4. PROPERTY, PLANT AND EQUIPMENT
At Valuation Cost
Computers/
factory/office Plant
Freehold Leasehold Motor furniture and and
Group land land Buildings vehicles equipment machinery Renovation Total
RM RM RM RM RM RM RM RM
Cost or valuation
At 1 January 2017 4,288,951 3,040,000 3,581,179 1,467,597 3,665,278 1,936,745 2,197,848 20,177,598
Additions – – – – 79,514 – – 79,514
Exchange differences – – – – (212,014) – – (212,014)
Disposals – (3,040,000) (1,440,000) (191,233) (569,772) – (918,224) (6,159,229)
Disposal of a subsidiary – – – (212,500) (217,729) (1,936,745) (20,190) (2,387,164)
Written off – – – – (72,563) – – (72,563)
Revaluation 740,498 – 203,910 – – – – 944,408
– 31 DECEMBER 2018 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS
ANNUAL REPORT 2018
GRAND-FLO BERHAD (607392-W)
107
4. PROPERTY, PLANT AND EQUIPMENT (CONT’D)
108
At Valuation Cost
Computers/
factory/office Plant
ANNUAL REPORT 2018
Accumulated depreciation
At 1 January 2017 – 149,736 258,978 731,742 2,777,307 1,428,446 1,524,543 6,870,752
Charge for the financial year – 18,717 57,482 163,703 243,429 60,666 116,181 660,178
Exchange differences – – – – (174,462) – – (174,462)
Disposals – (168,453) (131,922) (191,234) (419,400) – (542,490) (1,453,499)
– 31 DECEMBER 2018 (cont’d)
Charge for the financial year – – 46,902 161,806 202,400 – 53,134 464,242
Exchange differences – – – – 34,009 – – 34,009
Disposals – – – (76,248) (5,491) – – (81,739)
Written off – – – – (8,508) – – (8,508)
Furniture Office
Company Renovation and fittings equipment Total
RM RM RM RM
Cost
At 1 January 2017 20,170 11,687 48,277 80,134
Additions – – 7,000 7,000
Accumulated depreciation
At 1 January 2017 13,311 7,054 23,242 43,607
Charge for the financial year 2,420 1,403 6,401 10,224
(i) Freehold land and buildings were revalued in the financial year 2017 by Landserve Sdn. Bhd., a registered
valuer. The comparison method was adopted in arriving at the market value of the freehold land and
buildings.
In estimating the fair value of the properties, the highest and best use of the properties is their current
use. There has been no change to the valuation technique during the year. The revaluation surplus net
of applicable deferred tax was credited to other comprehensive income and is shown in revaluation
reserve under the equity.
Fair value measurement of the freehold land and buildings were categorised under Level 2. There were
no transfers between Level 1 and Level 2 during the financial year.
Level 2 fair value of freehold and buildings have been generally derived using the sales comparison
approach. Sales price of comparable properties in close proximity are adjusted for differences in key
attributes such as property size. The most significant input into this valuation approach is price per
square foot of comparable properties.
110
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
(ii) Had the following assets been stated at historical cost less accumulated depreciation, the net carrying
amount would have been as follows:-
Group
31.12.2018 31.12.2017 1.1.2017
RM RM RM
(iii) Freehold land, leasehold land and buildings of the Group have been pledged to licensed banks for
banking facilities granted to the Group.
The net carrying amounts of property, plant and equipment under finance lease arrangements are as follows:-
Group
31.12.2018 31.12.2017 1.1.2017
RM RM RM
Plant and machinery – – 232,133
Motor vehicles 304,935 486,151 624,055
5. INVESTMENT IN SUBSIDIARIES
Company
31.12.2018 31.12.2017 1.1.2017
RM RM RM
Company
31.12.2018 31.12.2017 1.1.2017
RM RM RM
Grandcon Sdn. Bhd. Malaysia 100 100 100 General contractor and
contractor of renovation works
Grand-Flo (HK) Limited * Hong Kong, 100 100 100 Investment holding
China
112
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
CL Solutions Limited * Hong Kong, 100 100 100 Provision of supply chain
China solutions and related services
Victor Group Limited * Hong Kong, 100 100 100 Investment holding
China
The Group’s subsidiaries that have material non-controlling interests are as follows:-
31.12.2018
Percentage of ownership
interest and voting interest (%) – 48 –
31.12.2017
Percentage of ownership
interest and voting interest (%) 20 48 *49
** Being redeemable non-convertible preference shares yet to redeem by the non-controlling interest as
at 31 December 2018.
114
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The Group’s subsidiaries that have material non-controlling interests are as follows (cont’d):-
1.1.2017
Percentage of ownership
interest and voting interest (%) 20 48 *49
* Represent of 49.9996%
The summary of financial information before intra-group elimination for the Group’s subsidiaries that have
material non-controlling interest is as below:-
Net assets –
4,609,579 –
The summary of financial information before intra-group elimination for the Group’s subsidiaries that have
material non-controlling interest is as below (cont’d):-
31.12.2017
The summary of financial information before intra-group elimination for the Group’s subsidiaries that have
material non-controlling interest is as below (cont’d):-
Other information
Dividend paid to non-controlling interest 40,000 – –
117
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
On 30 March 2018, the Company incorporated a wholly-owned subsidiary, BKW Residences Sdn. Bhd. for
a cash consideration of RM1.00.
On 6 July 2018, the Company acquired an additional 49.9996% equity interest in Innoceria Sdn. Bhd. (“ISB”),
increase its ownership from 50.0004% to 100% for a total consideration of RM21.9 million which was
satisfied by a combination of cash consideration of RM3 million and the remaining balance of RM18.9 million
to be paid in multiple tranches over a period of 30 months from the completion date, whereby each deferred
payment shall be made within 30 days from the completion of the sales of each unit of the properties under
Phase 1 of the Vortex Business Park Project and shall be of an amount equivalent to be net sales proceeds
provided always that the deferred payment in aggregate shall up to and not exceed the balance purchase
price. The carrying amount of ISB’s net assets in the Group’s financial statements on the date of acquisition
was RM19,350,988. The Group recognised a decrease in non-controlling interests of RM9,426,207 and a
decrease in retained earnings of RM12,473,793.
6. INVESTMENT IN ASSOCIATES
Group Company
31.12.2018 31.12.2017 1.1.2017 31.12.2018 31.12.2017 1.1.2017
RM RM RM RM RM RM
Simat Label Co., Ltd. * Thailand 14.12 14.12 14.12 Adhesive labels and stickers
printing
Net assets 16,057,019 12,279,871 92,847,845
The following table summarises the financial information of Group’s associate (cont’d):-
Other information
Dividend received – –
1,060,831
7. OTHER INVESTMENT
Group
31.12.2018 31.12.2017 1.1.2017
RM RM RM
Accumulated amortisation
Balance brought forward 5,706 5,296 4,886
Amortisation for the financial year 410 410 410
8. DEVELOPMENT COSTS
The development costs relate to the expenditure incurred for the development of “Warehouse Management
Systems” Solutions and other software products of the Group and of the Company.
The development cost has been fully written off at the end of the financial year ended 31 December 2017
as the Company has stopped providing “Warehouse Management System” Solutions with effective from 1
January 2018.
Included in development costs incurred during the financial year are as follows:-
9. GOODWILL ON CONSOLIDATION
Group
31.12.2018 31.12.2017 1.1.2017
RM RM RM
Goodwill has been allocated to the Group’s CGUs identified according to the subsidiaries, as follows:-
Group
31.12.2018 31.12.2017 1.1.2017
Subsidiaries RM RM RM
Labels
Kopacklabels (PG) Sdn. Bhd. – – 678,598
Properties
Jalur Bina Sdn. Bhd. 1,916,700 1,916,700 1,916,700
Innoceria Sdn. Bhd. 14,845,326 14,845,326 14,845,326
The recoverable amounts of the investment in the subsidiaries are based on its value-in-use and the recoverable
amounts are higher than the carrying amount of the investment. Thus, there is no impairment loss recognised
for the financial year ended 31 December 2018.
Grand-Flo Spritvest
Sdn. Bhd. and
Grand-Flo Data
Centrix Sdn. Bhd. 4 28 19 13 6-7 8-9 5-6
Grand-Flo (HK)
Limited and CL
Solution Limited 3 41 42 37 13 13 5
Jalur Bina Sdn. Bhd. 4 13 23 22 6-7 8-9 4-5
Innoceria Sdn. Bhd. 4 29 17 30 6-7 8-9 4-5
122
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The following describes each key assumption on which management has based its cash flow projections to
undertake impairment testing of goodwill:-
The budgeted growth rate is determined based on the industry trends and past performances of the
segments.
The basis used to determine the value assigned to the budgeted gross margin is the average gross
margin achieved in the year immediately before the budgeted year increased for expected efficiency
improvements.
The discount rate used is pre-tax and reflect specific risks relating to the relevant segments.
The Group believes that any reasonably possible changes in the above key assumptions applied are not likely
to materially cause recoverable amount to be lower than its carrying amount.
