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Prolexus PDF

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WHAT’S

INSIDE
2 Notice of Annual General Meeting
6 Statement Accompanying Notice of Annual General Meeting
7 Corporate Information

9 Financial Highlights
11 Management Discussion and Analysis
15 Sustainability Statement

25 Proﬁle of Directors
28 Proﬁle of Key Senior Management
30 Corporate Governance Overview Statement

39 Audit Committee Report

44 Statement on Risk Management and Internal Control
46 Statement on Directors’ Responsibility

47 Other Corporate Disclosure

48 Reports and Financial Statements
136 Top 10 Properties Held by Group

137 Analysis of Shareholdings

140 Analysis of Warrant Holdings
Proxy Form
2 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the 28th Annual General Meeting (“AGM”) of Prolexus Berhad to be conducted entirely
through live streaming from the Broadcast Venue at the Conference Room of Honsin Apparel Sdn. Bhd., 531 Batu 2½ ,
Jalan Kluang, 83000 Batu Pahat, Johor on Wednesday, 16 December 2020 at 10:00 a.m. for the following purposes:-

AGENDA

Ordinary Business

1. To receive the Audited Financial Statements for the ﬁnancial year ended 31 July 2020 together Please refer to
with the Reports of Directors and Auditors thereon. Note 7

2. To re-elect Encik Khadmudin Bin Mohamed Raﬁk, a Director who retires by rotation in Resolution 1
accordance with Article 107 of the Company’s Constitution and who, being eligible, offers
himself for re-election.

3. To re-elect Puan W Norma Binti W Daud, a Director who retires by rotation in accordance with Resolution 2
Article 107 of the Company’s Constitution and who, being eligible, offers herself for re-election.

4. To re-elect Mr. Lau Mong Fah, a Director who retires by rotation in accordance with Article 107 Resolution 3
of the Company’s Constitution and who, being eligible, offers himself for re-election.

5. To approve the payment of Directors’ fees amounting to RM431,000.00 for the ﬁnancial year Resolution 4
ended 31 July 2020.

6. To approve the payment of Directors’ beneﬁts up to an amount not exceeding RM100,000.00 Resolution 5
from 16 December 2020 until the conclusion of the next AGM of the Company. Please refer to
Note 9

7. To approve the payment of a First and Final Single Tier Dividend of 1.00 sen per ordinary share Resolution 6
for the ﬁnancial year ended 31 July 2020.

8. To re-appoint Messrs. Grant Thornton as auditors of the Company to hold ofﬁce until the Resolution 7
conclusion of the next AGM of the Company and to authorise the Directors to ﬁx their
remuneration.

Special Business

To consider and if thought ﬁt, to pass with or without any modiﬁcations the following ordinary
resolutions:-

9. AUTHORITY TO ALLOT AND ISSUE SHARES Resolution 8

“THAT, subject to the approvals of the regulatory authorities, the Board of Directors (“Board”)
of the Company be hereby authorised pursuant to Sections 75 and 76 of the Companies
Act 2016, to allot and issue shares in the Company at any time and upon such terms and
conditions and for such purposes as the Board may deem ﬁt, provided that the aggregate
number of shares to be issued does not exceed 20% of the total number of issued shares of
the Company.

AND THAT any Executive Director and/or Secretary of the Company be hereby authorised to
obtain the approval from Bursa Malaysia Securities Berhad for the listing and quotation of the
additional shares to be issued and to do all such acts and things necessary to give full effect to
such transactions as authorised by this resolution.

AND THAT, such authority shall commence immediately upon the passing of this resolution and
continue to be in force until the conclusion of the next AGM of the Company.”
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 3

NOTICE OF ANNUAL GENERAL MEETING

cont’d

10. PROPOSED CONTINUATION OF ENCIK KHADMUDIN BIN MOHAMED RAFIK IN Resolution 9

OFFICE AS INDEPENDENT DIRECTOR

“THAT authority be hereby given to Encik Khadmudin Bin Mohamed Raﬁk who had served
as an Independent Director of the Company for a cumulative term of more than 12 years to
continue to act as an Independent Director of the Company and to hold ofﬁce until the next
AGM of the Company.”

11. PROPOSED SHARE BUY-BACK MANDATE OF UP TO 10% OF THE ISSUED AND PAID- Resolution 10
UP SHARE CAPITAL OF THE COMPANY

“THAT subject to the Companies Act, 2016 (“the Act”), the Constitution of the Company and
the Main Market Listing Requirements (“Main LR”) of Bursa Malaysia Securities Berhad (“Bursa
Securities”) and any other relevant authorities, the Directors of the Company be and are hereby
authorised to purchase such number of ordinary shares (“Shares”) comprised in the Company’s
issued share capital as may be determined by the Directors from time to time through Bursa
Securities subject further to the following:

(i) the maximum number of Shares which may be purchased and/or held by the Company
shall not exceed ten per centum (10%) of the total number of issued shares of the
Company at the point of purchase subject to the restriction that the issued share capital
of the Company does not fall below the minimum share capital requirements of the Main
LR of Bursa Securities that the Company continues to maintain a shareholding spread
that is in compliance with the Main LR after the Share purchase;

(ii) the maximum funds to be allocated by the Company for the purpose of purchasing
the Shares under the Proposed Share Buy-Back shall not exceed the retained proﬁts
of the Company based on the latest Audited Financial Statements and/or the latest
management accounts of the Company (where applicable) available at the time of the
purchase(s);

(iii) the authority conferred by this resolution to facilitate the Proposed Share Buy-Back will
commence immediately upon passing of this ordinary resolution and will continue to be in
force until;

(i) the conclusion of the next AGM of the Company at which such resolution was
passed at the which time the authority would lapse unless renewed by ordinary
resolution, either unconditionally or conditionally; or

(ii) the expiration of the period within the next AGM of the Company after that date is
required by law to be held; or

(iii) the authority is revoked or varied by ordinary resolution passed by the shareholders
of the Company in a general meeting, whichever occurs ﬁrst, but not so as to
prejudice the completion of purchase(s) by the Company of the Shares before the
aforesaid expiry date and, made in any event, in accordance with the provisions of
the guidelines issued by Bursa Securities and any prevailing laws, rules, regulations,
orders, guidelines and requirements issued by any relevant authorities; and

(iv) upon completion of the purchase(s) of the Shares by the Company, the Directors of the
Company be and are hereby authorised to retain the Shares so purchased as treasury
shares, which may be distributed as dividends to shareholders, cancel and/or resold on
Bursa Securities, in the manner as prescribed by the Act and the requirements of the
Main LR of Bursa Securities and any other relevant authority for the time being in force.

And 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 Share
Buy-Back 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 the said Directors may deem fit and expedient in the best interest of the
Company to give full effect to and to complete the purchase of Shares.”

12. To transact any other business of which due notice shall have been given in accordance with
the Company’s Constitution and the Companies Act, 2016.
4 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTICE OF ANNUAL GENERAL MEETING

cont’d

FURTHER NOTICE IS HEREBY GIVEN THAT for the purpose of determining a member who shall be entitled to attend the
28th AGM, the Company shall be requesting Bursa Malaysia Depository Sdn. Bhd. to issue a General Meeting Record of
Depositors as at 8 December 2020. Only a depositor whose name appears on the Record of Depositors as at 8 December
2020 shall be entitled to attend the 28th AGM or appoint proxies to attend and/or vote on his/her behalf.

By Order of the Board,

LEE PENG LOON (MACS 01258)

P’NG CHIEW KEEM (MAICSA 7026443)
Company Secretaries

Penang
Date: 17 November 2020

NOTES ON APPOINTMENT OF PROXY

(1) A proxy may but need not be a member of the Company.

(2) A member shall be entitled to appoint a maximum of two (2) proxies to attend and vote at the same meeting. Where a member appoints
more than one (1) proxy, the appointment shall be invalid unless he/she specifies the proportions of his/her shareholdings to be represented
by each proxy.

(3) For a proxy to be valid, the proxy form duly completed, must be deposited at the registered office of the Company, 51-21-A Menara
BHL Bank, Jalan Sultan Ahmad Shah, 10050 Penang not less than 48 hours before the time appointed for holding the meeting or at any
adjournment thereof and in the case of a poll, not less than 24 hours before the time for taking of the poll. The instrument appointing a proxy
transmitted by facsimile or electronic mail will not be accepted.

(4) Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991 (“Exempt Authorised
Nominee”) which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”) there is
no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds.

(5) Where a member is an Exempt Authorised Nominee, it may appoint at least one (1) proxy but not more than two (2) proxies in respect
of each securities account it holds which is credited with the shares of the Company. The appointment of two (2) proxies in respect of a
particular securities account shall be invalid unless the authorised nominee specifies the proportion of its shareholding to be represented by
each proxy.

(6) In the case of corporate member, the proxy form must be executed under the corporation’s Common Seal or under the hand of an officer or
attorney duly authorised.

NOTES ON ORDINARY BUSINESS

(7) The Agenda 1 is meant for discussion only as the provision of Section 340(1)(a) of the Companies Act 2016 does not require the
shareholders’ approval for the Audited Financial Statements. Hence, the Agenda 1 is not put forward for voting.

(8) Encik Taufiq Ahmad @ Ahmad Mustapha Bin Ghazali is retiring by rotation in accordance with Article 107 of the Company’s Constitution as a
Director of the Company at the forthcoming 28th AGM and he had indicated to the Board that he is not seeking for re-election as a Director
of the Company.

The Board would like to thank Encik Taufiq Ahmad @ Ahmad Mustapha Bin Ghazali for his support, commitment and invaluable contributions
to the Group.

(9) The Resolution 5, if passed, will enable the Company to pay meeting allowances to non-executive directors of the Company and other
benefits such as directors’ indemnity insurance, training, travelling and accommodation expenses payable to the directors in accordance with
Section 230(1) of the Companies Act 2016. The total amount of directors’ benefits payable is estimated based on number of directors and
the scheduled meetings of the Board and Board Committees.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 5

NOTICE OF ANNUAL GENERAL MEETING

cont’d

NOTES ON SPECIAL BUSINESS

(10) The Resolution 8, if passed, will enable the Directors to allot and issue shares in the Company up to an amount not exceeding 20% of the
total number of issued shares of the Company for the time being for such purposes as the Directors consider will be in the best interest of
the Company. This authority, unless revoked or varied by the shareholders of the Company in a general meeting will expire at the conclusion
of the next AGM (20% General Mandate).

The Directors are of the view that the 20% General Mandate is in the best interest of the Company and the shareholders as it will provide
additional flexibility to the Company for any possible fund raising activities, including but not limited to placing of shares to meet the funding
requirements such as working capital and/or operational expenditure of the Company, expeditiously during this challenging time to ensure
long-term sustainability and interest of the Company and its shareholders.

As at the date of this notice, the Directors have not issued any shares pursuant to the general mandate granted at the last AGM of the
Company.

(11) The Resolution 9 is to seek shareholders’ approval through a two tier voting process and, if passed, will enable the Independent Director
who had served more than 12 years to be retained and continue to act as Independent Director of the Company to fulfil the requirements of
paragraph 15.02 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and to be in line with the practice 4.2 of the
Malaysian Code of Corporate Governance. The details of justifications are set out in the Company’s Corporate Governance Report for the
financial year ended 31 July 2020.

(12) The Resolution 10, is to seek approval for the Directors of the Company to purchase the Company’s shares up to 10% of the issued and
paid-up share capital of the Company. This mandate, unless revoked or varied by the shareholders of the Company in general meeting, will
expire at the conclusion of the next AGM of the Company. Further information on the Proposed Share Buy-Back is set out in the Circular to
Shareholders dated 17 November 2020.

NOTICE OF DIVIDEND ENTITLEMENT

NOTICE IS ALSO HEREBY GIVEN that a First and Final Single Tier Dividend of 1.00 sen per ordinary share for the ﬁnancial year
ended 31 July 2020, if approved, will be paid on 20 January 2021 to shareholders registered in the Record of Depositors of the
Company on 31 December 2020.

A depositor shall qualify for entitlement only in respect of:-

a. Shares transferred into the depositor’s securities account before 4.30 p.m. on 31 December 2020 in respect of
ordinary transfers; and

b. Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa
Malaysia Securities Berhad.

By Order of the Board,

LEE PENG LOON (MACS 01258)

P’NG CHIEW KEEM (MAICSA 7026443)
Company Secretaries

Penang

Date: 17 November 2020

6 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING

(PURSUANT TO PARAGRAPH 8.27(2) OF MAIN MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD)

1) No individuals are standing for election as Directors at the forthcoming 28th Annual General Meeting of the Company.

2) The proﬁles of the Directors who are standing for re-election as in Agenda 2, 3 and 4 of the Notice of the 28th Annual
General Meeting of the Company are set out in the Proﬁle of Directors section of this Annual Report.

3) The details of the Directors’ interests in the securities of the Company as at 15 October 2020 are set out in the
Analysis of Shareholdings section of this Annual Report.

4) The Resolution 8 tabled under Special Business as per the Notice of 28th Annual General Meeting of the Company
dated 17 November 2020 is a renewal of general mandate granted by shareholders of the Company at the last
Annual General Meeting held on 12 December 2019.

The proposed renewal of general mandate for issuance of shares will provide ﬂexibility to the Company for any
possible fund raising activities, including but not limited to further placing of shares for the purpose of funding future
investments, working capital and/or acquisitions.

As at the date of notice of meeting, the Directors have not issued any shares pursuant to the general mandate
granted at the last Annual General Meeting of the Company.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 7

CORPORATE INFORMATION

DIRECTORS

Ahmad Mustapha Ghazali Lau Mong Fah Boo Chin Liong

Executive Chairman Non-Independent Non-Executive Independent Non-Executive Director
Director
Lau Mong Ying
W Norma Binti W Daud
Managing Director Khadmudin Bin Mohamed Raﬁk
Independent Non-Executive Director
Independent Non-Executive Director
Choong Chee Mun
Lim Yong Lee
Executive Director cum Chin Chew Mun
Independent Non-Executive Director
Chief Financial Officer* Independent Non-Executive Director

COMPANY SECRETARIES RISK MANAGEMENT COMMITTEE BUSINESS ADDRESS

Lee Peng Loon (MACS 01258) Ahmad Mustapha Ghazali 531 Batu 2½, Jalan Kluang
Chairman, Executive Chairman 83000 Batu Pahat
P’ng Chiew Keem (MAICSA 7026443) Johor Darul Takzim
Lau Mong Fah Tel : 07-431 8388
Non-Independent Non-Executive Director Fax : 07-431 0133
AUDIT COMMITTEE E-Mail : [email protected]
Chin Chew Mun Website : www.prolexus.com.my
Chin Chew Mun Independent Non-Executive Director
Chairman,
Independent Non-Executive Director Boo Chin Liong SHARE REGISTRAR
Independent Non-Executive Director
Lau Mong Fah Bina Management (M) Sdn. Bhd.
Non-Independent Non-Executive Director W Norma Binti W Daud Lot 10 The Highway Centre, Jalan 51/205
Independent Non-Executive Director 46050 Petaling Jaya
Boo Chin Liong Selangor Darul Ehsan
Independent Non-Executive Director Tel : 03-7784 3922
INVESTMENT COMMITTEE Fax : 03-7784 1988
Khadmudin Bin Mohamed Raﬁk
Independent Non-Executive Director Ahmad Mustapha Ghazali
Chairman, Executive Chairman AUDITORS

NOMINATING COMMITTEE Lau Mong Ying Grant Thornton

Managing Director Chartered Accountants
Khadmudin Bin Mohamed Raﬁk
Chairman, Choong Chee Mun
Independent Non-Executive Director Executive Director PRINCIPAL BANKERS
cum Chief Financial Officer*
Chin Chew Mun AmBank Islamic Berhad
Independent Non-Executive Director Khadmudin Bin Mohamed Raﬁk Hong Leong Bank Berhad
Independent Non-Executive Director HSBC Bank Malaysia Berhad
W Norma Binti W Daud Public Bank Berhad
Independent Non-Executive Director Boo Chin Liong RHB Bank Berhad
Independent Non-Executive Director Standard Chartered Bank Malaysia Berhad
OCBC Al-Amin Bank Berhad
REMUNERATION COMMITTEE Industrial and Commercial Bank of China
REGISTERED OFFICE
Lau Mong Fah
Chairman, 51-21-A Menara BHL Bank STOCK EXCHANGE LISTING
Non-Independent Non-Executive Director Jalan Sultan Ahmad Shah
10050 Penang Main Market of Bursa Malaysia
Chin Chew Mun Tel : 04-210 8833 Securities Berhad
Independent Non-Executive Director Fax : 04-210 8831 Stock Name : PRLEXUS
Stock Code : 8966
Boo Chin Liong
Independent Non-Executive Director

Choong Chee Mun

Executive Director
cum Chief Financial Officer* * Re-appointed as Chief Financial Officer on 30 June 2020
8 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

CORPORATE INFORMATION
cont’d

DETAILS OF MEMBERSHIP IN BOARD COMMITTEES

Board Committees

Risk
Audit Nominating Remuneration Management Investment
Directors Committee Committee Committee Committee Committee

Ahmad Mustapha Ghazali - - - Chairman Chairman

Lau Mong Ying - - - - Member

Choong Chee Mun - - Member - Member

Lau Mong Fah Member - Chairman Member -

Khadmudin Bin Mohamed Raﬁk Member Chairman - - Member

Chin Chew Mun Chairman Member Member Member -

Boo Chin Liong Member - Member Member Member

W Norma Binti W Daud - Member - Member -

PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 9

FINANCIAL HIGHLIGHTS

2015 2016 2017 2018 2019 2020

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Operating Results:
Revenue 350,340 402,737 348,510 302,694 364,010 340,501
Profit before tax 31,055 40,686 36,370 13,563 12,329 24,791
Profit for the year 24,023 33,247 27,227 10,033 9,145 20,771
Profit attributable to owners of the Company 20,772 28,349 22,610 8,003 6,014 17,629
Key Data on Financial Position:
Total assets 192,074 303,821 309,350 352,459 407,087 432,183
Paid-up capital 57,931 88,389 105,248 105,487 105,487 106,045
Shareholders’ funds 114,455 196,405 219,586 223,271 227,969 246,969
Share Information:
Earnings per share (sen) 15 19 13 5 3 10
Dividend per share (sen)* 4.2 3.3 2.3 0.5 0.3 1.0
Dividend amount (RM’000)* 4,649 4,711 3,910 870 524 1,765
Net asset per share (RM) 0.83 1.15 1.26 1.28 1.30 1.41

* Dividend for FY2020 includes the proposed first and final single tier dividend as per Resolution 6 of the Notice of AGM on page 2

REVENUE PROFIT BEFORE TAX PROFIT FOR THE YEAR

(RM’000) (RM’000) (RM’000)
33,247
402,737

40,686

27,227
364,010
350,340

348,510

36,370
340,501

24,023
302,694

31,055

20,771
24,791

10,033
13,563

12,329

9,145

2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020
10 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

FINANCIAL HIGHLIGHTS
cont’d

PROFIT ATTRIBUTABLE TO TOTAL ASSETS PAID-UP CAPITAL

OWNERS OF THE COMPANY (RM’000) (RM’000)
(RM’000)
28,349

106,045
105,487
105,248

105,487
432,183
407,087
22,610

352,459

88,389
20,772

309,350
303,821
17,629

57,931
192,074
8,003

6,014

2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020

SHAREHOLDERS’ FUNDS EARNINGS PER SHARE DIVIDEND PER SHARE

(RM’000) (SEN) (SEN)*
246,969
227,969
223,271
219,586
196,405

4.2
15

3.3
13
114,455

2.3

1.0
5

0.5
3

0.3

2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020

DIVIDEND AMOUNT NET ASSET PER SHARE

(RM’000)* (RM)
4,711
4,649

1.41
1.30
1.28
1.26
3,910

1.15
0.83
1,765
870

524

2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 11

MANAGEMENT DISCUSSION
AND ANALYSIS

OVERVIEW

It has been a challenging and volatile year due to the 2019 Novel Coronavirus (“COVID-19”) outbreak. The
pandemic had caused major disruptions to the global supply chain and the world economy. The full impact is yet
to be known as there are uncertainties caused by the pandemic, as well as geopolitical and political tension around
the world. The business operation of the Group has been impacted as sales orders from our buyers are anticipated
to downscale due to disruption of economic activity and changes in retail operations. The partial factory shutdown
as a result of the lockdown in China in early February 2020 and the Movement Control Order (“MCO”) in Malaysia
starting middle of March 2020 had also disrupted our production capacity to a certain extent.

In order to cushion the negative impact, the Group had taken spontaneous and immediate steps to venture into
the research and development of Personal Protective Equipment (“PPE”) which involves the manufacturing and
sale of non-medical reusable fabric face masks (“fabric mask”) starting March 2020. The manufacturing of fabric
mask provides a perfect complement to the existing core business in the manufacturing of apparels. At the same
time, the Group could leverage on optimizing the existing production facilities and resources efﬁciently to generate
a stable and diversiﬁed income stream for the Group. This is also part of the Group’s corporate social responsibility
(“CSR”) initiatives as the reusable masks enhance public safety and is more environmentally friendly.

REVIEW OF FINANCIAL PERFORMANCE

The Group registered a total revenue of RM340.5 million in the ﬁnancial year ended 31 July 2020 (“FY2020”) which
represents a 6.5% decline compared to the previous ﬁnancial year. The drop in revenue from the apparel business
is mitigated by the revenue generated from the sales of fabric mask which contributed 11.1% of the Group’s revenue.
Revenue from the advertising division also recorded a decline of 28.3% in FY2020 mainly due to the shutdown of digital
advertisement boards during MCO following the postponement of advertisement spending by certain customers.

Despite the decline in revenue, the Profit After Tax (“PAT”) increased by 128.6% to RM20.8 million in FY2020 compared
to RM9.1 million in FY2019. The increase in PAT is mainly due to higher profit margin from the sales of fabric mask and
implementation of several cost cutting measures. The Group also benefited from the economic stimulus package by the
Malaysia and China government to a certain extent.
12 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

MANAGEMENT DISCUSSION AND ANALYSIS

cont’d

REVIEW OF FINANCIAL POSITION The apparel division continues to build on its core
competencies and create value with the following
As of 31 July 2020, the Group’s total assets increased strategies:
by 6.2% to RM432.2 million compared to the previous
financial year mainly due to net cash generated from t 7FSUJDBM JOUFHSBUJPO PG UIF BQQBSFM NBOVGBDUVSJOH
operating activities and net increase in cash and cash supply chain with the textile mill to strengthen the
equivalents of RM47.2 million and RM37.8 million competitive and comparative advantage.
respectively in FY2020. Despite borrowings increased by
2.2% to RM94.2 million, the Group has returned to a net t $POUJOVF UP FOIBODF MFBO NBOVGBDUVSJOH BOE
cash position as of 31 July 2020. embrace Industry 4.0 to further improve production
efﬁciency.
Net assets per share rose to RM1.41 as compared to
RM1.30 in FY2019. t 'PDVTPOQSPEVDUEFWFMPQNFOUBOEJOOPWBUJPO

t 'PDVT PO UBMFOU EFWFMPQNFOU UISPVHI USBJOJOH

BUSINESS REVIEW BY DIVISION programmes and retention schemes.

Apparel Division
Textile Division
The apparel division manufactures sportswear apparel for
major international brands and fabric mask for the overseas The textile mill is located in the district of Kluang, Johor. It is
and local market. There are three apparel manufacturing part of the Group’s vertical integration strategy in expanding
facilities located in Malaysia (Johor and Penang) and into upstream fabric manufacturing to complement the
China (Jiangsu Province) whereby it has a total capacity of apparel division by internal procurement of knitted fabrics
approximately 15 million pieces of apparel per annum and as well as for the purpose of external fabric sales.
the production capacity can be used interchangeably to
produce fabric mask to meet demands. The factories have Since commencement of business in November 2018, the
the ability and competency to uphold stringent customer textile mill has been focusing on product development and
demands such as quality, on-time delivery, costing and innovation. With the COVID-19 outbreak, the R&D team
sustainability standards. of the textile mill had innovated the ProX™ Technology
whereby the technology enables its functional fabric face
The apparel division contributed 96.2% of the Group’s mask, ProXmask™ to be both protective and preventive
revenue in FY2020 which are derived from various against the virus as it has water repellency, anti-viral, anti-
geographical locations as indicated in the below diagram. microbial and microfiltration function.
The United States of America is the largest export market
for the apparel division, contributing 38% of total apparel Even though the textile mill is currently not operating at its
sales in FY2020 followed by Asia and Europe with 29% optimal capacity and shouldering high depreciation and
and 18% respectively. finance costs, its results have improved significantly as
compared to FY2019 whereby losses have narrowed from
RM16.2 million to RM1.7 million in FY2020.
Apparel revenue geographical segments
The Group expects to derive the following long-term
Others Malaysia benefits from the textile mill:
10% 5%
t &OIBODF BOE JNQSPWF PO UIF 3% BOE JOOPWBUJPO
capabilities.

t 3FEVDF EFQFOEFODZ PO FYUFSOBM TVQQMZ PG GBCSJDT

and ensure undisrupted supply of key raw materials
at favourable pricing/terms.
Asia US
29% 38%
t 4IPSUFO UIF MFBE UJNF TJHOJmDBOUMZ GPS UIF BQQBSFM
division and end customers.

t $PTU TBWJOHT BOE JNQSPWFE NBSHJOT GSPN JOUFSOBM

procurement of materials.

t *ODPNF HFOFSBUJPO GSPN FYUFSOBM TBMFT PG LOJUUFE

Europe
18% fabrics.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 13

MANAGEMENT DISCUSSION AND ANALYSIS

cont’d

Advertising Division Dependency on Labour

The Group is also involved in the business of managing, The production of apparel products depends heavily on
operating, sales and marketing of media airtime for Digital labour especially for sewing related activities and any
Out-Of-Home TV network with 13 outdoor digital screens shortage in the supply of labour may disrupt the production
located across Malaysia. It owns the “PowerScreen” brand processes and increase the overall costs of production.
and is the first outdoor digital screen operator in Malaysia The on-going shortage of the local workforce has affected
since its establishment in 1999. All screens are placed at several industries including the textile industry, and this has
strategic locations with high traffic rates. resulted in the employment of a high number of foreign
workers in our Malaysian factories. Hence, we are required
The advertising division contributed 3.1% of the Group’s to comply with the policies imposed by the Government
revenue and 20.1% of the Group’s PAT in FY2020. on the employment of foreign workers and any changes to
such policies may have an impact on our operations and
financial performance.
RISKS RELATING TO THE BUSINESS AND INDUSTRY
In order to mitigate this risk, the Group has been
There are various risks affecting the ability of the Group continuously recruiting local employees as well as foreign
to meet its goals and objectives. While the management workers from different countries (to reduce dependency on
is constantly assessing and implementing strategies to labour from any particular country). To reduce dependency
mitigate controllable and uncontrollable risks, it is important on manual labour, the Group is prioritising automation
to consider the following risks which may have an impact towards improving efficiency in the production and
on the future performance of the Group. packaging processes. In the event the Group is unable to
reduce dependency on labour, any increase in the costs of
Business Risks production would inevitably affect the Group’s profit margin
and performance.
The Group is not isolated from general business risks
as well as risks inherent in the manufacturing industry Dependency on Major Customers
and those specific to the textile and apparel industry.
For example, the Group may be affected by a general Our major customers comprise mainly of international
downturn in the global, regional and/or national economy, sportswear brands. There is no over reliance on one single
entry of new competitors, constraints in labour supply, customer as we have been continuously making efforts to
shortage and rising cost of raw materials, changes in the diversify our customer base in recent years. Nevertheless,
law and tax legislation affecting the industry, increased there can be no assurance that the loss of any of our major
operational costs, fluctuations in foreign exchange rates customers or reduction in orders will not adversely impact
and changes in business and credit conditions. the Group’s business and performance.

Although the Group seeks to limit these risks through, Fluctuation in Foreign Exchange
inter-alia, maintaining good business relationships
with customers and suppliers, enhancing efficiency, The Group is exposed to foreign exchange fluctuation
implementing cost control measures and expansion/ through our imports of raw materials and our exports of
diversification of its products, no assurance can be given apparel products. Consequently, any adverse significant
that a change in any of the above-mentioned factors will movement in foreign currency may have an effect on the
not have an adverse effect on the Group’s business. financial performance of the Group.

Competition Nevertheless, as most of our imports and exports are

primarily transacted in USD, this provides a substantial
The Group’s products are exposed to competition from natural hedge to the Group. In addition, we maintain credit
local and overseas companies particularly those which facilities on foreign exchange forward contracts with several
operate in countries which enjoy lower labour cost vis-à- financial institutions and if necessary, will be utilized to
vis Malaysia. Besides cost, quality and on-time delivery are hedge the fluctuations in exchange rates. Notwithstanding
important requisites of the textile and apparel industry. the above, there can be no assurance that any foreign
currency exchange fluctuation in the future will not
The Group continues to take effective measures and efforts adversely affect the Group’s financial performance.
to enhance production efficiency as well as to provide
high quality products, on-time delivery, sustainable and
competitive pricing and sales services to our existing and
new customers.
14 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

MANAGEMENT DISCUSSION AND ANALYSIS

cont’d

Other Risks

The Group is also exposed to other risks such as

dependency on key personnel, insufﬁcient capacity to meet
demand from customers, credit risks of our customers and
political, economic and regulatory considerations for both
our local and foreign operations.

FUTURE PROSPECTS

We will continue to implement our strategies, or change

our strategies as and when necessary, to mitigate the
risks to achieve sustainable growth for the Group in the
coming years. In view of the current challenging business
environment and future uncertainties caused by the
COVID-19 pandemic, we are cautiously optimistic on the
ﬁnancial performance of the Group for the ﬁnancial year
ending 31 July 2021 (“FY2021”). Even though we expect a
temporary slow-down in apparel sales and the advertising
division, we expect the demand of reusable fabric face
mask to gradually increase as wearing a mask has become
a new norm. We will enhance and improve the research
and development, production and sale of reusable fabric
face masks and innovation of other related products in the
forthcoming year in order to reduce the negative impact on
business operations.

Dividend

The Company has not adopted any dividend policy but

is committed to distributing a portion of its profits as
dividend after taking into account the Group’s business
commitments and financial resources required for
continued stability and growth.

The Board has recommended, subject to shareholders’

approval at the forthcoming Annual General Meeting, the
payment of a ﬁrst and ﬁnal single tier dividend of 1.00 sen
per ordinary share. If approved, the total payout for the year
will be RM1.77 million.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 15

SUSTAINABILITY STATEMENT

SUSTAINABILITY AT PROLEXUS

At Prolexus, sustainability initiatives have always integrated into our way of conducting businesses and as part of the
business continuity risk management which is to ensure our stakeholders receive optimum returns. The Group vision and
strategy are form with consideration of our Economy, Environment and Social (EES) which is directly aligned with our long-
term Sustainability Goal.

SUSTAINABILITY GOVERNANCE

The Board of Directors acknowledge the importance of business sustainability and its responsibility towards Economic,
Environment and Social (EES). The Group adopt policy that promotes positive growth towards all aspect of EES.

z Review the sustainability framework and initiatives with Managing Director for
Board of
effective implementation.
Directors z Review and approve the Sustainability Statement.

z Review the sustainability initiatives with Sustainability Committee and

Managing formulate strategies.
Director z Report to the Board on material sustainability matters.

z Comprise representatives from Health, Safety, Security and Environment (HSSE),

Human Resource and General Affairs (HR&GA) and Beyond Compliance.
Sustainability z Responsible for detailed engagement strategy formulation, implementation,
Committee monitoring and communication with Head of Operations / Department Heads.
z Report to Managing Director on material sustainability matters.

