Apollo Ar 2018_bursa (1).pdf

ANNUAL REPORT 201 8

APOLLO FOOD HOLDINGS BERHAD (291471-M) INCORPORATED IN MALAYSIA

CONTENTS

ANNUAL REPORT 2018

02

NOTICE OF ANNUAL GENERAL MEETING

06

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING

07

GROUP STRUCTURE

08

FINANCIAL HIGHLIGHTS

09

CORPORATE INFORMATION

10

CORPORATE GOVERNANCE OVERVIEW STATEMENT

20

DIRECTORS’ RESPONSIBILITY STATEMENT

21

AUDIT COMMITTEE’S REPORT

24

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

30

PROFILE OF DIRECTORS

33

PROFILE OF KEY SENIOR MANAGEMENT

34

MANAGEMENT DISCUSSION AND ANALYSIS

37

SUSTAINABILITY STATEMENT

40

FINANCIAL STATEMENTS

116

ANALYSIS OF SHAREHOLDINGS

119

LIST OF PROPERTIES

121

FORM OF PROXY

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NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN that the 24th Annual General Meeting of Apollo Food Holdings Berhad (Co. No. 291471-M) will be held at Delima Room, Level 2, The Puteri Pacific Hotel, Jalan Abdullah Ibrahim, 80730 Johor Bahru, Johor Darul Takzim on Tuesday, 30th October 2018 at 10.00 a.m. for the following purposes:AGENDA Ordinary Business 1.

To receive the Audited Financial Statements for the financial year ended 30 April 2018 and the Reports of the Directors and Auditors thereon.

(Please refer to Explanatory Note 1)

2.

To approve a first and final single tier dividend of 20 sen per share for the financial year ended 30 April 2018.

Resolution 1

3.

To approve the payment of Directors’ Fees for the financial year ended 30 April 2018.

Resolution 2

4.

To approve the payment of Directors’ benefits at the capping amount of RM56,000 from 1 May 2018 to the next Annual General Meeting of the Company to be held in year 2019.

Resolution 3

5.

To re-elect the following Directors retiring in accordance with the Constitution of the Company: (i) (ii) (iii) (iv) (v)

6.

Mr. Liang Kim Poh Datin Paduka Hjh. Aminah Binti Hashim Datuk Shireen Ann Zaharah Binti Muhiudeen Ms. Foo Swee Eng En. Halid Bin Hasbullah

- Article 116 - Article 116 - Article 122 - Article 122 - Article 122

To re-appoint Messrs BDO as Auditors of the Company and to authorise the Directors to fix their remuneration.

Resolution 4 Resolution 5 Resolution 6 Resolution 7 Resolution 8 Resolution 9

Special Business To consider and, if thought fit, to pass with or without any modification(s), the following Ordinary Resolutions: 7.

ORDINARY RESOLUTION CONTINUING IN OFFICE AS INDEPENDENT NON-EXECUTIVE DIRECTORS “Subject to the passing of Resolution 5, that approval be and is hereby given to Datin Paduka Hjh Aminah Binti Hashim, who has served as an Independent NonExecutive Director of the Company for a cumulative term of more than nine (9) years, to continue to act as an Independent Non-Executive Director of the Company until the conclusion of the next Annual General Meeting of the Company.”

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Resolution 10

APOLLO FOOD HOLDINGS BERHAD (291471-M) APOLLO FOOD HOLDINGS BERHAD (291471-M)

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NOTICE OF ANNUAL GENERAL MEETING (continued) 8.

9.

Proposed Gratuity Payment for Former Directors (a)

“That approval be and is hereby given for the Company to make gratuity payment of RM76,000.00 to Datuk P. Venugopal A/L V.K. Menon, the former Non-Independent Non-Executive Director of the Company and that authority be and is hereby given to the Directors of the Company to take all such actions as they may consider necessary to give full effect to this resolution.”

Resolution 11

(b)

“That approval be and is hereby given for the Company to make gratuity payment of RM115,000.00 to Mr Ng Chet Chiang @ Ng Chat Choon, the former Independent Non-Executive Director of the Company and that authority be and is hereby given to the Directors of the Company to take all such actions as they may consider necessary to give full effect to this resolution.”

Resolution 12

(c)

“That approval be and is hereby given for the Company to make gratuity payment of RM68,000.00 to En. Abdul Rahim Bin Bunyamin, the former Independent Non-Executive Director of the Company and that authority be and is hereby given to the Directors of the Company to take all such actions as they may consider necessary to give full effect to this resolution.”

Resolution 13

To transact any other business for which due notice shall have been given in accordance with the Company's Constitution and the Companies Act, 2016.

By Order of the Board APOLLO FOOD HOLDINGS BERHAD Yong May Li (LS 0000295) Wong Chee Yin (MAICSA 7023530) Company Secretaries Johor Bahru Date: 30 August 2018

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NOTICE OF ANNUAL GENERAL MEETING (continued) Notes:1.

A member entitled to attend and vote at the Meeting is entitled to appoint a proxy or proxies to attend and vote in his/her stead. A proxy may but need not be a member of the Company. There shall be no restriction as to the qualification of the proxy.

2.

Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy.

3.

Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint not more than two (2) proxies in respect of each securities account it holds in ordinary shares of the Company standing to the credit of the said securities account.

4.

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

5.

Where the Proxy Form is executed by a corporation, it must be either under its Common Seal or under the hand of an officer or attorney duly authorized.

6.

The Proxy Form must be deposited at the Registered Office of the Company situated at Suite 1301, 13th Floor, City Plaza, Jalan Tebrau, 80300 Johor Bahru, Johor Darul Takzim not less than 48 hours before the time set for holding the Meeting.

7.

For the purpose of determining a member who shall be entitled to attend this 24 th Annual General Meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd, in accordance with Article 81(2) of the Company’s Constitution and Section 34(1) of the Securities Industry (Central Depositories) Act, 1991 to issue a general meeting Record of Depositor as at 19 October 2018. Only a depositor whose name appears therein shall be entitled to attend the said meeting or appoint a proxy to attend and/or vote on his stead.

EXPLANATORY NOTES Ordinary Business 1.

Item 1 of the Agenda Explanatory Note 1 Agenda 1 is meant for discussion only as the provision of the Companies Act, 2016 and the Articles of Association constituting part of the Company’s Constitution does not require a formal approval of the Shareholders for the Audited Financial Statements. Hence, this Agenda is not put forward for voting.

Special Business 1.

Item 7 of the Agenda Ordinary Resolution Continuing in Office as Independent Non-Executive Directors The Ordinary Resolution 10 as proposed in Agenda 7 above pertaining to approval by shareholders for Datin Paduka Hjh Aminah Binti Hashim to continue in office as Independent Non-Executive Director of the Company. The Nomination Committee and the Board holds the view that she remain objective and independent in carrying out her roles and responsibilities as member of the Board and Board Committees. The length of her service does not interfere with her ability and exercise of independent judgment as Independent Director. Therefore, the Board has recommended that the approval of the shareholders be sought for her to continue to act as Independent Non-Executive Director of the Company. 4

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NOTICE OF ANNUAL GENERAL MEETING (continued) 2.

Item 8 of the Agenda Ordinary Resolution Proposed Gratuity Payment for Former Directors The Ordinary Resolution 11, 12 and 13, if passed, will give approval to the Company to make payment of gratuity amounting to RM76,000.00 to Datuk P. Venugopal A/L V.K. Menon, RM115,000.00 to Mr. Ng Chet Chiang @ Ng Chat Choon and RM68,000.00 to En. Abdul Rahim Bin Bunyamin respectively in recognition and appreciation of their long services and contributions to the Company.

CLOSURE OF BOOKS To determine shareholders’ entitlement to the dividend payment, if approved at the 24 th Annual General Meeting of the Company, the Share transfer books and Register of Members will be closed on 12 December 2018. The dividend, if approved, will be paid on 9 January 2019 to shareholders whose names appear in the Register of Members and Record of Depositors at the close of business on 12 December 2018. A depositor shall qualify for entitlement to the dividend only in respect of: (a)

shares transferred into the depositor’s securities account before 4.00 p.m. on 12 December 2018 in respect of ordinary transfers; and

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

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STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING The Twenty-Fourth (24th) Annual General Meeting of Apollo Food Holdings Berhad will be held at Delima Room, Level 2, The Puteri Pacific Hotel, Jalan Abdullah Ibrahim, 80730 Johor Bahru, Johor Darul Takzim on Tuesday, 30th October 2018 at 10:00 a.m. Directors standing for election/re-election There is no person standing for election as Director of the Company at this Annual General Meeting except for the following Directors who are seeking for re-election at the Twenty-Fourth (24th) Annual General Meeting of the Company as follows: Name of Director Mr. Liang Kim Poh Datin Paduka Hjh. Aminah Binti Hashim Datuk Shireen Ann Zaharah Binti Muhiudeen Ms. Foo Swee Eng En. Halid Bin Hasbullah

Article 116 116 122 122 122

Details of the director who is standing for re-election and his shareholdings are set out in the Director’s Profile on pages 30 to 32 and Analysis of Shareholding on page 116 of the Annual Report.