Group Company
31.12.2018 31.12.2017 1.1.2017 31.12.2018 31.12.2017 1.1.2017
RM RM RM RM RM RM
9,863 –
339,000 – –
339,000
123
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Group
31.12.2018 31.12.2017 1.1.2017
RM RM RM
Group
31.12.2018 31.12.2017 1.1.2017
RM RM RM
Deferred tax assets have not been recognised in respect of the following items:-
Group Company
31.12.2018 31.12.2017 1.1.2017 31.12.2018 31.12.2017 1.1.2017
RM RM RM RM RM RM
The deductible temporary differences, unabsorbed tax losses and unutilised capital allowances are available
indefinitely for offset against future taxable profits of the Company and the subsidiaries in which those items
arose. Deferred tax assets have not been recognised in respect of these items as they may not be used to
offset taxable profits of the subsidiaries in the Group and they have arisen in the subsidiaries that have a
recent history of losses.
124
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Group
31.12.2018 31.12.2017 1.1.2017
RM RM RM
The freehold land held for property development is charged to a licensed bank to secure banking facilities
granted to subsidiary.
Interest capitalised in land held for property development amounted to RMNil (31.12.2017: RM50,071 and
1.1.2017: RM598,122).
On 6 December 2016, ISB, a subsidiary of the Company has entered into a mutual land exchange agreement
with Metrio Development Sdn. Bhd. for the exchange of land areas from 0.0161 hectare to 0.0455 hectare.
As at year end, the title deed of the said land areas are still in the progress of transferring to ISB.
125
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
12. INVENTORIES
Group
31.12.2018 31.12.2017 1.1.2017
RM RM RM
Group
31.12.2018 31.12.2017 1.1.2017
RM RM RM
– 3,781,856 11,216,282
Group
31.12.2018 31.12.2017 1.1.2017
RM RM RM
Contract assets – 3,781,856 11,216,282
Group
31.12.2018 31.12.2017 1.1.2017
RM RM RM
126
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The normal trade credit terms granted by the Group ranging from 14 to 120 (31.12.2017 and 1.1.2017: 14 to
120) days. Other credit terms are assessed and approved on a case-by-case basis.
Retention sums which retained by stakeholders that are due upon expiry of retention periods 24 months as
stipulated in the sale and purchase agreements.
The movement of allowance for expected credit losses of trade receivables during the financial year is as
follow:-
Group
31.12.2018 31.12.2017 1.1.2017
RM RM RM
The reversal of allowance for expected credit losses were due to there are subsequent receipts.
The information about the credit exposures are disclosed in Note 46(a)(i) to the financial statements.
Group Company
31.12.2018 31.12.2017 1.1.2017 31.12.2018 31.12.2017 1.1.2017
RM RM RM RM RM RM
The movement of allowance for expected credit losses of other receivables during the financial year is as
follow:-
Group Company
31.12.2018 31.12.2017 1.1.2017 31.12.2018 31.12.2017 1.1.2017
RM RM RM RM RM RM
The reversal of allowance for expected credit losses were due to there are subsequent receipts during the
financial year ended 31 December 2018.
The amount due from Directors arising from trade transactions are unsecured, interest free and have credit
term of Nil (31.12.2017: Nil and 1.1.2017: 14) days.
The amount due to a Director is arising from the Company acquired the remaining 124,999 ordinary share of
a subsidiary from a Director, interest free and repayable over 30 months (Note 5 to the financial statement).
Company
31.12.2018 31.12.2017 1.1.2017
RM RM RM
The outstanding amounts which are trade in nature are unsecured, bear no interest and repayable on demand.
The outstanding amounts which are non-trade in nature are unsecured, bear interest at 4% (31.12.2017 and
1.1.2017: Nil%) and repayable on demand.
128
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Group
31.12.2018 31.12.2017 1.1.2017
RM RM RM
Related parties refer to companies in which certain Directors have financial interest.
The outstanding balances are trade in nature, unsecured, bear no interest and with credit term of 30 (31.12.2017
and 1.1.2017: 30) days.
Group
The fixed deposits with licensed banks of RM576,899 (31.12.2017: RM2,044,510 and 1.1.2017: RMNil) of the
Group have been pledged to licensed banks as security for banking facilities granted to the Group.
The fixed deposits with licensed banks of RMNil (31.12.2017: RMNil and 1.1.2017: RM17,950) of the Group
have been pledged to Tenaga Nasional Berhad as security for the bank guarantee facility granted to the Group.
The fixed deposits bear interest at rates ranging from 1.01% to 3.51% (31.12.2017: 1.01% to 3.50% and
1.1.2017: 3.00% to 3.50%) per annum.
Company
The fixed deposits bear interest at rates ranging from 1.01% to 3.51% (31.12.2017: 1.01% to 3.50% and
1.1.2017: 3.00% to 3.50%) per annum.
Group Company
31.12.2018 31.12.2017 1.1.2017 31.12.2018 31.12.2017 1.1.2017
RM RM RM RM RM RM
Included in the cash at banks of the Group held under Housing Development Account pursuant to Housing
Development (Control and Licensing) Act, 2012 and are restricted from use in other operations.
Included in the cash at banks of the Group held under sinking funds account and maintenance account pursuant
to Strata Management Act, 2013 (Act 757) & Regulations and are restricted from use in other operations.
129
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
At 31 December 2017/
31 December 2018 483,115,711 62,849,846 – 62,849,846
The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All
ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company
residual assets. In respect of the Company’s treasury shares that are held by the Group, all rights are suspended
until those shares are reissued.
The shareholders of the Company, by an ordinary resolution passed in an annual general meeting held on 25
June 2018, approved the Group’s plan to repurchase its own shares.
During the financial year, the Group repurchased 4,298,000 (31.12.2017: 2,163,200 and 1.1.2017: 1,850,800)
of its issued ordinary shares from the open market at an average price of RM0.21 (31.12.2017: RM0.24 and
1.1.2017: RM0.22) per share. The total consideration paid for the repurchase including transaction costs was
RM887,762 (31.12.2017: RM508,812 and 1.1.2017: RM399,117). The shares repurchased are being held as
treasury shares in accordance with Section 127(6) of the Companies Act 2016.
Of the total 483,115,711 (31.12.2017: 483,115,711 and 1.1.2017: 483,115,711) issued and fully paid ordinary
shares, 12,268,000 (31.12.2017: 7,970,000 and 1.1.2017: 5,806,800) are held as treasury shares by the
Company. As at 31 December 2018, the number of outstanding ordinary shares in issue after the set off is
therefore 470,847,711 (31.12.2017: 475,145,711 and 1.1.2017: 477,308,911) ordinary shares of RM0.13 each.
Group
31.12.2018 31.12.2017 1.1.2017
RM RM RM
Non-distributable:-
Capital reserve 990,796 990,796 990,796
Legal reserve 118,655 118,655 118,655
Group
31.12.2018 31.12.2017 1.1.2017
RM RM RM
The revaluation reserve was in respect of the revaluation surplus of freehold and leasehold land, and building,
net of deferred tax and is not available for distribution as dividends.
The entire retained earnings as at 31 December 2018 of the Company is available for distribution as divided
under the single tier system without incurring additional tax liabilities.
Group
31.12.2018 31.12.2017 1.1.2017
RM RM RM
The Group’s finance lease liabilities interests are charged at rates ranging from 2.40% to 3.61% (31.12.2017:
2.40% to 5.95% and 1.1.2017: 2.40% to 3.61%) per annum.
131
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Group Company
31.12.2018 31.12.2017 1.1.2017 31.12.2018 31.12.2017 1.1.2017
RM RM RM RM RM RM
The effective annual interest rates and the securities of the term loans are as disclosed in Note 33 to the
financial statements.
The term loans of the Company has been fully settled during the previous financial year.
Group
31.12.2018 31.12.2017 1.1.2017
RM RM RM
Deferred revenue
- Repair and maintenance services 541,515 – –
Sales deposits received 1,328,514 – –
1,870,029 – –
At 1 January 664,237 – –
Deferred during the year 122,260 – –
Sales deposit received during the year 1,733,659 – –
Recognised as revenue during the year (650,096) – –
1,870,029 – –
Analysed as:-
- Current 1,855,365 – –
- Non-current 14,664 – –
132
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Group
31.12.2018 31.12.2017 1.1.2017
RM RM RM
The normal trade credit terms for trade payables granted to the Group ranging from 30 to 90 (31.12.2017 and
1.1.2017: 30 to 90) days and an amount of RM8,820,616 (31.12.2017: RM167,090 and 1.1.2017: RM9,847,436)
bears overdue interest at rate 8% (31.12.2017 and 1.1.2017: 8%) per annum and for retention sum is 6 to 18
months (31.12.2017 and 1.1.2017: 6 to 18 months) upon completion of projects.
Group Company
31.12.2018 31.12.2017 1.1.2017 31.12.2018 31.12.2017 1.1.2017
RM RM RM RM RM RM
Company
31.12.2018 31.12.2017 1.1.2017
RM RM RM
– (1,798,587) (354,643)
The outstanding amount which is trade in nature is unsecured, bears no interest and repayable on demand.
The outstanding amount which is non-trade in nature is unsecured, bears no interest and repayable on
demand.
133
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Group
31.12.2018 31.12.2017 1.1.2017
RM RM RM
Related parties refer to companies in which certain Directors have financial interest.
The outstanding amount which is trade in nature is unsecured, interest free and has credit terms of 30
(31.12.2017 and 1.1.2017: 30) days.
The outstanding amount which is non-trade in nature is unsecured, bear interest rates ranging from 4.52%
to 4.64% (31.12.2017: 4.52% to 4.64% and 1.1.2017: Nil) per annum and repayable on demand.
