PCCS group berhad

Co. No. 280929-K

(Incorporated In Malaysia)

Passion
Commitment
Competitiveness
Sincerity

Annual
Report
2016
PCCS Group Berhad (Co. No. 280929-K)
Annual Report 2016

Contents
2016
02 Notice of Annual General Meeting

05 Corporate Structure

06 Profile of Directors

12 Profile of Key Senior Management

15 Corporate Information

17 Audit Committee Report

21 Statement on Corporate Governance

47 Statement on Risk Management

and Internal Control

51 Statement of Directors’
Responsibility in relation to the
Financial Statements

52 Other Information required by the

Main Market Listing Requirements of
Bursa Malaysia Securities Berhad

53 Corporate Responsibility Statement

59 Chairman’s Statement

63 Financial Statements

132 Group Properties

134 Analysis of Shareholdings

• Form of Proxy
02 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Notice of Annual
General Meeting
NOTICE IS HEREBY GIVEN THAT the Twenty-Second (“22nd”) Annual General Meeting
of the Company will be held at PCCS Group Berhad’s Corporate Office, Lot 1376, GM127,
Mukim Simpang Kanan, Jalan Kluang, 83000 Batu Pahat, Johor Darul Takzim on Friday, 26
August 2016 at 10:00 a.m. or at any adjournment thereof for the following purposes:-

AGENDA

As Ordinary Business

1. To receive the Audited Financial Statements for the financial year ended 31 March Please refer to
2016 together with the Reports of the Directors and the Auditors thereon. Explanatory Note B1

2. To re-elect the following Directors who retire pursuant to Article 94 of the Company’s
Articles of Association, and being eligible, have offered themselves for re-election:-

(a) Mr. Chan Choo Sing Resolution 1

(b) Mr. Chan Chow Tek Resolution 2

3. To re-appoint Messrs. Ernst & Young as Auditors of the Company until the
conclusion of the next Annual General Meeting and to authorise the Directors to fix
their remuneration. Resolution 3

As Special Business

To consider and, if thought fit, with or without any modification, to pass the following
Ordinary Resolutions:-

4. ORDINARY RESOLUTION NO. 1

- PAYMENT OF DIRECTORS’ FEES

“THAT the Directors’ Fees amounting to RM402,000/- (Ringgit Malaysia: Four

Hundred and Two Thousand only) for the financial year ended 31 March 2016, be
and is hereby approved for payment.” Resolution 4

5. ORDINARY RESOLUTION NO. 2

- AUTHORITY TO ISSUE SHARES PURSUANT TO SECTION 132D OF THE
COMPANIES ACT, 1965

“THAT pursuant to Section 132D of the Companies Act, 1965, and the approvals
of the relevant governmental/regulatory authorities, the Directors be and are hereby
empowered to issue and allot shares in the Company, at any time to such persons
and upon such terms and conditions and for such purposes as the Directors may,
in their absolute discretion, deem fit, PROVIDED THAT the aggregate number of
shares issued pursuant to this Resolution does not exceed ten per centum (10%)
of the issued and paid-up share capital of the Company for the time being; AND
THAT the Directors be and are also empowered to obtain the approval for the listing
of and quotation for the additional shares so issued on Bursa Malaysia Securities
Berhad; 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 Annual
General Meeting of the Company.” Resolution 5
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 03

Notice of Annual
General Meeting

6. To transact any other business of which due notice shall have been given in
accordance with the Companies Act, 1965 or the Articles of Association of the
Company.

By Order of the Board

CHUA SIEW CHUAN (MAICSA 0777689)

Secretary

Kuala Lumpur
29 July 2016

Notes:

(A) Information for Shareholders/Proxies

1. For the purpose of determining a member who shall be entitled to attend this meeting, the Company shall be
requesting Bursa Malaysia Depository Sdn. Bhd. in accordance with Article 66(b) of the Company’s Articles
of Association and Section 34(1) of the Securities Industry (Central Depositories) Act, 1991 to issue a General
Meeting Record of Depositors as at 19 August 2016. Only a depositor whose name appears on the Record
of Depositors as at 19 August 2016 shall be entitled to attend the said meeting or appoint proxies to attend
and/or vote on his/her behalf.

2. A member of the Company entitled to attend and vote at a meeting of a company, shall be entitled to appoint
any person as his proxy to attend and vote instead of the member at the meeting without limitation and the
provisions of Sections 149 (1)(a), (b), (c) and (d) of the Companies Act, 1965 shall not apply. There shall be no
restriction as to the qualification of the proxy. A proxy appointed to attend and vote at the Meeting shall have
the same rights as the member to speak at the Meeting.

3. Where a holder appoints two (2) or more proxies, he shall specify the proportions of his shareholdings to be
represented by each proxy.

4. Where a member of the Company is an exempt authorised nominee which holds shares in the Company for
multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number
of proxies which the exempt authorised nominee may appoint in respect of each omnibus account.

5. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly
authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer
or attorney duly authorised.

6. The instrument appointing a proxy must be deposited at the Corporate Office of the Company at Lot 1376,
GM127, Mukim Simpang Kanan, Jalan Kluang, 83000 Batu Pahat, Johor Darul Takzim not less than forty-
eight (48) hours before the time for holding the Meeting or at any adjournment thereof.

Explanatory Notes to Ordinary Business:-

(B) Audited Financial Statements for the financial year ended 31 March 2016

1. This Agenda item is meant for discussion only, as the provision of Section 169(1) of the Companies Act, 1965
does not require a formal approval of the shareholders for the Audited Financial Statements. Hence, this
Agenda item is not put forward for voting.
04 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Notice of Annual
General Meeting

(C) Re-election of Directors

1. In determining the eligibility of the Directors to stand for re-election at the forthcoming 22nd Annual General
Meeting, the Nominating Committee (“NC”) has considered the requirements under Paragraph 2.20A of the
Main Market Listing Requirements (“Main LR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) and
recommended Mr. Chan Choo Sing and Mr. Chan Chow Tek for re-election as Directors pursuant to Article 94
of the Articles of Association of the Company (“Retiring Directors”).

All the Retiring Directors have consented to their re-election, and abstained from deliberation and voting in
relation to their individual re-election at the NC Meeting, where applicable and Board of Directors’ Meeting,
respectively.

(D) Re-appointment of Auditors

1. The Audit Committee (“AC”) have assessed the suitability and independence of the External Auditors and
recommended the re-appointment of Messrs. Ernst & Young as External Auditors of the Company for the
financial year ending 31 March 2017. The Board has in turn reviewed the recommendation of the AC and
recommended the same be tabled to the shareholders for approval at the forthcoming 22nd Annual General
Meeting of the Company under Resolution 3.

(E) Abstention from Voting

1. Any Director referred to in Resolutions 1 and 2, who is a shareholder of the Company will abstain from voting
on the resolution in respect of his re-election at the 22nd Annual General Meeting of the Company.

Explanatory Notes to Special Business:

(F) Resolution 4 – Payment of Directors’ Fees

1. The proposed adoption of the Ordinary Resolution No. 1 is to approve the Proposed Directors’ fees for the
financial year ended 31 March 2016 of RM402,000/- (2015: RM510,000/-).

The Resolution 4, if approved, will authorise the payment of Directors’ Fees pursuant to Article 105 (a) of the
Articles of Association of the Company.

(G) Abstention from Voting

1. Any Director of the Company who is shareholder of the Company will abstain from voting on Resolution 4 in
relation to payment of Directors’ fees at the 22nd Annual General Meeting of the Company.

(H) Resolution 5 – Authority to Issue Shares pursuant to Section 132D of the Companies Act, 1965

1. The proposed adoption of the Ordinary Resolution No. 2 is for the purpose of granting a renewed general
mandate (“General Mandate”), and if passed, will empower the Directors of the Company, pursuant to
Section 132D of the Companies Act, 1965, to issue and allot new shares in the Company from time to time
provided that the aggregate number of shares issued pursuant to the General Mandate does not exceed ten
per centum (10%) of the issued and paid-up share capital of the Company for the time being as the Directors
may consider such action to be in the interest of the Company.

The purpose to seek the General Mandate is to enable the Directors of the Company to issue and allot shares
at any time to such persons in their absolute discretion without convening a general meeting as it would be
both time-consuming and costly to organise a general meeting. This authority unless revoked or varied by
the Company in a general meeting, will expire at the conclusion of the next Annual General Meeting of the
Company.

The General Mandate will provide flexibility to the Company for allotment of shares for any possible fund raising
activities, including but not limited to further placing of shares, for the purpose of funding future investment
project(s), working capital and/or acquisition(s).

As at the date of this Notice, no new shares in the Company were issued pursuant to the mandate granted to
the Directors at the Twenty-First Annual General Meeting of the Company held on 4 September 2015 which
will lapse at the conclusion of the 22nd Annual General Meeting.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 05

Corporate
Structure

PCCS Group Berhad

(Co. No. 280929-K) Apparel Division
(Incorporated in Malaysia)

Embroidery & Printing Division

Labelling Division
Others

100%
Perusahaan Chan Choo Sing Sdn Bhd

100%
PCCS Garments Limited

100%
Beauty Apparels (Cambodia) Ltd

100%
JIT Textiles Limited

100% 100%
PCCS Garments (Suzhou) Ltd Yuxing Apparel Suqian Limited

100% 100%
PCCS (Hong Kong) Limited PCCS Garments Wuhan Limited

100% 100%
Thirty Three (Hong Kong) Limited Thirty Three (Shanghai) Limited

100% 70%
Shern Yee Garments Sdn Bhd Global Apparels Limited

100% 100%
Thirty Three Trading Sdn Bhd Beauty Silk Screen (M) Sdn Bhd

100% 100%
Jusca Garments Sdn Bhd Beauty Silk Screen Limited

100% 100%
Beauty Electronic Embroidering JIT Embroidery Limited
Centre Sdn Bhd

100% 100%
Keza Sdn Bhd Keza (Cambodia) Limited

51%
Perfect Seamless Garments
(Cambodia) Limited

100% 100%
Mega Labels & Stickers Sdn Bhd Mega Labels & Stickers
(Cambodia) Co., Ltd.
100%
Mega Label (Malaysia) Sdn Bhd
06 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Profile of
Directors
Julian Lim Wee Liang
Senior Independent Non-Executive Chairman
Malaysian, aged 42, Male

Date of appointment as : 14 November 2011

Director

Length of service : 4 years 8 months

as director since
appointment Mr. Julian was appointed as Independent Non-Executive Director on 14
(as at 29 July 2016) November 2011 and was re-designated as Senior Independent Non-Executive
Director on 22 May 2013 and subsequently appointed as Senior Independent
Non-Executive Chairman on 6 June 2014.

Board Committee(s) : • Member of the Audit Committee

served on • Chairman of the Nomination Committee

Academic/Professional : • Bachelor Degree in University of Sheffield, United Kingdom in July 1996

Qualification(s) • Member of the Malaysian Institute of Accountants
• Fellow member of the Association of Chartered Certified Accountants

Present Directorship(s) : He does not have any directorships in other public company and listed
in other Public/Listed company.
Companies

Family relationship with : Nil

any Director and/or
major shareholder of the
Company

Working experience : Mr. Julian worked with Arthur Andersen & Co and left in January 2000
to further his studies. Subsequently, he joined KY Siow & Co in January
2003 as Audit Manager.

Time committed : Mr. Julian attended all the five (5) Board of Directors’ Meetings of the
Company held in the financial year ended 31 March 2016.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 07

Profile of
Directors

Chan Choo Sing

Group Managing Director
Malaysian, aged 62, Male

Date of appointment as : 21 June 1995

Director

Length of service : 21 years 1 month

as director since
appointment Mr. Chan was appointed as the Group Managing Director of PCCS in 1995
(as at 29 July 2016) and as Chairman of PCCS on 24 August 2004. He has relinquished his role
as Chariman on 6 June 2014 but remains Group Managing Director of PCCS
till today.

Board Committee(s) : Member of the Remuneration Committee

served on

Academic/Professional : Completed Malaysian Certificate of Education, equivalent to O-Level.

Qualification(s)

Present Directorship(s) : Mr. Chan sits on the board of several private limited companies. He does not
in other Public/Listed have any directorships in other public company and listed company.
Companies

Family relationship with : Mr. Chan is a substantial shareholder of the Company effective from 20 June
any Director and/or 1995.
major shareholder of the
Company He is the brother of Mr. Chan Chow Tek, Dato’ Chan Chor Ngiak and Mr. Chan
Chor Ang, all of them are Directors and substantial shareholders of PCCS. Mr.
Chan is husband of Madam Tan Kwee Kee, who is a substantial shareholder
and has indirect interest of 34.40% in the equity of Setia Sempurna Sdn. Bhd.,
a major shareholder of PCCS.

Working experience : Mr. Chan started his career when he ventured into a garment business known
as Chan Trading in 1973. In 1981, he founded Perusahaan Chan Choo Sing
Sdn. Bhd. (“PCCSSB”), a company primarily involved in the manufacturing
of garments. His entrepreneurial skills and ability to recognise business and
expansion opportunities have led to successful business ventures including the
forming of a number of companies actively involved in the garment industry.
PCCS, the holding company of PCCSSB and its associated companies were
successfully listed on the Main Board of Bursa Malaysia Securities Berhad
(“Bursa Securities”) on 16 August 1995 as PCCS.

During the period from 2001 to 2006, Mr. Chan was the Chairman of the
Chinese Association in Parit Raja, Batu Pahat. He is the Honorary Member of
the Rotary Club of Batu Pahat.

Time committed : Mr. Chan attended four (4) out of five (5) Board of Directors’ Meetings of the
Company held in the financial year ended 31 March 2016.
08 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Profile of
Directors

Chan Chow Tek

Executive Director
Malaysian, aged 59, Male

Date of appointment as : 21 June 1995

Director

Length of service : 21 years 1 month

as director since
appointment
(as at 29 July 2016)

Board Committee(s) : Nil

served on

Academic/Professional : • Completed Malaysian Certificate of Education, equivalent to O-Level

Qualification(s) • Part-completion of the Higher Certificate of Education, equivalent to A-Level

Present Directorship(s) : Mr. Chan is a director of several private limited companies. He does not have
in other Public/Listed any directorships in other public company and listed company.
Companies

Family relationship with : Mr. Chan is a substantial shareholder of the Company effective from 20 June
any Director and/or 1995.
major shareholder of the
Company Mr. Chan is the brother of Mr. Chan Choo Sing, Dato’ Chan Chor Ngiak and
Mr. Chan Chor Ang, all of them are Directors and substantial shareholders of
PCCS. Mr. Chan has indirect interest of 24.40% in the equity of Setia Sempurna
Sdn. Bhd., a major shareholder of PCCS.

Working experience : Mr. Chan leads all the marketing activities in the Group and has more than forty
(40) years of experience in textile and apparel marketing and merchandising.
He started his career in 1973 in marketing the products of Chan Trading to local
departmental stores. In 1981, he successfully made the first export order for
Perusahaan Chan Choo Sing Sdn. Bhd. and has since brought the company’s
export sales to greater success.

He is also responsible for the development and growth of the Group’s garment
business. His job includes keeping abreast with the latest development in the
apparel and fashion industry by frequent overseas trips to identify new and
potential markets.

Time committed : Mr. Chan attended all the five (5) Board of Directors’ Meetings of the Company
held in the financial year ended 31 March 2016.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 09

Profile of
Directors

Dato’ Chan Chor Ngiak

Non-Independent Non-Executive Director
Malaysian, aged 54, Male

Date of appointment as : 21 June 1995

Director

Length of service : 21 years 1 month

as director since
appointment
(as at 29 July 2016)

Board Committee(s) : • Member of the Audit Committee

served on • Member of the Remuneration Committee
• Member of the Nomination Committee

Academic/Professional : Completed Malaysian Certificate of Education, equivalent to O-Level

Qualification(s)

Present Directorship(s) : Dato’ Chan is a director of several private limited companies. He does not have
in other Public/Listed any directorships in other public company and listed company.
Companies

Family relationship with : Dato’ Chan is a substantial shareholder of the Company effective from 20 June
any Director and/or 1995.
major shareholder of the
Company Dato’ Chan is the brother of Mr. Chan Choo Sing, Mr. Chan Chow Tek and
Mr. Chan Chor Ang, all of them are Directors and substantial shareholders of
PCCS. Mr. Chan has indirect interest of 18.40% in the equity of Setia Sempurna
Sdn. Bhd., a major shareholder of PCCS.

Working experience : Dato’ Chan started his carreer in 1980 in marketing the products of Chan
Trading to local department stores. Dato’ Chan has continuously established
connections with many business executives in the Chamber of Commerce and
Associations. He is the Honorary Vice Chairman of the Chinese Chamber of
Commerce in Batu Pahat, the Chairman of the Chinese Association in Parit
Raja, Batu Pahat, the Vice-Chairman of the Chinese Association in Johor State.

The Sultan of Pahang on his eighty-first (81st) birthday conferred the “Darjah
Indera Mahkota Pahang (D.I.M.P.)” to him that carries the prestigious title of
Dato’.

Time committed : Dato’ Chan attended all the five (5) Board of Directors’ Meetings of the Company
held in the financial year ended 31 March 2016.
10 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Profile of
Directors

Chan Chor Ang

Non-Independent Non-Executive Director
Malaysian, aged 53, Male

Date of appointment as : 21 June 1995

Director

Length of service : 21 years 1 month

as director since
appointment
(as at 29 July 2016)

Board Committee(s) : Nil

served on

Academic/Professional : Completed Junior Middle Three in Chinese High School

Qualification(s)

Present Directorship(s) : Mr. Chan is a director of several private limited companies. He does not have
in other Public/Listed any directorships in other public company and listed company.
Companies

Family relationship with : Mr. Chan is a substantial shareholder of the Company effective from 20 June
any Director and/or 1995.
major shareholder of the
Company Mr. Chan is the brothers of Mr. Chan Choo Sing, Dato’ Chan Chor Ngiak and
Mr. Chan Chow Tek, all of them are Directors and substantial shareholders of
PCCS. Mr. Chan has indirect interest of 14.00% in the equity of Setia Sempurna
Sdn. Bhd., a major shareholder of PCCS.

Working experience : Mr. Chan joined Perusahaan Chan Choo Sing Sdn. Bhd. in 1981 and was
transferred to Jusca Garments Sdn. Bhd. as the Factory Manager in 1985. He
has more than thirty (30) years of experience in the textile and garment industry.

Time committed : Mr. Chan attended all the five (5) Board of Directors’ Meetings of the Company
held in the financial year ended 31 March 2016.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 11

Profile of
Directors

Piong Yew Peng

Independent Non-Executive Director
Malaysian, aged 46, Male

Date of appointment as : 1 April 2015

Director

Length of service : 1 year 3 months

as director since
appointment
(as at 29 July 2016)

Board Committee(s) : • Chairman of the Audit Committee

served on • Chairman of the Remuneration Committee
• Member of the Nomination Committee

Academic/Professional : • Bachelor of Business (Accounting) from RMIT University, Melbourne,

Qualification(s) Australia
• Member of the Malaysian Institute of Accountants
• Fellow member of the Certified Practising Accountants, Australia

Present Directorship(s) : SWS Capital Berhad, a public listed company

in other Public/Listed
Companies

Family relationship with : Nil

any Director and/or
major shareholder of the
Company

Working experience : Mr. Piong has more than twenty (20) years of experience in providing audit
services to wide range of clients. He is actively involved in assisting clients
in Initial Public Offering (IPO), merger and acquisition, and other corporate
exercises. He regularly provides value added services to update clients in
financial reporting standards, listing requirements, and tax planning advisory.

Time committed : Mr. Piong attended all the five (5) Board of Directors’ Meetings of the Company
held in the financial year ended 31 March 2016.

Note:

1) Other than traffic offences, if any, none of the Directors have any convictions for offences within the past five
(5) years and any public sanction or penalty imposed by any relevant regulatory bodies for the financial year
ended 31 March 2016.

2) None of the Directors have any conflict of interest with the Company.
12 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Profile of Key
Senior Management
Chan Wee Kiang
Deputy Group General Manager
Malaysian, aged 38, Male

Date of appointment as Deputy : 30 March 2008

Group General Manager

Length of service as Deputy Group : 8 years 4 months

General Manager since appointment
(as at 29 July 2016)

Academic/Professional : Bachelor of Accounting & Finance, Monash University, Clayton

Qualification(s) Campus, Melbourne, Australia

Present Directorship(s) in other : Nil

Public/Listed Companies

Family relationship with any Director : Mr. Chan is the son of Mr. Chan Choo Sing, who is a Director
and/or major shareholder of the and substantial shareholders of PCCS, and has indirect interest
Company of 34.40% in the equity of Setia Sempurna Sdn. Bhd., a major
shareholder of PCCS.

Working experience : Mr. Chan started his career in Perusahaan Chan Choo Sing Sdn.
Bhd. as a Marketing Executive since 2002 and subsequently being
promoted as Marketing Manager in year 2003.

In year 2007, Mr. Chan was appointed as Group Marketing

Manager in PCCS Group Berhad and subsequently promoted as
Deputy Group General Manager in year 2008.

List of convictions for offences : Other than traffic offences, if any, Mr. Chan does not have any
convictions for offences within the past five (5) years and any public
sanction or penalty imposed by any relevant regulatory bodies for
the financial year ended 31 March 2016.

Conflict of Interest : Nil

Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 13

Profile of Key
Senior Management

Teo Hock Lim

Senior General Manager for Cambodia Division
Malaysian, aged 51, Male

Date of appointment as Senior : 16 September 2014

General Manager for Cambodia
Division

Length of service as Senior : 1 year 10 months

General Manager for Cambodia
Division since appointment
(as at 29 July 2016)

Academic/Professional : Bachelor of Art in Accounting and Finance, University of Findlay, AICPA, USA
Qualification(s)

Present Directorship(s) in other : Nil

Public/Listed Companies

Family relationship with any : Nil

Director and/or major shareholder
of the Company

Working experience : Mr. Teo started embarking on his career in year 1986 with Beltz Clothing Inc. in
USA. After accumulating extensive working experience, he left Beltz Clothing
Inc. and joined several companies in garment’s industry in China, Indonesia,
United Arab Emirates, Bangladesh, Guatemala, Malaysia and Cambodia. He
has more than thirty (30) years experiance in textile and garment industry.
The past working experiences of Mr. Teo were as follows:-
2010 to 2014 – Country Manager (Makalot Garments (Cambodia) Co. Ltd. &
Moha Garments Co. Ltd. in Cambodia)
2007 to 2009 – Country General Manager (Ghim Li (Cambodia) Pte Ltd. in
Cambodia)
2003 to 2006 – Country Manager (Estofel, SA. in Guatemala)
1999 to 2002 – Senior Factory Manager / Offshore Senior Manager (PLKL
Ltd. in Bangladesh)
1999 to 1999 – Executive Marketing Manager (Findlay Industries Sdn. Bhd.
in Malaysia)
1998 to 1999 – Factory & Operation Manager (Kian Lian Seng Garment
Manufacturing in Singapore)
1997 to 1998 – Factory & Operation Manager (P.T. Iwan Berjaya Garment in
Indonesia)
1994 to 1996 – Factory Manager (Sincerity Garment Manufacturing Co. Ltd.
in United Arab Emirates)
1992 to 1994 – Factory & Operation Manager (Ben Hin (XiaMen) Readyware
Co. Ltd. in China)
1990 to 1992 – Factory Manager (Beltz Clothing Inc. in USA)
1988 to 1990 – Accountant (Beltz Clothing Inc. in USA)
1986 to 1988 – Account Officer (Beltz Clothing Inc. in USA)

List of convictions for offences : Other than traffic offences, if any, Mr. Teo does not have any convictions
for offences within the past five (5) years and any public sanction or penalty
imposed by any relevant regulatory bodies during financial year ended 31
March 2016.

Conflict of Interest : Nil

14 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Profile of Key
Senior Management

Chan Wee Boon

General Manager for Label and Sticker Division
Malaysian, aged 36, Male

Date of appointment as Group : 1 July 2014

General Manager for Label and
Sticker Division

Length of service as Group General : 2 years 1 month

Manager for Label and Sticker
Division since appointment
(as at 29 July 2016)

Academic/Professional : Bachelor of Civil Engineering, Monash University, Clayton Campus,

Qualification(s) Melbourne, Australia

Present Directorship(s) in other : Nil

Public/Listed Companies

Family relationship with any Director : Mr. Chan is the son of Mr. Chan Choo Sing, a Director and substantial
and/or major shareholder of the shareholders of PCCS, and has indirect interest of 34.40% in the
Company equity of Setia Sempurna Sdn. Bhd., a major shareholder of PCCS.

Working experience : Mr. Chan started his career in China as Project Manager in 2004. In
year 2010, he joined Mega Labels & Stickers Sdn. Bhd. as General
Manager and subsequently being promoted as Group General
Manager for Label Division in year 2014.

The past working experiences of Mr. Chan were as follows:-

2014 to present – Group General Manager (Label Division)

2010 to 2014 – General Manager (Mega Labels & Stickers Sdn
Bhd)
2008 to 2010 – Assistant General Manager (Trio Paper Mill Sdn.
Bhd.) 
2005 to 2007 – Marketing Manager, South China (Guangdong
Haohe Construction Pte. Ltd.)  
2004 to 2005 – Project Manager (Blopak China Private Ltd.)

List of convictions for offences : Other than traffic offences, if any, Mr. Chan does not have any
convictions for offences within the past five (5) years and any public
sanction or penalty imposed by any relevant regulatory bodies
during financial year ended 31 March 2016.

Conflict of Interest : Nil

Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 15

Corporate
Information
BOARD OF DIRECTORS

Julian Lim Wee Liang Chan Chor Ang

Senior Independent Non-Executive Chairman Non-Independent Non-Executive Director

Chan Choo Sing Tan Chuan Hock

Group Managing Director Independent Non-Executive Director
(Resigned w.e.f. 1 April 2015)
Chan Chow Tek
Executive Director Piong Yew Peng
Independent Non-Executive Director
Dato’ Chan Chor Ngiak (Appointed w.e.f. 1 April 2015)
Non-Independent Non-Executive Director

AUDIT COMMITTEE REMUNERATION COMMITTEE

Piong Yew Peng (Chairman) Piong Yew Peng (Chairman)
Independent Non-Executive Director Independent Non-Executive Director
(Appointed w.e.f. 1 April 2015) (Appointed w.e.f. 1 April 2015)

Julian Lim Wee Liang Chan Choo Sing

Senior Independent Non-Executive Chairman Group Managing Director

Dato’ Chan Chor Ngiak Dato’ Chan Chor Ngiak

Non-Independent Non-Executive Director Non-Independent Non-Executive Director

NOMINATION COMMITTEE COMPANY SECRETARY

Julian Lim Wee Liang (Chairman) Chua Siew Chuan (MAICSA 0777689)
Senior Independent Non-Executive Chairman

Piong Yew Peng REGISTERED OFFICE

Independent Non-Executive Director
(Appointed w.e.f. 1 April 2015) LOT 1376, GM 127,
Mukim Simpang Kanan, Jalan Kluang,
Dato’ Chan Chor Ngiak 83000 Batu Pahat, Johor Darul Takzim
Non-Independent Non-Executive Director Tel No : 07-456 8866
Fax No : 07-456 8860
16 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Corporate
Information

REGISTRAR SUBSIDIARY COMPANIES

Securities Services (Holdings) Sdn. Bhd. (36869-T) • Beauty Apparels (Cambodia) Ltd
Level 7, Menara Milenium, • Beauty Electronic Embroidering Centre Sdn. Bhd.
Jalan Damanlela, (102438-U)
Pusat Bandar Damansara, • Beauty Silk Screen (M) Sdn. Bhd. (583304-X)
Damansara Heights, • Beauty Silk Screen Limited
50490 Kuala Lumpur, • Global Apparels Limited
Wilayah Persekutuan • JIT Embroidery Limited
Tel No : 03-2084 9000 • JIT Textiles Limited
Fax No : 03-2094 9940 / 2095 0292 • Jusca Garments Sdn. Bhd. (135950-M)
• Keza Sdn. Bhd. (138288-U)
• Keza (Cambodia) Limited
AUDITORS • Mega Labels & Stickers Sdn. Bhd. (190144-X)
• Mega Label (Malaysia) Sdn. Bhd. (533197-U)
Ernst & Young • Mega Labels & Stickers (Cambodia) Co., Ltd.
Chartered Accountants • PCCS Garments Limited
Level 16-1, Jaya 99, Tower B, • PCCS Garments (Suzhou) Ltd
99 Jalan Tun Sri Lanang, • PCCS Garments Wuhan Limited
75100 Melaka • PCCS (Hong Kong) Limited
• Perusahaan Chan Choo Sing Sdn. Bhd. (70765-W)
• Perfect Seamless Garments (Cambodia) Limited
SOLICITORS • Shern Yee Garments Sdn. Bhd. (206960-W)
• Thirty Three (Hong Kong) Limited
Enolil Loo • Thirty Three (Shanghai) Limited
Advocates & Solicitors • Thirty Three Trading Sdn. Bhd. (391830-P)
M-2-9 Plaza Damas, • Yuxing Apparel Suqian Limited
60 Jalan Sri Hartamas 1,
Sri Hartamas,
50480 Kuala Lumpur STOCK EXCHANGE LISTING

Main Market of Bursa Malaysia Securities Berhad

PRINCIPAL BANKERS

• Malayan Banking Berhad (3813-K) CORPORATE WEBSITE

• Standard Chartered Bank Malaysia Berhad
(115793-P) http://www.pccsgroup.net/
• United Overseas Bank (Malaysia) Berhad
(271809-K)
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 17

Audit Committee
Report
The Board of Directors of PCCS Group Berhad is pleased to present the following
report on the Audit Committee and its activities during the financial year ended 31
March 2016.

A. MEMBERSHIP

The present members of the Audit Committee of the Company are:-

Piong Yew Peng (Chairman)

Independent Non-Executive Director

Julian Lim Wee Liang

Senior Independent Non-Executive Chairman

Dato’ Chan Chor Ngiak

Non-Independent Non-Executive Director

B. ATTENDANCE

The Audit Committee held a total of five (5) meetings during the financial year ended 31 March 2016.