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(INCORPORATED IN MALAYSIA) ANNUAL REPORT 2018 ANNUAL REPORT 2018

GROUP STRUCTURE

APOLLO FOOD HOLDINGS BERHAD (291471-M)

Apollo Food Industries (M) Sdn Bhd

Hap Huat Food Industries Sdn Bhd

100%

100%

(189274-V)

(29228-W)

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FINANCIAL HIGHLIGHTS

240 220 200 180 160 140 120 100 80 60 40 20 0

Profit Before Tax (RM Million)

Earnings Per Share (Sen) 45

260 240 220 200 180 160 140 120 100 80 60 40 20 0

40 35 30 25 20 15 10 5 2018 2017 2016 2015 2014

0 2018 2017 2016 2015 2014

2018 2017 2016 2015 2014

50 45 40 35 30 25 20 15 10 5 0

Net Assets (RM Million)

2018 2017 2016 2015 2014

Revenue (RM Million)

Group

2018

2017

2016

2015

2014

Financial results (RM'000) Revenue Profit Before Tax Profit A�er Tax Profit A�ributable to Members Dividends

190,818 14,725 11,071 11,071 20,000

208,918 24,664 17,833 17,833 24,000

208,186 40,043 29,742 29,742 20,000

212,627 34,056 25,294 25,294 20,000

220,713 43,605 33,471 33,471 20,000

Financed by (RM'000) Shareholders' Funds Net Assets

243,615 243,615

253,250 253,250

257,561 257,561

248,432 248,432

243,674 243,674

13.84 25.00 3.05

22.29 30.00 3.17

37.18 25.00 3.22

31.62 25.00 3.11

41.84 25.00 3.05

Sta�s�cs Earnings Per Share (Sen) Gross Dividend Per Share (Sen) Net Assets Per Share (RM)

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(INCORPORATED IN MALAYSIA) ANNUAL REPORT 2018 ANNUAL REPORT 2018

CORPORATE INFORMATION BOARD OF DIRECTORS

Mr. Liang Chiang Heng Mr. Liang Kim Poh Datuk Shireen Ann Zaharah Binti Muhiudeen Datin Paduka Hjh. Aminah Binti Hashim Ms. Foo Swee Eng En. Halid Bin Hasbullah (appointed w.e.f. 27.08.2018) Mr. Ng Chet Chiang @ Ng Chat Choon (resigned w.e.f. 28.08.2018) Encik Abdul Rahim Bin Bunyamin (resigned w.e.f. 28.08.2018)

COMPANY SECRETARIES

Ms. Yong May Li (LS 0000295) (appointed w.e.f. 28.06.2018) Ms. Wong Chee Yin (MAICSA 7023530) Ms. Santhi Saminathan (MIA 37094) (resigned w.e.f. 28.06.2018)

REGISTERED OFFICE

Suite 1301, 13th Floor, City Plaza, Jalan Tebrau, 80300 Johor Bahru, Johor Darul Takzim. Tel No: 07-3322088 Fax No: 07-3328096

PRINCIPAL PLACE OF BUSINESS

70, Jalan Langkasuka, Larkin Industrial Area, 80350 Johor Bahru, Johor Darul Takzim. Tel No: 07-2365096 / 2365097 Fax No: 07-2374748 Email: [email protected]

SHARE REGISTRAR

TRICOR INVESTOR & ISSUING HOUSE SERVICES SDN BHD (11324-H) Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No.8, Jalan Kerinchi, 59200 Kuala Lumpur. Tel No: 03-27839299 Fax No: 03-27839222 Email: [email protected]

AUDITORS

Messrs BDO (AF 0206) Suite 18-04, Level 18, Menara Zurich, No 15, Jalan Dato’ Abdullah Tahir, 80300 Johor Bahru, Johor Darul Takzim. Tel No: 07-3319815 Fax No: 07-3319817

PRINCIPAL BANKERS

AmBank (M) Berhad AmFunds Management Berhad OCBC Bank (Malaysia) Berhad RHB Bank Berhad Malayan Banking Berhad

STOCK EXCHANGE LISTING

Main Market, Bursa Malaysia Securities Berhad

COMPANY’S WEBSITE

www.apollofood.com.my

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(Executive Chairman) (Executive Director cum Managing Director) (Non-Independent Non-Executive Director) (Independent Non-Executive Director) (Independent Non-Executive Director) (Independent Non-Executive Director) (Independent Non-Executive Director) (Independent Non-Executive Director)

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CORPORATE GOVERNANCE OVERVIEW STATEMENT The Board recognises the importance of good governance to support the Group’s con�nued growth and success. It is commi�ed to con�nuously improving and enhancing the Group’s procedures from �me to �me to ensure that the principles and best prac�ces in corporate governance recommended in the Malaysian Code on Corporate Governance 2017 (“the Code”) are applied within the Group to protect and enhance its shareholders’ value. The Group has complied substan�ally with the principles and best prac�ces outlined in the Code as indicated in the Corporate Governance Report (“CG Report”) which is available at the company’s official website: www.apollofood.com.my PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS Board Responsibili�es The Board has an overall responsibility for the proper conduct of the Company’s business and plays an ac�ve role in direc�ng management in an effec�ve and responsible manner. The Board has adopted most of the recommenda�ons as prescribed in the Code to effec�vely lead the Group and retains full and effec�ve control of the Group. This includes responsibility for determining the Group’s overall strategic direc�on, development and control. Key ma�ers, such as reviewing the performance of the Group, overseeing the corporate governance and conduct of the Group’s business, approval of annual and quarterly results, acquisi�ons and disposals of assets, as well as material agreements and major capital expenditures are reserved for the Board. The Board had delegated certain responsibili�es to the Audit Commi�ee, the Nomina�on Commi�ee and the Remunera�on Commi�ee. These Commi�ees have the authority to examine specific issues and forward their recommenda�ons to the Board which is ul�mately responsible for making the final decision. The Group’s Board Charter and formal Code of Conduct and Ethics are available at the Company’s official website. Board Composi�on and Balance As at end of the financial year, the Board consists of seven (7) Directors: Two (2) Execu�ve Directors (including the Execu�ve Chairman and Managing Director) One (1) Non- Independent Non-Execu�ve Director Four (4) Independent Non-Execu�ve Directors The concept of independence adopted by the Board is in tandem with the defini�on of an Independent Director in the Lis�ng Requirements. The key element of fulfilling the criteria is the appointment of an Independent Director, who is not a member of the management (a Non-Execu�ve Director) and is free of any rela�onship which could interfere with the exercise of independent judgement or the ability to act in the best interests of the Company and shareholders. More than one-third of the Board are Independent Non-Execu�ve Directors thereby bringing objec�ve, independent judgement to the decision making process. As and when any poten�al conflict of interest may arise, the Director concerned would declare his/her interest and abstain from the decision-making process and remain in a posi�on to fulfil his/her responsibility to provide a check and balance.

