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APFT Berhad | ANNUAL REPORT 2018

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APFT BerhadAnnual Report 2018

1

ContentsTable of

Corporate Structure | 2

Corporate Information | 3

Chairman’s Message | 4

Management Discussion and Analysis | 6

5-year Financial Highlights | 8

Board Of Directors’ Profile | 9

Senior Management Team Profile | 11

Corporate Governance Overview Statement | 13

Additional Compliance Information | 20

Audit Committee Report | 21

Statement On Risk Management & Internal Control | 23

Workplace Diversity Policy | 25

Financial Statements | 27

Directors’ Responsibility Statement | 28

Directors’ Report | 29

Statement by Directors | 35

Statutory Declaration | 35

Independent Auditors’ Report | 36

Statement of Financial Position | 40

Statement of Profit or Loss and Other

Comprehensive Income | 42

Statement of Changes in Equity | 44

Statement of Cash Flows | 47

Notes to the Financial Statements | 51

Analysis on Shareholdings | 129

Analysis on Warrant Holdings | 131

List Of Properties Held | 133

Notice Of Annual General Meeting | 134

Proxy Form | 137


2CORPORATE STRUCTURE

AERODYNAMIC SDN BHD

100%

APFT AVIATION SDN BHD

100%• Shareholding

• Investment Holding

APFT ENERGY SDN BHD

100%• Shareholding

• Investment Holding• Shareholding

100% Shareholding

100% Shareholding

100% Shareholding

APFT SERVICES SDN BHD

20% Shareholding

AVIATION AI INC

100% Shareholding

APFT CHARTER SERVICES SDN BHD

ASIA PACIFIC FLIGHT TRAINING SDN BHD

APFT ENGINEERING SDN BHD100% Shareholding

51% Shareholding

PTTM OIL & GAS SDN BHD

PT TECHNIC (M) SDN BHD

BOARD OF DIRECTORS


3CORPORATE

INFORMATION

AUDIT COMMITTEEChow Hung KeeyChairman

Dato’ Sri Ahmad Said Bin HamdanMember

NOMINATION COMMITTEEDato’ Sri Ahmad Said Bin HamdanChairman

Chow Hung KeeyMember

RENUMERATION COMMITTEEDato’ Sri Ahmad Said Bin HamdanChairman

Chow Hung KeeyMember

COMPANY SECRETARYTan Tong Lang (MAICSA 7045482)

AUDITORSMessrs. Adam & CoChartered AccountantsFirm No 1250No. 5A, Jalan Tengku Ampuan Zabedah J9/JSeksyen 9, 40100 Shah AlamSelangor, Malaysia

SHARE REGISTRARTricor Investor & Issuing House Services Sdn Bhd(Company No.: 1324-H)Unit 32-01, Level 32, Tower A, Vertical Business SuiteAvenue 3, Bangsar South, No.8, Jalan Kerinchi, 59200 Kuala Lumpur, MalaysiaTel: +603 2783 9277 Fax: +603 2783 9222

STOCK EXCHANGE LISTING

MAIN MARKETBursa Malaysia Securities Berhad (Company No. 635998-W)Stock Code: 5194

REGISTERED OFFICE c/o Boardroom.com Sdn Bhd (Company No.: 820910-X)Suite 10.03, Level 10, The Gardens South Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala LumpurTel: +603 2279 3080 Fax: +603 2279 3090

HEAD OFFICE Suite 9B.03, Level 10 Wisma E & C, 2 Lorong Dungun Kiri, Damansara Heights. 50490 Kuala Lumpur Tel: +603 2092 3177 Fax: +603 2093 9218Website: www.apft.com.my AIR FIELD / FLIGHT TRAINING CENTRE No.38021, Jalan Lapangan Terbang, Lapangan Terbang Sultan Azlan Shah , 31350 Ipoh, Perak

PRINCIPAL BANKERCIMB Bank Berhad

Y.T.M. Dato’ Muhammed Bin Haji AbdullahD.T.N.S., A.N.S., P.M.C., P.J.K., P.K.T

Independent Non-Executive Chairman

Edwin Silvester DasExecutive Director

YM Tengku Shamsulbhari bin Tengku Azman Shah, SMK

Executive Director

Chow Hung KeeyIndependent Non-Executive Director

Dato’ Sri Ahmad Said Bin HamdanIndependent Non-Executive Director

BOARD OF DIRECTORS


4CHAIRMAN’S MESSAGE

Overview

The last three years have been very challenging for the Group with continuing losses especially in the flight training and oil & gas businesses. Efforts are being made to consolidate the business operations and to restructure the Group. We are currently continuing to identify and reviewing unproductive and loss-incurring activities in the Group.

Corporate Developments

In 2017, the Group had embarked on a major restructuring exercise with the new management team. The present Board of Directors and management are new and have since undertaken various initiatives to rebuild the Company. We are undergoing a corporate restructuring exercise which concentrates on reducing overhead costs, disposing loss making subsidiaries and injecting new businesses into the Group. The priority of the new Board and Management is now focused on taking stringent efforts to steer the Group to financial stability, viability and sustainability in the near future.

We regret to note that one of our subsidiary, PT Technic (M) Sdn Bhd was wound up on 18 December 2017.

On 19 January 2018, APFT Berhad announced that it has triggered the criterion pursuant to Paragraph 2.1(e) of the Practice Note 17 (“PN17”) of the Main Market Listing Requirement of Bursa Malaysia Securities Berhad. The Company is currently in the midst of formulating an appropriate Regularization Plan to be uplifted from the PN17 status.

Financial Performance

During the period the Company underwent a corporate exercise where the issued and paid-up capital of the Company was increased from RM 23.9 million to RM 57.6 million by way of issuance of 865,088,873 new ordinary shares via exercising of options under the Employee Share Options Scheme, Creditors Capitalisation for

On behalf of the Board of Directors of APFT Berhad, I am pleased to present the Annual Report and Audited Financial Statements of our Company and the Group for the financial period from 1 August 2016 to 31 January 2018.


5CHAIRMAN’S

MESSAGE

partial settlement of amount owing to creditors, Directors, Capitalisation for partial settlement of amount due to directors and Private Placement for working capital purposes.

APFT Bhd and its subsidiaries generated a revenue of RM 7.1 million, incurring a loss before taxation of RM 58.7 million.The losses incurred for the financial period was mainly due to the cessation of our flight school operations, impairment and loss on disposal of PPE and writing off of plant, property, equipment, and goodwill.

Prospects

There is a very high demand for student enrollment in the flight training schools due to shortages in institutions offering these courses. Since we are a renowned academy within Asia with experienced aviation staff and a large fleet of both fixed wing aircrafts and helicopters, our prospect in this business is good. Our academy will also start to provide ground handling training and certifying ground handlers for the aviation industry in which the skills can be utilized in all airports within the country. We are currently in the midst of obtaining the relevant licenses from the regulatory bodies to commence our business.

Our existing fleet of fixed wing aircrafts and helicopters are free from encumbrances. We are re-entering the charter services business to cater to the tourism demands from China, Middle Eastern and local markets. The services rendered would include flights to tourist destination islands within Malaysia, island-hopping, and sky / city tours.

At present our flight academy and our charter services are located at Lapangan Terbang Sultan Azlan Shah, Ipoh, on a 4-acre land comprising of 3 large hangers, an administrative office, 2 blocks of classrooms, a technical store, an engineering hanger and a cafeteria.

Apart from the Aviation industry, we are also looking into the Oil & Gas / Construction sectors to improve before we get into the business.

Acknowledgement

On behalf of the Board of Directors, I would like to express my special appreciation to our valued investors, business associates and stakeholders for your continued support, assistance and confidence in the Group. The future directions of the Group is at the discretion of the new management, whom I strongly believe, will scale new heights with APFT Berhad. To the Management and Staff of the Group, your contributions, commitment and efforts are much appreciated.

Y. T. M. Dato’ Muhammed Bin Haji Abdullah,D.T.N.S., A.N.S., P.M.C., P.J.K., P.K.T.

Chairman


6MANAGEMENT DISCUSSION & ANALYSIS

The financial period under review of 1 August 2016 to 31 January 2018 (18 months) has been a turbulent period for the Group. During the financial period there has been a significant demand for pilots however due to various factors, we were unable to take advantage of the demand and therefore could not sustain ourselves. During the same period the Company and the Group underwent a change in management, in which the new management’s role is to revive the Group’s business as a whole and to address the loss of business opportunities and financial issues.

Business Overview

Our company was incorporated in Malaysia on 19 January 2010 as a private limited liability company under the name APFT Sdn Bhd. Our company was subsequently converted to a public limited liability company and assumed it’s present name on 12 February 2010 to facilitate it’s listing on the Main Market of Bursa Securities.

The Group’s revenue for the financial period ended 31 January 2018 was RM 7.1 million, representing a decrease of RM 19.8 million or 73.6% compared to RM 26.9 million in preceding year. The Group also recorded a higher consolidated loss before taxation of RM 58.7 million as at 31 January 2018 as compared to the preceding period which amounts to RM 44.5 million.

Factors attributed to the decrease in the revenue for the financial period under review as compared to the corresponding year can be summarized as below:

a) the cessation of operations of our flight academy

b) impairment and loss on disposal of plant, property, and equipment

c) property, plant, and equipment written-off

d) goodwill written-off

PN 17 OF THE MAIN MARKET LISTING REQUIREMENTS OF THE BURSA MALAYSIA SECURITIES BERHAD

On 19 January 2018, Bursa Malaysia Securities Berhad informed the Company that it had been classified as an affected listed issuer pursuant to Paragraph 2.1 (e) of Practice Note 17 (“PN17”) under the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. As a result, the Company is required to submit a Regularization Plan to the relevant authorities and to implement the Regularization Plan within a stipulated timeframe. The Company is in the midst of formulating an appropriate Regularization Plan to be uplifted from the PN17 status.

PROSPECT AND OUTLOOK

The principal activities of the Company are that of investment holding and providing management services, whereas the principal activities of its subsidiaries comprise of flight training, Air Charter Services and Oil & Gas / Construction. With the worldwide increase in the demand for pilots especially in the Asia-Pacific region which requires approximately 253,000 pilots or 40% of the worldwide demand, we will be recommencing our Flight Training as soon as we have obtained all the relevant approvals which we have applied for. We have a large fleet of aircrafts free from encumbrances and a new Flight Training academy complete with large hangers, 2 blocks of classrooms, a technical store and an administrative office located at Lapangan Terbang Sultan Azlan Shah, Ipoh, Perak.


7MANAGEMENT DISCUSSION

& ANALYSIS

Asia Pacific 253,000

North America 117,000

Europe 106,000

Middle East 63,000

Latin America 52,000

Africa 24,000

C.I.S / Russia 22,000

World Total 637,000

New Pilots by Region2017 - 2036

40%

18%

17%

10%

8%4% 3%

Source : Boeing

The Group is also venturing into air charter business to strengthen its portfolio in the aviation industry. The Company is recommencing its charter business with its existing fleet of aircrafts which are free from all encumbrances. With this, the operating costs would be low and the Company believes it would be able to penetrate the market.

Our Management wishes to extend our sincere appreciation to the APFT Team for their continuing hard work to grow our Group, and their commitment and dedication to our corporate, social, and environment agendas. The management takes this opportunity to thank all our shareholders, advisors, business associates, customers and relevant government authorities. The Group sincerely treasures their invaluable support and confidence over the years.


85-YEAR FINANCIAL HIGHLIGHTS

REVENUE(RM’000)

LOSS BEFORE TAX(RM’000)

LOSS FOR THE YEAR(RM’000)

TOTAL ASSET(RM’000)

SHAREHOLDER EQUITY(RM’000)

EARNINGS PER SHARE(RM’000)

0

20000

40000

60000

2012 2014 2015 2016 2018 2012 2014 2015 2016 2018

2012 2014 2015 2016 2018 2012 2014 2015 2016 2018

2012 2014 2015 2016 2018 2012 2014 2015 2016 2018

80000

100000

0

20000

40000

60000

80000

100000

120000

-60000

-50000

-40000

-30000

-20000

-10000

0

-80000

-70000

-60000

-50000

-40000

-30000

-20000

-10000

0

-20000

-10000

0

10000

20000

30000

40000

50000

60000

-10

-8

-6

-4

-2

0

2

4

6

8

10

12

56,

006

27,

088

73,

676

98,

237 1

13,5

03

61,

354

26,9

55

84,

531

33,

676

22,

420

(4,8

60)

31,

406

53,

666

33,

028

14,

594

(19,

260)

(3.1

0)

10.

89

7.0

1 8.5

0

(8.9

0)

(18,

615)

(21,

710)

(44,

585)

(58,

744)

(67,

567)

(44,

573)

(21,

965)

(19,

489)

(44,

573)


9

Y.T.M. Dato’ Muhammed Bin Haji AbdullahD.T.N.S., A.N.S., P.M.C., P.J.K., P.K.TChairman

Yang Teramat Mulia Dato’ Muhammed Bin Haji Abdullah started his career as a temporary school teacher. Later Yang Teramat Mulia became an Insurance officer with Takaful Malaysia and Bank Islam Berhad. On 23 March 2017 Yang Teramat Mulia was crowned as the 15th Undang Luak Johol. Prior to Yang Teramat Mulia’s crowning as the Undang Luak Johol, Yang Teramat Mulia was the Dato Baginda Tan Mas Johol (Deputy Undang of Johol).

He does not have any family relationship with any Director(s) and/or major shareholder(s) of APFT Berhad. He does not have any conflict of interest with the Company. He has not been convicted of any offences over the past five years and there was no public sanction or penalty imposed on him by the relevant regulatory bodies during the financial period.

Edwin Silvester DasExecutive Director

Edwin Silvester Das has had a long and illustrious banking and corporate career for more than 2 decades, with experience in banking and various types of industries in markets locally and abroad.

A graduate from Southern Illinois University at Carbondale, Illinois, USA, Das started his banking career in 1985 and worked in USA, Europe, Africa, India, Sri Lanka, and Malaysia. Throughout this time, he progressed rapidly through the ranks with hard work and immeasurable contributions in various banking sectors from Operational Banking to Corporate Recovery, Corporate Banking and Corporate Finance, and Investment Banking which were under his portfolio.

Das’s banking acumen and credentials continued to grow in the market and besides Goodnite and MCL; he served as an Advisor to UH Dove Berhad, another BURSA Malaysia-listed company until 2001. It was during this time the international business community started to notice and recognize Das’s capability. Immediately upon his contracted departure from UH Dove, he was offered a position as Financial and Banking Industry Expert to Oracle Corporation USA, specializing in the Financial/Banking Services Industry for the Asia Pacific region.

With his strength and knowledge in banking and restructuring of companies, Das was also appointed as a Board of Director to a commercial bank in South Sudan where he was instrumental to help turn around the bank.

In November 2016, Das was appointed as Executive Director of MQ Technology Berhad, a company listed on Bursa Malaysia. In August 2017, Das was appointed as Executive Director of APFT Berhad, a company listed on Bursa Malaysia.


BOARD OF DIRECTORS PROFILE


10

YM Tengku Shamsulbhari bin Tengku Azman Shah, SMKExecutive Director

YM Tengku graduated with a Diploma in Finance from the institute of Cost & Executive Accountants, London. He is the director and shareholder of several private companies undertaking the business of manufacturing, logistics management, and construction.

YM Tengku is also the advisor to the Malay Businessman & Industrialist Association Of Malaysia (Selangor). His wide exposure in the business circle and network is a major asset to the company. His management skills, leadership, and experience definitely helps to set strategic direction, goals, and objectives for the organization to progress.


Chow Hung KeeyIndependent Non-Executive Director

Chow Hung Keey joined KPMG in 2010 as an Audit Associate. Subsequently, he joined CIMB Bank in 2011 as a Relationship Manager where he was a Private Financial Advisor to High Net worth Clients. He was then promoted as Senior Relationship Manager in the bank. He is a member of the Association of Chartered Certified Accountants (ACCA).

In 2012, with his experience in Financing, Banking and Investment Advisory, he was appointed as the Business Development Director for an investment company which is listed in the UK. He currently serves as Independent Non-Executive Director for SMTrack Berhad and holds several directorships in private limited companies.


Dato’ Sri Ahmad Said Bin HamdanIndependent Non-Executive Director

Dato’ Sri Ahmad Said Bin Hamdan graduated with a Bachelor of Arts (Hons) in Humanities in 1975 from Universiti Sains Malaysia (USM), Pulau Pinang and obtained Master Of Science in Criminology from the Indiana State Of University, USA. Dato’ Sri Ahmad Said Bin Hamdan started as an Assistant Superintendent of Customs Department, Penang in early 1975. Later, he joined Anti-Corruption Agency of Malaysia (ACA) as Superintendent of Investigation.

Dato’ Sri was with the government service for 34 years and headed few divisions in Malaysia as the Director of States including Sabah, Perak and Selangor. He has been the Director of Investigations of ACA Malaysia since 1992 and was promoted to Deputy Director General in 1998. In 2008, he was promoted to Director General of ACA. He was first Chief Commissioner of Malaysian Anti-Corruption Commission (MACC) when it was formed in 2009. Dato’ Sri had participated in the Senior Executive Course conducted by the Central Office Training Centre in Seoul, South Korea in 1990. Dato Sri was awarded medal of honours by the Federal Government and states. Dato’ Sri is currently serving as the Board Deputy Advisor for Koperasi Tanjong Keramat, Kota Kinabalu, Sabah.


BOARD OF DIRECTORS PROFILE


11SENIOR MANAGEMENT

TEAM PROFILE

Capt. Syaiful Alam Bin IsmailPrincipal - Flight Training

Capt. Syaiful Alam joined APFT Group as an Instructor on 15 November 2008 and on 1 March 2016, he was appointed as Principal. He is a qualified pilot from Australian Air Academy Cessnock, New South Wales, Australia. He joined Malaysia Airlines Berhad in 1997 and has over 19 years of experience in Flight Operations.

He does not have any family relationship with any others Director(s) and/or major shareholder(s) of the Group and has no conflict of interest with the Group.

Siva Kumar KalugasalamHead - Finance and Administration

Siva, joined APFT Berhad on 19 September 2016 and was appointed as the Head of Finance and Administration for the Group on 1 December 2017. He graduated from University of Technology Sydney, Australia in Bachelors of Business (Accountancy). Siva is a member of Institute of Financial Accountants; member of Malaysian Institute of Human Resources, Management and Associate; member of Institute of Commercial and Industrial Accountants (ICIA).He has more than 10 years of experience in Financial and Human Resources Management and another 12 years of experience in Senior Management roles in SME and FMCG companies.


Lt. Colonel (Rtd) Thamil Chelvan Subramaniam Deputy Principal Flight Training

Lt. Colonel (Rtd) Thamil Chelvan Subramaniam, a former Royal Malaysian Air Force (RMAF) officer has vast experience in Air Traffic Management and Flight Operations which includes safety in the aviation industry. He joined APFT Group as the Ground Handling Manager/ Head of Air Traffic Management on 3 March 2016. He is an traffic controller by trade and an expert in providing air traffic services support for airport operational and administrative staff work. He is specialized in professional training and coaching operators working in the organization in accordance with CAR 1996 and CAR 2016 procedures. He also has experience in aircraft maintenance and repair works.

He does not have any family relationship with any others Director(s) and/or major shareholder(s) of the Group and hasno conflict of interest with the Group.

Muhammad Yasser Bin Kamarudin Quality Assurance Manager

Muhammad Yasser joined APFT Group as a Licensed Aircraft Engineer in 2013. He was appointed as Engineering Representative in 2016. In 2017, he was appointed as Quality Assurance Manager. He is a qualified Aircraft Maintenance Engineer who graduated from Malaysia Airlines Systems Engineering Training Centre (MTEC) in 2009. He has over 8 years’ experience in the field of aviation engineering.

He does not have any family relationship with any others Director(s) and/or major shareholder (s) of the Group and has no conflict of interest with the Group.


12SENIOR MANAGEMENT TEAM PROFILE

Sharmani ThorailingamGroup Finance Manager

Sharmani Thorailingam, joined APFT Berhad Group in April 2015 as an Accountant in a subsidiary. She qualified from the University of Waikato, New Zealand with a Bachelor of Management Studies and did an MBA in Business Administration with the Nottingham Trent University, UK. Sharmani is a member of the New Zealand Institute of Chartered Accountants as a Chartered Accountant and subsequently as a member of the Malaysian Institute of Accountants. She has 19 years of experience in the Accounting, Administration and Auditing field.

She does not have any family relationship with any others Director(s) and/or major shareholder(s) of the Group and has no conflict of interest with the Group.

Aely Fairus Bin Ahamat PaminContinuing Airworthiness Manager

Aely Fairus joined APFT Group as a Continuing Airworthiness Manager (CAM) in March 2018. He is a qualified Aircraft Maintenance Engineer (B2) who graduated from Malaysia Airlines System Engineering Training Centre (METC) in 2014. He has over 10 years of experience in aviation engineering field.


Capt. Hazri Satriawan Bin HaronQuality and Safety Manager

A qualified pilot from Australian Civil Air Academy Cessnock, New South Wales, Australia, Capt. Hazri Satriawan joined APFT Group as Quality and Safety Manager in 2018. Prior to joining APFT Capt. Hazri was with Malaysia Airlines. He is rated on B737 aircraft. He has over 20 years of experience in Flight Operations.


Dato’ Stephanie Low Pit KoonBusiness Development / Marketing

Dato’ Stephanie Low Pit Koon joined APFT Group in October 2017 and is involved in business development for the Group. Dato’ Stephanie is presently spearheading the business development and marketing activities for Aerodynamic Sdn Bhd & APFT Services Sdn Bhd and is working with various travel and tour agents in China, Middle Eastern and local markets.

She does not have any family relationship with any others Director(s) and/or major shareholder(s) of the Group and has no conflict of interest with the Group.


13

The Malaysian Code on Corporate Governance 2012 (“the Code”) sets out the principles and recommendations on the structures and processes that companies may adopt in governing the board towards achieving effective governance.

Towards this end, the Board of Directors (“Board”) of APFT Bhd (“APFT” or “the Company”) is pleased to present herewith its statement on how the Board has applied and observed the principles and recommendations suggested in the Code and has continued to exercise good governance in conducting its affairs.

Board Roles and Responsibilities

The Board assumes full responsibilities of the overall performance of APFT Group by setting strategic plans for the Company and overseeing the conduct of the Company’s businesses based on the periodic performance of the Group, reported by management in the quarterly financial results, explanation as well as operational information.

The Board also reviews the adequacy and integrity of the Company’s risk management, internal control systems and management information system including key risks and systems to manage these risks as well as develop shareholder’s communication policy and management succession for the Company. The Board recognizes that differences of opinion may happen among its members therefore the Board keeps its meetings open and constructive and seeks consensus among its members. The concept of transparency, accountability, and integrity continues to form the fundamentals to which the Board discharges its duties.

The Board has appropriately delegated specific tasks to two (2) Board Committees namely, Audit Committee and Nomination Committee. These Committees ensure greater attention, objectivity, and independence are provided in the deliberations of specific board agenda. In order to ensure the direction and control of the Group is firmly within the Board, the Board has defined the terms of reference for each Committee. The Chairman of the respective Board Committees would report to the Board during the Board meetings on significant matters and salient matters deliberated in the Committees.

In line with the recommendations of the Code, the Board has formalized its Board Charter, which sets out a list of specific roles, and functions reserved to the Board and other matters that are important for good corporate governance. The Board has also defined its ethical standards in the Code of Ethics and Conduct. The Code of Ethics and Conduct’s objectives are for the Board and each Director to focus on areas of ethical risk, provide guidance to Directors to assist them in recognizing and dealing with unethical conduct and helping to foster a culture of honesty, trust, and responsibility. Though the provisions in this Code of Ethics and Conduct are not exhaustive, it sets forth key guiding principles and policies as part of the Company’s commitment to integrity, transparency, and self-regulation. All Board members are encouraged to highlight and discuss ethical issues that may affect the Company’s reputation or image negatively to the attention of the Board.

Also, following the introduction of the Whistleblower Protection Act, 2010, the Board has formalized and adopted its whistle blowing policy. The Board Charter, Code of Ethics and Conduct and Whistleblowing policies are available for public viewing and accessible in the Company’s corporate website.

Board Composition

The Board composition is integral in providing an effective and strong leadership. We have a powerful mix of experienced individuals on the Board in which 60% of the Board comprises of Independent Non-Executive Directors who are able to offer their knowledge and experience to the business and positively challenge the Executive Directors in developing the Company’s goals and strategies. These Non-Executive Directors keep the Management in check by scrutinizing the Company’s performance and ensuring the goals and objectives of the Company are met and achieved as well as consistently monitoring the Company’s performance.

Our Board currently has five (5) members comprising of three (3) Independent Non-Executive Directors and two (2) Non-Independent Executive Directors. The Company had complied with Paragraph 15.02 of the MMLR of Bursa Malaysia which stipulates that at least two (2) directors or one-third of the Board, whichever is higher, must be independent.

In line with the MCCG, the tenure of an Independent Director should not exceed a cumulative term of nine years.

CORPORATE GOVERNANCE OVERVIEW STATEMENT


14CORPORATE GOVERNANCE OVERVIEW STATEMENT

However, an Independent Director may continue to serve on the Board upon reaching the nine-year limit subject to the Independent Director’s re-designation as a Non-Independent Non-Executive Director. In the event the Board intends to retain the Director as Independent after he/she has served a cumulative term of nine years, the Board must justify the decision and seek shareholders’ approval at general meeting. In justifying the decision, the NRC is entrusted to assess the candidate’s suitability to continue as an Independent Director having due regard to their performance and ability to continue contributing to the Board their knowledge, skills, and experience. On date of this statement, none of the Independent Directors have served for more than nine years on the Board.