The details of attendance at Audit Committee meetings held during the financial year under review were as follows:-

Name of Audit Committee Member No. of Meetings attended

Piong Yew Peng (Chairman) 5/5

Julian Lim Wee Liang 5/5

Dato’ Chan Chor Ngiak 5/5

C. SUMMARY OF WORK

The works of the Audit Committee were primarily in accordance with its duties, as set out in its terms of reference.
The main works undertaken by the Audit Committee during the financial year under review were as follows:-

(1) Overview of Financial Performance and Reporting

• Reviewed the unaudited quarterly financial results for the quarter ended 30 June 2015, 30 September
2015, 31 December 2015 and 31 March 2016 and recommend the same to the Board of Directors for
approval;

• Reviewed the draft audited financial statements for the financial year ended 31 March 2015 and
recommend the same to the Board of Directors for approval; and

• Reviewed the Group’s compliance with the accounting standards and relevant regulatory requirements.
18 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Audit Committee
Report

C. SUMMARY OF WORK (Cont’d)

(2) Oversight of External Auditors

• Reviewed the suitability and independence of the External Auditors vide a formalised “Assessment on
External Auditors” and upon reviewed and being satisfied with the results of the said assessment, the
same has been recommended to the Board of Directors for approval;

• Discussed and reviewed with the External Auditors, the applicability and the impact of the new
accounting standards and new financial reporting regime issued by the Malaysian Accounting Standards
Board, and the scope of work and audit plan for the financial year ended 31 March 2016, including any
significant issues and concerns arising from the audit;

• Met twice with the External Auditors without the presence of the Executive Board/Employees to discuss
issue of concern to the External Auditors arising from the annual statutory audit;

• Reviewed the revised Terms of Reference of the Audit Committee; and

• Reviewed the audit fees prior to the Board of Directors for approval.

(3) Oversight of Internal Audit (“IA”)

• Reviewed the IA Reports for the financial year ended 31 March 2016 and assessed the Internal Auditors’
findings and the management’s responses and made the necessary recommendations to the Board of
Directors for approval;

• Reviewed the adequacy and performance of the IA function and its comprehensive coverage of the
Group’s activities; and

• Reviewed and assessed the adequacy of the scope, functions, competency and resources of the
outsourced Internal Auditors and that they have the necessary authority to carry out their work.

(4) Oversight of Risk Management Working Group and Function

• Monitored the formation of Risk Management Working Group and the progress of updating the Risk
Registry.

(5) Review of Related Party Transactions

• Reviewed any related party transaction and conflict of interest situation that may arise within the Group
including any transaction, procedure or course of conduct that raises the questions on management
integrity.

(6) Oversight of Internal Control Matters

• Reviewed and confirmed the minutes of the Audit Committee Meetings; and

• Reviewed the Audit Committee Report and Statement on Risk Management and Internal Control to be
included in the Annual Report 2016.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 19

Audit Committee
Report

D. IA FUNCTION

(1) Appointment

The Group has appointed an outsourced IA service provider to carry out the IA function, namely Sterling
Business Alignment Consulting Sdn. Bhd. (“Sterling”). The outsourced Internal Auditors report directly to
the Audit Committee, providing the Board with a reasonable assurance of adequacy of the scope, functions
and resources of the IA function. The purpose of the IA function is to provide the Board, through the Audit
Committee, assurance of the effectiveness of the system of internal control of the designated entities of the
Group.

(2) IA Activities

The IA reporting format can broadly be segregated into four (4) main areas as follow:-

(a) IA Plan of the Group

At the beginning of the financial year, the IA Plan of the Group is presented to the Audit Committee by
Sterling for discussion and approval. The Audit Committee would then recommended the same to the
Board of Directors for adoption.

(b) Regular IA Reports

IA reports are reviewed and adopted by the Audit Committee on a quarterly basis. During the financial
year under review, Sterling has reviewed critical business processes, identified risks and internal
control gaps, assessed the effectiveness and adequacy of the existing state of internal control of the
major subsidiaries and recommended possible improvements to the internal control process. This is
to provide reasonable assurance that such system continues to operate satisfactorily and effectively
within the Group.

For the financial year ended 31 March 2016, the following subsidiaries of the Group were audited by
Sterling:-

Name of Entities audited by Sterling Date of IA Report

JIT Textiles Limited 29 May 2015
JIT Textiles Limited 21 August 2015
Apparel Division in Cambodia 18 November 2015
JIT Textiles Limited 19 February 2016

(c) Follow-up Reports

In addition, the Internal Auditors followed-up on the implementation of recommendations from previous
cycles of IA and updated the Audit Committee on the status of Management-agreed action plan.
20 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Audit Committee
Report

D. IA FUNCTION (Cont’d)

(2) IA Activities (Cont’d)

(c) Follow-up Reports (Cont’d)

For the financial year ended 31 March 2016, Sterling has presented their status report: follow-up
actions on previously reported audited findings in respect of the following subsidiaries of the Group:-

Name of Entities followed-up by Sterling Date of IA Status Report

JIT Textiles Limited 29 May 2015
Apparels Division in Cambodia 29 May 2015
PCCS Garments (SuZhou) Limited 29 May 2015
JIT Textiles Limited 21 August 2015
JIT Embroidery Limited 21 August 2015
Apparel Division in Cambodia 21 August 2015
JIT Textiles Limited 18 November 2015
JIT Embroidery Limited 18 November 2015
Apparel Division in Cambodia 19 February 2016
JIT Embroidery Limited 19 February 2016
JIT Textiles Limited 19 February 2016

(3) Total costs incurred for the financial year

The total costs incurred for the IA function of the Group for the financial year ended 31 March 2016 was
RM56,000/-.

(4) Review of IA Function

For the financial year ended 31 March 2016, the Audit Committee noted that the IA function is independent
and Sterling has performed their audit assignments with impartiality, proficiency and due professional care.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 21

Statement on Corporate
Governance
The Board of Directors of PCCS (“the Board”) is pleased to report on the manner in which the Principles
and Recommendations of Malaysian Code on Corporate Governance 2012 (“MCCG 2012”) are applied.
The policy of the Company is to achieve best practice in its standard of business integrity in all its activities.

The Board recognises the importance of practising high standards of corporate governance throughout the
Group as a basis of discharging their fiduciary duties and responsibilities to protect and enhance shareholders’
value and performance of the Group.

In preparing this report, the Board has considered the manner in which it has applied the Principles of the
MCCG 2012 and acknowledges the Recommendations of the MCCG 2012.

This statement also serves as a compliance with Paragraph 15.25 of the Main Market Listing Requirements
(“Main LR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”).

(I) ESTABLISH CLEAR ROLES AND RESPONSIBILITIES

(1) Clear Functions Reserved for the Board and those Delegated to Management

Board of Directors (“Board”)

The Board is responsible for the leadership, oversight and the long-term success of the Group. The Board
has established a Board Charter to provide guidance and clarity for Directors and Management with regard
to the role of the Board and its committees. In addition, the Board will also agrees with the Management, the
corporate objectives, which include performance targets during the review of yearly budget, to be met by the
Management.

The Board has reserved a formal schedule of matters for its decision making to ensure that the direction and
control of the Group is firmly in its hands. This includes strategic issues and planning, material acquisition
and disposal of assets, capital expenditure, Risk Management policies, appointment of auditors and review
of the financial statements, financing and borrowing activities, ensuring regulatory compliance and reviewing
the adequacy and integrity of internal controls.

The Board has also delegated certain responsibilities to other Board Committees, which operate within
clearly defined terms and reference. Standing committees of the Board include the Audit Committee (“AC”),
Nomination Committee (“NC”) and Remuneration Committee (“RC”). The Board receives reports at the
Board Meeting from the Chairman of each committee on current activities and it is the general policy of the
Company that all major decisions be considered by the Board as whole.
22 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Statement on Corporate
Governance

(I) ESTABLISH CLEAR ROLES AND RESPONSIBILITIES (Cont’d)

(1) Clear Functions Reserved for the Board and those Delegated to Management (Cont’d)

Senior Management Team

The Board is duly assisted by the Management of the Company, namely the Senior Management Team. The
Senior Management Team consists of senior employees holding the following positions:-

(i) Group Managing Director (“MD”) – Mr. Chan Choo Sing;

(ii) Executive Director – Mr. Chan Chow Tek;
(iii) Deputy Group General Manager – Mr. Chan Wee Kiang;
(iv) Senior General Manager for Cambodia Division – Mr. Teo Hock Lim; and
(v) General Manager for Label and Sticker Division – Mr. Chan Wee Boon.

The individual profile of the Key Senior Management Team is available for viewing at Pages 12 to 14 of this
Annual Report.

The principal responsibilities of the Senior Management Team are as follows:-

• Developing, co-ordinating and implementing business and corporate strategies for the approval of the
Board;
• Implementing the policies and decisions of the Board;
• Overseeing the day-to-day operations of the Group;
• To participates in various management committees or working committees for the effective discharge
of duties and functions;
• Relevant member(s) of the Senior Management Team will be invited to attend Board and/or Board
Committees meetings to advise and furnish the Board and/or Board Committees with information,
report, clarifications as and when required on the agenda items to be tabled to the Board and/or Board
Committees, to enable the Board and/or Board Committees to arrive at a decision.

(2) Clear Roles and Responsibilities of the Board

The Board is overall responsible for corporate governance, strategic direction, establishing corporate goals
and monitoring the achievement of these goals. It provides effective leadership and manages overall control
of the Company and its subsidiary companies the Group’s affairs through the discharge of the following
principal duties and responsibilities during the financial year ended 31 March 2016:-

(a) Reviewing and adopting a strategic plan for the Company

The Board reviewed the sustainability, effectiveness and implementation of the strategic plans for the
year and provided guidance and input to the Management.

Strategic Planning – New Investments

The Company had on 7 July 2015 entered into a joint venture with Mr. Huang Wei to incorporate a
subsidiary company in Cambodia under the name of Perfect Seamless Garments (Cambodia) Limited
(“PSG”) and the principal activity of PSG is establish accessory of garment factory.

The subsidiary of Company, PCCS Garments (Suzhou) Limited, had also on 13 June 2016, incorporated
a wholly-owned subsidiary company in China under the name of Yuxing Apparel Suqian Limited (“YASL”)
and the principal activity of YASL is manufacturing and trading of apparels, fashion accessories, fabric
materials and other products.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 23

Statement on Corporate
Governance

(I) ESTABLISH CLEAR ROLES AND RESPONSIBILITIES (Cont’d)

(2) Clear Roles and Responsibilities of the Board (Cont’d)

(b) Overseeing the conduct of the Company’s business

The Senior Management Team are responsible for the day-to-day management and operation of the
Company and the Group.

The Board monitors the performance of Management on a regular basis vide the insertion of the
following permanent agenda items in the Board Meetings:-

• “To review the Group’s performance for the quarterly financial period”; and
• “To discuss the report on the Group’s latest business developments.”

Any enquiries/concerns raised by the Board members in relation to the abovementioned agenda items
would be clarified by a member of the Senior Management Team.

(c) Identification of principal risks and implementation of appropriate internal controls and
mitigation measures

The AC has been entrusted by the Board to identify, evaluate, monitor and manage any relevant major
risk faced by the Group so that the Group will achieve its business objectives. However, the Board as
a whole remains responsible for all the actions of the AC with regard to the execution of the delegated
role and this includes the outcome of the review and disclosure on key risks and internal control in the
Company’s annual reports.

As at the date of the Annual Report, the Board vide the AC has formed a Risk Management Working
Group (“RMWG”) and Performance Management Review Team (“PMRT”) to discharge the Risk
Management function of the Group on behalf on the Board.

The Board has reviewed Registry of Risk for the PCCS Corporate Level, Apparels Division (Malaysia,
Cambodia and China) and Labels & Stickers (Malaysia and Cambodia) to ensure the major risks and
risk owners be identified, and the relevant risk mitigation measures be taken to minimise and/or address
the risks concerned.

(d) Succession Planning

The Board has formalised a Succession Planning Policy to ensure the Group’s continuity in leadership
for all key positions.

The Board recognises that succession planning is an ongoing process designed to ensure that the
Group identifies and develops a talent pool of employees through mentoring, training and job rotation
for high level management positions that become vacant due to retirement, resignation, death or
disability and/or new business opportunities.

As part of the agenda item of “To discuss the report on the Group’s latest business development”, the
Group MD would brief on the Group Human Resources (“HR”) updates, in particular, the impending
appointments and/or resignations/retirements of senior management staff, including overseas
subsidiaries, to ensure all succession issue in respect to any vacant of senior management positions
be addressed.

A copy of the Succession Planning Policy is available for viewing at the Group’s corporate website at
http://www.pccsgroup.net/.
24 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Statement on Corporate
Governance

(I) ESTABLISH CLEAR ROLES AND RESPONSIBILITIES (Cont’d)

(2) Clear Roles and Responsibilities of the Board (Cont’d)

(e) Overseeing the development and implementation of a shareholder communications policy

for the company

The Board is aware of commitment to enhance long term shareholder’s value through regular
communication with all its shareholders, regardless of individual or institutional investors.

However, the Board has yet to formalise a Shareholder Communication Policy in view that Clause 6
of the Board Charter which governs the “Board-Shareholders’ Relationship”, has, to a certain extent,
serves as guide to the Board on the strategy to communicate the Corporate’s vision and mission,
strategies, development, financial plans and prospects to shareholders.

(f) Reviewing the adequacy and the integrity of the Group’s internal control systems and
management information systems

The Board has established key control processes to ensure there is a sound framework of reporting on
internal controls and regulatory compliance. Details pertaining to the Group’s internal control system
and its effectiveness are set out in the Statement on Risk Management and Internal Control in this
Annual Report.

The AC has been delegated by the Board to review the adequacy and integrity of the Group’s internal
control systems and management information systems. The AC has in turn entrusted the outsourced
Internal Auditors, namely Sterling Business Alignment Consulting Sdn. Bhd. (“Sterling”), to carry out
such tasks and the same be incorporated as part of the Internal Audit Plan of the year to be adopted.
The Internal Auditors are required to report to the AC with their findings and recommendations on the
status of the internal control system of the Group on a quarterly basis.

(3) Code of Conduct

The Group has in place a Group’s Code of Conduct (“COC”) that is applicable to all its Directors and
employees. In the course of establishing the COC, the Board recognises the importance to promote and
reinforce ethical standards throughout the Group. Moving forward, the Company will continuously support,
promote and ensure compliance to the COC. The COC will not only apply to every employee of the Group,
but also to every Director (executive and non-executive). Furthermore, the Company will strive to ensure that
our consultants, agents, partners, representatives and others performing works or services for or on behalf
of the Company comply with the COC.

Whistle Blowing Policy

Whistleblowing is a specific means by which an employee/officer or stakeholder can report or disclose

through the following established channels, concerns about any violation of the Code of Ethics and Conduct,
unethical behaviour, malpractices, illegal acts or failure to comply with regulatory requirements that is taking
place/has taken place/may take place in future.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 25

Statement on Corporate
Governance

(I) ESTABLISH CLEAR ROLES AND RESPONSIBILITIES (Cont’d)

(3) Code of Conduct (Cont’d)

Whistle Blowing Policy (Cont’d)

The Board had reviewed and adopted a Whistle Blowing Policy with the following objectives:-

a) Provide an avenue for all employees and member of the public to disclose any improper conduct or
any action that is or could be harmful to the reputation of the Group and/or compromise the interest of
stakeholders;

b) Provide proper internal reporting channel to disclose any improper or unlawful conduct in accordance
with the procedures as provided for under the Whistle Blowing Policy;

c) Address a disclosure in an appropriate and timely manner;

d) Provide protection for the whistleblower from reprisal as a direct consequence of making a disclosure
and to safeguard such person’s confidentiality; and

e) Treat both the whistleblower and the alleged wrongdoer fairly.

Report(s) can be made verbal or in writing and forwarded in a sealed envelope to the following contact
person(s) labelling with a legend such as “To be opened by the AC Chairman/Senior Independent Non-
Executive Chairman/Deputy Group General Manager (“DGM”) or Head of Human Resources only (where
applicable):-

For matters relating to financial reporting, unethical or illegal conduct, one (1) can report directly to the
following designated person:

(1) AC Chairman

Mr. Piong Yew Peng at [email protected]; or

(2) Senior Independent Non-Executive Chairman

Mr. Julian Lim Wee Liang at [email protected]; or

(3) Group MD

Mr. Chan Choo Sing at [email protected].

For Employment-related concerns, one (1) can report directly to the following designated person:

(1) Head of Human Resources

Mr. Teo Bee San at [email protected]; or

(2) DGM

Mr. Chan Wee Kiang at [email protected].
26 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Statement on Corporate
Governance

(I) ESTABLISH CLEAR ROLES AND RESPONSIBILITIES (Cont’d)

(4) Promote Sustainability

The Board views the commitment to sustainability and Environmental, Social and Governance (“ESG”)
performance as part of its broader responsibility to clients, shareholders and the communities in which it
operates.

The Board also recognises the importance of its corporate and social responsibility whilst pursuing its
corporate goals.

(a) Environmental Aspect – Occupational Safety, Health, and Environmental (“OSHE”) Policy

The Board has established an OSHE Policy to ensure the Group operates its business activities with
full commitment in achieving environmental, occupational safety and health excellence. The Board
believes that a workplace that is ecologically harmless and accident-free would promote physical and
emotional health. In return, the Board envisages enhancement in employees’ productivity, efficiency
and quality.

(b) Social Aspect – Corporate Responsibility (“CR”)

The Board recognises the importance of CR whilst pursuing its corporate goals.

A summary of the CR activities undertaken for the financial year ended 31 March 2016 is set out in the
Corporate Responsibility Statement in this Annual Report.

(c) Governance Aspect – Quality Certifications

The Board strongly believes in maintaining the quality of its products and services, and the safety
of its processes. As such, the Group has documented its standard operating procedures, which
encompass all work processes.

Mega Labels & Stickers Sdn. Bhd. and Mega Label (Malaysia) Sdn. Bhd., the key subsidiaries under
the Group’s Labels Printing Division have both obtained dual quality certifications as follow:-

Certification Scope of work

ISO 9001:2008 Production & Printing of Labels, Stickers and Related Products
ISO 14001:2004 Production & Printing of Labels, Stickers and Related Products

(d) Group Sustainability

The Board recognises the importance of its corporate and social responsibility whilst pursuing its
corporate goals.

The Group has adopted the “Group Believes - that Skilled is a Valuable Asset” that would underpin the
sustainability as well as future success of the Group.

The Group continues to invest in its staff through continuous trainings to develop in-house capability
and also maintaining a united workforce that would assist the Group in realising its goals and objectives.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 27

Statement on Corporate
Governance

(I) ESTABLISH CLEAR ROLES AND RESPONSIBILITIES (Cont’d)

(5) Access to Information and Advice

All Directors can have full access to information and are also entitled to obtain full disclosure by the
Management on matters that are put forward to the Board for decisions to ensure that they are being
discussed and examined in an impartial manner that takes into consideration the long term interests of
shareholders, employees, customers, suppliers, and many communities in which the Group conducts its
business.

For Board Meeting, all Directors are provided with sufficient notices and board papers for each Board Meeting
on a timely manner (at least one week in advance) to allow the Directors to have ample time to peruse, obtain
additional information and where applicable, to seek further clarification on the matters to be tabled at the
Meeting.

The Directors may also interact directly with, or request further explanation, information or updates, on any
aspect of the Company’s operations or business concerns from the Management to enable the Board to
discharge its duties in relation to the matters being deliberated.

Protocol for seeking of professional advisory services

Where applicable, the Directors whether as a full Board or in their individual capacity, are encouraged to seek
independent professional advice from the following parties:-

• For corporate and/or governance matters, the external Company Secretary;

• For audit and/or audit-related matters, any representatives of the audit engagement team of the
External Auditors or the outsourced Internal Auditors;
• For any other specific issues where professional advice is required to enable the Board to discharge its
duties in connection with specific matters, the Board may proceed to do so, upon the approval of the
Chairman, in relation to the quantum of fees to be incurred.

For the financial year ended 31 March 2016, other than the external Company Secretary, outsourced Internal
Auditors and the External Auditors, the Board has not sought any other independent professional advices.

The Board recognises that the Senior Independent Non-Executive Chairman is entitled to the strong and
positive support of the Company Secretary in ensuring the effective functioning of the Board.

The Directors have unrestricted access to independent professional advice as well as the advice and services
of the Company Secretary and External Auditors and, may seek advice from the Management on issue under
their respective purview.

(6) Qualified and Competent Company Secretary

The appointment and removal of the Company Secretary is a matter for the Board. All Directors have
access to the advice and services of the Company Secretary, who are responsible for ensuring that Board
procedures are followed and that applicable rules and regulations are complied with. Also, the Company
Secretary ensure that the deliberations at the Board meetings are well captured and minuted. The Company
Secretary also play a key role to facilitate communication between the Board and Management.

28 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Statement on Corporate
Governance

(I) ESTABLISH CLEAR ROLES AND RESPONSIBILITIES (Cont’d)

(6) Qualified and Competent Company Secretary (Cont’d)

In performing her duties, the Company Secretary carry out, amongst others, the following tasks:-

• Statutory duties as required under the Companies Act, 1965, Main LR of Bursa Securities, Capital
Market and Services Act, 2007;
• Facilitating and attending Board and Board Committees Meetings;
• Ensuring that Board and Board Committees Meetings are properly convened and the proceedings are
properly recorded;
• Ensuring timely communications of the Board level decisions to the Management for further action;
• Ensuring that all appointments to the Board and/or Board Committees are properly made in accordance
with the relevant regulations and/or legislations;
• Maintaining records for the purpose of meeting statutory obligations;
• Facilitating the provision of information as may be requested by the Directors from time to time on
timely manner and ensuring adherence to Board policies and procedures;
• Facilitating the conduct of the assessment to be undertaken by the Board and/or Board Committees
as well as to compile the results of the assessments for the Board and/or Board Committees’ notation;
• Assisting the Board with the preparation of announcements for release to Bursa Securities and
Securities Commission; and
• Rendering advice and support to the Board and Management.

The appointed Company Secretary is a member of the Malaysian Institute of Chartered Secretaries and
Administrators (“MAICSA”) and is qualified to act as company secretary under Section 139A of the
Companies Act, 1965. The brief profile of the Company Secretary is as follows:-

Ms. Chua Siew Chuan, FCIS

Ms. Chua has been elected as a Fellow Member of the MAICSA since 1997. She has more than thirty-
five (35) years of experience in handling corporate secretarial matters, with working knowledge of many
industries and government services. She is currently the President of MAICSA.

Ms. Chua is a Chartered Secretary by profession. She is the MD of Securities Services (Holdings) Sdn. Bhd., a
prominent corporate secretarial service provider in Malaysia. Ms. Chua is also the named company secretary
for a number of public listed companies, public companies, private limited companies and societies.

Ms. Chua has been appointed as Company Secretary of the Company since 20 June 1995.

The Board is satisfied with the performance and support rendered by the Company Secretary to the Board
in the discharge of its roles and responsibility. The Company Secretary play an advisory role to the Board on
the Company’s contribution, Board’s policies and procedures and compliance with the relevant regulatory
requirements, codes or guidance and legislations.

Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 29

Statement on Corporate
Governance

(I) ESTABLISH CLEAR ROLES AND RESPONSIBILITIES (Cont’d)

(7) Board Charter

The Board Charter of the Company is in place and posted on the Company’s website. In the course of
establishing a Board Charter, the Board recognises the importance to set out the key values and principles
of the Company, as policies and strategy development are based on these considerations.

The Board Charter includes the division of responsibilities and powers between the Board and Management
as well as the different Committees established by the Board.

The Board Charter acts as a source of reference for Board members and Management, and the same is
accessible to the public on the Company’s corporate website. The Board Charter entails the following:-

• Board Governance Process

• Role of the Board and Board Committees
• Board-Management Relationship
• Board-Shareholders Relationship
• Stakeholders Relationship
• Commitment on Corporate Governance

The Board Charter is to be regularly reviewed by the Board as and when required.

A full copy of the Board Charter is available for viewing at the Group’s corporate website at
http://www.pccsgroup.net/.

(II) STRENGTHEN COMPOSITION

(1) Board Committees

The Board has in place the following Board Committees to assist in carrying out its fiduciary duties:-

(a) AC;
(b) NC; and
(c) RC.

All of these Committees have written Terms of Reference (“TOR”) clearly outlining their objectives, duties and
power. The final decision on all matters are determined by the Board as a whole.

(2) AC

The AC was set up on 7 February 2002 with current terms of reference adopted on 29 April 2016.

The membership of the AC are stated in the AC Report of this Annual Report. A summary of works of the AC
during the financial year, including an evaluation of the independent audit process, is set out in the AC Report
of this Annual Report.

A copy of the TOR of the AC is available for viewing at the Group’s corporate website at
http://www.pccsgroup.net/.
30 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Statement on Corporate
Governance

(II) STRENGTHEN COMPOSITION (Cont’d)

(3) NC

The NC was set up on 7 February 2002 with current terms of reference adopted on 29 April 2016. The
NC comprises exclusively of Non-Executive Directors, majority being Independent Non-Executive Directors,
i.e. two (2) Independent Non-Executive Director and one (1) Non-Independent Non-Executive Directors as
follows:-

Number of NC
Meeting attended /
held in the financial
year ended
NC Position Directorate 31 March 2016
Mr. Julian Lim Wee Liang Chairman Senior Independent Non-Executive 1/1
Chairman
Dato’ Chan Chor Ngiak Member Non-Independent Non-Executive 1/1
Director
Mr. Piong Yew Peng Member Independent Non-Executive Director 1/1

The Chairman of the NC is the Senior Independent Non-Executive Chairman of the Company. The NC is
governed by its TOR of NC which outlines its remit, duties and responsibilities. In accordance with the TOR,
the NC is responsible for making recommendations for any appointments to the Board, chief executive and
chief financial officer. In making these recommendations, the NC will consider the required mix of skills,
character, experience, integrity, competence and time contributions/commitment of the Directors. The NC
also regularly reviews the Board structure, size and composition as well as considers the Board Succession
Plan.

A copy of the TOR of the NC is available for viewing at the Group’s corporate website at
http://www.pccsgroup.net/.

(a) Activities conducted during the financial year

During the financial year under review, one (1) Meeting was held and attended by all members. Pursuant
to Paragraph 15.08A(3) of Main LR of Bursa Securities, the summary of activities of the NC during the
financial year under review were disclosed as follows:-

• Review and confirmed the minutes of the NC Meeting held in financial year ended 31 March
2015;
• Recommended the re-election of Mr. Chan Chor Ang and Mr. Julian Lim Wee Liang who retired
pursuant to Article 94 of the Company’s Articles of Association at the Twenty-First Annual General
Meeting held on 4 September 2015 (“21st AGM”);
• Recommended the re-election of Mr. Piong Yew Peng, who retired pursuant to Article 100 of the
Company’s Articles of Association at the 21st AGM;
• Reviewed and recommended to the Board, the adoption of “Declaration by Independent
Directors” to confirm the “Independence” of the Independent Directors on an annual basis;
• Reviewed the effectiveness, composition and balance of the Board of Directors; and
• Evaluated the effectiveness and contribution of the Board of Directors and Board Committees.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 31

Statement on Corporate
Governance

(II) STRENGTHEN COMPOSITION (Cont’d)

(3) NC (Cont’d)

(b) Develop, maintain and review criteria for recruitment and annual assessment of Directors

Appointment of Directors

The appointment of Directors is under the purview of the NC, which is to assist the Board on all new
Board and Board Committees’ appointments and to provide a formal and transparent procedure for
such appointments including obtaining a commitment from the candidate that sufficient time will be
devoted to carry out the responsibilities as a Director.

The policies and procedures for recruitment and appointment of Directors are set out in the Board
Charter.

Pursuant to the TOR of NC, the NC is tasked to identify and select potential new Directors and to make
recommendations to the Board for the appointment of Directors.

The NC reviews candidates for appointment as Directors based on the following criteria:-

• qualifications;
• skills and competence;
• functional knowledge;
• experience;
• background and character;
• integrity and professionalism;
• time commitment; and
• in the case of candidates for the position of Independent Non-Executive Directors, whether the
test of independence under the Main LR of Bursa Securities is satisfied.

In its review of the potential candidates, the NC also considered the following additional criteria:-

• Prevailing government policies such as gender diversity;

• Overall composition of the Board;
• Board dynamics;
• The combination of skills possessed by existing Directors to ensure the selected candidate would
help close any possible gaps in the Board; and
• Financial health of the Group.

As part of its evaluation procedures, representative(s) of the NC will conduct an informal interview with
the potential candidate(s).

Upon review, the NC shall make its recommendations to the Board of Directors for consideration and
approval.

The Board is entitled to the services of the Company Secretary who ensures that all appointments are
properly made, that all necessary information is obtained from Directors, both for the internal records
and for the purposes of meeting statutory obligations, as well as obligations arising from Main LR of
Bursa Securities or other regulatory requirements.

The Directors observe the recommendation of MCCG 2012, that they are required to notify the
Chairman before accepting any new directorship and to indicate the time expected to be spent on the
new appointment.
32 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Statement on Corporate
Governance

(II) STRENGTHEN COMPOSITION (Cont’d)

(3) NC (Cont’d)

(b) Develop, maintain and review criteria for recruitment and annual assessment of Directors
(Cont’d)

Appointment of Directors (Cont’d)

For the financial year ended 31 March 2016, the Chairman has not received any such notification from
any Directors.
During the financial year under review, Mr. Piong Yew Peng was appointed as Independent Non-
Executive Director on 1 April 2015. Mr. Piong also be appointed as the Chairman of the Audit Committee
and Remuneration Committee and a Member of the Nomination Committee on 1 April 2015.

Re-election of Directors

In accordance with the Article 94 of the Company’s Articles of Association, one-third (1/3) of the
Directors for the time being, or the number nearest to one-third (1/3) shall retire from office at each AGM
provided always that all Directors shall retire from office at least once every three (3) years in compliance
with the Paragraph 7.26 (2) of Main LR of Bursa Securities.
At the forthcoming AGM, Mr. Chan Choo Sing and Mr. Chan Chow Tek were due for retirement and
being eligible have offered themselves for re-election.
The NC were satisfied with the performance of the abovementioned Directors and recommended their
re-election to the Board for approval. The Board has in turn, recommended the same to be considered
by the shareholders at the forthcoming Twenty-Second (“22nd”) AGM of the Company.