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(INCORPORATED IN MALAYSIA) ANNUAL REPORT 2018 ANNUAL REPORT 2018

CORPORATE GOVERNANCE OVERVIEW STATEMENT (continued) Board Composition and Balance (continued) The Board comprises an appropriate balance of Directors with diverse experience and expertise required for the effective stewardship of the Group and independence in decision making at Board level. In line with the Code’s Practice 1.3, the positions of Executive Chairman and Managing Director are held by different individuals. The Board is headed by an Executive Chairman who is responsible to lead the Board in its collective oversight of management whilst the Managing Director is primarily responsible in implementing the Board’s decisions and oversees the Group’s business and day-to-day management. Although the Executive Chairman is a Non-Independent Director, the Board is of the view that there are sufficient experienced and independent minded Directors to ensure adequate check and balance of authority exists in the Board. Given that there is a balanced Board with four experienced Independent Directors, independent judgement is able to exercise with strong independent element within the Board. The Chairman has considerable experience in the Group’s business and is able to provide leadership to the Board in considering and setting the overall strategies and objectives of the Group. The Board is of the view that it is in the best interest of the Group to the above arrangement so that the Group could have the benefit of a chairman who is well versed about the Group’s business and is capable to guide discussion and brief the Board in a timely manner on key issues and developments. The Code recommends the tenure of an Independent Director should not exceed a cumulative term of nine (9) years. Upon completion of the nine (9) years, an Independent Director may continue to serve on the Board subject to re-designation as a Non-Independent Director. If the Board intends to retain an Independent Director for more than nine (9) years, the Board should provide justification and seek shareholders’ approval during the annual general meeting. For Independent Directors who serve for more than twelve (12) years on the Board, annual approval from shareholders via two-tier voting process is a must. Mr Ng Chet Chiang @ Ng Chat Choon and Encik Abdul Rahim Bin Bunyamin, both who have served the Board for more than twelve (12) years have expressed their intention to resign as Directors of the Company before the Company's 24th Annual General Meeting is held. Therefore, the Company will not seek for shareholders' approval to retain both Mr. Ng and En. Abdul Rahim in this regards. However, Datin Paduka Hjh. Aminah Binti Hashim will continue to be Independent Director of the Company, notwithstanding having served as Independent Director on the Board for more than nine (9) years. She remains independent and objective in her deliberations and decision making of the Board and Board Committees and she is independent of the Company’s management and free from any business or other relationship which could interfere with the exercise of independent judgement or the ability to act in the interest of the Group. The Board holds the view that her length of services does not interfere with her exercise of independent judgement and in discharging her role as Independent Director. The Group benefits from long serving Director, who possess detailed knowledge of the Group’s business and has proven commitment, experience and competence to advise and oversee management. Corporate Governance Blueprint 2011 recommends that the Board should ensure women participation on the Board to reach 30% by year 2016. The Group has recently set up a formal policy on gender diversity, as disclosed on page 12, to encourage women’s participation in decision-making positions within the Board and senior management levels. The Group ensures at least one female director is appointed and served on the Board as the Board recognizes that a gender diverse Board can offer greater benefits, depth and breadth to the Group’s business strategies. The Board also believes it is important to recruit and retain the best qualified individual who possesses the requisite skills, knowledge, experience, independence, foresight and good judgement to contribute effectively to the Board, regardless of age, gender, race or religion. As at 30 April 2018, the Board of Directors comprises of seven members, three of whom are lady Directors, representing 42.9% of the Board composition. No senior Independent Director was nominated as the Board is of the view that all Directors should shoulder the responsibility collectively. A brief profile of each Director is presented on pages 30 and 32. 11

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CORPORATE GOVERNANCE OVERVIEW STATEMENT (continued) Board Composition and Balance (continued) APOLLO FOOD HOLDINGS BERHAD (Company No. 291471-M)

GENDER DIVERSITY POLICY Purpose of the Policy In pursuant with the recommendation provided in the Malaysian Code on Corporate Governance 2017 (“MCCG 2017”), this policy is set up to provide a framework for the Group to increase women participation either in board or senior management positions.

The Board’s Commitment The board recognises that a gender diverse board can offer greater benefits, depth and breadth to the Group’s business strategies as compared to a gender non-diverse board. Different points of views or insights can be provided via gender diversity at both board and senior management positions as gender diverse workforce can provide a stronger talent pipeline and more successful business planning for the Group. In order to enhance women participation in decision-making positions, the board is responsible in monitoring its appointment process in a manner that promotes gender diversity. The Nomination Committee thus will become an important role in: • • •

Paying attention on experience female candidates with qualified skills and knowledge and recruiting her to fill in vacancy for board or senior management positions. Developing succession plans to ensure appropriate focus on gender diversity. Reviewing any other strategies related to gender diversity delegated by the board from time to time.

Monitoring and Measurement The Group ensure at least one female director is appointed and served on the board. Nevertheless, the Group is working towards to have more female directors (30% women participation) on the board if there is any opportunity arises. The Nomination and Remuneration Committee will assess the performance of female directors and ensure appropriate women participation on the board annually. The Group will also strive to provide and maintain a suitable working environment that is free from harassment and gender discrimination in order to attract and retain women participation on the board and senior management positions.

Review and Disclosures The Group will make appropriate disclosures on gender diversity policy in its annual report based on the practice stated in MCCG 2017. This policy is reviewed and approved by the board on 28 March 2018.

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CORPORATE GOVERNANCE OVERVIEW STATEMENT (continued) Board Meetings All Board meetings are scheduled in advance at the beginning of each financial year to enable Directors to plan ahead and maximise their attendance. The Board normally meets 4 times a year with additional meetings convened as and when necessary. During the financial year ended 30 April 2018, the Board met 4 times, where it deliberated upon and considered a variety of matters including the Group’s financial results, major investments, strategic decisions, business plan and direction of the Group. All the Directors have complied with the minimum 50% attendance as required by Paragraph 15.05 of the Bursa Malaysia Berhad’s Listing Requirements. The Company Secretary attends all Board meetings and all proceedings and conclusions from the Board meetings are minuted and signed by the Chairman. In the periods between the Board Meetings, Board approvals were sought via circular resolutions, which were attached with sufficient information required to make informed decision. Details of Board members attendance at Board meetings are as follows: Director Liang Chiang Heng Liang Kim Poh Ng Chet Chiang @ Ng Chat Choon Abdul Rahim Bin Bunyamin Datin Paduka Hjh. Aminah Binti Hashim Datuk P. Venugopal A/L V. K. Menon (Resigned on 24 October 2017) Datuk Shireen Ann Zaharah Binti Muhiudeen (Appointed on 29 January 2018) Ms. Foo Swee Eng (Appointed on 29 January 2018)

Number of Board meetings held during the year 4 4 4 4 4 1

Number of meetings attended by Directors 4 4 4 4 4 1

1

0

1

1

Supply of Information Notices, agenda, Board papers, and other meeting materials of each meeting are issued in a timely manner – five business days prior to the meetings to enable Directors to obtain further explanations/clarifications, where necessary, in order to be properly briefed before the meeting. All Directors have access to the advice and services of the Company Secretary in carrying out their duties. If necessary, the Directors may seek external advice and call for additional clarification and data from the management to assist them in forming their opinion and findings in the lead up to Board decisions.

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CORPORATE GOVERNANCE OVERVIEW STATEMENT (continued) Directors’ Training The Board is mindful of the importance for its members to undergo continuous training to be apprised of changes to the regulatory requirements and the impact of such regulatory requirements have on the Group. All the Directors of the Company have attended the Mandatory Accreditation Programme conducted by Bursa Malaysia Training Sdn Bhd within the stipulated timeframe required by the Main Market Listing Requirement of Bursa Malaysia. During the financial year, the Directors had attended the training programmes as follows: Director Liang Chiang Heng Liang Kim Poh Ng Chet Chiang @ Ng Chat Choon

• • • • •

Abdul Rahim Bin Bunyamin Datin Paduka Hjh. Aminah Binti Hashim Foo Swee Eng Datuk Shireen Ann Zaharah Binti Muhiudeen

• • • • • • • • •

Training Programme Attended Malaysian Code on Corporate Governance 2017 Malaysian Code on Corporate Governance 2017 Seminar on “Companies Act 2016” Seminar on “AGM, Accounts, Annual Returns Under the Companies Act 2016” SSM National Conference 2017 on Implementing the Companies Act 2016 Malaysian Code on Corporate Governance 2017 Malaysian Code on Corporate Governance 2017 Malaysian Code on Corporate Governance 2017 Companies Act 2016 Unlocked Mandatory Accreditation Programme for Directors of Public Listed Companies Workshop on Liquidity Risk Governance Compliance Conference 2017 Cyber Security Awareness AmBank Digital Briefing

The Directors will continue to attend relevant seminars and programmes to further enhance their skills and knowledge and to keep abreast with relevant changes and developments in the market place to assist them in the discharge of their stewardship role. Appointment and Re-election of Directors The Nomination Committee is responsible for the identification and making of recommendations on any nomination of new Directors to the Board and ensuring the appointments of individuals with appropriate experience and knowledge to fulfil the duties of a Director. There is an informal familiarisation programme in place for new Directors, which included visit to the factory, meeting with the senior management as appropriate, to facilitate their understanding of the Company’s business and operations. In accordance with the Company’s Articles of Association (Constitution), nearest to one third (1/3) of the Directors, including the Managing Director, shall retire from office at every Annual General Meeting but shall be eligible for re-election provided always that each Director shall retire at least once every three years. Directors who are appointed by the Board during the financial year are subject to re-election by the shareholders at the next Annual General Meeting held following their appointments. The names of Directors seeking for re-appointment and re-election at the forthcoming Annual General Meeting are disclosed in the Notice of Annual General Meeting in this Annual Report. 14