33. BORROWINGS
Group Company
31.12.2018 31.12.2017 1.1.2017 31.12.2018 31.12.2017 1.1.2017
RM RM RM RM RM RM
Secured:
Bankers’ acceptance – 3,570,000 6,629,000 – – –
Bank overdrafts – – 500,219 – – –
Term loans (Note 27) 126,240 808,776 3,635,878 – – 2,250,000
The effective annual interest rates at the reporting date for borrowings are as follows:-
(a) legal charge over certain property, plant and equipment of the Group;
(b) legal charge over leasehold property of the Group;
(c) legal charge over freehold property of the Group;
(d) a pledge on the fixed deposits of the Group;
(e) joint and several guarantee by certain Directors of the Group;
(f) guarantee by the Company;
(g) facilities agreement;
(h) memorandum of deposit for pledge of entire paid out ordinary share of certain subsidiaries;
134
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
(i) dividends attributable to certain subsidiaries’ shares pledged by way of revocable and irrevocable Letter
of Undertaking;
(j) Credit Guarantee Corporation (M) Bhd’s guarantee under the Portfolio Guarantee Scheme of up to
RM2,100,000 being 70% of the principal limit of the facility of RM3,000,000; and
(k) deed of charge over a debt service reserve account to be maintained with the Bank with an initial cash
deposit equivalent to three months’ estimated interest payment under the Banking Facility or such
amount as may be specified by the Bank as the minimum credit balance.
The term loan of the Company has been fully settled during the previous financial year.
34. REVENUE
Group Company
2018 2017 2018 2017
RM RM RM RM
Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days. In 31.12.2018:
RM476,849 (31.12.2017: RM530,844 and 1.1.2017: RM341,980) was recognised as allowance for
expected credit losses on trade receivables.
Contract liabilities include repair and maintenance services have been billed customer which yet to
provide services and sales deposits received from customer. The significant increase in contract liabilities
in 2018 was mainly due to the RM541,515 repair and maintenance services and the RM1,328,514 sales
deposits received which is disclosed in Note 28 to the financial statements.
Group Company
2018 2017 2018 2017
RM RM RM RM
Group Company
2018 2017 2018 2017
RM RM RM RM
Gain on disposal of property,
plant and equipment 10,660 5,660 – –
Fair value gain on amount due
to a Director 1,005,926 – 1,005,926 –
Forfeiture of deposit from a
customer 51,732 – – –
Interest income 769,345 288,016 609,477 116,938
Rental income 139,200 135,600 – –
Unrealised gain on foreign
exchange 29,568 – – –
136
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Group Company
2018 2017 2018 2017
RM RM RM RM
Group Company
2018 2017 2018 2017
RM RM RM RM
Interest expense
- bankers’ acceptance 69,362 341,485 – –
- finance lease 10,564 15,177 – –
- overdraft 5,364 13,209 – –
- term loans 126,538 437,220 – 207,120
- late payment interest 112,186 442,457 – –
- loan from related parties 309 1,204 – –
- commitment fees 5,009 3,069 – –
Dividend on redeemable non-
convertible preference share
of non-controlling interest 13,565 25,684 – –
Profit before tax has been determined after charging, amongst others, the following items:-
Group Company
2018 2017 2018 2017
RM RM RM RM
Auditors’ remuneration
- auditors of the Company 103,000 111,000 21,000 20,000
- other auditors 71,293 74,172 – –
Realised loss on foreign exchange – – 27,533 1,756
Rental expense 221,400 561,690 – 9,000
137
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Group Company
2018 2017 2018 2017
RM RM RM RM
Malaysian income tax is calculated at the statutory tax rate of 24% of the estimated assessable profits for the
current financial year. Taxation for other jurisdictions is calculated at the tax rates prevailing in the respective
jurisdictions.
Pioneer losses, unabsorbed tax losses and unutilised capital allowances carried forward, subject to the
agreement of the Inland Revenue Board are as follows:-
Group Company
2018 2017 2018 2017
RM RM RM RM
A reconciliation of income tax expense applicable to profit before tax at the statutory tax rate to income tax
expense at the effective tax rate of the Group and of the Company are as follows:-
Group Company
2018 2017 2018 2017
RM RM RM RM
* The Government of Malaysia announced the reduction of income tax rate from 24% to a range of 20%
to 24% based on the percentage of increase in chargeable income as compared to the immediate
preceding year of assessment for years of assessment 2017 and 2018.
139
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
(a) Basic
Basic earnings per share is calculated by dividing profit for the year attributable to owners of the parent
with the weighted average number of ordinary shares in issue during the financial year (excluding treasury
shares held by the Company).
Group
2018 2017
RM RM
(b) Diluted
There are no diluted earnings per share because the Company does not have any convertible financial
instruments as at the end of the financial year.
41. DIVIDENDS
The Director recommend a final single tier dividend of 0.50 sen per share in respect of the current financial
year for shareholders’ approval at the forthcoming Annual General Meeting. The current financial statements
do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for
in equity as an appropriation of retained earnings in the financial year ending 31 December 2019.
140
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Group Company
2018 2017 2018 2017
RM RM RM RM
Non-Executive:-
Other emoluments 27,000 – 3,000 –
Defined contribution plans 3,168 – – –
Social contribution plan 414 – – –
Fees 343,129 169,200 295,129 169,200
Included in the employee benefits expense is the Director remuneration as below (cont’d):-
Group Company
2018 2017 2018 2017
RM RM RM RM
830,821
1,116,012 – –
(a) Significant related party transactions during the financial year are as follows:-
Group Company
2018 2017 2018 2017
RM RM RM RM
(b) Key management personnel is defined as those persons having authority and responsibility for planning,
directing and controlling the activities of the Group either directly or indirectly and entity that provides
key management personnel services to the Group.
(c) The remuneration of key management personnel is same with the Directors’ remuneration as disclosed
in Note 42 to the financial statements. The Group and the Company have no other members of key
management personnel apart from the Executive Directors.
142
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Business Segments
Revenue
Sales to external customers 72,326,302 – 9,764,856 – 82,091,158
Inter-segment revenue i 11,741,935 – – (11,741,935) –
Results
Interest income (832,754) – (128,591) 192,000 (769,345)
Finance cost 134,773 82,064 332,421 (206,361) 342,897
Dividend income (11,194,000) - (10,361) 11,204,361 –
Depreciation and amortisation 444,152 20,500 – – 464,652
Share of profit equity-accounted
associates – 503,819 – – 503,819
Income tax expense 1,512,697 – 81,752 – 1,594,449
Other non-cash (income)/expenses ii (595,725) (326,953) - 859 (921,819)
Segment profit/(loss) iii 16,297,229 102,044 (268,617) (10,686,181) 5,444,475
Assets
Segment assets 168,429,023 1,138,878 97,746,482 (99,125,763) 168,188,620
Investment in associates iv – 491,520 – 1,368,224 1,859,744
Deferred tax assets 9,863 – – – 9,863
Additions to non-current assets v 146,001 – – – 146,001
Tax recoverable 112,523 124,438 1,810,649 – 2,047,610
Liabilities
Segment liabilities 46,077,005 5,417 75,241,562 (77,795,800) 43,528,184
Deferred tax liabilities 36,333 – – – 36,333
Tax payable 629,859 – – – 629,859
Revenue
Sales to external customers 72,379,307 1,498,114 30,173,102 – 104,050,523
Inter-segment revenue i 10,979,397 252,355 – (11,231,752) –
Results
Interest income (216,280) (2,614) (77,598) 8,476 (288,016)
Finance cost 616,142 194,018 504,562 (35,217) 1,279,505
Dividend income – – (13,741) 13,741 –
Depreciation and
amortisation 1,484,051 190,383 – – 1,674,434
Share of profit equity-accounted
associates – 813,523 – – 813,523
Income tax expense 271,804 (576,981) 822,140 – 516,963
Other non-cash (income)/expenses ii (8,637,071) 948,044 – – (7,689,027)
Segment profit/(loss) iii 19,877,972 (1,686,279) 2,772,641 (6,443,157) 14,521,177
Assets
Segment assets 155,680,838 3,557,633 107,974,498 (78,387,080) 188,825,889
Investment in associates iv – 491,520 – 864,405 1,355,925
Additions to non-current assets v 79,514 – – – 79,514
Tax recoverable 604,807 124,438 712,031 – 1,441,276
Liabilities
Segment liabilities 36,373,755 1,776,216 84,969,109 (92,051,235) 31,067,845
Deferred tax liabilities 27,849 – – – 27,849
Tax payable 57,462 – 133,233 – 190,695
Segment assets/liabilities
Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements:-
2018 2017
RM RM
(921,819)
(7,689,027)
iii. The following items are added to/(deducted from) segment profit to arrive at “Net profit for the financial
year” presented in the consolidated statement of profit or loss and other comprehensive income:-
2018 2017
RM RM
Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements
(cont’d):-
iv. The following items are added to segment assets to arrive at total assets reported in the consolidated
statement of financial position:-
2018 2017
RM RM
2018 2017
RM RM
Geographical Segments
The Group’s revenue and non-current assets information based on geographical location are as follows:-
Non-current assets information presented below consist of the following items as presented in the consolidated
statement of financial position:-
2018 2017
RM RM
43,337,021 43,153,471
Carrying
Group amount FVTPL AC
RM RM RM
31.12.2018
Financial assets
Other investment (Note 7) 14,384 14,384 –
Trade and other receivables (Notes 14 & 15) 18,040,806 – 18,040,806