Re-appointment of Directors

Pursuant to Section 129(2) of the Companies Act, 1965, Directors who are or over the age of seventy
(70) years shall retire at every AGM and may offer themselves for re-appointment to hold office until the
conclusion of the next AGM.
There is no Director subject to re-appointment under the abovementioned conditions at the forthcoming
22nd AGM of the Company.

Board Effectiveness Assessment

Assessment of the effectiveness of the Directors, the Board as a whole and the Board Committees
are being carried out annually. The objective is to improve the Board’s effectiveness by identifying
gaps, maximise strengths and address weaknesses. The Chairman of the Board oversees the overall
evaluation process and responses are analysed by the NC, before being tabled and discussed at the
Board.
The NC conducted the following assessments annually:-
(i) Directors’ self-assessment and Peer assessment survey
In conducting the Survey, the following main criteria were adopted by the NC:-
(i) Contribution to interaction;
(ii) Quality of Input; and
(iii) Understanding of Role.

Based on the Survey conducted for the financial year ended 31 March 2016, the NC was satisfied
with the performance of the individual Board of Directors.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 33

Statement on Corporate
Governance

(II) STRENGTHEN COMPOSITION (Cont’d)

(3) NC (Cont’d)

(b) Develop, maintain and review criteria for recruitment and annual assessment of Directors
(Cont’d)

Board Effectiveness Assessment (Cont’d)

(ii) Evaluation on the effectiveness of the Board as a Whole

In conducting the Evaluation, the following main criteria were adopted by the NC:-

• Establish clear roles and responsibilities;

• Strengthen composition;
• Reinforce independence;
• Foster commitment;
• Uphold integrity in financial reporting;
• Recognise and manage risks;
• Ensure timely and high quality disclosure;
• Strengthen relationship between company and shareholders

Based on the Evaluation conducted for the financial year ended 31 March 2016, the NC was
satisfied with the performance of the Board as a whole.

(C) Board Diversity Policy

The Board affirms its commitment to boardroom diversity as a truly diversified Board can enhance
the Board’s creativity, efficiency and effectiveness to thrive in good times and weather thought times.
Female representation will be taken into consideration when vacancies arise and suitable candidates
are identified, underpinned by the overriding primary aims of selecting the best candidate to support
the achievement of the Company’s strategic objectives.

Currently, the Board does not have any gender or ethnicity diversity policy. The NC does not set any
target on gender or ethnicity diversity but endeavour to include any member who will improve the
Board’s overall composition balance. The age profile of the Directors were ranging from forties to sixties
years of age, which underlies the Board’s commitment to age diversity at the Board level appointment.

(4) RC

The RC was set up on 7 February 2002, with its current TOR adopted on 20 February 2014. The RC
comprises two (2) Independent Non-Executive Director and one (1) MD and the composition of the RC is as
follows:-

Number of RC
Meeting attended /
held in the financial
year ended
RC Position Directorate 31 March 2016
Mr. Piong Yew Peng Chairman Independent Non-Executive Director 1/1
Mr. Chan Choo Sing Member Group MD 1/1
Dato’ Chan Chor Ngiak Member Non-Independent Non-Executive 1/1
Director

During the financial year under review, one (1) Meeting was held and attended by all members.
34 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Statement on Corporate
Governance

(II) STRENGTHEN COMPOSITION (Cont’d)

(4) RC (Cont’d)

The RC is governed by its TOR of RC which outlines its remit, duties and responsibilities. The principal duties
of the RC are to set up a policy framework and to make recommendations to the Board on remuneration
packages and benefits extended to the Executive Directors. The RC is also responsible for drawing from
outside advice whenever necessary prior to making the relevant recommendations to the Board such that
the levels of remuneration are sufficient to attract and retain the Directors needed to run the Company
successfully. In its review, the RC considers various factors including the Directors’ fiduciary duties, time
commitments expected of them and the Company’s performance.

(a) Activities conducted during the financial year

The following activities were undertaken by the RC during the financial year under review:-

(a) Reviewed and confirmed the minutes of the RC Meeting held in financial year ended 31 March
2016;
(b) Deliberated on the remuneration packages of the Executives Directors and recommended the
same to the Board for approval; and
(c) Reviewed the Directors’ fees and recommended the same for the Board for approval.

(b) Directors’ Remuneration

The details of the remuneration for the Directors during the year are as follows:

For the financial year ended 31 March 2016, the aggregate remuneration received/receivable by
the Directors of the Company from the Company and the subsidiaries categorised into appropriate
components are as follows:

Salaries
and Other
Fees* emoluments Bonus Total
Directors’ Remuneration (RM’000) (RM’000) (RM’000) (RM’000)
Executive Directors received from:
- Company 156 - - 156
- Subsidiaries - 1,290 106 1,396
Non-Executive Directors received from:
- Company 246 - - 246
- Subsidiaries - - - -

* Subject to the approval by shareholders at the 22nd AGM

The details of remuneration for Directors of the Company received/receivable for the financial year
ended 31 March 2016 by category and within the following bands:-

No. of Directors
Remuneration Bands Executive Non-Executive
RM50,001 to RM100,000 - 4
RM650,001 to RM700,000 1 -
RM850,001 to RM900,000 1 -

Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 35

Statement on Corporate
Governance

(II) STRENGTHEN COMPOSITION (Cont’d)

(4) RC (Cont’d)

(c) Directors’ Remuneration Policy

The remuneration of each Director reflects the level of responsibility and commitment, which goes with
Board membership. The full Board determines the remuneration of each Director.

The Board has adopted a Director Remuneration Policy to set the remuneration of its Group MD and
Executive Directors. The compensation system takes into account the performance of the Group MD
and each Executive Director and the competitive environment in which the Group operates.

The objective of the Director Remuneration Policy are as follows:-

• Determine the level of remuneration package of Directors and Group MD/DGM;

• Attract, develop and retain high performing and motivated Executive Directors and Group MD/
DGM with a competitive remuneration package;

• Provide a remuneration such that the Directors and Group MD/DGM are paid a remuneration
commensurate with the responsibilities of their position; and

• Encourage value creation for the Company and its Stakeholders.

It is the Board’s duty to ensure that the level of remuneration is sufficient to attract and retain the
Directors needed to run the Company successfully. Remuneration package of the Group MD and the
Executive Directors will be decided by the Board as a whole with the Director concerned abstaining
from deliberations and voting on decisions in respect of his individual remuneration.

A copy of the Director Remuneration Policy is available for viewing at the Group’s corporate website at
http://www.pccsgroup.net/.

(d) Directors’ Fees

The Directors Fees are at RM48,000/- per Non Independent Director per annum and RM36,000/- per
Independent Director per annum. In view of the onerous duties assumed, the Chairman of the AC is
accorded an additional RM12,000/- per annum while the Chairman of the RC & NC is also entitled to
RM12,000/- per annum respectively.

For the financial year ended 31 March 2016, a total Directors’ Fees of RM402,000/- have been
recommended to the shareholders for approval at the forthcoming 22nd AGM of the Company.

(III) REINFORCE INDEPENDENCE

(1) Annual Assessment of Independence of Directors

The Board principally adhered to the concept of independence in tandem with the definition of Independent
Director in Paragraph 1.01 of the Main LR of Bursa Securities through the assistance of the NC. The Board
has conducted assessment on its Independent Directors annually. To be in line with such recommendation,
the Board has put in place proper policies and procedures to ensure effectiveness of the Independent Non-
Executive Directors on the Board.
36 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Statement on Corporate
Governance

(III) REINFORCE INDEPENDENCE (Cont’d)

(1) Annual Assessment of Independence of Directors (Cont’d)

The Board considers that its Independent Directors provide an objective and independent views on various
issues dealt with at the Board and Board Committees level. All Independent Non-Executive Directors are
independent of management and free from any relationship. The Board is of the view that the current
composition of Independent Directors fairly reflects the interest of minority shareholder in the Company
through the Board representation.

The Board noted that Letters of Declaration has been executed by the following Independent Non-Executive
Directors of the Company, confirming their independence pursuant to Main LR of Bursa Securities as well
as the MCCG 2012 and the Independent Non-Executive Directors have undertaken to inform the Company
immediately should there be any change which could interfere with the exercise of their independent
judgement or ability to act in the best interest of the Company:-

• Mr. Julian Lim Wee Liang

• Mr. Piong Yew Peng

Based on the outcome of the Board Performance Evaluation and Self Performance Evaluation Forms
completed by each Directors and the Board as a whole, the Board is satisfied with the level of independence
demonstrated by the Independent Non-Executive Directors and their ability to act in the best interest of the
Company.

The Board considers that its Independent Non-Executive Directors provide an objective and independent
views on various issues dealt with at the Board and Board Committee level. All Independent Non-Executive
Director are independent of management and free from any business or other relationship. The Board is of the
view that the current composition of Independent Directors fairly reflects the interest of minority shareholders
in the Company through the Board representation.

(2) Tenure of Independence of Directors

MCCG 2012 recommended that the tenure of an Independent Director should not exceed a cumulative
terms of nine (9) years. Upon completion of the nine (9) years’ terms, an Independent Director may continue
to serve on the Board subject to the Director’s re-designation as a Non-Independent Director.

The Board shall provide justifications and seek shareholder’s approval in the event it proposes to retain an
Independent Director who has served the Board in that capacity for more than nine (9) years, upon the prior
review and relevant recommendation from the NC.

The Board noted that none of its Independent Directors have attained such tenure as at the date of this
Statement. Therefore, there is no such need for the Company to seek for shareholders’ approval on the said
purpose at the forthcoming 22nd AGM.

(3) Separation of Positions of Chairman and Group MD

The Board recognises the importance of having a clearly accepted division of power and responsibilities at
the head of the Company to ensure a balance of power and authority.

The separation of positions of the role of Chairman and Group MD also facilitates the division of responsibilities
between them. Mr. Julian Lim Wee Liang, the Senior Independent Non-Executive Chairman, primarily
responsible for the orderly conduct and working of the Board whilst Mr. Chan Choo Sing, the Group MD,
together with the Executive Directors, oversees the operations of the Group and implementation of the
Board’s decisions, business strategies, and policies.

The role of Chairman as well as the role of the Group MD have been clearly outlined in the Board Charter.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 37

Statement on Corporate
Governance

(III) REINFORCE INDEPENDENCE (Cont’d)

(4) Board Composition and Balance

The Board currently has six (6) members comprising one (1) Senior Independent Non-Executive Chairman,
one (1) Independent Non-Executive Director, two (2) Non-Independent Non-Executive Directors and two (2)
Executive Directors. The Independent Directors represent compliance with the requirement for one-third (1/3)
Independent Directors on the Board, pursuant to Paragraph 15.02(1) of the Main LR of Bursa Securities and
the adoption of the best practices set out in the MCCG 2012.

All Directors possess a wide range of business expertise, commercial and financial experience that is relevant
to their roles in providing leadership and direction to the Group. The mix of industry-specific knowledge with
broad business and commercial experience provides the strength that is needed to lead the Company to
meet its objectives and to provide effective leadership to the Company. A brief description on the background
of each Directors is presented separately in the Directors’ Profile of this Annual Report.

The Executive Directors have direct responsibilities for business operations whereas the Non-Executive
Directors have a responsibility to bring independent and objective judgement on the Board’s decisions.
The Board is of the view that the current composition of the Board is appropriate, where no individual shall
dominate the Board’s decision making. It reflects fairly the investment in the Company by the shareholders
at large even though four (4) of the Board members namely, Mr. Chan Choo Sing, Mr. Chan Chow Tek, Dato’
Chan Chor Ngiak and Mr. Chan Chor Ang are the substantial shareholders via their indirect interests in the
shareholdings of the major shareholder, Setia Sempurna Sdn. Bhd. in the Company. In that respect, the
interests of investors including the Company’s minority shareholders and the public are adequately served
and protected.

(5) Senior Independent Non-Executive Chairman

The Board has designated Mr. Julian Lim Wee Liang as Senior Independent Non-Executive Chairman to
whom concerns from shareholders/stakeholders may be conveyed.

Shareholders/Stakeholders may address their concerns to the Senior Independent Non-Executive Chairman
in the following manners:-

• By Letter – to be forwarded in a sealed envelope labelling with a legend of “To be opened by the
Senior Independent Non-Executive Chairman only”; or

• By Email – to be forwarded vide secure email with the heading of “For the eyes of the Senior
Independent Non-Executive Chairman only”.

Senior Independent Non-Executive Chairman

Mr. Julian Lim Wee Liang

Postal Address:-

PCCS Group Berhad

Lot 1376, GM 127, Mukim Simpang Kanan,
Jalan Kluang, 83000 Batu Pahat, Johor, Malaysia.

Email Address:-

[email protected]
38 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Statement on Corporate
Governance

(III) REINFORCE INDEPENDENCE (Cont’d)

(5) Senior Independent Non-Executive Chairman (Cont’d)

The above said information can also be found at the “Investor Relations” Section of the Company’s corporate
website at http://www.pccsgroup.net/html/list_903.html

For financial year ended 31 March 2016, Mr. Julian Lim informed that he has not received any concerns from
shareholders/stakeholders, be it written or verbal.

(IV) FOSTER COMMITMENT

(1) Time Commitment

The Board requires its members to devote sufficient time to the workings of the Board, to effectively discharge
their duties as Directors of the Company, and to use their best endeavour to attend meetings.

For the financial year ended 31 March 2016, the Board had convened a total of five (5) Board Meetings for
the purposes of deliberating on the Company’s quarterly financial results at the end of every quarter and
discussing important matters which demanded immediate attention and decision-making. During the Board
Meetings, the Board reviewed the operation and performance of the Company and other strategic issues
that may affect the Company’s business. Relevant staff were invited to attend some of the Board Meetings
to provide the Board with their views and clarifications on issues raised by the Directors.

(a) Review of attendance by the NC

The NC has been tasked to review the attendance of the Directors at Board and/or Board Committee
Meetings. Upon review, the NC noted the Board members have devoted sufficient time and effort to
attend Board and/or Board Committee meetings for the financial year ended 31 March 2016.

Details of attendance at Board Meetings held during the financial year ended 31 March 2016 is as
follows:-

Directors Attendance % of Attendance

Chan Choo Sing 4 out of 5 80
Chan Chow Tek 5 out of 5 100
Dato’ Chan Chor Ngiak 5 out of 5 100
Chan Chor Ang 5 out of 5 100
Julian Lim Wee Liang 5 out of 5 100
Piong Yew Peng 5 out of 5 100

The Board will also meet on an ad-hoc basis to deliberate urgent issues and matters that require
expeditious Board direction or approval. In the intervals between Board meetings, any matters requiring
urgent Board decisions and/or approval can be sought via circular resolutions which are supported
with all the relevant information and explanations required for an informed decision to be made.

Meeting papers were prepared to provide relevant facts, analysis and recommendations for supporting
the proposals to enable informed decision-making by the Board. The agenda and papers for meetings
were furnished to the Director and Board Committees’ member in advance (at least one week in
advance) to enable them to prepare for the meetings.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 39

Statement on Corporate
Governance

(IV) FOSTER COMMITMENT (Cont’d)

(1) Time Commitment (Cont’d)

(a) Review of attendance by the NC (Cont’d)

The Board encourages constructive and healthy debate at all meetings. The Directors are given the
chance to freely express their opinions or share information with their peers in the course of deliberation
as a participative Board. Any Director/Board Committees’ member who has direct or indirect interest
in the subject matter to be deliberate shall abstain from deliberation and voting on the same during the
meeting.

The Secretary would ensure a quorum is present for all meetings and that such meetings are convened
in accordance with the Company’s Articles of Association or relevant Board Committee’s TOR. The
Secretary record the proceedings of all meetings include pertinent issues, the substance of inquiries, if
any, and responses thereto, members’ suggestion and the decision made, as well as the rationale for
those decisions. The Board is therefore able to perform its fiduciary duties and fulfil its oversight role
towards instituting a culture of transparency and accountability in the Company.

(b) Annual Meeting Timetable

In facilitating the schedule of the Directors, the Company Secretary will prepare and circulate in advance
an annual meeting timetable, which includes all the proposed meeting dates for Board and Board
Committee Meetings, as well as the AGM. Upon the concurrence by all the Board members, the annual
meeting timetable will be adopted for the applicable financial year.

The Annual Meeting Schedule for year 2015 was approved and adopted by the Board at the Board
Meeting held on 27 November 2014.

The Annual Meeting Schedule for year 2016 was approved and adopted by the Board at the Board
Meeting held on 18 November 2015.

(c) Prior Notification to the Board vide Chairman and/or Secretary

As a matter of protocol, as stipulated under Clause 4.12.3 of the Board Charter, prior to the acceptance
of new Board appointment(s) in other companies, the Directors should notify the Chairman of the Board
and/or the Secretary in writing. The said notification should include an indication of time that will be
spent on the new appointment.

For the financial year ended 31 March 2016, there is no written notification received from the Directors.

(2) Directors’ Training

The Board acknowledges the importance of continuous education and training to equip themselves for the
effective discharge of its duties.

The Board has cultivated the following best practices:-

(a) All newly appointed Directors are required to attend the Mandatory Accreditation Training Programme
(MAP) as prescribed by Bursa Securities within the stipulated timeframe;

(b) All Directors are encouraged to attend talks, training programmes and seminars to update their
knowledge on the latest regulatory and business environment;
40 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Statement on Corporate
Governance

(IV) FOSTER COMMITMENT (Cont’d)

(2) Directors’ Training (Cont’d)

(c) The Directors may be requested to attend additional training courses according to their individual
needs as a Director/Board Committee’s member on which they serve; and

(d) The Directors are briefed by the Secretary on the letters issued by Bursa Securities at the Board
Meeting.

All Directors have attended the MAP prescribed by Bursa Securities, the Directors have attended seminars
to keep themselves updated on the expectations of their roles and other market developments and the
trainings attended were as follows:-

Directors Training(s) Attended

Julian Lim Wee Liang • 2016 Budget Seminar conducted by Ernst & Young
• Preparing to Transit form PERS to MPERS conducted by Malaysian
Institute of Accountants
• Briefing by the Company Secretary on the Amendments to the Main LR of
Bursa Securities
Chan Choo Sing • Nautical Vendor Summit 2015 conducted by VF Asia Limited
• 2016 Budget Seminar conducted by Malaysia Institute of Accountants
• Puma Trade Agreement Seminar conducted by World Cat Limited
• Briefing by the Company Secretary on the Amendments to the Main LR of
Bursa Securities
Chan Chow Tek • 2016 Budget Seminar conducted by Malaysia Institute of Accountants
• Briefing by the Company Secretary on the Amendments to the Main LR of
Bursa Securities
Dato’ Chan Chor Ngiak • Monthly Tax Deduction (MTD) Briefing conducted by Lembaga Hasil
Dalam Negeri
• Briefing by the Company Secretary on the Amendments to the Main LR of
Bursa Securities
Chan Chor Ang • Briefing by the Company Secretary on the Amendments to Main LR of
Bursa Securities
Piong Yew Peng • Mastering the Structural Shift in the Malaysian Tax System conducted by
Crowe Horwath
• Focus Group Session for Board of Directors on Strengthening Corporate
Governance Disclosure amongst the Listed Issues conducted by Bursa
Malaysia Berhad
• Briefing by the Company Secretary on the Amendments to Main LR of
Bursa Securities

Upon review, the Board concluded that the Directors’ Trainings for the financial year ended 31 March 2016
were adequate.

2017 Directors’ Training

Upon review of the training needs of the Directors for the financial year ending 31 March 2017 and
recognising the need to keep abreast with the fast changing business environment, the Board has requested
the Management to arrange for training courses to be organised either in-house or externally-held as part of
the Directors’ continuing education programmes for the financial year ending 31 March 2017.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 41

Statement on Corporate
Governance

(V) UPHOLD INTEGRITY IN FINANCIAL REPORTING

(1) Compliance with Applicable Financial Reporting Standards

The AC assist the Board to oversee the financial reporting process and the quality of its financial reporting
by reviewing the information to be disclosed, to ensure completeness, accuracy and adequacy prior to
endorsing the same to the Board for release to Bursa Securities and Securities Commission Malaysia.

The AC has received assurance that the financial statements of the Group and of the Company for the
financial year ended 31 March 2016 had been prepared in accordance with Malaysian Financial Reporting
Standards (“MFRSs”), International Financial Reporting Standards and the requirements of the Companies
Act, 1965 in Malaysia. Consequently, the AC has recommended the audited financial statement for the
financial year ended 31 March 2016 of the Company to the Board for approval and the Board upon its review,
has approved the same vide a Directors’ Circular Resolution In Writing dated 20 July 2016.

During the financial year ended 31 March 2016, the engagement partner of the External Auditors have
briefed the AC on the revised timeframe for issuance of period financial information by listed issuers following
the revision in the Main LR by Bursa Securities and the AC has in turn briefed the Board on the same.

The Board ensures that shareholders are presented with a clear, balanced, meaningful assessment of the
Company’s financial performance and prospects through the issuance of the audited financial statements and
quarterly announcements of financial results and vide corporate announcements on significant development
in accordance with the Main LR of Bursa Securities on a timely basis and in compliance with the applicable
financial reporting standards.

(2) Assessment of Sustainability and Independence of External Auditors

For the financial year ended 31 March 2016, the AC has formalised the procedures to assess the suitability
and independence of External Auditors vide an annual assessment of the suitability and independence of the
External Auditors, namely Messrs. Ernst & Young.

In its assessment, the AC considered, inter alia, the following factors:-

• The External Auditors have the adequate resources, skills, knowledge and experience to perform their
duties with professional competence and due care in accordance with approved professional auditing
standards and applicable regulatory and legal requirements;
• To the knowledge of the Audit Committee, the External Auditors do not have any record of disciplinary
actions taken against them for unprofessional conduct by the Malaysian Institute of Accountants
(“MIA”) which has not been reversed by the Disciplinary Board of MIA;
• The engagement partner has not served for a continuous period of more than five (5) years with the
Company;
• The external audit firm has the geographical coverage required to audit the Company;
• The external audit firm advises the AC on significant issues and new developments pertaining to risk
management, corporate governance, financial reporting standards and internal controls on a timely
basis;
• The external audit firm consistently meets the deadlines set by the Company;
• The level of quality control procedures in the external audit firm, including the audit review procedures;
• The AC receives written assurance from the External Auditors confirming that they are, and have been,
independent throughout the conduct of the audit engagement in accordance with the terms of all
relevant professional and regulatory requirements; and
• The external audit scope is adequate to cover the key financial and operational risks of the Company.
42 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Statement on Corporate
Governance

(V) UPHOLD INTEGRITY IN FINANCIAL REPORTING (Cont’d)

(2) Assessment of Sustainability and Independence of External Auditors (Cont’d)

The AC noted for the financial year ended 31 March 2016, Messrs. Ernst & Young, the External Auditors
of the Company confirmed that the engagement quality control reviewer and members of the engagement
team in the course of their audits were and had been independent for the purpose of the audit in accordance
with the terms of relevant professional and regulatory requirements.

The AC also noted the having served the requisite years, the engagement partner of Messrs. Ernst & Young
has been rotated during the financial year ended 31 March 2016.

Upon completion of its assessment, the AC was satisfied with Messrs. Ernst & Young’s technical competency
and audit independence during the financial year under review and recommended to the Board the re-
appointment of Messrs. Ernst & Young as External Auditors for the financial year ending 31 March 2017. The
Board has in turn, has recommended the same for shareholders’ approval at the forthcoming 22nd AGM of
the Company.

(VI) RECOGNISE AND MANAGE RISKS

(1) Sound Framework to Manage Risks

The Board affirms the importance of maintaining a sound system of internal controls and risk management
practices to good corporate governance. The AC has been entrusted by the Board to ensure effectiveness of
the Group’s internal control systems. The activities of the outsourced Internal Auditors are reported regularly
to the AC which provides the Board with the required assurance in relation to the adequacy and integrity of
the Group’s internal control systems. It acknowledges its overall responsibility in this area and also the need
to review its effectiveness regularly.

The Board has approved and adopted a Risk Management Handbook since 23 August 2013. The Risk
Management Handbook entails the following chapters:-

(1) Risk Management – Type of Risks and Benefits of Risk Management;

(2) Terms of Reference and Reporting Structure;
(3) Roles and Responsibilities;
(4) Risk Management Framework;
(5) Risk Measurement (Labels & Stickers Division);
(6) Risk Measurement (Garment Division); and
(7) Implementing Risk Management Process.

In conjunction with the adoption of the Risk Management Handbook, a PMRT comprising selected key
management personnel has been established to review, highlight and report significant risks to the AC.

As at the date of the Annual Report, the Board vide the AC has formed a RMWG together with PMRT to
discharge the Risk Management function of the Group on behalf on the Board. The RMWG is reporting to
PMRT in respect of the identified risks and PMRT will report directly to the AC.

The Statement on Risk Management and Internal Control of the Group as set out in this Annual Report
provides an overview of the state of Risk Management and internal controls within the Group.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 43

Statement on Corporate
Governance

(VI) RECOGNISE AND MANAGE RISKS (Cont’d)

(2) Internal Audit Function

The Board has outsourced its internal audit function to a professional internal audit service provider, namely,
Sterling. The outsourced Internal Auditors report directly to the AC.

The principal consultant of Sterling, Ms. So Hsien Ying, MBA, has twenty-three (23) years of relevant
experience, providing the Board with a reasonable assurance of adequacy of the scope, functions and
resources of the Internal Audit function.

The functions of the internal audit include major areas as follows:

• Perform regular review of operational compliance with the established internal control procedures and
the risk profiles of the major business units of the Group.
• Conduct investigations on specific areas or issues directed by the Audit Committee.
• Review the risk management processes.

The internal controls are tested for effectiveness and efficiency by Sterling. The report of the internal audit is
tabled for AC’s review and comments, and the audit findings will then be communicated to the Board. The
outsourced internal auditor’s representative met up four (4) times with the AC for the financial year ended 31
March 2016.

The internal audit review of the Group’s operations encompasses an independent assessment of the
Company’s compliance with its internal controls and recommendations are made for further improvement.

Formal Assessment of Internal Auditors

For the financial year under review, the AC has formalised the procedures to assess the performance of
Internal Auditors vide an annual assessment of suitability of the Internal Auditors.

In its assessment, the AC considered, inter alia, the following factors:-

• Understanding;
• Charter and structure;
• Skills and experiences;
• Communication; and
• Performance.

Upon completion of its assessment, the AC was satisfied with the outsourced Internal Auditor, Sterling’s
technical competency and audit independence during the financial year under review.

(VII) ENSURE TIMELY AND HIGH QUALITY DISCLOSURE

(1) Corporate Disclosure Policy

The Board recognises the value of transparent, consistent and coherent communications with investment
community consistent with commercial confidentiality and regulatory considerations.

The Company has in place a Corporate Disclosure Policy on confidentiality to ensure that confidential
information is handled properly by the Directors, employees and relevant parties to avoid improper use of
such information. The Board is mindful that information which is expected to be material must be announced
immediately to Bursa Securities.
44 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Statement on Corporate
Governance

(VII) ENSURE TIMELY AND HIGH QUALITY DISCLOSURE (Cont’d)

(1) Corporate Disclosure Policy (Cont’d)

The Board is committed to ensure communications to the investing public regarding the business, operations
and financial performance of the Company are accurate, timely, factual, informative, consistent, broadly
disseminated and where necessary, information filed with regulators is in accordance with applicable legal
and regulatory requirements.

A copy of the Corporate Disclosure Policy is available for viewing at the Group’s corporate website at
http://www.pccsgroup.net/.

(2) Leverage on Information Technology for Effective Dissemination of Information

The Company’s website at www.pccsgroup.net provides a plethora of information to the public, which
includes, inter alia, corporate information, business activities, corporate governance matters, latest press
releases, annual reports, financial results, and etc.

The Company has created the following dedicated sections to ensure more effective dissemination of
information:-

(a) A dedicated “Investor Relations” section which provides all relevant information on the Company and
is accessible by the public. It includes the announcements made by the Company and Annual Reports.
The Board discloses to the public all material information necessary for informed investment and takes
reasonable steps to ensure that all shareholders enjoy equal access to such information. The Investor
Relations section comprises the following specific information:-

• Stock information
• Financial reporting
• Meet the Directors (with personal photograph of each Director)

(b) A dedicated “Media Centre” section which provides access to various editions of the PCCS Group
Press ( ). Published since the year 2009 in bi-lingual language of English and Chinese, the PCCS
Group Press serves an internal communication channel for the Group in view of the Group subsidiaries’
diverse location around the globe.

Copies of the PCCS Group Press is available at the Company’s corporate website under the banner of
“Media Centre” at http://www.pccsgroup.net/html/list_895.html.

(c) A dedicated “Contact Us” section with the listing of contact particulars of all the subsidiaries of the
Group, including telephone numbers, facsimile as well as email address of the respective person-in-
charge for ease of communication by stakeholders.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 45

Statement on Corporate
Governance

(VIII) STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS

(1) Shareholders’ Participation at General Meetings

The Company communicates regularly with the shareholders and investors through Annual Reports,
quarterly financial reports and various announcements made to Bursa Securities as the Board
acknowledges the importance of accurate and timely dissemination of information to its shareholders,
potential investors and the public in general.

Several channels are used to disseminate information on a timely basis, such as:-

The AGM which is used as the main forum of dialogue for shareholders to raise any issues pertaining to
the Company;

Annual Report, quarterly financial results and various announcements made to Bursa Securities; and

The corporate websites www.pccsgroup.net which provide corporate information of the Group.

The notice of AGM together with the Annual Report is dispatched to shareholders at least twenty-one (21)
days prior to the meeting date.

(2) Poll Voting

The Board noted that pursuant to the Paragraph 8.29A of Main LR of Bursa Securities, the Company
must ensure that any resolution set out in the notice of any general meeting, or in any notice of resolution
which may be properly be moved and is intended to be moved at any general meeting, is voted by poll.
Also, the Recommendation 8.2 of MCCG 2012 states that the Board should encourage poll voting.