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(INCORPORATED IN MALAYSIA) ANNUAL REPORT 2018 ANNUAL REPORT 2018

CORPORATE GOVERNANCE OVERVIEW STATEMENT (continued) Remuneration Committee The Remuneration Committee was established on 29 June 2000 with clear defined terms of reference. It comprises three Independent Non-Executive Directors and one Non-Independent Non-Executive Director and its composition is as follows: Chairman Ng Chet Chiang @ Ng Chat Choon Members Abdul Rahim Bin Bunyamin Datin Paduka Hjh. Aminah Binti Hashim Datuk P. Venugopal A/L V.K Menon (Resigned on 24 October 2017)

Independent Non-Executive Director

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

The Committee meets at least once a year. The Remuneration Committee reviews and makes recommendations to the Board on the remuneration and other entitlements of the Executive Directors and Senior Management to ensure they are rewarded appropriately for their contribution to the Group’s growth and profitability. Remuneration of Non-Executive Directors is linked to their level of responsibilities. The Executive Directors play no part in the deliberations and decisions on their remuneration. The remuneration and entitlements of Non-Executive Directors are decided by the Board with the Director concerned abstaining from deliberations and voting on decisions in respect of his remuneration. The Directors’ fees, Directors’ remuneration and other benefits are subject to shareholders’ approval at the Annual General Meeting. Aggregate remuneration of the Directors categorised into appropriate components for the financial year ended 30 April 2018 are as follows:

Executive Directors Liang Chiang Heng Liang Kim Poh Sub-total Non-Executive Directors Ng Chet Chiang @ Ng Chat Choon Abdul Rahim Bin Bunyamin Datin Paduka Hjh. Aminah Binti Hashim Datuk P. Venugopal A/L V.K.Menon (Resigned 24 October 2017) Datuk Shireen Ann Zaharah Binti Muhiudeen (Appointed on 29 January 2018) Foo Swee Eng (Appointed on 29 January 2018) Sub-total Total

Salaries, Bonus and Allowances RM

Other Emoluments

Fees

Total

RM

RM

3,915,932 1,961,506 5,877,438

48,816 48,816

475,330 238,232 713,562

53,000 39,000 92,000

4,444,262 2,287,554 6,731,816

10,500 8,000 7,000

4,000 4,000 4,000

-

47,000 43,000 43,000

61,500 55,000 54,000

4,000

2,000

-

-

6,000

-

-

-

-

-

-

-

-

-

-

29,500 5,906,938

14,000 62,816

713,562

133,000 225,000

176,500 6,908,316

RM

15

Defined Contribution Plans RM

16 APOLLO FOOD HOLDINGS BERHAD (291471-M) APOLLO FOOD HOLDINGS BERHAD (291471-M) (INCORPORATEDANNUAL IN MALAYSIA) REPORT 2018 ANNUAL REPORT 2018

CORPORATE GOVERNANCE OVERVIEW STATEMENT (continued) Remuneration Committee (continued) Aggregate remuneration of the senior management within the band of RM50,000 for the financial year ended 30 April 2018 are as follows: Range of Remuneration RM 1,550,001-1,600,000 1,350,001-1,400,000 100,000-150,000

Senior Management Liang Kim Tee Liang Thong Guan Tan Sew Eng

The Remuneration Committee met once during the financial year and it was attended by all of its members. Nomination Committee The Nomination Committee was established on 23 March 2000 with clear defined terms of reference. It comprises three Independent Non-Executive Directors and one Non-Independent Non-Executive Director and its composition is as follows: Chairman Ng Chet Chiang @ Ng Chat Choon Members Abdul Rahim Bin Bunyamin Datin Paduka Hjh. Aminah Binti Hashim Datuk P. Venugopal A/L V.K Menon (Resigned on 24 October 2017)

Independent Non-Executive Director

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

The Committee is responsible for making recommendations to the Board on appointment of all new members to the Board and Committees of the Board. From year 2018 onwards, the Committee has extended its roles to include the appointment of senior management in compliance with the Code Practice 4.4. The Committee has to provide a formal and transparent procedure for such appointments. During the financial year ended 30 April 2018, the Nomination Committee has made recommendations to the Board on the appointment of one new Independent Non-Executive Director – Ms Foo Swee Eng and one new Non-Independent Non-Executive Director – Datuk Shireen Ann Zaharah Binti Muhiudeen. Their appointments are based on recommendations made by existing board members and major shareholder. The Board consists of major Independent Directors who are competent and professional in their respective fields. The Board will prioritise candidates recommended by internal sources before the use of independent sources. Their profiles are presented on pages 30 and 31. The Committee reviews annually the performance of the Board, Board Committees, and individual Directors as well as the required mix of skills and experience of the Directors on the Board in determining the appropriate balance and size of Executive and Non-Executive participation. Self assessment and peer review are carried out and facilitated by Company Secretary during the annual evaluation. The Nomination Committee meeting will be held at least once annually. The Committee meeting held during the financial year 30 April 2018 was attended by all members. The Chairman of the Nomination Committee is an Independent Non-Executive Director as per the Code’s Practice 4.7. By virtue of his vast experience, the Board believes that the existing Chairman of the Nomination Committee is competent and capable to lead the Nomination Committee in ensuring that the Board composition meets the needs of the Group. 16

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CORPORATE GOVERNANCE OVERVIEW STATEMENT (continued) PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT Audit Committee The composition of membership and the terms of reference of the Audit Committee and other pertinent information about the Audit Committee and its activities are highlighted in the Audit Committee Report set out on pages 21 to 23 of the Annual Report. Financial Reporting In presenting the annual financial statements and quarterly announcement of results to shareholders, the Directors take responsibility to present a balanced and accurate assessment of the Group’s position and prospects. The Audit Committee assists the Board in scrutinising the information for disclosure to ensure accuracy and transparency. Risk Management and Internal Controls The Board acknowledges its responsibility of maintaining a sound system in of internal controls covering not only financial controls but also operational and compliance controls as well as risk assessments. The internal control system is designed to meet the Group’s particular needs and to manage and minimise the risks to which it is exposed. This system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable, and not absolute, assurance against material misstatement, fraud or loss. Ongoing reviews are continuously being carried out to ensure the effectiveness, adequacy and integrity of the risk management framework and internal control systems in safeguarding the Group’s assets and therefore shareholders’ investment in the Group. The internal auditors report independently to the Audit Committee. The Statement of Risk Management and Internal Control is set out on pages 24 to 29 of the Annual Report. Relationship with External Auditors The role of the Audit Committee in relation to the external auditors is described in the Audit Committee Report. The Company maintained a formal and transparent relationship with its auditors to ensure compliance with the applicable accounting standards in Malaysia. During the financial year, the Audit Committee met 2 times with the external auditors without the presence of the Executive Directors and Management. The external auditors have also confirmed with the Audit Committee that they have been independent throughout the conduct of the audit engagement in accordance with the independence rules of the Malaysian Institute of Accountants and International Ethics Standards Board for Accountants.