Amount due from related parties (Note 18) 1,990,843 – 1,990,843
Dividend receivable 1,060,831 – 1,060,831
Fixed deposits with licensed banks (Note 19) 15,438,851 – 15,438,851
Cash and bank balances (Note 20) 9,643,022 – 9,643,022
Financial liabilities
Amount due to a Director (Note 16) 18,056,059 – 18,056,059
Amount due to related parties (Note 32) 1,171,162 – 1,171,162
Finance lease liabilities (Note 26) 29,172 – 29,172
Loans and borrowings (Notes 27 & 33) 772,907 – 772,907
Trade and other payables (Notes 29 & 30) 21,602,011 – 21,602,011
41,631,311 – 41,631,311
147
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Carrying
Group (cont’d) amount L&R AFS OFL
RM RM RM RM
31.12.2017
Financial assets
Other investment (Note 7) 14,794 – 14,794 –
Accrued billings (Note 13) 3,781,856 3,781,856 – –
Trade and other receivables
(Notes 14 & 15) 31,592,804 31,592,804 – –
Amount due from related parties
(Note 18) 36,227 36,227 –
Dividend receivable 1,060,831 1,060,831 – –
Fixed deposits with licensed
banks (Note 19) 21,137,792 21,137,792 – –
Cash and bank balances
(Note 20) 10,856,409 10,856,409 – –
Financial liabilities
Amount due to a Director
(Note 16) 4,870,961 – – 4,870,961
Amount due to related
parties (Note 32) 987,773 – – 987,773
Finance lease liabilities (Note 26) 139,602 – – 139,602
Loans and borrowings
(Notes 27 & 33) 6,170,501 – – 6,170,501
Trade and other payables
(Notes 29 & 30) 18,485,714 – – 18,485,714
30,654,551 – – 30,654,551
148
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Carrying
Group (cont’d) amount L&R AFS OFL
RM RM RM RM
1.1.2017
Financial assets
Other investment (Note 7) 15,204 – 15,204 –
Accrued billings (Note 13) 11,216,282 11,216,282 – –
Trade and other receivables
(Notes 14 & 15) 24,337,321 24,337,321 – –
Amount due from Directors
(Note 16) 3,563,019 3,563,019 – –
Amount due from related
parties (Note 18) 134,405 134,405 – –
Dividend receivable 1,060,831 1,060,831 – –
Fixed deposits with licensed
banks (Note 19) 1,693,174 1,693,174 – –
Cash and bank balances
(Note 20) 12,956,623 12,956,623 – –
Financial liabilities
Amount due to a Director
(Note 16) 8,000 – – 8,000
Amount due to related parties
(Note 32) 2,002,632 – – 2,002,632
Finance lease liabilities (Note 26) 350,916 – – 350,916
Loans and borrowings
(Notes 27 & 33) 18,858,871 – – 18,858,871
Trade and other payables
(Notes 29 & 30) 30,280,664 – – 30,280,664
51,501,083 – – 51,501,083
149
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Carrying
Company amount FVTPL AC
RM RM RM
31.12.2018
Financial assets
Other receivables (Note 15) 2,800 – 2,800
Amount due from subsidiaries (Note 17) 48,417,022 – 48,417,022
Fixed deposits with licensed banks (Note 19) 7,756,957 – 7,756,957
Cash and bank balances (Note 20) 93,111 – 93,111
56,269,890 – 56,269,890
Financial liabilities
Other payables (Note 30) 575,136 – 575,136
Amount due to Directors (Note 16) 17,894,074 17,894,074 –
The financial instrument classifications in the prior periods are in accordance with MFRS 139 as follows:-
Carrying
Company (cont’d) amount L&R AFS OFL
RM RM RM RM
31.12.2017
Financial assets
Other receivables (Note 15) 1,317,350 1,317,350 – –
Amount due from subsidiaries
(Note 17) 26,842,174 26,842,174 – –
Fixed deposits with licensed
banks (Note 19) 18,082,922 18,082,922 – –
Cash and bank balances
(Note 20) 1,626,094 1,626,094 – –
47,868,540 47,868,540 – –
Financial liabilities
Other payables (Note 30) 660,828 – – 660,828
Amount due to a subsidiary
(Note 31) 1,798,587 – – 1,798,587
2,459,415 – – 2,459,415
151
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
Carrying
Company (cont’d) amount L&R AFS OFL
RM RM RM RM
1.1.2017
Financial assets
Other receivables (Note 15) 2,350 2,350 – –
Amount due from subsidiaries
(Note 17) 24,070,776 24,070,776 – –
Fixed deposits with licensed
banks (Note 19) 169,000 169,000 – –
Cash and bank balances
(Note 20) 340,081 340,081 – –
24,852,927 24,852,927 – –
Financial liabilities
Other payables (Note 30) 2,151,495 – – 2,151,495
Amount due to a subsidiary
(Note 31) 354,643 – – 354,643
Loan and borrowings
(Notes 27 & 33) 7,500,000 – – 7,500,000
10,006,138 – – 10,006,138
The Group and the Company are exposed to financial risks arising from their operations and the use of
financial instruments. Financial risk management policy is established to ensure that adequate resources are
available for the development of the Group’s and the Company’s business whilst managing its credit risk,
liquidity risk, foreign currency risk and interest rate risk. The Group and the Company operate within clearly
defined policies and procedures that are approved by the Board of Directors to ensure the effectiveness of
the risk management process.
152
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The main areas of financial risks faced by the Group and the Company and the policy in respect of the major
areas of treasury activity are set out as follows:-
Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument
fails to meet its contractual obligations. It is the Group’s policy to enter into financial instrument with a
diversity of creditworthy counterparties. The Group does not expect to incur material credit losses of
its financial assets or other financial instruments.
Concentration of credit risk exists when changes in economic, industry and geographical factors similarly
affect the company of counterparties whose aggregate credit exposure is significant in relation to the
Group’s total credit exposure.
It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification
procedures. The Group does not offer credit terms without the approval of the head of credit control.
Following are the areas where the Group and the Company are exposed to credit risk:-
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each
customer. However, management also considers the factors that may influence the credit risk of
its customer base, including the default risk associated with the industry and country in which
customers operate.
The risk management committee has established a credit policy under which each new customer
is analysed individually for creditworthiness before the Group’s standard payment and delivery
terms and conditions are offered. The Group’s review includes external rating, if they are available,
financial statements, credit agency information, industry information and in some cases bank
references. Sale limits are established for each customer and reviewed quarterly. Any sales
exceeding those limits require approval from the risk management committee.
An impairment analysis is performed at each reporting date using a provision matrix to measure
expected credit losses. The provision rates are based on days past due for groupings of various
customer segments with similar loss patterns (i.e., by geographical region, product type,
customer type and rating, and coverage by letters of credit or other forms of credit insurance). The
calculation reflects the probability-weighted outcome, the time value of money and reasonable
and supportable information that is available at the reporting date about past events, current
conditions and forecasts of future economic conditions.
Generally, trade receivables are written off if past due for more than one year and are not subject
to enforcement activity. The maximum exposure to credit risk at the reporting date is the carrying
value of each class of financial assets disclosed in Note 14 to the financial statement. The Group
evaluates the concentration of risk with respect to trade receivables as low, as its customers are
located in several jurisdictions and industries and operate in largely independent markets.
153
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The main areas of financial risks faced by the Group and the Company and the policy in respect of the major
areas of treasury activity are set out as follows (cont’d):-
Following are the areas where the Group and the Company are exposed to credit risk (cont’d):-
Set out below is the information about the credit risk exposure on the Group’s trade receivables
using a provision matrix:-
Group
Trade receivables days past due
30-60 61-90 91-120
Current
<30 days days days days >120 days Total
RM RM RM RM RM RM RM
31.12.2018
Expected credit
loss rate 0% 0% 0% 0% 0% 47%
Estimated total
gross carrying
amount 6,177,274 8,692,657 620,671 364,955 235,684 1,023,337
17,114,578
Expected credit
loss – – – – –
476,849
476,849
The ageing of trade receivables and accumulated impairment loss of the Group as at 31 December
2017 and 1 January 2017 are as follows:-
Individually
Gross impaired Net
RM RM RM
31.12.2017
Not past due 7,366,064 – 7,366,064
Past due 1-30 days 14,065,332 – 14,065,332
Past due 31-60 days 1,916,505 – 1,916,505
Past due 61-90 days 2,407,949 – 2,407,949
Past due for 91-120 days 183,063 – 183,063
Past due more than 121 days 1,671,586 (530,844) 1,140,742
The main areas of financial risks faced by the Group and the Company and the policy in respect of the major
areas of treasury activity are set out as follows (cont’d):-
Following are the areas where the Group and the Company are exposed to credit risk (cont’d):-
The ageing of trade receivables and accumulated impairment loss of the Group as at 31 December
2017 and 1 January 2017 are as follows (cont’d):-
Individually
Gross impaired Net
RM RM RM
1.1.2017
Not past due 7,260,006 – 7,260,006
Past due 1-30 days 6,884,155 – 6,884,155
Past due 31-60 days 1,134,903 – 1,134,903
Past due 61-90 days 1,520,170 – 1,520,170
Past due for 91-120 days 2,391,522 – 2,391,522
Past due more than 121 days 3,436,076 (341,980) 3,094,096
The maximum exposure to credit risk is represented by their carrying amounts in the statements
of financial position.