In line with the Main LR of Bursa Securities and MCCG 2012, the Chairman will inform the shareholders
that all the resolutions to be passed on the 22nd AGM, are to be voted by way of poll, at the commencement
of the said meeting.

Where feasible and within the financial means of the Company, the Board will consider and explore the
suitability and feasibility of adopting electronic voting in coming years to facilitate greater shareholders
participation at general meeting(s).

(3) Shareholders’ Communication and Investor Relations

The Company is committed to on-going communication across its entire shareholder base, whether
institutional investors, private or employee shareholders. This is achieved principally through annual
and quarterly reports and the AGM and timely dissemination of information on significant company
developments and price sensitive information in accordance with the Main LR of Bursa Securities. All the
Directors were present at the Twenty-First AGM of the Company held on 4 September 2015 to engage
with the shareholders personally and proactively.

The Company’s AGM not only deals with the formal business of the Company, but represents the
principal forum for dialogue and interaction with shareholders, providing an opportunity for the Board to
communicate directly with shareholders and vice versa. Shareholders are invited to ask questions and
express their views about the Company’s business at the meeting. The Company presents to shareholders
an overview of the Group’s performance during the year at the AGM.
46 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Statement on Corporate
Governance

(VIII) STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS (Cont’d)

(3) Shareholders’ Communication and Investor Relations (Cont’d)

All Directors abstained from voting on the resolution concerning their remuneration. The results of all the
resolutions set out in the Notice of the 22nd AGM will be announced on the same day to Bursa Securities,
which is accessible on the Bursa Securities’ website.

The Board ensures that full information of the Directors who are retiring at the forthcoming 22nd AGM and
willing to serve if re-elected are disclosed in the Notice of the 22nd AGM.

The explanatory notes facilitating full understanding and evaluation of issues involved in the proposed
resolutions accompanying each item of special business is included in the Notice of the 22nd AGM.

Conclusion

The Board is satisfied that for the financial year ended 31 March 2016, it complies substantially with the principles and
recommendations of the MCCG 2012.

The Statement on Corporate Governance is made in accordance with a resolution of the Board of Directors passed on
20 July 2016.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 47

Statement on Risk Management

and Internal Control
INTRODUCTION

The Board of Directors (“the Board”) is pleased to present the Statement on Risk Management and Internal Control
which outlines the nature and scope of risk management and the internal control systems of the Group for the financial
year ended 31 March 2016 pursuant to Paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia
Securities Berhad (“Main LR”), Malaysian Code on Corporate Governance 2012 (“MCCG 2012”) and “Statement on
Internal Control and Risk Management: Guidelines for Directors of Listed Issuers”.

BOARD RESPONSIBILITY

The Board acknowledges its overall responsibility for the Group’s risk management and internal control system to
safeguard shareholders’ investment and the Group’s assets as well as reviewing its effectiveness, adequacy and integrity
on a regular basis.

The system of internal control covers governance, risk management, financial, organisational, operational and compliance
controls. However, due to the limitations that are inherent in any system of internal control, the Group’s system of internal
control is designed to manage, rather than eliminate the risk of failure to achieve corporate objectives. Accordingly, it
only provides reasonable but not absolute assurance against material misstatement or losses.

The Board, through the Audit Committee, ensures that the risk management and internal control practices are adequately
implemented within the Group. Management is required to apply good judgement in assessing the risks faced by the
Group, identifying PCCS’s ability to reduce the incidence and impact of risks, and ensuring the benefits outweigh the
costs of operating the controls.

RISK MANAGEMENT

The Board acknowledges its overall responsibility for the Group’s system of risk management and internal control,
and for reviewing its adequacy and effectiveness. The risk management system is designed to manage the Group’s
risks within an acceptable risk profile, rather than to totally avoid or eliminate the risks that are inherent to the Group’s
activities.

As at the date of the Annual Report, the Board vide the Audit Committee has formed a Risk Management Working
Group (“RMWG”) and Performance Management Review Team (“PMRT”) to discharge the Risk Management function
of the Group on behalf on the Board. The RMWG is reporting to PMRT in respect of the identified risks and PMRT will
report directly to the Audit Committee. The RMWG has been delegated to implement the risk management framework
and control framework, to update the Risk Registry and perform ongoing risk management implementation. PMRT is
tasked to set performance measures, review Risk Registry and to assess effectiveness risk management framework.

As at the date of the Annual Report, the Audit Committee and the Board had received and reviewed the Risk Registry
of the PCCS for Corporate Level, Apparels Division (Malaysia, Cambodia and China) and Labels & Stickers Division
(Malaysia and Cambodia). The risk factors identified and deliberated were assigned to the respective heads of subsidiary
and risk owner to implement the risk control actions. The Board would ensure that the risk control actions are taken
accordingly.

The Board is in the opinion that the role of Management is to implement the Board’s policies and guidelines on risks and
controls, to identify and evaluate the risks faced by the Group, and to operate a suitable system of internal controls to
manage these risks.

The Board has received assurances from Management that the Group’s system of Risk Management and Internal
Control is operating adequately and effectively throughout the financial year under review.
48 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Statement on Risk Management

and Internal Control

INTERNAL AUDIT FUNCTION

The Group in its efforts to provide adequate and effective internal control system had appointed an independent
consulting firm namely, Sterling Business Alignment Consulting Sdn. Bhd. (“Sterling”) as Internal Auditors to undertake
its internal audit function. Sterling acts as internal auditor and reports directly to the Audit Committee on quarterly basis.

Based on their internal audit reviews, observations were presented by Sterling, together with Management’s response
and proposed action plans, to the Audit Committee for review. In addition, the Internal Auditors followed up on the
implementation of recommendations from previous cycles of internal audit and updated the Audit Committee on the
status of Management-agreed action plan.

During the financial year under review, Sterling has reviewed critical business processes, identified risks and internal
control gaps, assessed the effectiveness and adequacy of the existing state of internal control of the major subsidiaries
and recommended possible improvements to the internal control process. This is to provide reasonable assurance that
such system continues to operate satisfactorily and effectively within the Group.

For the financial year ended 31st March 2016, three (3) internal audit reviews were carried out and follow up status were
reported by Sterling to the Audit Committee:-

Audit Period Reported in Audited Areas

1st Quarter (Apr Aug 2015 • Finance and Account functions of JIT Textiles Limited
2015 – Jun 2015) • Follow up status update on:
• JIT Textiles Limited (Quality Assurance and Quality Control and
Sample Development)
• JIT Embroidery Limited
• Apparels Division in Cambodia

2nd Quarter (Jul Nov 2015 • Sales & Marketing and Merchandising functions of Apparels Division in
2015 – Sep 2015) Cambodia
• Follow up status update on:
• JIT Textiles Limited (Finance and Account functions, Quality
Assurance and Quality Control, Sample Development)
• JIT Embroidery Limited (Operation Review)

3rd Quarter (Oct Feb 2016 • Closing Stock of JIT Textiles Limited
2015 – Dec 2015) • Follow up status update on:
• Apparel Division in Cambodia (Sales and Marketing, Merchandising,
Sales and Marketing and Marketing Department – Control
Environment)
• JIT Embroidery Limited
• JIT Textiles Ltd (Finance and Account functions, Quality Assurance
and Quality Control and Sample Development)

4th Quarter (Jan May 2016 • Follow up status update on:

2016 – Mar 2016) • JIT Textiles Limited (Closing Stock, Finance and Account functions,
Quality Assurance and Quality Control and Sample Development)
• Apparels Division in Cambodia (Sales & Marketing and Merchandising
functions)
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 49

Statement on Risk Management

and Internal Control

KEY ELEMENTS OF INTERNAL CONTROL

The following sets out the key elements of the Group’s internal control, which have been in place throughout the financial
year ended 31 March 2016, and up to 20 July 2016, being the date of this Statement:-

§ Organisational Structure

The Group has a well-defined organisational structure that is aligned to its business and operation requirements.
Clearly defined lines of accountability, delegation of responsibility and level of authorisation for all aspects of the
business have been laid down and communicated throughout the Group.

§ Limits of Authority

Authority charts have been established within the Group to provide a functional framework of authority in approving
sales order, purchases, expenses and capital expenditure.

§ Review of Financial and Operational Performance

The Group’s performance is monitored through a budgeted system which requires all material variances to be
identified, discussed and reviewed by Management on a regular basis.

The Group Finance and Accounts (“GFA”) Manager would table the same to the Audit Committee and the Board
for review and comments at the quarterly held Audit Committee and Board Meeting, respectively.

The Board reviews the Group’s financial and operational performance quarterly, which analyses the Group
performance against preceding year corresponding quarter performance.

§ Company Manual

A comprehensive “Company Manual” is developed to foster long-lasting and harmonious working relationship
among the employees and set out the rules and regulations to be adhered to by the employees in performing their
duties. The manual is regularly reviewed to incorporate changes that will enhance working efficiency.

§ Standard Operating Policies and Procedures (“SOPP”)

Numerous SOPPs have been established to serve as a general management guide for daily operations. These
policies and procedures are reviewed on a regularly basis to reflect changing risks or to resolve any operational
deficiencies. It is also to promote efficiency and accountability for the Group.

§ Health and Safety Manual

“Health and Safety Manual” is developed to assist in maintaining a safe working environment for all employees.

§ Staff Training and Development Programmes

Training and development programmes are established to ensure that staff is constantly kept up-to-date with the
constant technological changing environment in order to be competent in the industry in line with achieving the
Group’s business objectives.

§ Internal Quality Audits

Regular Internal Quality Audit are conducted as required by the ISO 9001:2008 and ISO 14001:2004 Quality
Management System on certain subsidiaries. This ensures that internal procedures and standard operating
procedures had been implemented and documented.
50 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Statement on Risk Management

and Internal Control

ASSURANCE FROM MANAGEMENT

The Board has received assurance from the Group Managing Director and GFA Manager that the Group’s risk
management and internal control system were operating adequately and effectively in all material aspects, based on the
risk management and internal control system of the Group, for the financial year ended 31 March 2016, and up to 20
July 2016, being the date of this Statement.

CONCLUSION

For the financial year under review and up to 20 July 2016, being the date of this Statement, the Board is of the opinion
that there is an ongoing process of identifying, evaluating, and managing significant risks faced by the Group. The Board
continues to take appropriate action plans to strengthen the risk management and internal control systems to meet the
Group’s objectives.

REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS

Pursuant to Paragraph 15.23 of Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the External
Auditors have reviewed this Statement on Risk Management and Internal Control and 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 Group’s risk management and internal
control system.

This Statement of Risk Management and Internal Control is made in accordance with a resolution of the Board of
Directors dated 20 July 2016.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 51

Statement of Directors’ Responsibility

in relation to the Financial Statements

This statement is prepared in compliance with the Companies Act, 1965, the Main Market Listing Requirements of
Bursa Malaysia Securities Berhad (“Main LR of Bursa Securities”) and the applicable approved accounting policies.

The Directors are required to prepare financial statements which give a true and fair view of the state of affairs of the
Group and the Company as at the end of each financial year and of their results and their cash flows for that financial
year then ended.

The Directors consider that in preparing the financial statements:-

• the Group and the Company have used appropriate accounting policies and were consistently applied;

• reasonable and prudent judgements and estimates were made; and

• all applicable approved accounting standards in Malaysia have been followed.

The Directors have relied on the system of Internal Controls to ensure that the information generated for the preparation
of the financial statements from the underlying accounting records are accurate and reliable.

The Directors are responsible for ensuring that the Company maintains accounting records which disclose with
reasonable accuracy the financial position of the Group and the Company, and which enable them to ensure that the
financial statements comply with the provision of the Companies Act, 1965, the Main LR of Bursa Securities, and the
applicable approved Malaysian Accounting Standard Board approved accounting standard in Malaysia.

The Directors have general responsibilities for taking such steps that are reasonably available to them to safeguard the
assets of the Group and the Company, and to prevent and detect fraud and other irregularities.

This statement on Directors’ Responsibility in relation to the Financial Statements is made in accordance with the
resolution of the Board of Directors dated 20 July 2016.
52 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Other Information Required

by the Main Market Listing Requirements of Bursa Malaysia Securities Berhad

Utilisation of Proceeds

The Company did not undertake any corporate proposal to raise any proceeds during the financial year.

Audit and Non-Audit Fees

For the financial year ended 31 March 2016, Messrs. Ernst & Young, its affiliates, and Messrs. T.C. Chew (for certain
subsidiaries only), the External Auditors have rendered certain audit and non-audit services to the Company and the
Group. A breakdown of fees paid were listed as below for information:-

Company Group
(RM) (RM)
Audit services rendered 32,000.00 278,502.00

Non-audit services rendered

(1) Tax Services 3,600.00 55,345.00
(2) Review of the Statement of Risk Management and Internal Control 5,000.00 5,000.00
(3) Certify the stock statements and increased export application form - 7,440.00
(4) Audit Review 16,000.00 16,000.00
Total 56,600.00 362,287.00

Material Contracts Involving Directors, Chief Executive and Major Shareholders’ Interest

None of the Directors, Chief Executive and major shareholders have entered into any material contracts with the
Company and/or its subsidiaries during the financial year under review.

Recurrent Related Party Transactions (“RRPT”) of Revenue Nature

The RRPTs were disclosed in Note 30 to the Financial Statements for the financial year ended 31 March 2016 on pages
118 and 119.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 53

Corporate Responsibility
Statement
PCCS Group Berhad (“PCCS” or “the Company”) and Group (“the Group”) recognises the importance of
Corporate Responsibility (“CR”) activities forms the basis of good corporate citizenship and upholds the highest
level of corporate governance.

Aligned with the Group’s business strategy, the Group endeavour to manage its business in a socially responsible
manner. The Group strive to look after the interests of its key stakeholders – ranging from shareholders, investors,
customers, suppliers to employees, as well as the local community where the Group operates.

Bursa Malaysia Berhad (“Bursa Malaysia”) has defined “Corporate Social Responsibility (“CSR”) as “open and
transparent business practices that are based on ethical values and respect for the community, employees, the
environment, shareholders. It is designed to deliver sustainable value to society at large.”

The Group has adopted the Bursa Malaysia’s CSR Framework which was launched in 2006 as a set of guidelines
for Malaysian public listed companies who wish to practice CSR. The Group’s CSR framework covers the following
four (4) areas:-

Workplace Community

ü Training and development ü Cultural Event in Cambodia and Malaysia

ü Workplace diversity ü Donations to Non-profit organisations
ü Healthy and safe working environment ü Blood Donation Campaign
ü Employees’ well being

Environment Marketplace

ü Reduce carbon footprint ü Whistleblowing

ü Environmental-friendly practices ü Corporate disclosure practices
ü Dedicated sections at corporate website

(1) WORKPLACE

At PCCS, the Group recognises that employees are the most valuable assets due to their ideas, initiatives,
contributions and decisions that drive the continuous growth of the Group. It is therefore imperative that the
Group continues to invest in human resource field.

(a) Training and development

The Group aims to remain as an employer of choice by providing its employees with continuous training
and development. The Group promotes lifelong learning in the pursuit of personal development of our
employees. Incentives are provided to staff upon attainment of work related qualification to promote
professionalism and excellence amongst employees. In addition, structured on-the-job training is
provided to new and unskilled employees by the production supervisors and team leaders.

Malaysia’s government implement the Goods and Services Tax (“GST”) on 1st April 2015, so the Group
had arranged employees to attend seminars and series of training on GST to create awareness of this
new tax regime.

During the year, the Group had conducted several in house trainings on Customs – Trade Partnership
Against Terrorism (“C-TPAT”) and Business Social Compliance Initiative (“BSCI”) for relevant staffs.

The Group recruits students for its internship initiative where students from universities are selected for
industrial and practical training in the Group’s operation. This practical training programme is created
on a day-to-day mentor and mentee basis which give student hands-on experience before turning to a
real workplace.
54 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Corporate Responsibility
Statement

(1) WORKPLACE (Cont’d)

(b) Workplace Diversity

To achieve the needs of diverse customer base, diversity provides PCCS with a competitive advantage
and the promise of a more sustainable future.

The Group embraces diversity at workplace and strictly disallow any form of discrimination practice
against people of different gender, age, ethnicity, nationality or marital status.

By employing a diverse workforce, the Group is able to have a better understanding of today’s dynamic
market demographics. It has also enable the Group to tap into a pool of people from diverse background
who can provide unique market insights or generate creative solutions, thereby increasing the Group’s
competitiveness in today’s globalised and challenging economy.

Gender diversity

As at 30 June 2016, the Group’s female to male employee ratio shows a distribution of 74:26 in
the workforce, well exceeded the government’s initiative to achieve 30% women participation in the
workplace. The Group is committed to recruit and retain women who are keen to re-enter the workforce.

Workforce In Terms of
Gender in PCCS Group 26%

74% Male

Female

Age diversity

As at 30 June 2016, 48% of the Group’s employees belong to the age group of between 26 to 35
with the second largest age group being those aged between 21 to 25 (28%). The Group’s age
demographics broadly reflected the general age demographics of the developing countries where
younger age employees form the majority of the workforce.

3.07% 0.68%
7.58%

Workforce In Terms of 12.63%

Age in PCCS Group Below 21

21 - 25

28.00% 26 - 35

36 - 45

46 - 55
48.03%
Above 55
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 55

Corporate Responsibility
Statement

(1) WORKPLACE (Cont’d)

(b) Workplace Diversity (Cont’d)

Nationality diversity

As at 30 June 2016, employees of Non-Malaysian Citizens ethnicity constituted the largest workforce
of the Group at 95%. Operating a business in a way that respects the differences between cultures is
an essential factor for a company to achieve highly diverse composition of our workplace. As a result,
the Group’s Human Resources Department is encouraged to have a well balancing recruitment.

Within the Group, the mainly active subsidiaries located in Cambodia and China, respectively, the
nationality of the Group’s employees broadly reflected as such, in line with the Group’s local hiring
practices.

As at 30 June 2016, employees of Cambodian nationality constituted the largest workforce of the
Group at 81%, while Chinese nationals from the Peoples’ Republic of China and Hong Kong Special
Administrative Region formed the next largest workforce at 9%. Malaysian constituted the third largest
workforce at 5%.

2% 3%

5%
Workforce In Terms
9%
of Nationality in Malaysian

PCCS Group Cambodian

Chinese Nationals (PRC & Hong Kong SAR)

Nepalese

81% Others

Ethnicity diversity

As at 30 June 2016, employees of Cambodia ethnicity forms the largest workforce of the Group at 81%,
with the next largest Group in terms of ethnicity were the Chinese nationals at 12%. Notwithstanding
so, the Group’s Human Resources Department has been instructed to ensure a well balance hiring of
staff during their recruitment process.

3% 2%
2%

Workforce In Terms 12%

of Ethnicity in Malay

PCCS Group Chinese

Cambodia

81% Nepal

Others
56 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Corporate Responsibility
Statement

(1) WORKPLACE (Cont’d)

(c) Healthy and safe working environment

The Group places high emphasis on health and safety policy at the work place for maximising the
well-being of all its employees and aims to maintain its excellence in Occupational Safety and Health
standards.

Occupational Safety, Health and Environment (“OSHE”) Committee

An OSHE Committee has been established since year 1996 to oversee the adherence to the
Occupational Safety and Health standards. To ensure the effectiveness in implementing the OSHE
standards, the OSHE Committee has undertaken the following initiatives:-

(1) Adoption of an Emergency Response Plan with periodic review;

(2) Adoption of OSHE Manual since January 1998 with periodic review;
(3) Formation of a Emergency Response Team;
(4) Formation of a First Aid Team; and
(5) Formation of an Internal Compliance Audit Team.

Activities undertaken by OSHE Committee

During the financial year under review, the OSHE Committee has organised the following activities:-

• Periodic internal meetings to ensure all OSHE updates were well disseminated;
• Review of feedbacks and recommendations from all levels of employees, local authorities and
buyers’ vendor compliance auditors;
• Firefighting and safety drill were exercised to instil sense of awareness amongst employees; and
• Emphasis on usage of safety gears and equipment.
• Provide First Aid Training program support First Aid Team members to develop first aid techniques
and knowledge in order to perform during an emergency with minimal equipment or material until
appropriate medical personnel arrived.

(d) Employees’ well being

The Group has strive to increase the motivation of its employees through various initiatives for the
financial year ended 31 March 2016:-

Annual Dinner & Award

The Group has held Annual Dinner as an appreciation to all staff. At the Annual Dinner, awards would
be given for long-serving employees as well as best employees in different divisions.

(2) ENVIRONMENT

The Group is committed to conducting a moral and social responsibility in reducing the carbon footprint,
contributing towards a greener environment.

Automation and Clean Technology

In pursuit of technological advancement, the Group has annual budget for capital expenditures where
the Group would identify and acquire the latest machineries that could reduce minimise labour errors and
efficient power consumption. By reducing the material wastage and power consumption in the manufacturing
process, the Group has in turn contributed to a greener environment by reducing its carbon footprint.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 57

Corporate Responsibility
Statement

(2) ENVIRONMENT (Cont’d)

Environmental-friendly Practices

Being one (1) of the major local employer in Cambodia, the Group has undertaken the opportunity to promote
and/or embark on the following environmental-friendly practices at its premises:-

• Proper Waste Management system;

• Full utilisation of well-arranged sanitary system; and
• Energy conservation efforts.

(3) COMMUNITY

Moving ahead to realise its vision of becoming an international leader in apparel and labelling industries,
the Group believes that it is only with sharing its benefits with the community in which its employees reside,
PCCS can continue to grow and be successful.

Cultural Event in Cambodia and Malaysia

For the financial year ended 31 March 2016, the Group’s subsidiaries in Cambodia, namely Global Apparel
Limited (“GAL”) and JIT Embroidery Limited (“JIT”) have celebrated “Pchum Ben” at GAL’s factory premises,
one (1) of the most important festival in the Buddhist-majority Cambodia. “Pchum Ben”, also known as
Ancestors’ Festival or Hungry Ghosts Festival, bores similarity with the Christian’s All Souls Day, where
offerings were made to the past souls in afterlife. Simultaneously, the Group also celebrated the “Zhong
Yuen” Festival in Malaysia, which bores similarity to the “Pchum Ben” Festival in Cambodia.

Donations to Non-profit organisations

As part of its contributions to the local community in Batu Pahat, where the headquarter of the Group is
located, the Group has been providing financial contributions to various activities carried out by local non-
profit organisations.

For the financial year ended 31 March 2016, donations were made to selected schools in the vicinity of Batu
Pahat as well as the Batu Pahat Basketball Association.

Blood Donation Campaign

In August 2016, the Group has organised a blood donation campaign with Batu Pahat General Hospital to
assist in the replenishment of blood supply in the blood bank of the said hospital

(4) MARKETPLACE

As a listed entity as well as an employer, the Group has an obligation to its shareholders and statutory
obligations to the relevant authorities. The Group has instituted several responsible marketplace practices to
maintain the highest standards of integrity, fairness and transparency in our conduct of business.

(a) Corporate Disclosure Practices

The Group recognises the importance of timely and thorough dissemination of accurate and useful
information relating to our operations to stakeholders. In this regard, we strictly adhere to the disclosure
requirements of Bursa Securities and the Malaysian Accounting Standards Board. In fact, this Annual
Report contains comprehensive information pertaining to the Group, while various disclosures on
financial results provide stakeholders with the latest financial information on the Group.
58 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Corporate Responsibility
Statement

(4) MARKETPLACE (Cont’d)

(b) Dedicated sections at corporate website

The Group has been using its corporate website at http://www.pccsgroup.net/ to communicate
its Group Believe, developments, overview of the Group, announcements, introducing its Board of
Directors and etc. provides the public with convenient and timely access to business updates, and
financial and non-financial information. Furthermore, stakeholders are able to direct queries to the
Group via this website.

The Company has created three (3) dedicated sections/ notices to ensure more effective dissemination
of information:-

• “Investor Relations” section;

• “Media Centre” section; and
• “Contact Us” section.

Listing of Contact Persons

In view of the diverse locations of the Group’s subsidiaries around the globe, each operating subsidiary
has identify contact persons whereby stakeholders may direct their enquiries to them directly. Full
address, telephone number, facsimile, and email address (where available) are duly listed at
http://www.pccsgroup.net/html/list_896.html.

CONCLUSION

The Group noted that Bursa Malaysia has always advocated CR as key to sustainability.

Similarly, the Group strongly believe that workplace that is ecologically-harmless and accident-free would cultivate
good physical and emotional health, which in turn would enhance the employees’ productivity, efficiency and work
quality.

Besides, the Group also recognises the important of sustainability and its increasing impact to the business.
The Group is committed to understanding and implementing sustainable practices and to exploring the benefits
to the business whilst attempting to achieve the right balance between the needs of the wider community, the
requirements of shareholders and stakeholders and economic success.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 59

Chairman’s
Statement

On behalf of the Board of Directors, I am pleased to present the Annual

Report and Audited Financial Statements of the Company and the
Group for the financial year ended 31 March 2016 (“FY2016”).

Overview of Textiles Industry in Malaysia

In year 2015, Malaysia exports on textiles and apparel were amounting to RM12.63 billion, showing an increase
of 8.70 per centum as compared with RM11.62 billion recorded in the same period last year. Exports of textiles
were amounted RM7.03 billion and accounting to 55.60 per centum market shares, while clothing and apparels
had accounted 44.4 per centum with value of RM5.6 billion. Major export items of apparel were knitted garments,
jerseys & pullovers, tee-shirts, over vests and baby clothes.

The main destinations country of export from Malaysia were the USA, Japan, China, Turkey and Indonesia. The
USA was the biggest export destination which recorded a value of RM2.41 billion, with 19.10 per centum of
market share over total exports of this industry. Second largest was Japan, which had 8.00 per centum in the
market share. Third largest was China (6.20 per centum), and followed by Turkey and Indonesia which had 5.90
per centum and 4.90 per centum in the market share respectively.

Ahead of the signing of the Trans-Pacific Partnership (“TPP”), Malaysian textile manufacturers are optimistic that
the industry can grow by at least 30.00 per centum once the agreements comes into effect. Malaysian export-
based manufacturers will see a tariff reduction between 70-90 per centum from the TPP members. The USA,
which is the largest trading partner of Malaysia would reduce 73.7 per centum of tariff. More buyers and investors
will come to Malaysia because of this benefit.

The challenges faced by Malaysia’s textile and apparel industry is to get sufficient labour force for the industry to
increase capacity and also to face fierce competition from low-cost suppliers in Asia.

[Source: Data from MATRADE - The Official Portal of Malaysia External Trade Development Corporation, News
from Fibre2fashion.com (January 2016) & New Straits Times Online (January 2016)]

Overview of Textiles Industry in Cambodia

In year 2015, Cambodia garment exports had increased to USD3.27 million, representing 9.95 per centum.
Cambodia’s garment export market share in the European Union (“EU”) was 3.64 per centum, which is 0.19 per
centum higher than Vietnam. According to the statistics of VITAS, Cambodia’s apparel market share in the EU in
2010 was half of Vietnam’s. As Cambodia’s exports have steadily grown over the years, the country caught up
with Vietnam in 2014.

Additionally, it has also been noted that employment in the garment and footwear sectors of Cambodia has gone
up by 42,000 people over the first six (6) months of year 2015, with total employment in registered factories
reaching 607,000 people in mid-2015.

Even though Cambodia had increased their exports in 2015, but as the same year, the Commerce Ministry of
Cambodia reported that Cambodia had 130 garment factories closed down as compared with 982 garment
factories that were registered with the Ministry.
60 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Chairman’s
Statement

The main reason for the closing down of many garment factories in Cambodia was the increase in the minimum
wages from USD128.0 to USD140.0 with effect from 1 January 2016, resulting a higher cost of recruitment
as compared to African nations, Myanmar and other Asian country. Secondly, Cambodia is not a member of
TPP and could not enjoy the benefits from the TPP. Thirdly, falling productivity and rising infrastructure cost
within Cambodia’s garment industry caused disadvantage as compared with the garment industry in Vietnam,
Bangladesh and Myanmar. According to data from the International Labour Organisation, labour productivity in
Cambodia’s garment and footwear sector fell by 14.00 per centum between year 2011 to 2014, and this decline
has continued to 2016.

Despite the above disadvantage factors, the garment industry is still one (1) of the most important pillar industry
of Cambodia, garment exports accounted for more than half of the country’s total exports.

[Source: Extracted from News from apparelresources.com (December 2015, May 2016), News from just-style.
com (May 2016)]

Overview of Textiles Industry in China

China’s textile exports fell by 5.00 per centum to USD286.8 billion in 2015. Textile exports had been growing
for past six (6) years, except in 2009, in the wake of the global financial crisis. The decline was partly due to a
slowdown in Europe and Southeast Asia’s sluggish growth, rising labour costs in China as well as an increase in
overseas investment.

For January to October in 2015, the textile industry saw positive growth in exports to the USA, Africa and South
Korea. Yet exports to other markets dropped, export to Japan reached USD18.8 billion, dropping 12.00 per
centum, and the exports to Asean countries hit USD29.03 billion, slipping by 1.7 per centum.

Despite the devaluation of Chinese Renminbi (“RMB”), rising raw material and labour costs, and slower growth in
market, China will still on track to surpass the USA to become the world’s largest textile and apparel manufacturing
base in the robust next few years. Many Chinese apparel companies, serving the domestic market alone would
enable them to upgrade from low-value added manufacturing to higher-value added functions such as design,
branding and distribution to boost exports.

Also, China’s Ministry of Industry and Information Technology is expected to release its development plan for
the textile industry soon and the 13th Five-Year Plan period (2016-2020) which can help to improve and increase
growth in their textile industry.

[Source: Extracted from News from apparelresources.com (September 2015, January 2016), news from chinadaily.
com.cn (January 2016), news from Nikkei Asian Review (April 2016)]

Overview of Label Industry

The global print label market is estimated to witness moderate growth to reach USD43.57 billion by 2020 at a
compound annual growth rate (“CAGR”) of 5.91% during the forecast period from 2015 to 2020. Labels play
an important part in the marketing of a product, product identification, brand promotion and logistics, thereby
representing as the key element of the packaging in all industries.