Board Meetings

Board meetings are scheduled in advance at the beginning of a calendar year with additional meetings convened when necessary. All Directors have complied with the Listing Requirements on attendance for Board meetings held during the financial period under review. Fourteen (14) Board meetings were held during the financial period under review with details of meetings’ attendance of each Director as follows:

No. From period 1.08.2016 to 31.01.2018 BOD ACM RC NC

1 Dato’ Faruk Bin OthmanChairman / Non-Independent Executive DirectorCeased office on 6 November 2017

11/11 2/2

2 Mr. Arif Bin FarukNon-Independent Executive DirectorCeased office on 2 August 2017

9/9

3 Dato’ Azmi Bin AbdullahIndependent Non-Executive DirectorCeased office on 7 December 2016

2/3 2/2 2/2 2/2

4 Mr. Nik Din Bin Nik SulaimanIndependent Non-Executive DirectorCeased office on 7 December 2016

2/3 2/2 1/2 1/2

5 Mr. Tan Nyap Keong @ Tony Tan Independent Non-Executive DirectorCeased office on 29 December 2017

10/12 5/6 5/6 4/4

6 Mr. Chiong Sui HiengIndependent Non-Executive DirectorCeased office on 19 December 2016

1/2

7 Mr. Tan Win SengIndependent Non-Executive DirectorCeased office on 7 April 2017

4/4

8 Mr. Lee Eng ThongIndependent Non-Executive DirectorCeased office on 7 April 2017

3/4

9 Mr. Tan Boon LengIndependent Non-Executive DirectorCeased office on 15 june 2017

2/4 2/2 2/2

10 Mr. Ng Kok WahIndependent Non-Executive Director Ceased office on 1 March 2017

2/2 2/2

11 Dato’ Hew Yuen NgiamIndependent Non-Executive DirectorCeased office on 8 November 2017

0/5


15

No. From period 1.08.2016 to 31.01.2018 BOD ACM RC NC

12 Dato’ Paduka (DR) Hii King HiongIndependent Non-Executive DirectorCeased office on 2 August 2017

0/1

13 Mr. Edwin Silvester DasNon-Independent Executive DirectorAppointed on 2 August 2017

4/5

14 Mr. Chow Hung KeeyIndependent Non-Executive Director Appointed on 2 August 2017

3/5 2/2

15 YM Tengku Shamsulbhari bin Tengku Azman Shah, SMK

Non-Independent Executive DirectorAppointed on 21 September 2017

3/4

16 Datin Anizah Binti MusaIndependent Non-Executive DirectorCeased office on 3 April 2018

2/3 2/2

17 Dato’ Sri Ahmad Said Bin HamdanIndependent Non-Executive DirectorAppointed on 29 December 2017

1/2 1/2

The Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of APFT as evidenced by the attendance record of the Directors at Board meetings, as set out in the above table. All Directors complied with the minimum attendance of at least 75% of Board meetings held during the financial year under BNM’s Guidelines on Corporate Governance.

The Board also took note of the expectation on time commitment to carry out their responsibilities outlined in one of the recommendations of the MCCG 2012. In this respect, members of the Board will notify the Chairman prior to their acceptance of any new directorship. Each Board member is expected to commit sufficient time to attend all Board and Committee meetings, AGM/EGM, Directors’ training, discussions with Management, and meetings with various stakeholders.

As prescribed in Paragraph 15.06 of the Listing Requirements, Directors must not hold directorships at more than five (5) PLCs. None of the Directors have exceeded these limits during the financial year under review. The Directors are required to declare their directorships and/or interests in other public and private companies on a monthly basis. Such information is also used to monitor the number of directorships held by the Directors, particularly those on PLCs and to notify the Companies Commission of Malaysia of any changes in other directorships in public companies.

Supply of Information

The supply, timeliness, and quality of the information affect the effectiveness of the Board to oversee the conduct of business and to evaluate the management’s performance.

Prior to each Board Meeting, all Directors are given an agenda and a set of Board papers to enable them to review the matters to be discussed at the Board Meeting and to be able to participate more effectively during the board meetings. The Board Papers include minutes of the previous meeting, quarterly financial results and other issues requiring the Board’s deliberation and approval. On the other hand, the Chairmen of Audit and Remuneration, and Nomination Committees will report and propose to the Board for matters that require the Board’s approval.

The Board members have unrestricted access to timely and accurate information, necessary for the performance of their duties as a full Board as well as in their individual capacities. Management personnel will be invited to the Board Meetings to assist the Board in understanding the Group’s operations when needed.

All Directors have access to the advice and services of the Company Secretary, Internal Auditors and External Auditors. Subject to the Board’s approval, all board members could seek independent professional advice in furthering their responsibilities at the expense of the Company.




The Company Secretary provide guidance to the Board on matters pertaining to the Board’s responsibilities in order to ensure that they are effectively discharged within the legal and regulatory requirements. This includes updating the Board on the Listing Requirements of Bursa Malaysia Securities Berhad, Companies Act, the Code and other legal and regulatory developments and their impact on the Group and its businesses.

The Company Secretary attends all Board Meetings and Board Committees’ meetings. The Company Secretary is responsible for the recording and safekeeping of the minutes and ensuring that these minutes are kept at the registered office of the Company and are available for inspection, if required.

Appointments, Appraisal and Re-Election of Directors

The principle of the Board’s composition policy is to maintain an effective size of the board that reflects its responsibilities, dynamic, the representatives of the interests of shareholders, and promotes common purpose and sense of sharing among its members.

The appointment of new Directors is under the purview of the Nomination Committee, which is responsible for making recommendations to the Board on suitable candidates for appointment as Directors of the Company. The actual decision as to who shall be nominated is the responsibility of the full Board after considering the Nomination Committee’s recommendations.

As part of the process of assessing the suitability of candidates for Board membership, the Nomination Committee takes into account various factors such as the individual’s educational background, independence, time availability, experience, skills, core competence, and general knowledge of the Company’s businesses and markets.

The Nomination Committee is empowered to review annually the effectiveness, contribution and performance of the Board, Board Committees, and Board members and the independence of its Independent Directors. The objective of this review is to ensure that the Board’s size, structure and composition meet the needs and expectations of the Company and the Listing Requirements as well as the diversity of the Board which includes skills, background, character, experience, integrity, competency, and time to effectively discharge their roles and responsibilities as a board member.

In accordance with the Company’s Articles of Association, all newly-appointed Directors shall retire from office but shall be eligible for re-election in the next Annual General Meeting subsequent to their appointment. The Articles of Association of the Company also provide that at least one third (1/3) of the remaining Directors be subject to re-election by rotation at each Annual General Meeting. Directors over seventy (70) years of age are required to submit themselves for re-appointment annually in accordance with Section 129(6) of the Companies Act, 1965.

During the financial year, the Nomination Committee conducted four (4) meetings. This meeting was attended by all members of the Committee. Based on the deliberation and review conducted, the Nomination Committee reported to the Board that:

(a) the present size and composition of the Board and Board Committees is adequate and effective in view of the present activities of the Group;

(b) the performance and contribution of each individual Director is satisfactory from the results of the evaluation;

(c) the Board possesses the required mix of skills, experience and other qualities necessary for carrying out their duties;

(d) the Head of Finance has demonstrated the necessary character, experience, integrity, competency and time commitment in discharging his role; and

(e) all Independent Non-Executive Directors have fulfilled the criteria under the definition of Independent Director as stated in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and, they are able to provide check and balance, and bring an element of objectivity to the Board.


17

Based on the Nomination Committee’s review, it was concluded that the caliber, experiences, qualifications and the present mix of Board members are sufficiently adequate.

Acknowledging the important of gender diversity in the board composition, going forward the Board through its Nomination Committee will ensure that women are sought when considering future candidates for vacancy at the Board.

Directors’ Training

The Directors are encouraged to attend continuous education programmes and seminars to keep abreast of relevant changes in laws and regulations and the development in the industry. New Directors would be briefed on the Company’s history, operations, and financial control system and field visits will be conducted to enable them to gain an understanding of the Company’s operations during the induction process.

For the financial period ended 31 January 2018, except for Y.T.M. Dato’ Muhammed Bin Haji Abdullah, all the present Directors have attended Mandatory Accreditation Programme for Directors conducted by an external consultant on Bursa’s analysis on corporate governance disclosures in Annual Report.

Directors’ Remuneration

The board defines remuneration philosophy and aligns business strategy and objectives with the overall goal of creating shareholder value. To ensure fair and responsible remuneration practices, we seek a balance between employee and shareholder interests while supporting entrepreneurial drive. We simultaneously strive to maintain a balance between risks and rewards.

To determine the remuneration of executive and non-executive directors and certain senior executives, the committee reviews relevant market and peer data and considers performance reviews. To retain flexibility and ensure fairness when directing human capital to those areas of the Group requiring focused attention, subjective performance assessments may sometimes be required when evaluating employee contributions. The committee assesses market practice relating to share-based incentive plans and considers market-related information in its review of board and committee fees. The board reviews committee proposals and, where required, submits them to shareholders for approval at the annual general meeting.

Details of the remuneration of Directors of the Group and Company for financial period ended 31 January 2018 are set out below:

GROUP COMPANY

Executive Director

Non- Executive

Director TOTALExecutive

Director

Non- Executive

Director TOTAL

(‘000) (‘000) (‘000) (‘000) (‘000) (‘000)

Fees - 34.20 34.20 - 34.20 34.20

Salaries and Other Emoluments

683.70 - 683.70 655.30 - 655.30

Benefit in Kind 263.00 - 263.00 247.00 - 247.00

946.70 - 946.70 902.30 34.20 936.50

*exclude of former Executive Chairman and Executive Director

Executive Director

Non- Executive

Director TOTAL

(‘000) (‘000) (‘000)

RM50,000 and below 1 3 4

RM50,001 - RM100,000 1 - 1

RM100,001 - RM150,000 - - -

RM150,001 - RM200,000 1 - 1

RM200,001 - RM250,000 1 - 1




Shareholders’ Right

The Board recognises the importance of establishing effective line of communication with shareholders. Following are the means of dissemination of information used by the Company currently:

(a) Annual Report;

(b) various disclosures and announcements made to Bursa Securities including Quarterly Results and Annual Results;

(c) explanatory circulars on business requiring shareholders’ approval; and

(d) Company’s website at www.apft.com.my

If requested, as part of the Company’s continuous investor relations and communications programme, the Company is ready to have dialogues and briefings with various research and investment analysts on APFT Group’s strategies, performance, and major developments.

General meeting empowers shareholders to exercise their rights. It also provides an opportunity for shareholders to have a dialogue with the Directors to share and exchange their views and opinions. Shareholders are encouraged to attend and participate at the AGM in order to know the latest development, performance and the future plan of the Group as well as to raise questions regarding the proposed resolutions and on matters relating to the Group’s businesses and affairs.

Effective 1 July 2016, Paragraph 8.29A of the Bursa Securities listing requirements provides that any resolution set out in the notice of any general meeting, or in any notice of resolution which may properly be moved and is intended to be moved at any general meeting, shall be voted by poll. Also, at least one scrutineer - who must not be an officer of the Company or its related corporation, and must be independent of the person undertaking the polling process will be appointed to validate the votes cast at the general meeting.

Financial Reporting

The Board is responsible to ensure the financial statements of the Company presents a fair and balanced view and assessment of the Group’s financial position, performance and prospects, and such financial statements are drawn up in accordance with the provisions of the Companies Act 1965 and applicable to approved accounting standards. The Board is assisted by the Audit Committee in reviewing the accuracy, adequacy, and completeness of disclosure and ensuring the Group’s financial statements comply with applicable financial reporting standards. On the other hand, the Audit Committee takes cognizance of its responsibility to review the adequacy and integrity of financial information by considering the results of both the Internal and External Auditors’ findings and reports as well as management actions to improve its systems of internal control.

The present External Auditors were appointed on 3 January 2018 after the External Auditors engaged since the financial period ended 31 July 2016 resigned during the current financial period. Annually, the Audit Committee also reviews the appointment, performance, and remuneration of the External Auditors before recommending them to the shareholders for re-appointment in the AGM. The Audit Committee would convene meeting with the External Auditors and Internal Auditors without the presence of the Executive Directors and employees of the Group as and when necessary. As part of the Audit Committee review processes, the Audit Committee has obtained 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.

Risk Management

The Board acknowledges that risk management is an integral part of governance. The Group’s risk management and execution is primarily driven by the Executive Director and key management. The state of risk management and internal control systems and the internal audit function of the Group are disclosed in the Statement on Risk Management and Internal Control on pages 23 to 24.


19CORPORATE GOVERNANCE

OVERVIEW STATEMENT

Corporate Disclosure

Corporate information is important for investors and shareholders. The Board is advised by the management, Company Secretary and External and Internal Auditors on the contents and timing of disclosure requirements of the Bursa Securities on the financial results and various announcements.

Besides ensuring timely releases of quarterly financial results, circulars, annual reports, corporate announcement and press releases on Bursa’s website, the Board leverages on its corporate website to communicate, disseminate and provide further information and details on the governance reporting. Further, pursuant to Paragraph 9.25 of the Listing Requirements, the Board will gradually transfer the publication of those static and principal governance information such as board committees’ terms of reference from annual report to the Company’s website in order to reduce dilution of impact of issues discussed in the annual report.

Promoting Sustainability in Business

In order to enhance stakeholders’ perception and public trust towards the Group, the Board believes that attention shall continuously be given to Environmental, Social, and Governance (“ESG”) aspect which are the main pillars at sustainability of the business. The Group will then relate these aspects to the interests of various stakeholders.

Board Assurance and Limitation

For the financial year under review, the Board is satisfied that the existing level of systems of internal control and risk management are reasonable. The Board recognises that the systems of risk management and internal control should be continuously improved in line with the evolving business development. Nonetheless, it should be noted that all risk management systems and systems of internal control can only be managed rather than eliminate risks of failure to achieve business objectives. Therefore, these systems of internal control and risk management in the Group can only provide reasonable but not absolute assurance against material misstatements, frauds and losses.

The Board and the Management is committed to continuously enhancing the system of risk management and internal control for the Group.

This Statement is made in accordance with a Board of Directors’ resolution dated 24 May 2018.


20

Practice Note 17

The Board of Directors of APFT Berhad announced that the Company has triggered the prescribed criteria pursuant to Paragraph 2.1 (e) of Practice Note 17 (“PN17”) of the Main Market Listing Requirements (“LR”). This was based on the Audited Financial Statements for the financial year ended 31 July 2016, the former external auditors of the Company, Messrs. SJ Grant Thornton, had expressed an emphasis of matter on the Company’s ability to continue as a going concern in the latest audited financial statements of the Company for the financial year ended 31 July 2016 and the Company’s shareholders’ equity on a consolidated basis was at 34.6% which was below 50% of the issued and paid-up capital (excluding treasury shares) of the Company as at 30 September 2017.

Exercise of Options, Warrants or Convertible Securities

The Company did not have Options, Warrants or Convertible Securities during the financial period ended 31 January 2018.

Audit and Non-Audit Fees

A breakdown of fees for audit and non-audit services incurred by the Group for the period ended 31 January 2018 is listed under the Notes to the Financial Statements of this Annual Report.

Profit Estimate, Forecast or Projection

The Company did not make any release on the profit estimate, forecast or projection for the financial period ended 31 January 2018.

Profit Guarantee

The Company did not make any arrangement during the financial period ended 31 January 2018 which require profit guarantee.

Material Contracts involving Directors’ And Major Shareholders’ Interest

There was no material contract entered into by the Company and/or its subsidiary companies involving Directors’ and Major Shareholders’ interest during the financial period ended 31 January 2018.

Utilisation of Proceeds From Corporate Proposal

A total of 865,088,873 new ordinary shares were issued during the financial period through the following:

• exercise of ESOS via the issuance of 71,500,000 Ordinary shares for cash;

• settlement of debts owing to certain creditors of the subsidiaries of APFT Berhad via the issuance of 226,299,873 new Ordinary shares in APFT;

• settlement of debts owing to Directors of APFT, namely Dato’ Faruk Bin Othman and Arif Bin Faruk via the issuance of 257,500,000 Settlement shares; and

• private placement of up to 309,789,000 APFT Shares for Working Capital purposes.

Change of Financial Year-End

During the financial period the Company had announced to Bursa Securities that the Company had changed its financial year-end from 31 July to 30 September and subsequently to 31 January 2018. Thereafter, the subsequent financial years of the company shall end on 31 January every year.

ADDITIONAL COMPLIANCE INFORMATION


21

COMPOSITION OF THE COMMITTEE

The Audit Committee comprises the following members.

Chairman : Mr Chow Hung KeeyMember : Dato ‘ Seri Ahmad Said Bin Hamdan

The Board appointed the members of the committee of which all are Independent Non-Executive Directors. An alternative Director shall not be appointed as a member of the Audit Committee. Mr Chow Hung Keey chairs the Audit Committee. The quorum shall be at least two (2) persons, Independent Directors. The Company Secretary shall act as secretary for the Audit Committee.

ATTENDANCE

The meeting attendance of the Committee members is provided in the Corporate Governance Statement in this Annual Report.

MEETINGS

There were six (6) meetings held during the period under review. Meetings of the Committee are planned ahead to provide the members with ample notice of meetings. Notice for the meetings is served before each meeting and the meeting papers are sent to each member to provide them time to read, including an opportunity for the members to inquire into the agenda items as well as to seek more information before the meeting. By invitation, the Head of Finance, other Board members, Internal Auditors or representatives from the External auditors may attend meetings to provide their input and advice or furnish appropriate relevant information.

At each Board meeting, the Committee Chairman briefs the Board pertaining to matters discussed at the Committee meeting held earlier.

SUMMARY OF WORKS DONE DURING THE FINANCIAL PERIOD

The principal activities undertaken by the Committee during the financial period under review are summarized as follows:

Quarterly Financial Reporting

1) reviewed the unaudited quarterly financial statements and period-end financial statements prior to submitting the same for the Board’s approval, focusing on significant events and compliance with applicable approved accounting standards and legal requirements;

2) reviewed material provisions, impairments and writing-off of bad debts in the unaudited quarterly financial report and final financial statements for Board approval;

3) briefed the Board on the outcome of the meetings of the committee covering results of the unaudited quarterly announcements;

Related Party Transactions

1) assessment of the related party transactions within the Group; to ensure the transactions are at all times carried out on arms-length bases;

AUDIT COMMITTEEREPORT


22

External Auditors

1) reviewed the appointment of the external auditors, their independence and effectiveness, including audit fees and remuneration, which are disclosed in the notes to the financial statements of the Group;

2) reviewed with the external auditors the latter’s audit planning memorandum, comprising the scope of audit, key audit areas and matters, audit approach and timetable;

3) met with the external auditors during the financial period to review the audit report and discuss audit findings;

4) reviewed the issues raised by the external auditors, including opportunities for improvement to internal controls based on observations made in the course of the audit;

5) evaluated the performance of the external auditors’ function based on timeliness and competency before recommending the re-appointment of external auditors to the Board;

6) briefed the Board on the outcome of the meetings of the committee for the period-end financial statements of the Group;

Internal Auditors

1) reviewed the adequacy of the scope, functions, competency and resources of the internal auditor’s function, and that it has necessary authority to carry out its work;

2) reviewed the scope of coverage of work by the internal auditors for the period under review, status of audit findings together with Management’s response to recommendations for improvement;

Audit Committee Report

1) reviewed the Audit Committee Report and its recommendation for inclusion in the Annual Report to the Board.

INTERNAL AUDIT FUNCTION AND SUMMARY OF WORK DONE

The Group outsourced its internal audit function to an external service provider. The principal function of the internal audit is to undertake systematic reviews of the governance, risk and internal control systems within the Group in accordance with an approved internal audit plan. This is to provide assurance that the systems in place are adequate and functioning as intended.

This Report is dated 24 May 2018.

AUDIT COMMITTEEREPORT


23

INTRODUCTION

The Board of Directors (“the Board”) of APFT Berhad (“the Company”) is pleased to present the Statement on Risk Management and Internal Control of the Company and its subsidiaries (“the Group”) which outlines the nature and scope of risk management and the internal control systems of the Group for the financial period ended 31 January 2018 pursuant to Para 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Main LR”), Malaysian Code on Corporate Governance 2017 (“MCCG 2017”) and “Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers”.

BOARD’S RESPONSIBILITY

The Board acknowledges its responsibilities for maintaining a sound risk management framework and internal control system to safeguard the shareholders’ investments, and the Group’s assets, as well as to discharge its stewardship responsibility in identifying principal risks and ensuring the implementation of an appropriate risk management and internal control system to manage those risks in accordance with Principle 6 of the Malaysian Code on Corporate Governance.

The Board has established a process for identifying, evaluating, monitoring and managing the significant risks faced by the Group in achieving its objectives and strategies. This process has been in place for the period under review and up to the date of approval of this statement.

AUDIT AND RISK MANAGEMENT COMMITTEE

Board committees such as the Audit and Risk Management Committee and Nominating and Remuneration Committee are established by the Board, and they are governed by clearly defined terms of reference and authority for areas within their scope. The Audit and Risk Management Committee (“ARMC”) maintains risk and audit oversight within the Group.

RISK MANAGEMENT

The Board recognises that risk management is an integral part of the Group’s business operations and has put in place the Risk Management Framework within the Group as an ongoing process for identifying, evaluating, monitoring, and managing significant risks affecting the achievement of its business objectives.

The risk identification process involves reviewing and identifying the possible risk exposure arising from changes in both external business environment and internal operating conditions. The risk measurement guidelines consist of financial and non-financial qualitative measures of risk consequences based on the risk-likelihood rating and risk-impact rating. The risk control actions are prioritized and implemented as per the risk control actions assigned to the respective risk owners.

Risk Profile consists of principal business risks which are identified and documented in the Registry of Risks. The Registry of Risks identifies the risk factors, statements of risk, risk owner, impact, likelihood and risk control actions. The Registry of Risks which comprises of corporate level and subsidiaries is tabled to the Audit Committee for review and approval every quarter. The Audit Committee reports to the Board on any significant changes in the business and external environment which affect key risks.

The Board is of the view that there is an ongoing process for identifying, evaluating, monitoring and managing risks affecting the achievement of its business objectives in their daily activities throughout the financial period and up to the date of approval of the Annual Report.

STATEMENT OF RISK MANAGEMENT AND INTERNAL CONTROL


24

With regard to internal controls, the Group has implemented the following key controls in its operations:

(i) management organization chart outlining the management responsibilities and hierarchical structure of reporting lines and accountability;

(ii) approval and authority limits of the top executives and heads of department;

(iii) documented internal policies, guidelines, procedures and manuals, which are updated from time to time;

(iv) the Audit Committee’s reviews and consultation with the management on the unaudited quarterly financial results to monitor the Group’s progress towards achieving the Group’s objectives;

(v) board discussion with management during the board meetings on business and operational issues as well as the measures taken by management to mitigate and manage risks associated with the business and operation issues;

(vi) insurance policies to protect the assets and/or interests of the Group;

(vii) the internal audit function is to assist the Audit Committee and the Board in conducting independent assessment on the internal control systems.

INTERNAL AUDIT FUNCTION

The internal audit function has been outsourced to external service providers to provide independent assurance and serves to assist the Company in achieving its risk management objectives. The Internal Auditors use the COSO (Committee of Sponsoring Organizations) model as a basis in conducting internal audit functions. Based on their internal audit reviews, observations were presented by the Internal Auditors, together with Management’s response and proposed action plans, to the Audit Committee for review during the quarterly Audit Committee meetings. In addition, the Internal Auditors have 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.

CONCLUSION

The Board is of the view that the system of risk management and internal control in place throughout the Group for the period under review, and up to the date of approval of this Statement, is sound and effective, providing reasonable assurance that the structure and operation of controls are appropriate for the Group’s operations. Implementation measures are continuously taken to strengthen the system of risk management and internal control so as to safeguard shareholders’ investments and the Group’s assets.

REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS

As required by Para 15.23 of the Bursa Malaysia Securities Berhad’s Main Market Listing Requirements, the external auditors have reviewed this Statement on Risk Management and Internal Control. Their limited assurance review was performed in accordance with Recommended Practice Guide (“RPG”) 5 (Revised) issued by the Malaysian Institute of Accountants. RPG 5 (Revised) does not require the external auditors to form an opinion on the adequacy and effectiveness of the risk management and internal control systems of the Group.

This Statement on Risk Management and Internal Control is made by the Board of Directors in accordance to its resolution dated 24 May 2018.

STATEMENT OF RISK MANAGEMENT AND INTERNAL CONTROL


25

At APFT, we acknowledge the importance of diversity at workplace and provide equal employment opportunity to employees regardless of age, gender, and ethnicity.

As at the financial period ended 31 Jan 2018, the composition of the ethnicity, age, and gender of our workforce in the Group are as follows.

OthersIndianChineseMalay

15

5 51

2018 2016 Malay 15 159Chinese 5 3Indian 5 4Others 1 1Total 26 167

Note: The above composition excludes Board member

2018 2016

EMPLOYEE'S ETHNICITY COMPOSITION

OthersIndianChineseMalay

159

1

34

WORKPLACE DIVERSITY


26

2018 2016

30 years and below 11 5731 - 40 years 5 4441 - 50 years 5 3051 years and above 5 36Total 26 167Note: The above composition excludes Board member

11

10

16

5 5 5 57 44 30 36

30 yearsand below

51 yearsand above

2018 2016

2018 2016

31 - 40 years

41 - 50 years

30 yearsand below

51 yearsand above

31 - 40 years

41 - 50 years

39

128

EMPLOYEE'S AGE GROUP COMPOSITION

EMPLOYEE'S GENDER COMPOSITION

2018 2016Male 16 128Female 10 39Total 26 167Note: The above composition excludes Board member

WORKPLACE DIVERSITY


27

StatementsFinancial

Financial Statements | 27

Directors’ Responsibility Statement | 28

Directors’ Report | 29

Statement by Directors | 35

Statutory Declaration | 35

Independent Auditors’ Report | 36

Statement of Financial Position | 40

Statement of Profit or Loss and Other

Comprehensive Income | 42

Statement of Changes in Equity | 44

Statement of Cash Flows | 47

Notes to the Financial Statements | 51

Analysis on Shareholdings | 129

Analysis on Warrant Holdings | 131

List Of Properties Held | 133

Notice Of Annual General Meeting | 134

Proxy Form | 137


28FINANCIAL STATEMENTS

DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors are responsible for ensuring that:

(a) The annual audited financial statements of the Group and of the Company are drawn up in

accordance with applicable Financial Reporting Standards, the provisions of the Companies

Act, 1965 and the Main Market Listing Requirements so as to give a true and fair view of the

state of affairs of the Group and the Company for the financial period and of the results and

cash flows of the Group and of the Company for the financial period, and

(b) Proper accounting and other records are kept which enable the preparation of the financial

statements with reasonable accuracy and taking reasonable steps to ensure that appropriate

systems are in place to safeguard the assets of the Group and to prevent and detect fraud and

other irregularities.