STAKEHOLDERS’ ENGAGEMENT

The Group has established a process for materiality assessment with clearly deﬁned resources and responsibilities. This
materiality assessment aims to better identify the priorities of the Group’s stakeholders and EES risks and opportunities.
Through this detail continuous approach, the Group is able to maintain a solid approach in evaluating operation
sustainability. It would empower our business strategies and further driving the transformation in sustainability development
and managing our risk and opportunities efﬁciently.

Stakeholder Sustainability
S Categorisation
Identiﬁcation Issues and Review
Determination Prioritisation
16 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

SUSTAINABILITY STATEMENT
cont’d

STAKEHOLDERS’ ENGAGEMENT (CONT’D)

STAKEHOLDERS ENGAGEMENT METHODS FREQUENCY

Shareholders and z Annual general meeting Annually
Investors z Extraordinary general meeting (if required)
z The Executive Director cum Chief Financial Officer oversees Throughout the year
investor relation matters
Employees z Employee Suggestion and Grievances Committee (ESGC) Throughout the year
z Corporate Social Responsibility (CSR) Activities
z Employee engagement programmes and training
Customers z Engagement via phone, email and face to face with customer Throughout the year
in order to have real time visibility on customer feedbacks and
expectation
z Periodic performance audit by customers
Local Government z Certification and compliance with Government legislative Throughout the year
Authorities framework
z Compliance with the relevant reporting requirement and disclosure
Local Communities and z Community engagement through CSR activities Throughout the year
NGOs z Corporate collaboration initiatives with NGOs

MATERIALITY ASSESSMENT

Our strategies and business decision are not limited to the Group’s ﬁnancial performance but also inclusive economic,
environmental and social impact.

We Care for Our Customers

At Prolexus, evolved and breakthrough is our DNA. To keep up with the challenge of delivering quality product to our
customer, we constantly ﬁnd ways to reinvent and restructure our key process and technologies to meet with the ever-
changing global manufacturing landscape. Our customers are our partners as we are in close collaboration with them
during the whole process of manufacture and exporting our product to all around the world.

Reaching the Highest Standards of Product Quality and Product Safety

Our top priority is ensuring consistent compliance to the highest standard of product quality and safety. This commitment is
reﬂected in our stringent production process controls and effective management systems.

Product Innovation

Innovation are the key for business to growth. In this fast-moving world and with the ever-changing consumer needs.
Through innovation in our people, process and products; we adapt the changes and meet the challenges it brings. We are
able to move beyond and as one of leader in creating new trend.

We always believe innovation works in the way where spark of idea from each member of our team were the catalyst
that sparks the creation of an idea and innovation. With our strong partnerships with our suppliers and industry leaders it
enables us to explore new venture and further evolves our existing product.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 17

SUSTAINABILITY STATEMENT
cont’d

MATERIALITY ASSESSMENT (CONT’D)

We Care for Our Environment

In Prolexus, we acknowledge the importance of environmental sustainability. We had made sustainability manufacturing as
our top priority in all of our business decisions. To work in line with this, we have the following effective beyond compliance
environmental initiatives in place:

Waste Energy and Carbon Water

Management Management

Waste Management

The Group has always been committed on caring for both our environment and community. Through our continual effort
with our partners, we have maintained our goal in achieving zero manufacturing waste landﬁll target by recycling, using
waste for energy recover as well as downcycling.

We had continued our waste minimum program which was introduced in year 2019. This is an attractive incentive schemes
that motivate our employees to reduce waste and encourage employees to participate in recycling. This initiative has
effectively lower the environmental impact and improved our waste segregation and recycle ratio.

2017 2019
Recycle : 28% Recycle : 68%
Landﬁll : 0% Landﬁll : 0%

2018 2020
Recycle : 28% Recycle : 20%
Landﬁll : 0% Downcycling : 80%
Landﬁll : 0%
18 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

SUSTAINABILITY STATEMENT
cont’d

MATERIALITY ASSESSMENT (CONT’D)

We Care for Our Environment (Cont’d)

Energy and Carbon

Effective energy management plays a vital part in achieving sustainable and competitive manufacturing. We had
continuously upgrade our production facilities with more energy efﬁcient equipment. In line with our ongoing capacity
expansion in FY2020, our electricity consumption decreased to 0.26 KWH/pcs. This led to decrease of carbon emission
from 0.20 to 0.18 kgCO2e/pc.
0.30
0.26
0.20 0.18

FY 2019 FY 2020

Electricity Consumption (kwh/pc) Carbon Emisson (kgC02e/pc)

Water Management

Water supply issue had been always an upmost concern to all of us, water management had been one of our focus. During
October 2019, we had started the use of rain water harvesting system to reduce fresh water consumption. The result had
shown to be positive; we achieve a reduction in fresh water consumption of about 22% in FY2020. We believe the rain
water harvesting initiatives would further improve our water utilization ratio.

1.47
1.14

FY 2019 FY 2020

Fresh Water Usage (L/pc)

We Care for Our People

Our people are true assets and an essential part of business success. Our diverse workforce of over 3,000 people are the
pillars that contribute to the Group’s success and growth. We recognise people as the driving force behind our business
through empowering our people with continuous talent development to reach their full potential which ultimately leads to
better performance.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 19

SUSTAINABILITY STATEMENT
cont’d

MATERIALITY ASSESSMENT (CONT’D)

We Care for Our People (Cont’d)

Investing in our People

Skills and knowledge were the foremost necessity criteria to cultivate human capital. Hence, we have implemented
structured initiatives to develop and nurture our employees. Our talent empowerment programme is aimed at empowering
our talent pool. We equip our people with various training and development initiatives from both internal and external
training parties to maximise their knowledge and experience. Our talent empowerment programme emphasize on
competency development to develop our employees with core skills and strengthen their leadership skills. Our systematic
training such as On Job Training (OJT) enables our employees possess the required functional skills and knowledge to
contribute to the Group’s growth. The Group is also supportive for employees who wish to further pursue their education to
upskills themselves through educational and skilled training.

Cultivating a Safe and Healthy Workplace

We are committed to provide a safe and healthy workplace for our employees to safeguard the welfare of our employees.
With the outbreak of the COVID-19 pandemic, we have implemented cleaning and disinfection procedures and provide
sanitizing facilities to reduce the exposures to COVID-19. Besides that, we have implemented several preventive measures
such as physical distancing, thermal screening, provide mask to employees and promote awareness of coronavirus disease
to employees by providing proper guidance on wearing masks and personal hygiene at workplace. The employees are also
encouraged to self-monitor their own temperature at home.

We aim to protect our employees and create a safe workplace to prevent and control the spread of COVID-19.

Prioritising Social Compliance

We support fair practices at our workplace and provide equal opportunities in employment. Besides, we fully respect
in granting freedom to our employees in joining any association and not coerce or hold staff against their wishes
in employment. We uphold the values of mutual respect through maintaining our workplace free from harassment and
violence. Any form of harassment and violence will not be tolerated.

We acknowledge that the protection of human rights in our operations and supply chain is a vital part of our sustainability
agenda. Our strategy includes adherence to Local Law and Regulations, Buyers Code of Conduct as well as standards
from International Labour Organization and Fair Labour Association in our operations.

In Safety and Health aspect, we utilize all available resources to maintain a safe and green workplace for our employees.
We set goals to improve our environmental performance & operating conditions to protect the safety and health of our
employees.

We Care for Our Community

We believe in giving back to our community and takes an active role in caring for the community. Prolexus had been
collaborated with Local Authorities and Non-Government Agency in hosting CSR Project every year. In year 2020, the
COVID-19 pandemic is spreading across the world in an unprecedented way. Through the research and development of
our own reusable fabric face mask, we were able to support our local front liner in a joint effort in combating the pandemic.
We continue our effort in caring for our community through actively engaged in activities on promoting awareness of
wearing mask and personal hygiene.
20 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

SUSTAINABILITY STATEMENT
cont’d

MATERIALITY ASSESSMENT (CONT’D)

We Care for Our Community (Cont’d)

Combating COVID-19
Supporting our Frontline Heroes

During the pandemic, we had distributed our reusable fabric face mask ProXmask™ to Batu Pahat Police Department,
Majlis Perbandaran Batu Pahat (MPBP) and Hospital Sultanah Nora Ismail (HSNI) in supporting our front liners in combating
the COVID-19 pandemic.

ProXmask™ CSR Collaboration Project

DHL CSR Collaboration Project

We had collaborated with DHL to initiate a CSR Project by distributing our reusable fabric face mask ProXmask™ to
selected schools in Southern, Northern and Central Region as an effort to enhance environmental consciousness to wear
fabric mask and reduce usage of disposable mask.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 21

SUSTAINABILITY STATEMENT
cont’d

MATERIALITY ASSESSMENT (CONT’D)

We Care for Our Community (Cont’d)

Malaysia Crime Prevention Foundation Joint Project

We worked together with Malaysia Crime Prevention Foundation (MCPF) in co-hosting a campaign with the distribution
of our ProXmask™ as an effort to improve awareness of the importance of wearing mask. We are also emphasizing the
importance of practicing physical distancing and increased vigilance in personal hygiene.

“Ten Thousand Masks, Ten Thousand Smiles” CSR Collaboration Project with Lions Club Kluang and OCBC
Bank Kluang Branch

As a collaboration partner, we worked together with Lions Club Kluang and OCBC Bank Kluang Branch in sponsoring
students from the lower income family and OKUs by distributing ProXmask™ to these students.
22 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

SUSTAINABILITY STATEMENT
cont’d

MATERIALITY ASSESSMENT (CONT’D)

We Care for Our Community (Cont’d)

Annual CSR Projects

Blood Donation Campaign

Annually we collaborate with Unit Tabung Darah HSNI, Unit Physiotherapy, Batu Pahat Mall and our associate’s business
partner in conducting Blood Donation Campaign.

Free Carbon Day - Green

We join awareness community event organized by Local Authority (Majlis Perbandaran Batu Pahat) in promoting Low
Carbon City.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 23

SUSTAINABILITY STATEMENT
cont’d

MATERIALITY ASSESSMENT (CONT’D)

We Care for Our Community (Cont’d)

EM Mud Ball with Local Authority (Majlis Perbandaran Batu Pahat) & Under Armour

A joint community event organized by Local Authority in planting trees at Taman Rekreasi Tasik Y near Parit Dobby and
ﬁlling Effective Microorganism (EM) ball to Sungai Parit Dobby.

Run Against Suicide - Sponsor Event T-Shirt for Hospital Sultanah Nora Ismail (Mental Health Club)
24 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

SUSTAINABILITY STATEMENT
cont’d

MATERIALITY ASSESSMENT (CONT’D)

We Care for Our Community (Cont’d)

Organized IPMC Meeting with Local Authority (MPBP)

Co-hosting IPMC Meeting with Local Authority (MPBP) along with the participation of Local Industries representative in
discussion to improve our industry area
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 25

PROFILE OF DIRECTORS

Ahmad Mustapha Ghazali, a Malaysian male aged 72, was appointed to the
Board on 6 September 1993 and was designated as Executive Chairman
on 25 January 2010. He is a Fellow of the Chartered Association of Certified
Accountants (UK), a Fellow member of the Institute of Chartered Accountants
AHMAD MUSTAPHA GHAZALI
in England and Wales and a member of both the Malaysian Institute of
Executive Chairman
Accountants and the Malaysian Association of Certified Public Accountants.
He is also a Fellow member of the Chartered Tax Institute of Malaysia. He
has an MBA from the University of Leicester, England and a MSc from School
of Oriental and African Studies, University of London. He was previously
attached to an international accounting firm as a partner and has more than
30 years of experience in statutory audit, financial reporting and corporate
finance.

He is also a board member of Luxchem Corporation Berhad.

He has no family relationship with other directors and/or major shareholders

of the Company, has no conflict of interest with the Company and has no
conviction for any offences within the past five years (other than traffic
offences, if any) and there was no public sanction or penalty imposed by the
relevant regulatory bodies during the financial year.

Lau Mong Ying, a Malaysian male aged 71, was appointed to the Board
on 27 August 1993 and until 1 October 2002 is both the Chairman and
Managing Director of the Group. On 1 October 2002, he relinquished the
post of Chairman to Ahmad Mustapha Ghazali and retained the post of
LAU MONG YING
Managing Director. He graduated with a Bachelor of Commerce in Economics
Managing Director
from Nanyang University of Singapore in 1973 and has been involved in the
apparel industry since 1973.

He is the brother of Lau Mong Fah, a director and major shareholder

of the Company. Besides, he is also the brother of Lau Boon Hwa, a key
senior management of the Company. He has no conflict of interest with the
Company and has no conviction for any offences within the past five years
(other than traffic offences, if any) and there was no public sanction or penalty
imposed by the relevant regulatory bodies during the financial year.

Choong Chee Mun, a Malaysian male aged 42, was appointed to the Board
on 26 October 2017 and re-appointed as Chief Financial Officer effective from
30 June 2020. He holds a Bachelor degree in Accounting and Finance and is
a member of Malaysian Institute of Accountants and CPA Australia. He joined
CHOONG CHEE MUN
the Group in April 2013 and was the Chief Financial Officer from 9 December
Executive Director cum Chief
2013 to 25 September 2018. Prior to joining the Group, he was attached to
Financial Officer
international accounting firms in Malaysia and China as well as a consultancy
firm and US multinational corporation in China.

He has no family relationship with other directors and/or major shareholders

PROFILE OF DIRECTORS
cont’d

Lau Mong Fah, a Malaysian male aged 66, was appointed to the Board on 3
September 1998. He is a Fellow Member of the Association of International
Accountants, London. He is currently attached to a professional firm
providing tax advisory and consulting services, and corporate secretarial and
LAU MONG FAH
share registration services.
Non-Independent
Non-Executive Director
He is the brother of Lau Mong Ying, a director and major shareholder of the
Company. Besides, he is also the brother of Lau Boon Hwa, a key senior
management and major shareholder of the Company. He has no conflict of
interest with the Company and has no conviction for any offences within the
past five years (other than traffic offences, if any) and there was no public
sanction or penalty imposed by the relevant regulatory bodies during the
financial year.

Khadmudin Bin Mohamed Rafik, a Malaysian male aged 67, was appointed
to the Board on 9 September 2003. He obtained his Australian Matriculation
Certificate in 1973 and Inspectors Certificate in 1976. He joined the Royal
Malaysian Police Force as Senior Police Officer from 1976 to 1995. His last
KHADMUDIN BIN position before optional retirement was the Assistant Superintendent of Police
MOHAMED RAFIK performing the duties of “Head of Prosecution Department”. He is presently
Independent the managing director and owner of a private limited company specialising in
Non-Executive Director knitted fabric.

He has no family relationship with other directors and/or major shareholders

Chin Chew Mun, a Malaysian male aged 49, was appointed to the Board on
16 November 2012. He is a member of Institute of Chartered Accountants
Australia and New Zealand, Malaysian Institute of Accountants and Chartered
Tax Institute of Malaysia. He holds a Bachelor of Commerce degree from
CHIN CHEW MUN
the University of Auckland, New Zealand. He was attached to international
Independent
accounting ﬁrms in Malaysia and China for 13 years involving in statutory
Non-Executive Director
and special audits of public listed companies, multinational corporations and
private companies of different industries. He was also involved in various initial
public offers in Malaysia and China as Reporting Accountants. He is presently
in public practice as Chartered Accountant.

He is also a board member of Y.S.P. Southeast Asia Holding Berhad.

He has no family relationship with other directors and/or major shareholders

PROFILE OF DIRECTORS
cont’d

Boo Chin Liong, a Malaysian male aged 59, was appointed to the Board on
9 December 2013. He holds a Bachelor of Law (Honours) degree from the
University of Malaya in 1985 and was called to the Malaysian Bar in 1986. He
is an advocate and solicitor and has been in active legal practice since 1986.
BOO CHIN LIONG
He is a founding partner of Messrs. C. L. Boo & Associates.
Independent
Non-Executive Director
He is also a board member of Poh Huat Resources Holdings Berhad.

He has no family relationship with other directors and/or major shareholders

W Norma W Daud, a Malaysian female aged 65, was appointed to the

Board on 15 June 2018. She holds a Bachelor of Arts (Hons) degree from
Universiti of Malaya majoring in Geography. She served in various government
agencies as an Administrative and Diplomatic Ofﬁcer with the Economic
W NORMA BINTI W DAUD Planning Unit (EPU), Ministry of International Trade and Malaysia External
Independent Trade Development Corporation (“MATRADE”). She was posted as Trade
Non-Executive Director Commissioner in London and as Senior Trade Commissioner in Beijing during
her tenure with MATRADE. Her last posting prior to her retirement in 2012
was as the Director of Cross Border in MATRADE.

She has no family relationship with other directors and/or major shareholders
of the Company, has no conflict of interest with the Company and has no
conviction for any offences within the past five years (other than traffic
offences, if any) and there was no public sanction or penalty imposed by the
relevant regulatory bodies during the financial year.

Lim Yong Lee, a Malaysian male aged 56, was appointed to the Board on
26 December 2018. He holds a Bachelor of Business Administration (Magna
cum Laude) degree in Operations Management from University of Toledo,
Ohio, USA. He also holds a Masters in Business Administration in Finance
LIM YONG LEE
and International Business from University of Toledo, Ohio, USA. He is
Independent
currently an Advisor to a regional private equity ﬁrm. His primary responsibility
Non-Executive Director
is coverage of Malaysia to source for and manage the ﬁrm’s investments in
Malaysia. His professional career spans more than 30 years.

He has no family relationship with other directors and/or major shareholders

PROFILE OF KEY SENIOR MANAGEMENT

LAU BOON HWA LIAO YUN MU

Executive Director, Honsin Apparel Sdn Bhd Executive Director, Honways Apparel Shuyang Limited

Lau Boon Hwa, a Malaysian male aged 58, was appointed Liao Yun Mu, a Taiwanese male aged 69, was appointed as
as General Manager of Honsin Apparel Sdn Bhd on 1 General Manager of Honways Apparel Shuyang Limited on
August 2011 and redesignated as Executive Director 27 July 2010 and redesignated as Executive Director on 1
on 1 January 2020. He holds a degree in Mechanical January 2020. He graduated from Donhai High School in
Engineering from National Cheng Kung University in 1969 and has been involved in the apparel industry since
Taiwan. He has more than 30 years of experience in the 1972.
apparel manufacturing industry.
He has no family relationship with other directors and/
Prior to joining the Group in 1993, he has accumulated or major shareholders of the Company, has no conflict
experience in the apparel manufacturing industry in of interest with the Company and has no conviction for
Singapore where he was involved in quality audit, sales and any offences within the past five years (other than traffic
technical support for apparel CAD system. Besides, he was offences, if any) and there was no public sanction or
also a quality auditor for a factory in Taiwan. penalty imposed by the relevant regulatory bodies during
the financial year.
He is the brother of Lau Mong Ying and Lau Mong Fah, a
director and major shareholder of the Company. He has no
conflict of interest with the Company and has no conviction
for any offences within the past five years (other than
traffic offences, if any) and there was no public sanction or
penalty imposed by the relevant regulatory bodies during
the financial year.

CHIN MUN YEW KAM TECK EE

Chief Executive Officer, HiQ Media (Malaysia) Sdn Bhd Executive Director, Trans Pacific Textile (M) Sdn Bhd

Chin Mun Yew, a Malaysian male aged 46, was appointed Kam Teck Ee, a Malaysian male aged 52, was appointed
as Chief Executive Officer of HiQ Media (Malaysia) Sdn Bhd as Executive Director of Trans Pacific (M) Sdn. Bhd. on 1
on 1 January 2015. He holds a certificate in Chartered October 2018. He holds Bachelor degree from USM, B.A
Institute of Marketing (CIM) which he obtained in 1993. He (Hons.) and obtained M.B.A in year 2004.
has accumulated more than 20 years of experience in the
advertising and marketing industry. Prior to joining the Group in 2017, he has international
experiences in the apparel manufacturing and industrial
He first joined the Group as a sales manager in May 2003. engineering systems since year 1999. He was involved
Prior to joining the Group, he was attached to a publisher in marketing and delivery of production reengineering
based in Malaysia and was involved in media advertising project to many multinational apparel companies in ASEAN
for its publications. He was also previously involved in sales countries, China and South Asia.
and marketing for various local brands.
He has no family relationship with other directors and/
He has no family relationship with other directors and/ or major shareholders of the Company, has no conflict
or major shareholders of the Company, has no conflict of interest with the Company and has no conviction for
of interest with the Company and has no conviction for any offences within the past five years (other than traffic
any offences within the past five years (other than traffic offences, if any) and there was no public sanction or
offences, if any) and there was no public sanction or penalty imposed by the relevant regulatory bodies during
penalty imposed by the relevant regulatory bodies during the financial year.
the financial year.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 29

PROFILE OF KEY SENIOR MANAGEMENT

cont’d

MOHAMMAD RAIZMAN BIN AHMAD MUSTAPHA

(RESIGNED ON 3 JUNE 2020)
Chief Financial Officer, Prolexus Berhad

Mohammad Raizman Mustapha, a Malaysian male aged

38, was appointed as Chief Financial Ofﬁcer of the Group
on 25 September 2018. He holds a Bachelor of Science
degree (Hons) in Business Management from King’s
College London, University of London. He is an associate
member of the Institute of Chartered Accountants in
England and Wales (ICAEW) and a member of Malaysian
Institute of Accountants.

Prior to joining the Group in 2014, he was attached to

various international accounting ﬁrms. He has accumulated
experiences in financial advisory services covering
corporate ﬁnance, mergers and acquisitions, due diligence
and valuation.

He is the son of Ahmad Mustapha Ghazali, a director of the

Company. He has no conflict of interest with the Company
and has no conviction for any offences within the past five
years (other than traffic offences, if any) and there was
no public sanction or penalty imposed by the relevant
regulatory bodies during the financial year.
30 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

CORPORATE GOVERNANCE OVERVIEW STATEMENT

The Board of Directors (“the Board”) of Prolexus Berhad (“the Company”) is committed to ensure that the highest standards
of corporate governance will be practiced throughout the Prolexus Berhad Group (“the Group”) as a fundamental part of
discharging its responsibilities to protect and enhance shareholders’ value and the ﬁnancial performance of the Group.
The Board adopts a corporate governance framework which is premised on the belief that sound corporate governance
practices are fundamental towards promoting investors’ conﬁdence. It is a prerequisite towards achieving the Company’s
ultimate corporate objectives of protecting shareholders’ interest.

This Corporate Governance Overview Statement is prepared in accordance with the Main Market Listing Requirements
(“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) and the Malaysian Code on Corporate Governance (“the
Code”) issued by the Securities Commission Malaysia.

This statement gives the shareholders an overview of the corporate governance practices of the Company during the
ﬁnancial year ended 31 July 2020 (“FY2020”) and it is to be read together with the Corporate Governance Report which is
available at the Company’s website (www.prolexus.com.my).

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS

1. Board Responsibilities

Board of Directors

The Board is primarily responsible for the stewardship of the Group’s business affairs. The Board seeks to discharge
its responsibilities by reviewing, discussing and adopting the overall business plan and overseeing the conduct of
business affairs and management of the Group.

The Board, in its stewardship role delegates speciﬁc powers to the relevant Board Committees, the Executive
Chairman and the Managing Director. Matters speciﬁcally reserved for the Board’s decisions following by any
recommendations as may be made from time to time by the Board Committees are as follows:

a) Material acquisitions and disposals of property, plant and equipment of the Group
b) New investment, divestment, corporate restructuring and/or establishment of joint ventures
c) Related party transactions and conflict of interest issues
d) Annual financial statements and quarterly financial results
e) Declaration of dividends
f) New appointment and vacation of office of directors
g) Appointment of, terms of reference and changes in the composition of the Board Committees established from
time to time
h) Changes to the Memorandum & Articles of Association
i) Limits of Authority
j) Any other transactions requiring Board’s approval

Role of the Chairman and Managing Director

The positions of Chairman and Managing Director are held by different individuals which is in line with Practice 1.3 of
the Code to promote accountability, balance of power and facilitates division of responsibilities between them.

Division of roles between the Chairman and the Managing Director is clearly deﬁned to ensure there is an appropriate
balance of roles, responsibilities and accountability. Both the Chairman and Managing Director are accountable to the
Board for the achievement of the Group’s objectives and performances.

The Chairman leads the Board for the implementation of the Board’s decisions into executive actions while promoting
high levels of corporate governance and transparency. The Chairman ensures orderly conduct and proceedings
and acts as facilitator at Board meetings to ensure that no director, whether executive or non-executive, dominates
discussions and that, appropriate discussions takes place. In addition, the Chairman has executive roles and
oversees functions of the Group in areas such as ﬁnance, governance and corporate development.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 31

CORPORATE GOVERNANCE OVERVIEW STATEMENT

cont’d

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)

1. Board Responsibilities (Cont’d)

Role of the Chairman and Managing Director (Cont’d)

The Chairman also represents the Board to all shareholders and stakeholders on the performance of the Group. At
the meeting of shareholders, the Chairman ensures orderly conduct and proceedings of such meetings and allow
shareholders to participate actively in the meetings.

The Managing Director focuses on sustainable operational excellence and growth of the Group’s business. Hence,
the Managing Director oversees the day-to-day operations, sets out policies and strategies to be implemented by the
Group and ensures compliance with relevant laws and regulations. The Managing Director is also responsible for the
overall management competencies and succession planning of key management of the Group.

Company Secretary

The Board is supported by qualiﬁed and competent Company Secretaries. Both Company Secretaries have tertiary
education and are qualiﬁed to act as company secretaries under Section 235 of the Companies Act 2016.

The Company Secretaries are also responsible for proper maintenance of secretarial records and attend to the
auditors in annual statutory audits on the Company’s statutory records in connection with the audit of the ﬁnancial
statements of the Company.

The Company Secretaries issue notices of meetings agendas and shall attend the meetings of the Board and
shareholders to record the proceedings of such meetings.

Access to Information and Advice

All directors have full and unrestricted access to all information within the Group as a full Board, a member of any
Board Committees and in their individual capacity in furtherance of their duties. The directors also have access to
the advice and services of the Company Secretary in carrying out their duties to ensure all rules, requirements and
regulations are complied with.

The Board is authorised whenever necessary to seek independent and professional advice from external advisers and
the cost of such service is borne by the Group.

Board Meetings

Board meetings are scheduled in advance to enable the directors to plan ahead and ﬁt the dates into their schedules.
In addition, Board meetings may be convened as and when the need arises to consider urgent proposals or matters
that require expeditious decision or deliberation by the Board. The Board receives documents on matters requiring its
consideration at least 7 days in advance of each meeting.
32 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

CORPORATE GOVERNANCE OVERVIEW STATEMENT

cont’d

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)

1. Board Responsibilities (Cont’d)

Board Meetings (Cont’d)

The Board held ﬁve (5) meetings in FY2020 and the details of attendance of each director at Board meetings are as
follows:-

Number of
meetings
Directors Designation attended %
Ahmad Mustapha Ghazali Executive Chairman 4/5 80
Lau Mong Ying Managing Director 5/5 100
Choong Chee Mun Executive Director cum Chief Financial Ofﬁcer 5/5 100
Lau Mong Fah Non-Independent Non-Executive Director 5/5 100
Khadmudin Bin Mohamed Raﬁk Independent Non-Executive Director 5/5 100
Chin Chew Mun Independent Non-Executive Director 5/5 100
Boo Chin Liong Independent Non-Executive Director 5/5 100
W Norma W Daud Independent Non-Executive Director 5/5 100
Lim Yong Lee Independent Non-Executive Director 5/5 100

Board Charter

The Board has established a Board Charter which sets out key roles and responsibilities of the Board which is
available on the company website at www.prolexus.com.my. The Board Charter is reviewed by the Board as and
when necessary to ensure their relevance and compliance.

The Board adopts the Board Charter to regulate its conducts in accordance with the principles of good corporate
governance. The objective of the Board Charter is to ensure all directors acting on behalf of the Company are aware
of their duties and responsibilities as Board members and to uphold the core values of integrity with due regard to
their ﬁduciary duties and responsibilities.

z The Board Charter covers amongst others, the following:

z Responsibilities of the Board
z Ethics and Compliance
z Size and Composition
z Remunerations
z Board Meetings
z Conﬂict of Interest
z Related Party Transactions
z Dealings in Securities
z Company Secretaries

Code of Conduct

The Board recognises the importance of acting ethically at all times and in ensuring that its business practices meet
the highest standards of integrity in line with the values of the Company. In this respect, the Board has established a
Code of Conduct that applies to all the directors and employees of the Group.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 33

CORPORATE GOVERNANCE OVERVIEW STATEMENT

cont’d

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)

1. Board Responsibilities (Cont’d)

Whistleblowing Policy

To reinforce the standards prescribed in the Code of Conduct, the Board had established a Whistleblowing
Policy to promote responsible corporate conduct across the Group. The Whistleblowing Policy sets out a formal
communication channel for employees and stakeholders of the Group to communicate matters of concern in good
faith and without fear of reprisal.

The Code of Conduct and Whistleblowing Policy are available on the Company’s website.

2. Board Composition

The Board currently has nine (9) members comprising three (3) executive directors, one (1) non-independent non-
executive director and ﬁve (5) independent non-executive directors. The composition of the Board is in compliance
with Paragraph 15.02 of the MMLR of Bursa Securities where at least two (2) directors or one-third (1/3) of the Board
members, whichever is higher, are independent directors.

In accordance with Practice 4.1 of the Code, the Board comprise a majority of independent directors. Minority
shareholders are fairly represented as the Board has sufﬁcient independent directors of calibre and experience.

The Board through the Nominating Committee (“NC”) assesses the independent directors on an annual basis with a
view to ensure there is no conﬂict of interest or undue inﬂuences from interested directors. Where any director has an
interest in any matter under deliberation, he is required to disclose his interest and abstain from participating in the
discussion and voting on the matter. Evaluation questionnaires are sent to the independent directors to self-evaluate
their “independence” and the NC will assess and make its recommendations to the Board.

The NC, upon its recent annual assessment carried out, is satisﬁed that the independent directors have been able to
discharge their responsibilities in an independent manner. The Board also unanimously agreed with the objectivity of
the independent directors.

Tenure of Independent Directors

The Board noted Practice 4.2 of the Code that the tenure of an independent director should not exceed a cumulative
term of nine (9) years. The NC and the Board are of the view that the ability of long serving independent directors
to remain independent and to discharge their duties with integrity and competency should not be measured solely
by tenure of service or any pre-determined age. Their long service should not affect their independence as they are
independent-minded and had provided the necessary checks and balances in the best interest of the shareholders.

Accordingly, Khadmudin Bin Mohamed Rafik who has been an independent non-executive director of the Company
since 9 September 2003, subject to shareholders’ approval at the forthcoming Annual General Meeting, will continue
to be an independent director of the Company, notwithstanding having served as an independent director on the
Board for more than nine (9) years. Key justifications to retain Khadmudin Bin Mohamed Rafik as an independent
non-executive director include the following:

(i) He has fulﬁlled the criteria of an independent director as stated in the MMLR of Bursa Securities, therefore is
able to provide independent and objective judgement to the Board.
(ii) His vast experiences and knowledge in relevant industries enables him to contribute his expertise to the Board’s
deliberation and decision making which he has been doing so and beneﬁted the Company
(iii) He has gained valuable insight into the Company’s business operations over his tenure which would allow him
to actively participate and contribute positively in Board discussions.
(iv) Over his tenure as an independent non-executive director, he has exercised due care and has carried out his
duties in the best interest of the Company.
34 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

CORPORATE GOVERNANCE OVERVIEW STATEMENT

cont’d

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)

2. Board Composition (Cont’d)

Appointment and Re-election of Directors

The Group practices non-discrimination in any form, whether based on age, gender, ethnicity or religion, throughout
the Group. This includes the selection of Board members and senior management.

In discharging its duties, the NC will assess the suitability of the new candidate by taking into account his/
her background, education, skills, experiences, integrity and independency. The Board will then consider the
recommendations of the NC and make its ﬁnal decision as to the appointment. The Company Secretary then ensures
the relevant procedures relating to the appointment of the new director are properly executed.