The Company provides unsecured advances to subsidiaries and related parties and monitors
their results regularly.
As at the end of the reporting date, there was no indication that advances to the subsidiaries and
related parties are not recoverable.
The maximum exposure to credit risk is represented by the carrying amounts in the statements
of financial position.
In view of the sound credit rating of counterparties, management does not expect any counterparty
to fail to meet its obligations.
155
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The main areas of financial risks faced by the Group and the Company and the policy in respect of the major
areas of treasury activity are set out as follows (cont’d):-
Following are the areas where the Group and the Company are exposed to credit risk (cont’d):-
The Company provides unsecured corporate guarantees to licensed banks in respect of banking
facilities granted to certain subsidiaries. The Company monitors on an ongoing basis the results
of the subsidiaries and repayments made by them. As at the end of the reporting period, there
was no indication that any subsidiaries would default on repayment.
Credit risk from balances with banks and financial institutions is managed by the Group’s treasury
department in accordance with the Group’s policy. Investments of surplus funds are made only
with approved counterparties and within credit limits assigned to each counterparty. Counterparty
credit limits are reviewed by the Group’s Board of Directors on an annual basis, and may be
updated throughout the year subject to approval of the Group’s Finance Committee. The limits
are set to minimise the concentration of risks and therefore mitigate financial loss through a
counterparty’s potential failure to make payments.
The Group’s maximum exposure to credit risk for the components of the statement of financial
position at 31 December 2018, 31 December 2017 and 1 January 2017 is the carrying amounts
as illustrated in Note above.
(b) Liquidity risk
Liquidity risk is the risk that the Group and the Company will not be able to meet their financial obligations
as they fall due to shortage of funds.
In managing its exposures to liquidity risk arises principally from its various payables and bank
borrowings, the Group and the Company maintain a level of cash and cash equivalents and bank
facilities deemed adequate by the management to ensure, as far as possible, that it will have sufficient
liquidity to meet its liabilities when they fall due.
The Group and the Company aim at maintaining a balance of sufficient cash and deposits and flexibility
in funding by keeping diverse sources of committed and uncommitted credit facilities from various
banks.
156
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The main areas of financial risks faced by the Group and the Company and the policy in respect of the major
areas of treasury activity are set out as follows (cont’d):-
The summary of the maturity profile based on the contractual undiscounted repayment obligation is as
follows:-
31.12.2017
Trade payables 14,866,983 14,866,983 14,866,983 – –
Other payables 3,618,731 3,618,731 3,618,731 – –
Amount due to a Director 4,870,961 4,870,961 4,870,961 – –
Amount due to related
parties 987,773 987,773 987,773 – –
Loan and borrowings 6,170,501 6,535,000 5,090,334 681,682 762,984
Finance lease liabilities 139,602 153,673 121,087 32,586 –
1.1.2017
Trade payables 26,587,772 26,587,772 26,587,772 – –
Other payables 3,692,892 3,692,892 3,692,892 – –
Amount due to a Director 8,000 8,000 8,000 – –
Amount due to related
parties 2,002,632 2,002,632 2,002,632 – –
Loan and borrowings 18,858,871 24,059,389 14,495,054 7,454,245 2,110,090
Finance lease liabilities 350,916 383,943 159,159 224,784 –
The main areas of financial risks faced by the Group and the Company and the policy in respect of the major
areas of treasury activity are set out as follows (cont’d):-
The summary of the maturity profile based on the contractual undiscounted repayment obligation is as
follows (cont’d):-
Financial guarantee –
1,149,051
1,149,051 – –
31.12.2017
Other payables 660,828 660,828 660,828 – –
Amount due to a subsidiary 1,798,587 1,798,587 1,798,587 – –
2,459,415
2,459,415
2,459,415 – –
Financial guarantee –
10,699,174
10,699,174 – –
1.1.2017
Other payables 2,151,495 2,151,495 2,151,495 – –
Amount due to a subsidiary 354,643 354,643 354,643 – –
Loan and borrowing 7,500,000 8,048,730 2,640,443 5,408,287 –
Financial guarantee –
11,086,441
11,086,441 – –
158
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The main areas of financial risks faced by the Group and the Company and the policy in respect of the major
areas of treasury activity are set out as follows (cont’d):-
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.
To mitigate the Group’s and the Company’s exposure to foreign currency risk, the Group and the
Company are exposed to foreign currency risk on sales and purchases that are denominated in a
currency other than the respective functional currencies of Group entities. The currency giving rise to
this risk is primarily US Dollar (“USD”), Hong Kong Dollar (“HKD”), Euro Dollar (“EUR”), Singapore Dollar
(“SGD”) and Thai Baht (“THB”).
The Group is also exposed to currency translation risk arising from its net investment in foreign operation
in Hong Kong and Thailand. The investment is not hedged as currency positions in HKD and THB are
considered to be long-term in nature.
The Group’s and the Company’s exposure to foreign currency risk, based on carrying amounts as of
the end of the reporting period are as follows:-
31.12.2018
Denominated in
USD HKD EUR THB
Group RM RM RM RM
31.12.2017
Denominated in
USD HKD EUR THB
RM RM RM RM
The main areas of financial risks faced by the Group and the Company and the policy in respect of the major
areas of treasury activity are set out as follows (cont’d):-
The Group’s and the Company’s exposure to foreign currency risk, based on carrying amounts as of
the end of the reporting period are as follows (cont’d):-
1.1.2017
Denominated in
USD HKD SGD THB
Group (cont’d) RM RM RM RM
Trade receivables 1,183,838 1,973,013 13,370 –
Other receivables – 615,456 – –
Cash and bank balances 108,148 4,772,294 – 2,113
Trade payables (1,941,599) (1,161,873) – –
Other payables – (923,169) – –
31.12.2018
Denominated in
THB USD HKD
Company RM RM RM
31.12.2017
Denominated in
THB USD HKD
RM RM RM
1.1.2017
Denominated in
THB USD HKD
RM RM RM
The main areas of financial risks faced by the Group and the Company and the policy in respect of the major
areas of treasury activity are set out as follows (cont’d):-
The following table demonstrates the sensitivity of the Group’s profit for the financial year to a reasonably
possible change in the USD, HKD, EUR, SGD and THB exchange rates against the respective functional
currency of the Group and of the Company, with all other variables held constant.
Group Increase/(Decrease)
Profit for the
financial year Equity
31.12.2018 RM RM
USD/RM
- Strengthened 0.19% (801) (801)
- Weakened 0.19% 801 801
HKD/RM
- Strengthened 0.18% 8,526 8,526
- Weakened 0.18% (8,526) (8,526)
EUR/RM
- Strengthened 0.20% 31 31
- Weakened 0.20% (31) (31)
THB/RM
- Strengthened 0.19% 15 15
- Weakened 0.19% (15) (15)
31.12.2017
USD/RM
- Strengthened 0.85% (693) (693)
- Weakened 0.85% 693 693
HKD/RM
- Strengthened 0.91% (37,827) (37,827)
- Weakened 0.91% 37,827 37,827
EUR/RM
- Strengthened 0.23% (106) (106)
- Weakened 0.23% 106 106
THB/RM
- Strengthened 0.07% (939) (939)
- Weakened 0.07% 939 939
161
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The main areas of financial risks faced by the Group and the Company and the policy in respect of the major
areas of treasury activity are set out as follows (cont’d):-
The following table demonstrates the sensitivity of the Group’s profit for the financial year to a reasonably
possible change in the USD, HKD, EUR, SGD and THB exchange rates against the respective functional
currency of the Group and of the Company, with all other variables held constant (cont’d).
USD/RM
- Strengthened 0.43% (2,793) (2,793)
- Weakened 0.43% 2,793 2,793
HKD/RM
- Strengthened 0.43% 22,686 22,686
- Weakened 0.43% (22,686) (22,686)
SGD/RM
- Strengthened 0.20% 27 27
- Weakened 0.20% (27) (27)
THB/RM
- Strengthened 0.44% 9 9
- Weakened 0.44% (9) (9)
Company
31.12.2018
USD/RM
- Strengthened 0.19% – –
- Weakened 0.19% – –
THB/RM
- Strengthened 0.19% 15 15
- Weakened 0.19% (15) (15)
HKD/RM
- Strengthened 0.18% 298 298
- Weakened 0.18% (298) (298)
162
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The main areas of financial risks faced by the Group and the Company and the policy in respect of the major
areas of treasury activity are set out as follows (cont’d):-
The following table demonstrates the sensitivity of the Group’s profit for the financial year to a reasonably
possible change in the USD, HKD, EUR, SGD and THB exchange rates against the respective functional
currency of the Group and of the Company, with all other variables held constant (cont’d).
USD/RM
- Strengthened 0.85% (2) (2)
- Weakened 0.85% 2 2
THB/RM
- Strengthened 0.06% (867) (867)
- Weakened 0.06% 867 867
HKD/RM
- Strengthened 0.91% (1,556) (1,556)
- Weakened 0.91% 1,556 1,556
1.1.2017
USD/RM
- Strengthened 0.97% 78 78
- Weakened 0.97% (78) (78)
THB/RM
- Strengthened 0.44% 757 757
- Weakened 0.44% (757) (757)
HKD/RM
- Strengthened 0.43% 9 9
- Weakened 0.43% (9) (9)
Exposures to foreign exchange rates vary during the financial year depending on the volume of overseas
transactions. Nonetheless, the analysis above is considered to be representation of the Group’s and
the Company’s exposures to foreign currency risk.