In the preparation of the financial statements for the financial period ended 31 January 2018, the

Directors have adopted appropriate accounting policies and have applied them consistently in the

financial statement with reasonable and prudent judgments and estimates. The Directors are also

satisfied that all relevant approved accounting standards have been followed in the preparation

of the financial statements.


29FINANCIAL

STATEMENTS

DIRECTORS’ REPORT

The directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial period 1 August 2016 to 31 January 2018.

PRINCIPAL ACTIVITY

The Company is principally engaged as an investment holding. The principal activities of its subsidiaries are disclosed in Note 7 to the financial statements. There have been no significant changes in the nature of these activities of the Company and of its subsidiaries during the financial period.

CHANGE OF FINANCIAL YEAR-END

During the financial period, the Company and its subsidiaries changed its financial year-end from 31 July to 31 January. Accordingly, the financial statements of the Company for the current financial period are drawn up for the period 1 August 2016 to 31 January 2018 for a period of 18 months.

RESULTS OF OPERATIONS

The results of operations of the Group and of the Company for the financial period are as follows:

Group Company RM RM

Continuing operations Loss before taxation (58,744,159) (14,508,455)Taxation - - Loss for the period from continuing operations (58,744,159) (14,508,455) Discontinued operations Loss for the period from discontinued operations, net of tax (8,823,835) - Net loss for the financial period (67,567,994) (14,508,455) Loss for the year attributable to: Owners of the Company (64,047,772) (14,508,455) Non-controlling interests (3,520,222) - (67,567,994) (14,508,455)

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



RESERVES AND PROVISIONS

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

DIVIDEND

No dividend has been paid or declared by the Company since the end of the previous financial period.

The directors also do not recommend the payment of any dividend in respect of the current financial period.

ISSUE OF SHARES AND DEBENTURES

During the financial year, the issued and paid-up share capital of the Company was increased by RM 33,702,616 (net of issuance cost) from RM 23,866,639 to RM 57,569,255 by way of issuance of 865,088,873 new ordinary shares pursuant to the following:

(a) 71,500,000 new ordinary shares of RM0.05 each arising from a grant and exercise of options under the Employees’ Share Option Scheme (“ESOS”) of RM 0.05 per share, the par value being the exercise price for a total consideration of RM 3,575,000.

(b) 226,299,873 new ordinary shares of RM 0.05 each at the issue price of RM 0.05 through a creditors capitalisation for a total consideration of RM 11,314,994 as a partial settlement to creditors.

(c) 257,500,000 new ordinary shares of RM 0.05 each at the issue price of RM 0.05 through a directors capitalisation for a total consideration of RM 12,875,000 as a partial settlement of the amount due to director.

(d) 206,526,000 new ordinary shares of RM 0.20 each at the issue price of RM 0.0194 through a private placement for a total consideration of RM 4,006,604 for working capital purposes.

(e) 103,263,000 new ordinary shares of RM 0.20 each at the issue price of RM 0.0187 through a private placement for a total consideration of RM 1,931,018 for working capital purposes.

The new ordinary shares issued during the financial period rank pari passu in all respects with the existing ordinary shares of the Company.

There was no issuance of debentures during the financial period.

EMPLOYEES’ SHARE OPTION SCHEME

The APFT Berhad Employees’ Share Option Scheme (“ESOS”) was approved by shareholders at the Extraordinary General Meeting held on 17 September 2014 and became effective on 31 December 2014.

The principal features of the ESOS, details of share options exercised during the financial year and outstanding at the end of the financial year are disclosed in Note 18 to the financial statements.


31FINANCIAL

STATEMENTS

WARRANTS

There were no warrants issued during the financial period. The salient terms of the warrants are disclosed in Note 19 to the financial statements.

The warrants were constituted under the Deed Poll dated 28 June 2013. No warrants were exercised during the current financial period and the total number of warrants that remain unexercised as at the reporting date.

The movements on warrants are as follows:

Number of warrants At 1 August 2016/31 January 2018 78,500,000

OTHER STATUTORY INFORMATION

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that:

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

(ii) any current assets which were unlikely to be realised in the ordinary course of business had been written down to an amount which they might be expected so to realise.

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

(i) that would render the amount written-off for bad debts, or the amount of the allowance for doubtful debts in the Group and in the Company inadequate to any substantial extent; or

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

(iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate; or

(iv) not otherwise dealt with in this report or the financial statements that would render any amount stated in the financial statements of the Group and of the Company misleading.

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

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

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

No contingent liability or other liability has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.



In the opinion of the directors, other than as disclosed in the financial statements, the financial performance of the Group and of the Company for the financial period ended 31 January 2018 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial period and the date of this report.

DIRECTORS

The directors who held office since the date of the last report:

Y.T.M. Dato’ Muhammed Bin Haji Abdullah, D.T.N.S., A.N.S., P.M.C., P.J.K., P.K.T

(appointed on 10.4.2018)

Edwin Silvester Das (appointed on 2.8.2017)

Chow Hung Keey (appointed on 2.8.2017)

YM Tengku Shamsulbhari B. Tengku Azman Shah, SMK (appointed on 21.9.2017)

Dato’ Sri Ahmad Said Bin Hamdan (appointed on 29.12.2017)

Chiong Sui Hieng (appointed on 11.8.2016 and resigned on 19.12.2016)

Lee Eng Thong (appointed on 7.12.2016 and resigned on 7.4.2017)

Kioh See Sein (appointed on 7.12.2016 and resigned on 19.12.2016)

Tan Win Sen (appointed on 7.12.2016 and resigned on 7.4.2017)

Tan Boon Leng (appointed on 19.12.2016 and resigned on 15.6.2017)

Ng Kok Wah (appointed on 19.12.2016 and resigned on 1.3.2017)

Dato’ Hew Yuen Ngian (appointed on 21.3.2017 and resigned on 8.11.2017)

Dato’ Paduka (DR) Hii King Hiong (appointed on 3.7.2017 and resigned on 2.8.2017)

Datin Anizah Binti Musa (appointed on 8.11.2017 and resigned on 3.4.2018)

Dato’ Azmi Bin Abdullah (resigned on 7.12.2016)

Nik Din Bin Nik Sulaiman (resigned on 7.12.2016)

Arif Bin Faruk (resigned on 2.8.2017)

Dato’ Faruk Bin Othman (resigned on 6.11.2017)

Tan Nyap Keong @ Tony Tan (resigned on 29.12.2017)

DIRECTORS OF THE SUBSIDIARIES

The names of the directors of the Company’s subsidiary(ies) since the beginning of the financial year to the date of this report, excluding those who are already listed above is Low Pit Koon.


33FINANCIAL

STATEMENTS

DIRECTORS’ INTERESTS

The interests and deemed interests in the ordinary shares and warrants of the Company and of its related subsidiaries (other than wholly-owned subsidiaries) of those who were directors at financial year end (including the interests of the spouses or children of the directors who themselves are not directors of the Company) as recorded in the Register of Directors’ Shareholdings are as follows:

Ordinary Shares of RM0.05 each

At 01.08.2016 Bought Sold

At 31.01.2018

Direct interest in the Company

YM Tengku Shamsulbhari B. Tengku Azman Shah, SMK - - - -

Edwin Silvester Das - - - -

Dato’ Faruk Bin Othman 83,002,422 17,500,000 28,039,000 72,463,422

Arif Bin Faruk 300,000 - - 300,000

Ordinary Shares of RM0.05 each

At 01.08.2016 Bought Sold

At 31.01.2018

Indirect interest in the Company

YM Tengku Shamsulbhari B.Tengku Azman Shah, SMK - - - -

Edwin Silvester Das - - - -

Dato’ Faruk Bin Othman* 766,754 17,500,000 9,807,700 8,459,054

Arif Bin Faruk* 83,469,176 240,000,000 250,750,009 72,719,167

*Deemed interest in securities held through persons connected with the director.

By virtue of the directors’ interests in the shares of the company, the above mentioned directors are also deemed interested in the shares of the Company or its subsidiaries during the financial period to the extent that the Company has an interest.

None of the other directors in office at the end of the financial period had any interest in the ordinary shares of the Company and of its related corporations during the financial period.

DIRECTORS’ BENEFITS

Since the end of the previous financial period, none of the directors of the Company has received or become entitled to receive any benefits (other than the benefits included in the aggregate amount of emoluments received or due and receivable by the directors as shown in the financial statements) by reason of a contract made by the Company or a related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest.

During and at the end of the financial period, no arrangements subsisted to which the Company was a party, whereby directors of the Company might acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other corporate body.



SIGNIFICANT EVENTS DURING THE FINANCIAL PERIOD AND SUBSEQUENT EVENTS AFTER THE FINANCIAL PERIOD

Significant events during the period and subsequent events after the period are disclosed in Note 39 to the financial statements.

INDEMNITIES AND INSURANCE FOR DIRECTORS AND OFFICERS

There are no indemnities given to or insurance affected for any directors and officers of the company in accordance with Section 289 of the Companies Act, 2016.

AUDITORS

The auditors, Messrs Adam & Co., have indicated their willingness to accept appointment.

AUDITORS’ REMUNERATION

The amount paid as remuneration of the auditors for the financial period from 1 August 2016 to 31 January 2018 is described in Note 30 to the financial statements.

Signed on behalf of the Board of Directorsin accordance with a resolution of the directors,

________________________________ ________________________________EDWIN SILVESTER DAS YM TENGKU SHAMSULBHARI B. TENGKU AZMAN SHAH, SMK

Shah Alam,Date:


35FINANCIAL

STATEMENTS

STATEMENT BY DIRECTORS

The directors of APFT BERHAD, state that, in their opinion, the accompanying financial statements are drawn up in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia so as to give a true and fair view of the financial position of the Company as of 31 January 2018 and of its financial performance and the cash flows for the period from 1 August 2016 to 31 January 2018.

Signed on behalf of the Board of Directorsin accordance with a resolution of the directors,

_______________________________ _________________________________EDWIN SILVESTER DAS YM TENGKU SHAMSULBHARI B. TENGKU AZMAN SHAH, SMK

Shah Alam,Date:

DECLARATION BY THE DIRECTOR PRIMARILY RESPONSIBLE FOR THE FINANCIAL MANAGEMENT OF THE COMPANY

I, EDWIN SILVESTER DAS, being the director primarily responsible for the financial management of APFT BERHAD, do solemnly and sincerely declare that the accompanying financial statements 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.

__________________________________EDWIN SILVESTER DAS

Subscribed and solemnly declared by the abovenamed EDWIN SILVESTER DAS at SHAH ALAM in the state ofSELANGOR this day of

Before me,

__________________________________COMMISSIONER FOR OATHS



INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OFAPFT BERHAD(Incorporated in Malaysia)

Report on the Audit of the Financial Statements

Qualified Opinion

We have audited the financial statements of APFT BERHAD, which comprise the statement of financial position as of 31 January 2018, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the period then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 40 to 128.

In our opinion, except for the effects of the matter described in the Basis of Qualified Opinion section of our report, the accompanying financial statements give a true and fair view of the financial position of the Company as of 31 January 2018, and of its financial performance and its cash flows for the period then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia.

Material Uncertainty Related to Going Concern

As disclosed in Note 2 to the financial statements, the Group and the Company incurred a net loss of RM 67,567,994 and RM 14,508,455 respectively for financial period from 1 August 2016 to 31 January 2018 and as of that date, the Group and the Company had a negative operating cash flow of RM 8,387,056 and RM 14,287,049 respectively. The Group’s total current liabilities exceeds its total current assets by RM 31,919,349.

In addition, one of the subsidiaries was unable to meet its borrowings obligations during the financial period as disclosed in Notes 23 and 24 to the financial statements. Few principal bankers had issued letters of demand and statement of claim to the subsidiary. Certain creditors as disclosed in Note 39 had issued letters of demand to the subsidiary due to long overdue debts.

In view of the matters set out above, there are material uncertainties that may cast significant doubt on the ability of the Group to continue as a going concern.

We draw attention to Note 39 of the Financial Statements, which indicates that the Company has triggered the Prescribed Criteria under Paragraph 2.1(a) of Practice Note 17 (“PN17”) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

In forming our audit opinion, we have considered the adequacy of the disclosure of these matters in the financial statements. Our opinion is not qualified on these matters.

Basis for Qualified Opinion

As disclosed in Note 18 to the financial statements, the Group had issued Employees’ Share Option Scheme (“ESOS”) amounting to RM 3,575,000. We were unable to obtain the valuation report from external specialist on the fair value of share options granted. Consequently, we were not able to obtain sufficient appropriate audit evidence to establish the completeness, valuation and allocation of the ESOS.


37FINANCIAL

STATEMENTS

Independence and Other Ethical Responsibilities

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significant in our audit of the Group and Company’s financial statements for the current year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key Audit Matters1) Revenue Recognition

Refer to Note 29 in the consolidated financial statements.

The Group focuses on revenue as a key performance measure which could create an incentive for revenue to be recognised before the risks and rewards have been transferred resulting in a significant risk associated with revenue from an audit prospective.

Therefore, this matter was determined to be a key audit matter.

Our audit performed and responses thereon

We have performed the following procedures:• Analysed and obtained an understanding of the

process and test the controls relevant to the recognition of revenue in accordance with relevant MFRSs.

• Perform test of details on sales invoices and delivery documents e.g. delivery orders to ensure risks and rewards have been transferred to buyers to ensure revenue recognition is appropriate and being recorded in the correct period.

• Perform floor-to-list test i.e. selecting invoices from the floor and tracing them to the sales listing.

2) Assessment of impairment of property, plant, and equipment in relation to the Group’s flight education and training

The Group has significant property, plant, and equipment relating to its flight education and training.

The downturn in the segment has impacted these operations and indicates that the related items of property, plant and equipment may be impaired.

Therefore, this matter was determined to be a key audit matter.

We have performed the following procedures:• Performed physical assets sighting to ensure the

existence and ensure the assets in good working condition to generate future profit.

• Assess whether objective evidence exist indicating impairment of asset during the year. (i.e continuous operating losses, restriction in laws and regulation, loss of customers, etc.)

• Should such evidence exist, the amount of impairment loss is measured by the management as the difference between the asset’s carrying amount and the recoverable amount of the assets.

Information Other than the Financial Statements and Auditors’ Report Thereon

The directors of the Company are responsible for the other information. The other information comprises annual report, but does not include the financial statements and our auditors’ report thereon.

Our opinion on the financial statements of the Group and the Company does not cover the other information and we do not express any form of assurance conclusion thereon.



In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the Financial Statements

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

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

Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

• Identify and assess the risks of material misstatement of the financial statements of the Group and Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group and the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group and the Company to cease to continue as a going concern.


39FINANCIAL

STATEMENTS

• Evaluate the overall presentation, structure and content of the financial statements of the Group and the Company, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with their all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

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

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 2016 in Malaysia, we report that the subsidiary, of which we have not acted as auditors, are disclosed in Note 7 to the financial statements.

Other Matter

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

ADAM & CO. ADAM SELAMAT BIN MUSAChartered Accountants (AF 1250) Partner - 02019/03/2020 J Chartered Accountant

Shah Alam,Date:



STATEMENT OF FINANCIAL POSITIONAS AT 31 JANUARY 2018(With comparative figures as of 31 July 2016)

Group Company Note 31.1.2018 31.7.2016 31.1.2018 31.7.2016 RM RM RM RMASSETS Property, plant and equipment 6 12,220,173 31,858,536 223,262 -Investments in subsidiaries 7 - - 4 4Investments in associates 8 - - - -Other investments 9 1,761,524 428,337 - -Deferred costs 10 - 145,257 - -Fixed deposits with licensed banks 11 112,625 112,625 - -Goodwill 12 - 18,631,027 - - Total non-current assets 14,094,322 51,175,782 223,266 4 Inventories 13 521,121 1,321,153 - -Amount due from contract customers 14 - 3,673,255 - -Trade receivables 15 7,794,371 8,946,796 - -Other receivables, deposits and prepayments 16 2,227,518 4,472,240 48,630 16,941Deferred costs 10 - 131,050 - -Amount due from subsidiaries 7 - - 65,855,648 45,182,161Tax recoverable 92,372 125,999 - -Cash and bank balances 2,358,788 2,398,401 658,471 2,152,188 Total current assets 12,994,170 21,068,894 66,562,749 47,351,290 Non-current asset held for sale 17 - 1,431,384 - - Total assets 27,088,492 73,676,060 66,786,015 47,351,294

(Forward)


41FINANCIAL

STATEMENTS

STATEMENT OF FINANCIAL POSITIONAS AT 31 JANUARY 2018(With comparative figures as of 31 July 2016)

Group Company 31.1.2018 31.7.2016 31.1.2018 31.7.2016 Note RM RM RM RM

Equity Share capital 18 57,569,255 23,866,639 57,569,255 23,866,639Reserves 19 15,632,322 15,625,821 15,627,393 15,627,393Merger deficit 20 (20,999,998) (20,999,998) - -(Accumulated losses)/ Unappropriated Profit (61,531,178) 2,516,594 (7,351,895) 7,156,560 Equity attributable to owners of the Company (9,329,599) 21,009,056 65,844,753 46,650,592Non-controlling interests 7 (9,930,544) (6,414,656) - - Total equity (19,260,143) 14,594,400 65,844,753 46,650,592 Non-current liabilities Deferred tax liabilities 21 133,555 133,555 - -Other payables and accruals 22 104,812 36,493 - -Borrowings 23 1,196,750 - - -Finance lease payables 24 - 77,697 - - Total non-current liabilities 1,435,117 247,745 - - Total current liabilities Trade payables 25 20,151,612 20,828,719 - -Other payables and accruals 22 22,198,053 16,466,915 941,262 700,702Amount due to non-controlling interests 26 1,410,184 2,419,229 - -Amount due to director(s) 27 100,982 7,652,559 - -Deferred income 28 302,986 2,449,239 - -Borrowings 23 - 7,928,582 - -Finance lease payables 24 749,702 1,088,672 - - Total current liabilities 44,913,519 58,833,915 941,262 700,702 Total liabilities 46,348,636 59,081,660 941,262 700,702 Total equity and liabilities 27,088,492 73,676,060 66,786,015 47,351,294

The accompanying Notes form an integral part of the Financial Statements.



STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE FINANCIAL PERIOD 1 AUGUST 2016 TO 31 JANUARY 2018(With comparative figures for the financial period ended 31 July 2016)

Group Company Note 31.1.2018 31.7.2016 31.1.2018 31.7.2016 (18 months) (16 months) (18 months) (16 months) RM RM RM RMContinuing operations Revenue 29 7,098,348 26,955,115 - 644,916Cost of services (13,265,902) (47,416,091) - -

Gross loss (6,167,554) (20,460,976) - 644,916 Other operating income 7,344,713 2,703,697 1,942 1,585,086 Marketing expenses (755,023) (293,874) - - Administrative expenses (57,803,619) (13,861,464) (14,510,397) (2,626,254) Other operating expenses (103,132) (10,559,798) - (50,237,994) Loss from operating activities (57,484,615) (42,472,415) (14,508,455) (50,634,246) Finance costs (1,259,544) (2,088,507) - - Net finance cost (58,744,159) (44,560,922) (14,508,455) (50,634,246) Share of loss on an associate - (24,541) - - Loss before taxation 30 (58,744,159) (44,585,463) (14,508,455) (50,634,246) Taxation 31 - 11,925 - -

Loss for the period from continuing operations (58,744,159) (44,573,538) (14,508,455) (50,634,246)

Discontinued operationsLoss for the period from discontinued operations (8,823,835) - - - Loss for the period (67,567,994) (44,573,538) (14,508,455) (50,634,246)

(Forward)


43FINANCIAL

STATEMENTS

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE FINANCIAL PERIOD 1 AUGUST 2016 TO 31 JANUARY 2018(With comparative figures for the financial period ended 31 July 2016)

Group Company Note 31.1.2018 31.7.2016 31.1.2018 31.7.2016 (18 months) (16 months) (18 months) (16 months) RM RM RM RM

Other comprehensive income/(loss), net of tax Item that may be reclassified subsequently to profit or loss Foreign currency translation differences for foreign operations 10,835 13,365 - - Total other comprehensive loss for the year (67,557,159) (44,560,173) (14,508,455) (50,634,246)

Loss attributable to: Owners of the Company - From continuing operations (58,744,159) (34,701,734) - From discontinued operations (5,303,613) - (64,047,772) (34,701,734) Non-controlling interests (3,520,222) (9,871,804) Loss for the year (67,567,994) (44,573,538) Total comprehensive loss attributable to: Owners of the Company - From continuing operations (58,744,159) (34,693,715) - From discontinued operations (5,297,112) - (64,041,271) (34,693,715)Non-controlling interests (3,515,888) (9,866,458) Total comprehensive loss for the year (67,557,159) (44,560,173) Basic (loss)/earnings per ordinary share (sen) 32 (8.90) 8.50 Diluted earnings per ordinary share (sen) * *

*Anti-dilutive in nature




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47FINANCIAL

STATEMENTS

STATEMENT OF CASH FLOWSFOR THE FINANCIAL PERIOD 1 AUGUST 2016 TO 31 JANUARY 2018(With comparative figures for the financial period ended 31 July 2016)

Group Company 2018 2016 2018 2016 (18 months) (16 months) (18 months) (16 months) Note RM RM RM RMCASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES Loss before tax (67,567,994) (44,585,463) (14,508,455) (50,634,246) Adjustments for: Amortisation of deferred costs 276,307 174,733 - - Bad debts written off 816,869 6,738 - - Deferred costs written off - 54,838 - - Goodwill written off 18,631,027 - - - Other investment written off 166,800 - - - Depreciation of property, plant and equipment 4,619,942 6,393,742 12,535 - Loss on disposal of property, plant and equipment 5,497,043 482,781 - - Gain on disposal of other investment - (28,705) - - Impairment loss of property, plant and equipment 1,523,035 3,144,910 - - Impairment loss of trade receivables 32,314 2,093,231 - - Impairment loss of amount due from subsidiaries - - - 50,237,994 Impairment loss of other receivables - 183,414 - - Impairment loss of goodwill - 2,674,752 - - Interest income (3,931) (29,947) (1,942) (7,392) Interest expenses 1,511,534 2,088,507 - - Transferred of property, plant and equipment 13,985,352 - - - Property, plant and equipment written off 3,098,786 912,824 - - Reversal of impairment loss on investment in subsidiaries - - - (1,184,497) Reversal of impairment loss on amount due from subsidiaries - - - (393,197) Reversal of impairment loss on trade receivables - (728,834) - -

(Forward)



STATEMENT OF CASH FLOWSFOR THE FINANCIAL PERIOD 1 AUGUST 2016 TO 31 JANUARY 2018(With comparative figures for the financial period ended 31 July 2016)

Group Company 2018 2016 2018 2016 (18 months) (16 months) (18 months) (16 months) RM RM RM RM Share of loss of an associate - 24,541 - -Unrealised gain on foreign exchange (43,696) (16,722) - - Operating loss before working capital changes (17,456,612) (27,154,660) (14,497,862) (1,981,338) Changes in working capital: Decrease in inventories 800,032 157,857 - - Decrease in amount due from contract customers 3,673,255 7,080,045 - - (Increase)/Decrease in trade and other receivables 2,591,660 2,979,272 (31,689) (16,738) Increase/(Decrease) in trade and other payables 5,122,349 10,404,956 240,560 (314,099) Decrease in non-controlling interest (1,009,045) (911,553) - - Decrease in deferred income (2,146,253) (59,393) - - Cash Used In Operating Activities (8,424,614) (7,503,476) (14,288,991) (2,312,175)Income tax paid - net 33,627 615,632 - -Interest received 3,931 29,947 1,942 7,392 Net Cash Used In Operating Activities (8,387,056) (6,857,897) (14,287,049) (2,304,783) CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES Acquisition of property, plant and equipment (i) (11,339,194) (2,077,806) (235,797) -Subscription of ordinary shares of subsidiary - - - (4)Proceeds from disposal of property, plant and equipment 2,298,000 744,597 - -Purchase of other investment (1,499,987) (3,679,836) - -Proceeds from disposal of other investment - 3,443,264 - -Proceeds from disposal of associates 1,431,384 - - -Interest paid (1,511,534) (1,167,150) - - Net Cash Used in Investing Activities (10,621,331) (2,736,931) (235,797) (4)

(Forward)


49FINANCIAL

STATEMENTS

STATEMENT OF CASH FLOWSFOR THE FINANCIAL PERIOD 1 AUGUST 2016 TO 31 JANUARY 2018(With comparative figures for the financial period ended 31 July 2016) Group Company 2018 2016 2018 2016 (18 months) (16 months) (18 months) (16 months) RM RM RM RMCASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES Repayment from director (7,551,577) (8,516,295) - (438,038)Repayment of borrowings (4,675,583) (1,234,641) - -Repayment of finance lease payables (416,667) (1,425,667) - -Net advances to subsidiaries - (20,673,487) (16,531,502)Increase in share capital, net of issuance cost 33,702,616 21,125,750 33,702,616 21,125,750 Net Cash Generated from Financing Activities 21,058,789 9,949,147 13,029,129 4,156,210 NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS 2,050,402 354,319 (1,493,717) 1,851,423Effects of exchange rate fluctuations on cash held (33,766) 14,162 - - CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 342,152 (26,329) 2,152,188 300,765 CASH AND CASH EQUIVALENTS AT END OF THE PERIOD (ii) 2,358,788 342,152 658,471 2,152,188

(i) Acquisition of property, plant and equipment

During the financial year, the Group and the Company acquired property, plant and equipment with aggregate costs of RM11,339,194 (2016: RM2,201,990) and RM217,007 (2016: RM Nil) respectively, which were satisfied as follows:

Group Company 2018 2016 2018 2016 RM RM RM RM Finance lease liabilities - 124,184 - -Cash payments 2,935,638 2,077,806 - -Transfer - intercompany 8,403,556 - 217,007 - 11,339,194 2,201,990 217,007 -

(Forward)



(ii) Cash and cash equivalents

Cash and cash equivalents included in the statement of cash flows comprise the following statement of financial position amounts:

Group Company 2018 2016 2018 2016 RM RM RM RM Cash and bank balances 2,360,788 2,398,401 658,471 2,152,188Bank overdrafts - (2,056,249) - - 2,358,788 342,152 658,471 2,152,188



51FINANCIAL

STATEMENTS

NOTES TO THE FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 JANUARY 2018

1. GENERAL INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad.

The consolidated financial statements of the Company as at and for the financial period ended 31 January 2018 comprise financial statements of the Company and its subsidiaries (together referred to as the “Group” and individually referred to as “Group entities”). The financial statements of the Company as at and for the financial period ended 31 January 2018 do not include other entities.