The assessments of the Board, Board Committees and its directors are carried out by way of evaluation
questionnaires. The responses are then compiled and presented to the NC for evaluation and consideration. The NC
will evaluate and table its recommendations to the Board. The director’s concern shall abstain from deliberating on his
own assessment.

The NC, upon its recent annual assessment carried out, is satisﬁed that the current size and composition of the
Board, Board Committees and its directors are adequate and appropriate with relevant mix of skills, expertise and
experiences.

The Board unanimously agreed to the above recommendations.

An overview of the Board composition, balance and diversity as at 31 July 2020 is as follows:

Gender Age Group Tenure of Board

Diversity Diversity Directorships Experience
% % % %

Male 89 41-50 years 22 Below 1 year - Textile and Apparels Industry 22

Female 11 51-60 years 22 1 – 2 years 11 Accounting & Finance 45
61-70 years 34 2 – 3 years 22 Legal/ Corporate Governance 22
Above 70 years 22 Above 5 years 67 Public Sector 11

Boardroom Diversity

The Board acknowledges gender diversity in the composition of the Board. Presently, the Board has one (1) female
representative. Although there are no formal policy with regards to gender diversity, the Board will take into account to
increase women representation on the Board in its future selection process should the need arises.

The NC, upon its recent assessment carried out, is satisﬁed that the existing Boardroom has a diverse blend of
ethnicity, age and culture.

Nominating Committee

The NC consists of the following members:-

z Khadmudin Bin Mohamed Raﬁk (Chairman/Independent Non-Executive Director)

z Chin Chew Mun (Member/Independent Non-Executive Director)
z W Norma Binti W Daud (Member/Independent Non-Executive Director)

The NC shall be appointed by the Board from amongst its members and comprised exclusively non-executive
directors, a majority of whom are independent. Members of the NC shall elect from among themselves a Chairman,
who shall be an independent non-executive director.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 35

CORPORATE GOVERNANCE OVERVIEW STATEMENT

cont’d

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)

2. Board Composition (Cont’d)

Nominating Committee (Cont’d)

The activities carried out by the NC during the ﬁnancial year are as follows:-

z reviewed and assessed the effectiveness of the Board and Board Committees
z reviewed and assessed the contributions of individual directors
z reviewed and assessed the independence of the independent directors
z reviewed and assessed the term of ofﬁce and performance of Audit Committee
z reviewed and assessed the non-independent executive chairman
z reviewed and assessed the senior management of the Company
z reviewed and assessed the directors due for retirement at the annual general meeting
z reviewed and assessed the continuance of independent directors who has served more than nine (9) years and
twelve (12) years
z reviewed and assessed boardroom diversity
z reviewed and assessed directors’ training needs

Directors’ training

All the directors had attended the Mandatory Accreditation Programme (MAP) prescribed by Bursa Securities.

In addition to MAP, the Board has resolved as an expressed stated policy that each director shall commit at least
two (2) days annually to attend training courses of his own personal requirement as part of a continuous education
programme.

The Nominating Committee and the Board, upon their annual assessment carried out, are satisfied that all directors
had committed sufficient time to attend trainings to enhance their knowledge and understanding of the changes or
development in the areas of finance, tax, laws and regulatory environment.

The continuing education programmes attended by the directors during the ﬁnancial year are as follows:

Director Trainings Attended

Ahmad Mustapha Ghazali z ISA 570 (Revised) on Going Concern Assessment & Evaluation
z ISA 315 (Revised) and ISA 330 on Auditors Responsibilities in Assessing and
Responding to Risks
z ISA 500 and ISA 230 on Auditors’ Responsibilities in Gathering Evidence and
Documentations
z Ethics, Governance and Transparency in Corporate Reporting Forum 2020

Lau Mong Ying z China International Sewing Machinery & Accessories Show (CISMA 2019)
z ShanghaiTex 2019

Choong Chee Mun z Talent Maximization and Disruptive Coaching

z Tax Seminar on Budget 2020
z RMCO and The New Norm
z Corporate Criminal Liability for Corruption (Section 17A MACC Act)

Khadmudin Bin Mohamed z ShanghaiTex 2019

Raﬁk z Corporate Criminal Liability for Corruption (Section 17A MACC Act)

Lau Mong Fah z 2020 Budget Seminar

z Transfer Pricing Documentation And Managing Transfer Pricing Audits
36 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

CORPORATE GOVERNANCE OVERVIEW STATEMENT

cont’d

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)

2. Board Composition (Cont’d)

Directors’ training (Cont’d)

Director Trainings Attended

Boo Chin Liong z Corporate Criminal Liability for Corruption (Section 17A MACC Act)
z General Anti-Corruption
z Fives Principles of Ministerial Guidelines of MACC Section 17A
z Corruption Risk Assessment, Framework and Policies

Chin Chew Mun z Crucial Tax Compliance Issues for Companies

z Implications on The Introduction of Digital Tax in Malaysia
z Latest Development in Malaysian Financial Reporting Standards (MFRS) / IFRS
and IC Interpretation: An Overview
z Accounting Considerations of the COVID-19 Pandemic and Economic
Recession
z Audit Completion Stage and Auditing Disclosures - with Special Emphasis on
COVID-19 Audit Procedures and Disclosures
z Latest Implications of Digital Tax in Malaysia

W Norma Binti W Daud z Corporate Criminal Liability for Corruption (Section 17A MACC Act)

Lim Yong Lee z Corporate Criminal Liability for Corruption (Section 17A MACC Act)
z Stakeholder Primacy: Increased Emphasis on Environmental, Social and
Governance (ESG)
z Competitive Strategies Using AI: A Board’s Perspective
z Crisis Management: Readiness, Response & Recovery
z Leadership Today: Authentic, Open & Transparent
z Cybersecurity Considerations Amid A Global Pandemic
z Leadership in Times of Distress
z Crisis Management: Managing HR for the Long Haul - Road to Recovery
z In Times of Crisis: Stakeholders Take Centre Stage
z Harnessing Mental Health and Resilience to Navigate Storms
z The Path to the Next Normal -So What Now for Leadership
z Rising Corporate Risks of Weaponised Fake News
z Navigating the COVID-19 Crisis: The New Normal for the Workforce
z New Normal: Post-COVID Cash Flow Management for SMEs
z SMEs: The Mindset to Adopt During a Crisis
z Virtual Board Meetings: In an Era of Social Distancing Boards

3. Remuneration

Directors’ Remuneration

The remuneration of the executive directors is, including fees as recommended by the Remuneration Committee
(“RC”), structured so as to link rewards to corporate and individual performance and for non-executive directors,
the level of remuneration reﬂects the experience and level of responsibilities undertaken. In line with the Code, the
Company aims to set remuneration for directors at levels which are sufﬁcient to attract and retain persons of calibre to
guide the Group, taking into consideration the duties and responsibilities enacted.

Currently, the executive directors remuneration comprises basic salary and fees (recommended by the RC), which
are reﬂective of their experience, level of responsibilities, individual performance as well as corporate performance.
Beneﬁts-in-kind such as company cars are made available as appropriate.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 37

CORPORATE GOVERNANCE OVERVIEW STATEMENT

cont’d

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)

3. Remuneration (Cont’d)

Directors’ Remuneration (Cont’d)

The details of aggregate remunerations of the directors for the ﬁnancial year ended 31 July 2020 including proposed
directors’ fees are as follows:-

Group Company
Executive Non-Executive Executive Non-Executive
Directors Directors Directors Directors
RM’000 RM’000 RM’000 RM’000

Salary 2,407 - 1,562 -

Fees and Allowance 130 321 130 321
Beneﬁts-in-kind 79 - 55 -
EPF 412 - 297 -
3,028 321 2,044 321

Group Company
Executive Non-Executive Executive Non-Executive
Remuneration bands Directors Directors Directors Directors

Below RM50,000 - 2 - 2
RM50,001 – RM100,000 - 4 - 4
RM400,001 – RM450,000 - - 1 -
RM500,001 – RM550,000 1 - - -
RM700,001 – RM750,000 - - 1 -
RM850,001 – RM900,000 - - 1 -
RM900,001 – RM950,000 1 - - -
RM1,600,001 – RM1,650,000 1 - - -

PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT

1. Audit Committee

The Board has set-up an Audit Committee (“AC”) comprising non-executive directors, with a majority of them being
independent. As prescribed by Practice 8.1 of the Code, the Chairman of the Audit Committee is not the Chairman
of the Board. All members of the AC are ﬁnancially literate and possess necessary skills and knowledge to discharge
their duties effectively.

None of the AC members are former key audit partners to the Company. Nevertheless, in accordance with Practice
8.2 of the Code, the Board has established a policy that requires a former key audit partner to observe a cooling-off
period of at least two (2) years before being appointed a member of the AC.

The Audit Committee annually assess and evaluate the suitability and independence of the external auditors taking
into consideration the adequacy of experience, their resources and professional staff assigned to carry out the audit.
The Audit Committee will also make recommendations to the Board for consideration in relation to the external
auditor’s re-appointment and audit fees.

The AC Report is presented on pages 39 to 43 of this Annual Report.

38 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

CORPORATE GOVERNANCE OVERVIEW STATEMENT

cont’d

PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT (CONT’D)

2. Risk Management and Internal Control Framework

The Board has established and maintained a sound risk management framework to safeguard the shareholders’
interest and Group’s assets. An overview of the Group’s risk management and internal control are set out on page 44.
The Internal Audit Function of the Group is outsourced to independent internal audit consulting ﬁrm. Further details of
the activities of the internal audit function are set out on pages 44 to 45.

The Board is of the opinion that the Group had adequately addressed the ﬁnancial, operational and compliance risks,
which are relevant and material to the Group’s operations, by ensuring that the systems of risk management and
internal control are operating adequately and effectively during the ﬁnancial year.

PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS

1. Communication with Stakeholders

The Board recognises the importance of an effective communication channel between the Board, stakeholders
and investors so as to provide a clear and comprehensive understanding of the Group’s performance and position
as much as possible. The Group values its dialogue with both institutional shareholders and private investors and
welcome contributions from them. The Group uses a number of formal channels for effective dissemination of
information to the shareholders and stakeholders particularly through the annual report, announcements to Bursa
Securities and the Company’s website.

The Board has adopted a Corporate Disclosure Policy to ensure timely and accurate disclosures in compliance with
the MMLR of Bursa Securities and for proper procedures and processes to be in place in ensuring the maintenance
of conﬁdentiality and proper handling of material price sensitive information, prior to them being announced to Bursa
Securities. The policy will be reviewed and enhanced from time to time.

2. Conduct of General Meetings

The annual general meeting provides a useful forum for shareholders to engage directly with the directors and senior
management. At each annual general meeting, the Chairman encourages shareholders to participate in the question
and answer session. Executive directors and the Chairman of the AC are available to respond to shareholders’
enquiries during the meeting. Where appropriate, the Chairman will undertake to provide a written answer to any
question that cannot be readily answered at the meeting. However, any information, which may be regarded as
conﬁdential material information about the Group, will not be given to any single shareholder or shareholders’ group.

The notice of Annual General Meeting is sent out to shareholders at least 28 days before the date of the meeting.
Each item of special business included in the notice of annual general meeting will be accompanied by explanatory
statement to facilitate a full understanding and evaluation of issues involved. In compliance with the MMLR of Bursa
Securities, all the resolutions set out in the notice of the forthcoming annual general meeting shall be voted upon by
poll.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 39

AUDIT COMMITTEE REPORT

1. COMPOSITION

The Audit Committee (“AC”) is formally constituted with written terms of reference. The present composition of the AC
was reviewed and retained by the Board of Directors on 28 October 2020.

Details of the composition of the AC and the attendance of each director at the ﬁve (5) AC meetings held during the
ﬁnancial year are as follows:-

Number of
meetings
Directors Designation attended %
Chin Chew Mun Independent Non-Executive Director 5/5 100
Chairman
Lau Mong Fah Non-Independent Non-Executive Director 5/5 100
Member
Boo Chin Liong Independent Non-Executive Director 5/5 100
Member
Khadmudin Bin Mohamed Raﬁk Independent Non-Executive Director 5/5 100
Member

2. TERMS OF REFERENCE

The Terms of Reference for the AC set out by the Board of Directors are as follows:-

a. Objectives

The primary objective of the AC is to assist the Board of Directors in fulﬁlling its responsibility relating to the
accounting and reporting practices of the Company and its subsidiary companies.

In addition, the AC shall:-

(i) Oversee and appraise the quality of the audit conducted both by the Company’s internal and external
auditors;
(ii) Maintain, through regular scheduled meetings, a direct line of communication between the Board of
Directors, internal and external auditors for the exchange of views and information, as well as to conﬁrm
their respective authority and responsibilities;
(iii) Keep under review the risk assessment and management framework of the Group; and
(iv) Determine the adequacy of the Group’s administrative, operating and accounting controls.

b. Size and Composition

The Committee shall be appointed by the Board of Directors from amongst its members and shall consist of not
less than three (3) members, all of whom shall be non-executive directors and ﬁnancially literate. The majority of
the Committee members shall be independent directors.

The Committee shall include at least one (1) person who is a member of Malaysian Institute of Accountants or a
person who must have at least 3 years’ working experience and has passed the examinations specified in Part
1 of the 1st Schedule of the Accountant Act, 1967 or is a member of one of the associations of accountants
specified in Part II of the said Schedule or a person who fulfils such other requirements as prescribed or
approved by the Exchange. The members of the AC shall elect from among themselves a Chairman, who shall
be an independent non-executive director.

If one or more members of the Committee resign or for any reason cease to be a member with the result that
the Listing Requirements of Bursa Malaysia Securities Berhad are breached, the Board shall, within 3 months
of that event, appoint such number of new members as may be required to correct the breach. The Board of
Directors shall review the composition of the Committee at least once every three (3) years.
40 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

AUDIT COMMITTEE REPORT

cont’d

2. TERMS OF REFERENCE (CONT’D)

b. Size and Composition (Cont’d)

The Committee requires a former key audit partner of the auditing ﬁrm to the Group to observe a cooling-off
period of at least two (2) years before being appointed as a member of the Committee.

c. Meetings

The AC shall hold at least four (4) quarterly meetings per year and such additional meetings as its Chairman
shall decide in order to fulﬁll its duties. The quorum for a meeting shall be two (2) members all of whom shall be
independent directors.

The Chairman of the AC shall engage on a continuous basis with senior management, such as the Chairman
and the Executive Directors, and the external auditors in order to be kept informed of matters affecting the
Company or the Group. The Internal Auditors shall report directly to the AC.

In the absence of the Chairman of the AC, members present shall elect a Chairman for the meeting from
amongst the independent directors present.

The non-member directors, the Chief Financial Ofﬁcer, other senior management of the Group, the internal
auditors and representatives of the external auditors may attend the meeting on invitation by the Committee.

The AC shall meet the external auditors without the presence of the executive board members at least twice (2)
a year and such other meetings as determined by the Committee and/or as requested by the external auditors.

The Company Secretary or the representative of the Secretary shall act as the secretary of the AC and shall
be responsible, in conjunction with the Chairman, for drawing up the agenda and circulating it, supported by
explanatory documentation to Committee members prior to each meeting.

The minutes of each meeting shall be kept and distributed to all members of the Board.

d. Duties and Responsibilities

The primary duties and responsibilities of the AC are to:-

z Consider the appointment of the external auditors, the audit fees and any questions of resignation or
dismissal, and inquire into the stafﬁng and competence of the external auditors in performing their work.

z Review with the external auditors the scope of their audit plan, their evaluation of the system on internal
control and the audit report on the ﬁnancial statements (in absence of the management if necessary).

z Review the assistance given by the employees of the Company and the Group to the external auditors.

z Discuss the impact and review of any proposed changes in or implementing of major accounting policy
changes, principles and practice, signiﬁcant adjustments resulting from the audit, signiﬁcant and unusual
events, the going concern assumption, compliance with accounting standards and compliance with the
stock exchange and statutory and legal requirements.

z Review any ﬁnancial information for publication, including quarterly and annual ﬁnancial statements prior to
submission to the Board for approval.

z Review the adequacy and relevance of the scope, functions, competency and resources of internal audit,
necessary authority to carry out internal audit work and extent of co-operation and assistance given by
the employees to internal audit.

z Review the internal audit plan and work programme, consider major ﬁndings of internal audit investigation
and management response and ensure co-ordination between internal and external auditors.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 41

AUDIT COMMITTEE REPORT

cont’d

2. TERMS OF REFERENCE (CONT’D)

d. Duties and Responsibilities (Cont’d)

z Ascertain the adequacy of the Group’s risk assessment and management framework in identifying and
considering principal business risks and ensure the implementation of appropriate systems to manage
these risks.

z Keep under review the effectiveness of internal control systems and in particular to review and monitor
the implementation of recommendation of the external auditors’ management letter and management’s
response.

z Consider and review any related party transaction that may arise within the Company or the Group
including any transaction, procedure or course of conduct that raises questions of management integrity.

z Identify and direct any special projects or investigation deemed necessary.

z Report any breaches of listing requirements, which have not been satisfactory resolved to the Bursa
Malaysia Securities Berhad.

z To review and verify the allotment of options to employees under Employees Share Option Scheme.

e. Authority

The AC is authorised by the Board to investigate any activity within its Terms of Reference. It shall be provided
with the resources to perform its duties in full and unrestricted access to information pertaining to the Company
and the Group. The Committee shall also have direct communication channels with both the internal and
external auditors and senior management of the Company and the Group including convening meetings with
the external auditors, the internal auditors or both, in the absence of other directors and employees of the
Company, whenever deemed necessary.

The AC shall also have the access to consult independent experts where they consider it necessary to carry out
their duties.

3. SUMMARY OF ACTIVITIES UNDERTAKEN BY AC DURING THE FINANCIAL YEAR

The primary objectives of the said AC are mainly for the purpose of discharging its oversight role on the Company’s
ﬁnancial reporting, external and internal audit.

a. Financial Reporting

t 3FWJFXFE BOE BQQSPWFE UIF VOBVEJUFE RVBSUFSMZ SFTVMUT BOE BVEJUFE mOBODJBM TUBUFNFOUT QSJPS UP
submission to the Board of Directors for consideration and approval.

t 3FWJFXFEBMMSFDVSSFOUSFMBUFEQBSUZUSBOTBDUJPOTFOUFSFEJOUPCZUIF$PNQBOZBOEUIF(SPVQ

b. External Audit

t %JTDVTTFEXJUIFYUFSOBMBVEJUPSTPOUIFJSBVEJUQMBOGPSUIFmOBODJBMZFBSFOEFE+VMZ PVUMJOJOHUIF
audit scope, methodology and timetable, audit materiality, areas of focus, fraud consideration and the risk
of management override, audit fee, the new and revised auditors reporting standards.

t "TTFTTFEUIFTVJUBCJMJUZBOEJOEFQFOEFODFPGUIFFYUFSOBMBVEJUPSTUBLJOHJOUPDPOTJEFSBUJPOUIFBEFRVBDZ
of experience, their resources and professional staff assigned to carry out the audit.
42 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

AUDIT COMMITTEE REPORT

cont’d

3. SUMMARY OF ACTIVITIES UNDERTAKEN BY AC DURING THE FINANCIAL YEAR (CONT’D)

b. External Audit (Cont’d)

t %FMJCFSBUFEXJUIUIFFYUFSOBMBVEJtor on the results of the audit for the ﬁnancial year ended 31 July 2020
and the Report to the AC as well as the management responses.

t "TTFTTFE BOE FWBMVBUFE UIF QFSGPSNBODF PG FYUFSOBM BVEJUPST BOE NBEF UIF SFDPNNFOEBUJPO UP UIF
Board for consideration in relation to their re-appointment and audit fees.

t 5IF "$ IBE B QSJWBUF TFTTJPO XJUI UIF FYUFSOBM BVEJUPST XJUIPVU UIF NBOBHFNFOUT QSFTFODF PO UXP
separate occasions during the ﬁnancial year to discuss if there are any issues arising from the audit and
the assistance given by the employees during the audit.

t 5IF "$ SFQPSUFE UIF FYUFSOBM BVEJUPST mOEJOHT UP UIF #PBSE IJHIMJHIUJOH UIF JTTVFT JG BOZ UIBU SFRVJSFE
management’s actions.

c. Internal Audit

t 3FWJFXFE BOE BQQSPWFE UIF *OUFSOBM "VEJU 1MBO GPS UIF mOBODJBM ZFBS FOEFE +VMZ UP FOTVSF
adequacy of scope and coverage of the auditable areas and that the resources are sufﬁcient and
competent to enable the internal auditors to discharge and carry out its functions effectively.

t 3FWJFXFE BOE EFMJCFSBUFE UIF BVEJU SFQPSUT BOE GPMMPXVQ SFQPSUT UP FOTVSF UIF NBOBHFNFOU IBT
implemented action plans to address outstanding audit issues and to ensure risks and control lapses have
been addressed.

t 5IF "$ SFQPSUFE UIF JOUFSOBM BVEJUPST mOEJOHT UP UIF #PBSE IJHIMJHIUJOH UIF JTTVFT JG BOZ UIBU SFRVJSFE
management’s actions.

Internal audit function is established to measure and evaluate the internal controls put in place by the
management of the Company and the Group. This internal audit function is outsourced and to assist the AC in
performing, inter alia, the following functions:-

t Promoting proactive risk management awareness, monitoring results of key performance indicators and
ensuring compliance with good corporate governance;

t Review and appraise the soundness, adequacy and application of accounting, ﬁnancial and other
operating controls and promote effective control at reasonable cost;

t Ascertain extent of compliance with established policies, plans and procedures;

t Ascertain extent to which company assets are accounted for and safeguarded from losses of all kinds.

The internal auditors report directly to AC and has direct access to the Chairman of the AC on all internal
control and internal audit issues.

The internal audit function also included follow-up reviews to determine the adequacy, effectiveness and
timeliness of action taken by the management on audit recommendations and provided updates on their status
to the AC.

The total fees incurred for the internal audit function of the Group for the current ﬁnancial year was RM58,000.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 43

AUDIT COMMITTEE REPORT

cont’d

3. SUMMARY OF ACTIVITIES UNDERTAKEN BY AC DURING THE FINANCIAL YEAR (CONT’D)

d. Others

t Visited the subsidiaries to obtain further insights on the operation.

This Audit Committee Report is approved by the Board of Directors in accordance with a resolution of the Board of
Directors dated 28 October 2020.

Signed on behalf of the Audit Committee

CHIN CHEW MUN

Chairman, Audit Committee

28 October 2020
44 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

Pursuant to paragraph 15.26(b) of Bursa Securities Listing Requirements, the Board of Directors of Prolexus Berhad is
pleased to provide the following statement on risk management and internal control of the Group, which has been prepared
in accordance with the Malaysian Code on Corporate Governance, the Corporate Governance Guide and the Statement on
Internal Control: Guidance for Directors of Public Listed Companies (‘Internal Control Guidance’).

RESPONSIBILITY FOR RISK MANAGEMENT AND INTERNAL CONTROL

The Board recognises the importance of an effective enterprise risk management and an ongoing risk-based internal audit
to establish and maintain a sound system of internal control. The Board afﬁrms its overall responsibility for the Group’s
systems of internal control and risk management. As the system is an on-going process designed to manage rather than
to eliminate the risk of failure to achieve business objectives, it can only provide reasonable but not absolute assurance
against any material misstatement of management and ﬁnancial information, loss or fraud.

The Board has established an ongoing process for identifying, evaluating, managing and monitoring the signiﬁcant
risks faced, or potentially exposed to, by the Group in pursuing its business objectives. This process has been in place
throughout the ﬁnancial year and up to the date of approval of the annual report. The adequacy and effectiveness of this
process have been continuously reviewed by the Board and are in accordance with the Internal Control Guidance.

RISK MANAGEMENT

The Risk Management Committee (“RMC”) has been established at Prolexus Berhad and its principal subsidiaries. The
RMC of Prolexus Berhad comprises directors and Chief Financial Ofﬁcer of the Group and is chaired by the Executive
Chairman whereas the RMC of the principal subsidiaries comprise their respective senior management and department
heads. The key objectives of the RMC are to:-

z Identify, assess, manage and monitor key business risks;

z Determine the Group’s risk appetite and tolerance;
z Promote an effective risk awareness culture where risk management is an integral aspect of the Group’s management
systems; and
z Identify emerging risks or changes in risks and taking appropriate action promptly.

The Board and management practice proactive significant risks identification, particularly on any major proposed
transactions, changes in nature of activities and/or operating environment, or venturing into new operating environment
which may entail different risks, and put in place the appropriate risk response strategies and controls until those risks
are managed to, and maintained at, a level acceptable to the Board. Risk assessment is conducted by subsidiaries’ RMC
and the Chief Financial Officer of the Group to review the risk status, progress of implementation of action plans as well as
identifying new or emerging risks. Consequently enterprise risk management report summarising the significant risks and
the status of each action plans are presented to the RMC of the Group for review, deliberation and recommendation for
endorsement by the Board of Directors.

INTERNAL AUDIT

The Board acknowledges the importance of internal audit function and has engaged the services of independent internal
audit consulting ﬁrm who reports directly to the Audit Committee to provide much of the assurance it requires regarding the
effectiveness as well as the adequacy and integrity of the Group’s systems of internal control.

The internal audit adopts a risk-based approach in developing its audit plan which addresses all the core auditable areas of
the Group based on the prioritisation of their risk proﬁling. Scheduled internal audits are carried out by the internal auditors
based on the audit plan approved by the Audit Committee. The audit focuses on areas with high risk and inadequate
controls to ensure that those areas are managed with adequate level of controls. For those areas with high risk and
inadequate controls, the audit ascertains that the risks are effectively mitigated by the controls. On quarterly basis or earlier
as appropriate, the results of internal audit will be reported to the Audit Committee particularly on areas for improvement
and will be subsequently followed up to determine the extent of actions that have been implemented.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 45

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

cont’d

INTERNAL CONTROL

Apart from risk management and internal audit, the Group has put in place the following key elements of internal control:-

z An organisation structure with well-defined scopes of responsibility, clear lines of accountability, and appropriate levels
of delegated authority;
z A process of hierarchical reporting which provides for a documented and auditable trail of accountability;
z A set of standard internal policies and procedures for operational, financial and human resource management, which
is subject to regular review and improvement;
z Regular and comprehensive information provided to management, covering financial and operational performance
and key business indicators, for effective monitoring and decision making;
z A comprehensive business planning and detailed budgeting process where operating units prepare budgets for the
coming year which are approved both at operating unit level and by the Board;
z Monitoring of results against budget, with major variances being followed up and management action taken, where
necessary;
z The day-to-day operations of the two major subsidiaries are guided by the ISO9001:2015 documented procedures
that provide limited scope of internal control; and
z Regular visits to operating units by members of the Board and senior management.

Based on the internal auditors’ reports, there is reasonable assurance that the Group’s systems of internal control as a
whole are adequate and working satisfactorily. Minor internal control weaknesses were identiﬁed during the ﬁnancial year, all
of which have been, or are being, addressed. None of the weaknesses have resulted in any material losses, contingencies
or uncertainties that would require disclosure in the Group’s annual report.

The Board continues to review and implement measures to strengthen the internal control environment of the Group.

The Board has received assurance from the Executive Chairman, Managing Director and Executive Director cum Chief
Financial Ofﬁcer that the risk management and internal control system of the Group is operating adequately and effectively.

This statement has been reviewed by the External Auditors in compliance with Paragraph 15.23 of Bursa Securities
Listing Requirements and pursuant to the scope set out in the Audit and Assurance Practice Guide 3 issued by the
Malaysian Institute of Accountants for inclusion in the annual report of the Group. The External Auditors have reported
to the Board that nothing has come to their attention that causes them to believe that the statement is inconsistent with
their understanding of the process adopted by the Board in reviewing the adequacy and integrity of the system of risk
management and internal control.

This statement is issued in accordance with a resolution of the Directors dated 28 October 2020.
46 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

STATEMENT ON DIRECTORS’ RESPONSIBILITY

IN RELATION TO THE FINANCIAL STATEMENTS

The Directors are required by the Companies Act, 2016 (“the Act”) to prepare financial statements for each financial year
which give a true and fair view of the financial position of the Group and of the Company at the end of the financial year
and of their financial performance and cash flows for the financial year then ended. As required by the Act and the Listing
Requirements of Bursa Malaysia Securities Berhad, the financial statements have been prepared in accordance with the
applicable approved accounting standards in Malaysia and the provisions of the Act.

The Directors consider that in preparing the financial statements for the financial year ended 31 July 2020 set out on pages
60 to 135, the Group and the Company have used appropriate accounting policies, consistently applied and supported by
reasonable and prudent judgments and estimates. The Directors have responsibility for ensuring that the Group and the
Company keep accounting records which enable them to ensure that the financial statements comply with the Act and
applicable approved accounting standards in Malaysia. The Directors have general responsibility for taking such steps as is
reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

This Statement is made in accordance with a resolution of the Board of Directors dated 28 October 2020.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 47

OTHER CORPORATE DISCLOSURE

Material Contracts or Contracts Relating to Loans

Apart from the executive directors’ employment contracts and those related party transactions as disclosed in Note 37,
there are no other material contracts involving the Directors and major shareholders with the Company and its subsidiaries.

Employees’ Share Options Scheme (“ESOS”)

The Company’s ESOS is governed by the By-Laws approved by the shareholders at the Extraordinary General Meeting
held on 3 September 2013, and the ESOS will be in force for duration of ﬁve (5) years expiring on 8 September 2018. The
Directors have resolved to extend the existing ESOS for another 5 years until 8 September 2023 in accordance with terms
of the ESOS By-Law.

There is no options granted to the director and employees during the ﬁnancial year. The actual allocation of ESOS to the
directors and senior management of the Group is 51.21% since the commencement of the ESOS.
REPORTS AND
FINANCIAL STATEMENTS
49 Directors’ Report
55 Directors’ Statement
55 Statutory Delaration
56 Independent Auditors’ Report
60 Statements of Financial Position
62 Statements of Comprehensive Income
63 Consolidated Statement of Changes in Equity
65 Statement of Changes in Equity
66 Statements of Cash Flows
68 Notes to the Financial Statements
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 49

DIRECTORS’ REPORT
For the Financial Year Ended 31 July 2020

The Directors have pleasure in submitting their report and the audited ﬁnancial statements of the Group and of the
Company for the ﬁnancial year ended 31 July 2020.

PRINCIPAL ACTIVITIES

There have been no signiﬁcant changes in the nature of these activities during the ﬁnancial year.

RESULTS

GROUP COMPANY
RM’000 RM’000

Proﬁt for the ﬁnancial year 20,771 717

Attributable to:
Owners of the Company 17,629 717
Non-controlling interests 3,142 -
20,771 717

In the opinion of the directors, the results of the operations of the Group and of the Company for the ﬁnancial year ended
31 July 2020 have not been substantially affected by any item, transaction or event of a material and unusual nature.

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the ﬁnancial year other than those disclosed in the
notes to the ﬁnancial statements.

DIVIDENDS

Since the end of the previous financial year, the Company has paid a first and final single tier dividend of 0.3 sen per
ordinary share amounting to RM524,174 in respect of the financial year ended 31 July 2019, on 20 January 2020.

The directors recommend a first and final single tier dividend of 1 sen per ordinary share amounting to RM1,765,453 in
respect of the financial year ended 31 July 2020 for shareholders’ approval at 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 July 2021.
50 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

DIRECTORS’ REPORT
For the Financial Year Ended 31 July 2020
cont’d

SHARE CAPITAL AND DEBENTURE

During the ﬁnancial year, the issued and paid-up capital ordinary share capital was increased from RM105,487,391 to
RM106,045,885 by issuance of 939,750 new ordinary shares arising from the exercise of option under Employee’s Share
Option Scheme (“ESOS”) at the following exercise price:

Exercise
price Number of
Grant date RM shares issued

12.9.13 0.500 911,600

7.5.14 0.722 2,400
5.9.14 0.775 25,750

The new ordinary shares issued during the ﬁnancial year ranked pari passu in all respects with the existing ordinary shares
of the Company. Other than the foregoing, the Company did not issue any other share or debenture.