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18 APOLLO FOOD HOLDINGS BERHAD (291471-M) APOLLO FOOD HOLDINGS BERHAD (291471-M) (INCORPORATEDANNUAL IN MALAYSIA) REPORT 2018 ANNUAL REPORT 2018

CORPORATE GOVERNANCE OVERVIEW STATEMENT (continued) PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS Shareholders Relations The Company maintains a policy of disseminating information that is material for shareholders’ attention through announcements and release of financial results on a quarterly basis, which provide the shareholders and the investing public with an overview of the Group’s performance and operations. At the Annual General Meeting of the Company, the Directors welcome the opportunity to gather the views of shareholders. Notices of each meeting are issued on a timely manner to all, and in the case of special business, a statement explaining the effect of the proposed resolutions is provided. Upon request, the Managing Director will also meet up with institutional investors, press and investment analysts to explain to them the Group’s operations so as to give them a better understanding of the Group’s business, but also to ensure that price sensitive information regarded as material undisclosed information about the Group is not revealed until after the prescribed announcement has been made to Bursa Securities. Corporate Social Responsibility The Group is committed to be a successful and responsible corporate citizen by not just delivering quality products and services and generating attractive returns to our customers and shareholders, but also recognising that it is our corporate social responsibility to ensure that we conduct our business in an ethical, professional and socially responsible manner. As we strive to achieve this aim, we recognise our responsibility to our employees, business associates and community with whom we conduct our business as well as the environment we operate in. The Group has always endeavored to safeguard the welfare of its employees by recognising its employees as an important asset. Occupational Safety and Health Programme have been established to provide a safe and healthy workplace and environment for the employees and visitors. Employees are also provided with the necessary training on an ongoing basis to further enhance their skills and knowledge. On community welfare, the Group has from time to time donated cash and sponsored company products to various organisations, associations and schools for them to carry out their various activities. The Group adheres strictly to all applicable environmental laws and regulations. Production processes are being constantly monitored and upgraded to ensure compliance with any changes in the environmental laws and regulations. Employees are encouraged to reduce wastage in operation and office resources at all times. The Group is committed to seek continuous improvements in its operations to minimise any negative impact on the environment.

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CORPORATE GOVERNANCE OVERVIEW STATEMENT (continued) ADDITIONAL COMPLIANCE INFORMATION In compliance with the Bursa Securities Listing Requirements, the following additional information is provided:(a) Recurrent Related Party Transactions (RRPT) The Company did not have any recurrent related party transactions of revenue nature for the financial year ended 30 April 2018. (b) Utilisation of Proceeds No proceeds were raised by the Company from any corporate proposal during the financial year.. (c) Deviation in Financial Results There was no deviation between the results for the financial year and the unaudited results previously announced. (d) Audit and Non-audit Fees The amount of audit and non-audit fees paid to external auditors and its affiliated company during the financial year ended 30 April 2018 are as follows: Group RM 88,000 20,800

Audit fees Non-audit fees

Company RM 30,000 5,100

(e) Material Contracts There were no material contracts outside the ordinary course of business, including contract relating to loan, entered into by the Company and/or its subsidiaries involving Directors and major shareholders that are still subsisting at the end of the financial year or which were entered into since the end of the previous financial year. (f) Revaluation Policy There was no revaluation performed on all properties of the Group during the financial year.

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DIRECTORS’ RESPONSIBILITY STATEMENT The Directors are required by the Companies Act 2016 to prepare financial statements for each financial year which have been made out in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the provisions of the Companies Act 2016 in Malaysia and to give a true and fair view of the financial position of the Group and of the Company at the end of the financial year and of the financial performance and cash flows of the Group and of the Company for the financial year then ended. During the preparation of the financial statements for the financial year ended 30 April 2018, the Directors have ensured that: ▪ The Group and the Company have used appropriate accounting policies which are consistently applied; ▪ Reasonable judgements and estimates that are prudent and reasonable have been made; and ▪ All applicable Malaysian Financial Reporting Standards and International Financial Reporting Standards in Malaysia have been followed. The accounting and other records required by the Act are properly kept and disclosed with reasonable accuracy on the financial position of the Group and of the Company which enable them to ensure that the financial statements comply with the Act. The Directors have general responsibilities for taking such steps that are reasonably available to them to safeguard the assets of the Group and of the Company to prevent and detect fraud and other irregularities and material misstatements. Such systems, by their nature, can only provide reasonable and not absolute assurance against material misstatement, loss and fraud.

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(INCORPORATED IN MALAYSIA) ANNUAL REPORT 2018 ANNUAL REPORT 2018

AUDIT COMMITTEE’S REPORT The Audit Committee (Committee) adopted the terms of reference which is available at the Company’s official website. COMPOSITION OF MEMBERS For the financial year ended 30 April 2018, the Committee comprised the following members:Chairman Ng Chet Chiang @ Ng Chat Choon Members Abdul Rahim Bin Bunyamin Datin Paduka Hjh. Aminah Binti Hashim Datuk P. Venugopal A/L V.K Menon (Resigned on 24 October 2017)

Independent Non-Executive Director

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

ACTIVITIES OF THE COMMITTEE The Committee met four times during the financial year ended 30 April 2018. The attendance of each Committee member was as follows:

Ng Chet Chiang @ Ng Chat Choon Abdul Rahim Bin Bunyamin Datin Paduka Hjh. Aminah Binti Hashim Datuk P. Venugopal A/L V. K. Menon (Resigned on 24 October 2017)

Total number of meetings held during the year 4 4 4 1

Number of meetings attended by Directors 4 4 4 1

The activities undertaken by the Audit Committee in the discharge of its duties and responsibilities for the financial year under review included the following: Financial Reporting i. Reviewed the audited results and audited financial statements together with Directors’ and Auditors Report prior to submission to the Board for their consideration and approval. The audited financial statements were prepared in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. ii. Reviewed the Group’s unaudited quarterly reports and announcements before recommending them for the Board’s consideration and approval. The unaudited quarterly financial results for the first quarter ended 31 July 2017, second quarter ended 31 October 2017, third quarter ended 31 January 2018, and fourth quarter ended 30 April 2018 were tabled at the meeting held on 24 August 2017, 28 December 2017, 28 March 2018, and 28 June 2018 respectively.

21

22 APOLLO FOOD HOLDINGS BERHAD (291471-M) APOLLO FOOD HOLDINGS BERHAD (291471-M) (INCORPORATEDANNUAL IN MALAYSIA) REPORT 2018 ANNUAL REPORT 2018

AUDIT COMMITTEE’S REPORT (continued) ACTIVITIES OF THE COMMITTEE (continued) External Audit i. Reviewed and recommended to the Board on the re-appointment of Messrs BDO as external auditors for the next financial year. ii. Reviewed and discussed with the external auditor on audit findings and outstanding matters. iii. Review the external auditors’ audit planning memorandum which includes the audit engagement and reporting responsibilities, audit approaches, areas of significant auditor attention, proposed audit deliverable timelines and proposed statutory audit fees for the financial year ended 30 April 2018. iv. Reviewed the competency and independence of external auditors for the year. v. Met with the external auditors without the presence of any executive board members and management personnel. Internal Audit i. Reviewed the methodology, approach, scope and frequency of the proposed internal audit plan for the financial year ended 30 April 2018. ii. Reviewed the internal audit reports which include the summary of internal audit results, recommendations suggested by internal auditors, management’s response and follow-up actions taken by management on such recommendations for the financial year. The internal audit function of the Group is outsourced to an independent professional firm, NeedsBridge Advisory Sdn Bhd, which reports directly to the Audit Committee. The internal audit function assists the Board in assessing the adequacy and operating effectiveness of the internal control system established by Management based on an agreed scope of work approved by the Audit Committee. The activities carried out by the internal auditors for the financial year ended 30 April 2018 included the following: i. Prepared annual internal audit plan for Audit Committee’s review and approval; ii. Assessed the adequacy and effectiveness of the governance, risk and control structures, compliance with the Group’s policies and procedures based on approved internal audit plan; iii. Proposed recommendation for the internal audit issues highlighted to the Audit Committee; and iv. Provided status of formulation of respective management action plans in relation to the internal audit findings for previous internal audit cycle conducted and its progress of implementation to the Audit Committee An overview on the details of internal audit function and state of risk management and internal control is set out in the Statement on Risk Management and Internal Control on pages 24 to 29 of the Annual Report.

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(INCORPORATED IN MALAYSIA) ANNUAL REPORT 2018 ANNUAL REPORT 2018

AUDIT COMMITTEE’S REPORT (continued) ACTIVITIES OF THE COMMITTEE (continued) Others i. Reported to and updated the Board on significant issues and concerns discussed during the Committee and where appropriate made the necessary recommendations to the Board; and ii. Reviewed relevant information and statements prior to the Board’s approval for inclusion in the Company’s annual report. The statements include Corporate Governance Overview Statement, Statement on Risk Management and Internal Control, Management Discussion and Analysis Statement, Director’s Responsibility Statement, and Audit Committee Report. iii. Discussed any other matters raised during the meeting.