163
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The main areas of financial risks faced by the Group and the Company and the policy in respect of the major
areas of treasury activity are set out as follows (cont’d):-
Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s
financial instruments will fluctuate because of changes in market interest rates.
The Group’s and the Company’s fixed rate borrowings are exposed to a risk of change in their fair value
due to changes in interest rates. The Group’s and the Company’s variable rate borrowings are exposed
to a risk of change in cash flows due to changes in interest rates. Short term receivables and payables
are not significantly exposed to interest rate risk.
The interest rate profile of the Group’s significant interest-bearing financial instruments, based on
carrying amounts as at end of the reporting period are:-
Group
31.12.2018 31.12.2017 1.1.2017
RM RM RM
Company
31.12.2018 31.12.2017 1.1.2017
RM RM RM
164
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The main areas of financial risks faced by the Group and the Company and the policy in respect of the major
areas of treasury activity are set out as follows (cont’d):-
The Group is exposed to changes in market interest rates through bank borrowings at variable interest
rates. Other borrowings are at fixed interest rates. The exposure to interest rates for the Group’s short
term placement is considered immaterial.
The following table illustrates the sensitivity of profit to a reasonably possible change in interest rates
of +/- 100 basis points (“bp”). These changes are considered to be reasonably possible based on
observation of current market conditions. The calculations are based on a change in the average market
interest rate for each period, and the financial instruments held at each reporting date that are sensitive
to changes in interest rates. All other variables are held constant.
Effect on profit/
(loss) for the year
+100bp -100bp
Group RM RM
Company
31 December 2018 – –
31 December 2017 – –
The carrying amounts of short term receivables and payables, cash and cash equivalents and short term
borrowings approximate their fair values due to the relatively short term nature of these financial instruments
and insignificant impact of discounting.
165
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The table below analyses financial instruments carried at fair value and those not carried at fair value for which
fair value is disclosed, together with their values and carrying amounts shown in the statement of financial
position.
31.12.2018
Financial asset
Other investment 14,384 – 14,384 14,384
Financial liabilities
Finance lease liabilities – 31,580 31,580 29,172
Borrowings – 772,907 772,907 772,907
31.12.2017
Financial asset
Other investment 14,794 – 14,794 14,794
Financial liabilities
Finance lease liabilities – 146,472 146,472 139,602
Borrowings – 6,062,061 6,062,061 6,170,501
1.1.2017
Financial asset
Other investment 15,204 – 15,204 15,294
Financial liabilities
Finance lease liabilities – 337,639 337,639 350,916
Borrowings – 18,492,048 18,492,048 18,858,871
Company
1.1.2017
Financial liabilities
Borrowings – 7,271,636 7,271,636 7,500,000
166
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The fair value of an asset to be transferred between levels is determined as of the date of the event or change
in circumstances that caused the transfer.
Level 1 fair value is derived from quoted price (unadjusted) in active markets for identical financial assets or
liabilities that the entity can access at the measurement date.
Level 2 fair value is estimated using inputs other than quoted prices included within Level 1 that are observable
for the financial assets or liabilities, either directly or indirectly.
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future
principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period.
In respect of the liability component of convertible notes, the market rate of interest is determined by reference
to similar liabilities that do not have a conversion option. For finance leases that market rate of interest is
determined by reference to similar lease agreements.
The effective interest rates used to discount estimated cash flow are as follows:-
Group
31.12.2018 31.12.2017 1.1.2017
% % %
Company
31.12.2018 31.12.2017 1.1.2017
% % %
Term loans – – 3.61
167
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
1 January 31 December
Group 2018 Cash flows Others 2018
RM RM RM RM
# This amount are net of purchase and shares issuance expenses from the issuance of treasury shares
during the financial year amounted to RM880,456 and RM7,306 respectively.
^ Being the interest expense for the current financial year.
** Being dividend paid for the current financial year.
@ Being the acquisition of ownership interest of a subsidiary from non-controlling interest owing to a
Director, dividend payable for redeemable non-convertible preference shares of non-controlling interest
and fair value gain on amount due to a Director amounted to RM18,900,000, RM4,000 and RM1,005,926
respectively.
1 January 31 December
2017 Cash flows Others 2017
RM RM RM RM
* This amount are net of drawndown and repayment during the financial year amounted to RM1,500,000
and RM10,629,151 respectively.
# This amount are net of purchase and shares issuance expenses from the issuance of treasury shares
during the financial year amounted to RM503,464 and RM5,348 respectively.
^ Being the interest expense for the current financial year.
@ Being the disposal of the sub-subsidiary of the Company, Kopacklabels (PG) Sdn. Bhd. during the
financial year.
** Being the dividend payable for redeemable non-convertible preference shares of non-controlling interest.
168
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
1 January 31 December
Company 2018 Cash flows Others 2018
RM RM RM RM
# This amount are net of purchase and shares issuance expenses from the issuance of treasury shares
during the financial year amounted to RM880,456 and RM7,306 respectively.
* Being dividend paid for the current financial year.
1 January 31 December
2017 Cash flows Others 2017
RM RM RM RM
# This amount are net of purchase and shares issuance expenses from the issuance of treasury shares
during the financial year amounted to RM503,464 and RM5,348 respectively.
^ Being the interest expense for the current financial year.
47. COMMITMENTS
The future minimum lease payments receivable under cancellable operating lease commitments are:
Group
2018 2017
RM RM
Future minimum lease payments receivables:-
Operating lease commitments represent rental receivables for the rent of the Group’s office. Leases are
negotiated for 1 to 2 years (2017: 1 to 3 years) term.
169
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s
ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to
sustain future development of the business.
There were no changes in the Group’s approach to capital management during the year.
(a) On 30 March 2018, the Company incorporated a wholly-owned subsidiary, BKW Residences Sdn. Bhd.
for a cash consideration of RM1.00.
(b) On 6 July 2018, the Company acquired the remaining 124,999 ordinary shares of Innoceria Sdn. Bhd.
(“ISB”), increasing its ownership from 50.0004% to 100% for a total consideration of RM21.9 million
which was satisfied by a combination of cash consideration of RM3 million and the remaining balance
of RM18.9 million to be paid in multiple tranches over a period of 30 months from the completion date,
whereby each deferred payment shall be made within 30 days from the completion of the sales of each
unit of the properties under Phase 1 of the Vortex Business Park Project and shall be of an amount
equivalent to be net sales proceeds provided always that the deferred payment in aggregate shall up
to and not exceed the balance purchase price.
(c) On 24 May 2019, Labels Network Sdn. Bhd. (“LNSB”), a wholly-owned subsidiary of the Company has
taken legal action against QLM Label Makers Sdn. Bhd. (“1st Defendant”) and Kopacklabels Press
Sdn. Bhd. (“2nd Defendant”) by filling a Writ and Statement of Claim of the sum of RM650,078 being
unpaid portion of the debt due to LNSB.
On 15 October 2018 entered the Consent Judgment and the Court recorded it. The Consent Judgment
ordered that: -
1. The 2nd Defendant shall pay to the LNSB a sum of RM300,000.00 failing which the LNSB is
entitled to take out execution proceedings against the 2nd Defendant;
2. The 1st Defendant shall, within 30 days from the date of this order, carry out its obligations in
clause 6 of the Share Sale Agreement dated 29 August 2016, i.e. to register the transfer of shares
from the LNSB to the 1st Defendant subject to the Stamping Office performing their duties to
effect the transfer of shares registration;
3. The 1st Defendant shall, within 60 days from the date of this order, carry out its obligations in
clause 8.2(a) of the Share Sale Agreement dated 29 August 2016 which provides that the 1st
Defendant to procure the release of the securities and/or corporate guarantees given by the LNSB
and/or its related company;
4. The 1st Defendant shall carry out its obligations in clause 8.2(c) of the Share Sale Agreement
dated 29 August 2016, i.e. to pay all late payment interests or any other payments due to the
financiers of the 2nd Defendant where the LNSB and/or its related companies are guarantors;
5. The 1st Defendant and 2nd Defendant shall be discharged of any further duties and/or obligations
of (2) and (3) above upon performance of their obligations and/or duties; and
6. This Consent Judgment shall be a full and final settlement of all dispute, controversy or claim
arising out of or relating to the Share Sale Agreement dated 29 August 2016 and the Supplemental
Agreement dated 13 September 2016 between 1st and/or the 2nd Defendant, including their
directors and/or representatives and the LNSB and/or its related companies, including their
respective directors and/or representatives, and they shall have no recourse and/or cause of
action against each other save for the 1st and/or the 2nd Defendant’s obligations under this
Consent Judgment.
(a) On 16 January 2019, Grand-Flo Data Centrix Sdn. Bhd. (“GFDC”), a wholly-owned subsidiary of the
Company applied to the Companies Commission of Malaysia (“CCM”) for striking off GFDC from the
register pursuant to Section 550 of the Companies Act 2016.
GFDC would be dissolved upon publication of its name in the Gazzette by the CCM.