WARRANTS

The salient features of the Warrants are disclosed in Note 22.1 to the ﬁnancial statements.

Details of Warrants issued to Directors are disclosed in the section of Directors’ interests in shares in this report.

TREASURY SHARES

As at 31 July 2020, the Company held a total of 6,265,400 treasury shares out of its 181,290,170 issued ordinary shares.
Further relevant details are disclosed in Note 21 to the ﬁnancial statements.

EMPLOYEES’ SHARE OPTION SCHEME (“ESOS”)

The Company’s ESOS is governed by the By-Laws approved by the shareholders at the Extraordinary General Meeting
held on 3 September 2013, and the ESOS will be in force for a duration of 5 years. On 17 August 2018, the Directors have
extended the existing ESOS for another 5 years until 8 September 2023 in accordance with terms of the ESOS By-Laws.

The details of options over unissued ordinary shares granted to eligible employees and Directors of the Group during the
ﬁnancial year are as follows:

Number of options over ordinary shares

Exercise
price Balance at Balance at
Grant date RM 1.8.19 Exercised Lapsed 31.7.20

12.9.13 0.500 3,095,100 (911,600) (43,050) 2,140,450

7.5.14 0.722 378,050 (2,400) (2,150) 373,500
5.9.14 0.775 830,150 (25,750) (75,600) 728,880
23.12.14 0.804 560,000 - (105,000) 455,000
8.9.16 1.234 1,044,200 - (60,000) 984,200

The salient features of the ESOS are disclosed in Note 42 to the ﬁnancial statements.

Details of options granted to Directors are disclosed in the section of Directors’ interest in shares in this report.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 51

DIRECTORS’ REPORT
For the Financial Year Ended 31 July 2020
cont’d

DIRECTORS

The Directors 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:

Directors of the Company:

Ahmad Mustapha Ghazali

Lau Mong Ying
Choong Chee Mun
Lau Mong Fah
Khadmudin Bin Mohamed Raﬁk
Chin Chew Mun
Boo Chin Liong
W Norma Binti W Daud
Lim Yong Lee

Directors of the subsidiaries:

Lau Boon Hwa

Lee Eng Sia
Cheah Chin Teong
Chen, Cheng-Chun
Liao Yun Mu
Kam Teck Ee
Tan Kee Wai (appointed on 1 October 2019)
Goh Ming Choo (retired on 30 September 2019)

DIRECTORS’ INTERESTS IN SHARES

According to the register of Directors’ Shareholdings required to be kept under Section 59 of the Companies Act, 2016, the
interests and deemed interests of the Directors in the ordinary shares of the Company and its related corporations are as
follows:

Number of ordinary shares

Balance at Balance at
1.8.19 Bought (Sold) 31.7.20

The Company
Direct Interest:
Ahmad Mustapha Ghazali 4,452,605 25,000 (800,000) 3,677,605
Lau Mong Ying 13,558,740 1,619,500 (50,000) 15,128,240
Lau Mong Fah 1,040,500 74,500 - 1,115,000
Khadmudin Bin Mohamed Raﬁk 1,232,200 - (50,000) 1,182,200
Chin Chew Mun 420,000 - - 420,000
Boo Chin Liong 334,200 50,000 - 384,200
Choong Chee Mun 304,600 - - 304,600
Lim Yong Lee 80,000 - (80,000) -

Deemed Interest:
#
Ahmad Mustapha Ghazali 17,006,400 - (1,077,900) 15,928,500
Lau Mong Ying * 17,480,700 - - 17,480,700
Lau Mong Fah * 17,480,700 - - 17,480,700
52 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

DIRECTORS’ REPORT
For the Financial Year Ended 31 July 2020
cont’d

DIRECTORS’ INTERESTS IN SHARES (CONT’D)

Number of Warrants
Balance at Balance at
1.8.19 Bought (Sold) 31.7.20

The Company
Direct Interest:
Ahmad Mustapha Ghazali 1,518,545 - (1,118,545) 400,000
Lau Mong Ying 4,317,926 340,000 (1,781,000) 2,876,926
Lau Mong Fah 306,300 - - 306,300
Khadmudin Bin Mohamed Raﬁk 407,400 - (407,400) -
Chin Chew Mun 140,000 - - 140,000
Boo Chin Liong 102,500 - - 102,500
Choong Chee Mun 104,600 - - 104,600

Deemed Interest:
#
Ahmad Mustapha Ghazali 5,717,740 - (5,717,740) -
Lau Mong Ying * 6,000,210 - (6,000,210) -
Lau Mong Fah * 6,000,210 - (6,000,210) -

Number of options over ordinary shares

Balance at Balance at
1.8.19 (Exercised) (Lapsed) 31.7.20

The Company
Direct Interest:
Lau Mong Ying 2,800,000 (900,000) - 1,900,000
Lau Mong Fah 75,000 - - 75,000
Boo Chin Liong 105,000 - - 105,000
Choong Chee Mun 295,000 - - 295,000
#
deemed interest by virtue of his interest in Narspa Holdings Sdn. Bhd. and Metro Capital Asset Management Sdn. Bhd.
* deemed interest by virtue of their interest in JE Holdings Sdn. Bhd.

DIRECTORS’ REMUNERATION

Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than
benefits disclosed as Directors’ remunerations in Note 31 to the financial statements) by reason of a contract made by the
Company or a related corporation with the Director or with a firm of which he or she is a member, or with a company in
which he or she has a substantial financial interests, other than those related party transactions disclosed in the financial
statements.

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 other than those arising from the ESOS as disclosed in the Directors’ Interests in
Shares section.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 53

DIRECTORS’ REPORT
For the Financial Year Ended 31 July 2020
cont’d

INDEMNITY AND INSURANCE FOR DIRECTORS AND OFFICERS

During the ﬁnancial year, the total amount of indemnity coverage and insurance premium paid for Directors and Ofﬁcers of
the Group and of the Company were RM10 million and RM12,500 respectively.

OTHER STATUTORY INFORMATION

Before the ﬁnancial statements of the Group and of the Company were made out, the Directors took reasonable steps:

(i) to ascertain that 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 adequate provision had been made for doubtful debts and there were no
bad debts to be written off; and

(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the
ordinary course of business had been written down to an amount which they might be expected so to realise.

At the date of this report, the Directors are not aware of any circumstances:

(i) that 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

(ii) that would render the value attributed to the current assets in the ﬁnancial statements of the Group and of the
Company misleading, or

(iii) that would render any amount stated in the ﬁnancial statements of the Group and of the Company misleading, or

(iv) that have arisen which would render adherence to the existing methods of valuation of assets or liabilities of the
Group and of the Company misleading or inappropriate.

At the date of this report, there does not exist:

(i) any charge on the assets of the Group and of the Company that has arisen since the end of the ﬁnancial year which
secures the liabilities of any other person, or

(ii) any contingent liability in respect of the Group and of the Company that has arisen since the end of the ﬁnancial year.

In the opinion of Directors:

(i) 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 of the Company
to meet their obligations as and when they fall due, and

(ii) 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 of the Company for the current ﬁnancial year in which this report is made.

SIGNIFICANT EVENT DURING THE REPORTING PERIOD

Details of the signiﬁcant event during the reporting period are disclosed in Note 43 to the ﬁnancial statements.
54 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

DIRECTORS’ REPORT
For the Financial Year Ended 31 July 2020
cont’d

AUDITORS

The total amount of fees paid to or receivable by the auditors, Grant Thornton, as remuneration for their services as
auditors of the Group and of the Company for the ﬁnancial year ended 31 July 2020 is disclosed in Note 31 to the ﬁnancial
statements.

There was no indemnity given to or insurance effected for the auditors of the Company.

The auditors, Grant Thornton, 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:

Lau Mong Ying Choong Chee Mun

Batu Pahat,

Date: 28 October 2020

PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 55

DIRECTORS’ STATEMENT

In the opinion of the Directors, the financial statements set out on pages 60 to 135 are properly 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 July 2020 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:

Lau Mong Ying Choong Chee Mun

Date: 28 October 2020

STATUTORY DECLARATION

I, Choong Chee Mun, the Director primarily responsible for the ﬁnancial management of Prolexus Berhad do solemnly and
sincerely declare that the ﬁnancial statements set out on pages 60 to 135 are to the best of my knowledge and belief,
correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of
the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by )

the abovenamed at Batu Pahat, Johor )
in this 28th day of October 2020. )

Choong Chee Mun

(MIA No. 23622)
Chartered Accountant
Before me,

Commissioner for Oaths

56 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

INDEPENDENT AUDITORS’ REPORT

To The Members of Prolexus Berhad
Registration No. 199201019353 (250857-T) (Incorporated In Malaysia)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

We have audited the financial statements of Prolexus Berhad, which comprise the statements of financial position as at
31 July 2020 of the Group and of the Company, and the statements of 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 accounting policies, as set out on pages 60 to 135.

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 July 2020 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.

Basis for Opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on
Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit
of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufﬁcient and
appropriate to provide a basis for our opinion.

Independence and Other Ethical Responsibilities

We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct
and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for
Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards)
(“IESBA Code”), and we have fulﬁlled our other ethical responsibilities in accordance with the By-Laws and the IESBA
Code.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the Group and of the Company for the current financial 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.

Key Audit Matter How our audit addressed the Key Audit Matter
Revenue recognition Our audit procedures in relation to the revenue recognition
(Note 30 to the financial statements) included:

The revenue recognition from the manufacturing of apparels t Evaluating the assessment performed by
and provision of advertising services depends on the nature management on compliance with revenue recognition
of the contractual arrangement with the customer and this policies.
could impact the point at which the control is transferred t Obtaining an understanding of the Group’s revenue
and service is rendered to the customer. recognition process and their application and
thereafter testing controls on the occurrence of
We have identiﬁed revenue recognition as a key audit revenue.
matter as there is a risk that revenue maybe incorrectly t Performed analytical procedures on the trend of
recognised as different contractual arrangements with revenue recognised to identify for any abnormalities.
customers will result in different timing in which revenue can t On sampling basis, we have performed substantive
be recognised. testing to verify that revenue recognition criteria are
being properly applied.
t Assessing the correct period for the revenue
recognised by testing cut-off through assessing sales
transactions taking place at either side of the end of
reporting period as well as checking credit notes and
sales return issued after the reporting period.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 57

INDEPENDENT AUDITORS’ REPORT

To The Members of Prolexus Berhad
Registration No. 199201019353 (250857-T) (Incorporated In Malaysia)
cont’d

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONT’D)

Key audit matters (Cont’d)

Key Audit Matter How our audit addressed the Key Audit Matter
Valuation of inventories Our audit procedures in relation to the valuation of
(Note 12 to the financial statements) inventories included the following:

The Group holds signiﬁcant inventories as at 31 July 2020 t Obtaining an understanding of:
which exposed the Group to a risk that the inventories - the Group’s inventory management process;
may become slow moving or obsolete and eventually non- - how the Group identifies and assesses
saleable or selling below their carrying value. inventory write downs; and
- how the Group makes the accounting estimates
We focused on this area as it involves estimation for inventory write downs.
uncertainty by the Directors in determining the accuracy of t Reviewing the consistency of the application of
provision for inventory obsolescence and in assessing the management’s methodology in determining and
net realisable value of the inventories. estimating the provision from year to year.
t Reviewing and testing the reliability of the aging report
of inventories provided by the management.
t Reviewing and testing the net realisable value of
inventories on sampling basis.
Assessment on impairment of trade receivables Our audit procedures in relation to management’s
(Note 13 to the financial statements) impairment assessment included the following:

The Group has signiﬁcant trade receivables as at 31 July t Obtaining an understanding of:
2020 and it is subject to credit risk exposure. We focused - the Group’s control over the customers’
on this area as the assessment of expected credit loss collection process;
of receivables requires management’s judgement and - how the Group identifies and assesses the
estimation uncertainty in determining the probability of impairment of receivables; and
default occurring by considering the ageing of receivables, - how the Group makes the accounting estimates
historical loss experience and forward-looking information. for impairment.
t Reviewing the consistency of the application of
management’s methodology for calculating the
expected credit loss from year to year.
t Reviewing the ageing analysis of trade receivables
and testing the reliability thereof.
t Reviewing subsequent collection for major customers
and overdue amounts.
t Evaluating techniques and methodology in
the expected credit loss approach against the
requirements of MFRS9.
t Assessing the collectability by examining the historical
repayment records, historical loss rate of receivables,
information regarding the current creditworthiness
and any signiﬁcant changes in credit quality of the
debtors, evidence of subsequent settlements and
other relevant information.

There are no key audit matters in the audit of the separate ﬁnancial statements of the Company.
58 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

INDEPENDENT AUDITORS’ REPORT

To The Members of Prolexus Berhad
Registration No. 199201019353 (250857-T) (Incorporated In Malaysia)
cont’d

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONT’D)

Information Other than the Financial Statements and Auditors’ Report Thereon

The directors of the Company are responsible for the other information. The other information comprises the Directors’
Report (DR) and Statement on Risk Management and Internal Control (SORMIC), which we obtained prior to the date of
this auditors’ report, and other sections in the 2020 Annual Report, which are expected to be made available to us after
that date. Other information 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.

Based on the work we have performed on the DR and SORMIC, we conclude that there is no material misstatement.
However, when we perform the work on the other information made available to us after the date of this report and we
conclude that there is a material misstatement, we will report this fact accordingly.

Directors’ Responsibilities for the Financial Statements

The directors of the Company are responsible for the preparation of the ﬁnancial statements of the Group and of the
Company so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International
Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. The directors are
also responsible for such internal control as the directors determine is necessary to enable the preparation of ﬁnancial
statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.

In preparing the ﬁnancial statements of the Group and of the Company, the directors are responsible for assessing the
Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the
Company or to cease operations, or have no realistic alternative but to do so.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the
Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing,
we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

t *EFOUJGZBOEBTTFTTUIFSJTLTPGNBUFSJBMNJTTUBUFNFOUPGUIFmOBODJBMTUBUFNFOUTPGUIF(SPVQBOEPGUIF$PNQBOZ
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.

t 0CUBJO BO VOEFSTUBOEJOH PG JOUFSOBM DPOUSPM SFMFWBOU UP UIF BVEJU JO PSEFS UP EFTJHO BVEJU QSPDFEVSFT UIBU BSF
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s
and of the Company’s internal control.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 59

INDEPENDENT AUDITORS’ REPORT

To The Members of Prolexus Berhad
Registration No. 199201019353 (250857-T) (Incorporated In Malaysia)
cont’d

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONT’D)

Auditors’ Responsibilities for the Audit of the Financial Statements (Cont’d)

t &WBMVBUF UIF BQQSPQSJBUFOFTT PG BDDPVOUJOH QPMJDJFT VTFE BOE UIF SFBTPOBCMFOFTT PG BDDPVOUJOH FTUJNBUFT BOE
related disclosures made by the directors.

t $PODMVEF PO UIF BQQSPQSJBUFOFTT PG UIF EJSFDUPST VTF PG UIF HPJOH DPODFSO CBTJT PG BDDPVOUJOH BOE CBTFE PO
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.

t &WBMVBUFUIFPWFSBMMQSFTFOUBUJPO TUSVDUVSFBOEDPOUFOUPGUIFmOBODJBMTUBUFNFOUTPGUIF(SPVQBOEPGUIF$PNQBOZ
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.

t 0CUBJO TVGmDJFOU BQQSPQSJBUF BVEJU FWJEFODF SFHBSEJOH UIF mOBODJBM JOGPSNBUJPO PG UIF FOUJUJFT PS CVTJOFTT BDUJWJUJFT
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 identified 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, actions taken to eliminate threats or safeguards applied.

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 financial year and are therefore the key audit
matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirements of the Companies Act 2016 in Malaysia, we report that the subsidiaries of which we
have not acted as auditors, are disclosed in Note 8 to the ﬁnancial statements.

OTHER MATTERS

This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies
Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this
report.

Grant Thornton John Lau Tiang Hua

No. AF: 0042 No. 01107/03/2022 J
Chartered Accountants Chartered Accountant

Penang
Date: 28 October 2020
60 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

STATEMENTS OF FINANCIAL POSITION

As at 31 July 2020

GROUP COMPANY
2020 2019 2020 2019
NOTE RM’000 RM’000 RM’000 RM’000

Non-current assets
Property, plant and equipment 4 198,437 202,741 149 252
Land use rights 5 - 10,804 - -
Right-of-use assets 6 2,094 - - -
Intangible assets 7 52 44 - -
Investment in subsidiaries 8 - - 105,559 105,559
Investment in a joint venture 9 308 458 - -
Other investments 10 2,021 2,021 2,021 2,021
Goodwill on consolidation 11 2,712 2,712 - -
205,624 218,780 107,729 107,832

Current assets
Inventories 12 42,605 39,670 - -
Trade receivables 13 60,555 70,263 - -
Other receivables, deposits and prepayments 14 5,934 12,200 50 50
Amount due from subsidiaries 15 - - 33,853 34,004
Amount due from a joint venture 9 220 283 - -
Current tax assets 286 31 39 -
Other investments 10 595 556 595 556
Derivative ﬁnancial instruments 16 79 125 - -
Deposits with ﬁnancial institutions 17 13,525 14,113 45 636
Cash and bank balances 18 90,447 51,066 1,411 1,014
214,246 188,307 35,993 36,260
Non-current assets held for sale 19 12,313 - - -
226,559 188,307 35,993 36,260

TOTAL ASSETS 432,183 407,087 143,722 144,092

The accompanying notes form an integral part of the ﬁnancial statements.

PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 61

STATEMENTS OF FINANCIAL POSITION

As at 31 July 2020
cont’d

GROUP COMPANY
2020 2019 2020 2019
NOTE RM’000 RM’000 RM’000 RM’000

EQUITY AND LIABILITIES

Equity attributable to owners of
the Company
Share capital 20 106,045 105,487 106,045 105,487
Treasury shares 21 (1,490) (1,490) (1,490) (1,490)
Reserves 22 22,448 21,113 18,534 18,674
Retained proﬁts 23 119,966 102,859 5,009 4,757
246,969 227,969 128,098 127,428
Non-controlling interests 28,812 26,711 - -
Total equity 275,781 254,680 128,098 127,428

Non-current liabilities
Lease liabilities 6 659 - - -
Borrowings 24 69,089 66,956 - 250
Hire purchase payables 25 256 377 82 115
Deferred tax liabilities 26 53 1,296 - -
70,057 68,629 82 365

Current liabilities
Trade payables 27 10,704 20,393 - -
Other payables and accruals 28 36,981 33,837 1,478 1,206
Contract liabilities 29 10,523 3,007 - -
Amount due to subsidiaries 15 - - 10,612 11,055
Lease liabilities 6 242 - - -
Borrowings 24 25,109 25,243 3,417 4,000
Hire purchase payables 25 122 117 35 30
Current tax liabilities 2,664 1,181 - 8
86,345 83,778 15,542 16,299
Total liabilities 156,402 152,407 15,624 16,664

TOTAL EQUITY AND LIABILITIES 432,183 407,087 143,722 144,092

The accompanying notes form an integral part of the ﬁnancial statements.

62 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

STATEMENTS OF COMPREHENSIVE INCOME

For the Financial Year Ended 31 July 2020

GROUP COMPANY
2020 2019 2020 2019
NOTE RM’000 RM’000 RM’000 RM’000

Revenue 30 340,501 364,010 6,845 7,534

Cost of sales (276,934) (308,393) - -
Gross profit 63,567 55,617 6,845 7,534
Other income 2,125 1,777 99 71
Administrative expenses (27,832) (30,256) (5,802) (5,070)
Selling and distribution expenses (7,557) (9,362) - -
Other expenses (710) (820) - -
Operating profit 29,593 16,956 1,142 2,535
Finance costs (4,652) (4,627) (224) (375)
Share of result of a joint venture (150) - - -
Profit before tax 31 24,791 12,329 918 2,160
Tax expense 32 (4,020) (3,184) (201) (349)
Profit for the financial year 20,771 9,145 717 1,811

Other comprehensive income, net of tax:

Items that will be reclassified subsequently
to profit or loss:
Foreign currency translation differences for
foreign operations 1,845 824 - -
Total comprehensive income for the
financial year 22,616 9,969 717 1,811

Proﬁt attributable to:

Owners of the Company 17,629 6,014 717 1,811

Non-controlling interests 3,142 3,131 - -
20,771 9,145 717 1,811

Total comprehensive income

attributable to:
Owners of the Company 19,071 6,648 717 1,811
Non-controlling interests 3,545 3,321 - -
22,616 9,969 717 1,811

Earnings per share attributable to owners

of the Company (sen)
- Basic 33 10 3
- Diluted 33 10 3

The accompanying notes form an integral part of the ﬁnancial statements.

Attributable to Owners of the Company
Non-distributable Distributable
Exchange Non-
Share Treasury Warrants Translation ESOS Statutory Retained Controlling Total
Capital Shares Reserve Reserve Reserve Reserve Proﬁts Total Interests Equity
NOTE RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2020
Balance at beginning 105,487 (1,490) 17,590 1,683 932 908 102,859 227,969 26,711 254,680
Transfer to statutory reserve - - - - - 33 (57) (24) 24 -

Foreign currency translation

differences for foreign
operations - - - 1,442 - - - 1,442 403 1,845
Profit for the financial year - - - - - - 17,629 17,629 3,142 20,771
Total comprehensive income for
the financial year - - - 1,442 - - 17,629 19,071 3,545 22,616

Transactions with owners:

Issuance of shares pursuant to:

- Share options
exercised/lapsed 20 558 - - - (140) - 59 477 - 477
Dividends 34 - - - - - - (524) (524) - (524)
Dividends paid to
non-controlling interests - - - - - - - - (1,468) (1,468)

Total transactions with owners 558 - - - (140) - (465) (47) (1,468) (1,515)

Balance at end 106,045 (1,490) 17,590 3,125 792 941 119,966 246,969 28,812 275,781
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020

For the Financial Year Ended 31 July 2020

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

The accompanying notes form an integral part of the ﬁnancial statements.

63
64
Attributable to Owners of the Company

cont’d
Non-distributable Distributable
Exchange Fair Non-
Share Treasury Warrants Translation Value ESOS Statutory Retained Controlling Total
Capital Shares Reserve Reserve Reserve Reserve Reserve Proﬁts Total Interests Equity
NOTE RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2019
Balance at beginning 105,487 (1,490) 17,590 1,049 18 980 904 98,733 223,271 23,886 247,157
Effects of adopting MFRS 9 - - - - (18) - - 18 - - -
For the Financial Year Ended 31 July 2020

Balance at beginning,
restated 105,487 (1,490) 17,590 1,049 - 980 904 98,751 223,271 23,886 247,157
Transfer to statutory reserve - - - - - - 4 (8) (4) 4 -

Foreign currency translation

differences for foreign
operations - - - 634 - - - - 634 190 824
Proﬁt for the ﬁnancial year - - - - - - - 6,014 6,014 3,131 9,145

Total comprehensive income

ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

for the ﬁnancial year - - - 634 - - - 6,014 6,648 3,321 9,969

Transactions with owners:

Effect of changes in
shareholding - - - - - - - (1,076) (1,076) 1,076 -
Issuance of shares
pursuant to:
- Share options
exercised/lapsed 20 -* - - - - (48) - 48 - - -
Dividends 34 - - - - - - - (870) (870) - (870)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Dividends paid to
non-controlling interests - - - - - - - - - (1,576) (1,576)

Total transactions with

owners - - - - - (48) - (1,898) (1,946) (500) (2,446)

Balance at end 105,487 (1,490) 17,590 1,683 - 932 908 102,859 227,969 26,711 254,680

* Denotes less than RM1,000

The accompanying notes form an integral part of the ﬁnancial statements.

PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 65

STATEMENT OF CHANGES IN EQUITY

For the Financial Year Ended 31 July 2020

Non-distributable Distributable
Share Treasury Warrants ESOS Retained Total
Capital Shares Reserve Reserve Proﬁts Equity
NOTE RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2020
Balance at beginning 105,487 (1,490) 17,590 1,084 4,757 127,428
Total comprehensive income
for the ﬁnancial year - - - - 717 717

Transactions with owners:

Issuance of shares
pursuant to:
- share options exercised/
lapsed 20 558 - - (140) 59 477
Dividends 34 - - - - (524) (524)
Total transactions with owners 558 - - (140) (465) (47)
Balance at end 106,045 (1,490) 17,590 944 5,009 128,098

Non-distributable Distributable
Fair
Share Treasury Warrants Value ESOS Retained Total
Capital Shares Reserve Reserve Reserve Proﬁts Equity
NOTE RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2019
Balance at beginning 105,487 (1,490) 17,590 18 1,132 3,750 126,487
Effects of adopting
MFRS 9 - - - (18) - 18 -
Balance at beginning,
restated 105,487 (1,490) 17,590 - 1,132 3,768 126,487
Total comprehensive income
for the ﬁnancial year - - - - - 1,811 1,811

Transactions with owners:

Issuance of shares
pursuant to:
- share options exercised/
lapsed 20 -* - - - (48) 48 -
Dividends 34 - - - - - (870) (870)
Total transactions with
owners - - - - (48) (822) (870)
Balance at end 105,487 (1,490) 17,590 - 1,084 4,757 127,428

* Denotes less than RM1,000

The accompanying notes form an integral part of the ﬁnancial statements.

66 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

STATEMENTS OF CASH FLOWS

For the Financial Year Ended 31 July 2020

GROUP COMPANY
2020 2019 2020 2019
NOTE RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM OPERATING

ACTIVITIES
Profit before tax 24,791 12,329 918 2,160
Adjustments for:
Amortisation of land use rights - 282 - -
Amortisation of intangible asset 6 3 - -
Bad debts written off - 30 - -
Depreciation of property, plant and
equipment 12,020 10,392 103 101
Depreciation of right-of-use assets 539 - - -
Fair value loss/(gain) on derivative financial
instruments 46 (125) - -
Fair value gain on other investments (18) (7) (18) (7)
Gain on disposal of property, plant and
equipment (58) (12) - -
Gross dividends from subsidiaries - - (1,228) (1,557)
Income distribution from unit trusts (21) (15) (21) (15)
Inventories written down 5,339 - - -
Interest expense 4,652 4,627 224 375
Interest income (671) (806) (61) (53)
Property, plant and equipment written off 23 28 - -
Provision for expected credit loss 102 - - -
Share result of a joint venture 150 - - -
Unrealised loss on foreign exchange 1,095 710 267 42
Operating profit before working capital
changes 47,995 27,436 184 1,046
Inventories (7,941) (9,942) - -
Receivables 17,461 (1,393) - (8)
Payables (9,117) 12,552 272 (114)
Contract liabilities 7,516 3,007 - -
Cash generated from operations 55,914 31,660 456 924
Tax paid (4,067) (3,558) (259) (423)
Tax refunded 18 205 11 -
Interest paid (4,652) (4,627) (224) (375)
Net cash from/(used in) operating activities 47,213 23,680 (16) 126

CASH FLOWS FROM INVESTING

ACTIVITIES
Interest received 652 800 61 53
Gross dividends received from subsidiaries - - 1,228 1,557
Proceeds from disposal of property, plant
and equipment 71 19 - -
Purchase of other investments - (2,021) - (2,021)
(i) Purchase of property, plant and equipment (10,142) (24,921) - (10)
Purchase of trademarks (13) (25) - -
Net cash (used in)/from investing activities (9,432) (26,148) 1,289 (421)

Balance carried forward 37,781 (2,468) 1,273 (295)

The accompanying notes form an integral part of the ﬁnancial statements.

PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 67

STATEMENTS OF CASH FLOWS

For the Financial Year Ended 31 July 2020
cont’d

GROUP COMPANY
2020 2019 2020 2019
NOTE RM’000 RM’000 RM’000 RM’000

Balance brought forward 37,781 (2,468) 1,273 (295)

CASH FLOWS FROM FINANCING

ACTIVITIES
Repayment/(Advance) to a joint venture 63 (263) - -
Dividends paid (524) (870) (524) (870)
Dividends paid to non-controlling interests (1,468) (1,576) - -
Drawdown of term loans 10,143 51,690 - -
Net change in subsidiaries balances - - (564) 6,877
Payment of hire purchase payables (116) (74) (28) (34)
Payment of lease liabilities (229) - - -
Drawdown/(Repayment) of revolving credit 1,000 (9,000) - (4,000)
Drawdown/(Repayment) of invoice financing 479 (5,687) - -
Repayment of export credit refinancing - (1,285) - -
Repayment of term loans (5,922) (2,492) (833) (1,000)
Repayment of trust receipts (3,870) (2,210) - -
Proceeds from issuance of shares pursuant
to ESOS 477 -* 477 -
Net cash from/(used in) financing activities 33 28,233 (1,472) 973

NET INCREASE/(DECREASE) IN CASH

AND CASH EQUIVALENTS 37,814 25,765 (199) 678

Effects of foreign exchange rate

changes on cash and cash
equivalents 960 (390) 5 (27)

CASH AND CASH EQUIVALENTS AT

BEGINNING OF FINANCIAL YEAR 62,979 37,604 1,650 999

CASH AND CASH EQUIVALENTS AT

END OF FINANCIAL YEAR 101,753 62,979 1,456 1,650

Cash and cash equivalents comprise:

Deposits with ﬁnancial institutions 17 13,525 14,113 45 636
Cash and bank balances 18 90,447 51,066 1,411 1,014
103,972 65,179 1,456 1,650
Less: Deposits pledged 17 (2,219) (2,200) - -
Cash and cash equivalents 101,753 62,979 1,456 1,650

(i) Purchase of property, plant and

equipment
Total acquisition cost 10,142 25,310 - -
Acquired under hire purchase - (389) - -
- -
Total cash acquisition 10,142 24,921 - -

* Denotes less than RM1,000

The accompanying notes form an integral part of the ﬁnancial statements.

68 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020

1. CORPORATE 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 51-21-A Menara BHL Bank, Jalan Sultan Ahmad Shah, 10050
Penang while its principal place of business is located at 531 Batu 2 ½ Jalan Kluang, 83000 Batu Pahat, Johor Darul
Takzim.

The principal activities of the Company consist of investment holding and provision of management services.
The principal activities of the subsidiaries are disclosed in Note 8 to the financial statements. There have been no
significant changes in the nature of these activities during the financial year.

The ﬁnancial statements were authorised for issue by the Board of Directors in accordance with a resolution of the
directors on 28 October 2020.

2. BASIS OF PREPARATION

2.1 Statement of Compliance

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.

2.2 Basis of Measurement

The ﬁnancial statements of the Group and of the Company are prepared under the historical cost convention
unless otherwise indicated in the summary of accounting policies.

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 and the
Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use
when pricing the asset or liability, assuming that market participants act in their best economic interest.

A fair value measurement of a non-ﬁnancial asset takes into account a market participant’s ability to generate
economic beneﬁts by using the asset in its highest and best use or by selling it to another market participant
that would use the asset in its highest and best use.

The Group and the Company use 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.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 69

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

2. BASIS OF PREPARATION (CONT’D)

2.3 Presentation and Functional Currencies

Ringgit Malaysia is the presentation currency of the Group and of the Company and the amounts in the ﬁnancial
statements are rounded-up to the nearest RM’000, except where otherwise stated.

Ringgit Malaysia is also the functional currency of the Company. The functional currency is the currency of the
primary economic environment in which the Company operates. The Group’s foreign operations have different
functional currencies.