The Company is principally engaged as an investment holding. The principal activities of its subsidiaries are disclosed in Note 7 to the financial statements.

There have been no significant changes in the nature of the activities of the Company and of its subsidiaries during the financial period.

During the financial period, the Company changed its financial year end from 31 July to 31 January. Accordingly, the financial statements of the Company for the current financial period are drawn up for the period 1 August 2016 to 31 January 2018 for the period of 18 months.

The registered office of the Company is located at 10.03, Level 10, The Garden South Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur and the principal place of business of the Company is located at Suite 9B.03, Level 10, Wisma E&C, No.2, Lorong Dungun Kiri, Damansara Heights, 50490 Kuala Lumpur, Malaysia.

The financial statements are presented in Ringgit Malaysia (RM), which is also the Company’s functional currency.

The financial statements of the Company were authorised by the Board of Directors for issuance in accordance with a resolution of directors on 24 May 2018.

2. GOING CONCERN

The financial statements of the Group and of the Company have been prepared on the going concern assumption that the Group and the Company will continue as a going concern. The application of going concern basis is based on the assumption that the Group and the Company will be able to realise its assets and liquidate its liabilities in the normal course of business.

The Group and the Company incurred a net loss of RM67,567,994 and RM14,508,455 respectively and recorded a negative operating cash flows of RM8,387,056 and RM14,287,049 respectively for financial period from 1 August 2016 to 31 January 2018. The Group had a capital deficiency of RM9,329,599 and its total current liabilities exceeded its total current assets by RM31,919,349.

In addition, one of the subsidiaries was unable to meet its borrowings obligations during the financial period as disclosed in Notes 23 and 24 to the financial statements. Few principal bankers had issued letters of demand and statement of claim to the subsidiary. Certain creditors as disclosed in Note 39 had issued letters of demand to the Company due to long overdue debts.



These conditions indicate the existence of a material uncertainty which may cast significant doubt on the Group to continue as a going concern. Based on the management plan, the ability of the Group and the Company to continue as going concerns is dependent upon:

(a) successful in disposing the assets to repay the outstanding debts;(b) successful in negotiation with creditors on an amicable solution to their demands;(c) continuing support from a Director of the Company; and(d) achieving sustainable and viable operations

In the event that these are not forthcoming, the Group and the Company may not be able to realise its assets and discharge its liabilities in the normal course of business. Accordingly, the financial statements may require adjustments relating to the recoverability and classification of recorded assets and liabilities that may be necessary should the Group and the Company be unable to continue as going concerns.

3. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The financial statements of the Group and the Company have been prepared in accordance with the Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards (“IFRSs”), and the requirements of the Companies Act, 2016 in Malaysia.

Application of New and Revised Financial Reporting Standards

In the current financial year, the Group and the Company has applied a number of new and revised MFRSs issued by Malaysian Accounting Standards Board (“MASB”) that are relevant to its operations and effective for annual financial periods beginning on or after 1 January 2017 and 2018 as follows:

Amendments to MFRS 107 Disclosure InitiativeAmendments to MFRS 112 Recognition of Deferred Tax Assets for Unrealised LossesAmendments to MFRSs Annual Improvements to MFRSs 2014-2016 CycleMFRS 9 Financial InstrumentsMFRS 15 Revenue from Contracts with CustomersAmendments to MFRSs Annual Improvements to MFRSs 2014-2016 Cycle

The adoption of these Standards will have no material impact on the financial statements of the Group and the Company in the period of initial application except as disclosed below:

MFRS 9 Financial Instruments

MFRS 9 (IFRS 9 issued by IASB in November 2009) introduced new requirements for the classification and measurement of financial assets. MFRS 9 (IFRS 9 issued by IASB in October 2010) includes requirements for the classification and measurement of financial liabilities and for de-recognition, and in February 2015, the new requirements for general hedge accounting was issued by MASB. Another revised version of MFRS 9 was issued by MASB-MFRS 9 (IFRS 9 issued by IASB in July 2015) mainly to include (a) impairment requirements for financial assets and (b) limited amendments to the classification and measurement requirements by introducing a ‘fair value through other comprehensive income’ (FVTOCI) measurement category for certain simple debt instruments.

Key requirements of MFRS 9:

(a) All recognised financial assets that are within the scope of MFRS 139 Financial Instruments: Recognition and Measurement are required to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash


53FINANCIAL

STATEMENTS

flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. Debt instruments that are held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets, and that have contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, are measured at FVTOCI. All other debt investments and equity investments are measured at their fair value at the end of subsequent accounting periods.

In addition, under MFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognised in profit or loss.

(b) With regard to the measurement of financial liabilities designated as at fair value through profit or loss, MFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s credit risk are not subsequently reclassified to profit or loss. Under MFRS 139, the entire amount of the change in the fair value of the financial liability designated as fair value through profit or loss is presented in profit or loss.

(c) In relation to the impairment of financial assets, MFRS 9 requires an expected credit loss model, as opposed to an incurred credit loss model under MFRS 139. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognised.

(d) The new general hedge accounting requirements retain the three types of hedge accounting mechanisms currently available in MFRS 139. Under MFRS 9, greater flexibility has been introduced to the types of transactions eligible for hedge accounting, specifically broadening the types of instruments that qualify for hedging instruments and the types of risk components of non-financial items that are eligible for hedge accounting. In addition, the effectiveness test has been overhauled and replaced with the principle of an ‘economic relationship’. Retrospective assessment of hedge effectiveness is also no longer required. Enhanced disclosure requirements about an entity’s risk management activities have also been introduced.

The Group and the Company are currently assessing the impact of MFRS 9 and plans to adopt the new standard on the required effective date.

MFRS 15 Revenue from Contracts with Customers

MFRS 15 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. MFRS 15 will supersede the current revenue recognition guidance including MFRS 118 Revenue, MFRS 111 Construction Contracts and the related Interpretations when it becomes effective.

The core principle of MFRS 15 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the Standard introduces a 5-step approach to revenue recognition:

(a) Step 1 : Identify the contract(s) with a customer.(b) Step 2 : Identify the performance obligations in the contract(s).(c) Step 3 : Determine the transaction price.(d) Step 4 : Allocate the transaction price to the performance obligations in the contract(s).(e) Step 5 : Recognise revenue when (or as) the entity satisfies a performance obligation.



Under MFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive guidance has been added in MFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures are required by MFRS 15.

The Group and the Company are currently assessing the impact of MFRS 15 and plans to adopt the new standard on the required effective date.

Standards in Issue But Not Yet Effective

MFRS 16 Leases1

Amendments to MFRS 9 Prepayment Features with Negative Compensation1

Amendments to MFRSs Annual Improvements to MFRSs 2015-2017 Cycle¹MFRS 128 Long-term Interests in Associates and Joint Ventures1

MFRS 17 Insurance contracts2

1 Effective for annual periods beginning on or after 1 January 2019, with earlier application permitted.2 Effective for annual periods beginning on or after 1 January 2021, with earlier application permitted.

The Group anticipates that the abovementioned Standards will be adopted in the annual financial statements of the Group when they become effective.

Effective for annual periods beginning on or after 1 January 2019

MFRS 16 Leases

MFRS 16 Leases supersedes MFRS 117 Leases and the related interpretations. Under MFRS 16, a lease is a contract (or part of a contract) that conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

MFRS 16 eliminates the classification of leases by the lessee as either finance leases (on balance sheet) or operating leases (off-balance sheet). MFRS 16 requires a lessee to recognise a “right-of-use” of the underlying assets and lease liability reflecting future lease payments for most leases.

The right-of-use asset is depreciated in accordance with the principle in MFRS 116 Property, Plant and Equipment and the lease liability is accreted over time with interest expense recognised in the income statement.

For lessors, MFRS 16 retains most of the requirements in MFRS 117. Lessors continue to classify all leases as either operating leases or finance leases, and account for them differently.

A lessee can choose to apply the standard using either a full retrospective or a modified retrospective transition approach. MFRS 16 is effective for annual periods beginning on or after 1 January 2019, with early application permitted, but not before an entity applies MFRS 15.

The Group is in the process of assessing the impact on the financial statements arising from the above standards.


55FINANCIAL

STATEMENTS

4. SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The financial statements of the Group have been prepared under the historical cost convention. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group and the Company take into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.

Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of FRS 2, leasing transactions that are within the scope of FRS 117, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in FRS 102 or value in use in FRS 136.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can assess at the measurement date;

• Level 2 inputs are inputs other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

• Level 3 inputs are unobservable inputs for the asset or liability.

Foreign Currency Transactions and Translations

Transactions in foreign currencies are initially recorded at the functional currency rates prevailing at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange ruling at the reporting date.

All differences are taken to the profit or loss.

Basis of consolidation

Subsidiaries

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

Control is defined as follows:

• Control exists when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

• Potential voting rights are considered when assessing control only when such rights are substantive.



• The Company considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return.

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

The accounting policies of subsidiaries are changed when necessary to align them with the policies adopted by the Group.

Business combinations

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

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

• the fair value of the consideration transferred; plus

• the recognised amount of any non-controlling interests in the acquiree; plus

• if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less

• the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

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

For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date. Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

Associates

Associates are entities, including unincorporated entities, in which the Group has significant influence, but not control, over the financial and operating policies.

Investments in associates are accounted for in the consolidated financial statements using the equity method less any impairment losses. The cost of the investment includes transaction costs. The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of the associates, after adjustments, if any, to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases.

When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that interest including any long-term investments is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the associate.

When the Group ceases to have significant influence over an associate, any retained interest in the former associate at the date when significant influence is lost is measured at fair value and this amount is regarded as the initial carrying amount of a financial asset. The difference between the fair value of any retained interest plus proceeds from the interest disposed of and the carrying amount of the investment at the date when equity method is discontinued is recognised in the profit or loss.


57FINANCIAL

STATEMENTS

When the Group’s interest in an associate decreases but does not result in a loss of significant influence, any retained interest is not re-measured. Any gain or loss arising from the decrease in interest is recognised in profit or loss. Any gains or losses previously recognised in other comprehensive income are also reclassified proportionately to the profit or loss if that gain or loss would be required to be reclassified to profit or loss on the disposal of the related assets or liabilities.

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

Joint arrangements

Joint arrangements are arrangements of which the Group has joint control, established by contracts requiring unanimous consent for decisions about the activities that significantly affect the arrangements’ returns.

Joint arrangements are classified and accounted for as follows:

• A joint arrangement is classified as “joint operation” when the Group or the Company has rights to the assets and obligations for the liabilities relating to an arrangement. The Group and the Company account for each of its share of the assets, liabilities and transactions, including its share of those held or incurred jointly with the other investors, in relation to the joint operation.

• A joint arrangement is classified as “joint venture” when the Group has rights only to the net assets of the arrangements. The Group accounts for its interest in the joint venture using the equity method.

Non-controlling interests

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

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

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

Unrealised gains arising from transactions with equity-accounted associates and joint ventures are eliminated against the investment to the extent of the Group’s interest in the investees. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.



Foreign currency

Foreign currency transactions

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

Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are retranslated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the reporting date except for those that are measured at fair value that are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments, which are recognised in other comprehensive income.

Operations denominated in functional currencies other than Ringgit Malaysia (“RM”)

The assets and liabilities of operations denominated in functional currencies other than RM, including goodwill and fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the reporting period, except for goodwill and fair value adjustments arising from business combinations before 1 January 2006 which are reported using the exchange rates at the dates of the acquisitions. The income and expenses of foreign operations, are translated to RM at exchange rates at the dates of the transactions.

Foreign currency differences are recognised in other comprehensive income and accumulated in the foreign exchange translation reserve (“FETR”) in equity. When a foreign operation is disposed of, such that control, significant influence or joint control is lost, the cumulative amount in the FETR related to that foreign operation is reclassified to profit or loss as part of the profit or loss on disposal.

When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

In the consolidated financial statements, when settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are presented in the FETR in equity.

Financial instruments

Initial recognition and measurement

A financial asset or a financial liability is recognised in the statement of financial position when, and only when, the Group becomes a party to the contractual provisions of the instrument.

A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument.


59FINANCIAL

STATEMENTS

Financial instrument categories and subsequent measurement

The Group and the Company categorise financial instruments as follows:

Financial assets

(a) Loans and receivables

Loans and receivables category comprises debt instruments with fixed and determinable payment that are not quoted in an active market.

Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective interest method.

(b) Available-for-sale financial assets

Available-for-sale category comprises investment in equity and debt securities instruments that are not held for trading.

Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost. Other financial assets categorised as available-for-sale are subsequently measured at their fair values with the gain or loss recognised in other comprehensive income, except for impairment losses, foreign exchange gains and losses arising from monetary items which are recognised in profit or loss. On derecognition, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity into profit or loss. Interest calculated for a debt instrument using the effective interest method is recognised in profit or loss.

All financial assets are subject to review for impairment.

Financial liabilities

All financial liabilities are subsequently measured at amortised cost.

Equity Instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group and the Company are recognised at the proceeds received, net of direct issue costs. Ordinary shares and warrants are equity instruments.

(a) Ordinary Shares

Ordinary shares are recorded at the proceeds received, net of direct attributable transactions costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period which they are declared.

(b) Warrants

Warrants are classified as equity instruments. The issuance of ordinary shares upon exercise of the warrants is treated as new subscription of ordinary shares for a consideration equivalent to the exercise price of the warrants.

Derecognition

A financial asset or a part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or



substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in profit or loss.

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

Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost less any accumulated depreciation and any accumulated impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged between knowledgeable willing parties in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment is based on the quoted market prices for similar items when available and replacement cost when appropriate.

When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net within “other operating incomes” and “other operating expenses” respectively in profit or loss.

(ii) Subsequent costs

The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group or the Company, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

(iii) Depreciation

Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed, and if a component has a useful life that is different from the remainder of that asset, then that component is depreciated separately.


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Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Freehold land is not depreciated. Property, plant, and equipment under construction are not depreciated until the assets are ready for their intended use.

The estimated useful lives for the current and comparative periods are at the following annual rates:

Freehold buildings 2%Leasehold buildings 10%Leasehold improvement on building 50%Plant and machinery, moveable cabins and tool implements 6% - 33%Computers 20%Computer software 10%Electrical installation and renovation 10%Air-conditioner, signboard, furniture and fittings 10%Motor vehicles and crane 20%Flying equipment and office equipment 10%Simulators 10%Refueller and skid tank 10%Aircrafts 4%Aircrafts engines 50%

Depreciation methods, useful lives and residual values are reviewed at the end of the reporting period, and adjusted as appropriate.

Leased assets

(i) Finance lease

As lessee

Leases in terms of which the Group assume substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

As lessor

The Group shall recognise assets held under a finance lease in its statement of financial position and present them as a receivable at an amount equal to the net investment in the lease.

Under a finance lease substantially all the risks and rewards incidental to legal ownership are transferred by the Group, and thus the lease payment receivable is treated by the Group as repayment of principal and finance income to reimburse and reward the Group for its investment and services.



Initial direct costs are often incurred by the Group and include amounts such as commissions, legal fees and internal costs that are incremental and directly attributable to negotiating and arranging a lease. These costs are included in the initial measurement of the finance lease receivable and reduce the amount of income recognised over the lease term.

(ii) Operating lease

Leases, where the Group or the Company does not assume substantially all the risks and rewards of ownership are classified as operating leases and, except for property interest held under operating lease, the leased assets are not recognised in the statement of financial position. Property interest held under an operating lease, which is held to earn rental income or for capital appreciation or both, is classified as investment property and measured using fair value model.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred. Leasehold land which in substance is an operating lease is classified as prepaid lease payments.

Intangible Assets

Intangible assets acquired in a business combination

Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

Intangible asset acquired separately

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.

Derecognition of intangible assets

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.

At each reporting date, the Group assesses whether there is any indication of impairment. If such indications exist, the carrying amount of intangible assets is assessed and written down immediately to its recoverable amount. Accounting policy on the impairment of other assets is as stated in Note 3.

Offsetting financial instruments

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


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Goodwill

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any.

For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in the subsequent periods.

On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Deferred costs

Deferred costs relate to training expenses incurred for sponsored students over 18 months under the course duration. Such costs are amortised on a straight line method over 5 years after the completion of sponsored students’ course as the sponsored students are bound for 5 years. In the case of breach of contract, all the related costs will be charged to profit or loss.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on a first-in-first-out basis and includes all expenses incurred in bringing the inventories to their present location and condition which consists of cost of purchase and transportation cost.

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

Property development costs

Property development costs comprise all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities. Costs consist of land and construction costs and other development costs including related overheads and capitalised borrowing costs.

When the financial outcome of a development activity can be reliably estimated, development revenue and costs are recognised in the profit or loss by reference to the stage of development activity at the reporting date.

When the financial outcome of a development activity cannot be reliably estimated, development revenue is recognised only to the extent of development costs incurred that is probable and will be recoverable, and development costs on properties sold are recognised as an expense in the period in which they are incurred.

Any expected loss on a development project is recognised as an expense immediately.



Property development costs not recognised as an expense is recognised as an asset, which is measured at the lower of cost and net realisable value.

Accrued billings as current assets represent the excess of revenue recognised in the profit or loss over billings to purchasers. Progress billings as current liabilities represent the excess of billings to purchasers over revenue recognised in profit or loss.

Non-current asset held for sale

Non-current asset that is expected to be recovered primarily through sale rather than through continuing use is classified as held for sale.

Classification of the asset as held for sale occurs only when the asset is available for immediate sale in its present condition subject only to terms that are usual and customary and the sale must be highly probable. Management must be committed to a plan to sell the assets which are expected to qualify for recognition as a completed sale within one year from the date of classification. Action required to complete the plan should indicate that it is unlikely that significant changes to the plan will be made or the plan will be withdrawn.

Immediately before classification as held for sale, the asset is remeasured in accordance with the Company’s accounting policies. Thereafter generally the asset is measured at the lower of its carrying amount and fair value less costs to sell.

Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.

In addition, equity accounting of equity accounted associate ceases once classified as held for sale.

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits placed with licensed banks. For the purpose of the statements of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

Impairment

(i) Financial assets

All financial assets (except for investments in subsidiaries, investments in associates and joint ventures) are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised. For an investment in an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment. If any such objective evidence exists, then the impairment loss of the financial asset is estimated.

For the determination of impairment on receivables, the Group assesses individually each receivable whether objective evidence of impairment exists at the end of each reporting period. An impairment loss in respect of loans and receivables is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account.


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An impairment loss in respect of loans and receivables is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account.

An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured as the difference between the asset’s acquisition cost (net of any principal repayment and amortisation) and the asset’s current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an available-for-sale financial asset has been recognised in other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity to profit or loss.

An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the financial asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.

Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available for sale is not reversed through profit or loss.

If, in a subsequent period, 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, to the extent that the asset’s carrying amount does not exceed what the carrying amount would have been, had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss.

(ii) Other assets

The carrying amounts of other assets (except for inventories, amount due from contract customers, deferred tax assets and investment property measured at fair value) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill and intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment and at least annually, and whenever there is an indication that the asset may be impaired.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units. Subject to an operating segment ceiling test, for the purpose of goodwill impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to the group of cash-generating units that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or cash-generating unit is the greater of its value-in-use and its fair value less costs of disposal. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit.



An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its estimated recoverable amount.

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (group of cash-generating units) and then to reduce the carrying amounts of the other assets in the cash-generating unit (groups of cash-generating units) on a pro rata basis.

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

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments.

Share capital represents the nominal value of shares that have been issued.

Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

Warrant reserve is valued based on the theoretical fair value which was arrived by using Black Scholes Option Pricing Model. The issuance of the ordinary shares upon exercise of the warrants is treated as new subscription of ordinary shares for the consideration equivalent to the exercise price of the warrants.

Discount on shares is a reserve account that is created to preserve the par value of the ordinary shares. Unappropriated profits/accumulated losses include all current period and prior years’ unappropriated profits/accumulated losses. All transactions with owners of the Company are recorded separately within equity.

Employee benefits

(i) Short-term employee benefits

Short-term employee benefits obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.


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(ii) Defined contribution plans

Defined contribution plans are post-employment benefit plans under which the Group and the Company pay fixed contributions into independent entities of funds and will have no legal or constructive obligation to pay further contribution if any of the funds do not hold sufficient assets to pay all employees’ benefits relating to employees’ services in the current and preceding financial period/years.

Such contributions are recognised as expenses in the profit or loss as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund (“EPF”).

(iii) Defined benefit plans

The Group’s net obligation in respect of defined benefit plan of an overseas subsidiarys is calculated by estimating the amount of future benefit that employees have earned in the current and prior periods and discounting that amount.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Group, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, are recognised immediately in other comprehensive income. The Group determines the net interest expense or income on the net defined liability for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then net defined benefit liability, taking into account any changes in the net defined benefit liability during the period as a result of contributions and benefit payments, if any.

Net interest expense and other expenses relating to defined benefit plans are recognised in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Group recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.

Provisions

Provisions are recognised when there is a present legal or constructive obligation that can be estimated reliably, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses.

Any reimbursement that the Group or the Company can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provisions.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provisions are reversed. Where the effect of the time of money is material, provisions are discounted using a current pre-tax



rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provisions due to the passage of time is recognised as a finance cost.

Deferred income

Deferred income represents course fee billed in advance whereas the services have not been rendered as at reporting date.

Revenue and other income recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the Company and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable.

i) Management fees

Management fees are recognised when services are rendered.

ii) Course fees

Revenue from course fees is recognised over the period of the course in profit or loss.

iii) Rendering of services

Revenue is recognised upon rendering of services and when the outcome of the transaction can be estimated reliably.

iv) Rental income

Rental income is accounted for on a straight-line basis over the lease terms.

v) Interest income

Interest income is recognised as it accrues using the effective interest method in profit or loss except for interest income arising from temporary investment of borrowings taken specifically for the purpose of obtaining a qualifying asset which is accounted for in accordance with the accounting policy on borrowing costs.

vi) Construction contracts

Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payments, to the extent that it is probable that they will result in revenue and can be measured reliably. As soon as the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognised in profit or loss in proportion to the stage of completion of the contract. Contract expenses are recognised as incurred unless they create an asset related to future contract activity. The stage of completion is assessed by reference to the proportion that contract costs incurred for work performed to-date bear to the estimated total contract costs.

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable. An expected loss on a contract is recognised immediately in profit or loss. Significant judgement is exercised in determining the percentage of completion, the extent of the costs incurred, the estimated total contract value and costs, as well as the recoverability of the contract projects.


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vii) Management fees

Management fees are recognised when services are rendered.

Borrowing costs

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

Income tax

Income tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the financial year. Taxable profit differs from profit as reported in the statement of profit or loss and other comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company’s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that sufficient future taxable profits will be available against which those deductible temporary differences, unused tax losses and unused tax credits can be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.



The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is probable that sufficient future taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax for the year

Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items that are recognised outside profit or loss (whether in other comprehensive income or directly in equity), in which case the current and deferred tax is also recognised in other comprehensive income or directly in equity respectively.

Goods and Service Tax

Goods and Services tax (“GST”) is a consumption tax based on value-added concept. GST is imposed on goods and services at every production and distribution stage in the supply chain including importation of goods and services, at the applicable tax rate of 6%. Input GST that the Company paid on purchases of business inputs can be deducted from output GST.

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

• where the GST incurred in a purchase of assets or services is not recoverable from the authority, in which case the GST is recognized as part of the cost of acquisition of the assets or as part of the expense items as applicable: and

• receivables and payables that are stated with the amount of GST included.

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

Earnings per ordinary share

The Group presents basic and diluted earnings per share data for its ordinary shares (“EPS”).

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.Diluted EPS, if any, is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which comprise of warrants and options.

Operating segments

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


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Contingent liabilities

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

Related Parties

A related party is a person or entity that is related to the Company. A related party transaction is a transfer of resources, services or obligations between the Company and its related party, regardless of whether a price is charged.

(a) A person or a close member of that person’s family is related to the Company if that person:

(i) has control or joint control over the Company; or

(ii) has significant influence over the Company; or

(iii) is a member of the key management personnel of the immediate or ultimate holding companies of the Company, or the Company.

(b) An entity is related to the Company if any of the following condition applies:

(i) the entity and the Company are members of the same group; or

(ii) one entity is an associate or joint venture of the other entity; or

(iii) both entities are joint ventures of the same third party; or

(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity; or

(v) the entity is a post-employment benefit plan for the benefits of employees of either the Company or an entity related to the Company; or

(vi) the entity is controlled or jointly-controlled by a person identified in (a) above; or

(vii) a person identified in (a)(i) above has significant influence over the entity or is a member of the key management personnel of the immediate or ultimate holding companies of the Company; or

(viii) the entity or any member of a group of which it is part of provides key management personnel services to the Company or to the immediate or ultimate holding companies of the Company.

5. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group and of the Company’s accounting policies, which are described in Note 4, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.



The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgements in applying the Group’s and the Company’s accounting policies

In the process of applying the Group’s and the Company’s accounting policies, which are described in Note 4 above, management is of the opinion that there are no instances of application of judgement which are expected to have a significant effect on the amounts recognised in the financial statements.

Key sources of estimation uncertainty

Information about the significant estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income, and expenses are discussed below.

Useful lives of depreciable assets

Property, plant and equipment are depreciated on a straight line basis over their useful life. Management estimates the useful lives of the plant and equipment to be within 2 to 50 years and reviews the useful lives of the depreciable assets at each reporting date. Changes in the expected level of usage and technological developments could impact the economic useful life and the residual values of these assets, therefore future depreciation charges could be revised.