(b) On 8 March 2019, LNSB, a wholly-owned subsidiary of the Company entered into a Share Purchase
Agreement with Simat Technologies Public Company Limited for the disposal of its entire 480,000
ordinary shares which representing 14.12% of the total issued share capital of Simat Label Company
Limited for a cash consideration of THB 26,000,000 (equivalent to approximately RM3,346,070).
Certain comparative figures in the financial statements have been reclassified to conform to the current year
presentation.
As previously As
reported reclassified
Group RM RM
31.12.2017
Certain comparative figures in the financial statements have been reclassified to conform to the current year
presentation (cont’d).
As previously As
reported reclassified
Group (cont’d) RM RM
31.12.2017 (cont’d)
ANALYSIS OF SHAREHOLDINGS
As at 29 March 2019
No. of No. of
Size of Holdings Holders % Shares *** %
Notes:-
(1) Deemed interested by virtue of the shares held by his spouse, Yap Li Li and both his and his spouse’s interest
in Grand-Flo Corporation Sdn. Bhd..
(2) Deemed interested by virtue of the shares held by her spouse, Tan Bak Hong and both her and her spouse’s
interest in Grand-Flo Corporation Sdn. Bhd..
(3) Deemed interested by virtue of his interest in Al Capital Sdn. Bhd..
(4) Deemed interested by virtue of the shares held by her spouse, Chuah Chew Hai.
(5) Deemed interested by virtue of the shares held by his spouse, Chong Poh Yoong.
173
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
ANALYSIS OF SHAREHOLDINGS
As at 29 March 2019 (cont’d)
DIRECTORS’ SHAREHOLDINGS
AS AT 29 MARCH 2019
(As per the Register of Directors’ Shareholdings)
Notes:-
(1) Deemed interested by virtue of the shares held by his spouse, Yap Li Li and both his and his spouse’s interest
in Grand-Flo Corporation Sdn. Bhd..
(2) Deemed interested by virtue of his interest in AI Capital Sdn. Bhd..
(3) Deemed interested by virtue of the shares held by his spouse, Chong Poh Yoong.
ANALYSIS OF SHAREHOLDINGS
As at 29 March 2019 (cont’d)
^ All percentage shareholding computations are based on the total number of issued shares less treasury shares
account (12,698,000 shares) arising from the share buy-back exercise.
175
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
list of Properties
As at 31 December 2018
Net Book
Age of Land/ Value as at
Date of Current building Built-up 31.12.2018
Owner Title/Location Acquisition Description use Tenure (Years) Area (RM)
Grand-Flo No. 3-1, 3-2, 3-3, 3-4, 8-Dec-04 Five storey Office Freehold 20 years 771 sq m 3,210,580
Electronic 3-5, Block D2, shop office
System Jalan PJU 1/39,
Sdn. Bhd. Dataran Prima,
47301 Petaling Jaya,
Selangor Darul Ehsan,
Malaysia
Grand-Flo No. G-9-1, 2 & 3, 17-Nov-05 Three storey Office, Freehold 10 years 363 sq m 3,932,518
Electronic Lorong Bayan Indah 1, shop office laboratory
System Bay Avenue, Queensbay, and
Sdn. Bhd. Sg. Nibong, warehouse
11900 Penang, Malaysia
176
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
NOTICE IS HEREBY GIVEN that the Sixteenth Annual General Meeting (“AGM” or “Meeting”) of GRAND-FLO
BERHAD (“Grand-Flo” or “the Company”) will be held at Greens III, Ground Floor, Sports Wing, Tropicana Golf &
Country Resort, Jalan Kelab Tropicana, 47410 Petaling Jaya, Selangor Darul Ehsan on Wednesday, 19 June 2019
at 11:00 a.m. to transact the following businesses:-
AGENDA
1. To receive the Audited Financial Statements for the financial year ended PLEASE REFER TO
31 December 2018 together with the Reports of the Directors and EXPLANATORY NOTE 1
Auditors thereon.
2. To approve the payment of a Final Single-Tier Dividend of 0.50 sen per ORDINARY RESOLUTION 1
ordinary share for the financial year ended 31 December 2018.
As Special Business:-
To consider and if thought fit, pass with or without any modifications,
the following resolutions:-
7. RETENTION OF INDEPENDENT NON-EXECUTIVE DIRECTORS
(i) “THAT subject to the passing of Ordinary Resolution 6, Mr. Yu Chee ORDINARY RESOLUTION 8
Sing, who has served as an Independent Non-Executive Director
of the Company for a cumulative term of more than twelve (12)
years, be and is hereby retained as an Independent Non-Executive
Director of the Company.”
(ii) “THAT Mr. Cheong Kee Yoong, who has served as an Independent ORDINARY RESOLUTION 9
Non-Executive Director of the Company for a cumulative term
of more than nine (9) years, be and is hereby retained as an
Independent Non-Executive Director of the Company.”
177
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
“THAT subject always to the Act, rules, regulations and orders made
pursuant to the Act, provisions of the Constitution of the Company,
the Main Market Listing Requirements of Bursa Securities (“Listing
Requirements”) and the approvals of any other relevant governmental
and/or regulatory authorities, the Company be and is hereby authorised to
purchase and/or hold such amount of ordinary shares in the Company’s
issued share capital (“Grand-Flo Shares”) through Bursa Securities upon
such terms and conditions as the Directors may deem fit and expedient
in the interest of the Company provided that:
(ii) the maximum funds to be allocated for the share buy-back shall
not exceed the aggregate of the retained earnings of the Company;
and
AND THAT such authority shall commence immediately upon the passing
of this resolution until:
(i) the conclusion of the next AGM of the Company following the
general meeting at which this resolution is passed, at which time it
shall lapse, unless the authority is renewed by a resolution passed
at the next AGM; or
(ii) the expiration of the period within which the next AGM after that
date it is required by law to be held; or
AND FURTHER THAT, the Directors of the Company be and are hereby
authorised to take all such steps as are necessary or expedient to
implement, finalise, complete or to effect the Proposed Renewal of
Share Buy-Back Authority with full powers to assent to any conditions,
modifications, resolutions, variations and/or amendments (if any) as may
be imposed by the relevant authorities and to do all such acts and things
as they may deem fit and expedient in the best interest of the Company
to give effect to and to complete the purchase of the Grand-Flo Shares.”
AND THAT such authority shall commence immediately upon the passing
of this resolution until:
(i) the conclusion of the next AGM of the Company following the
general meeting at which the ordinary resolution for the Proposed
Shareholders’ Mandate was passed, at which time it shall lapse,
unless the authority is renewed by a resolution passed at the next
AGM; or
(ii) the expiration of the period within which the next AGM after that
date it is required by law to be held pursuant to Section 340(2) of
the Act (but shall not extend to such extension as may be allowed
pursuant to Section 340(4) of the Act); or
179
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
whichever is earlier.
AND FURTHER THAT the Directors of the Company be and are hereby
authorised to do all acts, deeds and things as they may be deemed
fit, necessary, expedient and/or appropriate in order to implement the
Proposed Shareholders’ Mandate with full power to assent to all or any
conditions, variations, modifications and/or amendments in any manner
as may be required by any relevant authorities or otherwise and to deal
with all matters relating thereto and to take all such steps and to execute,
sign and deliver for and on behalf of the Company all such documents,
agreements, arrangements and/or undertakings, with any party or parties
and to carry out any other matters as may be required to implement,
finalise and complete, and give full effect to the Proposed Shareholders’
Mandate in the best interest of the Company.”
12. To transact any other business of which due notice shall have been given.
NOTICE IS ALSO HEREBY GIVEN that a Final Single-Tier Dividend of 0.50 sen per ordinary share in respect of the
financial year ended 31 December 2018, if approved by the shareholders at the Sixteenth AGM of the Company,
will be paid on 19 July 2019 to the shareholders whose names appear in the Record of Depositors of the Company
at the close of business on 5 July 2019.
A depositor shall qualify for entitlement to the dividend only in respect of:-
(i) Shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 5 July 2019 in respect of
ordinary transfers; and
(ii) Shares bought on Bursa Securities on a cum-entitlement basis according to the Rules of Bursa Securities.
Notes:
(a) A member entitled to attend and vote at the Meeting is entitled to appoint a proxy or proxies to attend and
vote in his stead. A proxy may but need not be a member of the Company.
(b) A shareholder shall be entitled to appoint up to two (2) proxies to attend and vote at the same meeting. Where
a shareholder appoints two (2) proxies, he shall specify the proportion of his shareholdings to be represented
by each proxy.
(c) Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central
Depositories) Act 1991, it may appoint at least one (1) proxy in respect of each securities account it holds
with ordinary shares of the Company standing to the credit of the said securities account.
(d) Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the
Company for multiple beneficial owners in one (1) 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. The appointment of multiple proxies shall not be valid unless the proportion of its shareholdings
represented by each proxy is specified.
(e) The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly
authorised in writing. If the appointor is a corporation, the instrument must be executed under its Common
Seal or under the hand of an officer or attorney so authorised.
(f) To be valid, the instrument appointing a proxy must be deposited at the Share Registrar of the Company
situated at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan
Kerinchi, 59200 Kuala Lumpur, not less than forty-eight (48) hours before the time for holding the Meeting or
adjourned meeting at which the person named in the instrument proposes to vote.
(g) For the purpose of determining a member who shall be entitled to attend the Meeting, the Company will be
requesting Bursa Malaysia Depository Sdn. Bhd. in accordance with Clause 65(3) of the Company’s Constitution
to issue a General Meeting Record of Depositors as at 12 June 2019. Only members whose names appear
in the General Meeting Record of Depositors as at 12 June 2019 shall be regarded as members and entitled
to attend, speak and vote at the Sixteenth AGM.