2.4 Adoption of New Standards/Amendments/Improvements to MFRSs

The accounting policies adopted by the Group and by the Company are consistent with those of the previous
ﬁnancial years except for the adoption of the following standards that are mandatory for the current ﬁnancial
year:

Effective for annual periods beginning on or after 1 January 2019

MFRS 16 Leases
Amendments to MFRS 9 Financial Instruments: Prepayment Features with Negative Compensation
Amendments to MFRS 119 Employee Benefits: Plan Amendment, Curtailment or Settlement
Amendments to MFRS 128 Investments in Associates and Joint Ventures: Long-term Interest in Associates and
Joint Ventures
IC Interpretations 23 Uncertainty over Income Tax Treatments
Annual Improvements to MFRS Standards 2015-2017 Cycle

Initial application for the above standards did not have any material impact to the ﬁnancial statements of the
Group and of the Company upon adoption except as mentioned below:

MFRS 16 Leases

MFRS 16 supersedes MFRS 117 Leases, IC Interpretation 4 Determining whether an Arrangement contains a
Lease, IC Interpretation 115 Operating Leases-Incentives and IC Interpretation 127 Evaluating the Substance
of Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the recognition,
measurement, presentation and disclosure of leases.

Lessor accounting under MFRS 16 is substantially unchanged from MFRS 117. Lessors will continue to classify
leases as either operating or ﬁnance leases using similar principles as in MFRS 117. Therefore, MFRS 16 does
not have an impact for leases where the Group is the lessor.

During the financial year, the Group changed its accounting policies on leases upon adoption of MFRS 16
with the date of initial application of 1 August 2019. The Group has elected to use the simplified retrospective
transition method and to apply a number of practical expedients as provided in MFRS 16. Under the simplified
retrospective transition method, the comparative information for 2019 were not restated and the reclassifications
and adjustments arising from the new leasing rules are recognised in the opening balance of the statements
of financial position of the Group as at 1 August 2019. The comparative information continued to be reported
under the previous accounting policies under MFRS 117 Leases and IC Interpretation 4 Determining whether an
arrangement contains a lease.

Consequently, the Group had reclassiﬁed leasehold lands which were previously included in property, plant and
equipment and land use rights respectively to right-of-use assets on the date of initial application of MFRS 16.

The Group has lease contracts for the rental of advertising sites used in its operations. Lease term of the
advertising sites are between 2 to 3 years, with an option to renew the leases for another 1 to 2 years.
70 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

2. BASIS OF PREPARATION (CONT’D)

2.4 Adoption of New Standards/Amendments/Improvements to MFRSs (Cont’d)

MFRS 16 Leases (Cont’d)

The detailed impact arising from the adoption of MFRS 16 on the statements of ﬁnancial position of the Group
as at 1 August 2019 is as follows:

Effects of As at
As at adoption of 1 August
31 July 2019 MFRS 16 2019
RM’000 RM’000 RM’000

Group
Property, plant and equipment 202,741 (712) 202,029
Land use rights 10,804 (10,804) -
Right-of-use assets - 12,646 12,646
Lease liabilities - (1,130) (1,130)

Upon adoption of MFRS 16, the Group applied a single recognition and measurement approach for all leases
where leases will be recognised as right-of-use asset and corresponding lease liability except for short-term
leases and leases of low-value assets where the lease rental payments are recognised as an expense.

t Leases previously classified as finance leases

Leases which were previously classiﬁed as ﬁnance leases under MFRS 117 continue to be treated as
such without any changes upon adoption of MFRS 16 on 1 August 2019.

t Leases previously accounted for as operating leases

The Group recognised right-of-use asset and lease liability for the lease previously classified as
operating lease, except for short-term leases and leases of low-value assets. The right-of-use asset
were recognised based on the carrying amount as if the standard had always been applied, apart
from the use of incremental borrowing rate at the date of initial application. The right-of-use asset
was recognised based on the amount equal to the lease liability, adjusted for any related prepaid and
accrued lease payments previously recognised. Lease liability was recognised based on the present value
of the remaining lease payments, discounted using the incremental borrowing rate at the date of initial
application.

The Group also applied the available practical expedients wherein it:

- Used a single discount rate to a portfolio of leases with reasonably similar characteristics;
- Relied on its assessment of whether leases are onerous immediately before the date of initial application;
- Applied the short-term leases exemptions to leases with lease term that ends within 12 months of the
date of initial application;
- Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial
application; and
- Used hindsight in determining the lease term where the contract contained options to extend or terminate
the lease.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 71

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

2. BASIS OF PREPARATION (CONT’D)

2.5 Standards Issued But Not Yet Effective

The new and amended standards and interpretations that are issued, but not yet effective, up to the date
of issuance of the Group’s and the Company’s ﬁnancial statements are disclosed below. The Group and the
Company intend to adopt these new and amended standards and interpretations, if applicable, when they
become effective.

Effective for annual periods beginning on or after 1 January 2020

Amendments to References to the Conceptual Framework in MFRS Standards

Amendments to MFRS 3 Business Combinations: Definition of a Business
Amendments to MFRS 101 Presentation of Financial Statements and MFRS 108 Accounting Policies, Changes
in Accounting Estimates and Errors: Definition of Material
Amendments to MFRS 9, MFRS 139 and MFRS 7 Interest Rate Benchmark Reform

Effective for annual periods beginning on or after 1 June 2020

Amendments to MFRS 16 Leases: Covid-19 - Related Rent Concessions

Effective for annual periods beginning on or after 1 January 2021

Amendments to MFRS 9, MFRS 139, MFRS 7, MFRS 4 and MFRS 16 Interest Rate Benchmark
Reform-Phase 2

Effective for annual periods beginning on or after 1 January 2022

Amendments to MFRS 3 Business Combinations: Reference to the Conceptual Framework

Amendments to MFRS 116 Property, Plant and Equipment: Property, Plant and Equipment – Proceeds before
Intended Use
Amendments to MFRS 137 Provisions, Contingent Liabilities and Contingent Assets: Onerous Contracts
– Cost of Fulfilling a Contract
Annual Improvements to MFRS Standards 2018 – 2020

Effective for annual periods beginning on or after 1 January 2023

MFRS 17 Insurance Contracts

Amendments to MFRS 17 Insurance Contracts
Amendments to MFRS 101 Presentation of Financial Statements: Classification of Liabilities as Current or
Non-Current

Effective date yet to be conﬁrmed

Amendments to MFRS 10 Consolidated Financial Statements and MFRS 128 Investments in Associates and
Joint Ventures - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The existing MFRS 4 and Amendments to MFRS 4 will be withdrawn upon the adoption of the new MFRS 17
which will take effect on or after 1 January 2023.

The initial application of the above standards is not expected to have any material impacts to the ﬁnancial
statements of the Group and of the Company upon adoption.
72 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

2. BASIS OF PREPARATION (CONT’D)

2.6 Signiﬁcant Accounting Estimates and Judgements

The preparation of ﬁnancial statements requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported amounts of assets, liabilities, income and
expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised and in any future periods affected.

2.6.1 Judgements made in applying accounting policies

There are no significant areas of critical judgement in applying accounting policies that have any
significant effect on the amount recognised in the financial statements.

2.6.2 Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the
end of the reporting period that have a signiﬁcant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next ﬁnancial year are discussed below:

(i) Useful lives of depreciable assets

Property, plant and equipment are depreciated on a straight-line basis over their estimated
useful lives. Management estimates the useful lives of the property, plant and equipment to be
within 5 to 37 years. Changes in the expected level of usage and technological developments
could impact the economic useful lives and the residual values of property, plant and equipment.
Therefore, future depreciation charges could be revised.

The carrying amount and depreciation charges of plant and machinery is disclosed in Note 4 to
the ﬁnancial statements.

(ii) Impairment of non-ﬁnancial assets

An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds
its recoverable amount. To determine the recoverable amount, the Group and the Company
estimate expected future cash flows from each asset 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, the Group and the Company make assumptions about future operating
results. The actual results may vary, and may cause significant adjustments to the Group and the
Company’s assets within the next financial year.

In most cases, determining the applicable discount rate involves estimating the appropriate
adjustment to market risk and the appropriate adjustment to asset-speciﬁc risk factors.

(iii) 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 time the
estimate is made. Possible changes in these estimates could result in revisions to the valuations of
inventories.

The inventories written-down to their net realisable value are disclosed in Note 12 to the ﬁnancial
statements.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 73

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

2. BASIS OF PREPARATION (CONT’D)

2.6 Signiﬁcant Accounting Estimates and Judgements (Cont’d)

2.6.2 Key sources of estimation uncertainty (Cont’d)

(iv) Provision for expected credit loss (“ECL”) of receivables

The Group uses a provision matrix to calculate expected credit losses for receivables. The
provision rates are based on days past due for groupings of various customer segments that have
similar loss patterns.

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. 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 expected credit losses is a signiﬁcant estimate. The amount of expected credit
losses 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 provision for expected credit loss is disclosed in Note 13 to the ﬁnancial statements.

3. ACCOUNTING POLICIES

The following accounting policies adopted by the Group and by the Company are consistent with those adopted in
the previous ﬁnancial years unless otherwise indicated below.

3.1 Basis of Consolidation

(i) Subsidiaries

Subsidiaries are entities, including structured entities, controlled by the Company. The financial
statements of subsidiaries are included in the consolidated ﬁnancial statements from the date that control
commences until the date that control ceases.

The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity. Potential voting
rights are considered when assessing control only when such rights are substantive. The Group also
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.

Investment in subsidiaries is measured in the Company’s statement of ﬁnancial position at cost less
any impairment losses, unless the investment is classiﬁed as held for sale or distribution. The cost of
investments includes transaction costs.

Upon disposal of investment in a subsidiary, the difference between the net disposal proceed and its
carrying amount is recognised in proﬁt or loss.
74 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

3. ACCOUNTING POLICIES (CONT’D)

3.1 Basis of Consolidation (Cont’d)

(ii) Business combination

Business combinations are accounted for using the acquisition method from the acquisition date, which is
the date on which control is transferred to the Group.

For new acquisitions, the Group measures the cost of goodwill at the acquisition date as:

t UIFGBJSWBMVFPGUIFDPOTJEFSBUJPOUSBOTGFSSFE QMVT
t UIFSFDPHOJTFEBNPVOUPGBOZOPODPOUSPMMJOHJOUFSFTUJOUIFBDRVJSFF QMVT
t JGUIFCVTJOFTTDPNCJOBUJPOJTBDIJFWFEJOTUBHFT UIFGBJSWBMVFPGUIFFYJTUJOHFRVJUZJOUFSFTUJOUIF
acquiree, less
t UIFOFUSFDPHOJTFEBNPVOUBUGBJSWBMVFPGUIFJEFOUJmBCMFBTTFUTBDRVJSFEBOEMJBCJMJUJFTBTTVNFE

When the excess is negative, a bargain purchase gain is recognised in proﬁt or loss.

For each business combination, the Group elects whether to recognise non-controlling interest in
the acquiree at fair value, or at the proportionate share of the acquiree’s identiﬁable net assets at the
acquisition date.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group
incurs in connection with a business combination are expensed as incurred.

(iii) Acquisitions of non-controlling interests

The Group accounts for all changes in its ownership interest in a subsidiary that do not result in a loss of
control as equity transactions between the Group and its non-controlling interest holders. Any difference
between the Group’s share of net assets before and after the change, and any consideration received or
paid, is adjusted to or against Group reserve.

(iv) Loss of control

Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the subsidiary,
any non-controlling interests and the other components of equity related to the former subsidiary from the
consolidated statement of position. Any surplus or deficit arising from 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 an available-for-sale financial asset depending on the level of influence retained.

(v) Non-controlling interests

Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable
directly or indirectly to the equity holders of the Company, are presented in the consolidated statement
of ﬁnancial position and consolidated 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 comprehensive income as an allocation of the proﬁt or
loss and the comprehensive income for the year between non-controlling interests and owners of the
Company.

Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling
interests even if doing so causes the non-controlling interests to have a deﬁcit balance.

(vi) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra group
transactions, are eliminated in preparing the consolidated ﬁnancial statements.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 75

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

3. ACCOUNTING POLICIES (CONT’D)

3.1 Basis of Consolidation (Cont’d)

(vii) Joint venture

A joint venture is a type of joint arrangement whereby the parties have joint control over the net assets of
the joint venture. Joint control is contractually agreed sharing of control of an arrangement, which exists
only when decisions about the relevant activities require unanimous consent of the parties sharing control.

The Group’s investment in its joint venture is accounted for using the equity method. Under the equity
method, investment in a joint venture is carried in the statement of ﬁnancial position at cost plus post
acquisition changes in the Group’s share of net assets of the joint venture since the acquisition date.
Goodwill relating to the joint venture is included in the carrying amount of the investment and is neither
amortised nor individually tested for impairment.

The share of the result of a joint venture 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 a joint venture, 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 joint venture are
eliminated to the extent of the interest in the joint venture.

The aggregate of the Group’s share of profit or loss of a joint venture 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 joint venture.

When the Group’s share of losses exceeds its interest in a joint venture, 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 joint venture. The ﬁnancial statements of the joint venture are prepared as of the same reporting
period as the Group. Where necessary, adjustments are made to bring the accounting policies of the joint
venture 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 joint venture. The Group determines at each
end of the reporting period whether there is any objective evidence that the investments in the joint
venture is impaired. If there is such evidence, the Group calculates the amount of impairment as the
difference between the recoverable amount of the joint venture 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 joint control over the joint venture, the Group measures and recognises any retained
investment at its fair value. Any difference between the carrying amount of the joint venture upon loss
of joint control and the fair value of the retained investment and proceeds from disposal is recognised in
profit or loss.
76 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

3. ACCOUNTING POLICIES (CONT’D)

3.2 Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation or amortisation and
accumulated impairment losses.

Property, plant and equipment are depreciated using the straight-line method to write off the cost of each asset
to its residual value over its estimated useful life, at the following annual rates:

Buildings Amortise over the lease period and 5%

Multimedia boards 10% - 20%
Plant and machinery 5% - 10%
Equipment and ﬁxtures 10% - 20%
Motor vehicles 20%

From 1 August 2019, leasehold land are included within right-of-use assets in the statements of ﬁnancial
position. Refer to accounting policies as disclosed in Note 3.3 to the ﬁnancial statements.

Freehold land is not depreciated as it has an inﬁnite life.

Depreciation on capital expenditure in progress commences when the construction of the assets are completed
and ready for their intended use.

The residual value, useful life and depreciation method are reviewed at the end of each reporting period to
ensure that the amount, method and period of depreciation are consistent with previous estimates and the
expected pattern of consumption of the future economic beneﬁts embodied in the items of property, plant and
equipment.

Upon the disposal of an item of property, plant and equipment, the difference between the net disposal proceed
and its carrying amount is included in proﬁt or loss.

3.3 Leases

Current ﬁnancial year

The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identiﬁed asset for a period of time in exchange for consideration.

3.3.1 Group as a lessee

The Group applies a single recognition and measurement approach for all leases, except for short-term
leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments
and right-of-use assets representing the right to use the underlying assets.

3.3.1.1 Right-of-use assets

The Group recognises right-of-use (“ROU”) assets at the commencement date of the lease
(i.e., the date the underlying asset is available for use). ROU assets are measured at cost, less
any accumulated depreciation and impairment losses, and adjusted for any remeasurement
of lease liabilities. The cost of ROU assets includes the amount of lease liabilities recognised,
initial direct costs incurred, and lease payments made at or before the commencement date
less any lease incentives received.

The ROU assets are depreciated over their lease period.

PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 77

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

3. ACCOUNTING POLICIES (CONT’D)

3.3 Leases (Cont’d)

Current ﬁnancial year (Cont’d)

3.3.1 Group as a lessee (Cont’d)

3.3.1.1 Right-of-use assets (Cont’d)

The original lease term of the ROU assets are as follows:

Leasehold land 33 years

Land use rights 41 years
Advertising sites 2 to 3 years

The right-of-use assets are also subject to impairment as detailed in Note 3.8 to the ﬁnancial
statements.

3.3.1.2 Lease liabilities

At the commencement date of the lease, the Group recognises lease liabilities measured at
the present value of lease payments to be made over the lease term. The lease payments
include ﬁxed payments (including in-substance ﬁxed payments) less any lease incentives
receivable, variable lease payments that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees.

In calculating the present value of lease payments, the Group uses its incremental borrowing
rate at the lease commencement date because the interest rate implicit in the lease is not
readily determinable. After the commencement date, the amount of lease liabilities is
increased to reﬂect the accretion of interest and reduced for the lease payments made. In
addition, the carrying amount of lease liabilities is remeasured if there is a modiﬁcation, a
change in the lease term, a change in the lease payments (e.g., changes to future payments
resulting from a change in an index or rate used to determine such lease payments) or a
change in the assessment of an option to purchase the underlying asset.

3.3.1.3 Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition exemption to its short-term leases of
hostel, certain advertising site and machineries (i.e., those leases that have a lease term of 12
months or less from the commencement date and do not contain a purchase option). It also
applies the lease of low-value assets recognition exemption to leases of equipment that are
considered to be low value. Lease payments on short-term leases and leases of low value
assets are recognised as expense on a straight-line basis over the lease term.

Previous ﬁnancial year

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 asset)
or the arrangement conveys a right to use the asset, even if that right is not explicitly specific
in an arrangement.
78 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

3. ACCOUNTING POLICIES (CONT’D)

3.3 Leases (Cont’d)

Current ﬁnancial year (Cont’d)

3.3.1 Group as a lessee (Cont’d)

3.3.1.3 Short-term leases and leases of low-value assets (Cont’d)

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 asset 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.

Group as a lessor

Leases in which the Group does not transfer substantially all the risks and rewards of
ownership of an asset are classiﬁed as operating leases. Rental income arising is accounted
for on a straight-line basis over the lease terms and is included in revenue in the statement
of proﬁt or loss due to its operating nature. Initial direct costs incurred in negotiating and
arranging an operating lease are added to the carrying amount of the leased asset and
recognised over the lease term on the same basis as rental income. Contingent rents are
recognised as revenue in the period in which they are earned.

3.4 Intangible Assets

Intangible assets which comprise trademarks are assessed to have definite useful life are amortised on straight-
line basis over the estimated economic useful life and assessed for impairment whenever there is an indication
that the intangible assets may be impaired. The amortisation period and the amortisation method for an
intangible asset with a finite useful life are reviewed at least at each financial year end. The amortisation expense
on intangible assets with finite useful life is recognised in the profit or loss.

Gain or loss arising from derecognition of an intangible asset is measured as the difference between the net
disposal proceed and its carrying amount and is recognised in the proﬁt or loss.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 79

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

3. ACCOUNTING POLICIES (CONT’D)

3.5 Goodwill

Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of
business combination over the Group’s interest in the net fair value of the identiﬁable assets, liabilities and
contingent liabilities.

Goodwill is stated at cost less accumulated impairment losses. Goodwill is not amortised but instead, it is
reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the
carrying value may be impaired. Gains and losses on the disposal of an entity include the carrying amount of
goodwill relating to the entity sold.

3.6 Inventories

Inventories are stated at the lower of cost and net realisable value.

Cost of raw materials and trading goods refer to invoiced cost of goods plus incidental handling and freight
charges and is determined on the ﬁrst-in, ﬁrst-out basis.

Cost in the case of work-in-progress and ﬁnished goods include materials, direct labour and attributable
production overheads and are determined on the weighted average basis.

Net realisable value represents estimated selling price less all estimated costs to completion and estimated
costs to be incurred in marketing, selling and distribution.

3.7 Financial Instruments

3.7.1 Initial recognition

Financial assets or ﬁnancial liabilities are recognised when the Group or the Company become a party
to the contractual provisions of the instrument.

3.7.2 Classiﬁcation and subsequent measurement of ﬁnancial assets

Financial assets, other than those designated as hedging instruments, are classiﬁed into the following
categories:

- amortised cost (“AC”);

- fair value through proﬁt or loss (“FVTPL”); and
- fair value through other comprehensive income (“FVOCI”).

The classiﬁcation is determined by both:

- the entity’s business model for managing the financial asset; and
- the contractual cash flow characteristics of the financial asset.

All income and expenses relating to the financial assets that are recognised in profit or loss are
presented within financial cost, financial income or other financial items, except for impairment of
receivables which is presented within other expenses.
80 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

3. ACCOUNTING POLICIES (CONT’D)

3.7 Financial Instruments (Cont’d)

3.7.2 Classiﬁcation and subsequent measurement of ﬁnancial assets (Cont’d)

Financial assets at amortised cost (“AC”)

Financial assets are measured at amortised cost if the assets meet the following conditions (and are not
designated as FVTPL):

- they are held within a business model whose objective is to hold the ﬁnancial assets and collect
its contractual cash ﬂows; and

- 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 and the Company’s
cash and cash equivalents, trade and most other receivables fall into this category of ﬁnancial
statements.

Financial assets at fair value through proﬁt or loss (“FVTPL”)

Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold to
collect and sell’ are categorised at fair value through profit and loss. Further, irrespective of business
model, financial assets whose contractual cash flows are not solely payments of principal and interest
are accounted for at FVTPL.

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. The Group’s and the Company’s quoted
investment fall into their category of financial instruments.

Financial assets at fair value through other comprehensive income (“FVOCI”)

The Group accounts for ﬁnancial assets at FVOCI if the assets meet the following conditions:

- they are held under a business model whose objective it is “hold to collect” the associated cash
flows and sell; and
- 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.

Any gains or losses recognised in other comprehensive income (OCI) will be recycled upon
derecognition of the asset.

3.7.3 Classiﬁcation and subsequent measurement of ﬁnancial liabilities

Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction
costs unless the Group and the Company designated a ﬁnancial liability at fair value through proﬁt or
loss.

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.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 81

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

3. ACCOUNTING POLICIES (CONT’D)

3.7 Financial Instruments (Cont’d)

3.7.4 Derecognition

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.

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the
contract is discharged or cancelled or expired. On derecognition of a financial liability, the difference
between the carrying amount of the financial liability extinguished or transferred to another party and
the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in
profit or loss.

3.7.5 Impairment of ﬁnancial assets

MFRS 9’s impairment requirements use more forward-looking information to recognise expected credit
losses – the ‘expected credit loss (“ECL”) model’. Instruments within the scope of the requirements
included loans, trade and other receivables and other debt-type ﬁnancial assets measured at amortised
cost and ﬁnancial assets at FVOCI.

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
ECL, including past events, current conditions, reasonable and supportable forecasts that affect the
expected collectability of the future cash ﬂows of the instrument.

In applying this forward-looking approach, a distinction is made between:

- financial instruments that have not deteriorated significantly in credit quality since initial recognition
or that have low credit risk (‘Stage 1’) and
- 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 ECL’ are recognised for the ﬁrst category while ‘lifetime ECL’ are recognised for the second
category.

Measurement of the ECL is determined by a probability-weighted estimate of credit losses over the
expected life of the ﬁnancial instrument.

Trade and other receivables

The Group makes use of a simplified approach in accounting for trade receivables and records the loss
allowance as lifetime ECL. 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 ECL, the
Group has established a provision matrix that is based on its historical credit loss experience, adjusted
for forward-looking factors such as external indicators surrounding the economic environment in which
the debtor is operating.

For other receivables, the Group measures the loss allowance for other receivables equal to 12-month
ECL, unless when there has been a signiﬁcant increase in credit risk since initial recognition, the Group
recognises lifetime ECL. The assessment of whether lifetime ECL should be recognised is based on
signiﬁcant increase in the likelihood or risk of default occurring since initial recognition.
82 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

3. ACCOUNTING POLICIES (CONT’D)

3.7 Financial Instruments (Cont’d)

3.7.6 Offsetting of ﬁnancial instruments

Financial assets and ﬁnancial liabilities are offset and the net amount is reported in the statement of
ﬁnancial position if, and only if, there is currently a legally enforceable right to offset the recognised
amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities
simultaneously.

3.7.7 Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to
reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in
accordance with the terms of debt instruments.

Fair value arising from financial guarantee contracts are classified as deferred income and are amortised
to profit or loss using a straight-line method over the contractual period or, when there is no specified
contractual period, recognised in profit or loss upon discharge of the guarantee. When settlement of a
financial guarantee contract becomes probable, an estimate of the obligation is made. If the carrying
value of the financial guarantee contract is lower than the obligation, the carrying value is adjusted to
the obligation amount and accounted for as a provision.

3.7.8 Derivative ﬁnancial instruments

The Group enters into derivative ﬁnancial instruments such as foreign currency forward contracts to
manage its exposure to foreign currency risks.

Derivatives are initially recognised at fair value at the date the derivative contract is entered and are
subsequently remeasured to their fair value at the end of the reporting period. The resulting gain or loss
is recognised in proﬁt or loss immediately.

A derivative with a positive fair value is recognised as a ﬁnancial asset whereas a derivative with a
negative fair value is recognised as a ﬁnancial liability. A derivative is presented as a non-current asset
or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not
expected to be realised or settled within 12 months. Other derivatives are presented as current assets
or current liabilities.

The Group has not designated any derivatives as hedging instruments.

3.8 Impairment of non-ﬁnancial assets

The carrying amounts of non-ﬁnancial assets (except for inventories) are reviewed at the end of each reporting
year to determine whether there is any indication of impairment. If any such indication exists, then the asset’s
recoverable amount is estimated.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that
generates cash inﬂows from continuing use that are largely independent of the cash inﬂows of other assets or
cash-generating units (“CGU”).

The recoverable amount of an asset of CGU is the greater of its value in use and its fair value less costs of
disposal. 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 or CGU.

An impairment loss is recognised in proﬁt or loss if the carrying amount of an asset or its related CGU exceeds
its estimated recoverable amount.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 83

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

3. ACCOUNTING POLICIES (CONT’D)

3.8 Impairment of non-ﬁnancial assets (Cont’d)

Impairment losses recognised in prior years are assessed at the end of each reporting period for any indications
that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in
the estimates used to determine the recoverable amount since the last impairment loss was recognised. An
impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been
recognised. Reversals of impairment losses are credited to proﬁt or loss in the ﬁnancial year in which the
reversals are recognised.

3.9 Non-current Assets Held for Sale

Non-current assets are classiﬁed as held for sale if their carrying amounts will be recovered principally through
a sale transaction rather than through continued use. This condition is regarded as met only when the sale is
highly probable and the asset is available for immediate sale in its present condition subject only to terms that
are usual and customary.

Immediately before classification as held for sale, the measurement of the non-current assets is brought up-to-
date in accordance with applicable MFRS. Then, on initial classification as held for sale, non-current assets are
measured in accordance with MFRS 5 that is at the lower of carrying amount and fair value less costs to sell.
Any differences are recognised in profit or loss.

3.10 Cash and Cash Equivalents

Cash comprises cash in hand, cash at bank and demand deposits. Cash equivalents are short term and highly
liquid investments that are readily convertible to known amount of cash and which are subject to an insigniﬁcant
risk of changes in value, against which bank overdraft balances, if any, are deducted.

3.11 Borrowing Costs

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. Capitalisation of borrowing
costs is suspended or ceases when substantially, all the activities necessary to prepare the qualifying asset for
its intended use or sale are interrupted or completed.

Other borrowing costs are recognised as expenses 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.

3.12 Provisions

Provisions are recognised when the Group and the Company have a present legal or constructive obligation as
a result of past events, when it is probable that an outﬂow of resources embodying economic beneﬁts will be
required to settle the obligation, and when a reliable estimate of the amount can be made.

Provisions are measured at the present value of the expenditures expected to be required to settle the
obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks
specific to the obligation. The increase in the provision due to passage of time is recognised as finance cost
expense.
84 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

3. ACCOUNTING POLICIES (CONT’D)

3.13 Revenue Recognition

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 Group has generally concluded that it is the principal in its revenue
arrangement because it typically controls the goods or services before transferring them to the customer.

(i) Sale of garments and fabrics

Revenue from sale of apparels and fabrics usually includes the manufacturing of garments, fabric face
masks and fabrics and revenue is recognised at a point in time when the transfer of control of the
completed goods have been passed to the buyer, generally on the delivery of the goods.

In the case of consignment sales, revenue is recognised when the goods are sold by the consignee to a
third party. Revenue is not recognised to where there are signiﬁcant uncertainties regarding recovery of the
consideration due, associated costs or the possible return of goods.

(ii) Provision of advertising services

Revenue from provision of advertising services is recognised at point in time when the services have been
rendered to the customer and coincides with the delivery of services and acceptance by customers.

(iii) Dividend income

Dividend income is recognised when the right to receive payment is established.

(iv) Management fee

Management fee is recognised on the accrual basis when services are rendered.

(v) Interest income

Interest income is recognised on a time proportion basis using the applicable effective interest rate.

(vi) Rental income

Rental income is recognised on a time proportion basis over the lease term.

3.13.1 Contract balances

Trade receivables

A receivable represents the Group’s right to an amount of consideration that is unconditional (i.e., only
the passage of time is required before payment of the consideration is due).

Contract liabilities

A contract liability is the obligation to transfer goods or services to a customer for which the Group
has received consideration (or an amount of consideration is due) from the customer. If a customer
pays consideration before the Group transfers goods or services to the customer, a contract liability is
recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities
are recognised as revenue when the Group performs under the contract.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 85

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

3. ACCOUNTING POLICIES (CONT’D)

3.14 Employee Beneﬁts

(i) Short term beneﬁts

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year
in which the associated services are rendered by employees of the Group and of the Company. Short
term accumulating compensated absences such as paid annual leave are recognised when services are
rendered by employees that increase their entitlement to future compensated absences, and short term
non-accumulating compensated absences such as sick leave are recognised when the absences occur.

(ii) Deﬁned contribution plans

As required by law, companies in Malaysia make such contributions to the national pension scheme, the
Employees Provident Fund (“EPF”). Such contributions are recognised as an expense as incurred. The
Group’s China subsidiaries also make contributions to their country’s statutory pension scheme, details of
which are described in 3.14(iii).

(iii) Retirement beneﬁts scheme

Pursuant to the relevant regulations of The People’s Republic of China (“The PRC”) government, the
China subsidiaries participate in a local municipal government retirement benefits scheme (the “Scheme”),
whereby the subsidiaries are required to contribute a certain percentage of the basic salary of its
employees to the Scheme to fund their retirement benefits. The only obligation of the China subsidiaries
with respect to the Scheme is to pay the ongoing required contributions under the Scheme mentioned
above. Contributions under the Scheme are charged to the profit or loss as incurred. There is no provision
under the Scheme whereby forfeited contributions may be used to reduce future contributions.

(iv) Share-based compensation

The Company’s Employee Share Options Scheme (“ESOS”), an equity-settled, share-based compensation
plan, allows the Group’s employees to acquire ordinary shares of the Company. The total fair value of
share options granted to employees is recognised as an employee cost with a corresponding increase in
the share option reserve within equity over the vesting period and taking into account the probability that
the options will vest. The fair value of share options is measured at grant date, taking into account, if any,
the market vesting conditions upon which the options were granted but excluding the impact of any non-
market vesting conditions. Non-market vesting conditions are included in assumptions about the number
of options that are expected to become exercisable on vesting date.

At the end of each reporting period, the Group revises its estimates of the number of options that are
expected to become exercisable on vesting date. It recognises the impact of the revision of original
estimates, if any, in the proﬁt or loss, and a corresponding adjustment to equity over the remaining vesting
period. The equity amount is recognised in the share option reserve until the option is exercised, upon
which it will be transferred to share capital, or until the option expires, upon which it will be transferred
directly to retained proﬁts. The proceeds received net of any directly attributable transaction costs are
credited to share capital when the options are exercised.

3.15 Income Tax

Income tax expense comprises current tax 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.
86 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

3. ACCOUNTING POLICIES (CONT’D)

3.15 Income Tax (Cont’d)

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 temporary differences arising from the initial recognition of goodwill and assets or 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.

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.

Unutilised reinvestment allowance and investment tax allowance, being tax incentives that is not a tax base of
an asset, is recognised as a deferred tax asset to the extent that it is probable that future taxable proﬁts will be
available against which the unutilised tax incentive can be utilised.

3.16 Goods and Services Tax (“GST”) and Sales and Service Tax (“SST”)

GST is a consumption tax based on the 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% in Malaysia. Input tax that a company pays on business purchases is offset against
output tax.