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24 APOLLO FOOD HOLDINGS BERHAD (291471-M) APOLLO FOOD HOLDINGS BERHAD (291471-M) (INCORPORATEDANNUAL IN MALAYSIA) REPORT 2018 ANNUAL REPORT 2018

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL INTRODUCTION Pursuant to paragraph 15.26(b) and Practice Note 9 of the Bursa Malaysia Securities Berhad Main Market Listing Requirements in relation to requirement to prepare statement about the state of risk management and internal control of the listed issuer as a group, and as guided by the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers (“the Guidelines”) and the Malaysian Code on Corporate Governance (“MCCG”), the Board of Directors (“the Board”) of Apollo Food Holdings Berhad (“the Company”) (collectively with its subsidiaries, “the Group”) is pleased to present the statement on the state of risk management and internal control of the Group for the financial year ended 30 April 2018 and up to the date of approval of this statement. The scope of this Statement includes the Company and all operating subsidiaries. BOARD RESPONSIBILITY The Board affirms its overall responsibility for maintaining a sound risk management and internal control system and for reviewing their adequacy and effectiveness so as to safeguard all its stakeholders’ interests and protecting the Group’s assets. The system of internal controls includes, inter-alia, risk assessment as well as financial, operational, environmental and compliance controls. The Board is responsible to determine the acceptable risk tolerance and appetite of the Group as well as to articulate and implement risk management and internal control system. The Board delegates the duty of identification, assessment and management of key business risks to the Executive Chairman and Senior Management and its review role to the Audit Committee, through terms of reference approved by the Board, in order to provide assurance to the Board on the adequacy and effectiveness of risk management and internal control system of the Group. However, in view of the limitations that are inherent in any system of internal controls, the system of internal controls is designed to manage, rather than to eliminate, the risk of failure to achieve the Group’s business objectives. Accordingly, the system of internal controls can only provide reasonable and not absolute assurance against material misstatement of losses and fraud. RISK MANAGEMENT The Board maintains an on-going commitment for identifying, evaluating and managing significant risks faced by the Group during the financial year under review. The Board, via the Risk Management Committee established by the Executive Chairman and Senior Management, had put in place structured Risk Management Policy and internal control system in order to manage key business risks faced by the Group adequately and effectively. The responsibility for the identification, evaluation and management of the key business risks is delegated to the Executive Chairman and Senior Management and executed by the Risk Management Committee, led by Technical Director. The Risk Management Policy defines the risk management processes to be employed and reporting structure of Risk Management Committee. The systematic risk management process as defined in the Risk Management Policy is employed by the Risk Management Committee for risk identification, risk assessment, control identification, risk treatment and control activities. Risk assessment, at gross and residual level, is guided by the likelihood rating and impact rating established based on the risk tolerance and appetite established in the Risk Management Policy. Based on the risk management process, Risk Sheets were compiled by the Risk Management Committee and reviewed by the Executive Chairman, with the relevant key risks identified rated based on the agreed upon risk rating. The Risk Sheets are used for the identification of high residual risks which are above the risk tolerance and appetite of the Group that requires the Risk Management Committee and the Board’s immediate attention and risk treatment as well as for future risk monitoring.

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(INCORPORATED IN MALAYSIA) ANNUAL REPORT 2018 ANNUAL REPORT 2018

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (continued) RISK MANAGEMENT (continued) As an important risk monitoring mechanism, the Risk Management Committee review the Risk Sheets and assessment of emerging risks identified on an annual basis or on more frequent basis (if circumstances required). During the financial year under review, the Risk Management Committee conducted a review and assessment exercise whereby existing key business risks were reviewed with emerging risks identified assessed and incorporated into the Risk Sheets for on-going risk monitoring and assessment. The proceeding of the meeting of the Risk Management Committee was documented in the minutes of meeting. The Risks Sheets was subjected to review by the Executive Chairman. The Group’s risk management is embedded into key processes at all level of organisation structure whereby respective head of departments (as risk owners) are delegated with the responsibility to continuously identify, evaluate and manage the existing and emerging risks, resulting from changes to internal and external environment, faced by the Group under their scope of responsibility by formulating and implementing adequate internal control to manage the risk exposure identified. Changes in the key operational risks or emergence of new key business risks are identified through daily operational management and controls and review of financial and operational reports by respective level of Management generated by internal management information system supplemented by external data and information collected. Respective risk owners are responsible to assess the changes to the existing operational risks and emerging risks and to formulate and implement effective controls to manage the risks. Critical and material risks are highlighted to the Executive Chairman for the final decision on the formulation and implementation of effective internal controls. The Executive Directors manage key business risks faced by the Group through constant communication among themselves and with respective head of departments during daily management of operation and through scheduled management meetings. Changes in the key business risks faced by the Group or emergence of new key business risks are highlighted to the Board for deliberation and decision making, if any. At strategic level, business strategies with risks consideration are formulated by the Executive Directors and presented to the Board for review and deliberation to ensure proposed plans and strategies are in line with the Group’s risk tolerance and appetite. In addition, specific strategic and key operational risks are highlighted and deliberated by the Audit Committee and the Board during the review of the financial performance of the Group in the scheduled meetings. During the financial year under review, the internal audit function conducted a review of the adequacy and effectiveness of the Risk Management Policy based on the instruction from the Audit Committee. The results of the review and areas of improvement on the risk management policy and process implemented with management action plans formulated by the Risk Management Committee were reported to the Audit Committee for review and to determine its adequacy and effectiveness in the context of the Group’s business and operations. The monitoring of the risk management by the Group is enhanced by the internal audits carried out by the internal audit function with specific audit objectives and business risks identified for each internal audit cycles based on the internal plan approved by the Audit Committee. The Group had practised the above process for the financial year under review and up to the date of approval of this statement. Please refer to the “Risk Overview” of the Management Discussion and Analysis for the significant risks faced by the Group and the mitigation plans implemented.

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26 APOLLO FOOD HOLDINGS BERHAD (291471-M) APOLLO FOOD HOLDINGS BERHAD (291471-M) (INCORPORATEDANNUAL IN MALAYSIA) REPORT 2018 ANNUAL REPORT 2018

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (continued) INTERNAL CONTROL SYSTEM The key features of the Group’s internal control system are described below: •

Board of Directors/Board Committees Board Committees (i.e. Audit Committee, Remuneration Committee and Nomination Committee) had been established by the Board to carry out duties and responsibilities delegated by the Board, governed by written terms of reference. Meetings of Board of Directors and respective Board Committees are carried out on scheduled basis to review the performance of the Group, from financial and operational perspective, and to carry out its fiduciary duties. Potential business strategies are proposed by the Executive Directors for the Board’s review and approval, after taking into consideration risk and responses.

•

Integrity and Ethical Value The tone from the top on integrity and ethical value are enshrined in formal Code of Conduct established and approved by the Board. This formal code forms the foundation of integrity and ethical value for the Group. Integrity and ethical values expected from the employees are incorporated in the Employees Handbook whereby the ethical behaviour and proper conduct expected from employees to carry out their duties and responsibilities assigned is established and formalised.

•

Organisation Structure and Authorisation Procedure The Group has a formal organisation structure in place to ensure appropriate level of authority and delegation of responsibilities to competent staff in achieving operational effectiveness and efficiency.

•

Policy and Procedure The Group has documented policies and procedures that are periodically reviewed and updated to ensure its relevance to regulate key operations in compliance with its International Organisation for Standardisation (“ISO”) certification and Good Manufacturing Practice (“GMP”) certification.

•

Employee Handbook Guidelines on the human resource management are in place to ensure the Group’s ability to operate in an effective and efficient manner by employing and retaining adequate competent employees possessing necessary knowledge, skill and experience in order to carry out their duties and responsibilities assigned effectively and efficiently. Performance evaluations are carried out for all levels of staff to identify performance gaps, for training needs identification and talent development.

•

Information and Communication At operational levels, clear reporting lines are established across the Group and operation and management reports are prepared for dissemination to relevant personnel for effective communication of critical Information throughout the Group for timely decision-making and execution in pursuit of the business objectives. Matters that require the Board and Senior Management’s attention are highlighted for review, deliberation and decision.

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STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (continued) INTERNAL CONTROL SYSTEM (continued) •

Information and Communication (continued) The Group puts in place effective and efficient information and communication infrastructures and channels, i.e. computerized systems, secured intranet, electronic mail system and modern telecommunication, so that operation data and management information can be communicated timely and securely to dedicated personnel within the Group for decision making. Apart from that, relevant financial and management reports are generated for different levels of the organization structure for review and decision making. The management and board meetings are held for effective two-way communication of information at different level of management and the Board.