The carrying amount of the Group’s and the Company’s property, plant and equipment at the reporting date is disclosed in Note 6 to the financial statements.

Inventories

Inventories are measured at the lower of cost and net realisable value. In estimating net realisable value, management takes into account the most reliable evidence available at the times the estimates are made.

Construction contract

Construction contract accounting requires reliable estimation of the cost to complete the contract and reliable estimate of the stage of contract completion. Using experience gained on each contract and taking into account of the expectation of the time and material required to complete the contract, management used budgeting tools to estimate the profitability of the contract at any time.

Construction contract accounting requires that variations, claims and incentive payments only be recognised as contract revenue to the extent that it is probable that they will be accepted by the customers. As the approval process often takes some time, judgment is required to be made of its probability and revenue is recognised accordingly.

Impairment of non-financial assets

An impairment loss is recognised for the amount by which the assets or cash-generating units exceeds its recoverable amount. To determine the recoverable amount, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. In the process of measuring expected future cash flows, management makes assumptions about future operating results. The actual results may vary, and may cause significant adjustments to the Company’s assets within the next financial period.


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

Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value-in-use of the subsidiary companies to which goodwill is allocated. Estimating a value-in-use amount requires management to make an estimate of the expected future cash flows from the subsidiary companies and also to choose a suitable discount rate in order to calculate the present value of those cash flows.

Impairment of loans and receivables

The Company 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 Company 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 of assets with similar credit risk characteristics.

Deferred tax assets

Deferred tax assets are recognised for all unabsorbed business losses and unutilised capital allowances to the extent that it is probable that future taxable profits will be available against which unabsorbed business losses and unutilised capital allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

Income taxes

Significant judgement is involved in determining the Company-wide provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognises tax liabilities based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the period in which such determination is made.

Leases

In applying the classification of leases in MFRS 117, management considers the lease transaction is not always conclusive, management uses judgement in determining whether the lease is a finance lease arrangement that transfers substantially all the risks and rewards incidental to ownership, whether the lease term is for the major part of the economic life of the asset even if title is not transferred and others in accordance with MFRS 117 Leases.



Leasehold

building

Freehold

building

Leasehold improvement on building

Plant and

machinery,

moveable cabin

and tools

implements

Computers

and

computer

software

Electrical

installation

and

renovation

Air-

conditioner,

signboard, furniture

and fittings

Motor

vehicles

and

crane

Flying

equipment

and

office

equipment

Simulators

and

books

Refueller and

skidtank

Aircrafts

Aircraft

engine

Construction in

progress

Total

RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM

GROUP Cost

As of 1 August 2016 10,115,968 1,815,000 59,618 2,520,223 2,112,231 1,334,920 883,231 2,343,895 1,294,752 3,828,501 347,841 34,543,755 4,759,742 225,336 66,185,013 Additions 1,097,499 - - 892,007 254,675 784,542 76,493 - 45,589 849,809 - 7,128,666 - 209,915 11,339,194 Disposals - (815,000) - (440,088) - - (19,669) (54,600) (35,059) - (347,841) (10,677,664) - - (12,389,921) Written- off (10,523,467) - - - (1,608,764) (2,002,869) (758,968) (929,121) (131,210) - - - - - (15,954,399) Transfers - - - (1,564,980) (593,544) 225.336 - - (192,762) (3,828,501) - (17,161,660) - (225,336) (23,341,447) Translation - - - - - (1,159) - - - (1,507) - - - - (2,666) As of 31 January 2018 690,000 1,000,000 59,618 1,407,162 164,598 340,770 181,087 1,360,174 981,310 848,302 - 13,833,097 4,759,742 209,915 25,835,774 Accumulated depreciation As of 1 August 2016 7,727,608 187,733 59,618 1,024,143 1,634,582 1,099,480 636,588 1,846,893 529,821 2,695,298 220,332 8,759,729 4,759,742 - 31,181,567 Charge for the period 882,327 32,408 - 884,219 257,438

85,366

88,316 316,605 98,864 347,821 36,871 1,589,707 - - 4,619,942

Disposals - (80,141) (13,764) (220,189) - - (15,051) (39,130) (11,248) - (257,203) (3,958,152) - - (4,594,878) Written- off (8,527,135) - - - (1,517,539) (1,158,816) (659,106) (881,322) (111,696) - - - - - (12,855,614) Transfers - - - (825,087) (386,423) - - - (62,130) (2,998,361) - (5,084,094) - - (9,356,095) Translation - - 734 (53,086) 1,670 127 6,439 - (1,843) (1,308) - - - - (47,267) As of 31 January 2018 82,800 140,000 46,588 810,000

(10,272) 26,157 57,186 1,243,046 441,768 43,450 - 1,307,190 4,759,742 - 8,947,655

Accumulated impairment As of 1 August 2016 - - - - - - - - - - - 3,144,910 - - 3,144,910 Recognised - - - 138,110 - 31,445 - - - - - 1,353,481 - - 1,523,036 As of 31 January 2018 - - - 138,110 -

31,445

-

-

-

-

- 4,498,391 - - 4,667,946

Net carrying Amount As of 31 January 2018 607,200 860,000 13,030 459,052 154,326 283,168 123,901 117,128 539,542 804,852 - 8,027,516 - 209,915 12,219,173

(Forward)

6. PROPERTY, PLANT AND EQUIPMENT


75

Leasehold

building

Freehold

building


Plant and

machinery,

moveable cabin

and tools

implements

Computers

and

computer

software

Electrical

installation

and

renovation

Air-

conditioner,

signboard, furniture

and fittings

Motor

vehicles

and

crane

Flying

equipment

and

office

equipment

Simulators

and

books

Refueller and

skidtank

Aircrafts

Aircraft

engine

Construction in

progress

Total

RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM

GROUP Cost

As of 1 August 2016 10,115,968 1,815,000 59,618 2,520,223 2,112,231 1,334,920 883,231 2,343,895 1,294,752 3,828,501 347,841 34,543,755 4,759,742 225,336 66,185,013 Additions 1,097,499 - - 892,007 254,675 784,542 76,493 - 45,589 849,809 - 7,128,666 - 209,915 11,339,194 Disposals - (815,000) - (440,088) - - (19,669) (54,600) (35,059) - (347,841) (10,677,664) - - (12,389,921) Written- off (10,523,467) - - - (1,608,764) (2,002,869) (758,968) (929,121) (131,210) - - - - - (15,954,399) Transfers - - - (1,564,980) (593,544) 225.336 - - (192,762) (3,828,501) - (17,161,660) - (225,336) (23,341,447) Translation - - - - - (1,159) - - - (1,507) - - - - (2,666) As of 31 January 2018 690,000 1,000,000 59,618 1,407,162 164,598 340,770 181,087 1,360,174 981,310 848,302 - 13,833,097 4,759,742 209,915 25,835,774 Accumulated depreciation As of 1 August 2016 7,727,608 187,733 59,618 1,024,143 1,634,582 1,099,480 636,588 1,846,893 529,821 2,695,298 220,332 8,759,729 4,759,742 - 31,181,567 Charge for the period 882,327 32,408 - 884,219 257,438

85,366

88,316 316,605 98,864 347,821 36,871 1,589,707 - - 4,619,942

Disposals - (80,141) (13,764) (220,189) - - (15,051) (39,130) (11,248) - (257,203) (3,958,152) - - (4,594,878) Written- off (8,527,135) - - - (1,517,539) (1,158,816) (659,106) (881,322) (111,696) - - - - - (12,855,614) Transfers - - - (825,087) (386,423) - - - (62,130) (2,998,361) - (5,084,094) - - (9,356,095) Translation - - 734 (53,086) 1,670 127 6,439 - (1,843) (1,308) - - - - (47,267) As of 31 January 2018 82,800 140,000 46,588 810,000

(10,272) 26,157 57,186 1,243,046 441,768 43,450 - 1,307,190 4,759,742 - 8,947,655

Accumulated impairment As of 1 August 2016 - - - - - - - - - - - 3,144,910 - - 3,144,910 Recognised - - - 138,110 - 31,445 - - - - - 1,353,481 - - 1,523,036 As of 31 January 2018 - - - 138,110 -

31,445

-

-

-

-

- 4,498,391 - - 4,667,946

Net carrying Amount As of 31 January 2018 607,200 860,000 13,030 459,052 154,326 283,168 123,901 117,128 539,542 804,852 - 8,027,516 - 209,915 12,219,173

(Forward)

FINANCIAL STATEMENTS


76

Leasehold building

Freehold building


Plant and machinery,

moveable cabin and tools

implements

Computers

and computer software

Electrical

installation and

renovation

Air-conditioner, signboard, furniture

and fittings

Motor

vehicles and

crane

Flying equipment

and office

equipment

Simulators

Refueller and

skidtank

Aircrafts

Aircraft engine

Construction in progress

Total RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM

GROUP Cost

As of 1 April 2015 10,115,968 1,815,000 63,673 4,008,345 1,995,998 1,309,494 857,559 2,224,620 1,191,685 3,828,501 347,841 34,442,733 4,759,742 - 66,961,159 Additions - - 22,004 331,638 115,776 25,426 23,983 119,275 102,972 - - 1,235,580 - 225,336 2,201,990

Disposals - - (27,346) (1,824,632) - - - - - - - - - - (1,851,978)

Written-off - - - - - - - - - - - (1,134,558) - - (1,134,558)

Transfers - - 1,287 4,872 457 - 1,689 - 95 - - - - - 8,400 As of 31 July 2016 10,115,968 1,815,000 59,618 2,520,223 2,112,231 1,334,920 883,231 2,343,895 1,294,752 3,828,501 347,841 34,543,755 4,759,742 225,336 66,185,013 Accumulated depreciation

As of 1 April 2015 6,452,413 139,333 24,835 761,193 1,164,254 957,702 525,919 1,310,334 388,539 2,252,631 174,641 7,146,261 4,339,072 - 25,637,127 Charge for the period 1,275,195 48,400 34,907 889,999 470,550

141,778

110,808 536,559 141,316 442,667 45,691 1,835,202 420,670 - 6,393,742

Disposals - - - (624,600) - - - - - - - - - - (624,600) Written-off - - - - - - - - - - - (221,734) - - (221,734) Transfers - - (124) (2,449) (222) - (139) - (34) - - - - - (2,968) As of 31 July 2016 7,727,608 187,733 59,618 1,024,143

1,634,582 1,099,480 636,588 1,846,893 529,821 2,695,298 220,332 8,759,729 4,759742 - 31,181,567

Accumulated impairment

As of 1 April 2015 - - - - - - - - - - - - - - -

Recognised - - - - - - - - - - - 3,144,910 - - 3,144,910 As of 31 July 2016 - - - - - - - - - - - 3,144,910 - - 3,144,910 Net carrying Amount As of 31 July 2016 2,388,360 1,627,267 - 1,496,080 477,649 235,440 246,643 497,002 764,931 1,133,203 127,509 22,639,116 - 225,336 31,858,536

(Forward)



77

Leasehold building

Freehold building


Plant and machinery,

moveable cabin and tools

implements

Computers

and computer software

Electrical

installation and

renovation

Air-conditioner, signboard, furniture

and fittings

Motor

vehicles and

crane

Flying equipment

and office

equipment

Simulators

Refueller and

skidtank

Aircrafts

Aircraft engine

Construction in progress

Total RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM

GROUP Cost

As of 1 April 2015 10,115,968 1,815,000 63,673 4,008,345 1,995,998 1,309,494 857,559 2,224,620 1,191,685 3,828,501 347,841 34,442,733 4,759,742 - 66,961,159 Additions - - 22,004 331,638 115,776 25,426 23,983 119,275 102,972 - - 1,235,580 - 225,336 2,201,990

Disposals - - (27,346) (1,824,632) - - - - - - - - - - (1,851,978)

Written-off - - - - - - - - - - - (1,134,558) - - (1,134,558)

Transfers - - 1,287 4,872 457 - 1,689 - 95 - - - - - 8,400 As of 31 July 2016 10,115,968 1,815,000 59,618 2,520,223 2,112,231 1,334,920 883,231 2,343,895 1,294,752 3,828,501 347,841 34,543,755 4,759,742 225,336 66,185,013 Accumulated depreciation

As of 1 April 2015 6,452,413 139,333 24,835 761,193 1,164,254 957,702 525,919 1,310,334 388,539 2,252,631 174,641 7,146,261 4,339,072 - 25,637,127 Charge for the period 1,275,195 48,400 34,907 889,999 470,550

141,778

110,808 536,559 141,316 442,667 45,691 1,835,202 420,670 - 6,393,742

Disposals - - - (624,600) - - - - - - - - - - (624,600) Written-off - - - - - - - - - - - (221,734) - - (221,734) Transfers - - (124) (2,449) (222) - (139) - (34) - - - - - (2,968) As of 31 July 2016 7,727,608 187,733 59,618 1,024,143

1,634,582 1,099,480 636,588 1,846,893 529,821 2,695,298 220,332 8,759,729 4,759742 - 31,181,567

Accumulated impairment

As of 1 April 2015 - - - - - - - - - - - - - - -

Recognised - - - - - - - - - - - 3,144,910 - - 3,144,910 As of 31 July 2016 - - - - - - - - - - - 3,144,910 - - 3,144,910 Net carrying Amount As of 31 July 2016 2,388,360 1,627,267 - 1,496,080 477,649 235,440 246,643 497,002 764,931 1,133,203 127,509 22,639,116 - 225,336 31,858,536

(Forward)




Tele- Computer Furniture Office Electrical communication and and fittings equipment fitting equipment equipment Total RM RM RM RM RM RM

COMPANY Cost As of 1 April 2015/1 August 2016 - - - - - -Additions 910 - 18,790 - - 19,700Transfers 65,156 6,076 - 3,928 140,937 216,097 As of 31 January 2018 66,066 6,076 18,790 3,928 140,937 235,797 Accumulated Depreciation As of 1 April 2015/1 August 2016 - - - - - -Charge for the period 8 - 626 - - 634Transfers 2,171 203 - 131 9,396 11,901 As of 31 January 2018 2,179 203 626 131 9,396 12,535 Net carrying Amount As of 31 July 2016 - - - - - - As of 31 January 2018 63,887 5,873 18,164 3,797 131,541 223,262

Included in the above property, plant, and equipment are:

(i) the net carrying amounts of assets pledged as securities for borrowings (Note 24) are as follows:

31.1.2018 31.7.2016Group RM RM

Freehold building 860,000 1,627,267Leasehold building 607,200 626,750Aircrafts 8,027,516 12,061,740 Net carrying amount 9,494,716 14,315,757


79FINANCIAL

STATEMENTS

(ii) the net carrying amount of property, plant, and equipment acquired under finance lease arrangements are as follows:

31.1.2018 31.7.2016Group RM RM

Motor vehicles 117,128 481,533Flying equipment 539,542 252,616Simulators 802,469 893,363 Net carrying amount 1,459,139 1,627,512

(iii) In current financial period, the subsidiaries carried out a review of the recoverable amount of its aircrafts as the Company is making gross loss. An impairment of RM 1,353,481 (31.7.2016: RM 3,144,910), representing the write down of aircrafts to their recoverable amount is recognised in “other expenses” line item of the statement of profit or loss and other comprehensive income. The recoverable amount is determined based on fair value less costs to sell.

Fair value information

Fair value of aircrafts is categorised as follows:

31.1.2018 31.7.2016Group RM RMLevel 2 Aircrafts 8,027,516 15,743,980

There were no transfers between Level 1 and Level 2 during the financial period.

Valuation processes applied by the Company for Level 2 fair value

The fair value of aircrafts is measured internally by management based on observable market information and generally derived using the sales comparison approach. Sales price of comparable aircrafts are adjusted for differences in key attributes such as year of manufacture. There is no change in the valuation technique during the financial period.



7. INVESTMENTS IN SUBSIDIARIES

Company 31.1.2018 31.7.2016 RM RM Unquoted shares, at cost At beginning of period 492,363 58,201,295Addition of equity in subsidiary/new subsidiaries - 26,850,004Disposal of subsidiary - (84,558,936) 492,363 492,363Less: Accumulated impairment losses (492,359) (492,359) At end of period 4 4

Movement in impairment account for unquoted shares: At beginning of period (492,359) (1,676,856)Reversal of impairment loss no longer required - 1,184,497 At end of period (492,359) (492,359)

Amount due from subsidiaries Amount due from subsidiaries 119,938,995 95,381,290Less: Accumulated impairment losses (54,083,347) (50,199,129) At end of period 65,855,648 45,182,161

Movement in impairment account for amount due from subsidiaries: At beginning of period (50,199,129) (354,332)Impairment loss recognised (3,884,218) (50,237,994)Reversal of impairment loss no longer required - 393,197 At end of period (54,083,347) (50,199,129)


81FINANCIAL

STATEMENTS

The details of the subsidiaries are as follows:

Name of subsidiaries Country of incorporation Principal activities

Proportion of ownership interest and voting power

held

31.1.2018 31.7.2016

% %

APFT Energy Sdn Bhd Malaysia Investment holding 100 100

APFT Aviation Sdn Bhd Malaysia Investment holding 100 100

Aero Dynamic Sdn Bhd (formerly known as APFT Express Sdn Bhd)

Malaysia Dormant 100 100

Subsidiaries of APFT Energy Sdn Bhd

PT Technic (M) Sdn Bhd Malaysia Mechanical engineering works for oil, gas and

petrochemical industries

51 51

PTTM Oil & Gas Sdn Bhd Malaysia Dormant 100 100

Subsidiaries of APFT Aviation Sdn Bhd

Asia Pacific Flight Training Sdn Bhd

Malaysia Flight education and training and

investment holding

100 100

APFT Engineering Sdn Bhd

Malaysia Maintenance, repair and overhaul services for

aircrafts

100 100

APFT Services Sdn Bhd Malaysia Renting of pilot training aircraft and unscheduled commercial air transport

operation and investment holding

100 100

APFT Maintenance Training Sdn Bhd

Malaysia Maintenance training service for aviation

industry

- 100

Subsidiary of Asia Pacific Flight Training Sdn Bhd

Asia Pacific Flight Training Academy Limited *

India Flight education and training

- 60

Subsidiary of APFT Services Sdn Bhd

APFT Charter Services Malaysia Sdn Bhd

Malaysia Dormant 100 100

* Not audited by Adam & Co


82

(a) Transaction during the period

i) the Group had on 8 September 2017 entered into a share sale agreement with GMR Hyderabad International Airport Limited for the disposal of 5,335,454 ordinary shares of RM 1 each representing 60% of the issued and paid up capital of Asia Pacific Academy Training Limited at a consideration of RM 4. The net carrying amount of the investment in Asia Pacific Academy Training Limited at the date of disposal was RM 2,954,586.

Upon the completion of the disposal on 8 September 2017, Asia Pacific Flight Training Academy Limited has ceased to be a subsidiary of the Asia Pacific Flight Training Sdn Bhd.

ii) the Group had on 6 October 2017 entered into a Share Sale Agreement with Paradigm Portfolio Sdn Bhd for the disposal of RM 3,000,000 ordinary shares of RM1 each representing 100% of the issued and paid up capital of APFT Maintenance Training Sdn Bhd at a consideration of RM 20,000. The net carrying amount of the investment in APFT Maintenance Training Sdn Bhd as at the date of disposal was RM 3,000,000.

Upon the completion of the disposal on 6 October 2017, APFT Maintenance Training Sdn Bhd has ceased to be a subsidiary of the APFT Aviation Sdn Bhd.

(b) Transaction during the previous period

i) the Company incorporated new wholly-owned subsidiaries with cash subscription of RM 2, represents 2 ordinary shares of RM 1 each in APFT Energy Sdn Bhd (“APFTE”).

ii) the Company incorporated new wholly-owned subsidiaries with cash subscription of RM 2, represents 2 ordinary shares of RM 1 each in APFT Aviation Sdn Bhd (“APFTA”).

iii) the Group acquired 2 ordinary shares of RM 1 each in PTTM Oil & Gas Sdn Bhd (“PTOG”), representing 100% of the total issued and paid up capital of PTOG, for a total cash consideration of RM 2.

iv) the Company subscribed additional 22,000,000 ordinary shares of RM 1 each in Asia Pacific Flight Training Sdn Bhd (“APFTSB”) for a total consideration of RM 22,000,000 and paid by way of capitalisation of advances to APFTSB.

v) The Company subscribed additional 4,850,000 ordinary shares of RM1 each in APFT Engineering Sdn Bhd (“APFTEG”) for a total consideration of RM4,850,000 and paid by way of capitalisation of advances to APFTEG.

vi) the Company subscribed additional 2,800,000 ordinary shares of RM 1 each for a total consideration of RM 2,800,000 and paid by-way of capitalisation of advances to APFT Maintenance Training Sdn Bhd (“AMTSB”).

vii) the Group subscribed additional 99,998 ordinary shares of RM 1 each in PTTM Oil & Gas Sdn Bhd (“PTOG”) for a total consideration of RM 99,998.

viii) the Group performed internal restructuring by transfer of 25,000,000 ordinary shares of RM 1 each in Asia Pacific Flight Training Sdn Bhd (“APFTSB”), representing 100% of the total issued and paid up capital of APFTSB, from the Company to APFT Aviation Sdn Bhd (“APFTA”) for a total consideration of RM 46,194,577.



83

ix) the Group performed internal restructuring by transfer of 5,000,000 ordinary shares of RM 1 each in APFT Engineering Sdn Bhd (“APFTEG”), representing 100% of the total issued and paid up capital of APFTEG, from the Company to APFT Aviation Sdn Bhd (“APFTA”) for a total consideration of RM 4,958,938.

x) the Group performed internal restructuring by transfer of 3,000,000 ordinary shares of RM 1 each in APFT Services Sdn Bhd (“APFTS”), representing 100% of the total issued and paid up capital of APFTS, from the Company to APFT Aviation Sdn Bhd (“APFTA”) for a total consideration of RM 2,805,421.

xi) the Group performed internal restructuring by transfer of 2,549,999 ordinary shares of RM 1 each in PT Technic (M) Sdn Bhd (“PTTM”), representing 51% of the total issued and paid up capital of PTTM, from the Company to APFT Energy Sdn Bhd (“APFTE”) for a total consideration of RM 30,600,000.

xii) the Group performed internal restructuring by transfer of 2,000,000 ordinary shares of RM 1 each in APFT Charter Services Sdn Bhd (“APFTCS”), representing 100% of the total issued and paid up capital of APFTCS, from the Asia Pacific Flight Training Sdn Bhd (“APFTSB”) to APFT Services Sdn Bhd (“APFTS”) for a total consideration of RM 2,000,000.

xiii) the Group performed internal restructuring by transfer of 3,000,000 ordinary shares of RM 1 each in APFT Maintenance Training Sdn Bhd (“APFTMT”), representing 100% of the total issued and paid up capital of APFTMT, from Asia Pacific Flight Training Sdn Bhd (“APFTSB”) to APFT Aviation Sdn Bhd (“APFTA”) for a total consideration of RM 3,000,000.



84

Material non-controlling (“NCI”) interests

Summarised financial information in respect of the Group’s subsidiaries that have material non-controlling interests are set out below:

Percentage of ownership interest and Carrying Loss voting interest amount of allocated to held by NCI (%) NCI NCI Group RM RM 31.1.2018 PT Technic (M) Sdn. Bhd. 49 (8,499,982) (2,862,122)Asia Pacific Flight Training Academy Limited 40 (1,430,562) (658,100)

(9,930,544) (3,520,222) 31.7.2016 PT Technic (M) Sdn. Bhd. 49 (5,637,860) (9,261,886)Asia Pacific Flight Training Academy Limited 40 (776,796) (609,918) (6,414,656) (9,871,804)

The summarised financial information below represents amounts before intragroup eliminations as follow:

Group 31.1.2018 31.7.2016 RM RM

PT Technic (M) Sdn Bhd Non-current assets 111,750 1,945,210Current assets 6,116,090 12,728,375 Total assets 6,227,840 14,673,585 Non-current liabilities - 211,252Current liabilities 23,574,743 25,968,171 Total liabilities 23,574,743 26,179,423 Capital deficiencies (17,346,903) (11,505,838)



85

Group 31.1.2018 31.7.2016 RM RMAsia Pacific Flight Training Academy Limited Non-current assets 2,627,652 775,699Current assets 1,599,169 1,905,541 Total assets 4,226,821 2,681,240 Non-current liabilities 104,812 36,493Current liabilities 7,698,415 4,586,739

Total liabilities 7,803,227 4,623,232 Capital deficiencies (3,576,406) (1,941,992)

8. INVESTMENTS IN ASSOCIATES

Group 31.1.2018 31.7.2016 RM RM

Unquoted shares, at cost At beginning of period - 1,622,725 Share of post-acquisition loss - (24,541) Transfer to non-current asset held for sale - (1,431,384) Transfer to other investments - (166,800) At end of period - -

9. OTHER INVESTMENTS Group

31.1.2018 31.7.2016 RM RM

Financial assets at fair value through profit or loss:Unquoted shares, at cost: At beginning of period 428,337 - Investment in mutual funds 1,499,987 261,537 Transfer from investment in associate (Note 8) - 166,800 Less: Written-off (166,800) - At end of period 1,761,524 428,337

Mutual funds are funds invested mainly in money market and fixed income instruments and are managed by investment management companies.

In previous year, the Group transfer from investment in associate, PT Trans Asia Pacific Aviation Training (“TAPAT”) which is involved in flight education and training as principal activities.



86

10. DEFERRED COSTS

Group 31.1.2018 31.7.2016 RM RM

Deferred costs 655,248 733,588Less: Written off - (78,340) 655,248 655,248Less: Accumulated amortisation (Note 30) (655,248) (378,941) - 276,307

Movement in amortisation account as follows: 31.1.2018 31.7.2016 RM RM At beginning of period (378,941) (227,710)Amortisation recognised (276,307) (174,733)Reversal - 23,502 At end of period (655,248) (378,941)

Represented by: Current - 131,050Non-current - 145,257 - 276,307

11. FIXED DEPOSITS WITH LICENSED BANKS

Group 31.1.2018 31.7.2016 RM RM

Fixed deposits 112,625 112,625

Included in deposits placed with licensed banks of the Group are pledged to financial institution for banking facilities granted to a subsidiary.

The weighted average effective interest rates range from 1.50% to 3.20% (2016: 1.50% to 3.20%) per annum.