Revenue, expenses and assets are recognised net of GST except:

- where the GST incurred in a purchase of asset or service is not recoverable from the authority, in which
case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item
as applicable; and

- receivables and payables that are stated with GST inclusive.

The net GST recoverable from, or payable to, the taxation authority is included as part of receivables or
payables in the consolidated statement of ﬁnancial position.

The Finance Ministry of Malaysia has zero rated the GST effective from 1 June 2018. The government has
replaced the GST with SST which came into effect on 1 September 2018.

The SST has two elements: a service tax that is charged and levied on taxable services provided by any taxable
person in Malaysia in the course and furtherance of business, and a single stage sales tax levied on imported
and locally manufactured goods, either at the time of importation or at the time the goods are sold or otherwise
disposed of by the manufacturer.

The rate for sales tax is ﬁxed at 5% or 10%, while the rate for service tax is ﬁxed at 6%.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 87

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

3. ACCOUNTING POLICIES (CONT’D)

3.17 Value-added Tax

The Group’s sale of goods in The PRC is subjected to value-added tax (“VAT”) for The PRC domestic sales.
Input VAT on purchases can be deducted from output VAT.

The net amount of VAT recoverable from, or payable to, the taxation authority is included as part of “other
receivables” or “other payables” in the statement of ﬁnancial position.

Revenues, expenses and assets are recognised net of the amount of VAT except when the VAT incurred on
the purchase of assets or services is not recoverable from the taxation authority, in which case the VAT is
recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable.

3.18 Foreign Currency Translation

(i) Foreign currency transactions

Transactions in foreign currencies are translated to the functional currency of the Group at exchange rates
at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are
translated to the functional currency at the exchange rate at that date.

Non-monetary assets and liabilities measured at historical cost in a foreign currency at the end of the
reporting period are translated to the functional currency at the exchange rate at the date of the
transaction except for those measured at fair value shall be translated at the exchange rate at the date
when the fair value was determined.

Exchange differences arising from the settlement of foreign currency transactions and from the translation
of foreign currency monetary assets and liabilities are recognised in proﬁt or loss.

Exchange differences arising on the translation of non-monetary items carried at fair value are included in
proﬁt or loss for the period except for the differences arising on the translation of non-monetary items in
respect of which gains or losses are recognised directly in other comprehensive income.

(ii) Foreign operations

The assets and liabilities of foreign operations are translated to RM at exchange rates at the end of the
reporting period. The income and expenses of foreign operations are translated to RM at exchange rates
at the dates of the transactions.

Exchange differences are recognised in other comprehensive income and accumulated in the foreign
translation reserve (“FTR”) 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, the significant influence or joint control is lost, the
cumulative amount in the FTR related to the foreign operation is reclassified to profit or loss as part of the
profit or loss on disposal.

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 the FTR in equity.
88 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

3. ACCOUNTING POLICIES (CONT’D)

3.19 Warrants

Warrants are classiﬁed as equity instruments and its value is allocated based on the Black-Scholes model
upon issuance. The issuance of the ordinary shares upon exercise of warrants is treated as new subscription of
ordinary shares for the consideration equivalent to the exercise price of the warrants. The proceeds received net
of any directly attributable transaction costs are credited to share capital when the warrants are exercised.

3.20 Share Capital, Share Issuance Costs and Dividends

Classiﬁcation

Ordinary shares are classiﬁed as equity. Other shares are classiﬁed as equity and/or liability according to the
economic substance of the particular instrument.

Share issuance costs

Incremental external costs directly attributable to the issuance of new shares are deducted against equity.

Dividends

Dividends on ordinary shares are accounted for in shareholder’s equity as an appropriation of retained proﬁts
and recognised as a liability in the period in which they are declared.

3.21 Treasury Shares

When shares of the Company, that have not been cancelled, recognised as equity are reacquired, the amount
of consideration paid is recognised directly in equity. Reacquired shares are classiﬁed as treasury shares and
presented as a deduction from total equity. No gain or loss is recognised in proﬁt or loss on the purchase, sale,
issue or cancellation of treasury shares. When treasury shares are reissued by resale, the difference between the
sales consideration and the carrying amount is recognised in equity.

3.22 Statutory Reserve

In accordance with the relevant laws and regulations of The PRC, the foreign subsidiaries established in The
PRC are required to transfer 10% of their net proﬁt for the ﬁnancial year (after offsetting prior years’ losses)
to the statutory reserve until the reserve balance reaches 50% of the respective registered capital. The
statutory reserve can be utilised, upon approval by the relevant authorities, to offset accumulated losses or for
capitalisation as paid-up capital.

3.23 Segment Reporting

An operating segment is a component of the Group that engages in business activities from which it may
earn revenue and incur expenses, including revenues and expenses that relate to transactions with any of
the Group’s other components. An operating segment’s operating results are reviewed regularly by the chief
operating decision maker, which in this case are the Executive Directors of the Company, to make decisions
about resources to be allocated to the segment and assess its performance, and for which discrete ﬁnancial
information is available.

3.24 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 but 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.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 89

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

3. ACCOUNTING POLICIES (CONT’D)

3.25 Related Parties

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:

(i) Has control or joint control over the Group;

(ii) Has signiﬁcant inﬂuence over the Group; or
(iii) Is a member of the key management personnel of the Group,

(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) The entity is an associate or joint venture of the other entity.
(iii) Both entities are joint ventures of the same third party.
(iv) The 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)(i) 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 when it is a part, provides key management personnel
services to the Group.
90 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

4. PROPERTY, PLANT AND EQUIPMENT

GROUP

Equipment Capital
Freehold Leasehold Multimedia Plant and and Motor expenditure
land land Buildings boards machinery ﬁxtures vehicles in progress Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2020
At cost
Balance at beginning,
as previously
reported 41,563 1,600 114,759 8,912 64,186 17,889 3,584 2,803 255,296
Effect of adopting
MFRS 16 - (1,600) - - - - - - (1,600)

Balance at beginning,
as restated 41,563 - 114,759 8,912 64,186 17,889 3,584 2,803 253,696
Additions 788 - 263 263 3,983 1,280 195 3,370 10,142
Disposals - - - - (93) (58) (168) - (319)
Written off - - - (347) (67) (452) - - (866)
Reclassiﬁcation - - 11 - 3 379 - (393) -
Reclassiﬁed to
non-current assets
held for sale - - - - - - - (1,948) (1,948)
Foreign currency
translation - - 180 - 191 64 9 38 482

Balance at end 42,351 - 115,213 8,828 68,203 19,102 3,620 3,870 261,187

Accumulated
depreciation
Balance at beginning,
as previously
reported - 888 11,773 7,592 18,909 10,998 2,395 - 52,555
Effect of adopting
MFRS 16 - (888) - - - - - - (888)
Balance at beginning,
as restated - - 11,773 7,592 18,909 10,998 2,395 - 51,667
Current charge - - 5,608 382 3,871 1,583 576 - 12,020
Disposals - - - - (84) (55) (167) - (306)
Written off - - - (340) (52) (451) - - (843)
Foreign currency
translation - - 51 - 103 52 6 - 212

Balance at end - - 17,432 7,634 22,747 12,127 2,810 - 62,750

Carrying amount 42,351 - 97,781 1,194 45,456 6,975 810 3,870 198,437
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 91

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

4. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

GROUP (CONT’D)

2019
At cost
Balance at beginning 41,563 1,600 37,293 15,888 26,321 14,655 3,456 97,343 238,119
Additions - - 3,487 977 3,751 2,748 123 14,224 25,310
Disposals - - - - (295) (47) - - (342)
Written off - - - (7,953) (44) (47) - - (8,044)
Reclassiﬁcation - - 73,885 - 34,371 545 - (108,801) -
Foreign currency
translation - - 94 - 82 35 5 37 253

Balance at end 41,563 1,600 114,759 8,912 64,186 17,889 3,584 2,803 255,296

Accumulated
depreciation
Balance at beginning - 817 7,477 15,064 15,553 9,743 1,802 - 50,456
Current charge - 71 4,283 476 3,648 1,322 592 - 10,392
Disposals - - - - (287) (48) - - (335)
Written off - - - (7,948) (34) (34) - - (8,016)
Foreign currency
translation - - 13 - 29 15 1 - 58

Balance at end - 888 11,773 7,592 18,909 10,998 2,395 - 52,555

Carrying amount 41,563 712 102,986 1,320 45,277 6,891 1,189 2,803 202,741
92 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

4. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

COMPANY

Equipment
and Motor
ﬁxtures vehicles Total
RM’000 RM’000 RM’000

2020
At cost
Balance at beginning/Balance at end 307 335 642

Accumulated depreciation
Balance at beginning 195 195 390
Current charge 36 67 103
Balance at end 231 262 493

Carrying amount 76 73 149

2019
At cost
Balance at beginning 297 335 632
Additions 10 - 10
Balance at end 307 335 642

Accumulated depreciation
Balance at beginning 160 129 289
Current charge 35 66 101
Balance at end 195 195 390

Carrying amount 112 140 252

PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 93

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

4. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

(i) The carrying amount of property, plant and equipment pledged as security for banking facilities granted to the
Company and certain subsidiaries are as follows:

GROUP
2020 2019
RM’000 RM’000

Freehold land 27,906 27,118

Buildings 87,082 91,087
Plant and machinery 30,811 33,441
Capital expenditure in progress 3,215 300
149,014 151,946

(ii) The carrying amount of assets acquired under hire-purchase are as follows:

GROUP
2020 2019
RM’000 RM’000

Motor vehicles 73 140

Equipment and ﬁxtures 291 378
364 518

(iii) The amount of borrowing costs capitalised in the capital expenditure-in-progress for the ﬁnancial year is
RM56,981 (2019: RM359,134).
94 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

5. LAND USE RIGHTS

GROUP
2020 2019
RM’000 RM’000

At cost
Balance at beginning, as previously reported 11,743 11,518
Effects of adopting of MFRS 16 (11,743) -
Balance at beginning, as restated - 11,518
Foreign currency translation - 225
Balance at end - 11,743

Accumulated amortisation
Balance at beginning, as previously reported 939 645
Effects of adopting of MFRS 16 (939) -
Balance at beginning, as restated - 645
Current charge - 282
Foreign currency translation - 12
Balance at end - 939

Carrying amount - 10,804

Land use rights represent leasehold interest on land located in Jiangsu province, the People’s Republic of China and
Tien Giang province, Vietnam.

Included herein is a land use rights with carrying amount of RM Nil (2019: RM578,588) pledged to a licensed bank as
security for banking facilities granted to a subsidiary.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 95

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

6. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES

GROUP

Set out below are the carrying amounts of right-of-use assets and lease liabilities recognised and movements during
the ﬁnancial year:

Right-of-use assets

Leasehold Land use Advertising

land rights sites Total
RM’000 RM’000 RM’000 RM’000

2020
At Cost
Balance at beginning, upon adoption of MFRS 16 1,600 11,743 1,130 14,473
Reclassiﬁed to non-current assets held for sale - (11,245) - (11,245)
Foreign currency translation - 230 - 230
Balance at end 1,600 728 1,130 3,458

Accumulated depreciation
Balance at beginning, upon adoption of MFRS 16 888 939 - 1,827
Depreciation 71 220 248 539
Reclassiﬁed to non-current asset held for sale - (1,020) - (1,020)
Foreign currency translation - 18 - 18
Balance at end 959 157 248 1,364

Carrying amount 641 571 882 2,094

The land use rights is pledged to a licensed bank as security for banking facilities granted to a subsidiary.

Lease liabilities

Leasehold Land use Advertising

land rights sites Total
RM’000 RM’000 RM’000 RM’000

Balance at beginning, upon adoption of MFRS 16 - - 1,130 1,130

Accretion of interest - - 46 46
Payments - - (275) (275)
Balance at end - - 901 901

Represented by:
Non-current liabilities - - 659 659
Current liabilities - - 242 242
- - 901 901
96 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

6. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (CONT’D)

GROUP (CONT’D)

Lease liabilities (Cont’d)

The following amounts are recognised in proﬁt or loss:

GROUP
2020
RM’000

Depreciation of right-of-use assets 539

Interest expense on lease liabilities 46
Expenses relating to short term leases 1,988
Total amount recognised in proﬁt or loss 2,573

7. INTANGIBLE ASSETS

GROUP
2020 2019
RM’000 RM’000

Trademarks
At cost
Balance at beginning 44 23
Additions 13 25
Amortisation (6) (3)
Foreign currency translation 1 (1)
Balance at end 52 44

The above intangible assets represent the trademarks registered by a subsidiary.

8. INVESTMENT IN SUBSIDIARIES

COMPANY
2020 2019
RM’000 RM’000

Unquoted shares, at cost 105,643 105,643

ESOS granted to employees of subsidiaries 1,982 1,982
Less: Accumulated impairment loss (2,066) (2,066)
105,559 105,559
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 97

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

8. INVESTMENT IN SUBSIDIARIES (CONT’D)

The details of the subsidiaries, all of which were incorporated in Malaysia, except where indicated are as follows:

Effective Equity
Interest
Name of Subsidiary 2020 2019 Principal Activities
% %

Direct subsidiaries

Honsin Apparel Sdn. Bhd. 100 100 Manufacturing of apparels, fabric face
masks and investment holding.

Plas Industries Sdn. Bhd. 100 100 Provision of apparel manufacturing

services.

Prolexus Marketing Sdn. Bhd. 100 100 Dormant.

Novel Realty Sdn. Bhd. 100 100 Property investment.

Laser Capital Holdings Sdn. Bhd. 57.64 57.64 Investment holding.

Bixiz Kids Incorporated (M) Sdn. Bhd. 100 100 Investment holding.
3
Trans Paciﬁc Textile (M) Sdn. Bhd. 94.44 94.44 Manufacturing of fabric.
1
Prolexus International Limited 100 100 Trading of apparels and fabric face masks.
(Incorporated in Hong Kong)
1
Trans Paciﬁc Textile (HK) Limited 100 100 Investment holding.
(Incorporated in Hong Kong)

Subsidiaries of Honsin Apparel

Sdn. Bhd.
1
Honways International Limited 64 64 Investment holding, trading of apparels
(Incorporated in Hong Kong) and provision of agency services.

Jia Yong Industries Sdn. Bhd. 100 100 Provision of apparel manufacturing
services.

Subsidiary of Laser Capital

Holdings Sdn. Bhd.
2
HiQ Media (Malaysia) Sdn. Bhd. 51.91 51.91 Provision of advertising services on
multimedia boards.

Subsidiary of Bixiz Kids

Incorporated (M) Sdn. Bhd.

BE Elementz Sdn. Bhd. 100 100 Marketing of apparels and fabric face
masks.

Subsidiary of Trans Paciﬁc Textile

(HK) Limited
1
Trans Paciﬁc Textile (VN) Co., Ltd. 100 100 Dormant.
(Incorporated in Vietnam)
98 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

8. INVESTMENT IN SUBSIDIARIES (CONT’D)

The details of the subsidiaries, all of which were incorporated in Malaysia, except where indicated are as follows:
(Cont’d)

Effective Equity
Interest
Name of Subsidiary 2020 2019 Principal Activities
% %

Subsidiary of Honways
International Limited
1
Honways Apparel Shuyang Limited 64 64 Manufacturing of apparels, fabric face
(Incorporated in The PRC) masks and investment holding.

Subsidiaries of Honways Apparel

Shuyang Limited
1
HK Apparel Shuyang Limited 44.8 44.8 Provision of apparel printing services.
(Incorporated in The PRC)
1
Super Sport Apparel (Shuyang) 64 64 E-commerce sales of sportswear apparels.
Limited (Incorporated in The PRC)
1
D. Diamond Apparel (Shuyang) Limited 64 64 E-commerce sales of casual wear
(Incorporated in The PRC) apparels.

Note:

1
Not audited by Grant Thornton. However, component audit has been carried out by Grant Thornton and Grant
Thornton China on these subsidiaries for the purpose of forming the Group’s audit opinion.

2
HiQ Media (Malaysia) Sdn. Bhd. is invested through the companies below:

Equity interest held

by the Group
2020 2019
% %

Prolexus Berhad 21.75 21.75

Laser Capital Holdings Sdn. Bhd. 30.16 30.16
51.91 51.91

3
Trans Pacific Textile (M) Sdn. Bhd. is invested through the companies below:

Equity interest held

by the Group
2020 2019
% %

Prolexus Berhad 86.36 86.36

Honsin Apparel Sdn. Bhd. 8.08 8.08
94.44 94.44
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 99

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

8. INVESTMENT IN SUBSIDIARIES (CONT’D)

8.1 Additional investment in subsidiaries

In 2019, Trans Paciﬁc Textile (M) Sdn. Bhd. (“TPTM”) increased its issued share capital from RM39,550,000
to RM79,150,000 with an allotment of 36,000,000 ordinary shares at an issue price of RM1.10 per share
amounting to RM39,600,000 as satisfaction of amount due to the Company and Honsin Apparel Sdn. Bhd.
of RM33,550,000 and RM5,746,858 respectively and the remaining balance of RM303,142 for cash, paid by
Honsin Apparel Sdn. Bhd.

8.2 Subsidiaries with material non-controlling interests

The Group’s subsidiaries, namely Honways International Limited (“HIL”), Honways Apparel Shuyang Limited
(“HASL”) and HK Apparel Shuyang Limited (“HKA”) (“collectively known as Honways Group”) and HiQ Media
(Malaysia) Sdn. Bhd. (“HIQ”) have material non-controlling interests which are set out below. The equity interests
held by non-controlling interests are as follows:
Equity interest held by
non-controlling interests
2020 2019
% %

HIL 36.00 36.00

HASL 36.00 36.00
HKA 55.20 55.20
HIQ 48.09 48.09

Summarised financial information of subsidiaries which have non-controlling interests that are material
to the Group is set out below. The summarised ﬁnancial information presented below is the amount before
intercompany elimination.

GROUP

Honways
Group HIQ Total
RM’000 RM’000 RM’000

As at 31 July 2020
Non-current assets 15,765 2,347 18,112
Current assets 72,794 19,278 92,072
Non-current liabilities - (659) (659)
Current liabilities (35,499) (6,373) (41,872)
Net assets 53,060 14,593 67,653

Year ended 31 July 2020

Revenue 107,084 10,468 117,552

Proﬁt for the ﬁnancial year, representing total comprehensive

income for the ﬁnancial year 4,546 4,178 8,724

Total comprehensive income attributable to:

- Owners of the Company 4,450 4,178 8,628
- Non-controlling interests 96 - 96
4,546 4,178 8,724
100 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

8. INVESTMENT IN SUBSIDIARIES (CONT’D)

8.2 Subsidiaries with material non-controlling interests (Cont’d)

GROUP

Honways
Group HIQ Total
RM’000 RM’000 RM’000

Year ended 31 July 2020 (Cont’d)

Net cash generated from:
Operating activities 8,548 5,914 12,462
Investing activities (4,683) (143) (4,826)
Financing activities (352) (2,680) (3,032)

Net change in cash and cash equivalents 3,513 3,091 4,604

Dividends paid to non-controlling interests 54 1,144 1,198

As at 31 July 2019
Non-current assets 16,826 1,403 18,229
Current assets 65,697 18,410 84,107
Current liabilities (34,206) (6,998) (41,204)
Net assets 48,317 12,815 61,132

Year ended 31 July 2019

Revenue 133,348 14,607 147,955

Proﬁt for the ﬁnancial year, representing total comprehensive

income for the ﬁnancial year 6,752 5,609 12,361

Total comprehensive income attributable to:

- Owners of the Company 6,723 5,609 12,332
- Non-controlling interests 29 - 29
6,752 5,609 12,361

Net cash (used in)/generated from:

Operating activities (2,410) 6,309 3,899
Investing activities 1,206 (689) 517
Financing activities (2,582) 1,372 (1,210)
Net change in cash and cash equivalents (3,786) 6,992 3,206
Dividends paid to non-controlling interests 134 777 911
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 101

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

9. INVESTMENT IN A JOINT VENTURE

GROUP
2020 2019
RM’000 RM’000

Unquoted shares in Malaysia, at cost 458 458

Share of post-acquisition results (150) -
308 458

The details of the joint venture are as follow:-

Effective equity interest

Name of joint venture 2020 2019 Principal activities
% %

T&W Synergy Sdn. Bhd. 50 50 Peaching and ﬁnishing of fabrics

There is no disclosure on the ﬁnancial information of the joint venture as the investment cost and results are not
material to the Group as at the reporting date.

Amount due from a joint venture

The amount due from a joint venture is non-trade related, unsecured, non-interest bearing and repayable on demand.

10. OTHER INVESTMENTS

GROUP
AND COMPANY
2020 2019
RM’000 RM’000

Non-current
Equity instruments designated at fair value through OCI
Unquoted equity investment outside Malaysia 2,021 2,021

Current
Fair value through proﬁt or loss
Unit trusts quoted in Malaysia, at fair value 595 556

Equity instruments designated at fair value through OCI are investment in equity shares of an unquoted company. The
Group holds non-controlling interests of 17.24% in this company. This investment was irrevocably designated at fair
value through OCI as the Group considers this investment to be strategic in nature.

The management is of the opinion that the fair value of this investment approximates its cost as it is still at its
preliminary stage of operations thus it is not presently comparable to established companies with similar business
nature.

Financial assets at fair value through proﬁt or loss are investments in unit trusts quoted in Malaysia. Fair values of
these unit trusts are determined by reference to published price quotations in an active market.
102 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

11. GOODWILL ON CONSOLIDATION

GROUP
2020 2019
RM’000 RM’000

Arising from the acquisition of a subsidiary 2,712 2,712

Impairment testing on goodwill

Goodwill acquired through business combinations has been allocated to its advertising segment as its cash
generating unit (“CGU”).

For annual impairment testing purposes, the recoverable amount of the CGU, which is a reportable business, is
determined based on its value-in-use. The value-in-use calculations apply a discounted cash flow model using the
cash flow projections based on financial budget and projections approved by management.

No impairment loss is required for the goodwill as its recoverable amount exceeded the carrying amount of the CGU.

The key assumptions on which the management has based on for the computation of value-in-use are as follows:

(i) Cash ﬂow projections and growth rate

The ﬁve-year cash ﬂow projections are based on the most recent budget approved by the management and
extrapolated using a steady growth rate of 2% (2019: 5%) per annum for the subsequent years.

(ii) Discount rate

The discount rate of 11.36% (2019: 12.35%) is applied to the cash ﬂow projections. The discount rate is
estimated based on the weighted average cost of capital of the CGU for the year.

The management believes that no reasonably possible changes in any key assumptions would cause the recoverable
amount of the CGU to differ materially from its carrying amount except for changes in prevailing operating
environment which is not ascertainable.

12. INVENTORIES

GROUP
2020 2019
RM’000 RM’000

Raw materials 12,356 13,631

Work-in-progress 18,414 20,854
Finished goods 11,591 5,036
Trading goods 244 149
At carrying amount 42,605 39,670

Cost of inventories recognised in proﬁt or loss:

Inventories recognised as cost of sales 196,217 219,896
Inventories written down 5,339 -
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 103

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

13. TRADE RECEIVABLES

GROUP
2020 2019
RM’000 RM’000

Trade receivables 60,657 70,263

Less: Allowance for expected credit loss (102) -

Balance at end 60,555 70,263

The currency proﬁle of trade receivables is as follows:

GROUP
2020 2019
RM’000 RM’000

Ringgit Malaysia 2,775 5,251

US Dollar 48,231 51,906
Chinese Renminbi 9,549 13,106
60,555 70,263

The trade receivables are non-interest bearing and are generally on 14 to 120 days (2019: 14 to 75 days) credit
terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.

14. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

GROUP COMPANY
2020 2019 2020 2019
RM’000 RM’000 RM’000 RM’000

Other receivables 1,534 2,025 - -

Trade advances to suppliers 671 1,673 - -
VAT/GST receivables 166 2,668 - -
Deposits 1,431 1,346 26 26
Prepayments 2,132 4,488 24 24
5,934 12,200 50 50
104 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

14. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS (CONT’D)

The currency proﬁle of other receivables, deposits and prepayments is as follows:

GROUP COMPANY
2020 2019 2020 2019
RM’000 RM’000 RM’000 RM’000

Ringgit Malaysia 3,640 7,379 50 50

US Dollar 512 1,670 - -
Chinese Renminbi 1,732 3,140 - -
Others 50 11 - -
5,934 12,200 50 50

Included in the prepayments of the Group is:

(i) an amount of RM Nil (2019: RM496,585) paid to suppliers for purchase of plant and machinery, and;
(ii) an amount of RM67,405 (2019: RM107,180) paid to suppliers for purchase of raw materials.

15. AMOUNTS DUE FROM/(TO) SUBSIDIARIES

The currency proﬁle of the amounts due from/(to) subsidiaries is as follows:

COMPANY
2020 2019
RM’000 RM’000

Amount due from subsidiaries

Ringgit Malaysia 31,938 32,148
US Dollar 1,915 1,856
33,853 34,004

Amount due to subsidiaries - US Dollar (10,612) (11,055)

Amounts due from/(to) subsidiaries are non-trade related, unsecured, non-interest bearing and is repayable on
demand, except for an amount due from a subsidiary amounting to RM1,717,102 (2019: RM1,586,605) which bears
interest of 3.5% (2019: 3.5%) per annum and is denominated in US Dollar.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 105

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

16. DERIVATIVE FINANCIAL INSTRUMENTS

The Group enters into foreign currency forward contracts to manage its exposure to sales and purchases transactions
that are denominated in foreign currencies. Foreign currency forward contracts are recognised as derivatives,
categorised as fair value through profit or loss and are measured at their fair values with gains or losses recognised
in the profit or loss. The foreign currency forward contracts are not designated as cash flow or fair value hedges and
are entered into for periods consistent with currency transaction exposure. Such derivatives do not qualify for hedge
accounting.

GROUP
2020 2019
RM’000 RM’000

Derivatives at fair value through proﬁt or loss

- Foreign currency forward contracts

Notional value of contracts 5,167 13,105

Assets 79 125

17. DEPOSITS WITH FINANCIAL INSTITUTIONS

GROUP COMPANY
2020 2019 2020 2019
RM’000 RM’000 RM’000 RM’000

Fixed deposits 2,226 2,206 - -

Short term placements 11,299 11,907 45 636
13,525 14,113 45 636

Included in the Group’s ﬁxed deposits is amounts of RM2,218,873 (2019: RM2,199,945) which are pledged as
security for banking facilities granted to subsidiaries.

The effective interest rates per annum of the deposits with ﬁnancial institutions at the end of the reporting period are
as follows:

GROUP COMPANY
2020 2019 2020 2019
% % % %

Fixed deposits 1.70 to 1.95 3.00 - -

Short term placements 2.33 to 3.12 2.27 to 3.60 2.92 to 3.12 2.27 to 3.60
106 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

18. CASH AND BANK BALANCES

The currency proﬁle of cash and bank balances is as follows:

GROUP COMPANY
2020 2019 2020 2019
RM’000 RM’000 RM’000 RM’000

Ringgit Malaysia 19,417 3,678 1,378 971

US Dollar 68,027 34,533 33 43
Chinese Renminbi 2,821 12,269 - -
Vietnam Dong 91 109 - -
Others 91 477 - -
90,447 51,066 1,411 1,014

The Chinese Renminbi is not freely convertible into foreign currencies. Under The PRC Foreign Exchange Control
Regulations and Administration of Settlement, Sales and Payment of Foreign Exchange Regulations, the China
subsidiaries are permitted to exchange Chinese Renminbi for foreign currencies through banks that are authorised to
conduct foreign exchange business.

19. NON-CURRENT ASSETS HELD FOR SALE

2020 2019
RM’000 RM’000

Reclassiﬁed from:
- Property, plant and equipment 1,948 -
- Right-of-use assets 10,225 -
Foreign currency translation 140 -
12,313 -

Non-current assets held for sale comprise land use rights located in Tien Giang province, Vietnam.

20. SHARE CAPITAL

Number of
ordinary shares Amount
2020 2019 2020 2019
’000 ’000 RM’000 RM’000

Issued and fully paid

Balance at beginning 180,351 180,350 105,487 105,487

Exercise of ESOS 939 1 558 *
Balance at end 181,290 180,351 106,045 105,487

* Denotes less than RM1,000

PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 107

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

20. SHARE CAPITAL (CONT’D)

During the ﬁnancial year, the issued and paid-up capital ordinary share capital was increased from RM105,487,391
to RM106,045,885 by issuance of 939,750 new ordinary shares arising from the exercise of option under Employee’s
Share Option Scheme (“ESOS”) at the following exercise price:

Exercise price Number of

Grant date RM shares issued

12.9.13 0.500 911,600

7.5.14 0.722 2,400
5.9.14 0.775 25,750

The new ordinary shares issued during the ﬁnancial year ranked pari passu in all respects with the existing ordinary
shares of the Company. Other than the foregoing, the Company did not issue any other share or debenture.

21. TREASURY SHARES

Out of the total 181,290,170 (2019: 180,350,420) issued ordinary shares as at 31 July 2020, 6,265,400 (2019:
6,265,400) are held as treasury shares at a cost of RM1,489,377 (2019: RM1,489,377) by the Company. As at
31 July 2020, the number of outstanding ordinary shares in issue after the set off is therefore 175,024,770 (2019:
174,085,020) ordinary shares.

Treasury shares have no rights to voting, dividends and participation in other distribution.

22. RESERVES

GROUP COMPANY
2020 2019 2020 2019
Note RM’000 RM’000 RM’000 RM’000

Warrant reserve 22.1 17,590 17,590 17,590 17,590

Exchange translation reserve 22.2 3,125 1,683 - -
ESOS reserve 22.3 792 932 944 1,084
Statutory reserve 22.4 941 908 - -
22,448 21,113 18,534 18,674

22.1 Warrants reserve

On 20 May 2016, the Company issued 56,832,730 5-year free detachable warrants (“Warrants”) pursuant to
the Company’s Rights Issue. The Warrants are constituted by a deed poll dated 5 May 2016. The Warrants are
listed on Bursa Malaysia on 20 June 2016.

The main features of the Warrants are as follows:

(i) Each Warrant entitles the registered holder at any time during the exercise period to subscribe for one
new ordinary share in the Company at an exercise price of RM1.20 per ordinary share.

(ii) The exercise price and/or the number of Warrants in issue shall be subject to adjustments in accordance
with the provisions of the deed poll during the exercise period.
108 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

22. RESERVES (CONT’D)

22.1 Warrants reserve (Cont’d)

The main features of the Warrants are as follows: (Cont’d)

(iii) The Warrants may be exercised at any time within ﬁve (5) years commencing on and including the date of
issuance of the Warrants until the last market day prior to the ﬁfth anniversary of the date of issuance of
the Warrants.

(iv) The Warrant holders are not entitled to any voting rights in any general meeting of the Company or
to participate in any distribution and/or offer of further securities in the Company unless such Warrant
holders exercise their Warrants for the new ordinary shares.

(v) All new ordinary shares to be issued upon the exercise of the Warrants shall, on allotment and issue, rank
pari passu in all respects with the then existing ordinary shares of the Company save and except that they
shall not be entitled to any dividends, rights, allotments and other distributions, the entitlement date of
which is prior to the date of allotment of such new ordinary shares, and will be subject to all provisions of
the Articles of Association of the Company.

(vi) At the expiry of the exercise period, any Warrants which have not been exercised will lapse and cease to
be valid for any purpose.

The warrants reserve is in respect of the allocated fair value of the 56,832,730 warrants issued.

22.2 Exchange translation reserve

The exchange translation reserve is in respect of foreign exchange differences on translation of the ﬁnancial
statements of the Group’s foreign subsidiaries.

22.3 ESOS reserve

The fair value of equity-settled share options granted was estimated using Black-Scholes model, taking into
account the terms and conditions upon which the options were granted.

The expected life of the option is based on historical data and is not necessarily indicative of exercise patterns
that may occur. The expected volatility reﬂects the assumption that the historical volatility is indicative of future
trends, which may also not necessarily be the actual outcome. No other features of the options granted were
incorporated into the measurement of fair value.