Asia is the largest regional producer of labels and its share will continue to grow to more than 41.00 per centum
of the global value by 2019. In terms of end user market, food remains the largest category of labels, making up
47.00 per centum of the total in 2014. Including beverages, this figure rises to 63.9 per centum. Global packaging
print market will continued growth because of the rise in consumer spending, population growth, increased
urbanization and emerging markets.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 61

Chairman’s
Statement

Label production was traditionally dominated by offset and flexography, requiring skills in pre-press, plate making
and press operation. However, the increased demand for shorter runs has shifted production towards digital
print technologies as analogue printing processes are no longer conductive to efficient short run production or to
minimize material waste.

[Source: Extracted from articles from printmalaysia.com (2015), News from modernintelligence.com/industry-
reports (December 2015)]

FINANCIAL REVIEW

The challenging business environment in Cambodia had affected the Group’s financial result in the financial year
(“FY”) 2016.

The Group’s consolidated turnover increased by 49.1 per centum to RM532.9 million as compared to RM357.4
million achieved in the previous financial year due to the increase in apparel orders received by manufacturing
plants in China.

The Group made a loss after taxation of RM12.7 million in the financial year ended 31 March 2016 as compared to
a loss after taxation of RM17.4 million recorded in the previous financial year. The loss was attributed to the higher
cost of sales and poor productivity in the Apparel division of Cambodia.

DIVIDEND

In view of the less than stellar financial performance of the Group, the Board does not recommend any dividend
payment for the FY2016.

CORPORATE DEVELOPMENTS

During the FY2016, the Management had initiated some group restructuring plans, including shut down of the
operation in Beauty Apparels (Cambodia) Ltd in December 2015. Furthermore, the Management had decided to
shut down another loss making subsidiary, i.e. Global Apparels Limited by end of October 2016. Some additional
expenses were expected to be incurred for this closure exercise.

On 13 June 2016, PCCS Garments (Suzhou) Limited had incorporated a 100%-owned subsidiary company in
China under the name of Yuxing Apparel Suqian Limited (“YASL”) with a registered capital of RMB12,000,000. The
principal activity of YASL would be manufacturing and trading of apparels, fashion accessories, fabric materials
and other products.

Other than the aforementioned, there were no new business development in the Group. The Group had chosen
to focus on cost control measurement and worked on enhancement of products and equipment throughout the
financial year.

GROUP PERFORMANCE REVIEW

Apparel Division

The turnover of the Apparel Division for the current financial year increased to RM479.0 million from RM306.4
million recorded in the previous year. This increase in revenue was mainly contributed by significant increase in
orders received by the manufacturing plants in China.
62 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Chairman’s
Statement

The Apparel Division recorded an operating loss of RM12.8 million as compared to an operating loss of RM14.9
million recorded in the previous financial year. The loss was attributed to the lower sales order and higher cost of
sales in Cambodia.

Label and other division

The Label Division has continued to grow rapidly, achieving strong year-on-year revenue growth despite challenging
market conditions. The Group maintains a continued focus on customer service, exploiting evolving market
opportunities and delivering further cost savings. The revenue had increased by 9.7 per centum to RM42.5 million
from RM35.1 million recorded in the previous year.

As a supporting unit to the Apparel Division, the decrease of turnover in the Cambodia Apparel Division has the
cascading effect on the business of elastic, embroidering and printing had decreased by RM4.6 million during the
financial year from RM15.9 million to RM11.3 million.

OUTLOOK AND PROSPECT

The Board expects next financial year to be another challenging year for its Apparel Division as the cost of direct
labour is increasing in Cambodia and China. The label business will be expanded with some new machines
purchased.

The Board will operate cautiously through cost control measures and continuous improvement in production
efficiencies to achieve better result.

CORPORATE SOCIAL RESPONSIBILITY

The Group has adopted the Bursa Malaysia Berhad (“Bursa Malaysia”)’s Corporate Social Responsibility
Framework which covers the four (4) areas, namely Workplace, Community, Environment and Marketplace. The
Group is committed to conduct its business activities in a socially, economically and environmentally sustainable
manner. The details of the Corporate Responsibility activities were disclosed in page 53 of the Corporate
Responsibility Statement for details.

ACKNOWLEDGEMENT

On behalf of the Board, I wish to express my appreciation to our shareholders, business associates, bankers and
the authorities for their support and assistance given.

Finally, I take this opportunity to express my thanks to the Board members, the Management and staff of PCCS
for their continue dedication and contribution to the Group during the financial year under review.

JULIAN LIM WEE LIANG

Senior Independent Non-Executive Chairman
29 July 2016
PCCS Group Berhad (Co. No. 280929-K)
Annual Report 2016

financial
statements

64 Directors’ Report

68 Statement by Directors

68 Statutory Declaration

69 Independent Auditors’ Report

71 Statements of Comprehensive Income

72 Statements of Financial Position

73 Statements of Changes in Equity

75 Statements of Cash Flows

77 Notes to the Financial Statements

131 Supplementary Information
64 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Directors’ report

The directors have pleasure in presenting their report together with the audited financial statements of the Group and of
the Company for the financial year ended 31 March 2016.

Principal activities

The principal activities of the Company are investment holding and provision of management services. The principal
activities of the subsidiaries are described in Note 19 to the financial statements. There have been no significant changes
in the nature of the principal activities during the financial year.

Results

Group Company
RM’000 RM’000

(Loss)/profit net of tax (12,716) 978

(Loss)/profit attributable to:

Owners of the parent (10,255) 978
Non-controlling interests (2,461) -
(12,716) 978

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

In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year
were not substantially affected by any item, transaction or event of a material and unusual nature.

Dividends

No dividend has been paid or declared by the Company since the end of previous financial year. The directors do not
recommend the payment of any dividend for the current financial year.

Directors

The names of the directors of the Company in office since the date of the last report and at the date of this report are:

Chan Choo Sing

Chan Chow Tek
Dato’ Chan Chor Ngiak
Chan Chor Ang
Julian Lim Wee Liang
Piong Yew Peng
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 65

Directors’ report

Directors’ benefits

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the
Company was a party, whereby the directors might acquire benefits by means of acquisition of shares in or debentures
of the Company or any other body corporate.

Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than
benefit included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed
salary of a full-time employee of the Company as shown in Note 13 to the financial statements) by reason of a contract
made by the Company or a related corporation with any director or with a firm of which the director is a member, or
with a company in which the director has a substantial financial interest, except as disclosed in Note 30 to the financial
statements.

Directors’ interests

According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial
year in shares in the Company and its related corporations during the financial year were as follows:

Number of ordinary shares of RM1 each

1.4.2015 Bought Sold 31.3.2016

Direct interest -

Chan Choo Sing 2,643,220 - - 2,643,220

Chan Chow Tek 2,272,750 - - 2,272,750
Dato’ Chan Chor Ngiak 339,817 - - 339,817
Chan Chor Ang 542,350 - - 542,350

Indirect interest -

Chan Choo Sing 28,385,382 110,000 - 28,495,382

Chan Chow Tek 24,000,078 - - 24,000,078
Dato’ Chan Chor Ngiak 24,001,411 - - 24,001,411
Chan Chor Ang 24,040,078 - - 24,040,078

Chan Choo Sing, Chan Chow Tek, Dato’ Chan Chor Ngiak and Chan Chor Ang by virtue of their interest in shares
in the Company are also deemed interested in shares in all the Company’s subsidiaries to the extent that the
Company has an interest.

None of the other directors in office at the end of the financial year had any interest in shares in the Company or
its related corporations during the financial year.
66 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Directors’ report

Other statutory information

(a) Before the statements of comprehensive income and statements of financial position of the Group and of the
Company were made out, the directors took reasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of
provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that
adequate provision had been made for doubtful debts; and

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

(b) At the date of this report, the directors are not aware of any circumstances which would render:

(i) the amount written off for 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; and

(ii) the values attributed to the current assets in the financial statements of the Group and of the Company
misleading.

(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render
adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading
or inappropriate.

(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report
or financial statements of the Group and of the Company which would render any amount stated in the financial
statements misleading.

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

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

(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial
year.

(f) In the opinion of the directors:

(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period
of twelve months after the end of the financial year which will or may affect the ability of the Group or of the
Company to meet its obligations when they fall due; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the
financial year and the date of this report which is likely to affect substantially the results of the operations of the
Group or of the Company for the financial year in which this report is made.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 67

Directors’ report

Auditors

The auditors, Ernst & Young, have expressed their willingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the directors dated 20 July 2016.

Chan Choo Sing Chan Chow Tek
68 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Statement by Directors
Pursuant to Section 169 (15) of the Companies Act, 1965

We, Chan Choo Sing and Chan Chow Tek, being two of the directors of PCCS Group Berhad, do hereby state that, in the
opinion of the directors, the accompanying financial statements set out on pages 71 to 130 are drawn up in accordance
with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the
Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the
Company as at 31 March 2016 and of their financial performance and cash flows for the year then ended.

The information set out in Note 38 to the financial statements have been prepared in accordance with the Guidance on
Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant
to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Signed on behalf of the Board in accordance with a resolution of the directors dated 20 July 2016.






Chan Choo Sing Chan Chow Tek

Statutory Declaration
Pursuant to Section 169 (16) of the Companies Act, 1965

I, Chan Choo Sing, being the director primarily responsible for the financial management of PCCS Group Berhad, do
solemnly and sincerely declare that the accompanying financial statements set out on pages 71 to 131 are in my opinion
correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions
of the Statutory Declarations Act, 1960.



Subscribed and solemnly declared by
the abovenamed, Chan Choo Sing
at Batu Pahat in the State of Johor
on 20 July 2016 Chan Choo Sing

Before me,

CHIANG EE CHIN (J247)
Commissioner for Oaths
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 69

Independent Auditors’ Report

To the members of PCCS Group Berhad (Incorporated in Malaysia)

Report on the financial statements

We have audited the financial statements of PCCS Group Berhad, which comprise statements of financial position of
the Group and of the Company as at 31 March 2016, and statements of comprehensive income, statements of changes
in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of
significant accounting policies and other explanatory notes, as set out on pages 71 to 130.

Directors’ responsibility for the financial statements

The directors of the Company are responsible for the preparation of financial statements 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, 1965 in Malaysia. The directors are also responsible for such internal control
as the directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit
in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on our judgment, including the assessment of risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider
internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of the accounting
policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the
Company as at 31 March 2016 and of their financial performance and cash flows for the year then ended in accordance
with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the
Companies Act, 1965 in Malaysia.


70 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Independent Auditors’ Report

To the members of PCCS Group Berhad (Incorporated in Malaysia)

Report on other legal and regulatory requirements

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company
and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions
of the Act.

(b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not
acted as auditors, which are indicated in Note 19 to the financial statements, being financial statements that have
been included in the consolidated financial statements.

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial
statements of the Company are in form and content appropriate and proper for the purposes of the preparation of
the consolidated financial statements and we have received satisfactory information and explanations required by
us for those purposes.

(d) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did
not include any comment required to be made under Section 174(3) of the Act.


Other reporting responsibilities

The supplementary information set out in Note 38 on page 131 is disclosed to meet the requirement of Bursa Malaysia
Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of
the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised
and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing
Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa
Malaysia Securities Berhad. In our opinion, the supplementary information has been prepared, in all material respects,
in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.


Other matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies
Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content
of this report.

Ernst & Young Lee Ah Too
AF: 0039 2187/09/17(J)
Chartered Accountants Chartered Accountant

Melaka, Malaysia
Date: 20th July 2016
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 71

Statements of
comprehensive income
For the financial year ended 31 March 2016

Group Company
Note 2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000

Revenue 8 532,871 357,376 1,500 3,491

Cost of sales (472,336) (320,344) - -
Gross profit 60,535 37,032 1,500 3,491

Other items of income

Interest income 104 81 87 73
Other income 9 5,498 7,745 4,233 1,536

Other items of expense

Administrative expenses (54,412) (45,863) (4,842) (11,885)
Selling and marketing expenses (18,342) (11,850) - -
Operating (loss)/profit (6,617) (12,855) 978 (6,785)
Finance costs 10 (5,885) (4,055) - -
(Loss)/profit before tax 11 (12,502) (16,910) 978 (6,785)
Income tax expense 14 (214) (485) - (84)
(Loss)/profit, net of tax (12,716) (17,395) 978 (6,869)

Other comprehensive income:

Foreign currency translation 1,701 3,475 - -
Other comprehensive income
for the year, net of tax 1,701 3,475 - -

Total comprehensive (loss)/income

for the year (11,015) (13,920) 978 (6,869)

(Loss)/profit attributable to:

Owners of the parent (10,255) (17,465) 978 (6,869)
Non-controlling interests (2,461) 70 - -
(12,716) (17,395) 978 (6,869)
Total comprehensive (loss)/
income attributable to:
Owners of the parent (8,739) (14,068) 978 (6,869)
Non-controlling interests (2,276) 148 - -
(11,015) (13,920) 978 (6,869)
Loss per share attributable to owners
of the parent (sen per share)

Basic and dilluted 15 (17.1) (29.1)

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
72 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Statements of financial position

As at 31 March 2016

Group Company
Note 2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000

Assets

Non-current assets
Property, plant and equipment 16 71,525 73,250 70 88
Investment properties 17 10,754 11,004 - -
Land use rights 18 2,920 2,877 - -
Investment in subsidiaries 19 - - 59,803 54,413
Deferred tax assets 26 89 412 - -
85,288 87,543 59,873 54,501

Current assets
Inventories 20 64,801 53,926 - -
Trade and other receivables 21 80,699 71,889 3,637 9,786
Other current assets 22 9,765 7,106 27 13
Tax recoverable - - 45 83
Cash and bank balances 23 38,034 19,755 5,761 7,949
193,299 152,676 9,470 17,831
Total assets 278,587 240,219 69,343 72,332

Equity and liabilities

Current liabilities
Loans and borrowings 24 89,951 60,446 - -
Trade and other payables 25 84,066 67,022 8,689 12,656
Tax payable 5,400 2,193 - -
179,417 129,661 8,689 12,656
Net current assets 13,882 23,015 781 5,175

Non-current liabilities
Loans and borrowings 24 2,026 4,251 - -
2,026 4,251 - -
Total liabilities 181,443 133,912 8,689 12,656
Net assets 97,144 106,307 60,654 59,676

Equity attributable to owners of the parent

Share capital 27 60,012 60,012 60,012 60,012
Share premium 28(a) 4 4 4 4
Foreign exchange reserve 28(b) 7,594 6,078 - -
Legal reserve fund 28(c) 326 326 - -
Retained earnings/(accumulated losses) 29 28,977 39,232 638 (340)
Shareholders’ equity 96,913 105,652 60,654 59,676
Non-controlling interests 231 655 - -
Total equity 97,144 106,307 60,654 59,676
Total equity and liabilities 278,587 240,219 69,343 72,332

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
 Attributable to owners of the parent
Non-distributable Distributable Non-distributable

Equity
attributable
to owners
of the Other Foreign Legal Non-
Equity, parent, Share Share Retained reserves, exchange reserve controlling
Group total total capital premium earnings total reserve fund interests
2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Opening balance at
1 April 2015 106,307 105,652 60,012 4 39,232 6,404 6,078 326 655
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K)

Issuance of shares of
For the financial year ended 31 March 2016

subsidiary 1,852 - - - - - - - 1,852

Total comprehensive loss (11,015) (8,739) - - (10,255) 1,516 1,516 - (2,276)

Closing balance at
31 March 2016 97,144 96,913 60,012 4 28,977 7,920 7,594 326 231

2015

Opening balance at
1 April 2014 120,227 119,720 60,012 4 56,697 3,007 2,681 326 507

Total comprehensive loss (13,920) (14,068) - - (17,465) 3,397 3,397 - 148

Closing balance at
31 March 2015 106,307 105,652 60,012 4 39,232 6,404 6,078 326 655
Statements of changes in equity
73
74 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Statements of changes in equity

For the financial year ended 31 March 2016

Non-
distributable Distributable
Retained
earnings/
Equity, Share Share (accumulated
total capital premium losses)
RM’000 RM’000 RM’000 RM’000
Company
2016

Opening balance at 1 April 2015 59,676 60,012 4 (340)

Total comprehensive profit 978 - - 978

Closing balance at 31 March 2016 60,654 60,012 4 638

2015

Opening balance at 1 April 2014 66,545 60,012 4 6,529

Total comprehensive loss (6,869) - - (6,869)

Closing balance at 31 March 2015 59,676 60,012 4 (340)

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 75

Statements of cash flows

For the financial year ended 31 March 2016

Group Company
2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000

Operating activities
(Loss)/profit before tax (12,502) (16,910) 978 (6,785)
Adjustments for:
Bad debts written off 13 2,008 - -
Depreciation and amortisation:
- Property, plant and equipment 10,670 10,463 25 24
- Investment properties 261 222 - -
- Land use rights 69 60 - -
Loss/(gain) on disposal of:
- Property, plant and equipment (282) 422 - -
Gain on disposal of investment securities - (6) - -
Impairment loss on:
- Investment in subsidiaries - - - 7,069
- Trade and other receivables 19 56 2,178 1,060
Write-down of inventories 170 3,016 - -
Interest expense 5,885 4,055 - -
Interest income (104) (81) (87) (73)
Net unrealised foreign exchange (gain)/loss (460) (4,313) 688 -
Reversal of allowance for impairment of
investment in subsidiaries - - (3,461) -
Property, plant and equipment written off 511 30 - 1
Total adjustments 16,752 15,932 (657) 8,081
Operating cash flows before changes
in working capital 4,250 (978) 321 1,296

Changes in working capital

Increase in inventories (11,045) (11,121) - -
(Increase)/decrease in trade and other receivables (5,002) (9,986) 3,971 (2,261)
(Increase)/decrease in other current assets (2,659) (316) (14) 14
Increase/(decrease) in trade and other payables 17,044 28,571 (4,655) 1,619
Total changes in working capital (1,662) 7,148 (698) (628)
Cash flows from /(used in) operations 2,588 6,170 (377) 668

Interest paid (5,885) (4,055) - -

Tax refunded 812 314 38 765
(5,073) (3,741) 38 765
Net cash flows (used in)/ from
operating activities (2,485) 2,429 (339) 1,433
76 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Statements of cash flows

For the financial year ended 31 March 2016

Group Company
2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000

Investing activities
Interest received 104 81 87 73
Additional investment in subsidiary - - (1,928) -
Purchase of property, plant and equipment (7,458) (9,998) (8) (10)
Placement of deposit pledged with bank (20) (54) - -
Proceeds from disposal of:
- Property, plant and equipment 964 626 - -
Proceeds from issuance of shares of subsidiary 1,852 - - -
Proceeds from winding up of a subsidiary securities - 76 - -
Net cash flows (used in)/
from investing activities (4,558) (9,269) (1,849) 63

Financing activities
Payments of hire purchase and finance
lease liabilities (1,126) (678) - -
Repayment of term loans (3,618) (791) - -
Increase/(decrease) in short term borrowings 33,626 (3,024) - -
Net cash flows from/(used in)
financing activities 28,882 (4,493) - -

Net increase/(decrease) in cash and

cash equivalents 21,839 (11,333) (2,188) 1,496
Effects of foreign exchange rate changes (927) (750) - -
Cash and cash equivalents at 1 April 15,940 28,023 7,949 6,453
Cash and cash equivalents at 31 March
(Note 23) 36,852 15,940 5,761 7,949

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 77

notes to the financial statements

For the financial year ended 31 March 2016

1.
Corporate information

PCCS Group Berhad (“the Company”) is a public limited liability company, incorporated and domiciled in Malaysia
and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office of the Company is
located at Lot 1376, GM127, Mukim Simpang Kanan, Jalan Kluang, 83000 Batu Pahat, Johor.

The principal activities of the Company are investment holding and provision of management services. The principal
activities of the subsidiaries are described in Note 19. There have been no significant changes in the nature of the
principal activities during the financial year.

2.
Basis of preparation

The financial statements of the Group and of the Company have been prepared in accordance with Malaysian
Financial Reporting Standards (“MFRS”) as issued by the Malaysian Accounting Standards Board (“MASB”),
International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board
and the requirements of the Companies Act, 1965 in Malaysia.

The financial statements of the Group and the Company have also been prepared on a historical basis, except as
disclosed in the accounting policies below.

The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to nearest thousand
(RM’000) except when otherwise indicated.

3.
Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and of its subsidiaries
as at 31 March 2016. Control is achieved when the Group is exposed, or has rights, to variable returns from
its involvement with the investee and has the ability to affect those returns through its power over the investee.
Specifically, the Group controls an investee if and only if the Group has:

- Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the
investee);
- Exposure, or rights, to variable returns from its involvement with the investee; and
- The ability to use its power over the investee to affect its returns.

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all
relevant facts and circumstances in assessing whether it has power over an investee, including:

- The contractual arrangement with the other vote holders of the investee;
- Rights arising from other contractual arrangements; and
- The Group’s voting rights and potential voting rights.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group
obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities,
income and expenses of a subsidiary acquired or disposed of during the year are included in profit or loss from the
date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the
parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having
a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity,
income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on
consolidation.


78 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

3. Basis of consolidation (Cont’d)

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
transaction. If the Group loses control over a subsidiary, it:

- Derecognises the assets (including goodwill) and liabilities of the subsidiary;

- Derecognises the carrying amount of any non-controlling interests;
- Derecognises the cumulative translation differences recorded in equity;
- Recognises the fair value of the consideration received;
- Recognises the fair value of any investment retained;
- Recognises any surplus or deficit in profit or loss; and
- Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained
earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or
liabilities.

4. Summary of significant accounting policies

4.1 Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The cost of an acquisition is
measured as the aggregate of the consideration transferred measured at acquisition date fair value and the
amount of any non-controlling interests in the acquiree. For each business combination, the Group elects
whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share
of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and included in
administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic circumstances and
pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host
contracts by the acquiree.

If the business combination is achieved in stages, any previously held equity interest is re-measured at its
acquisition date fair value and any resulting gain or loss is recognised in profit or loss. It is then considered in
the determination of goodwill.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition
date. Contingent consideration classified as an asset or liability that is a financial instrument and within the
scope of MFRS 139 Financial Instruments: Recognition and Measurement, is measured at fair value with
changes in fair value recognised either in profit or loss or as a change to OCI. If the contingent consideration
is not within the scope of MFRS 139, it is measured in accordance with the appropriate MFRS. Contingent
consideration that is classified as equity is not re-measured and subsequent settlement is accounted for
within equity.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and
the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable
assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate
consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired
and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised
at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired
over the aggregate consideration transferred, then the gain is recognised in profit or loss.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 79

notes to the financial statements

For the financial year ended 31 March 2016

4. Summary of significant accounting policies (Cont’d)

4.1 Business combinations and goodwill (Cont’d)

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the
purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date,
allocated to each of the Group’s cash-generating units that are expected to benefit from the combination,
irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is
disposed of, the goodwill associated with the disposed operation is included in the carrying amount of
the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is
measured based on the relative values of the disposed operation and the portion of the cash-generating unit
retained.

Business combinations involving entities under common control are accounted for by applying the pooling
on interest method. The assets and liabilities of the combining entities are reflected at their carrying amounts
reported in the consolidated financial statements of the controlling holding company. Any difference between
the consideration paid and the share capital of the “acquired” entity is reflected within equity as merger
reserve. The statement of comprehensive income reflects the results of the combining entities for the full year,
irrespective of when the combination takes place. Comparatives are presented as if the entities have always
been combined since the date the entities had come under common control.

4.2 Current versus non-current classification

Assets and liabilities in statement of financial position are presented based on current/non-current
classification. An asset is current when it is:

- Expected to be realised or intended to sold or consumed in normal operating cycle;

- Held primarily for the purpose of trading;
- Expected to be realised within twelve months after the reporting period; or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least
twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when:

- It is expected to be settled in normal operating cycle;

- It is held primarily for the purpose of trading;
- It is due to be settled within twelve months after the reporting period; or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the
reporting period.

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.


80 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

4. Summary of significant accounting policies (Cont’d)

4.3 Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value measurement is based on
the presumption that the transaction to sell the asset or transfer the liability takes place either:

- In the principal market for the asset or liability; or

- In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to by the Company.

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

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

Valuation techniques that are appropriate in the circumstances and for which sufficient data are available,
are used to measure fair value, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised
within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the
fair value measurement as a whole:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable

Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company
determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation
(based on the lowest level input that is significant to the fair value measurement as a whole) at the end of
each reporting period.

Policies and procedures are determined by senior management for both recurring fair value measurement
and for non-recurring measurement.

External valuers are involved for valuation of significant assets and significant liabilities. Involvement of
external valuers is decided by senior management. Selection criteria include market knowledge, reputation,
independence and whether professional standards are maintained. The senior management decides, after
discussions with the external valuers, which valuation techniques and inputs to use for each case.

Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 81

notes to the financial statements

For the financial year ended 31 March 2016

4. Summary of significant accounting policies (Cont’d)

4.3 Fair value measurement (Cont’d)

At each reporting date, the senior management analyses the movements in the values of assets and liabilities
which are required to be re-measured or re-assessed according to the accounting policies of the Company.
For this analysis, the senior management verifies the major inputs applied in the latest valuation by agreeing
the information in the valuation computation to contracts and other relevant documents.

The senior management, in conjunction with the external valuers, also compares the changes in the fair value
of each asset and liability with relevant external sources to determine whether the change is reasonable.

For the purpose of fair value disclosures, classes of assets and liabilities are determined based on the
nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained
above.

4.4 Transactions with non-controlling interest

Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners
of the Company, and is presented separately in the consolidated statement of comprehensive income and
within equity in the consolidated statement of financial position, separately from equity attributable to owners
of the Company.

Changes in the Company owners’ ownership interest in a subsidiary that do not result in a loss of control
are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling
and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary.
Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the
consideration paid or received is recognised directly in equity and attributed to owners of the parent.

4.5 Foreign currencies

(a) Functional and presentation currency

The Group’s and the Company’s financial statements are presented in Ringgit Malaysia which is also
the Company’s functional currency. Each entity in the Group determines its own functional currency and
items included in the financial statements of each entity are measured using that functional currency.

(b) Transactions and balances

Transactions in foreign currencies are initially recorded by the Group entities at the functional currency
spot rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities
denominated in foreign currencies are translated at the functional currency spot rates at the reporting
date.

Differences arising on settlement or translation of monetary items are recognised in profit or loss with
the exception of monetary items that are designated as part of the hedge of the Group’s net investment
of a foreign operation. These are recognised in OCI until the net investment is disposed of, at which
time, the cumulative amount is reclassified to profit or loss. Tax charges and credits attributable to
exchange differences on those monetary items are also recorded in OCI.
82 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

4. Summary of significant accounting policies (Cont’d)

4.5 Foreign currencies (Cont’d)

(b) Transactions and balances (Cont’d)

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated
using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the exchange rates at the date when the fair value is
determined. The gain or loss arising on translation of non-monetary items measured at fair value is
treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation
differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised
in OCI or profit or loss, respectively).

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the
carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities
of the foreign operation and translated at the spot rate of exchange at the reporting date.

(c) Group companies

On consolidation, the assets and liabilities of foreign operations are translated into RM at the rate of
exchange prevailing at the reporting date and their income statements are translated at exchange
rates prevailing at the dates of the transactions. The exchange differences arising on translation for
consolidation are recognised in OCI. On disposal of a foreign operation, the component of OCI relating
to that particular foreign operation is recognised in profit or loss.

4.6 Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group or
the Company and the revenue can be reliably measured, regardless of when the payment is being made.
Revenue is measured at the fair value of the consideration received or receivable, taking into account
contractually defined terms of payment and excluding taxes or duty. The Group and the Company have
concluded that they are the principals in all of its revenue arrangements since they are the primary obligors
in all the revenue arrangements, have pricing latitude and are also exposed to inventory and credit risks.

The specific recognition criteria described below must also be met before revenue is recognised.

(a) Sale of goods

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of
the goods have passed to the buyer, usually on delivery of the goods.

(b) Interest income

For all financial instruments measured at amortised cost and interest bearing financial assets classified
as available for sale, interest income or expense is recorded using the effective interest rate (“EIR”),
which is the rate that exactly discounts the estimated future cash payments or receipts through the
expected life of the financial instrument or a shorter period, where appropriate, to the net carrying
amount of the financial asset or liability. Interest income is included in finance income in the income
statement.

(c) Management fees

Management fees are recognised when services are rendered.

Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 83

notes to the financial statements

For the financial year ended 31 March 2016

4. Summary of significant accounting policies (Cont’d)

4.6 Revenue recognition (Cont’d)

(d) Dividend income

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

(e) Rental income

Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of
incentives provided to lessees are recognised as a reduction of rental income over the lease term on a
straight-line basis.

4.7 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. Short term accumulating compensated
absences such as paid annual leave are recognised when services are rendered by employees that
increase their entitlement to future compensated absences. Short term non-accumulating compensated
absences such as sick leave are recognised when the absences occur.

(ii) Defined contribution plans

The Group participates in the national pension schemes as defined by the laws of the countries in
which it has operations. The Malaysian companies in the Group make contributions to the Employee
Provident Fund in Malaysia, a defined contribution pension. Contributions to defined contribution pension
schemes are recognised as an expense in the period in which the related service is performed.

4.8 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily
takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost
of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs
consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

4.9 Taxes

(a) Current income tax

Current income tax assets and liabilities for the current period are measured at the amount expected
to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute
the amount are those that are enacted or substantively enacted, at the reporting date in the countries
where the Group operates and generates taxable income.

Current income tax relating to items recognised directly in equity is recognised in equity and not in
the profit or loss. Management periodically evaluates positions taken in the tax returns with respect to
situations in which applicable tax regulations are subject to interpretation and establishes provisions
where appropriate.