87

12. GOODWILL

Group 31.1.2018 31.7.2016 RM RM

At beginning of period 31,305,779 31,305,779Less: Written-off (31,305,779) - - 31,305,779Less: Allowance for impairment loss - (12,674,752) At end of period - 18,631,027

Movement in allowance impairment account as follows: 31.1.2018 31.7.2016 RM RM At beginning of period (12,674,752) (10,000,000)Impairment loss recognised - (2,674,752)Impairment no longer required (12,674,752) - At end of period - (12,674,752)

Impairment testing for cash-generating units containing goodwill

For the purpose of impairment testing, goodwill is allocated to the Group’s operating divisions which represent the lowest cash-generating unit level within the Group at which the goodwill is monitored for internal management purposes.

The aggregate carrying amounts of goodwill allocated to each subsidiary are as follows:

Group 31.1.2018 31.7.2016 RM RM

Flight education and training industry - 20,191Engineering work for oil and gas industry - 18,610,836 - 18,631,027

The recoverable amount for goodwill was based on its value-in-use, determined by discounting the future cash flows generated from the continuing use of the Group’s cash-generating unit and was based on the following key assumptions:

Growth rate Discount rate 31.1.2018 31.7.2016 31.1.2018 31.7.2016 % % % % Engineering work for oil and gas industry - 3 - 9



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There is no carrying amount of the cash-generating unit during the period to determine (2016: flight education and training industry) amounting to RM Nil (2016: RM 20,191) was determined to be higher than its recoverable amount of RM Nil (2016: RM 20,191). Therefore, an impairment loss of RM Nil (2016: RM 2,674,752) was recognised in the profit or loss was due to written-off as disclosed in Note 39 (f) to the financial statements. With regards to the assessments of value-in-use of these cash-generating unit, management believes that no reasonably possible changes in any of the key assumptions would cause the carrying value of this unit to differ materially from their recoverable amounts except for the changes in prevailing operating environment which is not ascertainable.

13. INVENTORIES

Group 31.1.2018 31.7.2016 RM RM

Materials for students - 132,604Consumables 521,121 1,188,549 521,121 1,321,153 Recognised in profit or loss Inventories recognised as cost of services - 888,849

14. AMOUNT DUE FROM CONTRACT CUSTOMERS

Group 31.1.2018 31.7.2016 RM RM

Contract costs incurred to-date - 120,980,542Attributable profits recognised to-date - (4,342,364)Reversal of completed projects - (13,140,682) - 103,497,496Less: Progress billing issued to-date - (112,964,923) Reversal of completed project - 13,140,682 Amount due from contract customers - 3,673,255



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15. TRADE RECEIVABLES

Group 31.1.2018 31.7.2016 RM RM

Trade receivables 12,303,059 11,671,147Less: Allowance for impairment loss (4,508,688) (4,476,374) 7,794,371 7,194,773Retention sum - 1,752,023 7,794,371 8,946,796

Movement in allowance for impairment account as follows: 31.1.2018 31.7.2016 RM RM At beginning of period (4,476,374) (3,111,977)Impairment loss recognised (Note 30) (32,314) (2,093,231)Reversal (Note 30) - 728,834 At end of period (4,508,688) (4,476,374)

Trade receivables are non-interest bearing and normal trade credit terms granted by the Company is 14 to 60 days (2016: 14 to 60 days). They are recognized their by original invoiced amounts which represent their fair values on initial recognition.

Aging of trade receivables are categorised as follows:

Group 31.1.2018 31.7.2016 RM RM

Non-impaired: Not past due - 3,898,3221 - 30 days past due 114,555 26,995More than 61 days past due 12,188,504 9,497,853 12,303,059 13,423,170 Impaired: More than 90 days past due (4,508,688) (4,476,374) 7,794,371 8,946,796

In determining the recoverability of a trade receivable, the Company considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the end of reporting period. The concentration of credit risk is limited due to the customer base being large and unrelated.

The Group has trade receivables amounting to RM12,303,059 (2016: RM13,423,170) that are past due at the reporting date but not impaired. The Group has put in place a credit control measure for flight education and training segment whereby students will only be issued the flight training license and certificate upon full



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settlement of their outstanding fees. This will inevitably reduce chances of nonpayment of fees by students. For customers other than students, these relate to a number of independent customers from whom there is no recent history of default. No impairment has been made as the directors are of the view that the amounts are recoverable.

The Group’s policy is to make full allowance for all trade receivables that are in dispute, under legal action or where recoveries are considered to be doubtful.

The net carrying amount of trade receivables is considered a reasonable approximate of fair value. 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.

16. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

Group Company 31.1.2018 31.7.2016 31.1.2018 31.7.2016 RM RM RM RM Non-trade receivables 1,915,312 2,689,801 - 12,738Less: Allowance for impairment loss (276,184) (276,184) - - 1,639,128 2,413,617 - 12,738Deposits for purchase of land and buildings 91,429 520,000 - -Other deposits 240,934 877,436 48,630 4,203Prepayments 256,027 661,187 - - 2,227,518 4,472,240 48,630 16,941

Movement in allowance for impairment account as follows: Group

31.1.2018 31.7.2016 RM RM

At beginning of period (276,184) (92,770)Impairment loss recognised - (183,414) At end of period (276,184) (276,184)



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17. NON-CURRENT ASSET HELD FOR SALE

Group 31.1.2018 31.7.2016 RM RM

Transfer from investment in associate - 1,431,384 18. SHARE CAPITAL

Group and Company Number Number of shares Amount of shares Amount 31.1.2018 31.1.2018 31.7.2016 31.7.2016 RM RMAuthorised: Ordinary shares of RM0.05 each At beginning/end of period - - 10,000,000,000 500,000,000 Issued and fully paid up: Ordinary shares of RM0.05 each At beginning of period 477,332,785 23,866,639 315,202,761 63,040,552Issuance of shares @ RM0.20 each - - 94,560,000 18,912,000Settlement of debts owing to a director @ RM0.05 each 257,500,000 12,875,000 24,570,024 4,914,005Settlement of debts owing to creditors @ RM0.05 each 226,299,873 11,314,994 - -Par value reduction - - - (65,149,918)Issuance of shares @ RM0.05 each 71,500,000 3,575,000 43,000,000 2,150,000Issuance of shares @ RM0.0194 each 206,526,000 4,006,604 - -Issuance of shares @ RM0.0187 each 103,263,000 1,931,018 - - Ordinary shares of RM0.04 each At end of period 1,342,421,658 57,569,255 477,332,785 23,866,639



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The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.

The Company’s issued and fully paid-up share capital comprises ordinary shares with a par value of RM0.05 each. The new Companies Act 2016 (Act), which came into operation on 31 January 2017, introduces the “no par value” regime. Accordingly, the concepts of “authorised share capital” and “par value” have been abolished.

In accordance with the transitional provisions of the Act, the amount standing to the credit of the Company’s share premium account and capital redemption reserve has become part of the Company’s share capital. These changes do not have an impact on the number of shares in issue or the relative entitlement of any of the shareholders.

However, the Company has a period of 24 months from the effective date of the Act to use the existing balances credited in the share premium account and capital redemption reserves in a manner as specified by the Act. Upon effective date of the Companies Act, 2016 on 31 January 2017, the ordinary shares no longer have any par value.

During the financial year, the Company increased its issued and paid-up share capital from RM 23,866,639 to RM 57,569,255 by way of:

(i) issuance of 71,500,000 new ordinary shares for cash arising from the exercise of options under the Company’s ESOS;

(ii) issuance of 226,299,873 new ordinary shares of RM 0.05 each at the issue price of RM 0.05 through a creditors capitalisation for a total consideration of RM 11,314,994 as a partial settlement to creditors.

(iii) issuance of 257,500,000 new ordinary shares of RM 0.05 each at the issue price of RM0.05 through a directors capitalisation for a total consideration of RM 12,875,000 as a partial settlement of the amount due to Director.

(iv) issuance of 206,526,000 new ordinary shares of RM 0.20 each at the issue price of RM 0.0194 through a private placement for a total consideration of RM 4,006,604 for working capital purposes.

(v) issuance of 103,263,000 new ordinary shares of RM 0.20 each at the issue price of RM 0.0187 through a private placement for a total consideration of RM 1,931,018 for working capital purposes.

The APFT Berhad Employees’ Share Option Scheme (“ESOS”) was approved by the shareholders at the Extraordinary General Meeting held on 17 September 2014 and became effective on 31 December 2014. On 13 March 2017, the Company issued options under the new ESOS for eligible Executive Directors and Employees of APFT Berhad and its subsidiaries.

The principal features of the ESOS are as follows:

(i) full-time and confirmed employees within APFT Group and executive directors of APFT (“eligible person”) are eligible to participate in the ESOS. Participation, however, is subject to the discretion of the Option Committee.

(ii) the ESOS shall be in force for a period of 5 years from 13 March 2017 provided that before the final year of the ESOS, the Option Committee may extend for up to another 5 years the duration of ESOS commencing from the expiration of the original 5 years. The duration of the ESOS shall not be more than 10 years from its effective date.



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(iii) the total number of new shares to be allotted under the ESOS shall not exceed 15% of the issued and paid-up share capital of the Company at any point of time during the duration of the ESOS.

(iv) the subscription price for the new shares under the ESOS shall be the volume weighted average market price of the shares as quoted on the Main Market of Bursa Malaysia Securities Berhad for the five (5) market days immediately preceding the date of offer of the options, or at par value of the share, whichever is higher.

(v) the aggregate number of shares to be offered to an eligible person shall be determined at the discretion of the Option Committee after taking into consideration, amongst other factors, the position, performance, seniority and length of service that the eligible person has rendered and subject to the maximum allowable allotment of shares for each eligible person.

(vi) the number of shares comprised in the ESOS options which remain unexercised or the exercise prices or both may be adjusted following any alteration in the capital structure of the Company during the option period, whether such alteration is by way of capitalisation of profits or reserves, right issues, consolidation of shares, sub-division of shares or reduction of capital or otherwise howsoever taking place.

(vii) the options shall not carry any right to vote at any general meeting of the Company and a grantee shall not be entitled to any dividends, rights or other entitlements on his/her unexercised options.

(viii) the options granted under ESOS are not assignable.

(ix) there is no restriction on the grantee in exercising their ESOS options or selling their APFT shares allotted and issued pursuant to the exercise of their options. Upon a sale of APFT shares, if the net proceeds from the disposal is less than the Exercise Value (being the Exercise Price multiplied by the number of APFT Shares sold), the entire net proceeds will be released to the grantee. However, if the net proceeds is more than the Exercise Value, an amount equivalent to the Exercise Value will be released to the grantee. The balance proceeds not released to the grantee will be placed in an interest-bearing account for the benefit of the grantee. The balance proceeds (being the net proceeds less Exercise Value) together with the attributable interest, if any, will be released to the grantee over the period of the scheme in accordance with APFT’s ESOS By-Law on each anniversary of the scheme.

(x) the new shares allotted upon any exercise of the options shall rank pari passu in all respects with the then existing issued and paid-up ordinary shares of the Company except that the new shares so issued will not be entitled for any dividends, rights, allotments and/or other distributions, the entitlement date of which is prior to the date of allotment of the new shares.

(xi) no grantee shall participate at any time in more than one ESOS implemented by any company within the APFT Group.

(xii) options to subscribe for ordinary shares under the ESOS were granted on the following dates:

Grant date Exercise price Number of Exercise period RM options 13 March 2017 0.05 71,500,000 13 March 2017 to 12 March 2022



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(xiii) The number and weighted average exercise prices (“WAEP”) of, and movements in, share options during the financial year are as follows

Number of shares options Movement during the yearExercise Outstanding Outstandingprice per share and exercisable and exercisable(RM) at 1.8.2018 Granted Exercised at 31.1.2018 0.05 - 71,500,000 (71,500,000) -

19. RESERVES

Group Company 31.1.2018 31.7.2016 31.1.2018 31.7.2016 RM RM RM RM

Non-distributable: Share premium At beginning of period 15,627,393 15,477,648 15,627,393 15,477,648Arising from issuance of shares - 149,745 - 149,745 At end of period 15,627,393 15,627,393 15,627,393 15,627,393 Warrants At beginning/end of period 19,232,500 19,232,500 19,232,500 19,232,500 Discount on shares At beginning/end of period (19,232,500) (19,232,500) (19,232,500) (19,232,500) Non-distributable: Translation reserve Foreign exchange translation reserve 4,929 (1,572) - - 15,632,322 15,625,821 15,627,393 15,627,393

The movements in each category of the reserves are disclosed in the statements of changes in equity.



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Share Premium/Capital Reserve

In accordance with the transitional provisions of the Act, the amount standing to the credit of the Company’s share premium account and capital redemption reserve has become part of the Company’s share capital. These changes do not have an impact on the number of shares in issue or the relative entitlement of any of the shareholders.

Warrants reserve and discount on shares

On 16 July 2013, the Company issued 78,500,000 warrants pursuant to bonus issue of 1 warrant for every 2 existing ordinary shares held in the Company. The warrants were listed on the Main Market of Bursa Malaysia Securities on 19 July 2013. The warrants issued were constituted by a Deed Poll dated 28 June 2013.

The main features of the warrants are as follows:

i) each warrant entitles the registered holder at any time during the exercise period to subscribe for one new ordinary share of RM0.20 each in the Company at an exercise price of RM0.40.

ii) the exercise price and the number of warrants are subject to adjustment in the event of alteration to the share capital of the Company in accordance with the provisions set out in the deed poll.

iii) the warrants shall be exercisable at any time within the period commencing on and including the date of issue of the warrants until the last market day prior to the fifth anniversary for warrant of the respective dates of issue of the warrants.

iv) sll new ordinary shares to be issued arising from the exercise of the warrants shall rank pari passu in all respects with the existing ordinary shares of the Company except that such new ordinary shares shall not be entitled to any dividends, rights, allotments and other distributions on or prior to the date of allotment of the new ordinary shares arising from the exercise of the warrants.

v) st the expiry of the exercise period which is on 16 July 2018, any warrants which have not been exercised will lapse and cease to be valid for any purpose.

No warrant was exercised since the date of the issuance of such warrants. The warrants reserve and discount on shares arose from the allocated fair value of the 78,500,000 warrants issued.

Warrant reserve represents the total value of free warrants of 78,500,000 computed based on theoretical fair value of about RM0.245 each per warrant, which was arrived by using Black Scholes Option Pricing Model.

Translation reserve

The foreign exchange translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.

20. MERGER DEFICIT

Merger deficit represents the excess arising by the Group from the nominal value of the shares issued over the nominal value of shares acquired.



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21. DEFERRED TAX LIABILITIES

Recognised deferred tax liabilities

Group 31.1.2018 31.7.2016 RM RM

At beginning/end of the period 133,555 133,555

The deferred tax liabilities at the end of the reporting period are made up of the temporary differences arising from:

Group 31.1.2018 31.7.2016 RM RM

Property, plant and equipment 133,555 133,555

Unrecognised deferred tax assets

Deferred tax assets were not recognised in respect of the following items:

Group 31.1.2018 31.7.2016 RM RM

Carrying amount of property, plant and equipment in excess of their tax base 22,594,000 22,594,000Unabsorbed investment tax allowances (25,737,000) (25,737,000)Unabsorbed tax losses (52,714,420) (48,761,000)Unutilised capital allowance (26,208,000) (26,208,000)Others (4,476,000) (4,476,000) (86,541,420) (82,588,000)

Deferred tax assets were not recognised in respect of those items because it was not probable that sufficient future taxable profit would be available against which certain subsidiaries could utilise the benefits therefrom. The unused tax losses and unutilised capital allowances are subject to agreement with the authorities.



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22. OTHER PAYABLES AND ACCRUALS


Current: Other payables 11,807,178 9,197,353 282,148 622,172Employees benefits - 18,352 - -Deposits received 829,926 435,028 - -Accruals 9,560,949 6,806,527 659,114 78,530Advances from contract customers - 9,655 - - 22,198,053 16,466,915 941,262 700,702 Non-current: Employees benefits 104,812 36,493 - - Other payables consist of the following:


Amount due to a Company in which directors have interest 4,002 4,002 - -Amount due to a person connected to directors - 245,585 - -



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23. BORROWINGS

Group 31.1.2018 31.7.2016 Note RM RM Current-secured Term loans a - 5,872,333Bank overdraft b - 2,056,249 - 7,928,582 Non-current-secured Term loans a 1,196,750 - 1,196,750 7,928,582 Repayment terms: Less than one year 1,196,750 7,928,582

Note a

Term loan - I (i) - 4,195,196Term loan - II (ii) - 396,277Term loan - III (iii) 1,196,750 1,280,860 1,196,750 5,872,333

The term loans of the Company comprise the followings:

(i) Term loan I consists of two facilities and bear interest at 1.75% (2016: 1.75%) above bank’s base financing rate per annum, repayable over 72 months and 84 months respectively. However, the subsidiary had defaulted in the repayments which resulted a change in the interest rate to current rate of Islamic Money Market Rate during the financial period. The facilities are secured by the following:

(a) first party charge over 20 units of aircrafts;

(b) debenture (with negative pledge provision);

(c) supplemental debenture;

(d) joint and several guarantee by the Company’s directors;

(e) security deposit with amount equivalent to the total of the 3 installments each of term loans to be placed under General Investments Account (“GIA”) and Memorandum of Deposit with Letter of Set Off to be executed over designated accounts; and

(f) corporate guarantee by the Company.



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(ii) Term loan II was obtained under the name of the Company’s directors and bears interest at 2.20% (2016: 2.20%) below bank’s base lending rate (“BLR”) per annum, repayable over 108 months. However, the subsidiary had defaulted in the repayments which resulted a change in the interest rate to 1% above bank’s BLR during the financial period. The facility is secured by the following:

(a) loan agreement and irrecoverable power of attorney;

(b) private caveat on master title holding the property of the subsidiary;

(c) original sales and purchase agreement of the property of the subsidiary; and

(d) third party first charge on the property of the subsidiary.

(iii) Term loan III is consists of two facilities which regards as “Facility I” and “Facility II”. Term loans bear interest ranging from 1.50% to 1.70% (2016: 1.50% to 1.70%) below bank’s BLR per annum and are repayable over 240 months. However, the subsidiary had defaulted in repayments which resulted a change in the interest rate ranging from 0% to 3.50% above bank’s BLR. The facilities are secured by the following:

(a) facility agreements and irrecoverable power of attorney;

(b) deeds of assignment;

(c) private caveat on master title holding the properties of the subsidiary;

(d) original sales and purchase agreements of the properties of the subsidiary;

(e) first party charge on the properties of the subsidiary; and

(f) joint and several guarantee by the Company’s director and a person connected to the Company’s directors.

Note b

Bank overdraft obtained bears interest ranging from 1.50% to 1.75% (2016: 1.50% to 1.75%) above bank’s BLR per annum.

Bank overdraft obtained is secured by the following: (a) corporate guarantee by Company;

(b) joint and several guarantees by the Company’s directors;

(c) trade financing general agreement; and

(d) third party charge on the properties of a company in which a director has interest.



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During the financial period, the Subsidiary had defaulted in payment of RM1,320,514 on term loans III which had been overdue since May 2016.

Defaults in the repayments of the above term loans have provided the banks with the rights to demand for immediate repayment of all outstanding amounts. Accordingly, all the above term loans are classified as current liabilities. The Company had on 29 September 2016 made full redemption payment for term loans I as disclosed in Note 39(g) (i) to the financial statements.

24. FINANCE LEASE PAYABLES

Group 31.1.2018 31.7.2016 RM RM

Minimum lease payments Less than one year 786,743 1,177,695Between one and five years - 87,209 786,743 1,264,904Less: Interest-in-suspense (37,041) (98,535) Present value of finance lease payables 749,702 1,166,369 Present value of finance lease payables Less than one year 749,702 1,088,672Between one and five years - 77,697 749,702 1,166,369

Certain finance lease payables are secured by way of corporate guarantee by the Company.

Finance lease payables bear interest ranging from 2.69% to 4.00% (2016: 2.69% to 4.00%) per annum.

The Company had made full redemption payment for finance leases as disclosed in Note 39(h) (iv) to the financial statements.

25. TRADE PAYABLES

The Group’s trade payables are non-interest bearing. The normal credit term granted by suppliers ranging from 30 to 60 days (2016: 30 to 60 days). Included in trade payables of the Group amounting to RM Nil (2016: RM 63,872) is an amount due to a related company of non-controlling interests.

26. AMOUNT DUE TO NON-CONTROLLING INTERESTS

The Group’s amount due to non-controlling interests is trade in nature, unsecured, bears interest at 18% (2016: 18%) per annum on the overdue balance of RM Nil (2016: RM 200,419) and has credit term of 18 to 45 days (2016: 18 to 45 days).



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27. AMOUNT DUE TO DIRECTORS

The Group’s and the Company’s amount due to directors is non-trade in nature, unsecured, bears no interest and repayable on demand except for RM Nil (2016: RM 6,429,129) of the Group bears interest at Nil % (2016: 8.35%) per annum.

28. DEFERRED INCOME

The Group’s deferred income represents deferred course fees income as follow:

Group 31.1.2018 31.7.2016 RM RM At beginning of period 2,449,239 2,449,239Additions - -Credited to profit or loss (2,146,253) - At end of period 302,986 2,449,239

29. REVENUE

Group Company 31.1.2018 31.7.2016 31.1.2018 31.7.2016 (18 months) (16 months) (18 months) (16 months)Continuing operations RM RM RM RM

Course fees 6,185,858 16,751,971 - 644,916Rental income 911,600 139,085 - -Rendering service 890 - - -Aircraft maintenance services - 105,227 - -Contract revenue - 9,958,832 7,098,348 26,955,115 - 644,916



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30. LOSS BEFORE TAXATION

Loss before taxation is arrived after charging/ (crediting):

Group Company 31.1.2018 31.7.2016 31.1.2018 31.7.2016 (18 months) (16 months) (18 months) (16 months) RM RM RM RMAuditors’ remuneration: - statutory audit 106,000 194,500 50,000 55,000 - other auditors 13,893 13,904 - - - non-audit fees - 6,800 - 6,000Amortisation of deferred costs (Note 10) 276,307 174,733 - -Deferred costs written-off (Note 10) - 54,838 - -Other investment written- off (Note 9) 166,800 - - -Depreciation of property, plant and equipment (Note 6) 4,619,942 6,393,742 12,535 -Directors’ fee 34,280 129,600 34,280 129,600Directors’ remuneration 179,918 1,207,901 149,918 1,140,960Employees benefits expenses (Note 33) 9,580,421 19,332,975 1,552,653 1,562,648Impairment loss on: - Trade receivables (Note 15) 32,314 2,093,231 - - - Other receivables - 183,414 - - - Amount due from subsidiaries (Note 7) - - 4,597,790 50,237,994 - Goodwill (Note12) - 2,674,752 - - - Property, plant and equipment (Note 6) 1,523,035 3,144,910 - -Loss/(Gain) on disposal of property, plant and equipment 5,497,043 482,781 - -Interest expenses: - Term loans 67,466 612,219 - -- Hire purchase 86,288 127,836 - -- Bank overdrafts 26,598 223,811 - -- Non-controlling interest 218,496 203,284 - -- Director 1,112,686 921,357 - -

(Forward)



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Group Company 31.1.2018 31.7.2016 31.1.2018 31.7.2016 (18 months) (16 months) (18 months) (16 months) RM RM RM RM Realised gain on forex exchange - (16,448) - -Unrealised gain on forex exchange (43,696) (16,722) - -Rental expenses: - Aircrafts 1,186,979 786,735 - - - Condominium 322,662 285,541 - - - Equipment - 1,113,788 - - - Land - 78,408 - - - Land for skidtank 1,867,119 500,672 - - - Office 705,316 1,696,952 - - - Office equipment 42,632 91,090 - - - Motor vehicles - 68,207 - -Property, plant and equipment written-off (Note 6) 3,098,786 912,824 - -Goodwill written-off - net (Note 12) 18,631,027 Reversal of impairment loss on: - Amount due from subsidiaries - - - (393,197) - Trade receivables (Note 15) - (728,834) - - - Investment in subsidiaries (Note 7) - - - (1,184,497)Gain on disposal of other investments (28,705) - -Bad debts recovered - (1,200) - -Rental income (285,540) (344,041) - -Interest income (3,931) (29,947) (1,942) (7,392)

The details of directors’ remuneration of the Group and the Company during the financial period as follows: Group Company

31.1.2018 31.7.2016 31.1.2018 31.7.2016 (18 months) (16 months) (18 months) (16 months) RM RM RM RMExecutive: Salaries and other emoluments 158,328 1,069,600 131,928 1,009,600Defined contribution plan 21,590 113,360 17,990 106,560Other benefits - 24,941 - 24,800 179,918 1,207,901 149,918 1,140,960Non-executive: Directors’ fee 34,280 129,600 34,280 129,600 214,198 1,337,501 184,198 1,270,560



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31. TAXATION

Group 31.1.2018 31.7.2016 (18 months) (16 months) RM RM Estimated current tax payable: - Over provision in prior years - (11,925) - (11,925)

The Finance (No. 3) Act 2017 gazetted on 16 January 2017 reduced the corporate income tax rate from 24% to rates below based on the percentage of increase in chargeable income as compared to the immediate preceding year of assessment:

Percentage of increase in chargeable income as compared to the immediate preceding year of assessment

Percentage point of reduction income

tax rate

Reduced income tax rate on increase in chargeable income

%

Less than 5% Nil 24

5% - 9.99% 1 23

10% - 14.99% 2 22

15% - 19.99% 3 21

20% and above 4 20

The above changes are effective for year of assessment 2017 and 2018. Following this, the applicable tax rates to be used for the measurement of any applicable deferred tax will be at the expected rates.