22.4 Statutory reserve

In accordance with the relevant laws and regulations of The PRC, the subsidiaries of the Company established
in The PRC are required to transfer 10% of their proﬁts after tax prepared in accordance with the accounting
regulation of The PRC to the statutory reserve until the reserve balance reaches 50% of their respective
registered capital. Such reserve may be used to reduce any losses incurred or for capitalisation as paid-up
capital.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 109

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

23. RETAINED PROFITS

COMPANY

The franking of dividends of the Company is under the single tier system and therefore there is no restriction on the
Company to distribute dividends subject to the availability of retained proﬁts.

24. BORROWINGS

GROUP COMPANY
2020 2019 2020 2019
RM’000 RM’000 RM’000 RM’000

Non-current liabilities
Secured:
Term loans 69,089 66,956 - 250

Current liabilities
Secured:
Term loans 9,712 7,624 417 1,000
Trust receipts 10,918 10,746 - -
Invoice ﬁnancing 479 - - -
Revolving credits 4,000 3,000 3,000 3,000

Unsecured:
Trust receipts - 3,873 - -
25,109 25,243 3,417 4,000

Total borrowings 94,198 92,199 3,417 4,250

The currency proﬁle of the borrowings is as follows:-

GROUP COMPANY
2020 2019 2020 2019
RM’000 RM’000 RM’000 RM’000

Ringgit Malaysia 83,279 77,580 3,417 4,250

US Dollar 6,785 10,549 - -
Chinese Renminbi 4,134 4,070 - -
Total borrowings 94,198 92,199 3,417 4,250
110 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

24. BORROWINGS (CONT’D)

A summary of the effective interest rates and the maturities of the borrowings is as follows:

More than
Average More than 2 years
effective 1 year and and less
interest rate Within 1 less than 2 than 5 More than
per annum Total year years years 5 years
GROUP % RM’000 RM’000 RM’000 RM’000 RM’000

2020
Term loans 4.10 to 4.39 78,801 9,712 13,524 31,628 23,937
Trust receipts 2.45 to 5.50 10,918 10,918 - - -
Invoice ﬁnancing 1.40 479 479 - - -
Revolving credits 4.10 to 4.39 4,000 4,000 - - -

94,198 25,109 13,524 31,628 23,937

2019
Term loans 4.20 to 5.85 74,580 7,624 13,891 32,759 20,306
Trust receipts 4.18 to 5.50 14,619 14,619 - - -
Revolving credits 5.45 3,000 3,000 - - -
92,199 25,243 13,891 32,759 20,306

COMPANY
2020
Term loan 4.39 417 417 - - -
Revolving credits 4.39 3,000 3,000 - - -
3,417 3,417 - - -

2019
Term loan 5.45 1,250 1,000 250 - -
Revolving credits 5.45 3,000 3,000 - - -
4,250 4,000 250 - -

The borrowings are secured by:

(i) Facility agreements;

(ii) Corporate guarantee of the Company and a subsidiary;
(iii) Legal charge over freehold land and buildings and land use rights of certain subsidiaries;
(iv) First party speciﬁc debenture by way of ﬁxed charge to be created over a subsidiary’s plant and machinery and
capital expenditure in progress; and
(iv) First/third party deed of assignment and charge over the Finance Service Reserve Account (“FSRA”) of a
subsidiary.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 111

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

25. HIRE PURCHASE PAYABLES

GROUP COMPANY
2020 2019 2020 2019

RM’000 RM’000 RM’000 RM’000

Secured:
Within one year 143 143 40 40
More than two years but less than ﬁve years 292 431 86 123
435 574 126 163
Less: Interest-in-suspense (57) (80) (9) (18)
378 494 117 145

Represented by:
- Within one year 122 117 35 30
- More than two years but less than ﬁve years 256 377 82 115
378 494 117 145

The hire purchase payables of the Group and of the Company are secured over the assets as disclosed in Note 4
to the ﬁnancial statements and the average effective interest rate is at 3.06% to 3.55% (2019: 3.06% to 3.55%) per
annum.

26. DEFERRED TAX LIABILITIES

GROUP
2020 2019
RM’000 RM’000

Balance at beginning 1,296 2,114

Recognised in proﬁt or loss (1,882) (176)
Under/(Over) provision in prior year 639 (642)
Balance at end 53 1,296

The deferred tax liabilities at the end of the reporting period are made up of the temporary differences arising from:-

GROUP
2020 2019
RM’000 RM’000

Revaluation surplus 1,132 1,174

Property, plant and equipment 1,496 306
Unrealised proﬁt on inventories (1,973) -
Others (602) (184)
53 1,296
112 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

27. TRADE PAYABLES

The currency proﬁle of trade payables is as follows:

GROUP
2020 2019
RM’000 RM’000

Ringgit Malaysia 3,719 2,891

US Dollar 2,418 8,310
Chinese Renminbi 4,567 9,189
Others - 3
10,704 20,393

The trade payables are non-interest bearing and are generally on 30 to 90 days (2019: 30 to 90 days) credit terms.

28. OTHER PAYABLES AND ACCRUALS

GROUP COMPANY
2020 2019 2020 2019
RM’000 RM’000 RM’000 RM’000

Other payables 22,021 20,619 33 41

VAT/SST payable 544 460 - -
Accruals 14,416 12,758 1,445 1,165
36,981 33,837 1,478 1,206

Included in other payables of the Group is an amount of RM12,066,453 (2019: RM12,116,453) due to a company for
construction of the factory building of a subsidiary.

The currency proﬁle of other payables and accruals is as follows:

GROUP COMPANY
2020 2019 2020 2019
RM’000 RM’000 RM’000 RM’000

Ringgit Malaysia 28,002 26,727 1,478 1,206

Chinese Renminbi 5,286 4,806 - -
US Dollar 2,913 2,304 - -
Vietnam Dong 780 - - -
36,981 33,837 1,478 1,206
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 113

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

29. CONTRACT LIABILITIES

GROUP
2020 2019
RM’000 RM’000

Balance at end 10,523 3,007

Contract liabilities comprised of advances received from customers for rendering services and manufacturing orders.

When the Group receives advances before the advertising/manufacturing activity commences, this will give rise to
contract liabilities at the start of a contract. The advances will be reversed and recognised as revenue upon satisfying
the performance obligation within the contract.

All advances billing received are expected to be settled within one year.

Contract liabilities outstanding at the beginning of the year amounting to RM3,007,231 (2019: RM3,050,074) have
been recognised as revenue during the year.

30. REVENUE

Disaggregated revenue information

GROUP COMPANY
2020 2019 2020 2019
RM’000 RM’000 RM’000 RM’000

Types of goods and services :

Gross dividend from subsidiaries - - 1,228 1,557

Management fee - - 5,617 5,977
Sales of apparels, fabric face masks and fabrics 329,566 348,559 - -
Provision of advertising services 10,468 14,607 - -
Provision of agency services 467 844 - -
340,501 364,010 6,845 7,534

Revenue information based on geographical location of customers are disclosed in Note 36 to the ﬁnancial
statements.

Timing of revenue recognition

At a point in time, representing total revenue
from contracts with customers 340,501 364,010 6,845 7,534
114 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

31. PROFIT BEFORE TAX

This is arrived at:

GROUP COMPANY
2020 2019 2020 2019
RM’000 RM’000 RM’000 RM’000

After charging:

Auditors’ remuneration
- audit fees
- current year 159 178 38 43
- others 9 3 9 3
- Other auditors
- statutory audit 58 50 - -
Amortisation of land use rights - 282 - -
Amortisation of intangible asset 6 3 - -
Bad debts written off - 30 - -
Depreciation of property, plant and equipment 12,020 10,392 103 101
Depreciation of right-of-use assets 539 - - -
Directors’ fee 491 544 431 479
Fair value loss on derivative financial instruments 46 - - -
Interest expense on:
- Bankers acceptance - 51 - -
- Export credit refinancing - 20 - -
- Hire purchase 23 25 7 9
- Invoice financing - 85 - -
- Lease liabilities 46 - - -
- Revolving credits 177 245 165 264
- Term loans 3,830 3,494 52 102
- Trust receipts 576 707 - -
Inventories written down 5,339 - - -
Property, plant and equipment written off 23 28 - -
Provision for expected credit loss 102 - - -
Rental of advertising sites 541 821 - -
Rental of machinery and equipment 109 119 - -
Rental of premises 1,338 1,448 73 76
Staff costs* 97,836 100,385 4,034 4,190
Realised loss on foreign exchange - 2 77 -
Unrealised loss on foreign exchange 1,095 710 267 42
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 115

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

31. PROFIT BEFORE TAX (CONT’D)

GROUP COMPANY
2020 2019 2020 2019
RM’000 RM’000 RM’000 RM’000

And crediting:

Gross dividend income from subsidiaries - - 1,228 1,557

Income distribution from unit trusts 21 15 21 15
Interest income 671 806 61 53
Fair value gain on derivative ﬁnancial instruments - 125 - -
Fair value gain other investments 18 7 18 7
Gain on disposal of property, plant and
equipment 58 12 - -
Rental income 67 89 - -
Realised gain on foreign exchange 429 - - 2

*Staff costs

- Wages, salaries, incentives, overtime, allowance

and bonus 90,222 89,479 3,449 3,725
- Deﬁned contribution plans 7,002 10,535 576 456
- SOCSO and EIS 612 371 9 9
97,836 100,385 4,034 4,190

* Directors’ remunerations

Included in the staff costs, the aggregate amount of remuneration received and receivable by Directors of the
Company and its subsidiaries are shown below:

GROUP COMPANY
2020 2019 2020 2019
RM’000 RM’000 RM’000 RM’000

Executive Directors of the Company:

Directors’ remuneration
- Salaries and bonus 2,407 3,238 1,562 2,303
- Deﬁned contribution plans 412 440 297 310
- Fees 130 130 130 130
2,949 3,808 1,989 2,743
Beneﬁts-in-kind 79 79 55 55
3,028 3,887 2,044 2,798

Executive Directors of subsidiaries:

Directors’ remuneration
- Salaries and bonus 993 988 - -
- Deﬁned contribution plans 44 51 - -
- Fees 60 65 - -
1,097 1,104 - -
Beneﬁts-in-kind 17 17 - -
1,114 1,121 - -
116 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

31. PROFIT BEFORE TAX (CONT’D)

GROUP COMPANY
2020 2019 2020 2019
RM’000 RM’000 RM’000 RM’000

Non-executive Directors of the Company:

- Allowance 20 24 20 24
- Gratuity - 25 - 25
- Fees 301 349 301 349
321 398 321 398
Total Directors’ remuneration 4,463 5,406 2,365 3,196

32. TAX EXPENSE

GROUP COMPANY
2020 2019 2020 2019
RM’000 RM’000 RM’000 RM’000

In Malaysia:

Current year (3,657) (3,913) (113) (245)

(Under)/Over provision in prior year
- Current tax (380) (45) (88) (104)
- Deferred tax (639) 642 - -
Deferred tax relating to origination and reversal
of temporary differences 1,840 134 - -
Realisation of deferred tax upon depreciation of
revalued assets 42 42 - -
(2,794) (3,140) (201) (349)
Outside Malaysia:
Current year (1,226) (16) - -
(Under)/Over provision in prior year
- Current tax - (28) - -
(4,020) (3,184) (201) (349)
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 117

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

32. TAX EXPENSE (CONT’D)

Tax expense for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. The reconciliation
of tax expense of the Group and of the Company is as follows:

GROUP COMPANY
2020 2019 2020 2019
RM’000 RM’000 RM’000 RM’000

Proﬁt before tax 24,791 12,329 918 2,160

Add: Share of result of a joint venture 150 - - -
24,941 12,329 918 2,160

Income tax at Malaysian statutory tax rate of 24% (5,986) (2,959) (220) (518)
Tax rates differences in foreign jurisdictions 3,200 876 - -
Income not subject to tax 213 616 289 391
Expenses not deductible for tax purposes (1,362) (240) (179) (115)
Annual crystallisation of deferred tax on
revaluation surplus 42 42 - -
Utilisation of unabsorbed capital allowances and
tax losses 135 742 - -
Utilisation of automation allowances 592 - - -
Deferred tax movements not recognised 165 (2,830) (3) (3)
(3,001) (3,753) (113) (245)
(Under)/Over provision in prior years (1,019) 569 (88) (104)
(4,020) (3,184) (201) (349)

As at the end of the reporting year, the Group and the Company have not recognised the following deferred tax
(assets)/liabilities (stated at gross amount):

GROUP COMPANY
2020 2019 2020 2019
RM’000 RM’000 RM’000 RM’000

Property, plant and equipment 21,368 18,785 23 36

Unused tax losses (18,047) (18,618) - -
Unabsorbed capital allowances (24,317) (22,162) - -
Others (5,275) (5,524) - -
(26,271) (27,519) 23 36

Deferred tax assets have not been recognised on the above temporary differences as it is not probable that taxable
proﬁts will be available in the foreseeable future to the extent that the above deductible temporary differences can be
utilised.

The unused tax losses can be carried forward for seven consecutive years of assessment immediately following that
year of assessment (unused tax losses accumulated up to year of assessment 2018 can be carried forward until
year of assessment 2025) and the unabsorbed capital allowances can be carried forward indeﬁnitely pursuant to the
gazetted Finance Act 2018.
118 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

32. TAX EXPENSE (CONT’D)

The unabsorbed tax losses of the Group will expire in the following years of assessment (“YA”):

GROUP
2020 2019
RM’000 RM’000

YA 2025 (18,047) (18,618)

33. EARNINGS PER SHARE

33.1 Basic Earnings Per Share

The basic earnings per share of the Group is calculated by dividing the proﬁt for the year attributable to owners
of the Company by the weighted average number of ordinary shares in issue during the ﬁnancial year as follows:

2020 2019

Proﬁt attributable to owners of the Company (RM’000) 17,629 6,014

Weighted average number of shares (’000) 174,660 174,085

Basic earnings per share (sen) 10 3

33.2 Diluted Earnings Per Share

The diluted earnings per share of the Group is calculated by dividing the proﬁt for the year attributable to
owners of the Company by the weighted average number of ordinary shares in issue during the ﬁnancial year
adjusted to assume conversion of all dilutive potential ordinary shares arising from warrants and share options
granted to employees and directors as follows:

2020 2019

Proﬁt attributable to owners of the Company (RM’000) 17,629 6,014

Weighted average number of issued ordinary shares as above (’000) 174,660 174,085
Adjustment for dilutive effect of warrants and ESOS (’000) - -
174,660 174,085

Diluted earnings per share (sen) 10 3

As at the reporting date, the issued convertible instruments were anti-dilutive as the conversion/exercise price
were higher than the prevailing mother share price.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 119

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

34. DIVIDENDS

COMPANY
2020 2019
RM’000 RM’000

In respect of ﬁnancial year ended 31 July 2019:

- A single tier dividend of 0.3 sen per ordinary share declared on 12
November 2019 and paid on 20 January 2020 524 -

In respect of ﬁnancial year ended 31 July 2018:

- A single tier dividend of 0.5 sen per ordinary share declared on 14
November 2018 and paid on 18 January 2019 - 870
524 870

35. CAPITAL COMMITMENTS

GROUP COMPANY
2020 2019 2020 2019
RM’000 RM’000 RM’000 RM’000

Property, plant and equipment:

- Contracted but not provided for 273 19,039 - -
- Approved but not contracted for 4,700 7,426 - -

4,973 26,465 - -
120 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

36. SEGMENTAL INFORMATION

Segmental information is presented in respect of the Group’s business and geographical segments. The primary
format and business segments are based on the Group’s management and internal reporting structure. Inter-segment
pricing is determined based on negotiated terms.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis.

Business Segments

The Group comprises the following main business segments:

(1) Apparels Manufacturing of apparels and fabric face masks and provision of apparels manufacturing
services.

(2) Textile Manufacturing of textile and provision of textile manufacturing services.

(3) Advertising Provision of advertising services on multimedia boards.

(4) Others Investment holding, property investment, provision of management services and provision of
agency services.

Notes to segment information:

A Inter-segment revenues are eliminated on consolidation.

B Additions to non-current assets consists of:

2020 2019
RM’000 RM’000

Property, plant and equipment 10,142 25,310

Intangible asset 13 25
Right-of-use assets 882 -
11,037 25,335

C Other non-cash (income)/expenses consist of the following items:

2020 2019
RM’000 RM’000

Bad debts written off - 30

Fair value loss/(gain) on derivative ﬁnancial instruments 46 (125)
Fair value gain on other investments (18) (7)
Gain on disposal of property, plant and equipment (58) (12)
Inventories written down 5,339 -
Property, plant and equipment written off 23 28
Provision for expected credit losses 102 -
Share results of a joint venture 150 -
Unrealised loss on foreign exchange 1,095 710
6,679 624
36. SEGMENTAL INFORMATION (CONT’D)

By business segments
Apparels Textile Advertising Others Elimination Total
2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Note RM’000 RM’000

Revenue
External sales 327,563 346,657 2,003 1,902 10,468 14,607 467 844 - - 340,501 364,010
Inter-segment sales - - 19,243 977 - - 9,317 8,724 (28,560) (9,701) A - -
Total revenue 327,563 346,657 21,246 2,879 10,468 14,607 9,784 9,568 (28,560) (9,701) 340,501 364,010

Results
Segment results 30,731 21,421 1,923 (13,084) 5,303 7,247 392 2,478 (9,427) (1,912) 28,922 16,150
Share of results of a joint venture - - - - - - - - (150) - (150) -
Interest expense (748) (1,040) (3,634) (3,312) (46) - (276) (375) 52 100 (4,652) (4,627)
Interest income 328 211 19 215 315 327 61 53 (52) - 671 806
Tax expense (4,399) (869) - - (1,394) (1,965) (200) (350) 1,973 - (4,020) (3,184)
Proﬁt/(Loss) for the
ﬁnancial year 25,912 19,723 (1,692) (16,181) 4,178 5,609 (23) 1,806 (7,604) (1,812) 20,771 9,145

Assets
Segment assets 265,148 292,560 143,394 138,493 4,676 6,215 188,117 169,827 (273,797) (265,801) 327,538 341,294
Investment in joint venture - - 458 458 - - - - (150) - 308 458
Current tax assets (13) 31 - - 260 - 39 - - - 286 31
Derivative ﬁnancial instruments 79 125 - - - - - - - - 79 125
Deposits with ﬁnancial institutions 676 657 1,550 2,881 11,254 9,939 45 636 - - 13,525 14,113
Cash and bank balances 74,257 44,206 8,543 1,126 5,435 3,659 2,212 2,075 - - 90,447 51,066
Total assets 340,147 337,579 153,945 142,958 21,625 19,813 190,413 172,538 (273,947) (265,801) 432,183 407,087

Liabilities
Segment liabilities 114,318 108,669 19,216 14,451 7,032 6,360 29,461 29,953 (110,918) (102,196) 59,109 57,237
Borrowings 14,450 19,618 76,332 68,331 - - 3,416 4,250 - - 94,198 92,199
Hire purchase payables - - 262 349 - - 116 145 - - 378 494
Deferred tax liabilities 1,716 986 - - - - - - (1,663) 310 53 1,296
Current tax liabilities 2,664 535 - - - 638 - 8 - - 2,664 1,181
Total liabilities 133,148 129,808 95,810 83,131 7,032 6,998 32,993 34,356 (112,581) (101,886) 156,402 152,407

Other information
Additions to non-current assets 4,858 1,170 4,773 23,107 1,406 1,016 - 42 - - B 11,037 25,335
Depreciation and amortisation 5,170 5,114 6,510 4,873 703 510 182 180 - - 12,565 10,677
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020

Non-cash expenses other than

depreciation and amortisation 6,157 361 66 193 43 36 263 34 150 - C 6,679 624
cont’d
31 July 2020
NOTES TO THE FINANCIAL STATEMENTS
121
122 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

36. SEGMENTAL INFORMATION (CONT’D)

Geographical Segments

The Group’s location of its customers is in the principal geographical regions, namely Malaysia, China, United States
of America and European countries.

Revenue and non-current assets information based on the geographical location of customers and assets
respectively are as follows:

Revenue Non-current assets

2020 2019 2020 2019
RM’000 RM’000 RM’000 RM’000

Malaysia 16,396 16,668 178,228 189,818

United States of America 127,837 133,248 - -
European countries 60,116 84,147 - -
Asia 99,989 86,707 27,396 28,962
Other countries 36,163 43,240 - -
340,501 364,010 205,624 218,780

Information about major customers

Total revenue from 2 (2019: 2) major customers which individually contributed more than 10% of the Group revenue
are from the apparels segment which amounted to RM224,975,007 (2019: RM214,169,984).

37. RELATED PARTY DISCLOSURES

(i) Identity of related parties

The Group has related party relationship with its subsidiaries, key management personnel and the following
parties:

Related party Relationship

C L Boo & Associates : A ﬁrm in which a Director of the Company, Mr. Boo Chin Liong is a
partner.

Ahmad Mustapha & Co : A ﬁrm in which a Director of the Company, En. Ahmad Mustapha
Ghazali is the sole proprietor.

Maple Tricot Industries Sdn. Bhd. : A company in which a Director of the Company, En. Khadmudin Bin
Mohamed Raﬁk is a director.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 123

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

37. RELATED PARTY DISCLOSURES (CONT’D)

(ii) Related party transactions

GROUP COMPANY
2020 2019 2020 2019
RM’000 RM’000 RM’000 RM’000

Gross dividend income from subsidiaries - - 1,228 1,557

Management fee income from subsidiaries - - 5,617 5,977

Interest income from a subsidiary - - 51 51

Professional fee charged by C L Boo &

Associates - 64 - -

Rental expenses charged by Ahmad

Mustapha & Co 73 76 73 76

Sales to Maple Tricot Industries Sdn. Bhd. 66 61 - -

Purchase from Maple Tricot Industries

Sdn. Bhd. 31 - - -

(iii) Compensation of key management personnel

Key management personnel is deﬁned as those persons having authority and responsibility for planning,
directing and controlling the activities of the Group and the Company either directly or indirectly.

The Group and the Company have no other key management personnel apart from the Executive Directors
of the Company and of the subsidiaries, of whom their remunerations are shown in Note 31 to the ﬁnancial
statements.
124 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

38. CATEGORIES OF FINANCIAL INSTRUMENTS

The table below provides an analysis of ﬁnancial instruments categorised as amortised cost (“AC”), fair value through
proﬁt or loss (“FVTPL”) and fair value through other comprehensive income (“FVOCI”).

Carrying
amount AC FVTPL FVOCI
2020 RM’000 RM’000 RM’000 RM’000

GROUP
Financial assets
Other investments 2,616 - 595 2,021
Trade receivables 60,555 60,555 - -
Other receivables and deposits 2,965 2,965 - -
Amount due from a joint venture 220 220 - -
Derivatives ﬁnancial instruments 79 - 79 -
Deposits with ﬁnancial institutions 13,525 13,525 - -
Cash and bank balances 90,447 90,447 - -
170,407 167,712 674 2,021

Financial liabilities
Trade payables 10,704 10,704 - -
Other payables and accruals 36,437 36,437 - -
Borrowings 94,198 94,198 - -
Hire purchase payables 378 378 - -
141,717 141,717 - -

COMPANY

Financial assets
Other investments 2,616 - 595 2,021
Other receivables 26 26 - -
Amount due from subsidiaries 33,853 33,853 - -
Deposits with ﬁnancial institutions 45 45 - -
Cash and bank balances 1,411 1,411 - -
37,951 35,335 595 2,021

Financial liabilities
Other payables and accruals 1,478 1,478 - -
Borrowings 3,417 3,417 - -
Hire purchase payables 117 117 - -
5,012 5,012 - -
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 125

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

38. CATEGORIES OF FINANCIAL INSTRUMENTS (CONT’D)

Carrying
amount AC FVTPL FVOCI
2019 RM’000 RM’000 RM’000 RM’000

GROUP

Financial assets
Other investments 2,577 - 556 2,021
Trade receivables 70,263 70,263 - -
Other receivables and deposits 3,371 3,371 - -
Amount due from a joint venture 283 283 - -
Derivatives ﬁnancial instruments 125 - 125 -
Deposits with ﬁnancial institutions 14,113 14,113 - -
Cash and bank balances 51,066 51,066 - -
141,798 139,096 681 2,021

Financial liabilities
Trade payables 20,393 20,393 - -
Other payables and accruals 33,377 33,377 - -
Borrowings 92,199 92,199 - -
Hire purchase payables 494 494 - -
146,463 146,463 - -

COMPANY
Financial assets
Other investments 2,577 - 556 2,021
Other receivables 26 26 - -
Amount due from subsidiaries 34,004 34,004 - -
Deposits with ﬁnancial institutions 636 636 - -
Cash and bank balances 1,014 1,014 - -
38,257 35,680 556 2,021

Financial liabilities
Other payables and accruals 1,206 1,206 - -
Borrowings 4,250 4,250 - -
Hire purchase payables 145 145 - -
5,601 5,601 - -
126 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

39. FINANCIAL RISK MANAGEMENT

The Group and the Company are exposed to a variety of financial risks arising from their operations and the use of
financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk and foreign currency
risk. The Group and the Company operate within clearly defined guidelines that are approved by the Board and the
Group’s and the Company’s policy is not to engage in speculative activities.

39.1 Credit Risk

Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in ﬁnancial
loss to the Group and to the Company. The Group’s exposure to credit risk arises principally from its trade
receivables. The Company’s exposure to credit risk arises principally from advances and ﬁnancial guarantees
given to its subsidiaries.

39.1.1 Trade receivables

The Group extends to existing customers credit terms that range between 14 to 120 days (2019:
14 to 75 days). In deciding whether credit shall be extended, the Group will take into consideration
factors such as the relationship with the customer, its payment history and credit worthiness. The Group
subjects new customers to credit veriﬁcation procedures. In addition, debt monitoring procedures
are performed on an on-going basis with the result that the Group’s exposure to bad debts is not
signiﬁcant.

In addition, as set out in Note 3.7, the Group assesses expected credit loss (ECL) under MFRS 9 on
trade receivables based on a provision matrix, the expected loss rates are based on the payment
profile for sales in the past as well as the corresponding historical credit losses during that period. The
historical rates are adjusted to reflect current and forward looking macroeconomics factors affecting
the customer’s ability to settle the amount outstanding. At each reporting date, the historical default
rates are updated and changes in the forward-looking estimates are analysed. However given the short
period exposed to credit risk, the impact of these macroeconomics factors has not been considered
significant within the reporting period.

The ageing of trade receivables of the Group is as follows:

Expected
Gross credit loss Net
RM’000 RM’000 RM’000

2020
Not past due 57,691 - 57,691

Past due 1 - 30 days 1,801 - 1,801

Past due 31 - 60 days 397 - 397
Past due 61 - 90 days 62 - 62
Past due more than 90 days 706 (102) 604
2,966 (102) 2,864
60,657 (102) 60,555
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 127

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

39. FINANCIAL RISK MANAGEMENT (CONT’D)

39.1 Credit Risk (Cont’d)

39.1.1 Trade receivables (Cont’d)

Expected
Gross credit loss Net
RM’000 RM’000 RM’000

2019
Not past due 53,736 - 53,736

Past due 1 - 30 days 10,046 - 10,046

Past due 31 - 60 days 4,974 - 4,974
Past due 61 - 90 days 257 - 257
Past due more than 90 days 1,250 - 1,250
16,527 - 16,527
70,263 - 70,263

Trade receivables that are neither past due nor impaired are creditworthy customers with good payment
record with the Group. None of the Group’s trade receivables that are neither past due nor impaired
have been renegotiated during the ﬁnancial year.

The Group has trade receivables of RM2,864,144 (2019: RM16,527,889) that are past due but not
impaired as the management is of the view that these debts will be recovered in due course.

The Group has signiﬁcant concentration of credit risk in the form of outstanding balance due from 2
customers (2019: 3 customers) representing 77% (2019: 72%) of the total trade receivables.

39.1.2 Intercompany balances

The Company provides advances to its subsidiaries and monitors the ﬁnancial performance of the
subsidiaries regularly.

The maximum exposure to credit risk is represented by its carrying amount in the statement of ﬁnancial
position.

As at the end of the reporting period, there was no indication that the advances to its subsidiaries
are not recoverable. The Company does not speciﬁcally monitor the ageing of the advances to its
subsidiaries.

39.1.3 Financial guarantees

The Company has issued unsecured ﬁnancial guarantees to licensed ﬁnancial institutions for banking
facilities granted to certain subsidiaries up to a limit of RM231,189,000 (2019: RM228,663,000). The
maximum exposure to credit risk amounted to RM84,030,711 (2019: RM70,854,303), representing the
outstanding banking facilities of the subsidiaries as at the reporting date.

The Company monitors on an ongoing basis the results of the subsidiaries and repayments made by
the subsidiaries. As at the end of the reporting period, there was no indication that the subsidiaries
would default on repayment.

The fair value of the ﬁnancial guarantees have not been recognised at inception date as it is not material
and the Company has not received any consideration for the issuance of such ﬁnancial guarantees.
128 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

39. FINANCIAL RISK MANAGEMENT (CONT’D)

39.2 Liquidity Risk

Liquidity risk is the risk that the Group and the Company will not be able to meet their financial obligations as
and when they fall due. The Group and the Company actively manage their debt maturity profile, operating cash
flows and availability of funding so as to ensure that all repayment and funding needs are met. As part of their
overall prudent liquidity management, the Group and the Company maintain sufficient levels of cash and cash
equivalents to meet their working capital requirements.

The table below summarises the maturity proﬁle of the Group’s and the Company’s ﬁnancial liabilities as at the
reporting period based on the undiscounted contractual payments:

Carrying Contractual Within Within 2 More than

amount cash ﬂows 1 year to 5 years 5 years
RM’000 RM’000 RM’000 RM’000 RM’000

GROUP

2020

Borrowings 94,198 103,415 25,109 52,599 25,707

Hire purchase payables 378 435 143 292 -
Lease liabilities 901 986 278 708 -
Trade payables 10,704 10,704 10,704 - -
Other payables and
accruals 36,437 36,437 36,437 - -
142,618 151,977 72,671 53.599 25,707

2019
Borrowings 92,199 92,756 25,510 46,674 20,572
Hire purchase payables 494 574 143 431 -
Trade payables 20,393 20,393 20,393 - -
Other payables and
accruals 33,377 33,377 33,377 - -
146,463 147,100 79,423 47,105 20,572
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 129

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

39. FINANCIAL RISK MANAGEMENT (CONT’D)

39.2 Liquidity Risk (Cont’d)

Carrying Contractual Within Within 2 More than

amount cash ﬂows 1 year to 5 years 5 years
RM’000 RM’000 RM’000 RM’000 RM’000

COMPANY

2020

Borrowings 3,417 3,439 3,439 - -

Hire purchase payable 117 126 40 86 -
Other payables and
accruals 1,478 1,478 1,478 - -
Financial guarantees* - 84,031 84,031 - -
5,012 89,074 88,988 86 -

2019

Borrowings 4,250 4,318 4,054 264 -

Hire purchase payable 145 163 40 123 -
Other payables and
accruals 1,206 1,206 1,206 - -
Financial guarantees* - 70,854 70,854 - -
5,601 76,541 76,154 387 -

* This liquidity risk exposure is included for illustration purpose only as the related financial guarantees have not
crystallised.

39.3 Interest Rate Risk

The Group’s and the Company’s fixed rate instruments are exposed to a risk of change in their fair value due
to changes in interest rates. The Group’s and the Company’s floating rate instruments are exposed to a risk of
change in cash flows due to changes in interest rates.