84 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

4. Summary of significant accounting policies (Cont’d)

4.9 Taxes (Cont’d)

(b) Deferred tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between
the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all temporary differences, except:

(i) where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability
in a transaction that is not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss; and

(ii) in respect of taxable temporary differences associated with investments in subsidiaries, where the
timing of the reversal of the temporary differences can be controlled and it is probable that the
temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax
credits and unused tax losses, to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences, and the carry forward of unused tax credits and unused
tax losses can be utilised, except:

(i) where the deferred tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the
time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

(ii) in respect of deductible temporary differences associated with investments in subsidiaries,

deferred tax assets are recognised only to the extent that it is probable that the temporary
differences will reverse in the foreseeable future and taxable profit will be available against which
the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting
date and are recognised to the extent that it has become probable that future taxable profits will allow
the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred
tax items are recognised in correlation to the underlying transaction either in other comprehensive
income or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off
current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable
entity and the same taxation authority.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate
recognition at that date, would be recognised subsequently if new information about facts and
circumstances changed. The adjustment would either be treated as a reduction to goodwill (as long as
it does not exceed goodwill) if it is incurred during the measurement period or in profit or loss.



Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 85

notes to the financial statements

For the financial year ended 31 March 2016

4. Summary of significant accounting policies (Cont’d)

4.9 Taxes (Cont’d)

(c) Goods and Services Tax (“GST”)

Revenues, expenses and assets are recognised net of the amount of GST except:

(i) Where the amount of GST incurred in a purchase of assets or services is not recoverable from the
taxation 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

(ii) Receivables and payables that are stated with the amount of GST included.

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

4.10 Property, plant and equipment

Property, plant and equipment are stated at cost, net of accumulated depreciation and/or accumulated
impairment losses, if any. Such cost includes the cost of replacing component parts of the property, plant
and equipment and borrowing costs for long-term construction projects if the recognition criteria are met.

When significant parts of property, plant and equipment are required to be replaced at intervals, the Group
derecognises the replaced part, and recognises the new part with its own associated useful life and
depreciation. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount
of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and
maintenance costs are recognised in the profit or loss as incurred. The present value of the expected cost for
the decommissioning of the asset after its use is included in the cost of the respective asset if the recognition
criteria for a provision are met.

Freehold land has an unlimited useful life and therefore is not depreciated. Capital work-in-progress are also
not depreciated as these assets are not available for use. Depreciation is computed on a straight-line basis
over the estimated useful lives of the assets as follows:

- Buildings: 20 to 50 years
- Plant and machinery: 10 years
- Air conditioners: 10 years
- Factory equipment: 10 years
- Electrical installation: 10 years
- Renovation: 10 years
- Furniture, fittings and office equipment: 5 to 10 years
- Motor vehicles: 5 years

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in profit or
loss in the year the asset is derecognised.

The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year
end and adjusted prospectively, if appropriate.



86 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

4. Summary of significant accounting policies (Cont’d)

4.11 Investment properties

Investment properties are initially measured at cost, including transaction costs. Subsequent to initial
recognition, investment properties are stated at cost less accumulated depreciation and any accumulated
impairment losses. The depreciation policy for investment properties are in accordance with that for property,
plant and equipment as described in Note 4.10.

Investment properties are derecognised either when they have been disposed of or when they are permanently
withdrawn from use and no future economic benefit is expected from their disposal. The difference between
the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period of
derecognition.

Transfers are made to (or from) investment property only when there is a change in use. For a transfer from
investment property to owner-occupied property, the deemed cost for subsequent accounting is the carrying
amount at the date of change in use. For a transfer from owner-occupied property to investment property,
the property is accounted for in accordance with the accounting policy for property, plant and equipment set
out in Note 4.10 up to the date of change in use.

4.12 Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the
arrangement at the inception date. The arrangement is assessed for whether fulfilment of the arrangement
is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or
assets, even if that right is not explicitly specified in an arrangement.

(a) As lessee

Finance leases that transfer substantially all the risks and benefits incidental to ownership of the
leased item to the Group, are capitalised at the commencement of the lease at the fair value of the
leased property or, if lower, at the present value of the minimum lease payments. Lease payments are
apportioned between finance charges and reduction of the lease liability so as to achieve a constant
rate of interest on the remaining balance of the liability. Finance charges are recognised in profit or loss
as finance costs.

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.

Operating lease payments are recognised as an operating expense in the profit or loss on a straight-line
basis over the lease term.

(b) As lessor

Leases in which the Group does not transfer substantially all the risks and benefits of ownership of the
asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease
are added to the carrying amount of the leased asset and recognised over the lease term on the same
bases as rental income. Contingent rents are recognised as revenue in the period in which they are
earned.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 87

notes to the financial statements

For the financial year ended 31 March 2016

4. Summary of significant accounting policies (Cont’d)

4.13 Land use rights

Land use rights are initially measured at cost. Following initial recognition, land use rights are measured at
cost less accumulated amortisation and accumulated impairment losses. The land use rights are amortised
over their lease terms.

4.14 Investment in subsidiaries

A subsidiary is an entity over which the Group has the power to govern the financial and operating policies
so as to obtain benefits from its activities.

Investments in subsidiaries are accounted for at cost less impairment losses.

4.15 Inventories

Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the inventories
to their present location and condition are accounted for as follows:

- Raw materials: purchase costs on a first-in first-out basis.

- Finished goods and work-in-progress: costs of direct materials and labour and a proportion of
manufacturing overheads based on normal operating capacity, but excluding borrowing costs.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of
completion and the estimated costs necessary to make the sale.

4.16 Impairment of non-financial assets

At each reporting date, an assessment is made as to whether there is an indication that an asset may be
impaired. If any indication exists, or when annual impairment testing for an asset is required, the asset’s
recoverable amount is estimated. An asset’s recoverable amount is the higher of an asset’s or cash-generating
unit’s (“CGU”) fair value less costs of disposal and its value in use. Recoverable amount is determined for an
individual asset unless the asset does not generate cash inflows that are largely independent of those from
other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-
tax discount rate that reflects current market assessments of the time value of money and the risks specific
to the asset. In determining fair value less costs of disposal, recent market transactions are taken into
account. If no such transactions can be identified, an appropriate valuation model is used. These calculations
are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available
fair value indicators.

Impairment calculation are based on detailed budgets and forecast calculations, which are prepared separately
for each CGU to which the individual assets are allocated. These budgets and forecast calculations generally
cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project
future cash flows after the fifth year.

Impairment losses of continuing operations, including impairment on inventories, are recognised in profit or
loss in expense categories consistent with the function of the impaired asset.
88 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

4. Summary of significant accounting policies (Cont’d)

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

Goodwill is tested for impairment annually at reporting date and when circumstances indicate that the
carrying value may be impaired. Impairment is determined by assessing the recoverable amount of each
CGU (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less
than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be
reversed in future periods.

For assets other than goodwill, an assessment is made at each reporting date to determine whether there is an
indication that previously recognised impairment losses no longer exist or have decreased. If such indication
exists, the recoverable amount of the asset or CGU is estimated. A previously recognised impairment loss
is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable
amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of
the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such
reversal is recognised in profit or loss.

4.17 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity.

4.18 Financial assets

(a) Initial recognition and measurement

Financial assets are classified, at initial recognition, as financial assets at fair value through profit or
loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as
derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial assets
are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through
profit or loss, transaction costs that are attributable to the acquisition of the financial asset.

Purchases or sales of financial assets that require delivery of assets within a time frame established by
regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e.,
the date that the Group commits to purchase or sell the asset.

(b) Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in four categories:

(i) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and
financial assets designated upon initial recognition at fair value through profit or loss. Financial
assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing
in the near term. Derivatives, including separated embedded derivatives are also classified as held
for trading unless they are designated as effective hedging instruments as defined by MFRS 139.
Financial assets at fair value through profit or loss are carried in the statement of financial position
at fair value with net changes in fair value presented as finance costs (negative net changes in fair
value) or finance income (positive net changes in fair value) in profit or loss.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 89

notes to the financial statements

For the financial year ended 31 March 2016

4. Summary of significant accounting policies (Cont’d)

4.18 Financial assets (Cont’d)

(b) Subsequent measurement (Cont’d)

(i) Financial assets at fair value through profit or loss (Cont’d)

Derivatives embedded in host contracts are accounted for as separate derivatives and recorded
at fair value if their economic characteristics and risks are not closely related to those of the host
contracts and the host contracts are not held for trading or designated at fair value through
profit or loss. These embedded derivatives are measured at fair value with changes in fair value
recognised in profit or loss. Re-assessment only occurs if there is either a change in the terms
of the contract that significantly modifies the cash flows that would otherwise be required or a
reclassification of a financial asset out of the fair value through profit or loss.

The Group has not designated any financial assets at fair value through profit or loss.

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. After initial measurement, such financial assets are
subsequently measured at amortised cost using the effective interest rate (“EIR”) method, less
impairment. Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included
in finance income in profit or loss. The losses arising from impairment are recognised in profit or
loss in finance costs for loans and in cost of sales or other operating expenses for receivables.
This category generally applies to trade and other receivables.

(iii) Held-to-maturity investments

Non-derivative financial assets with fixed or determinable payments and fixed maturities are
classified as held to maturity when the Group has the positive intention and an ability to hold them
to maturity. After initial measurement, held to maturity investments are measured at amortised
cost using the EIR, less impairment. Amortised cost is calculated by taking into account any
discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR
amortisation is included as finance income in profit or loss. The losses arising from impairment are
recognised in profit or loss as finance costs.

The Group did not have any held-to-maturity investments during the years ended 31 March 2015
and 2016.

(iv) Available-for-sale (“AFS”) financial investments

AFS financial investments include equity investments and debt securities. Equity investments
classified as AFS are those that are neither classified as held for trading nor designated at fair
value through profit or loss. Debt securities in this category are those that are intended to be
held for an indefinite period of time and that may be sold in response to needs for liquidity or in
response to changes in the market conditions.

After initial measurement, AFS financial investments are subsequently measured at fair value with
unrealised gains or losses recognised in OCI and credited in the AFS reserve until the investment
is derecognised, at which time the cumulative gain or loss is recognised in other operating
income, or the investment is determined to be impaired, when the cumulative loss is reclassified
from the AFS reserve to profit or loss in finance costs. Interest earned whilst holding AFS financial
investments is reported as interest income using the EIR method.
90 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

4. Summary of significant accounting policies (Cont’d)

4.18 Financial assets (Cont’d)

(b) Subsequent measurement (Cont’d)

(iv) Available-for-sale (“AFS”) financial investments (Cont’d)

The Group evaluates whether the ability and intention to sell its AFS financial assets in the
near term is still appropriate. When, in rare circumstances, the Group is unable to trade these
financial assets due to inactive markets, the Group may elect to reclassify these financial assets
if the management has the ability and intention to hold the assets for foreseeable future or until
maturity.

For a financial asset reclassified from the AFS category, the fair value carrying amount at the date
of reclassification becomes its new amortised cost and any previous gain or loss on the asset
that has been recognised in equity is amortised to profit or loss over the remaining life of the
investment using the EIR. Any difference between the new amortised cost and the maturity amount
is also amortised over the remaining life of the asset using the EIR. If the asset is subsequently
determined to be impaired, then the amount recorded in equity is reclassified to profit or loss.

(c) Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is primarily derecognised (i.e., removed from the statements of financial position) when:

- The rights to receive cash flows from the asset have expired;

- The Group has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks
and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the
risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a
pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of
ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the
asset, nor transferred control of the asset, the Group continues to recognise an associated liability.
The transferred asset and the associated liability are measured on a basis that reflects the rights and
obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at
the lower of the original carrying amount of the asset and the maximum amount of consideration that
the Group could be required to repay.

(d) Impairment of financial assets

The Group assesses at each reporting date whether there is any objective evidence that a financial asset
or a group of financial assets is impaired. An impairment exists if one or more events that has occured
since the initial recognition of the asset (an incurred ‘loss event’), has an impact on the estimated
future cash flows of the financial asset or the group of financial assets that can be reliably estimated.
Evidence of impairment may include indications that the debtors or a group of debtors is experiencing
significant financial difficulty, default or delinquency in interest or principal payments, the probability
that they will enter bankruptcy or other financial reorganisation and where observable data indicate
that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or
economic conditions that correlate with defaults.


Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 91

notes to the financial statements

For the financial year ended 31 March 2016

4. Summary of significant accounting policies (Cont’d)

4.18 Financial assets (Cont’d)

(d) Impairment of financial assets (Cont’d)

Financial assets carried at amortised cost

For financial assets carried at amortised cost, the Group first assesses whether impairment exists
individually for financial assets that are individually significant, or collectively for financial assets that are
not individually significant. If the Group determines that no objective evidence of impairment exists for
an individually assessed financial asset, whether significant or not, it includes the asset in a group of
financial assets with similar credit risk characteristics and collectively assesses them for impairment.
Assets that are individually assessed for impairment and for which an impairment loss is, or continues
to be, recognised are not included in a collective assessment of impairment.

The amount of any impairment loss identified is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows (excluding future expected credit losses
that have not yet been incurred). The present value of the estimated future cash flows is discounted at
the financial asset’s original effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the loss
is recognised in profit or loss. Interest income (recorded as finance income in profit or loss) continues
to be accrued on the reduced carrying amount and is accrued using the rate of interest used to
discount the future cash flows for the purpose of measuring the impairment loss. Loans together with
the associated allowance are written off when there is no realistic prospect of future recovery and all
collateral has been realised or has been transferred to the Group. If, in a subsequent year, the amount
of the estimated impairment loss increases or decreases because of an event occurring after the
impairment was recognised, the previously recognised impairment loss is increased or reduced by
adjusting the allowance account. If a write-off is later recovered, the recovery is credited to finance
costs in profit or loss.

Available-for-sale (“AFS”) investments

For AFS financial investments, an assessment is made at each reporting date whether there is objective
evidence that an investment or a group of investments is impaired.

In the case of equity investments classified as AFS, objective evidence would include a significant or
prolonged decline in the fair value of the investment below its cost. ‘Significant’ is evaluated against the
original cost of the investment and ‘prolonged’ against the period in which the fair value has been below
its original cost. When there is evidence of impairment, the cumulative loss (measured as the difference
between the acquisition cost and the current fair value, less any impairment loss on that investment
previously recognised in profit or loss) is removed from other comprehensive income and recognised in
the statement of profit or loss. Impairment losses on equity investments are not reversed through profit
or loss; increases in their fair value after impairment are recognised in other comprehensive income.

In the case of debt instruments classified as AFS, the impairment is assessed based on the same
criteria as financial assets carried at amortised cost. However, the amount recorded for impairment is
the cumulative loss measured as the difference between the amortised cost and the current fair value,
less any impairment loss on that investment previously recognised in profit or loss.

Future interest income continues to be accrued based on the reduced carrying amount of the asset,
using the rate of interest used to discount the future cash flows for the purpose of measuring the
impairment loss. The interest income is recorded as part of finance income. If, in a subsequent year,
the fair value of a debt instrument increases and the increase can be objectively related to an event
occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed
through profit or loss.

92 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

4. Summary of significant accounting policies (Cont’d)

4.19 Financial liabilities

(a) Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit
or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an
effective hedge, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs.

The Group’s financial liabilities include trade and other payables, loans and borrowings and financial
guarantee contracts.

(b) Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

(i) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and
financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are incurred for the purpose of
repurchasing in the near term. This category also includes derivative financial instruments entered
into by the Group that are not designated as hedging instruments in hedge relationships as
defined by MFRS 139. Separated embedded derivatives are also classified as held for trading
unless they are designated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognised in the profit or loss.

Financial liabilities designated upon initial recognition at fair value through profit or loss are
designated at the initial date of recognition, and only if the criteria in MFRS 139 are satisfied. The
Group has not designated any financial liability at fair value through profit or loss.

(ii) Other financial liabilities

The Group’s other financial liabilities include trade payables, other payables and loans and
borrowings.

Trade and other payables are recognised initially at fair value plus directly attributable transaction
costs and subsequently measured at amortised cost using the effective interest method.

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and
subsequently measured at amortised cost using the effective interest rate method. Gains and
losses are recognised in the profit or loss when the liabilities are derecognised as well as through
the effective interest rate method (“EIR”) amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and
fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs
in profit or loss.

Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 93

notes to the financial statements

For the financial year ended 31 March 2016

4. Summary of significant accounting policies (Cont’d)

4.19 Financial liabilities (Cont’d)

(c) Financial guarantee contracts

Financial guarantee contracts issued by the Group are those contracts that require a payment to be
made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment
when due in accordance with the terms of a debt instrument. Financial guarantee contracts are
recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable
to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the best
estimate of the expenditure required to settle the present obligation at the reporting date and the
amount recognised less cumulative amortisation.

(d) Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or
expired. When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as the derecognition of the original liability and the recognition of a new liability.
The difference in the respective carrying amounts is recognised in profit or loss.

(e) Offsetting of financial instruments

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

4.20 Derivative financial instruments

Derivative financial instruments, such as forward currency contracts is used to hedge its foreign currency
risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative
contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial
assets when the fair value is positive and as financial liabilities when the fair value is negative.

The purchase contracts that meet the definition of a derivative under MFRS 139 are recognised in profit or
loss as cost of sales. Commodity contracts that are entered into and continue to be held for the purpose
of the receipt or delivery of a non-financial item in accordance with the expected purchase, sale or usage
requirements are held at cost.

Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss.

4.21 Cash and short-term deposits

Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand and
short-term deposits with a maturity of three months or less.

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term
deposits as defined above, net of outstanding bank overdrafts, if any.

94 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

4. Summary of significant accounting policies (Cont’d)

4.22 Share capital and share issuance expenses

An equity instrument is any contract that evidences a residual interest in the assets of the Group and of the
Company after deducting all of its liabilities. Ordinary shares are equity instruments and are recorded at the
proceeds received, net of directly attributable incremental transaction costs.

4.23 Cash dividend and non-cash distribution to equity holders of the Group

The Company recognises a liability to make cash or non-cash distributions to equity holders of the parent
when the distribution is authorised and the distribution is no longer at the discretion of the Company. A
distribution is authorised when it is approved by the shareholders and a corresponding amount is recognised
directly in equity.

Non-cash distributions are measured at the fair value of the assets to be distributed with fair value re-
measurement recognised directly in equity.

Upon distribution of non-cash assets, any difference between the carrying amount of the liability and the
carrying amount of the assets distributed is recognised in profit or loss.

4.24 Provisions

Provisions are recognised when there is a present obligation (legal or constructive) as a result of a past event
and it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation. When it is expected that
some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is
recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to
a provision is presented in the statements of profit or loss net of any reimbursement.

4.25 Contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose
existence will be confirmed only by the occurance or non-occurance of uncertain future event(s) not wholly
within the control of the Group.

Contingent liabilities and assets are not recognised in the statements of financial position of the Group and
of the Company.

4.26 Segment reporting

For management purposes, the Group is organised into operating segments based on their products
and services which are independently managed by the respective segment managers responsible for the
performance of the respective segments under their charge. The segment managers report directly to the
management of the Company who regularly review the segment results in order to allocate resources to the
segments and to assess the segment performance. Additional disclosures on each of these segments are
shown in Note 36, including the factors used to identify the reportable segments and the measurement basis
of segment information.





Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 95

notes to the financial statements

For the financial year ended 31 March 2016

5. Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except as follows:

On 1 April 2015, the Company adopted the following new and amended MFRS and IC Interpretations mandatory
for annual financial periods beginning on or after 1 July 2014.

Effective for annual periods

Description beginning on or after

Amendments to MFRS 119: Defined Benefit Plans:

Employee Contributions 1 July 2014
Annual Improvements to MFRSs 2010 - 2012 Cycle 1 July 2014
Annual Improvements to MFRSs 2011 - 2013 Cycle 1 July 2014

Adoption of the above standards and interpretation did not have any effect on the financial performance or position
of the Group and the Company.

6. Standards issued but not yet effective

The standards and interpretations that are issued but not yet effective up to the date of issuance of the Group
and the Company financial statements are discussed below. The Group and the Company intends to adopt these
standards if applicable, when they become effective.

Effective for annual periods

Description beginning on or after

Annual Improvements to MFRSs 2012 – 2014 Cycle 1 January 2016

Amendments to MFRS 116 and MFRS 138: Clarification of Acceptable
Methods of Depreciation and Amortisation 1 January 2016
Amendments to MFRS 116 and MFRS 141 Agriculture: Bearer Plants 1 January 2016
Amendments to MFRS 11: Accounting for Acquisitions of Interests in Joint
Operations 1 January 2016
Amendments to MFRS 127: Equity Method in Separate Financial Statements 1 January 2016
Amendments to MFRS 101: Disclosure Initiatives 1 January 2016
Amendments to MFRS 10, MFRS 12 and MFRS 128: Investment Entities:
Applying the Consolidation Exception 1 January 2016
MFRS 14 Regulatory Deferral Accounts 1 January 2016
Amendments to MFRS 107: Disclosure Initiative 1 January 2017
Amendments to MFRS 112: Recognition of Deferred Tax Assets for
Unrealised Losses 1 January 2017
MFRS 15 Revenue from Contracts with Customers 1 January 2018
MFRS 9 Financial Instruments 1 January 2018
MFRS 16 Leases 1 January 2019
Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture Deferred
96 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

6. Standards issued but not yet effective (Cont’d)

The directors expect that the adoption of the above standards and interpretations will have no material impact on
the financial statements in the period of initial application except as disclosed below:

Amendments to MFRS 127: Equity Method in Separate Financial Statements

The amendments will allow entities to use the equity method to account for investments in subsidiaries, joint
ventures and associate in their separate financial statements. Entities already applying MFRS and electing to
change to the equity method in its separate financial statements will have to apply this change retrospectively.
For first-time adopters of MFRS electing to use the equity method in its separate financial statements, they will
be required to apply this method from the date of transition to MFRS. The amendments are effective for annual
periods beginning on or after 1 January 2016, with early adoption permitted.

Amendments to MFRS 101: Disclosure Initiatives

The amendments to MFRS 101 include narrow-focus improvements in the following five areas:

• Materiality
• Disaggregation and subtotals
• Notes structure
• Disclosure of accounting policies
• Presentation of items of other comprehensive income arising from equity accounted investments

The directors of the Company do not anticipate that the application of these amendments will have a material
impact on the Group’s and the Company’s financial statements.

Amendments to MFRS 10, MFRS 12 and MFRS 128: Investment Entities: Applying the Consolidation Exception

The amendments clarify that the exemption from presenting consolidated financial statements applies to a parent
entity that is a subsidiary of an investment entity, when the investment entity measures all of its subsidiaries at fair
value. The amendments further clarify that only a subsidiary that is not an investment entity itself and provides
support services to the investment entity is consolidated. In addition, the amendments also provides that if an entity
that is not itself an investment entity has an interest in an associate or joint venture that is an investment entity, the
entity may, when applying the equity method, retain the fair value measurement applied by that investment entity
associate or joint venture to the investment entity associate’s or joint venture’s interests in subsidiaries.

The amendments are to be applied retrospectively and are effective for annual periods beginning on or after 1
January 2016, with early adoption permitted.

MFRS 9 Financial Instruments

In November 2014, MASB issued the final version of MFRS 9 Financial Instruments which reflects all phases of the
financial instruments project and replaces MFRS 139 Financial Instruments: Recognition and Measurement and
all previous versions of MFRS 9. The standard introduces new requirements for classification and measurement,
impairment and hedge accounting. MFRS 9 is effective for annual periods beginning on or after 1 January 2018, with
early application permitted. Retrospective application is required, but comparative information is not compulsory.
The adoption of MFRS 9 will have an effect on the classification and measurement of the Group’s financial assets,
but no impact on the classification and measurement of the Group’s financial liabilities.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 97

notes to the financial statements

For the financial year ended 31 March 2016

7. Significant accounting judgments, estimates and assumptions

The preparation of these financial statements requires management to make judgments, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying
disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could
result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future
periods.

7.1 Judgments made in applying accounting policies

In the process of applying the above accounting policies, management has made the following judgments,
apart from those involving estimations, which significantly affect the amounts recognised in these financial
statements.

Classification between investment properties and property, plant and equipment

The Group has developed certain criteria based on MFRS 140 in making judgment whether a property
qualifies as an investment property. Investment property is a property held to earn rentals or for capital
appreciation or both.

Some properties comprise a portion that is held to earn rentals or for capital appreciation and another
portion that is held for use in the production or supply of goods or services or for administrative purposes.
If these portions could be sold separately (or leased out separately under a finance lease), the Group would
account for the portions separately. If the portions could not be sold separately, the property is an investment
property only if an insignificant portion is held for use in the production or supply of goods or services or for
administrative purposes. Judgment is made on an individual property basis to determine whether ancillary
services are so significant that a property does not qualify as investment property.

7.2 Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting
date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are described below. Assumptions and estimates are based on
parameters available when the financial statements were prepared. Existing circumstances and assumptions
about future developments, however, may change due to market changes or circumstances arising beyond
the control of the Group and of the Company. Such changes are reflected in the assumptions when they
occur.

(a) Useful lives of plant and machinery

The cost of plant and machinery is depreciated on a straight-line basis over the assets’ useful lives.
Management estimates the useful lives of these plant and machinery to be 10 years. These are common
life expectancies applied in the industry. Changes in the expected level of usage and technological
developments could impact the economic useful lives and the residual values of these assets, therefore
future depreciation charges could be revised.

(b) Fair value of investment properties

The Group carried out the impairment test of investment properties based on fair value of investment
properties. The Group engaged independent valuation specialists to determine fair value as at 31
March 2016 based on the comparison method.


98 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

7. Significant accounting judgments, estimates and assumptions (Cont’d)

7.2 Estimates and assumptions (Cont’d)

(c) Impairment of loans and receivables

The Group assesses at each reporting date whether there is any objective evidence that a financial
asset is impaired. To determine whether there is objective evidence of impairment, the Group considers
factors such as the probability of insolvency or significant financial difficulties of the debtor and default
or significant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash flows are
estimated based on historical loss experience for assets with similar credit risk characteristics. The
carrying amount of the Group’s loans and receivables at the reporting date is disclosed in Note 21. If
the financial conditions of the receivables of the Group were to deteriorate, additional provision may be
required.

(d) Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable
amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less
costs to sell calculation is based on available data from binding sales transactions in an arm’s length
transaction of similar assets or observable market prices less incremental costs for disposing of the
asset. The value in use calculation is based on a discounted cash flow model. The cash flows are
derived from the budget for the next five years and do not include restructuring activities that the Group
is not yet committed to or significant future investments that will enhance the asset’s performance of
the cash generating unit being tested. The recoverable amount is most sensitive to the discount rate
used for the discounted cash flow model as well as the expected future cash-inflows and the growth
rate used for extrapolation purposes.

(e) Taxes

Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws,
and the amount and timing of future taxable income. Given the wide range of international business
relationships and the long-term nature and complexity of existing contractual agreements, differences
arising between the actual results and the assumptions made, or future changes to such assumptions,
could necessitate future adjustments to tax income and expense already recorded.

The Group establishes provisions, based on reasonable estimates, for possible consequences of audits
by the tax authorities of the respective countries in which it operates. The amount of such provisions
is based on various factors, such as experience of previous tax audits and differing interpretations of
tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation
may arise on a wide variety of issues depending on the conditions prevailing in the company’s domicile.
As the Group assesses the probability for litigation and subsequent cash outflow with respect to taxes
as remote, no contingent liability has been recognised.

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable
profit will be available against which the losses can be utilised. Significant management judgment is
required to determine the amount of deferred tax assets that can be recognised, based upon the likely
timing and the level of future taxable profits together with future tax planning strategies.

The amount of deferred tax assets recognised in respect of unutilised tax losses, capital allowances,
reinvestment allowances, and allowance for increased exports and the amounts of such losses and
allowances for which deferred tax assets were not recognised are disclosed in Note 26.


Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 99

notes to the financial statements

For the financial year ended 31 March 2016

8. Revenue

Group Company
2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000

Sales of goods 532,871 357,376 - -

Management fee - - 1,500 3,491
532,871 357,376 1,500 3,491

9. Other income

Group Company
2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000

Bad debts recovered 12 - - -

Gain on disposal of property, plant
and equipment 282 - - -
Gain on disposal of investment securities - 6 - -
Rental income 257 261 - -
Reversal of allowance for impairment
of investment in subsidiaries - - 3,461 -
Sales of stock lots 361 1,438 - -
Sundry income 1,433 1,158 - -
Realised foreign exchange gain 2,693 569 772 -
Unrealised foreign exchange gain 460 4,313 - 1,536
5,498 7,745 4,233 1,536

10. Finance costs

Group
2016 2015
RM’000 RM’000

Interest expense on:

- Bank loans and bank overdrafts 5,834 4,028
- Obligations under finance leases 51 27
Total finance costs 5,885 4,055
100 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

11. (Loss)/profit before tax

The following items have been included in arriving at (loss)/profit before tax:

Group Company
2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000

Auditors’ remuneration
- Statutory audit
Company’s auditors 217 203 32 32
Other auditors 71 55 - -
Overprovision in prior year (10) (1) - -
- Other services
Company’s auditors 76 60 25 35
Bad debts written off 13 2,008 - -
Depreciation and amortisation:
- Property, plant and equipment (Note 16) 10,670 10,463 26 24
- Investment properties (Note 17) 261 222 - -
- Land use rights (Note 18) 69 60 - -
Employee benefits expense (Note 12) 150,716 113,475 887 2,931
Impairment loss on:
- Trade and other receivables (Note 21) 19 56 2,178 1,060
- Investment in subsidiaries - - - 7,069
Write-down of inventories 170 3,016 - -
Loss on disposal of property, plant
and equipment - 422 - -
Minimum operating lease payments:
- Land and buildings 5,700 4,603 - -
- Machinery 70 79 6 -
Non-executive directors’ emoluments (Note 13) 250 286 246 282
Unrealised foreign exchange loss - - 688 -
Property, plant and equipment written off 511 30 - 1

12. Employee benefits expense

Group Company
2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000

Executive directors (Note 13)

Executive directors of the Company 1,552 2,025 156 1,760
Executive directors of subsidiaries 819 738 - 258
2,371 2,763 156 2,018
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 101

notes to the financial statements

For the financial year ended 31 March 2016

12. Employee benefits expense (Cont’d)

Group Company
2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000

Other staff
Wages and salaries 141,963 102,768 634 798
Defined contribution plans 3,610 3,005 78 98
Other related costs 2,772 4,939 19 17
148,345 110,712 731 913
150,716 113,475 887 2,931

13. Directors’ remuneration

The details of remuneration receivable by directors of the Company during the year are as follows:

Group Company
2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000

Directors of the Company

Executive:
- Salaries and other emoluments 1,396 1,641 - 1,376
- Defined contribution plans - 156 - 156
- Fees 156 228 156 228
1,552 2,025 156 1,760
Non-Executive:
- Fees 246 282 246 282

Directors of Subsidiaries
Executive:
- Salaries and other emoluments 819 738 - 258

Non-Executive:
- Fees 4 4 - -
Total directors’ remuneration 2,621 3,049 402 2,300

Analysis of directors’ remuneration:

Executive directors (Note 12) 2,371 2,763 156 2,018
Non-executive directors (Note 11) 250 286 246 282
Total directors’ remuneration 2,621 3,049 402 2,300
102 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

14. Income tax expense

Major components of income tax expense

The major components of income tax expense for the years ended 31 March 2016 and 2015 are:

Group Company
2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000

Statements of comprehensive income:

Current income tax:
- Malaysian income tax 27 843 - -
- Foreign tax 8 185 - -
- (Over)/under provision in respect of prior years (144) 100 - 84
(109) 1,128 - 84
Deferred tax (Note 26):
- Origination and reversal of
temporary difference 901 (441) - -
- Over provision in respect of prior years (578) (202) - -
323 (643) - -
Income tax expense recognised in profit or loss 214 485 - 84

Reconciliation between tax expense and accounting (loss)/profit

The reconciliation between tax expense and the product of accounting (loss)/profit multiplied by the applicable
corporate tax rate for the years ended 31 March 2016 and 2015 are as follows:

2016 2015
RM’000 RM’000
Group

Loss before tax (12,502) (16,910)

Taxation at Malaysian statutory tax rate of 24% (2015: 25%) (3,000) (4,228)
Different tax rates in other countries 906 905
Adjustments:
Effect of income not subject to tax (1,625) (497)
Effect of expenses not deductible for tax purposes 2,513 217
Utilisation of previously unrecognised tax losses (256) (841)
Deferred tax assets recognised in respect of current
year’s unutilised reinvestment allowances (43) (310)
Deferred tax assets recognised on increased export allowance 607 (359)
Deferred tax assets not recognised in respect of unutilised
capital allowances, reinvestment allowances and tax losses 1,834 5,700
Over provision of deferred tax in prior years (578) (202)
(Over)/under provision of tax expense in prior years (144) 100
Income tax expense recognised in profit or loss 214 485
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 103

notes to the financial statements

For the financial year ended 31 March 2016

14. Income tax expense (Cont’d)

2016 2015
RM’000 RM’000
Company

Profit/(loss) before tax 978 (6,785)

Taxation at Malaysian statutory tax rate of 24% (2015: 25%) 235 (1,696)
Adjustments:
Effect of income not subject to tax (1,016) (384)
Effect of expenses not deductible for tax purposes 760 2,080
Deferred tax assets not recognised on unutilised current year business loss 21 -
Underprovision of tax expense in prior years - 84
Income tax expense recognised in profit or loss - 84

Domestic income tax is calculated at the Malaysian statutory tax rate of 24% (2015: 25%) of the estimated
assessable (loss)/profit for the year. Year of assessment 2016 onwards, the domestic statutory tax rate will be
remain 24%. The computation of deferred tax as at 31 March 2016 has reflected these changes.

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.

15. Loss per share

Basic earnings per share amounts are calculated by dividing loss for the year, net of tax, attributable to owners of
the parent by the weighted average number of ordinary shares outstanding during the financial year.

The following tables reflect the profit and share data used in the computation of basic loss per share for the years
ended 31 March:

Group
2016 2015

Loss net of tax attributable to owners of the parent (RM’000) (10,255) (17,465)

Weighted average number of ordinary shares in issue (‘000) 60,012 60,012

Basic loss per share (sen) (17.1) (29.1)

The diluted (loss)/earnings per share is the same as the basic (loss)/earnings per share as the Company does not
have any potential dilutive ordinary shares.
104 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

16. Property, plant and equipment

Plant and
machinery,
air-
conditioners,
factory Renovation,
equipment furniture,
and fittings,
* Land and electrical office Motor
buildings installation equipment vehicles Total
Group RM’000 RM’000 RM’000 RM’000 RM’000

Cost

At 1 April 2014 45,173 119,930 44,915 6,730 216,748

Additions 1,223 6,828 1,438 776 10,265
Transfer to investment properties (8,074) - - - (8,074)
Disposals - (5,675) (33) (386) (6,094)
Written off - (876) (1,345) (1) (2,222)
Reclassification - (914) 914 - -
Exchange differences 2,847 8,233 4,256 429 15,765
At 31 March and 1 April 2015 41,169 127,526 50,145 7,548 226,388
Additions 1,927 4,536 1,439 608 8,510
Disposals - (9,513) (105) (545) (10,163)
Written off - (3,182) (3,926) - (7,108)
Exchange differences 200 3,114 764 130 4,208
At 31 March 2016 43,296 122,481 48,317 7,741 221,835

Accumulated depreciation and

impairment losses

At 1 April 2014 6,880 91,621 36,782 4,553 139,836

Depreciation charge
for the year (Note 11) 673 6,904 2,169 717 10,463
Transfer to investment properties (153) - - - (153)
Disposals - (4,710) (29) (307) (5,046)
Written off - (853) (1,338) (1) (2,192)
Reclassification (89) (178) 267 - -
Exchange differences 233 6,152 3,559 286 10,230
At 31 March and 1 April 2015 7,544 98,936 41,410 5,248 153,138
Depreciation charge
for the year (Note 11) 749 6,819 2,272 830 10,670
Disposals - (8,943) (64) (473) (9,480)
Written off - (2,902) (3,695) - (6,597)
Exchange differences (7) 2,053 459 74 2,579
At 31 March 2016 8,286 95,963 40,382 5,679 150,310

Net carrying amount:

At 31 March 2015 33,625 28,590 8,735 2,300 73,250

At 31 March 2016 35,010 26,518 7,935 2,062 71,525

Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 105

notes to the financial statements

For the financial year ended 31 March 2016

16. Property, plant and equipment (cont’d)

* Land and buildings

Capital
Freehold work
land Buildings in progress Total
RM’000 RM’000 RM’000 RM’000

Cost

At 1 April 2014 4,584 40,589 - 45,173

Additions - 161 1,062 1,223
Transfer to investment properties - (8,074) - (8,074)
Exchange differences - 2,847 - 2,847
At 31 March and 1 April 2015 4,584 35,523 1,062 41,169
Additions - 288 1,639 1,927
Reclassification - 2,711 (2,711) -
Exchange differences - 190 10 200
At 31 March 2016 4,584 38,712 - 43,296

Accumulated depreciation
At 1 April 2014 - 6,880 - 6,880
Depreciation charge for the year - 673 - 673
Reclassification - (89) - (89)
Transfer to investment properties - (153) - (153)
Exchange differences - 233 - 233
At 31 March and 1 April 2015 - 7,544 - 7,544
Depreciation charge for the year - 749 - 749
Exchange differences - (7) - (7)
At 31 March 2016 - 8,286 - 8,286

Net carrying amount

At 31 March 2015 4,584 27,979 1,062 33,625

At 31 March 2016 4,584 30,426 - 35,010

106 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

16. Property, plant and equipment (cont’d)

Air-
conditioners,
and Office Motor
computer equipment vehicles Total
RM’000 RM’000 RM’000 RM’000

Company

Cost

At 1 April 2014 41 65 47 153

Additions - 10 - 10
Written off - (2) - (2)
At 31 March and 1 April 2015 41 73 47 161
Additions - 8 - 8
At 31 March 2016 41 81 47 169

Accumulated depreciation

At 1 April 2014 4 32 14 50
Depreciation charge for the year (Note 11) 4 12 8 24
Written off - (1) - (1)
At 31 March and 1 April 2015 8 43 22 73
Depreciation charge for the year (Note 11) 5 13 8 26
At 31 March 2016 13 56 30 99

Net carrying amount

At 31 March 2015 33 30 25 88

At 31 March 2016 28 25 17 70

(a) Net carrying amounts of property, plant and equipment held under hire purchase arrangements are as
follows:

Group
2016 2015
RM’000 RM’000

Plant and machinery 2,364 5,117

Motor vehicles 312 475
2,676 5,592
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 107

notes to the financial statements

For the financial year ended 31 March 2016

16. Property, plant and equipment (cont’d)

(b) During the financial year, the Group acquired property, plant and equipment with an aggregate costs of
RM8,510,000 (2015: RM10,265,000) of which RM1,051,000 (2015: RM267,000) were acquired by means
of hire purchase arrangements.

(c) The Group’s certain land and buildings with net carrying amounts of RM5,346,000 (2015: RM4,233,000)
are pledged to secure the Group’s bank borrowings as disclosed in Note 24. Certain property, plant and
equipment of the Group with net carrying amounts of RM18,635,000 (2015: RM22,080,229) were subject to
negative pledges in relation to banking facilities granted to the Group as disclosed in Note 24.

17. Investment properties

Group
2016 2015
RM’000 RM’000

Cost
At 1 April 11,886 3,464
Transfer from property, plant and equipment - 8,074
Exchange differences 7 348
At 31 March 11,893 11,886

Accumulated depreciation
At 1 April 882 455
Depreciation charge for the year (Note 11) 261 222
Transfer from property, plant and equipment - 153
Exchange differences (4) 52
At 31 March 1,139 882

Net carrying amount 10,754 11,004

Fair value of investment properties (Note 33) 13,982 14,384

Certain investment properties of the Group with net carrying amounts of RM721,000 (2015: RM733,000) were
subject to negative pledges in relation to banking facilities granted to the Group as disclosed in Note 24.

18. Land use rights

Group
2016 2015
RM’000 RM’000

At 1 April 2,877 2,652

Amortised for the year (Note 11) (69) (60)
Exchange differences 112 285
At 31 March 2,920 2,877

This is in respect of short-term leasehold land which are subject to negative pledge in relation to banking facilities
granted to the Group as described in Note 24. The land use rights have a remaining tenure ranging from 35 years
to 46 years (2015: 36 years to 47 years).
108 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

19. Investment in subsidiaries

Company
2016 2015
RM’000 RM’000

Unquoted shares, at cost 81,281 79,353

Less: Accumulated impairment losses (21,478) (24,940)
59,803 54,413

Details of the subsidiaries are as follows:

Name of Country of Proportion (%) of

subsidiaries incorporation Principal activities ownership interest
2016 2015

Subsidiaries of the Company

Perusahaan Chan Choo Sing Malaysia Manufacturing and sale of apparels 100 100
Sdn. Bhd.

Beauty Electronic Embroidering Malaysia Embroidering of logos and emblems 100 100
Centre Sdn. Bhd.

Jusca Garments Sdn. Bhd. Malaysia Temporarily ceased operations 100 100

Keza Sdn. Bhd. * Malaysia Fabric-knitting and manufacturing of 100 100

elastic bands

Mega Labels & Stickers Malaysia Printing and sale of labels 100 100
Sdn. Bhd. and stickers

Mega Label (Malaysia) Sdn. Bhd. Malaysia Printing and sale of labels 100 100
and stickers

Shern Yee Garments Sdn. Bhd. * Malaysia Temporarily ceased operations 100 100

Thirty Three Trading Sdn. Bhd. * Malaysia Temporarily ceased operations 100 100

PCCS Garments Limited Cambodia Temporarily ceased operations 100 100

JIT Textiles Limited Cambodia Manufacturing and sale of apparels 100 100

PCCS Garments (Suzhou) Ltd. * The People’s Manufacturing and sale of apparels 100 100
Republic of
China

PCCS (Hong Kong) Limited * Hong Kong Trading of apparels 100 100
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 109

notes to the financial statements

For the financial year ended 31 March 2016

19. Investment in subsidiaries (cont’d)

Name of Country of Proportion (%) of

subsidiaries incorporation Principal activities ownership interest
2016 2015

Subsidiaries of the Company (Cont’d)

Beauty Apparels (Cambodia) Ltd. Cambodia Manufacturing of garments 100 100

Thirty Three (Hong Kong) Ltd.* Hong Kong Investment holding 100 100

Perfect Seamless Garments Cambodia Manufacturing of seamless bonding 51 -

(Cambodia) Ltd.

Subsidiary of Beauty Electronic

Embroidering Centre Sdn. Bhd.

JIT Embroidery Limited Cambodia Embroidering of logos, emblems and 100 100
printing of silk screen products

Subsidiary of Shern Yee

Garments Sdn. Bhd.

Global Apparels Limited Cambodia Manufacturing and sale of apparels 70 70

Subsidiary of Thirty
Three Trading Sdn. Bhd.

Beauty Silk Screen Malaysia Temporarily ceased operations 100 100

(M) Sdn. Bhd.*

Subsidiary of Beauty Silk

Screen (M) Sdn. Bhd.

Beauty Silk Screen Limited Cambodia Embroidering of logos, emblems and 100 100
printing of silk screen products

Subsidiary of PCCS Garments

(Suzhou) Ltd.

PCCS Garments The People’s Property holding 100 100

Wuhan Ltd. * Republic of
China
110 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

19. Investment in subsidiaries (cont’d)

Name of Country of Proportion (%) of

subsidiaries incorporation Principal activities ownership interest
2016 2015

Subsidiary of Thirty Three

(Hong Kong) Ltd.

Thirty Three (Shanghai) Ltd. * The People’s Trading of apparels and accessories 100 100
Republic of
China

Subsidiary of Mega Labels

& Stickers Sdn. Bhd.

Mega Labels & Stickers Cambodia Printing and sale of labels and 100 100
(Cambodia) Co., Ltd. stickers and manufacturing of elastic
bands and related products

Subsidiary of Keza Sdn. Bhd.

Keza (Cambodia) Limited Cambodia Manufacturing of elastic bands 100 100

and related products

* Audited by firms other than Ernst & Young

20. Inventories

Group
2016 2015
RM’000 RM’000

Cost
Raw materials 17,277 16,312
Work-in-progress 13,908 10,995
Finished goods 31,923 25,720
63,108 53,027
Net realisable value
Raw materials 1,361 807
Finished goods 332 92
64,801 53,926
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 111

notes to the financial statements

For the financial year ended 31 March 2016

21. Trade and other receivables

Group Company
2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000

Trade receivables
Third parties 77,019 68,460 - -
Less: Allowance for impairment (48) (86) - -
Trade receivables, net 76,971 68,374 - -

Other receivables
Due from subsidiaries - - 23,085 27,056
Refundable deposits 1,599 1,542 6 6
Sundry receivables 3,788 3,605 - -
5,387 5,147 23,091 27,062
Less: Allowance for impairment (1,659) (1,632) (19,454) (17,276)
3,728 3,515 3,637 9,786
80,699 71,889 3,637 9,786

Total trade and other receivables 80,699 71,889 3,637 9,786

Add: Cash and bank balances (Note 23) 38,034 19,755 5,761 7,949
Total loans and receivables 118,733 91,644 9,398 17,735

(a) Trade receivables

The Group’s normal trade credit term ranges from 15 to 120 (2015: 30 to 90) days. Other credit terms are
assessed and approved on a case-by-case basis. They are recognised at their original invoice amounts
which represent their fair values on initial recognition.

Trade receivables of the Group amounting to RM949,000 (2015: RM3,400,000) are pledged to bank as
securities for borrowings as disclosed in Note 24.

Ageing analysis of trade receivables

The ageing analysis of the Group’s trade receivables is as follows:

Group
2016 2015
RM’000 RM’000

Neither past due nor impaired 53,809 51,791

1 to 30 days past due not impaired 19,209 10,231
31 to 60 days past due not impaired 2,535 4,779
61 to 90 days past due not impaired 387 694
91 to 120 days past due not impaired 429 604
More than 121 days past due not impaired 602 275
23,162 16,583
Impaired 48 86
77,019 68,460
112 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

21. Trade and other receivables (cont’d)

(a) Trade receivables (Cont’d)

Receivables that are neither past due nor impaired

Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good
payment records with the Group.

None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during
the financial year.

Receivables that are past due but not impaired

The Group has trade receivables amounting to RM23,162,000 (2015: RM16,583,000) that are past due at
the reporting date but not impaired. The directors are of the opinion that the receivables are collectible in view
of long term business relationships with the customers. These receivables are unsecured in nature.

Receivables that are impaired

The Group’s trade receivables that are impaired at the reporting date and the movement of the allowance
accounts used to record the impairment are as follows:

Group
2016 2015
RM’000 RM’000

Trade receivable - nominal amounts 48 86

Less: Allowance for impairment (48) (86)
- -

Movement in allowance accounts:

Group
2016 2015
RM’000 RM’000

At 1 April 86 2,536
Charge for the year (Note 11) 19 56
Written off (61) (2,573)
Exchange difference 4 67
At 31 March 48 86

Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that
are in significant financial difficulties and have defaulted on payments. These receivables are not secured by
any collateral or credit enhancements.

(b) Related party balances

Amounts due from subsidiaries are non-interest bearing, unsecured and repayable on demand.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 113

notes to the financial statements

For the financial year ended 31 March 2016

21. Trade and other receivables (cont’d)

(c) Other receivables

Other receivables that are impaired

Movement in allowance accounts:

Group Company
2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000

At 1 April 1,632 2,057 17,276 16,216

Charge for the year (Note 11) - - 2,178 1,060
Written off - (164) - -
Exchange difference 27 (261) - -
At 31 March 1,659 1,632 19,454 17,276

22. Other current assets

Group Company
2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000

Prepaid operating expenses 4,910 3,881 27 13

Value added tax recoverable 4,855 3,225 - -
9,765 7,106 27 13

23. Cash and bank balances

Group Company
2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000

Cash on hand and at banks 35,389 16,346 3,562 4,987

Deposits with banks 2,645 3,409 2,199 2,962
Cash and bank balances 38,034 19,755 5,761 7,949
Bank overdrafts (Note 24) (741) (3,394) - -
Less: Deposit pledged with bank (441) (421) - -
Cash and cash equivalents 36,852 15,940 5,761 7,949

Deposits with banks of the Group amounting to RM441,000 (2015: RM421,000) are pledged to bank for credit
facility granted to the Group as disclosed in Note 24.

Deposit with a licensed bank amounting to RM5,000 (2015: RM5,000) is registered in trust by a director.
114 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

23. Cash and bank balances (Cont’d)

Bank balances of the Group amounting to RM9,000 (2015: RM29,000) are held under trust by managerial staff of
the Group.

The weighted average effective interest rates and average maturities of deposits at the reporting date were as
follows:

Group Company
2016 2015 2016 2015
Weighted average effective
interest rates (%) 2.82 2.77 3.30 3.10
Average maturities (days) 57 53 31 32

24. Loans and borrowings

Group
2016 2015
Maturity RM’000 RM’000
Current
Unsecured:
Bank overdrafts (Note 23) On demand 741 3,394
Revolving credit at 6.23% (2015: 7.67%) p.a. 2017 25,358 25,639
Bankers’ acceptances at 4.85% (2015: 5.09%) p.a. 2017 2,841 2,854
Trade loan at 2.33% (2015: 1.63%) p.a. 2017 6,597 8,421
Trust receipts at 5.17% (2015: 7.90%) p.a. 2017 26,167 6,694
Export bill financing at 2.26% (2015: 2.14%) p.a. 2017 4,808 8,349
Bank loans:
- 2.59% p.a. fixed rate RM loan 2017 150 360
- RM loan at COF + 2.0% p.a. 2017 83 736
- RM loan at fixed profit rate of 5% p.a. 2017 262 250
- USD loan at COF + 2.0% p.a. 2017 1,294 1,519
68,301 58,216
Secured:
Bank loan - HKD loan at COF + 3% p.a. 2017 862 827
Obligations under finance lease (Note 31 (b)) 2017 479 906
Trade loan at 2.33% (2015: 3.78%) p.a. 2017 20,309 497
21,650 2,230
89,951 60,446
Non-current
Unsecured:
Bank loans:
- 2.59% p.a. fixed rate RM loan 2018 - 150
- RM loan at COF + 2.0% p.a. 2018 - 65
- USD loan at COF + 2.0% p.a. 2017 - 1,292
- RM loan at fixed profit rate of 5% p.a. 2016 - 2020 792 1,052
792 2,559
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 115

notes to the financial statements

For the financial year ended 31 March 2016

24. Loans and borrowings (Cont’d)

Group
2016 2015
Maturity RM’000 RM’000

Non-current
Secured:
Bank loan - HKD loan at COF + 3% p.a. 2018 431 1,241
Obligations under finance lease (Note 31 (b)) 2019 803 451
2,026 4,251
Total loans and borrowings 91,977 64,697

The remaining maturities of the loans and borrowings at reporting date are as follows:

Group
2016 2015
RM’000 RM’000

On demand or within one year 89,951 60,446

More than 1 year and less than 2 years 1,138 2,839
More than 2 years and less than 5 years 888 1,412
91,977 64,697

Obligations under finance leases

Those obligations are secured by a charge over the leased assets (Note 16). These obligations bore interest at the
reporting date of between 2.58% to 3.17% (2015: 2.53% to 3.09%) per annum.

Bank overdrafts

Bank overdrafts denominated in RM, bear interest range from BLR + 1.00% p.a. to BLR + 1.5% p.a. (2015: range
from BLR + 1.25% p.a. to BLR + 1.5% p.a.).

Bank overdrafts denominated in HKD, bear interest at bank’s best lending rate + 1.75% p.a. (2015: Bank’s best
lending rate + 1.75% p.a.).

Bank overdrafts denominated in USD, bear interest at COF + 1.75% p.a. (2015: COF + 1.75% p.a.).

The unsecured loans and borrowings of the Group are guaranteed by the Company and with negative pledges
over certain assets of the Group as disclosed in Note 16, Note 17 and Note 18.

The secured loans and borrowings are secured by certain assets of the Group as disclosed in Note 16, Note 17,
Note 18, Note 21 and Note 23.

* BLR : Base lending rate is 6.95% p.a. (2015: 6.85% p.a.)

COF : Cost of fund ranged from 0.33% p.a. to 6.15% p.a. (2015: 0.33% p.a. to 6.15% p.a.)
116 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

25. Trade and other payables

Group Company
2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000
Current
Trade payables
Third parties 45,842 41,765 - -

Other payables
Due to subsidiaries - - 4,617 8,453
Other payables and accruals 38,224 25,257 4,072 4,203
38,224 25,257 8,689 12,656

Total trade and other payables 84,066 67,022 8,689 12,656

Add: Loans and borrowings (Note 24) 91,977 64,697 - -
Total financial liabilities carried at amortised cost 176,043 131,719 8,689 12,656

(a) Trade payables

Trade payables are non-interest bearing and the normal trade terms granted to the Group ranges from 30 to
90 (2015: 30 to 90) days.

(b) Other payables

Other payables are non-interest bearing and the normal trade terms granted to the Group and the Company
ranges from 30 to 90 (2015: 30 to 90) days.

(c) Amounts due to subsidiaries

The amounts due to subsidiaries are unsecured, interest free and are repayable on demand.

26. Deferred taxation

Group
2016 2015
RM’000 RM’000

At 1 April (412) 231

Recognised in profit or loss (Note 14) 323 (643)
At 31 March (89) (412)

Presented after appropriate offsetting as follows:

Group
2016 2015
RM’000 RM’000

Deferred tax assets (2,002) (2,986)

Deferred tax liabilities 1,913 2,574
(89) (412)
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 117

notes to the financial statements

For the financial year ended 31 March 2016

26. Deferred taxation (Cont’d)

The components and movements of deferred tax (assets)/liabilities during the financial year are as follows:

Unutilised
reinvestment
allowances,
allowance
for increased
exports, tax
losses and
unabsorbed Property,
capital plant and
allowances Others equipment Total
RM’000 RM’000 RM’000 RM’000

At 1 April 2014 (2,600) (62) 2,893 231

Recognised in profit or loss (386) 215 (472) (643)
At 31 March 2015 (2,986) 153 2,421 (412)
Recognised in profit or loss 1,192 (361) (508) 323
At 31 March 2016 (1,794) (208) 1,913 (89)

Deferred tax assets have not been recognised in respect of the following items:

Group
2016 2015
RM’000 RM’000

Unutilised tax losses 12,483 17,668

Unutilised reinvestment allowances 1,525 2,594
Unabsorbed capital allowances 2,711 7,356
Unutilised allowance for increased exports 7,971 8,002


27. Share capital

Number of ordinary shares

of RM1 each Amount
2016 2015 2016 2015
‘000 ‘000 RM’000 RM’000

Authorised:
1 April 2014/2015; 31 March 2015/2016 100,000 100,000 100,000 100,000

Issued and fully paid:

1 April 2014/2015; 31 March 2015/2016 60,012 60,012 60,012 60,012

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary
shares carry one vote per share without restrictions and rank equally with regard to the Company residual assets.
118 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

28. Other reserves

(a) Share premium

This reserve comprise the premium paid on subscription of shares in the Company over and above the par
value of the shares.

(b) Foreign currency translation reserve

The foreign currency translation reserve represents exchange differences arising from the translation of the
financial statements of foreign operations whose functional currencies are different from that of the Group’s
presentation currency.

(c) Legal reserve fund

This represents a general reserve provided for in respect of subsidiaries incorporated in Cambodia.

Under the Company Statute of subsidiaries in Cambodia, 5% of the net profit after taxation in each financial
year must be credited to this reserve, until it reaches 10% of the paid up capital.


29. Retained earnings

The Company may distribute dividends out of its entire retained earnings as at 31 March 2016 and 31 March 2015
under the single tier system.


30. Related party transactions

(a) Sale and purchase of goods and services

In addition to the related party information disclosed elsewhere in the financial statements, the following
significant transactions between the Company and related parties took place at terms agreed between the
parties during the financial year:

Subsidiaries:

- Perusahaan Chan Choo Sing Sdn. Bhd. (“PCCSSB”)
- Beauty Electronic Embroidering Centre Sdn. Bhd. (“BEEC”)
- Keza Sdn. Bhd. (“Keza”)
- Mega Labels & Stickers Sdn. Bhd. (“Mega”)
- Mega Label (Malaysia) Sdn. Bhd. (“Megam”)
- Beauty Apparels (Cambodia) Ltd (“BAL”)
- Global Apparels Limited (“GAL”)
- Beauty Silk Screen Limited. (“BSSL”)
- JIT Embroidery Limited (“JEL”)
- JIT Textiles Limited (“JTL”)
- Keza (Cambodia) Limited (“KEZAC”)
- Mega Labels & Stickers (Cambodia) Co., Ltd. (“MEGAC”)
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 119

notes to the financial statements

For the financial year ended 31 March 2016

30. Related party transactions (Cont’d)

Company
2016 2015
RM’000 RM’000
Transactions with subsidiaries:
Management fees received from:
- PCCSSB 600 462
- BEEC - 22
- Keza - 86
- Mega - 286
- Megam 600 178
- GAL - 409
- BSSL 100 43
- JEL - 76
- JTL 200 1,753
- BAL - 40
- KEZAC - 30
- MEGAC - 106

Rental of premises paid to a director - 5

(b) Compensation of key management personnel

The remuneration of key management personnel comprising solely executive directors is disclosed in Note
13.

31. Commitments

(a) Operating lease commitments - as lessee

The Group has entered into a non-cancellable operating lease agreement for the use of land and buildings.
The lease is for a period of 2 to 5 years with a renewal option included in the contract. There are no
restrictions placed upon the Group by entering into these leases.

The future aggregate minimum lease payments under non-cancellable operating leases contracted for as at
the reporting date but not recognised as liabilities are as follows:

Group
2016 2015
RM’000 RM’000

Future minimum rentals payables:

Not later than 1 year 3,541 3,069
Later than 1 year and not later than 2 years 1,277 2,155
Later than 2 years and not later than 5 years 710 2,098
Later than 5 years - 78
5,528 7,400
120 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

31. Commitments (Cont’d)

(b) Finance lease commitments

Group
2016 2015
RM’000 RM’000

Minimum lease payments:

Not later than 1 year 536 1,016
Later than 1 year and not later than 2 years 482 266
Later than 2 years and not later than 5 years 419 234
1,437 1,516
Less: Amounts representing finance charges (155) (159)
Present value of minimum lease payments 1,282 1,357

Present value of payments:

Not later than 1 year 479 906
Later than 1 year and not later than 2 years 431 242
Later than 2 years and not later than 5 years 372 209
1,282 1,357
Analysed as:
Due within 12 months (Note 24) 479 906
Due after 12 months (Note 24) 803 451
1,282 1,357

32. Offsetting of financial instruments

The following table presents the recognised financial instruments that are subject to enforceable master netting
arrangements and similar agreements but not offset and the impact on the Group’s statement of financial position
if all set-off rights were exercised.

Amounts not offset

Gross Financial
assets instruments Net
RM’000 RM’000 RM’000
Group
Financial assets
As at 31 March 2016
Restricted cash 441 (441) -
Trade receivables 76,971 (949) 76,022
77,412 (1,390) 76,022

As at 31 March 2015
Restricted cash 421 (421) -
Trade receivables 68,374 (3,400) 64,974
68,795 (3,821) 64,974
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 121

notes to the financial statements

For the financial year ended 31 March 2016

32. Offsetting of financial instruments (Cont’d)

Amounts not offset

Cash
Gross Financial collateral
liabilities instruments pledged Net
RM’000 RM’000 RM’000 RM’000

Financial liabilities
As at 31 March 2016
Loans and borrowings 91,977 (949) (441) 90,587

As at 31 March 2015
Loans and borrowings 64,697 (3,400) (421) 60,876

33. Fair value of financial instruments

Determination of fair value

Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation
of fair value

The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are
reasonable approximation of fair value:

Note

Trade and other receivables (current) 21

Trade and other payables (current) 25
Loans and borrowings (current) 24

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due
to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or
near the reporting date.

The carrying amounts of the current portion of loans and borrowings are reasonable approximations of fair values
due to the insignificant impact of discounting.

The fair values of current loans and borrowings are estimated by discounting expected future cash flows at market
incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date.

Quoted equity instruments

Fair value is determined directly by reference to their published market bid price at the reporting date.