•

Monitoring and Review Executive Directors are closely and directly involved in operations and regular reviews the operational data including production, marketing and financial data. Regular management meetings, supported by operation and financial reports (including key indicators) prepared by respective departments, are held to assess the Group’s performance and risks factors in order to formulate and implement mitigating controls. Apart from the above, the quarterly financial performance review containing key financial results and previous corresponding financial results are presented to the Board for their review. Internal quality audits are carried out for the purpose of compliance with ISO22000:2005 Food Safety Management System and GMP certification by in-house independent personnel to provide assurance of compliance with established ISO and GMP procedures and the monitoring of compliance with relevant laws and regulations by relevant regulatory bodies on specific areas of safety, health and environment.

INTERNAL AUDIT The review of the adequacy and effectiveness of the Group’s risk management and internal control system is outsourced to an independent professional firm, NeedsBridge Advisory Sdn Bhd, who, through the Audit Committee, provides the Board with much of the assurance it requires in respect of the adequacy and effectiveness of the Group’s system on the risk management and internal control. The outsourced internal audit function is reporting to the Audit Committee directly. The appointment and resignation of the internal audit function as well as the scope of works together with proposed audit fees are subject to review and approval by the Audit Committee for its reporting to the Board for ultimate approval. To preserve the independence and objectivity, the outsourced internal audit function is not permitted to act on behalf of Management, decide and implement management action plan, perform ongoing internal control monitoring activities (except for follow up on progress of action plan implementation), authorize and execute transactions, prepare source documents on transactions, have custody of assets or act in any capacity equivalent to a member of the Management or the employee. The outsourced internal audit function is accorded unrestricted access to all functions, records, property, personnel, Audit Committee and other specialized services from within or outside the Group and necessary assistance of personnel in units of the Group where they perform audits. The engagement director of the outsourced internal audit function, Mr. Pang Nam Ming, is a Certified Internal Auditor accredited by the Institute of Internal Auditors Global and a professional member of the Institute of Internal Auditors Malaysia. The internal audits are carried out, in material aspects, in accordance with the International Professional Practices Framework established by the Institute of Internal Auditors Global. The outsourced internal audit function is manned by one (1) engagement director, three (3) managers/assistant manager and five (5) senior consultants/consultants during the financial year under review. 27

28 APOLLO FOOD HOLDINGS BERHAD (291471-M) APOLLO FOOD HOLDINGS BERHAD (291471-M) (INCORPORATEDANNUAL IN MALAYSIA) REPORT 2018 ANNUAL REPORT 2018

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (continued) INTERNAL AUDIT (continued) Based on the review of the works performed and deliverables by the outsourced internal audit function during the financial year, the Audit Committee and the Board are satisfied: •

that the outsourced internal audit function is free from any relationships or conflicts of interest which could impair their objectivity and independence;

•

with the scope of the outsourced internal audit function;

•

that the outsourced internal audit function possesses relevant experience, knowledge, competency and authority to discharge its functions effectively, possesses sufficient resources and has unrestricted access to employees and information for the internal audit activities; and

•

with the internal audit plan, processes, the results of the internal audit plan, processes or investigation undertaken

Risk-based internal audit plan in respect of financial year ended 30 April 2018 was recommended by the outsourced internal audit function, after taking into consideration existing and emergent key business risks identified in the Risk Sheets of the Group, the Executive Directors’ opinion and previous internal audits performed in the context of audit universe of the Group, and was reviewed and approved by the Audit Committee prior to execution. Each internal audit cycles within the internal audit plan are specific with regard to audit objective, key risks to be assessed and scopes of the internal control review. The internal control review procedures performed by the outsourced internal audit function are designed to understand, document and evaluate risks and related controls to determine the adequacy and effectiveness of governance, risk and control structures and processes and to formulate recommendations for improvement thereon. The internal audit procedures applied principally consisted of process evaluations through interviews with relevant personnel involved in the process under review, review of the Standard Operating Procedures and/or process flows provided and observations of the functioning of processes in compliance with results of interviews and/or documented Standard Operating Procedures and/or process flows. Thereafter, testing of controls for the respective audit areas through the review of the samples selected based on sample sizes calculated in accordance to predetermined formulation, subject to the nature of testing and verification of the samples. During financial year ended 30 April 2018, the outsourced internal audit function has conducted review for credit control management, pricing development, salesmen’s performance, sales order processing, cash flow management, receipt and payment processing, physical cash management, foreign currency management and insurance coverage for key subsidiary based in Malaysia based on the internal plan approved by the Audit Committee. Upon the completion of the individual internal audit field works during the financial year, the internal audit reports were presented to the Audit Committee during its scheduled meetings. During the presentation, the internal audit findings and recommendations as well as management response and action plans are presented and deliberated with the members of the Audit Committee. Update on the status of action plans as identified in the previous internal audit report are presented at subsequent Audit Committee meeting for review and deliberation. The cost incurred in maintaining the outsourced internal audit function for the financial year ended 30 April 2018 amounted to RM 46,733.

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STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (continued) ASSURANCE PROVIDED BY EXECUTIVE DIRECTORS During the meeting of Board of Directors in the financial year under review, the performance of the Group was reviewed and deliberated by the Board, including, but not limited to, the adequacy and effectiveness of risk management and internal control system in relation to the strategic objectives of the Group. In line with the guidelines, the Executive Chairman, being the highest ranking executive in the Company and the person primarily responsible for the management of the financial affairs of the Company, together with the Managing Director, has provided assurance to the Board that the Group’s risk management and internal control system operated adequately and effectively, in all material aspects, to meet the Group’s objectives during the financial year under review. OPINION AND CONCLUSION Based on the review of the risk management policy and process, results of the internal audit activities, monitoring and review mechanism stipulated above and assurance provided by the Executive Chairman and Managing Director, the Board is of the opinion that the risk management and internal control systems are satisfactory and have not resulted in any material losses, contingencies or uncertainties that would require disclosure in the Group’s annual report. The Board continues to take pertinent measures to sustain and, where required, to improve the Group’s risk management and internal control systems in meeting the Group’s strategic objectives. The Board is committed towards maintaining an effective risk management and internal control system throughout the Group and where necessary put in place appropriate plans to further enhance the Group’s systems of internal control. Notwithstanding this, the Board will continue to evaluate and manage the significant business risks faced by the Group in order to meet its business objectives in the current and challenging business environment. REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS Pursuant to paragraph 15.23 of the Listing Requirements, the External Auditors have reviewed this Risk Management and Internal Control Statement. Their review was performed in accordance with Audit and Assurance Practice Guide 3: Guidance for Auditors on Engagements to Report on the Statement on Risk Management and Internal Control included in the Annual Report, issued by the Malaysia Institute of Accountants. Based on their review, nothing has come to their attention that causes them to believe this Statement is not prepared, in all material aspects, in accordance with the disclosures required by paragraph 41 and 42 of the Statement on Risk Management and Internal Control: Guidelines for Directors of Public Listed Companies to be set out, nor is factually incorrect.

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30 APOLLO FOOD HOLDINGS BERHAD (291471-M) APOLLO FOOD HOLDINGS BERHAD (291471-M) (INCORPORATEDANNUAL IN MALAYSIA) REPORT 2018 ANNUAL REPORT 2018

PROFILE OF DIRECTORS Liang Chiang Heng 68 years of age, Male, Singaporean Executive Chairman Mr. Liang Chiang Heng was appointed as Managing Director on 20 March 1996 and Executive Chairman on 21 July 1998. He joined Apollo Group since 1979 and the Group’s business has grown and expanded within the short period of time under his leadership. Mr. Liang Chiang Heng was awarded an Honorary PhD in Business Administration from the Wisconsin International University. He currently sits on the Board of several private companies. Liang Kim Poh 57 years of age, Male, Singaporean Managing Director Mr. Liang Kim Poh was appointed as an alternate director on 20 March 1996 and subsequently to the Board on 21 July 1998. Presently, he was appointed as Managing Director on 28 December 2017. He also sits on the Board of several private companies. Datuk Shireen Ann Zaharah Binti Muhiudeen 52 Years of age, Female, Malaysian Non-Independent Non-Executive Director Datuk Shireen Ann Zaharah Binti Muhiudeen was appointed to the Board on 29 January 2018. Datuk Shireen obtained Bachelor of Science in Business Administration - International Business from Marshall School of Business, University of Southern California, U.S.A. and Master of Business Administration, from Loyola Marymount University, California, U.S.A. She is the Founder, Managing Director and Principal Fund Manager of Corston-Smith Asset Management. Prior to Corston-Smith, Datuk was the Chief Executive Officer of AIG Investment Corporation. She has more than 25 years experience in managing funds. She is also an Independent Non-Executive Director of AMMB Holdings Berhad since 30 June 2016. Datin Paduka Hjh. Aminah Binti Hashim 70 years of age, Female, Malaysian Independent Non-Executive Director Datin Paduka Hjh. Aminah was appointed to the Board on 31 October 2006. She is a member of the Audit, Remuneration and Nomination Committees. Datin Paduka Hjh. Aminah graduated with Bachelor of Arts (Economics) from University of Malaya. She provided her services from 1972 to 2003 by serving and holding different job positions in various Johor State Government Department. Those departments include The Johor State Secretary Office, Batu Pahat Land Office, Batu Pahat Local Council Office, Johor State Treasury Office, Johor State Islamic Development Corporation, and Johor Lands and Mines Office. Her last post was being the Director General of Lands and Mines at Johor Lands and Mines Office in 2003. Datin is also a committee member of Puspanita Johor, Pemadam Johor, and Mawar Johor. She currently sits on the Board of a private company.