The interest rate proﬁle of the Group’s and the Company’s interest-bearing ﬁnancial instruments based on their
carrying amounts as at the end of the reporting period is as follows:

GROUP COMPANY
2020 2019 2020 2019
RM’000 RM’000 RM’000 RM’000

Fixed rate instruments

Financial assets 2,226 2,206 1,717 1,587
Financial liabilities (378) (494) (117) (145)
1,848 1,712 1,600 1,442

Floating rate instruments

Financial assets 11,299 11,907 45 636
Financial liabilities (94,198) (92,199) (3,417) (4,250)
(82,899) (80,292) (3,372) (3,614)
130 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

39. FINANCIAL RISK MANAGEMENT (CONT’D)

39.3 Interest Rate Risk (Cont’d)

Sensitivity analysis for ﬁxed rate instruments

The Group and the Company do not account for any fixed rate financial assets and liabilities at fair value
through profit or loss, and the Group and the Company do not designate derivatives as hedging instruments
under a fair value hedge accounting model. Therefore, a change in interest rates at the end of the reporting
period would not affect profit or loss.

Sensitivity analysis for variable rate instruments

The following illustrates the sensitivity of proﬁt to a reasonably possible change in interest rates of +/-25 (2019:
+/-25) 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 the end of each reporting period that are sensitive to changes in
interest rates. All other variables are held constant.

GROUP COMPANY
Effect on proﬁt for the year Effect on proﬁt for the year
RM’000 RM’000 RM’000 RM’000

2020 (+/-25bp) (207) 207 (8) 8

2019 (+/-25bp) (201) 201 (12) 12

39.4 Foreign Currency Risk

The objectives of the Group’s and the Company’s foreign exchange policies are to allow the Group and the
Company to manage exposures that arise from trading activities effectively within a framework of controls that
does not expose the Group and the Company to unnecessary foreign exchange risks.

The Group and the Company are exposed to foreign currency risk mainly on sales and purchases that are
denominated in a currency other than the Company’s functional currency. The Group and the Company also
hold cash and bank balances denominated in foreign currencies for working capital purposes. The currency
giving rise to this risk is primarily US Dollar (“USD”) and Chinese Renminbi (“RMB”)

The Group’s and the Company’s exposure to foreign currency risk, based on carrying amounts as at the
reporting date is as follows:

2020 2019
USD RMB USD RMB
RM’000 RM’000 RM’000 RM’000

GROUP

Trade receivables 48,231 9,549 51,906 13,106

Other receivables 512 1,732 1,670 3,140
Cash and bank balances 68,027 2,821 34,533 12,269
Borrowings (6,785) (4,134) (10,549) (4,070)
Trade payables (2,418) (4,567) (8,310) (9,189)
Other payables (2,913) (5,286) (2,304) (4,806)
Net exposure 104,654 115 66,946 10,450
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 131

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

39. FINANCIAL RISK MANAGEMENT (CONT’D)

39.4 Foreign Currency Risk (Cont’d)

2020 2019
USD RMB USD RMB
RM’000 RM’000 RM’000 RM’000

COMPANY

Cash and bank balances 33 - 43 -

Intercompany balance (8,697) - (9,199) -
Net exposure (8,664) - (9,156) -

Sensitivity analysis for foreign currency risk

The table below illustrates the sensitivity to a reasonably possible change in the foreign currency exchange rates
against Ringgit Malaysia, with all other variables held constant, of the Group’s and the Company’s proﬁt before
tax. A +/-10% (2019: +/-10%) change in RM against the following currencies at the end of the reporting period
would have decreased/increased proﬁt before tax by the amount shown below and a corresponding weakening
would have an equal but opposite effect.

If RM had strengthened against the foreign currencies, the effect to proﬁt for the year would be as follows:

GROUP COMPANY
USD RMB Total USD RMB Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2020 10,465 12 10,477 (866) - (866)

2019 6,695 1,045 7,740 (915) - (915)

If RM had weakened against the foreign currencies, the effect to proﬁt for the year would be the opposite.

39.5 Reconciliation of liabilities arising from ﬁnancing activities

Foreign
Balance at currency Acquisition Balance
beginning translation Cash ﬂows of PPE at end
GROUP RM’000 RM’000 RM’000 RM’000 RM’000

2020
Borrowing:
Term loans 74,580 - 4,221 - 78,801
Hire purchase payables 494 - (116) - 378
Trust receipts 14,619 169 (3,870) - 10,918
Invoice ﬁnancing - - 479 - 479
Revolving credits 3,000 - 1,000 - 4,000
Total 92,693 169 1,714 - 94,576
132 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

39. FINANCIAL RISK MANAGEMENT (CONT’D)

39.5 Reconciliation of liabilities arising from ﬁnancing activities (Cont’d)

Foreign
Balance at currency Acquisition Balance
beginning translation Cash ﬂows of PPE at end
GROUP RM’000 RM’000 RM’000 RM’000 RM’000

2019
Borrowing:
Term loans 25,382 - 49,198 - 74,580
Hire purchase payables 179 - (74) 389 494
Trust receipts 16,668 161 (2,210) - 14,619
Export credit reﬁnancing 1,285 - (1,285) - -
Invoice ﬁnancing 5,687 - (5,687) - -
Revolving credits 12,000 - (9,000) - 3,000
Total 61,201 161 30,942 389 92,693

Balance Balance
at beginning Cash ﬂows at end
COMPANY RM’000 RM’000 RM’000

2020
Borrowing:
Term loan 1,250 (833) 417
Hire purchase payables 145 (28) 117
Revolving credits 3,000 - 3,000
Total 4,395 (861) 3,534

2019
Borrowing:
Term loans 2,250 (1,000) 1,250
Hire purchase payables 179 (34) 145
Revolving credits 7,000 (4,000) 3,000
Total 9,429 (5,034) 4,395
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 133

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

40. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of financial assets and financial liabilities of the Group and of the Company at the end of the
reporting period approximate their fair values due to their short-term nature or that they are floating rate instruments
that are re-priced to market interest rates on or near the end of the reporting period.

The carrying amounts of the non-current portion of hire purchase payables are reasonable approximation of fair values
due to the insigniﬁcant impact of discounting.

The table below analyses ﬁnancial instruments carried at fair value which fair value grouped into Level 1 to 3 based is
disclosed together with their fair value and carrying amounts shown in the statements of ﬁnancial position.

Total Carrying
Level 1 Level 2 Level 3 fair value amount
RM’000 RM’000 RM’000 RM’000 RM’000

GROUP

2020
Foreign currency forward
contracts (assets) - 79 - 79 79
Quoted unit trusts 595 - - 595 595

2019
Foreign currency forward
contracts (assets) - 125 - 125 125
Quoted unit trusts 556 - - 556 556

COMPANY

2020
Quoted unit trusts 595 - - 595 595

2019
Quoted unit trusts 556 - - 556 556

Level 1 fair value

Level 1 fair value of the quoted unit trusts are derived by reference to their quoted market prices in active markets at
the end of the reporting period.

Level 2 fair value

Level 2 fair value of the derivative ﬁnancial assets arising from the fair value changes on the foreign currency forward
contracts is estimated by discounting the difference between the contractual forward price and the current forward
price for the residual maturity of the current contract using a risk-free interest rate.

Policy on transfer between levels

The fair value of an asset to be transferred between levels is determined as at the date of the event or change in
circumstances that caused the transfer. There were no transfers between Level 1 and Level 2 during the ﬁnancial year.
134 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

41. CAPITAL MANAGEMENT

The primary objective of the Group’s capital management policy is to maintain a strong capital base to support its
businesses and maximise shareholders’ value.

The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions
or expansion of the Group. The Group may adjust the capital structure by issuing new shares, returning capital to
shareholders or adjusting the amount of dividends to be paid to shareholders or sell assets to reduce debts. No
changes were made in the objective, policy and process during the ﬁnancial year under review as compared to the
previous ﬁnancial year.

A licensed bank in which a subsidiary of the Group obtains credit facilities has imposed a debt covenant that requires
this subsidiary to ensure its gearing ratio does not exceed 1.0 at all times. The subsidiary did not breach the covenant
imposed by the licensed bank.

Other than the aforementioned, the Group is not subject to any externally imposed capital requirements. The Group
manages capital by regularly monitoring its liquidity requirements rather than using debt/equity ratio.

42. EMPLOYEE SHARE OPTION SCHEME (“ESOS”)

The Company’s ESOS is governed by the By-Laws approved by the shareholders at the Extraordinary General
Meeting held on 3 September 2013, and the ESOS will be in force for a duration of 5 years. On 17 August 2018, the
Directors have extended the existing ESOS for another 5 years until 8 September 2023 in accordance with terms of
the ESOS By-Laws.

The salient features of the ESOS are as follows:

(i) The total number of new ordinary shares which are available to be issued under the ESOS shall not in
aggregate exceed ﬁfteen percent (15%) of the total issued and fully paid-up share capital (excluding treasury
shares) of the Company at any point in time during the duration of the scheme.

(ii) A person shall be eligible to participate in the ESOS if, as at the date of offer, has attained the age of at least
eighteen (18) years old; not be an undischarged bankrupt nor subject to any bankruptcy proceedings; be a
director of the Company or be a full-time Malaysian employee conﬁrmed in service and served at least one (1)
continuous year within the Group (“Eligible Person”). Eligibility to participate in the scheme does not confer on
an Eligible Person a claim or right to participate in the scheme unless the ESOS Committee has made an offer
and the Eligible Person has accepted the offer in accordance with the terms of the offer and the scheme. The
selection of any Eligible Person to participate in the scheme shall be at the discretion of the ESOS Committee.

(iii) The option price at which the grantee is entitled to subscribe for each new ordinary share shall not be lower
than the par value and be either at a premium or discount of not more than 10% (or such lower or higher limit
in accordance with any prevailing guidelines, rules or regulations issued by the Bursa Securities) of the 5-day
volume weighted average market price of the Company’s share as at the offer date.

(iv) The options offered to the grantee may, subject to the compliance or fulﬁlment by the grantee of the vesting
conditions, be vested in the grantee in such number or tranche or tranches as shall be determined by the ESOS
Committee.

(v) The new ordinary shares to be allotted upon the exercise of the option will, upon allotment, rank pari passu in
all respects with the then existing issued and fully paid-up shares of the Company, except that the new ordinary
shares so allotted will not be entitled to any rights, dividends, allotments or other forms of distribution, the
entitlement date of which is declared prior to the date of allotment of the ordinary shares and will be subject to
all the provisions of the Articles of Association of the Company and the Listing Requirements relating to transfer,
transmission and otherwise.

(vi) The ESOS shall continue to be in force for a period of ﬁve (5) years from the effective date of the ESOS.
However, the ESOS may at the discretion of the ESOS Committee be extended without any approval from the
shareholders of the Company in any general meeting provided that the extension of the ESOS shall not exceed
ﬁve (5) years.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 135

NOTES TO THE FINANCIAL STATEMENTS

31 July 2020
cont’d

42. EMPLOYEE SHARE OPTION SCHEME (“ESOS”) (CONT’D)

The following table lists the inputs to the Black Scholes model for the ESOS granted:

12-Sep-13 7-May-14 5-Sep-14 23-Dec-14 8-Sep-16

Fair value (RM) 0.14 0.50 0.44 0.42 0.31

Expected volatility (%) 10.09 36.89 36.58 35.09 37.63
Risk-free interest rate (% p.a.) 3.82 3.91 4.03 4.01 3.32
Dividend yield (%) 3.11 1.96 1.97 2.19 2.31
Borrowings cost (%) 2.56 2.56 2.56 3.38 6.95
Expected life of option (years) 4.99 4.34 4.01 3.71 2.00
Weighted average share price (RM) 0.96 1.51 1.51 1.60 1.45

The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that
may occur. The expected volatility reﬂects the assumption that the historical volatility over a period similar to the life of
the options is indicative of future trends, which may not necessarily be the actual outcome.

43. SIGNIFICANT EVENT DURING THE REPORTING PERIOD

The World Health Organisation declared the 2019 Novel Coronavirus outbreak (“COVID-19”) a pandemic on 11 March
2020. To contain the spread of the virus, our government implemented the Movement Control Order (“MCO”) which
was effective for the period from 18 March 2020 to 3 May 2020 and relaxed with a Conditional Movement Control
Order (“CMCO”) from 4 May 2020 to 9 June 2020. To open up the economy further, our government replaced the
CMCO with a Recovery Movement Control Order effective for the period from 10 June 2020 to 31 August 2020
which was further extended to 31 December 2020.

The COVID-19 pandemic has impacted the business operations of the Group particularly on the Group’s revenue as
sales orders received from buyers are anticipated to downscale due to the disruption of economic activity globally and
changes in retail operations.

The Group started manufacturing reusable fabric face mask (“fabric mask”) in March 2020. The manufacturing of
fabric mask provides a perfect complement to the existing core business in the manufacturing of apparels. At the
same time, the Group could leverage in optimising existing production facilities and resources efﬁciently to generate a
stable income stream for the Group.

The manufacturing of fabric mask had cushioned the decline in revenue arising from delay in delivery of apparel
orders due to the MCO. The Group is cautiously optimistic on the ﬁnancial performance of the Group for the ﬁnancial
year ending 31 July 2021 as the demand for reusable face mask is expected to increase as wearing a mask has
become the new norm.

The Group will monitor the developments of COVID-19 situation closely and implement proactive measures to control
costs, capital expenditure and streamline its operations to mitigate the consequences of COVID-19 pandemic. The
Group has sufﬁcient working capital to sustain its business operations and to continue its business as a going-
concern.
136 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

TOP TEN PROPERTIES HELD BY GROUP

Carrying
Tenure Amount
(approximate as at Year of
Land area/ age of 31 July 2020 acquisition/
No Company Location Description built up area Existing use building) (RM'000) revaluation

1 Trans Pacific PTD 94657, Mukim Kluang, A textile 107,880 metre2 Factory and Freehold 81,656 2016
Textile (M) Sdn Kluang, Johor. factory (52,852 metre2) office (2 years)
Bhd cum office
with boiler
house and
waste water
treatment
plant

2 Honsin Apparel Lot 590 (New Lot 2596) Mukim An apparel 12,147 metre2 Factory and Freehold 10,839 2010*
Sdn Bhd of Simpang Kanan, Batu Pahat, factory cum (12,639 metre2) ofﬁce (20 1/2 years
Johor. ofﬁce with to 24 years)
storage
building

3 Trans Paciﬁc Lot No. 125 & 126, Long Jiang Land 61,950 metre2 Vacant Leasehold 41 10,343 2016
Textile (VN) Co., Industrial Park, Tan Lap 1 years expiring
Ltd Commune, Tan Phuoc District, on 26.11.2057
Tien Giang Province, Vietnam.

4 Novel Realty Sdn Lot 1606 GM 16, Mukim of Land 27,797 metre2 Vacant Freehold 8,657 2013
Bhd Tanjung Kupang, Kg Pok Kechil
Tanjung Kupang, Johor Bahru,
Johor.

5 Honways Apparel Land Certification No. A factory 26,667 metre2 Factory, Leasehold 50 8,352 2010
Shuyang Limited 27141,Property Certification No. with 14 units (17,856 metre2) office, hostel, years expiring
0013753,Shuyang Development of buildings canteen and on 16.11.2055
Zone, Jiangsu, China. warehouse (4 to 13 years)

6 Plas Industries Plot No. 255 (iii), Kawasan 3 storey 6,898 metre2 Factory, Leasehold 60 6,434 2010*
Sdn Bhd Perusahaan Mak Mandin, factory and a (8,769 metre2) warehouse years expiring
Mukim 14, Seberang Perai single-storey and ofﬁce on 21.2.2052
Tengah, Pulau Pinang. factory with (20 years)
an annexed
two storey
ofﬁce block
in front

7 Honsin Apparel HS (M) 5216, PTD 11249, A single 3,871 metre2 Vacant Freehold 4,597 2013
Sdn Bhd Taman Perindustrian Ulu Choh, storey (1,871 metre2) (6 years)
Mukim of Jeram Batu, Pontian, detached
Johor. factory with
a double
storey ofﬁce

8 Trans Paciﬁc Lot 5476, Mukim Kluang, Land 36,421 metre2 Factory Freehold 3,982 2017
Textile (M) Sdn Kluang, Johor.
Bhd

9 Honsin Apparel Lot 4373, Mukim Simpang Land 8,094 metre2 Vacant Freehold 3,418 2015
Sdn Bhd Kanan, Batu Pahat, Johor.

10 Novel Realty Sdn Lot 2937, Mukim of Simpang Land 16,162 metre2 Vacant Freehold 3,149 2013
Bhd Kanan, Batu Pahat, Johor

* Years of revaluation
At the date of transition to MFRSs in the ﬁnancial year ended 31 July 2013, the Group and the Company had elected to apply optional
exemption to use the previous revaluation of the said assets, adjusted for depreciation (if any) as deemed costs under MFRSs. Upon
transition to MFRSs, the Group and the Company had elected to measure all its property, plant and equipment using the cost model
under MFRS 116, Property, Plant and Equipment.
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 137

ANALYSIS OF SHAREHOLDINGS
As at 15 October 2020

Issued and fully paid-up capital : 175,024,770 ordinary shares (excluding 6,265,400 treasury shares)
Voting rights : One vote per ordinary share

DISTRIBUTION SCHEDULE OF SHAREHOLDINGS AS AT 15 OCTOBER 2020

No. of No. of
Size of Holdings shareholders % shares held %

Less than 100 142 3.09 4,479 *

100 - 1,000 750 16.31 469,113 0.27
1,001 - 10,000 2,422 52.68 12,361,996 7.06
10,001 - 100,000 1,093 23.77 35,359,949 20.20
100,001 - 8,751,238 189 4.11 100,139,827 57.22
8,751,239 and above 2 0.04 26,689,406 15.25
TOTAL 4,598 100.00 175,024,770 100.00

* Negligible

30 LARGEST SHAREHOLDERS AS AT 15 OCTOBER 2020

No. of
shares held %

1 RHB NOMINEES (TEMPATAN) SDN BHD 16,596,200 9.48

PLEDGED SECURITIES ACCOUNT FOR JE HOLDINGS SDN BHD
2 RHB NOMINEES (TEMPATAN) SDN BHD 10,093,206 5.77
PLEDGED SECURITIES ACCOUNT FOR LAU MONG YING
3 LAU MONG YING 5,883,794 3.36
4 CARTABAN NOMINEES (ASING) SDN BHD 5,828,820 3.33
EXEMPT AN FOR STANDARD CHARTERED BANK SINGAPORE
(EFGBHK-ASING)
5 CITIGROUP NOMINEES (TEMPATAN) SDN BHD 4,514,500 2.58
EMPLOYEES PROVIDENT FUND BOARD (PHEIM)
6 DB (MALAYSIA) NOMINEE (TEMPATAN) SENDIRIAN BERHAD 3,250,000 1.86
EXEMPT AN FOR KUMPULAN SENTIASA CEMERLANG SDN BHD (TSTAC/CLNT)
7 KENANGA NOMINEES (TEMPATAN) SDN BHD 2,701,000 1.54
RAKUTEN TRADE SDN BHD FOR WONG AH KUM
8 GOO MOI 2,443,000 1.40
9 LIM HOEI BOON 2,432,620 1.39
10 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 2,300,000 1.31
PLEDGED SECURITIES ACCOUNT FOR TAN BOON PING (7004677)
11 TA NOMINEES (TEMPATAN) SDN BHD 1,841,700 1.05
PLEDGED SECURITIES ACCOUNT FOR YAP KIM CHOO
12 TEH GUAT HONG 1,801,500 1.03
13 LIN, CHENG-LANG 1,652,170 0.94
14 ONG LEI IM 1,648,000 0.94
15 YIP YUEN KUAN 1,579,920 0.90
138 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

ANALYSIS OF SHAREHOLDINGS
As at 15 October 2020
cont’d

30 LARGEST SHAREHOLDERS AS AT 15 OCTOBER 2020 (CONT’D)

No. of
shares held %

16 AMSEC NOMINEES (TEMPATAN) SDN BHD 1,540,000 0.88

PLEDGED SECURITIES ACCOUNT FOR NARSPA HOLDINGS SDN BHD
17 NG SEA YONG 1,385,500 0.79
18 RHB NOMINEES (TEMPATAN) SDN BHD 1,182,200 0.68
PLEDGED SECURITIES ACCOUNT FOR KHADMUDIN BIN MOHAMED RAFIK
19 DB (MALAYSIA) NOMINEE (TEMPATAN) SENDIRIAN BERHAD 1,128,000 0.64
DEUTSCHE BANK AG SINGAPORE FOR KSC (S) PTE LTD (LEE HAU HIAN)
20 MAYBANK SECURITIES NOMINEES (ASING) SDN BHD 1,110,000 0.63
MAYBANK KIM ENG SECURITIES PTE LTD FOR LAU YU JUN EUGENE
21 CGS-CIMB NOMINEES (TEMPATAN) SDN BHD 1,017,600 0.58
PLEDGED SECURITIES ACCOUNT FOR ANG ENG CHUAN (MM1124)
22 CHONG TECK SENG 1,013,640 0.58
23 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 1,000,000 0.57
PLEDGED SECURITIES ACCOUNT FOR TAN YUEN YUEN (8112164)
24 CHUAH BENG KIAT 1,000,000 0.57
25 LOW HING NOI 1,000,000 0.57
26 RONIE TAN CHOO SENG 1,000,000 0.57
27 RONIE TAN CHOO SENG 1,000,000 0.57
28 LIM THUNG XUAN 980,000 0.56
29 CHEW JIN CHEW 970,000 0.55
30 TOH JIA LING 888,200 0.51
80,781,570 46.15
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 139

ANALYSIS OF SHAREHOLDINGS
As at 15 October 2020
cont’d

1. DIRECTORS’ SHAREHOLDINGS AS AT 15 OCTOBER 2020

No. of ordinary shares

Direct % Deemed %

i Ahmad Mustapha Ghazali - - 1,540,000 (1) 0.88%

(2)
ii Lau Mong Ying 15,977,240 9.13% 17,480,700 9.99%
1,110,000 (3) 0.63%
iii Choong Chee Mun 304,600 0.17% - -
(2)
iv Lau Mong Fah 1,115,000 0.64% 17,480,700 9.99%
v Khadmudin Bin Mohamed Raﬁk 1,182,200 0.68% - -
vi Chin Chew Mun 420,000 0.24% - -
vii Boo Chin Liong 434,200 0.25% - -

(1) Deemed interested by virtue of Section 8 of the Companies Act, 2016 held through Narspa Holdings Sdn Bhd
(2) Deemed interested by virtue of Section 8 of the Companies Act, 2016 held through JE Holdings Sdn Bhd
(3) Deemed interested by virtue of Section 59(11)(c) of the Companies Act, 2016 held through a family member

2. SUBSTANTIAL SHAREHOLDERS (EXCLUDING BARE TRUSTEES) AS AT 15 OCTOBER 2020

No. of ordinary shares

Direct % Deemed %

i Lau Mong Ying 15,977,240 9.13% 17,480,700 (1) 9.99%

ii Lau Mong Fah 1,115,000 0.64% 17,480,700 (1) 9.99%
iii JE Holdings Sdn. Bhd. 17,480,700 9.99% - -

(1) Deemed interested by virtue of Section 8 of the Companies Act, 2016 held through JE Holdings Sdn Bhd
140 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

ANALYSIS OF WARRANT HOLDINGS

As at 15 October 2020

Number of outstanding warrants : 54,558,750

Exercire period : The exercise period is any time within a period of 5 years from the date of
issue up to the expiry date of 14 June 2021
Exercise price : RM 1.20 each
Warrant entitlement : Each warrant entitles the registered holder during the exercise period to
subscribe for one new ordinary share

DISTRIBUTION SCHEDULE OF WARRANT HOLDINGS AS AT 15 OCTOBER 2020

No. of No. of
Size of Warrant holdings warrant holders % warrants held %

Less than 100 58 3.46 2,255 *

100 - 1,000 228 13.59 149,340 0.27
1,001 - 10,000 787 46.90 4,247,350 7.78
10,001 - 100,000 533 31.76 18,968,129 34.78
100,001 - 2,727,937 71 4.23 28,314,750 51.90
2,727,938 and above 1 0.06 2,876,926 5.27
TOTAL 1,678 100.00 54,558,750 100.00

* Negligible

30 LARGEST WARRANT HOLDERS AS AT 15 OCTOBER 2020

No. of
warrants held %

1 RHB NOMINEES (TEMPATAN) SDN BHD 2,876,926 5.27

PLEDGED SECURITIES ACCOUNT FOR LAU MONG YING
2 SAW SUAN KHENG 2,636,000 4.83
3 PUBLIC INVEST NOMINEES (TEMPATAN) SDN BHD 1,851,000 3.39
EXEMPT AN FOR PHILLIP SECURITIES PTE LTD (CLIENTS)
4 GOH JOO LONG 1,445,000 2.65
5 NG CHING HOON 1,430,060 2.62
6 LIM HENG LOONG 1,400,970 2.57
7 LOH KIAN LIANG 1,100,000 2.02
8 GAN TIONG GE 1,052,000 1.93
9 MAYBANK SECURITIES NOMINEES (ASING) SDN BHD 1,000,000 1.83
MAYBANK KIM ENG SECURITIES PTE LTD FOR LAU YU JUN EUGENE
10 PUBLIC NOMINEES (TEMPATAN) SDN BHD 850,100 1.56
PLEDGED SECURITIES ACCOUNT FOR CHANG SOKE HUN (E-BBB/RLU)
11 LOW WAN YEE 735,000 1.35
12 KENANGA NOMINEES (TEMPATAN) SDN BHD 730,000 1.34
RAKUTEN TRADE SDN BHD FOR YEOH BAN THYE
13 LIM KIM SOON 700,000 1.28
14 LEW LEE KEIN 689,500 1.26
15 CARTABAN NOMINEES (ASING) SDN BHD 685,340 1.26
EXEMPT AN FOR STANDARD CHARTERED BANK SINGAPORE
(EFGBHK-ASING)
PROLEXUS BERHAD 199201019353 (250857-T) | ANNUAL REPORT 2020 141

ANALYSIS OF WARRANT HOLDINGS

As at 15 October 2020
cont’d

30 LARGEST WARRANT HOLDERS AS AT 15 OCTOBER 2020 (CONT’D)

No. of
warrants held %

16 TAN JOO EE 620,000 1.14

17 CHEN TSU PEH @ CHIN FUI 550,000 1.01
18 TAN LEE GEK 540,000 0.99
19 GAN CHEE SOON 500,000 0.92
20 HA MING JOON 500,000 0.92
21 PUBLIC NOMINEES (TEMPATAN) SDN BHD 400,000 0.73
PLEDGED SECURITIES ACCOUNT FOR NG JAU HON (E-SGM)
22 SOH CHAI LEY 400,000 0.73
23 WONG PEI SUN 350,000 0.64
24 LIM HOEI BOON 345,000 0.63
25 HLIB NOMINEES (TEMPATAN) SDN BHD 305,000 0.56
PLEDGED SECURITIES ACCOUNT FOR OOI ING CHEW
26 LIM GECK SIM 280,000 0.51
27 NG KIM YOKE 260,000 0.48
28 TAN KAH TIAN 256,000 0.47
29 LOW HING NOI 250,000 0.46
30 RAFI AHMAD BIN ABDUL MUTHALIP 250,000 0.46
24,987,896 45.80

1. DIRECTORS’ WARRANT HOLDINGS AS AT 15 OCTOBER 2020

No. of warrants held

Direct % Deemed %

i Lau Mong Ying 2,876,926 5.27% 1,000,000 (1) 1.83%

ii Choong Chee Mun 104,600 0.19% - 0.00%
iii Lau Mong Fah 306,300 0.56% - 0.00%
iv Chin Chew Mun 140,000 0.26% - 0.00%
v Boo Chin Liong 202,500 0.37% - 0.00%

(1) Deemed interested by virtue of Section 59(11)(c) of the Companies Act, 2016 held through a family member

2. SUBSTANTIAL WARRANT HOLDERS AS AT 15 OCTOBER 2020

No. of warrants held

Direct % Deemed %

i Lau Mong Ying 2,876,926 5.27% - 0.00%

142 ANNUAL REPORT 2020 | PROLEXUS BERHAD 199201019353 (250857-T)

This page has been intentionally left blank.

PROLEXUS BERHAD
Registration No. 199201019353 (250857-T)
(Incorporated in Malaysia)
PROXY FORM
Number of Shares Held CDS ACCOUNT NO.
- -

* I /We (*NRIC/Passport/Company No. )

(Full Name in Block Letters)

of
(Address)
being a * member / members of the abovenamed Company, hereby appoint:

Full Name in Block Letters NRIC / Passport No. Proportion of Shareholdings

No. of Shares %
Address

Email Address
Telephone No.
*and/or

Full Name in Block Letters NRIC / Passport No. Proportion of Shareholdings

No. of Shares %
Address

Email Address
Telephone No.
or failing whom, the Chairman of the meeting as *my/our proxy to vote for *me/us on *my/our behalf at the 28th Annual General Meeting
(“AGM”) of the Company to be conducted entirely through live streaming from the Broadcast Venue at the Conference Room of Honsin
Apparel Sdn. Bhd., 531 Batu 2½, Jalan Kluang, 83000 Batu Pahat, Johor on Wednesday, 16 December 2020 at 10:00 a.m. and at any
adjournment thereof.
ORDINARY RESOLUTIONS FOR AGAINST
1 To re-elect Encik Khadmudin Bin Mohamed Rafik as a director of the Company
2 To re-elect Puan W Norma Binti W Daud as a director of the Company
3 To re-elect Mr. Lau Mong Fah as a director of the Company
4 To approve the payment of directors’ fees
5 To approve the payment of directors’ benefits
6 To approve the payment of a First and Final Single Tier Dividend
7 To re-appoint Messrs. Grant Thornton as auditors of the Company
8 To authorise the directors to allot and issue new shares
9 To retain Encik Khadmudin Bin Mohamed Rafik who served more than 12 years as Independent
Director of the Company
10 To approve the proposed Share Buy-Back Mandate of up to 10% of the Issued and Paid-Up Share
Capital of the Company
Please indicate with an “x” in the appropriate spaces provided above on how you wish your vote to be cast. If no specific direction as to
voting is given, the proxy may vote as he thinks fit.

Signed this day of 2020.

Signature of Member(s)/Common Seal

Notes:
1. A proxy may but need not be a member of the Company.
2. A member shall be entitled to appoint a maximum of two (2) proxies to attend and vote at the same meeting. Where a member appoints more than one
(1) proxy, the appointment shall be invalid unless he/she specifies the proportions of his/her shareholdings to be represented by each proxy.
3. For a proxy to be valid, the proxy form duly completed, must be deposited at the registered office of the Company, 51-21-A Menara BHL Bank, Jalan
Sultan Ahmad Shah, 10050 Penang not less than 48 hours before the time appointed for holding the meeting or at any adjournment thereof and in the
case of a poll, not less than 24 hours before the time for taking of the poll. The instrument appointing a proxy transmitted by facsimile or electronic mail
will not be accepted.
4. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991 (“Exempt Authorised Nominee”)
which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”) there is no limit to the number of
proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds.
5. Where a member is an Exempt Authorised Nominee, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each securities
account it holds which is credited with the shares of the Company. The appointment of two (2) proxies in respect of a particular securities account shall be
invalid unless the authorised nominee specifies the proportion of its shareholding to be represented by each proxy.
6. In the case of corporate member, the proxy form must be executed under the corporation’s Common Seal or under the hand of an officer or attorney duly
authorised.
7. Only a depositor whose name appears on the Record of Depositors as at 8 December 2020 shall be entitled to attend the said meeting or appoint proxies
to attend and/or vote on his/her behalf.
8. Members are advised to refer to the Administrative Guide and follow the procedures set out therein in order to participate remotely via the Remote
Participation and Voting (RPV) facilities.
* Strike out whichever is not applicable.
Fold This Flap For Sealing

2nd fold here

Stamp

The Company Secretary

PROLEXUS BERHAD
Registration No.199201019353 (250857-T)

51-21-A Menara BHL Bank

Jalan Sultan Ahmad Shah
10050 Penang
Malaysia

1st fold here

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