122 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

33. Fair value of financial instruments (Cont’d)

Fair value hierarchy

The following table provides the fair value measurement hierarchy of the Group’s assets and liabilities as at reporting
date:

Quoted
prices in Significant Significant
active observable unobservable
market inputs inputs
Total (Level 1) (Level 2) (Level 3)
RM’000 RM’000 RM’000 RM’000
Group

As at 31 March 2016

Assets for which fair values are disclosed:

Investment properties (Note 17) 13,982 - 11,570 2,412

As at 31 March 2015

Assets for which fair values are disclosed:

Investment properties (Note 17) 14,384 - 11,770 2,614

During the reporting period ended 31 March 2016 and 2015, there were no transfers between the various fair value
measurements.

34. Financial risk management objectives and policies

Financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables, and financial
guarantee contracts. The main purpose of these financial liabilities is to finance the Group’s and the Company’s
operations and to provide guarantees to support its operations. Financial assets include trade and other receivables
and cash and short-term deposits that derive directly from its operations.

The Group is exposed to market risk, credit risk and liquidity risk. The Group’s senior management oversees the
management of these risks and ensures that the Group’s financial risk activities are governed by appropriate
policies and procedures and that financial risks are identified, measured and managed in accordance with the
Group’s policies and risk objectives. All derivative activities for risk management purposes are carried out by senior
management who have the appropriate skills, experience and supervision. It is the Group’s policy that no trading
in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for
managing each of these risks, which are summarised below:

(a) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because
of changes in market prices. Market risk comprises interest rate risk and foreign exchange currency risk.
Financial instruments affected by market risk include loans and borrowings, deposits, available-for-sale
investments and derivative financial instruments.

Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 123

notes to the financial statements

For the financial year ended 31 March 2016

34. Financial risk management objectives and policies (Cont’d)

(b) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default
on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and
other receivables. For other financial assets (including cash and bank balances), the Group and the Company
minimise credit risk by dealing exclusively with high credit rating counterparties.

The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased
credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s
policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In
addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to
bad debts is not significant.

Exposure to credit risk

At the reporting date, the Group and the Company’s maximum exposure to credit risk is represented by:

- The carrying amount of each class of financial assets recognised in the statements of financial position,
with positive fair values.

- A nominal amount of RM94,729,000 (2015: RM80,789,000) relating to a corporate guarantee provided
by the Company to financial institutions for credit facilities granted to subsidiaries.

Credit risk concentration profile

At the reporting date, the Group has significant concentration of credit risk that may arise from exposure two
(2015: three) trade receivables who accounted for 72% (2015: 50%) of total trade receivables. The directors
believe that this will not create significant credit risk for the Group in view of the length of relationship with
these customers and the Group works closely with its customers to provide customer satisfaction through
timely delivery and the provision of high quality products and services at competitive cost.

At the reporting date, the Company has significant concentration of credit risk that may arise from exposures
to amounts due from its subsidiaries which account for 100% (2015: 100%) of the gross receivables of the
Company. The directors believe that this does not create significant impact for the Group in view of the fact that
the directors have direct participation and influential power in the management of these counterparties.

Financial assets that are neither past due nor impaired

Information regarding trade and other receivables that are neither past due nor impaired is disclosed in Note
21. Deposits with banks that are neither past due nor impaired are placed with or entered into with reputable
financial institutions with high credit ratings and no history of default.

Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired is disclosed in Note 21.

(c) Liquidity risk

Liquidity risk is the risk that the Group and the Company will encounter difficulty in meeting financial obligations
due to shortage of funds. The Group and the Company’s exposure to liquidity risk arises primarily from
mismatches of the maturities of financial assets and liabilities. The Group and the Company’s objective is to
maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.




124 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

34. Financial risk management objectives and policies (Cont’d)

(c) Liquidity risk (Cont’d)

The Group and the Company manage its debt maturity profile, operating cash flows and the availability of
funding so as to ensure that refinancing, repayment and funding needs are met. As part of its overall liquidity
management, the Group and the Company maintain sufficient levels of cash or cash convertible investments
to meet its working capital requirements. In addition, the Group and the Company strive to maintain available
banking facilities at a reasonable level to its overall debt position. As far as possible, the Group and the
Company raise committed funding from financial institutions and balances its portfolio with some short term
funding so as to achieve overall cost effectiveness.

Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting
date based on contractual undiscounted repayment obligations.

2016
RM’000
On demand
or within One to
one year five years Total

Group
Financial liabilities:
Trade and other payables 84,066 - 84,066
Loans and borrowings 90,041 2,202 92,243
Total undiscounted financial liabilities 174,107 2,202 176,309

Company
Financial liabilities:
Trade and other payables, excluding financial guarantees * 8,689 - 8,689
Total undiscounted financial liabilities 8,689 - 8,689

2015
RM’000
On demand
or within One to
one year five years Total
Group
Financial liabilities:
Trade and other payables 67,022 - 67,022
Loans and borrowings 60,649 4,425 65,074
Total undiscounted financial liabilities 127,671 4,425 132,096

Company
Financial liabilities:
Trade and other payables, excluding financial guarantees * 12,656 - 12,656
Total undiscounted financial liabilities 12,656 - 12,656

* At the reporting date, the counterparties to the financial guarantees do not have a right to demand cash
as default has not occurred. Accordingly, financial guarantees under the scope of MFRS 139 are not
included in the above maturity profile analysis.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 125

notes to the financial statements

For the financial year ended 31 March 2016

34. Financial risk management objectives and policies (Cont’d)

(d) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial
instruments will fluctuate because of changes in market interest rates.

The Group’s and the Company’s exposure to interest rate risk arises primarily from their loans and
borrowings. The Group manages its interest rate exposure by maintaining a prudent mix of fixed and floating
rate borrowings. The Group actively reviews its debt portfolio, taking into account the investment holding
period and nature of its assets. This strategy allows it to capitalise on cheaper funding in a low interest rate
environment and achieve a certain level of protection against rate hikes.

Sensitivity analysis for interest rate risk

Based on the utilisation of floating rate loans and borrowings throughout the reporting period, if interest
rates had been 10 basis point lower/higher, will all other variables held constant, the Group’s profit before
tax would have been RM109,000 (2015: RM62,000) higher/lower, arising mainly as a result of lower/higher
interest expense on floating rate loans and borrowings. The assumed movement in basis points for interest
rate sensitivity analysis is based on the currently observable market environment.

(e) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates.

The Group is exposed to transactional currency risk primarily respective through sales and purchases that
are denominated in a currency other than the respective functional currencies of the Group entities. The
currencies giving rise to this risk are primarily Ringgit Malaysia and United States Dollars (“USD”). Such
transactions are kept to an acceptable level.

The net unhedged financial assets and financial liabilities of the Group companies that are not denominated
in their functional currencies are as follows:

Net financial assets/(liabilities)
held in non-functional currencies
United
Ringgit States
Malaysia Dollars Total
RM’000 RM’000 RM’000

Functional currency of Group companies

Group
At 31 March 2016
Ringgit Malaysia - 10,725 10,725
Chinese Renminbi - 5,780 5,780
United States Dollars (90) - (90)
Hong Kong Dollars - (20,802) (20,802)
(90) (4,297) (4,387)
126 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

34. Financial risk management objectives and policies (Cont’d)

(e) Foreign currency risk

(Cont’d)

Net financial assets/(liabilities)

held in non-functional currencies
United
Ringgit States
Malaysia Dollars Total
RM’000 RM’000 RM’000
Functional currency of Group companies (Cont’d)

Group
At 31 March 2015
Ringgit Malaysia - 4,738 4,738
Chinese Renminbi - 6,558 6,558
United States Dollars (174) - (174)
Hong Kong Dollars - (2,081) (2,081)
(174) 9,215 9,041


United
States Chinese
Dollars Renminbi Total
RM’000 RM’000 RM’000
Functional currency of Company

Company
At 31 March 2016
Ringgit Malaysia 2,079 1,137 3,216

At 31 March 2015
Ringgit Malaysia 7,100 6,953 14,053

Sensitivity analysis for foreign currency risk

The following table illustrates the hypothetical sensitivity of the Group’s profit before tax to a reasonably
possible change in the USD and RMB exchange rate at the reporting date against the functional currency of
the Group entities, with all other variables held constant.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 127

notes to the financial statements

For the financial year ended 31 March 2016

34. Financial risk management objectives and policies (Cont’d)

(e) Foreign currency risk (Cont’d)

Group Company
2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000
Profit before tax Profit before tax

USD/RM
- strengthened 5% (2014: 5%) 620 237 138 355
- weakened 5% (2014: 5%) (620) (237) (138) (355)
USD/RMB
- strengthened 5% (2014: 5%) 289 328 - -
- weakened 5% (2014: 5%) (289) (328) - -
USD/HKD
- strengthened 5% (2014: 5%) (1,040) (104) - -
- weakened 5% (2014: 5%) 1,040 104 - -
RM/USD
- strengthened 5% (2014: 5%) (5) (9) - -
- weakened 5% (2014: 5%) 5 9 - -
RMB/RM
- strengthened 5% (2014: 5%) 1 - 1 348
- weakened 5% (2014: 5%) (1) - (1) (348)

35. Capital management

The main objective of the Group’s capital management is to ensure that it maintains a healthy capital ratio to
support its operations and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions.
To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders. No
changes were made in the objectives, policies or processes during the years ended 31 March 2016 and 31 March
2015.

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The
Group includes within net debt, loans and borrowings, trade and other payables, less cash and bank balances.

Group Company
Note 2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000

Loans and borrowings 24 91,977 64,697 - -

Trade and other payables 25 84,066 67,022 8,689 12,656
Less: - Cash and bank balances 23 (38,034) (19,755) (5,761) (7,949)
Net debt 138,009 111,964 2,928 4,707

Total capital 97,144 106,307 60,654 59,676

Capital and net debt 235,153 218,271 63,582 64,383

Gearing ratio 59% 51% 5% 7%

128 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

36.
Segmental information

For management purposes, the Group is organised into business units based on their products and services, and
has four reportable operating segments as follows:

(i) Apparel - manufacturing and marketing of apparels.

(ii) Labelling - printing of labels and stickers.
(iii) Others - investment holding and provision for management services, manufacturing of seamless bonding,
embroidering of logos and emblems, printing and marketing of silk screen printing products.

Management monitors the operating results of its business units separately for the purpose of making decisions
about resource allocation and performance assessment. Segment performance is evaluated based on operating
profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit
or loss in the consolidated financial statements. Group financing (including finance costs) and income taxes are
managed on a group basis and are not allocated to operating segments.

The directors are of the opinion that all inter-segment transactions have been entered into in the normal ordinary
course of business and have been established on negotiated and mutually agreed basis.

Per
Adjustments consolidated
and financial
Apparel Labelling Others elimination Notes statements
RM’000 RM’000 RM’000 RM’000 RM’000
31 March 2016

Revenue:
External sales 479,043 42,503 11,325 - 532,871
Inter-segment sales 212,727 7,155 17,966 (237,848) A -
Total revenue 691,770 49,658 29,291 (237,848) 532,871

Results:
Interest income 1,176 - 86 (1,158) 104
Finance cost 5,390 475 20 - 5,885
Depreciation and amortisation:
- Property, plant and equipment 6,745 2,912 1,118 (105) 10,670
- Investment properties 256 30 3 (28) 261
- Land use rights 22 47 - - 69
Segment (loss)/profit (12,765) 6,701 (1,299) 746 B (6,617)

Assets:
Additions to non-current assets 2,793 7,243 1,730 (3,256) C 8,510
Segment assets 266,253 76,342 138,299 (202,307) D 278,587

Segment liabilities 248,997 40,367 47,153 (155,074) E 181,443

Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 129

notes to the financial statements

For the financial year ended 31 March 2016

36. Segmental information (Cont’d)

Per
Adjustments consolidated
and financial
Apparel Labelling Others elimination Notes statements
RM’000 RM’000 RM’000 RM’000 RM’000
31 March 2015

Revenue:
External sales 306,363 35,149 15,864 - 357,376
Inter-segment sales 157,690 5,555 15,490 (178,735) A -
Total revenue 464,053 40,704 31,354 (178,735) 357,376

Results:
Interest income 381 - 73 (373) 81
Finance cost 400 230 55 (234) 4,055
Depreciation and amortisation:
- Property, plant and equipment 6,535 3,189 921 (182) 10,463
- Investment properties 157 25 3 37 222
- Land use rights 21 39 - - 60
Segment (loss)/profit (14,852) (621) (10,150) 12,768 B (12,855)

Assets:
Additions to non-current assets 4,087 3,998 2,180 - C 10,265
Segment assets 247,519 61,168 137,655 (206,123) D 240,219

Segment liabilities 213,124 31,206 48,366 (158,784) E 133,912

A Inter-segment revenues are eliminated on consolidation.

B The following items are added to/(deducted from) segment profit to arrive at “(loss)/profit before tax” presented
in the consolidated statement of comprehensive income.

2016 2015
RM’000 RM’000

Impairment loss on investment in subsidiaries 1,573 12,695

Impairment loss on trade and other receivables 5,434 1,060
Reversal of allowance for impairment of investment in subsidiaries (6,441) (1,196)
Profit from inter-segment sales 180 209
746 12,768

C Inter-segment addition to non-current assets are deducted from addition to non-current assets.

Additions to non-current assets consist of:

2016 2015
RM’000 RM’000

Property, plant and equipment 8,510 10,265

130 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

notes to the financial statements

For the financial year ended 31 March 2016

36. Segmental information (Cont’d)

D Inter-segment assets are deducted from segment assets to arrive at total assets reported in the consolidated
statement of financial position.

E Inter-segment liabilities are deducted from segment liabilities to arrive at total liabilities reported in the
consolidated statement of financial position.

Geographical information

Revenue and non-current assets information based on the geographical location of customers and assets
respectively are as follows:

Revenue Non-current assets

2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000

Malaysia 170,242 196,411 32,612 34,691

Cambodia 81,124 62,056 27,416 26,964
The People’s Republic of China 184,137 82,541 25,125 25,718
Hong Kong 97,368 16,368 135 170
532,871 357,376 85,288 87,543

Non-current assets information presented above consist of the following items as presented in the consolidated
statement of financial position:

2016 2015
RM’000 RM’000

Property, plant and equipment 71,525 73,250

Investment properties 10,754 11,004
Land use rights 2,920 2,877
Deferred tax assets 89 412
85,288 87,543

Information about a major customer

Revenue from one major customer amounted to RM183,586,000 (2015: RM104,061,000), arising from sales by
the apparel segment.

37. Authorisation of financial statements for issue

The financial statements for the year ended 31 March 2016 were authorised for issue in accordance with a
resolution of the directors on 20 July 2016.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 131

Supplementary INformation

38. Supplementary information - Breakdown of realised and unrealised retained

earnings

The breakdown of the retained earnings of the Group and of the Company as at 31 March 2016 into realised and
unrealised earnings is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad
dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of
Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities
Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Group Company
2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000

Total retained earnings of the PCCS Group

Berhad and its subsidiaries:
- Realised 5,032 23,820 (50) 1,196
- Unrealised (460) (4,313) 688 (1,536)
4,572 19,507 638 (340)

Less: Consolidated adjustment 24,405 19,725 - -

Total Group’s retained earnings as

per consolidated accounts 28,977 39,232 638 (340)


132 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Group Properties
As at 31 March 2016

Description Land Area Age of Net Book Date of

and Existing (build-up area) Building Value Acquisition/
No. Location Use Tenure sq. ft. No. of Years RM’000 Revaluation*

Perusahaan Chan Choo Sing Sdn Bhd

1 No. 18, Jalan Keris Naga, 4 Storey Freehold 6,056 23 721 04/04/1994*
Taman Pasifik Selatan, Building (13,946)
83000 Batu Pahat, Complex
Johor, Malaysia.

2 Plo 10, Kawasan Perindustrian 3 Blocks Leasehold 114,127 20 4,191 21/04/1995

Parit Raja, 86400 Parit Raja, Office and expiring (82,720)
Batu Pahat, Johor, Malaysia. Factory 10/09/2051
Buildings

3 Lot 1376, GM 127, Office and Freehold 185,130# 18 8,026 12/12/1997

Mukim Simpang Kanan, Factory (88,000)
Jalan Kluang, Building
83000 Batu Pahat,
Johor, Malaysia.

4 Lot 1376, GM 127, 2 Blocks Freehold 74,104 13 3,601 31/03/2004

Mukim Simpang Kanan, of Hostel (148,844)
Jalan Kluang, Building
83000 Batu Pahat,
Johor, Malaysia.

# Inculding 74,104 sq ft for Hostel - Item 4

Keza Sdn Bhd

5 No. 11A, Jalan 3, Factory Freehold 2,002 17 116 04/09/2007

Taman Perindustrian Sinaran, Building (2,000)
86000 Kluang,
Johor, Malaysia.

Mega Label (Malaysia) Sdn Bhd

6 No. 4, Jalan Palam 34/18A, 2 Storey Freehold 22,593 5 4,170 28/12/2010

Seksyen 34, Office cum (14,936)
40470 Shah Alam, 1 Storey
Selangor Darul Ehsan. Factory
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 133

Group Properties
As at 31 March 2016

Description Land Area Age of Net Book Date of

and Existing (build-up area) Building Value Acquisition/
No. Location Use Tenure sq. ft. No. of Years RM’000 Revaluation*

PCCS Garments (Suzhou) Ltd

7 North Side of Road 318, Office and Leasehold 162,497 14 8,508 28/08/2008
Jin Xing Village, Factory expiring (128,325)
Zhen Ze Town Building 3/11/2052
Development Zone,
215231 Zhen Ze, 1 Block of Leasehold 23,509 8 1,778 21/08/2008
Wu Jiang City, Dormitory expiring (28,710)
Jiang Su Province, China. 27/7/2058

8 Room 203, 205 & 206, 3 units Leasehold 10,570 3 7,585 30/4/2013
2nd Floor, Shanghai Western Office Lot expiring (9,462)
Business District C-2, cum 3 units 13/9/2056
No. 31, Lot 1555, Car Park
Jing Sha Jiang Xi Road,
Jia Ding Area, Shanghai,
China 201803

PCCS Garments Wuhan Ltd

9 Room 3, 28th Floor, 1 unit Office Leasehold 1,939 12 2,332 09/09/2010

1st Block, Time Square, Lot expiring (1,939)
Yan Jiang Road No. 159, 1/3/2053
Jiang An Area, Wuhan City,
Hubei Province, China.

Mega Labels & Stickers (Cambodia) Co. Ltd.

10 P2-067, Phnom Penh 2 Blocks of Leasehold 61,785 4 5,143 23/7/2012

Special Economic Zone, 2 Storey expiring (42,614)
Sangkat Kantouk, Office and 22/7/2062
Sangkat Phleung Chhe Rotes, Factory
and Sangkat Beung Thom, Building
Khan Por Senchey,
Phnom Penh, Cambodia.

11 P2-068, Phnom Penh Factory Leasehold 56,145 1 2,514 12/9/2012

Special Economic Zone, Building expiring (25,663)
Sangkat Kantouk, 12/9/2062
Sangkat Phleung Chhe Rotes,
and Sangkat Beung Thom,
Khan Por Senchey,
Phnom Penh, Cambodia.
134 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Analysis of Shareholdings
As at 30 June 2016

Authorised Share Capital : RM100,000,000.00

Issued and Paid-Up Share Capital : RM60,012,002.00
Class of Shares : Ordinary Shares of RM1.00 each
Voting rights : One (1) vote per shareholder on a show of hands
One (1) vote per ordinary share on a poll

DISTRIBUTION OF SHAREHOLDINGS

No. of No. of
Size of Shareholdings Shareholders % Shares %

1 – 99 252 10.54 12,438 0.02

100 – 1,000 188 7.87 150,001 0.25
1,001 – 10,000 1,606 67.20 5,891,159 9.82
10,001 – 100,000 308 12.89 9,103,556 15.17
100,001 – 3,000,599 (*) 34 1.42 17,131,231 28.55
3,000,600 and above (**) 2 0.08 27,723,617 46.20
TOTAL 2,390 100.00 60,012,002 100.00

REMARK: * Less than 5% of issued shares

** 5% and above of issued shares

LIST OF SUBSTANTIAL SHAREHOLDERS

The substantial shareholders of PCCS (holding 5% or more of the capital) based on the Register of Substantial
Shareholders of the Company and their respective shareholdings are as follows:

Direct Interest Indirect Interest

Substantial Shareholders No. of Shares % No. of Shares %

Chan Choo Sing 2,643,220 4.40 28,495,382 (1) 47.48

Chan Chow Tek 2,272,750 3.79 24,000,078 (2) 39.99
Dato’ Chan Chor Ngiak 339,817 0.57 24,001,411 (3) 39.99
Chan Chor Ang 542,350 0.90 24,040,078 (4) 40.06
Tan Kwee Kee 3,833,539 6.39 27,305,063 (5)  45.50 
Setia Sempurna Sdn. Bhd. 24,000,078 39.99 - -

Notes:
(1) Deemed interested by virtue of his direct interest of 34.4% in the equity of Setia Sempurna Sdn. Bhd., by virtue of
his spouse, Madam Tan Kwee Kee’s shareholding in PCCS and by virtue of his sons, Mr. Chan Wee Kiang’s and
Mr. Chan Wee Boon’s shareholdings in PCCS.
(2) Deemed interested by virtue of his direct interest of 24.4% in the equity of Setia Sempurna Sdn. Bhd.
(3) Deemed interested by virtue of his direct interest of 18.4% in the equity of Setia Sempurna Sdn. Bhd. and by virtue
of his spouse, Madam Mok Gwa Nang’s shareholding in PCCS.
(4) Deemed interested by virtue of his direct interest of 14.0% in the equity of Setia Sempurna Sdn. Bhd. and by virtue
of his spouse, Madam Chia Lee Kean’s shareholding in PCCS.
(5) Deemed interested by virtue of her spouse, Mr. Chan Choo Sing’s shareholding in PCCS and by virtue of her sons,
Mr. Chan Wee Kiang’s and Mr. Chan Wee Boon’s shareholdings in PCCS.
Annual Report 2016 • PCCS Group Berhad (Co. No. 280929-K) 135

Analysis of Shareholdings
As at 30 June 2016

LIST OF DIRECTORS’ SHAREHOLDINGS

The Directors’ Shareholdings of PCCS based on the Register of Directors’ Shareholdings of the Company are as follows:

Direct Interest Indirect Interest

Directors No. of Shares % No. of Shares %

Chan Choo Sing 2,643,220 4.40 28,495,382 (1) 47.48

Chan Chow Tek 2,272,750 3.79 24,000,078 (2) 39.99
Dato’ Chan Chor Ngiak 339,817 0.57 24,001,411 (3) 39.99
Chan Chor Ang 542,350 0.90 24,040,078 (4) 40.06
Julian Lim Wee Liang - - - -
Piong Yew Peng - - - -

Notes:
(1) Deemed interested by virtue of his direct interest of 34.4% in the equity of Setia Sempurna Sdn. Bhd., by virtue of
his spouse, Madam Tan Kwee Kee’s shareholding in PCCS and by virtue of his sons, Mr. Chan Wee Kiang’s and
Mr. Chan Wee Boon’s shareholdings in PCCS.
(2) Deemed interested by virtue of his direct interest of 24.4% in the equity of Setia Sempurna Sdn. Bhd.
(3) Deemed interested by virtue of his direct interest of 18.4% in the equity of Setia Sempurna Sdn. Bhd. and by virtue
of his spouse, Madam Mok Gwa Nang’s shareholding in PCCS.
(4) Deemed interested by virtue of his direct interest of 14.0% in the equity of Setia Sempurna Sdn. Bhd. and by virtue
of his spouse, Madam Chia Lee Kean’s shareholding in PCCS.
136 PCCS Group Berhad (Co. No. 280929-K) • Annual Report 2016

Analysis of Shareholdings
As at 30 June 2016

THIRTY (30) LARGEST SHAREHOLDERS

Number of Percentage of
No. Shareholders Shares Issued Capital

1. Setia Sempurna Sdn. Bhd. 24,000,078 39.99

2. Tan Kwee Kee 3,723,539 6.20
3. Chan Choo Sing 2,643,220 4.40
4. TA Nominees (Tempatan) Sdn. Bhd. 2,464,000 4.11
Pledged Securities Account for Lee Chee Ming
5. Chan Chow Tek 2,272,750 3.79
6. Pam Yoon Eng 1,329,833 2.22
7. Siow Kok Chian 1,005,000 1.67
8. Lim Poh Teot 642,466 1.07
9. Ng Choon Fatt 624,733 1.04
10. Kenanga Nominees (Tempatan) Sdn. Bhd. 544,866 0.91
Pledged Securities Account for Mohd Radzuan bin Ab Halim
11. Chan Chor Ang 542,350 0.90
12. Chan Wee Kiang 480,765 0.80
13. Stanley Tan Jik Shuen 400,000 0.67
14. Chan Chor Ngiak 319,550 0.53
15. Ching Gek Lee 300,000 0.50
16. Low Hing Noi 250,000 0.42
17. Tang Boon Heng 245,600 0.41
18. CIMSEC Nominees (Tempatan) Sdn. Bhd. 242,200 0.40
Pledged Securities Account for Tay Ley Chee
19. Go Hout Hing 216,066 0.36
20. Maybank Nominees (Tempatan) Sdn. Bhd. 211,400 0.35
Pledged Securities Account for Yong Chew Keat
21. Chew Lim Cheong @ Hong Thiam Soon 200,000 0.33
22. CIMSEC Nominees (Tempatan) Sdn. Bhd. 200,000 0.33
CIMB Bank for Looi Boon Han
23. Yung Lay Kiang 196,666 0.33
24. Yap Nyet Yune 180,933 0.30
25. Ho, Wei-Hua 167,200 0.28
26. Yeo Eck Liong 166,100 0.28
27. Maybank Securities Nominees (Tempatan) Sdn. Bhd. 154,700 0.26
Pledged Securities Account for Tan Mooi Kim
28. Public Nominees (Tempatan) Sdn. Bhd. 152,200 0.25
Pledged Securities Account for Oon Eng Kiat
29. Seow Ching Yuen @ Khoo Sau Chun 152,000 0.25
30. Chan Wee Boon 131,000 0.22
44,159,215 73.58
Form of Proxy
(Before completing this form, please see the notes below)

NUMBER OF SHARES HELD CDS ACCOUNT NO.

PCCS Group Berhad
(Co. No. 280929-K)
(Incorporated in Malaysia)

*I/We,
(Full Name In Capital Letters)

of
(Full Address)

being a *Member/Members of PCCS GROUP BERHAD, do hereby appoint

(Full Name In Capital Letters)

of
(Full Address)

or failing *him/her,
(Full Name In Capital Letters)

of
(Full Address)

or failing *him/her, the CHAIRMAN OF THE MEETING, as *my/our proxy to attend and vote for *me/us and on *my/our behalf
at the Twenty-Second (“22nd”) Annual General Meeting of the Company to be held at PCCS Group Berhad’s Corporate Of-
fice, Lot 1376, GM 127, Mukim Simpang Kanan, Jalan Kluang, 83000 Batu Pahat, Johor Darul Takzim on Friday, 26 August
2016 at 10:00 a.m. and at any adjournment thereof.

Please indicate with an “X” in the spaces provided below how you wish your votes to be casted. If no specific direction as to
voting is given, the proxy will vote or abstain from voting at his/her discretion.

Resolutions For Against

1. To re-elect Mr. Chan Choo Sing as Director (Article 94). (Resolution 1)
2. To re-elect Mr. Chan Chow Tek as Director (Article 94). (Resolution 2)
3. To re-appoint Messrs. Ernst & Young as Auditors of the Company. (Resolution 3)
As Special Business
4. Ordinary Resolution No. 1
- Payment of Directors’ Fees (Resolution 4)
5. Ordinary Resolution No. 2
Authority to Issue Shares Pursuant to Section 132D of the Companies
Act, 1965. (Resolution 5)

* Strike out whichever not applicable

Signed this day of 2016

Signature of Member/Common Seal

Notes:
1. For the purpose of determining a member who shall be entitled to attend 3. Where a holder appoints two (2) or more proxies, he shall specify the
this meeting, the Company shall be requesting Bursa Malaysia Depository proportions of his shareholdings to be represented by each proxy.
Sdn. Bhd. in accordance with Article 66(b) of the Company’s Articles
of Association and Section 34(1) of the Securities Industry (Central 4. Where a member of the Company is an exempt authorised nominee which
Depositories) Act, 1991 to issue a General Meeting Record of Depositors as holds shares in the Company for multiple beneficial owners in one (1)
at 19 August 2016. Only a depositor whose name appears on the Record of securities account (“omnibus account”), there is no limit to the number
Depositors as at 19 August 2016 shall be entitled to attend the said meeting of proxies which the exempt authorised nominee may appoint in respect of
or appoint proxies to attend and/or vote on his/her behalf. each omnibus account.

2. A member of the Company entitled to attend and vote at a meeting of a 5. The instrument appointing a proxy shall be in writing under the hand of the
company, shall be entitled to appoint any person as his proxy to attend appointor or of his attorney duly authorised in writing or, if the appointor is a
and vote instead of the member at the meeting without limitation and the corporation, either under its seal or under the hand of an officer or attorney
provisions of Sections 149 (1)(a), (b), (c) and (d) of the Companies Act, 1965 duly authorised.
shall not apply. There shall be no restriction as to the qualification of the
proxy. A proxy appointed to attend and vote at the Meeting shall have the 6. The instrument appointing a proxy must be deposited at the Corporate
same rights as the member to speak at the Meeting. Office of the Company at Lot 1376, GM127, Mukim Simpang Kanan, Jalan
Kluang, 83000 Batu Pahat, Johor Darul Takzim not less than forty-eight (48)
hours before the time for holding the Meeting or at any adjournment thereof.
Fold here

affix
stamp

PCCS Group Berhad Co. No. 280929-K

LOT 1376, GM 127,
Mukim Simpang Kanan, Jalan Kluang,
83000 Batu Pahat, Johor Darul Takzim

Fold here
www.pccsgroup.net

PCCS group berhad 280929-K

Lot 1376, GM 127,

Mukim Simpang Kanan,
Jalan Kluang, 83000 Batu Pahat,
Johor Darul Takzim

Tel No: 07-456 8866

Fax No: 07-456 8860