A reconciliation of income tax expense applicable to loss before tax at the applicable statutory income tax rate to income tax expense at the effective income tax rate of the Group is as follows:

Group 31.1.2018 31.7.2016 (18 months) (16 months) RM RM Loss before taxation (67,567,994) (44,585,463) Tax at statutory tax rate of 24% (2016: 24%) (16,216,319) (10,700,511)Tax effect of: Expenses not deductible for tax purposes 18,097,848 1,496,747 Income not subject to tax (4,067,153) (85,236) Deferred tax assets not recognised 2,185,624 9,289,000 Over provision in prior years - (11,925) Income tax credit - (11,925)



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32. EARNINGS PER ORDINARY SHARE

Basic (loss)/earnings per ordinary share

The calculation of basic earnings per ordinary share at 31 January 2018 was based on the net loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares in issue during the period as follow:

Weighted average number of ordinary shares

Group 31.1.2018 31.7.2016 (18 months) (16 months) Net losses for the financial period attributable to ordinary shares holders of the Company (RM) 64,047,772 34,701,734Weighted average number of ordinary shares in issues (Unit) 719,846,449 408,350,805 Basic (losses)/earnings per ordinary share (sen) (8.90) 8.50

Diluted earnings per ordinary share

Diluted losses per ordinary share is not applicable for the financial period as the unexercised convertible warrants were anti-dilutive in nature, this is due to the average market share price of the Company is below the exercise price of warrants.

33. EMPLOYEES BENEFITS EXPENSES

Group Company

31.1.2018 31.7.2016 31.1.2018 31.7.2016 (18 months) (16 months) (18 months) (16 months) RM RM RM RM

Directors’ remuneration 179,918 1,207,901 149,918 1,140,960Salaries and other emoluments 7,644,632 15,825,877 1,228,211 353,573Defined contribution plan 1,366,614 1,573,510 146,503 42,548Social security contributions 103,215 153,086 6,619 3,330Other benefits 286,042 572,601 21,402 22,237 9,580,421 19,332,975 1,552,653 1,562,648



106

34. RELATED PARTY DISCLOSURES

(a) Significant related party transactions of the Group and of the Company are as follows:

Group Company


Management fee charged to subsidiaries - - - 644,916Interest charged by a directors 1,112,686 921,357 - -Supply of manpower to non-controlling interest - 401,928 - -Interest payable to non-controlling interest - 203,284 - -Transfer of investment in subsidiaries to other subsidiaries - - - 84,558,936

The directors of the Group and of the Company are of the opinion that the above transactions were entered into in the normal course of business and had been established under negotiated terms.

(b) Related party balances

The outstanding balances arising from related party transactions at the reporting date are disclosed in Note 7, 8, 26 and 27 to the financial statements.

(c) Compensation of key management personnel

Key management personnel include directors of the Company and persons who have authority and responsibility for planning, directing and controlling the activities of the Group and the Company, either directly or indirectly.

The remunerations of other members of key management personnel during the financial period are as follows:

Group Company


Salaries and other short-term employees benefits - 2,471,107 - 1,342,888



107

35. CONTIGENT LIABILITIES

Group Company


Unsecured: Corporate guarantee granted to subsidiaries for:

- Banking facilities and finance lease facility - - - 6,749,301 - Project secured - - 37,599,752 37,599,752

Secured: Sub-contractor claims or manpower supply - 2,386,167 - -

Having considered legal advice from the external legal counsel, the directors are of the opinion that the possibility of outflow is not probable and therefore, no provision is required to be made.

36. OPERATING SEGMENTS

The Group has three (3) reportable segments, as described below, which are the Group’s strategic business units. The strategic business units offer different products and services, and are managed separately because they require different business strategies. For each of the strategic business units, the director evaluated regularly in deciding how to allocate resources and in assessing performance of the Group. The following summary describes the operations in each of the Group’s reportable segments:

i) Flight education and training - Dealing in flight education and training providerii) Mechanical engineering works and services - Dealing in mechanical engineering works and servicesiii) Others - Investment holding, maintenance training service, rental of aircrafts. Maintenance and repair services

Segment assets

The total of segment assets is measured based on all assets (including goodwill and intangible assets) of a segment, as included in the internal management reports that are reviewed by the director. Segment total asset is used to measure the return on assets of each segment.



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Segment liabilities The total of segment liabilities is measured based on all liabilities of a segment, as included in the internal management reports that are reviewed by the director. Segment total liability is used to measure the gearing ratio of each segment.

Segment capital expenditure

Segment capital expenditure is the total cost incurred during the financial year to acquire property, plant and equipment, and intangible assets other than goodwill.

Geographical segments

The Group operates in two principal geographical areas of the world:

i) Malaysia - Flight education and training provider, mechanical engineering works and services, investment holding, maintenance training service, rental of aircrafts. Maintenance and repair services

ii) India - Flight education and training



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Mechanical Flight engineering Note education and works and Eliminations/ training services Others adjustments Consolidated RM RM RM RM RM31.1.2018 Revenue External revenue 11,039,674 56,006,531 3,786,546 - 70,832,751Inter-segment revenue (i) - - 260,460 (260,460) - Total revenue 11,039,674 56,006,531 4,047,006 (260,460) 70,832,751 Results Segment results (31,912,269) (5,841,065) (55,605,473) 25,790,813 (67,567,994)

Interest income 1,989 - 1,942 - 3,931Finance costs (1,320,266) - (345) - (1,320,611)Amortisation of deferred costs (276,308) - - - (276,308)Depreciation (3,506,944) (652,246) (460,752) - (4,619,942)Other non-cash income/ (expenses) (i) (3,098,786) (18,631,027) - - (21,729,813) Other Information Segment assets 11,845,434 6,227,840 89,383,016 (80,367,798) 27,088,492

Net additions to non-current assets (iii) 2,764,133 89,650 8,485,411 - 11,339,194 Segment liabilities 51,832,618 23,574,743 109,409,328 (138,468,054) 46,348,636



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Mechanical Flight engineering Note education and works and Eliminations/ training services Others adjustments Consolidated RM RM RM RM RM

31.7.2016 Revenue External revenue 15,236,065 9,958,832 1,760,218 - 26,955,115Inter-segment revenue (i) - - 4,962,479 (4,962,479) - Total revenue 15,236,065 9,958,832 6,722,697 (4,962,479) 26,955,115 Results Segment results (18,159,013) (18,901,809) (103,898,500) 96,385,784 (44,573,538)

Interest income 22,555 - 7,392 - 29,947Finance costs (2,038,662) (46,335) (3,510) - (2,088,507)Amortisation of deferred costs (174,733) - - - (174,733)Depreciation (5,051,907) (1,051,488) (290,347) - (6,393,742)Other non-cash income/ (expenses) (i) (3,442,410) - (200,004) - (3,642,414)

Share of loss of associate (24,541) - - - (24,541)Tax income - 11,925 - - 11,925 Other Information Segment assets 38,885,566 14,673,585 96,166,813 (94,680,931) 55,045,033

Net additions to non-current assets (iii) 1,833,071 368,919 - - 2,201,990

Segment liabilities 46,971,316 26,179,423 94,290,268 (108,359,347) 59,081,660



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Notes to the nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements:

(i) Inter-segment revenues are eliminated on consolidation.

(ii) Other non-cash expenses consist of the following items:

Group 31.1.2018 31.7.2016 (18 months) (16 months) RM RM

Deferred costs written-off - (54,838)Impairment loss on goodwill - (2,674,752)Property, plant and equipment written-off (3,098,786) (912,824)Goodwill written-off (31,305,779) -Impairment of goodwill no longer required 12,674,752 - (21,729,813) (3,642,414)

(iii) Additions to non-current assets consist of:

Group 31.1.2018 31.7.2016 (18 months) (16 months) RM RM Property, plant and equipment 11,339,194 2,201,990

Geographical information

In presenting information on the basis of geographical segments, segment revenue is based on geographical location of customers. Segment assets are based on the geographical location of the assets. The amounts of non-current assets consist of property, plant and equipment and goodwill on consolidation.

Revenue Non-current assets

31.1.2018 31.7.2016 31.1.2018 31.7.2016 (18 months) (16 months) Group RM RM RM RM

Malaysia 65,978,935 22,793,929 11,354,045 49,975,401India 4,853,816 4,161,186 866,128 514,162 70,832,751 26,955,115 12,220,173 50,489,563



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Information about major customers

The followings are major customers from mechanical engineering works and services segment only with revenue equal or more than 10% of the Group’s total revenue:

Group 31.1.2018 31.7.2016 (18 months) (16 months) RM RM

Customer A - 4,690,910Customer B 58,875,882 4,512,543

37. FINANCIAL INSTRUMENTS

37.1 Categories of financial instruments

The table below provides an analysis of financial instruments categorised as follows:

(a) Loans and receivables (“L&R”);(b) Available-for-sale financial assets (“AFS”); and(c) Other financial liabilities measured at amortised cost (“OFL”).



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Group Company Carrying Carrying amount L&R/(OFL) amount L&R/(OFL) RM RM RM RM 31.1.2018 Financial liabilities Trade and other payables (42,454,477) (42,454,477) (941,262) (941,262)Loans and borrowings (1,946,452) (1,946,452) - - (44,400,929) (44,400,929) (941,262) (941,262) 31.7.2016 Financial liabilities Trade and other payables (37,332,127) (37,332,127) (700,702) (700,702)Loans and borrowings (9,094,951) (9,094,951) - - (46,427,078) (46,427,078) (700,702) (700,702)

37.2 Financial risk management

The Group has exposure to the following risks from its use of financial instruments:

• Credit risk• Liquidity risk• Market risk

37.3 Credit risk

Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from its trade and other receivables, bank balances and deposits placed with licensed banks, concession service receivable, amount due from joint venture and advances to ultimate holding company, associate and affiliates. The Company’s exposure to credit risk arises principally from trade and other receivables, bank balances and deposits placed with licensed banks and advances to ultimate holding company, subsidiaries and affiliates.

Receivables

Risk management objectives, policies and processes for managing the risk Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis.

Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented by the carrying amounts in the statement of financial position.



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Management has taken reasonable steps to ensure that trade receivables that are neither past due nor impaired are stated at their realisable values. A significant portion of these trade receivables are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the trade receivables.

Impairment losses

The Group maintains an ageing analysis in respect of trade receivables only. The ageing of trade receivables (current and non-current) as at the end of the reporting period was:

Individual Gross impairment Net RM RM RMThe Group 31.1.2018 1 - 30 days past due 114,555 - 114,555Past due 31 - 60 days 647,396 - 647,396More than 61 days past due 11,541,108 (4,508,688) 7,032,420 12,303,059 (4,508,688) 7,794,371

31.7.2016 Not past due 3,898,322 - 3,898,3221 - 30 days past due 26,995 - 26,995More than 61 days past due 9,497,853 (4,476,374) 5,021,479 13,423,170 (4,476,374) 8,946,796

There is allowance made for impairment losses of trade receivables for the Group of RM4,508,688 (2016: RM4,476,374) during the financial period.

Financial guarantees

Risk management objectives, policies and processes for managing the risk

The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to certain subsidiaries. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made by the subsidiaries.

Exposure to credit risk, credit quality and collateral

The maximum exposure to credit risk amounts to RM37,599,752 (2016: RM44,349,053) representing the contract value of the project secured by another subsidiary as at the end of the reporting period.

The financial guarantee has not been recognised as the fair value on initial recognition was immaterial since the financial guarantee provided by the Company did not contribute towards credit enhancement of the subsidiary’s borrowing and finance lease payable in view of the securities pledged by the subsidiary. In addition, there was no indication that another subsidiary could not perform the contracts for works in accordance with the contacts’ term.



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Inter-company loans and advances

Risk management objectives, policies and processes for managing the risk The Company provides unsecured loans and advances to subsidiaries and monitors the results of the subsidiaries regularly.

Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts in the statement of financial position as shown in Note 15 and Note 16.

Impairment losses As at the end of the reporting period, there was no indication that the amounts due from subsidiaries are not recoverable.

Cash and cash equivalents

The credit risk for cash and cash equivalents is considered negligible as the cash and cash equivalents are placed with reputable banks which have high quality external credit ratings.

37.4 Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s exposure to liquidity risk arises principally from its various payables, loans and borrowings.

The Group maintains a level of cash and cash equivalents and bank facilities deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due.

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.



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Maturity analysis

The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities as at the end of the reporting period based on undiscounted contractual payments:

Current Non-current Undiscounted Less Between Between Carrying contractual than 1 to 2 3 to 5 More than amount cash flows 1 year years years 5 yearsGroup RM RM RM RM RM RM 31.1.2018 Non-derivative financial liabilities Secured: Borrowings 1,196,750 1,196,750 1,196,750 - - -Finance lease payables 749,702 786,743 786,743 - - - 1,946,452 1,983,493 1,983,493 - - - Group

31.1.2018 Unsecured: Trade payables 20,151,612 20,151,612 20,151,612 - - -Other payables 22,302,865 22,302,865 22,198,053 104,812 - -Amount due non- controlling interest 1,410,184 1,410,184 1,410,184 - - -Amount due to director 100,982 100,982 100,982 - - - 43,965,643 43,965,643 43,860,831 104,812 - - Total undiscounted financial liabilities 45,912,095 45,949,136 45,844,324 104,812 - -



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Current Non-current Undiscounted Less Between Between Carrying contractual than 1 to 2 3 to 5 More than amount cash flows 1 year years years 5 yearsGroup RM RM RM RM RM RM

31.7.2016 Non-derivative financial liabilities Secured: Borrowings 7,928,582 7,928,582 7,928,582 - - -Finance lease payables 1,166,369 1,264,904 1,177,695 35,496 51,713 - 9,094,951 9,193,486 9,106,277 35,496 51,713 -

Group

31.7.2016 Unsecured: Trade payables 20,828,719 20,828,719 20,828,719 - - -Other payables 16,503,408 16,503,408 16,466,915 36,493 - -Amount due to non-controlling interest 2,419,229 2,419,229 2,419,229 - - -Amount due to director 7,652,559 7,652,559 7,652,559 - - - 47,403,915 47,403,915 47,367,422 36,493 - -

Total undiscounted financial liabilities 56,498,866 56,597,401 56,473,699 71,989 51,713 -

As the reporting date, the maturity profile of the Company’s non-derivate financial liabilities based on contractual undiscounted cash flows is less than one year.



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37.5 Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and other prices will affect the Group’s financial position or cash flows.

37.5.1 Currency risk

The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities. The currency giving rise to this risk are primarily Indonesia Rupiah (“IDR”). Mainly arising from the advances from the associate which was reclassified as other investment in current financial period.

Risk management objectives, policies and processes for managing the risk The Group presently does not hedge its foreign currency exposures. Nevertheless, the management regularly monitor its exposure and keep this policy under review. Exposure to foreign currency risk

The Group’s exposure to foreign currency (a currency other than the functional currency of Group entities) risk, based on carrying amounts as at the end of the reporting period was:

Group 31.1.2018 31.7.2016 RM RM

Indonesia Rupiah - advances from the associate - 1,043,261

Currency risk sensitivity analysis

The following table demonstrates the sensitivity of the Group’s loss for the financial period to a reasonably possible change in the IDR and USD exchange rates against the respective functional currency of the Group. This analysis assumes that all other variables, in particular interest rates remained constant and ignores any impact of forecasted sales and purchases.

Increase/(Decrease) in loss for the financial period 31.1.2018 31.7.2016 (18 months) (16 months) RM RMIDR/RM - Strengthened 1% - 10,433 - Weakened 1% - (10,433)

USD/RM - Strengthened 1% - (8,377) - Weakened 1% - 8,377

37.5.2 Interest rate risk

The Group’s fixed-rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. Short-term receivables and payables are not significantly exposed to interest rate risk.



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The Group’s excess cash is invested in fixed deposits and other investments with tenure of less than twelve (12) months, hence exposure to risk of change in their fair values due to changes in interest rates is not significant.

Risk management objectives, policies and processes for managing the risk The Company does not have a formal policy for managing interest rate risk. The exposure to interest rate risk is monitored closely by the management. Exposure to interest rate risk The interest rate profile of the Group’s significant interest-bearing financial instruments, based on carrying amounts as at the end of the reporting period was:

Group 31.1.2018 31.7.2016 RM RMFixed rate instruments Fixed deposits with licensed banks 112,625 112,625Amount due to director - (6,429,129)Amount due to non-controlling interest - (200,419)Finance lease payables - (1,166,369) Fixed rate instruments Borrowings - (7,928,582)

Interest rate risk sensitivity analysis

(a) Fair value sensitivity analysis for fixed rate instruments

The Group only has fixed rate deposits placed with licensed banks with tenure of less than twelve (12) months for financial assets. The Group does not account for fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss.

(b) Cash flow sensitivity analysis for variable rate instruments

A change of +/-0.5% (2016: +/-0.5%) in interest rates at the end of the reporting period would have increased/(decreased) equity and post-tax profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remained constant.

(Increase)/Decrease in loss for the financial period

31.1.2018 31.7.2016 RM RMGroup +0.5% -0.5%Floating rate instrument 31 January 2018 - - 31 July 2016 (39,643) 39,643



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37.6 Fair value information

The carrying amounts of cash and cash equivalents, short term receivables and payables and short-term borrowings approximate fair values due to the relatively short-term nature of these financial instruments.

It was not practicable to estimate the fair value of the Group’s investment in unquoted shares due to the lack of comparable quoted prices in an active market and the fair value cannot be reliably measured.

Fair value hierarchy

No fair value has been disclosed as the Group and the Company does not have financial instruments measured at fair value.

38. MATERIAL LITIGATION

i) on 5 December 2016, P3 Technology Engineering Sdn Bhd (“P3”) through its solicitors filed and served a winding-up petition on PTTSB claiming the sum of RM 4,436,737.71 being the alleged outstanding sum due to P3 for the supply of manpower by P3 for the SAMUR Project. The matter is fixed for hearing on 2 April 2017. The Company has signed an out of court settlement agreement on 31 March 2017 with P3 Technology in which P3 has reduced the claim to RM1.5 million if the amount is fully settled on or before 30 June 2017. On 23 December 2017, P3 had obtained winding up order against PT Technic (M) Sdn Bhd (“PTTMSB”).

ii) on 2 July 2015, Cadet Nadia Adib Shakila Binti Roslan (“Cadet”) sued Asia Pacific Flight Training Sdn Bhd (“APFTSB”) for wrongful termination of a flight training course and claims a sum of RM 250,000.00 being the refund of the fee paid and general damages of RM 280,000.00 (being the cost of completion the said course with another approved flight training organisation). The termination of Cadet’s flight training course was due to the Cadet not successfully completing all her professional exams in line with the guidelines from the Department of Civil Aviation, Malaysia. On 23 October 2015, the Judge allowed the Cadet’s solicitors’ oral application to transfer the case from the High Court to the Sessions Court. This matter is currently pending the Sessions Court to revert with the first case management date. Our Directors are of the opinion that our Company has a strong case and that they would be able to obtain favorable judgment.

iii) on 28 October 2014, Captain Ramesh A/L Marutheappan (“Captain”) commenced an industrial action against Asia Pacific Flight Training Sdn Bhd (“APFTSB”) for unlawful termination and a claim for loss of salary. The Captain’s employment was terminated due to an incident involving detachment and damages of the rear door of a plane during a training conducted by the Captain. This matter has been fixed for case management on 20 March 2017 and full hearing on 25 and 26 April 2017.On 26 April 2017, both parties have signed a settlement agreement in which APFTSB will make full settlement of RM 90,774.00 by initial payment of RM 50,000 followed by 3 equal monthly installment amounting to RM 40,774.00.

iv) on 7 December 2016, Teguh Oil Sdn Bhd filed a suit against Asia Pacific Flight Training Sdn Bhd (“APFTSB”) claiming a sum of RM 1,574,972.00 being amounts outstanding for the supply of AVGAS 100LL, a type of aviation fuel used by light aircrafts. APFTSB has applied for the matter to be transferred to Kuala Lumpur. The matter is now fixed for case management on 6 April 2017 pending the outcome of a viable settlement negotiation from both parties. The Case Management was held on 11 January 2017, the Court was directed the Plaintiff and APFTSB filed defense and closed of pleadings on 22 February 2017 for mediation.



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On 22 February 2017, the Court was fixed the matter for another case management on 6 April 2017 which pending settlement. The consent judgment has been recorded on 04.05.2017 in which APFTSB is to make monthly repayment of RM 20,000 per month.

39. SIGNIFICANT EVENTS DURING THE FINANCIAL PERIOD AND SUBSEQUENT EVENTS AFTER THE FINANCIAL PERIOD

a) Prescribed Criteria under Paragraph 2.1(a) of Practice Note 17 (“PN17”)

On 19 January 2018, the Company announced that it has triggered the Prescribed Criteria under Paragraph 2.1(a) of Practice Note 17 (“PN17”) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Malaysia”) as the shareholders’ equity of the Group was at 34.6% which was below 50% of the total issued and paid-up capital.

Pursuant to PN17, the Company is required to comply with the following:

(i) within 12 months from the date of this announcement (“First Announcement”):

(a) submit a regularisation plan to the Securities Commission (“SC”) if the plan will result in a significant change in the business direction or policy of the Company; or

(b) submit a regularisation plan to Bursa Malaysia if the plan will not result in a significant change in the business direction or policy of the Company, and obtain Bursa Malaysia’s approval to implement the plan;

(ii) implement the regularisation plan within the timeframe stipulated by the SC or Bursa Malaysia, as the case may be;

(iii) announce within 3 months from this First Announcement, on whether the regularisation plan will result in a significant change in the business direction or policy of the Company.

On 2 April, the Company intending to undertake and formulate a self-regularisation plan which will not result in a significant change in the business direction or policy of the Company.

(iv) announce the status of its regularisation plan and the number of months to the end of the relevant timeframe referred to in Paragraphs 5.1 and 5.2 of PN17, as may be applicable, on a monthly basis until further notice from Bursa Malaysia;

(v) announce its compliance or non-compliance with a particular obligation imposed pursuant to PN17, on an immediate basis;

(vi) announce the details of the regularisation plan (“Requisite Announcement”) and sufficient information to demonstrate that the Company is able to comply with all the requirements set out in Paragraph 5.4 of PN17 after implementation of the regularisation plan, which include a timeline for the complete implementation of the regularisation plan. The Requisite Announcement must be made by the Company’s Principal Adviser; and

(vii) where the Company fails to regularise its condition, it will announce the dates of suspension and de-listing of its listed securities, immediate upon notification of suspension and de-listing by Bursa Malaysia.



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b) Employees’ Share Option Scheme (ESOS)

71,500,000 new ordinary shares of RM 0.05 each arising from a grant and exercise of options under the Employees’ Share Option Scheme (“ESOS”) of RM 0.05 per share, the par value being the exercise price for a total consideration of RM 3,575,000.

c) Creditors Capitalisation

On 14 November 2016, the Company proposed to undertake a settlement of debts owing to certain creditors of the subsidiaries of APFT via the issuance of new ordinary shares of RM 0.05 each in APFT.

APFT has entered into 15 settlement agreements with certain creditors of the subsidiaries of APFT namely Asia Pacific Flight Training Sdn Bhd (“APFTSB”) and PT Technic (M) Sdn Bhd (PTTSB)

226,299,873 new ordinary shares of RM 0.05 each at the issue price of RM0.05 through a creditors capitalisation for a total consideration of RM 11,314,994 as a partial settlement to creditors.

d) Directors Capitalisation

On 14 November 2016, the Company proposed to undertake a settlement of debts owing to directors of APFT, namely Dato’ Faruk bin Othman and Arif bin Faruk via the issuance of settlement shares.

257,500,000 new ordinary shares of RM 0.05 each at the issue price of RM 0.05 through a directors capitalisation for a total consideration of RM 12,875,000 as a partial settlement of the amount due to directors.

e) Private Placement

On 10 March 2017, the Company proposed to undertake private placement of up to 333,339,700 Placement shares, representing up to 30% of the enlarged number of issued shares of APFT.

On 8 September 2017, TA Securities on behalf of The Board, had fixed the issue price for the 206,526,000 Placement Shares at RM 0.0194 per Placement Share.

Bursa Malaysia Securities Berhad (“Bursa Malaysia”) had approved the above said on 21 September 2017 and the private placements of 206,526,000 new ordinary shares were issued on 25 September 2017 at RM 0.0194 per Placement share.

On 28 December 2017, TA Securities on behalf of The Board, had fixed the issue price for the 103,263,000 Placement Shares at RM 0.0187 per Placement Share.

Bursa Malaysia Securities Berhad (“Bursa Malaysia”) had approved the above said on 3 January 2018 and the private placements of 103,263,000 new ordinary shares were issued on 4 January 2017 at RM 0.0187 per Placement share.



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f) Non related party disclosure

On 29 November 2017, APFT Services Sdn Bhd (“Purchaser”), a wholly-owned subsidiary of APFT, entered into conditional share sale agreement (“SSA”) with Dato’ Sri Teh Chee Teong (“Vendor”) for the acquisition of 200 common shares representing 20% equity interest in Aviation A.I.Inc. (“Sale Shares”) for a cash consideration of RM 3,200,000 (“Proposed Acquisition”).

AAI is a profit corporation incorporated in accordance with the laws of the state of Wyoming, United States of America under the Wyoming Business Corporation Act on 30 June 2016. AAI is presently dormant with the intended principal activity of the provision of private charter air transport services. It presently owns a Gulfstream G-1159A private jet (“Aircraft”) which the aircraft will operate from Sultan Abdul Aziz Airport, Selangor.

On 26 January 2018, Board of Directors of APFT announced that all Conditions Precedent as set out in SSA pursuant to the Proposed Acquisition have been fulfilled and hence the SSA had become unconditional.

On 8 February 2018, the Vendor has transferred the Sale Shares to APFT Services Sdn. Bhd. and the Balance Purchase Consideration has been fully settled. Following thereto, the proposed Acquisition is deemed completed and AAI has become a 20% owned associate company of APFT.

g) Disposal of subsidiaries and associate companies

(i) On 25 April 2018, APFT Aviation Sdn. Bhd. (“the Vendor”) a wholly-owned subsidiary of the Company, had entered into a Share Sale Agreement (“SSA”) with Mohamad Farizan bin Razali and Muhammad Syafiq bin Ibrahim (“the Purchasers”) for the disposal of 250,000,000 equity shares in Asia Pacific Flight Training Sdn Bhd (“APFTSB”), representing 100% of the total share capital of APFTSB (“Sale Shares”), for a total consideration of RM10,000 (“Disposal Consideration”)(“Proposed Disposal”).

Upon completion of the proposed disposal, APFTSB will cease to be subsidiary of APFTA.