(h) All the resolutions set out in this Notice of Meeting will be put to vote by poll.
This Agenda is meant for discussion only as the provision of Section 340(1)(a) of the Companies Act 2016
does not require a formal approval of shareholders for the Audited Financial Statements. Hence, this Agenda
is not put forward for voting.
The estimated fees payable to the Non-Executive Directors of the Company for the financial year ending 31
December 2019 was calculated based on current Board size. In the event the proposed amount is insufficient
due to enlarged Board size, shareholders’ approval for the shortfall will be sought at the next AGM of the
Company.
The estimated benefits comprise meeting allowance payable to Non-Executive Directors of the Company,
was calculated based on the scheduled Board and Board Committees’ meetings to be held during the period
from 1 January 2019 up to the next AGM of the Company. In the event the proposed amount is insufficient
due to more meetings held, shareholders’ approval for the shortfall will be sought at the next AGM of the
Company.
181
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The Board has assessed the independence of Mr. Yu Chee Sing and Mr. Cheong Kee Yoong, who have
served as Independent Non-Executive Directors of the Company for a cumulative term of more than twelve
(12) years and nine (9) years, respectively. The Board is satisfied that they have met the independence and
recommended them to continue to act as Independent Non-Executive Directors of the Company based on
the following justification:
(a) they have declared and confirmed that they fulfilled the independence guidelines as set out in Chapter
1 of the Listing Requirements of Bursa Securities;
(b) they have vast experience in their respective industries which could provide the Board with a diverse
set of experience, expertise and independent judgement;
(c) they have good knowledge of the Company’s business operations;
(d) they have devoted sufficient time and attention to their professional obligations for informed and
balanced decision making; and
(e) they have exercised due care during their tenure as Independent Non-Executive Directors of the Company
and carried out their professional duties in the best interest of the Company and shareholders.
Pursuant to Practice 4.2 of the Malaysian Code on Corporate Governance, the retention of Mr. Yu Chee Sing
who has served as an Independent Non-Executive Director of the Company for a cumulative term of more
than twelve (12) years, the approval of the shareholders at the Meeting will be sought through a two-tier voting
process.
The Ordinary Resolution 10 proposed under item 8 of the Agenda is a renewal of the general mandate for
issuance of shares by the Company under Sections 75 and 76 of the Companies Act 2016. This Ordinary
Resolution, if passed, will give the Directors of the Company from the date of the above meeting, authority to
allot and issue ordinary shares from the unissued capital of the Company for such purposes as the Directors
consider would be in the interest of the Company. The authority, unless revoked or varied by the Company
in a general meeting, will expire at the next AGM.
This general mandate will provide flexibility to the Company for allotment of shares 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).
As at the date of this Notice, no new shares in the Company were issued pursuant to the mandate granted to
the Directors at the last AGM held on 25 June 2018 which will lapse at the conclusion of the Sixteenth AGM.
The Ordinary Resolution 11 proposed under item 9 of the Agenda is to renew the shareholders’ mandate for
the share buy-back by the Company. The said proposed renewal of shareholders’ mandate will empower the
Directors to buy-back and/or hold up to a maximum of 10% of the Company’s total number of issued shares
at any point of time, by utilising the amount allocated which shall not exceed the total retained profits of the
Company. This authority unless revoked or varied by the Company at a general meeting, will expire at the
conclusion of the next AGM, or the expiration of period within which the next AGM is required by law to be
held, whichever is earlier.
Please refer to the Share Buy-Back Statement to Shareholders dated 30 April 2019 for further details.
182
GRAND-FLO BERHAD (607392-W)
ANNUAL REPORT 2018
The Ordinary Resolution 12 proposed under item 10 of the Agenda, if passed, will give the mandate for
the Company and/or its subsidiaries to enter into Recurrent Related Party Transactions in accordance with
Paragraph 10.09 of the Listing Requirements of Bursa Securities.
Please refer to the Circular to Shareholders dated 30 April 2019 for further details.
The Special Resolution proposed under item 11 of the Agenda in relation to the proposed amendments to
the existing Constitution of the Company are made mainly for the following purposes:-
(a) To ensure compliance with the Listing Requirements of Bursa Securities; and
(b) To provide clarity and consistency with the amendments that arise from the Companies Act 2016 and
other relevant regulatory provisions.
This Special Resolution if passed, will allow the Company to alter or amend the whole of the existing Constitution
by the replacement with the proposed new Constitution as per “Appendix A” in accordance with Section 36(1)
of the Companies Act 2016. The “Appendix A” on the proposed new Constitution of the Company, which is
circulated together with the Notice of AGM dated 30 April 2019, shall take effect once the special resolution
has been passed by a majority of not less than seventy-five per centum (75%) of such members who are
entitled to vote and do vote in person or by proxy at the Sixteenth AGM.
PROXY FORM
(Incorporated in Malaysia)
of (full address)___________________________________________________________________________________________________________
being (a) member(s) of GRAND-FLO BERHAD (607392-W) (“the Company”) hereby appoint (full name in capital letters)_______________
________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________ or
failing him/her*, the Chairman of the Meeting as my/our* proxy to vote for me/us* on my/our* behalf at the Sixteenth Annual General
Meeting (“AGM” or “Meeting”) of the Company to be held at Greens III, Ground Floor, Sports Wing, Tropicana Golf & Country Resort, Jalan
Kelab Tropicana, 47410 Petaling Jaya, Selangor Darul Ehsan on Wednesday, 19 June 2019 at 11:00 a.m. and at any adjournment thereof.
Please indicate with an “X” in the appropriate spaces how you wish your votes to be cast. If no specific direction as to vote is given, the
Proxy will vote or abstain from voting at his/her discretion.
No. Ordinary Resolutions For Against
1. To approve the payment of a Final Single-Tier Dividend of 0.50 sen per ordinary share for the
financial year ended 31 December 2018.
2. To approve the payment of fees payable to Non-Executive Directors of the Company up to
RM500,000 for the financial year ending 31 December 2019.
3. To approve the payment of benefits payable to Non-Executive Directors of the Company up to
RM100,000 from 1 January 2019 until the next AGM of the Company.
4. To re-elect Mr. Tan Bak Hong as Director of the Company.
5. To re-elect Mr. Tan Chuan Hock as Director of the Company.
6. To re-elect Mr. Yu Chee Sing as Director of the Company.
7. To re-appoint Messrs. Grant Thornton Malaysia as Auditors of the Company.
8. To retain Mr. Yu Chee Sing as an Independent Non-Executive Director of the Company.
9. To retain Mr. Cheong Kee Yoong as an Independent Non-Executive Director of the Company.
10. To authorise the Directors to allot shares pursuant to Sections 75 and 76 of the Companies
Act 2016.
11. To approve the Proposed Renewal of Share Buy-Back Authority.
12. To approve the Proposed Shareholders’ Mandate for Recurrent Related Party Transactions
of a Revenue and/or Trading Nature.
Notes:
a) A member entitled to attend and vote at the Meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy may but need
not be a member of the Company.
b) A shareholder shall be entitled to appoint up to two (2) proxies to attend and vote at the same meeting. Where a shareholder appoints two (2) proxies,
he shall specify the proportion of his shareholdings to be represented by each proxy.
c) Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint
at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities
account.
d) Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one
(1) 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. The appointment of multiple proxies shall not be valid unless the proportion of its shareholdings represented by each
proxy is specified.
e) The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing. If the appointor is a
corporation, the instrument must be executed under its Common Seal or under the hand of an officer or attorney so authorised.
f) To be valid, the instrument appointing a proxy must be deposited at the Share Registrar of the Company situated at Unit 32-01, Level 32, Tower A,
Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, not less than forty-eight (48) hours before the time for
holding the Meeting or adjourned meeting at which the person named in the instrument proposes to vote.
g) For the purpose of determining a member who shall be entitled to attend the Meeting, the Company will be requesting Bursa Malaysia Depository
Sdn. Bhd. in accordance with Clause 65(3) of the Company’s Constitution to issue a General Meeting Record of Depositors as at 12 June 2019. Only
✄
members whose names appear in the General Meeting Record of Depositors as at 12 June 2019 shall be regarded as members and entitled to attend,
speak and vote at the Sixteenth AGM.
h) All the resolutions set out in this Notice of Meeting will be put to vote by poll.
Please fold here
AFFIX
STAMP
Malacca Office
11-1, Jalan BU5, Taman Bacang Utama, Bacang, 75350 Melaka, Malaysia
Tel : 606-281 7806 Fax : 606-281 7827
Seremban Office
219, 1st Floor, Jalan S2 B10, Uptown Avenue, Seremban 2, 70300 Seremban, Negeri Sembilan, Malaysia
Tel : 606-601 7221 Fax : 606-601 1083
Penang Office
G-9-2 & 3, Lorong Bayan Indah 1, Bay Avenue, Queensbay, Sg. Nibong, 11900 Penang, Malaysia
Tel : 604-645 6991 Fax : 604-645 6993 Email : adminpg@grand-flo.com
AN N U AL RE P OR T 2 01 8
Innoceria Sdn. Bhd.
Business With
Long Sustainable
Stability Term Growth
2018 ANNUAL
REPORT