Barring any unforeseen circumstances, the Proposed Disposal is expected to be completed by 15 July 2018.

(ii) The Group had on 8 September 2017 entered into a share sale agreement with GMR Hyderabad International Airport Limited for the disposal of 5,335,454 ordinary shares of RM1.00 each representing 60% of the issued and paid up capital of Asia Pacific Academy Training Limited at a consideration of RM4.00. The net carrying amount of the investment in Asia Pacific Academy Training Limited at the date of disposal was RM2,954,586.

Upon the completion of the disposal on 8 September 2017. Asia Pacific Academy Training Limited has ceased to be a subsidiary of the Asia Pacific Flight Training Sdn. Bhd.

(iii) The Group had on 6th October 2017 entered into a Share Sale Agreement with Paradigm Portfolio Sdn Bhd for the disposal of RM3,000,000 ordinary shares of RM1 each representing 100% of the issued and paid up capital of APFT Maintenance Training Sdn Bhd at a consideration of RM20,000. The net carrying amount of the investment in APFT Maintenance Training Sdn Bhd as at the date of disposal was RM3,000,000.

Upon the completion of the disposal on 6th October 2017, APFT Maintenance Training Sdn Bhd has ceased to be a subsidiary of the APFT Aviation Sdn Bhd.



125

h) Defaulted payments

(i) During the financial period, the Company had defaulted in the repayments of term loans I as disclosed in Note 19 to the financial statements.

A banker (“the plaintiff’) requested for immediate repayment on the overdue amounts on 18 March 2016, recalled and cancelled the banking facilities granted to the Company on 26 April 2016.

On 15 July 2016, the plaintiff’s solicitors issued a writ of summon and statement of claim to the Company and stated that the Company failing to settle the total outstanding amount of RM4,167,134 (as at 30 June 2016) for Murabahah Tawarruq facilities granted by the plaintiff.

On 24 August 2016, the plaintiff appointed a Receiver and Manager to undertake the assets of the Company as per the provisions stipulated in the Debenture. On 29 September 2016, the Company had made full redemption payment to the plaintiff based on the redemption statement cum letter of undertaking from the plaintiff dated 20 September 2016. Subsequently, receivership was terminated by plaintiff on 30 September 2016

(ii) During the financial period, the Company had defaulted in repayments of term loan II as disclosed in Note 19 to the financial statements.

On 2 August 2016, the banker requested for immediate repayment on the overdue amount of RM39,173 (as at 2 August 2016) for the facility obtained under the name of the Company’s directors.

On 4 November 2016, the Company entered the Sale and Purchase Agreement with the third party to dispose one (1) Unit of Serviced Apartment financed under the facility and subsequently settled the Redemption Sum payable to the hire purchase creditor of RM399,780.

(iii) During the financial period, the Company had defaulted in the repayments of term loans III as disclosed in Note 19 to the financial statements.

On 11 July 2016, the banker requested for immediate repayment of the whole outstanding amount of RM729,760 (as at 4 July 2016) for Facility I granted to the Company.

On 10 August 2016, the banker requested for immediate repayment on the overdue amount of RM10,699 (as at 4 August 2016) for Facility II granted to the Company.

On 8 November 2016, the banker’s solicitors issued letters of demand to request for immediate repayment of the whole outstanding amount of RM746,986 (as at 18 October 2016) for Facility I and RM550,838 (as at 18 October 2016) for Facility II.

On 27 December 2016, the banker’s solicitors issued letters of demand to request for immediate repayment of the whole outstanding amount of RM760,075 (as at 27 December 2016) for Facility I and RM560,439 (as at 27 December 2016) for Facility II.

The Company is negotiating with the banker as at the date of this report.



126

(iv) During the financial period, the Company had defaulted in the repayments of finance leases on three motor vehicles as disclosed in Note 20 to the financial statements. On 20 September 2016, the finance creditor of simulator requested for immediate repayment of the whole outstanding amount of RM498,764 (as at 13 September 2016).

On 16 October 2017, the Company was discharged with the liabilities and responsibilities concerning with the facility.

(v) On 13 July 2016, the Company received a legal notice of demand from Lembaga Kumpulan Wang Simpanan Malaysia (“KWSP”) due to default in the payment of contributions for the following months:

Contributions in arrears RM Period of default March 2014 to December 2014 1,029,644January 2015 to June 2015 710,259August 2015 to December 2015 594,956January 2016 to March 2016 356,731 2,691,590Less: Repayment (587,440)

Balance outstanding as of 31 March 2016 2,104,150

The Company had not make any repayment arrangement with KWSP as at the reporting date. No legal proceedings were initiated by KWSP as at the date of this report.

(vi) A letter of demand was received from a supplier on 21 March 2016 to request for immediate repayment from the Company on the total outstanding amount of RM 1,494,200. The Company had subsequently paid RM 40,386 to the supplier and no legal action was taken against the Company as at the date of this report.

(vii) On 18 May 2016, the Company entered into a sale and purchase agreement with a purchaser to dispose its 44% shareholdings, represent 5,280 units of shares in the associate for a total cash consideration of Rs.5,280,000,000 (approximately RM 1,599,840). On 19 September 2016, a supplemental letter was issued by the Company and the purchaser agreed to make payment by end of July 2017. There is no further update as at the date of this report.

(viii) A letter of demand and summon were received from a student’s (“plaintiff’) solicitors on 6 February 2015 and 6 March 2016 respectively to demand for RM 280,000 from the Company. The student claimed that the Company did not issue flight training license upon completion of the course.

The Company argued that the reason for not issuing the flying license was due to the student has yet to settle the outstanding course fee. As at the date of the report, the case management date is still not yet fixed by the Sessions Court.

(ix) A former staff of the Company took legal action against the Company to claim for RM 218,205 due to wrongful dismissal. The mediation was fixed on 22 November 2016. There is no further update as at the date of this report.



127

40. CAPITAL MANAGEMENT

The Group’s objective when managing capital is to maintain a strong capital base and safeguard the Company’s ability to continue as a going concern, so as to maintain shareholder, creditors and market confidence and to sustain future development of the business.

The Company sets the amount of capital in proportion to its overall financing structure, i.e. equity and financial liabilities. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may issue new shares or sell assets to reduce debts.

There were no changes in the Company’s approach to capital management during the current financial period.

The debt-to-equity ratio of the Group as at the end of the reporting period is as follows:

Group 31.1.2018 31.7.2016 RM RM

Term loans 1,196,750 5,872,333Bank overdraft - 2,056,249Finance lease payables 749,702 1,166,369 1,946,452 9,094,951Less: Fixed deposits with licensed banks (112,625) (112,625) Cash and bank balances (2,358,788) (2,398,401) (524,961) 6,583,925 Total equity (19,260,143) 14,594,400 Debt-to-equity ratio 0.03 0.45

41. COMPARATIVE FIGURES

The financial year end of the Company had changed from 31 July to 31 January to be consistent with the holding company.

The comparative figures are for the financial period from 01 April 2015 to 31 July 2016. Consequently, the comparative amounts for the statement of profit or loss and other comprehensive income, statement of cash flows, statement of changes in equity and related notes are not comparable.

The comparative information of the Company were audited by a firm other than Adam & Co.



128

42. D1SCLOSURE OF REALISED AND UNREALISED PROFITS/ (LOSSES)

Bursa Malaysia Securities Berhad had on 25 March 2010 and 20 December 2010, issued directives which require all listed corporations to disclose the breakdown of unappropriated profits or accumulated losses into realised and unrealised on Group and Company basis in the annual audited financial statements.

The breakdown of unappropriated profits/accumulated losses as at the reporting date which have been prepared by the directors in accordance with the directives from Bursa Malaysia Securities Berhad stated above and the Guidance on Special Matter No. 1 issued on 20 December 2010 by the Malaysian Institute Accountants are as follow:

Group Company 31.1.2018 31.7.2016 31.1.2018 31.7.2016 (18 months) (16 months) (18 months) (16 months) RM RM RM RM

(Accumulated losses)/ unappropriated profits of the Group and of the Company - realised (198,958,515) (105,616,030) (7,351,895) 7,156,560- unrealised (133,155) (116,833) - - (199,091,670) (105,732,863) (7,351,895) 7,156,560Consolidation adjustments 137,560,492 108,249,457 - - (61,531,178) 2,516,594 (7,351,895) 7,156,560

The disclosure of realised and unrealised profits/(losses) above is solely for complying with the disclosure requirements stipulated in the directive of Bursa Malaysia Securities Berhad and should not be applied for any other purposes.

The above disclosure were reviewed and approved by the Board of Directors in accordance with a resolution of the Directors passed on 24 May 2018.



129

ANALYSIS BY SIZE OF HOLDINGS AS AT 07/05/2018 (MALAYSIA & FOREIGN - COMBINE)

SIZE OF HOLDINGS NO. OF HOLDERS % NO. OF SHARES %

1 - 99 12 0.333 253 0.000 100 - 1,000 564 15.697 116,407 0.008 1,001 - 10,000 544 15.140 3,912,000 0.291 10,001 - 100,000 1,377 38.324 73,926,300 5.506 100,001 - 67,121,081(*) 1,095 30.475 1,185,203,698 88.288 67,121,082 AND ABOVE(**) 1 0.027 79,263,000 5.904

TOTAL : 3,593 100.000 1,342,421,658 100.000

REMARK : * - LESS THAN 5% OF ISSUED SHARES ** - 5% AND ABOVE OF ISSUED SHARES

LIST OF TOP 30 HOLDERS AS AT 07/05/2018

NO. NAMENATIONALITY / COUNTRY OF

INCORPORATIONHOLDINGS %

1 GOH BOON SOO @ GOH YANG ENG MALAYSIANMALAYSIA 79,263,000 5.904

2 SEIK THYE KONG MALAYSIANMALAYSIA 61,615,300 4.589

3 FARUK BIN OTHMAN MALAYSIANMALAYSIA 60,835,422 4.531

4 HONG WEA PING MALAYSIANMALAYSIA 50,000,000 3.724

5 ONG KHEAM CHYE MALAYSIANMALAYSIA 44,870,000 3.342

6 HENG YONG KANG @ WANG YONG KANG MALAYSIANMALAYSIA 40,603,000 3.024

7 KOH BOON POH MALAYSIANMALAYSIA 21,705,700 1.616

8 GAN CHIA HEE MALAYSIANMALAYSIA 18,988,400 1.414

9 SIN & CHAI RENOVATION & CONSTRUCTION SDN. BHD.

MALAYSIANMALAYSIA 18,247,860 1.359

10 U.E.C ENGINEERING SDN. BHD. MALAYSIANMALAYSIA 17,932,377 1.335

11 HO LEE FUNG MALAYSIANMALAYSIA 17,490,200 1.302

12PUBLIC INVEST NOMINEES (ASING) SDN BHDEXEMPT AN FOR PHILLIP SECURITIES PTE LTD (CLIENTS)


13 CHEK SOON HONG MALAYSIANMALAYSIA 14,000,000 1.042

ANALYSIS ON SHAREHOLDINGSAS AT 7/5/2018


130ANALYSIS ON SHAREHOLDINGSAS AT 7/5/2018



14 SYARIKAT TIONG JOO (JOHOR) SDN BHD MALAYSIANMALAYSIA 13,144,386 0.979

15 TEN HOCK SDN. BHD. MALAYSIANMALAYSIA 12,263,044 0.913

16 SEIK YEE KOK MALAYSIANMALAYSIA 12,000,000 0.893

17 SU MING KEAT MALAYSIANMALAYSIA 11,890,442 0.885

18 BI NOMINEES (TEMPATAN) SDN BHDFARUK BIN OTHMAN


19 TAN CHIA SHUEN @ GAN CHIA SHUEN MALAYSIANMALAYSIA 11,000,000 0.819

20 ARDENT FOCUS SDN BHD MALAYSIANMALAYSIA 10,059,166 0.749

21 HO CHUN SIONG MALAYSIANMALAYSIA 10,000,000 0.744

22 SU MING MING MALAYSIANMALAYSIA 10,000,000 0.744

23 GAN CHIA SHONG MALAYSIANMALAYSIA 9,169,000 0.683

24 SOUREN NORENDRA MALAYSIANMALAYSIA 9,140,000 0.680

25 NG GUAT THENG MALAYSIANMALAYSIA 9,000,200 0.670

26 GOH KHENG HOCK MALAYSIANMALAYSIA 9,000,000 0.670

27PUBLIC NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR YEOW THIAM HOOI (E-KLG)


28 TOK BOON SEONG SINGAPOREANMALAYSIA 8,532,600 0.635

29 INTER-PACIFIC EQUITY NOMINEES (ASING) SDN BHDPLEDGED SECURITIES ACCOUNT FOR LIM YAN LING


30 ROSLAN BIN ZAINAL MALAYSIANMALAYSIA 6,800,000 0.506

SUMMARY : TOTAL NO. OF HOLDERS : 30TOTAL HOLDINGS : 631,109,097TOTAL PERCENTAGE (%) : 47.012


131ANALYSIS ON WARRANT HOLDINGS

AS AT 7/5/2018

ANALYSIS BY SIZE OF HOLDINGS AS AT 07/05/2018 (MALAYSIA & FOREIGN - COMBINE)

SIZE OF HOLDINGS NO. OF HOLDERS % NO. OF WARRANTS %

1 - 99 481 37.315 23,745 0.030 100 - 1,000 86 6.671 52,105 0.066 1,001 - 10,000 233 18.076 1,283,200 1.634 10,001 - 100,000 327 25.368 14,816,150 18.874 100,001 - 3,924,999(*) 161 12.490 58,144,200 74.069 3,925,000 AND ABOVE(**) 1 0.077 4,180,600 5.325

TOTAL : 1,289 100.000 78,500,000 100.000

REMARK : * - LESS THAN 5% OF ISSUED WARRANTS ** - 5% AND ABOVE OF ISSUED WARRANTS

LIST OF TOP 30 HOLDERS AS AT 07/05/2018



1AMSEC NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR YAP CHING LOON


2 NUR IZZAH AMIRA BINTI ABDUL SATAR MALAYSIANMALAYSIA 3,013,200 3.838

3 TAN OOI CHEW KEONG MALAYSIANMALAYSIA 2,300,000 2.929

4 HO LEE FUNG MALAYSIANMALAYSIA 2,097,100 2.671

5 TAN GIEK EE MALAYSIANMALAYSIA 2,000,000 2.547

6AMSEC NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR YAP CHING LOON (SMART)


7 MOHD AIZUDDEEN BIN MOHD ZAIDDEEN MALAYSIANMALAYSIA 1,000,000 1.273

8 UMI UMAIRAH BINTI MUSA MALAYSIANMALAYSIA 1,000,000 1.273

9JF APEX NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR SIM PUI YEE (STA 1)

MALAYSIANMALAYSIA 970,000 1.235

10 NG MEI YEE MALAYSIANMALAYSIA 970,000 1.235

11 TAN PEI YEE MALAYSIANMALAYSIA 900,000 1.146

12 HO CHIN CHEOW MALAYSIANMALAYSIA 820,000 1.044

13 LIM SWEE GUAN MALAYSIANMALAYSIA 805,000 1.025


132ANALYSIS ON WARRANT HOLDINGSAS AT 7/5/2018



14 CHUA CHEE WOOI MALAYSIANMALAYSIA 762,200 0.970

15 MAYBANK NOMINEES (TEMPATAN) SDN BHDTING SIU HUI


16 ABD RAHMAN BIN ABDULLAH MALAYSIANMALAYSIA 740,000 0.942

17 ONG BOK LIM MALAYSIANMALAYSIA 700,000 0.891

18AFFIN HWANG NOMINEES (TEMPATAN) SDN. BHD.PLEDGED SECURITIES ACCOUNT FOR CHEH KAH YEE


19 AMRULQAYS BIN MAAROF MALAYSIANMALAYSIA 632,000 0.805

20 LAI TAI LOY MALAYSIANMALAYSIA 626,200 0.797

21DB (MALAYSIA) NOMINEE (TEMPATAN) SENDIRIAN BERHADEXEMPT AN FOR BANK OF SINGAPORE LIMITED


22 MAYBANK NOMINEES (TEMPATAN) SDN BHDWONG WAI HONG


23 TIEW KIAN YEAP MALAYSIANMALAYSIA 550,000 0.700

24 TAN OOI HAI KEONG MALAYSIANMALAYSIA 500,400 0.637

25

AFFIN HWANG NOMINEES (TEMPATAN) SDN. BHD.PLEDGED SECURITIES ACCOUNT FOR CHEH KAH ON


26 HO SIEW PING MALAYSIANMALAYSIA 500,000 0.636

27 LEONG HIN WAH MALAYSIANMALAYSIA 500,000 0.636

28 LEONG NGAN FOONG MALAYSIANMALAYSIA 500,000 0.636

29 LYE MING ZH MALAYSIANMALAYSIA 500,000 0.636

30 TAN TEONG HUN MALAYSIANMALAYSIA 500,000 0.636

SUMMARY : TOTAL NO. OF HOLDERS : 30TOTAL HOLDINGS : 32,006,600TOTAL PERCENTAGE (%) : 40.772


133

PROPERTIES OWNED BY THE COMPANY AND IT’S SUBSIDIARIES

Registered Beneficial

Owner

Description And

Existing Use

Location Tenure Land Area/Built-Up

Area

Age Of The

Building (Year)

Net Book Value (RM)

Date Of Acquisition

Asia Pacific Flight

Training Sdn. Bhd.

Office Premise

Suite 50-5-5, 5th Floor, Wisma UOA

Damansara, No. 50 Jalan Dungun, Bukit Damansara, 50490

Kuala Lumpur

Freehold N/A / 1,956 sq. ft

12 860000 10/03/10

Asia Pacific Flight

Training Sdn. Bhd.

3 storey Shophouse

1661, Commercial Area Bandar Baru

Kubang Kerian, 16150 Kota Baru,

Kelantan

Leasehold N/A ; 377.38

sq. ft

9 607200 20/06/11

LIST OF PROPERTIES HELD


134NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Seventh Annual General Meeting (“7th AGM”) of the Company will be held at Royale Chulan Seremban Jalan Dato A.S Dawood, 70100 Seremban, Negeri Sembilan, Malaysia on Thursday, 26 July 2018 at 9:00 a.m. for the transaction of the following businesses:

AGENDAA Ordinary Business

1. To receive the Audited Financial Statements for the financial period ended 31 January 2018 together with the Reports of the Directors and Auditors thereon.

2. To re-elect the following Directors who retires in accordance with Article 91 of the Articles of Association and being eligible, have offered themselves for re-election:-

a) Dato’ Y.T.M. Dato’ Muhammed bin Haji Abdullah, D.T.N.S., A.N.S., P.M.C., P.J.K., P.K.T. Ordinary Resolution 1

b) YM Tengku Shamsulbhari Bin Tengku Azman Shah, SMK Ordinary Resolution 2

c) Dato’ Sri Ahmad Said Bin Hamdan Ordinary Resolution 3

d) Mr Edwin Silvester Das Ordinary Resolution 4

e) Mr Chow Hung Keey Ordinary Resolution 5

3. To approve the payment of Directors’ Fee of RM 34,280.00 per annum for the period ended 31 January 2018;

Ordinary Resolution 6

4. To approve the payment of Directors’ Fee of RM 132,000.00 for the period from 1 February 2018 up to the 8th Annual General Meeting;


5. To re-appoint Messrs Adam & Co as Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration.


B Special Business

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

6. Authority to allot and issue shares in general pursuant to Sections 75 and 76 of the Companies Act, 2016


“THAT pursuant to Sections 75 and 76 of the Companies Act, 2016 and subject to the approvals of the relevant governmental/ regulatory authorities, the Directors be and are hereby empowered to issue shares in the capital of the Company from time to time 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 10% of the issued share capital of the Company for the time being and that the Directors be and are hereby also empow-ered to obtain approval from the Bursa Malaysia Securities Berhad for the listing and quotation of the additional shares so issued and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company”

7. To transact any other business of which due notice have been given.


135NOTICE OF ANNUAL GENERAL MEETING

BY ORDER OF THE BOARD

TAN TONG LANG (MAICSA 7045482)Company Secretary

Kuala Lumpur

Date: 31 May 2018

NOTES:

1. A member entitled to attend and vote at this meeting is entitled to appoint a proxy/proxies to attend and vote instead of him. A proxy may but need not be a member of the Company. There shall be no restrictions as to the qualifications 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.

2. Where a member appoints more than one proxy, the appointment shall be invalid unless he/she specifies the proportions of his/her holdings to be represented by each proxy.

3. The Form of Proxy, in the case of an individual, shall be signed by the appointer or his attorney, and in the case of a corporation, shall be executed under its Common Seal or under the hand of its attorney of the corporation duly authorised.

4. For the purpose of determining a member who shall be entitled to attend the Seventh AGM, the Company shall request Bursa Malaysia Depository Sdn Bhd to issue a Record of Depositors as at 19 July 2018. Only a depositor whose name appears on the Record of the Depositor as at 19 July 2018 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote on his/her behalf.

5. To be valid, the proxy form duly completed and signed must be deposited at the Share Registrar’s Office, at Tricor Investor & Issuing House Services Sdn Bhd, Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof.

Explanatory Notes to Ordinary Business:

The Audited Financial Statements laid at this meeting pursuant to Section 340(1)(a) of the Companies Act, 2016 are meant for discussion only. It does not require shareholders’ approval, and therefore, shall not be put forward for voting.

Explanatory Notes to Special Business:

The proposed Ordinary Resolution 9 is the renewal of the mandate obtained from the members at the last Annual General Meeting held on 19 December 2016 (“the previous mandate”). The previous mandate was not utilised and accordingly no proceeds were raised. The pro-posed resolution, if passed, will provide flexibility to the Directors to undertake fund-raising activities, including but not limited to placement of shares for the funding of the Company’s future investments projects, working capital and/or acquisitions, by the issuance of shares in the Company to such persons at any time, as the Directors may deem fit, without having to convene a general meeting. This authority, unless revoked or varied by the Company in a general meeting will expire at the conclusion of next Annual General Meeting of the Company.


136

THIS PAGE IS INTENTIONALLY LEFT BLANK

FORM OF PROXY APFT BERHAD (Company No. 886873-T)

I/We,...............................................................................................................................................................................

I.C. or Company No ..........................................................................................................................................................(Full name in block letters)

of................……………………..............................................…….......................................................................................(Full address)

.....................................................................................……............................................................................................

being a member/ members of APFT BERHAD hereby appoint (Proxy 1) ....................................................................................

I.C. No. ....................................................................... of ..............................................................................................

.............................................................................. or failing him/ her (Proxy 2) ................................................................

.................... I.C No. .........................................................................of ..........................................................................

........................................................................................................................................................................................or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us and on my/our behalf at the Seventh Annual General Meeting of the Company to be held at Royale Chulan Seremban, Jalan Dato A.S Dawood, 70100 Seremban, Negeri Sembilan, Malaysia on Thursday, 26 July 2018 at 9:00 a.m. or at any adjournment thereof.

The proxy is to vote on the Resolutions set out in the Notice of the Meeting as indicated with an “X” in the appropriate spaces. If no specific direction as to the voting is given, the Proxy will vote or abstain from voting at his/her discretion.

FOR AGAINST

RESOLUTION 1 To re-elect Dato’ Y.T.M. Dato’ Muhammed bin Haji Abdullah D.T.N.S., A.N.S.,

P.M.C., P.J.K., P.K.T. who retires in accordance with Article 91 of the Company’s Articles of Association

RESOLUTION 2 To re-elect YM Tengku Shamsulbhari Bin Tengku Azman Shah, SMK who retires in accordance with Article 91 of the Company’s Articles of Association

RESOLUTION 3 To re-elect Dato’ Sri Ahmad Said Bin Hamdan who retires in accordance with Article 91 of the Company’s Articles of Association

RESOLUTION 4 To re-elect Mr Edwin Silvester Das who retires in accordance with Article 91 of the Company’s Articles of Association

RESOLUTION 5 To re-elect Mr Chow Hung Keey who retires in accordance with Article 91 of the Company’s Articles of Association

RESOLUTION 6 To approve the payment of Directors’ Fees of RM 34,280.00 per annum for the period ended 31 January 2018

RESOLUTION 7 To approve the payment of Directors’ Fees of RM 132,000.00 for the period from 1 February 2018 up to the 8th Annual General Meeting

RESOLUTION 8 To re-appoint Messrs Adam & Co. as Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration.

RESOLUTION 9 Authority to issue shares pursuant to Sections 75 and 76 of the Companies Act, 2016

Signed this.............. day of ........................... 2018

..................................................Signature of Shareholder(s)

NOTES:1. A member entitled to attend and vote at this meeting is entitled to appoint a proxy/proxies to attend and vote instead of him. A proxy may but need not be a member of the Company.

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. 2. Where a member appoints more than one proxy, the appointment shall be invalid unless he/she specifies the proportions of his/her holdings to be represented by each proxy.3. The Form of Proxy, in the case of an individual, shall be signed by the appointer or his attorney, and in the case of a corporation, shall be executed under its Common Seal or under

the hand of its attorney of the corporation duly authorised.4. For the purpose of determining a member who shall be entitled to attend the Seventh AGM, the Company shall request Bursa Malaysia Depository Sdn Bhd to issue a Record of

Depositors as at 19 July 2018. Only a depositor whose name appears on the Record of the Depositor as at 19 July 2018 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote on his/her behalf.

5. To be valid, the proxy form duly completed and signed must be deposited at the Share Registrar’s Office, at Tricor Investor & Issuing House Services Sdn Bhd, Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof.

No. of shares held

CDS Account No.

The proportions of my/our holdings to be represented by my/our proxies are as follows:-

First ProxyNo. of Shares: ……………………………

Percentage : …………………………..….%

Second ProxyNo. of Shares: …………………….………

Percentage : …………………………….%

Then fold here

1st fold here

AFFIXSTAMP

Tricor Investor & Issuing House Services Sdn BhdUnit 32-01, Level 32, Tower A, Vertical Business SuiteAvenue 3, Bangsar South No.8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia

APFT BERHAD(886873-T)

Suite 9B.03, Level 10, Wisma E&C,2 Lorong Dungun Kiri, Damansara Heights50490 Kuala Lumpur Malaysia

Tel : +603 2092 3177Fax : +603 2093 9218

www.apft.com.my

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