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(INCORPORATED IN MALAYSIA) ANNUAL REPORT 2018 ANNUAL REPORT 2018

PROFILE OF DIRECTORS (continued) Foo Swee Eng 61 Years of age, Female, Malaysian Independent Non-Executive Director Ms Foo Swee Eng was appointed to the Board on 29 January 2018. She is also appointed as member of Audit Committee, a member of Remuneration Committee and a member of Nomination Committee on 28 June 2018. Ms Foo is a Fellow Member of the Association of Chartered Certified Accountants (FCCA,UK) and a Chartered Accountant of the Malaysian Institute of Accountants (CA(M)). She is also a member of Chartered Tax Institute of Malaysia (ACTIM). She started her accountancy career with an accounting firm in 1977 and is currently a partner of Reanda LLKG International, Chartered Accountants and a director of K-Konsult Taxation (JB) Sdn Bhd. Halid Bin Hasbullah 62 Years of age, Male, Malaysian Independent Non-Executive Director En Halid Bin Hasbullah was appointed to the Board on 27 August 2018. He obtained his Master of Business Administration from UNISEL Graduate School of Management (USGM), UNISEL in year 2005 to 2007 and was a Bachelor of Business Administration in year 1992 to 1989 from International Islamic University Malaysia. He is also a Chartered Member (CMILT) of the Chartered Institute of Logistic and Transport, UK. He holds various key positions and capacities as Managing Director/Chief Executive Officer, Chief Operating Officer, General Manager and Consultant. He was exposed and involved in decision making process, strategic planning and maximize wealth of the shareholders. He started his career in the banking sector followed by cooperative movement, healthcare, education, microfinance industry and current, in the area of human talent. Ng Chet Chiang @ Ng Chat Choon 69 years of age, Male, Malaysian Independent Non-Executive Director Mr. Ng Chet Chiang @ Ng Chat Choon was appointed to the Board on 20 March 1996. He was appointed as Chairman of the Audit Committee on 9 May 1996. He is also a member of the Remuneration and Nomination Committees. Mr. Ng Chet Chiang @ Ng Chat Choon is an associate member of Malaysian Institute of Taxation. He was a licensed company secretary. He started his career as a tax officer with the Inland Revenue Board before setting up his own tax and secretarial practices in 1982. He currently sits on the Board of several private companies.

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32 APOLLO FOOD HOLDINGS BERHAD (291471-M) APOLLO FOOD HOLDINGS BERHAD (291471-M) (INCORPORATEDANNUAL IN MALAYSIA) REPORT 2018 ANNUAL REPORT 2018

PROFILE OF DIRECTORS (continued) Abdul Rahim Bin Bunyamin 65 years of age, Male, Malaysian Independent Non-Executive Director Mr. Abdul Rahim was appointed to the Board on 14 December 2001. He is a member of the Audit, Remuneration and Nomination Committees. Mr. Abdul Rahim is a fellow Member of The Association of Chartered Certified Accountants, UK (ACCA). He has extensive working experiences in the field of corporate finance, having been attached with a reputable merchant bank and he also sits on the board of several locally and oversea incorporated companies. OTHER INFORMATION •

Family Relationship None of the Directors have any family relationships with each other and/or major shareholders except Mr. Liang Chiang Heng and Mr. Liang Kim Poh are brothers.

•

Directors’ Shareholding The Directors’ interests in the shares of the Company as at 31 July 2018 are shown on page 116.

•

List of Convictions of Offence None of the Directors have been convicted of any offences within the past 5 years other than traffic offences, if any.

•

Conflict of Interest None of the Directors have any conflict of interest with the Company.

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(INCORPORATED IN MALAYSIA) ANNUAL REPORT 2018 ANNUAL REPORT 2018

PROFILE OF KEY SENIOR MANAGEMENT Liang Kim Tee 64 Years of age, Male, Singaporean Production Director of Apollo Food Industries (M) Sdn Bhd Mr. Liang Kim Tee joined Apollo Food Industries (M) Sdn Bhd, a wholly owned subsidiary company, as Production Director on 4 January 1997. He has more than 17 years of related working experience prior to joining the Company. He is the brother of Mr Liang Chiang Heng (Executive Chairman) and Mr Liang Kim Poh (Managing Director) and uncle of Mr Liang Thong Guan. Mr Liang Kim Tee does not have any conflict of interest with the Company. Liang Thong Guan 38 Years of age, Male, Singaporean Technical Director of Apollo Food Industries (M) Sdn Bhd Mr. Liang Thong Guan joined Apollo Food Industries (M) Sdn Bhd, a wholly owned subsidiary company, as Technical Director on 4 March 2013. He has more than 8 years of related working experience prior to joining the Company. He is the son of Mr Liang Chiang Heng (Executive Chairman) and nephew of Mr Liang Kim Poh (Managing Director) and Mr Liang Kim Tee (Production Director). Mr Liang Thong Guan does not have any conflict of interest with the Company. Tan Sew Eng 49 Years of age, Female, Malaysian Senior Accountant of Apollo Food Industries (M) Sdn Bhd Ms Tan Sew Eng joined Apollo Food Industries (M) Sdn Bhd, a wholly owned subsidiary company, as Senior Accountant on 15 June 2015. She is a member of Certified Practising Accountant, Australia and Malaysian Institute of Accountants (MIA). She has more than 23 years of related working experience prior to joining the Company. She does not have any family relationship with any director or major shareholder of the company, nor does she have any conflict of interest with the company.

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34 APOLLO FOOD HOLDINGS BERHAD (291471-M) APOLLO FOOD HOLDINGS BERHAD (291471-M) (INCORPORATEDANNUAL IN MALAYSIA) REPORT 2018 ANNUAL REPORT 2018

MANAGEMENT DISCUSSION AND ANALYSIS OVERVIEW OF THE GROUP’S BUSINESS AND OBJECTIVES Apollo Food Holdings Berhad is principally an investment holding company and currently it has two wholly owned subsidiaries as below: (i) Apollo Food Industries (M) Sdn Bhd is principally engaged in manufacturing and distributing compound chocolates, chocolate confectionery products and layer cakes in both local & overseas markets. (ii) Hap Huat Food Industries Sdn Bhd is principally engaged in investment holding. Over the years, the Group has established itself as one of the leading manufacturer of chocolate confectionery products and layer cakes in Malaysia. The aim of the Group is to always fulfil the customer needs and requirements by using the latest equipments and technology. In order to achieve the aim, the Group uses only the finest natural ingredients sourced from a select panel of suppliers and employs state-of-art technology in manufacturing its products. The Group firmly believes that quality sells. Holding this belief, the Group strives to ensure that following principles are taken to improve its market position: • • • • • •

Implement and maintain quality management system and continually improve its effectiveness Produce products with top quality of raw and packaging materials Use world class wafer and layer cake manufacturing machinery from Europe and constantly upgrade to improve the quality and competitiveness Enhance customer satisfaction by meeting customer requirements Recognize customers’ needs by introducing individual packaging Implement quality assurance procedures such as HALAL and ISO accreditation

FINANCIAL PERFORMANCE Revenue The Group registered a turnover of RM190.82 million for the financial year ended 30 April 2018, a slight decrease of 8.66% as compared to RM208.92 million in previous financial year ended 30 April 2017. 68% of the turnover was contributed by local market and there were no material changes on the sales proportion from previous financial year. During the financial year, the Group encountered limited labour resources in running production activities to fulfil sales orders placed by both local and export customers. As a consequence, sales to export markets were lower. Profit for the Financial Year The profit after taxation had decreased by 37.91% to RM11.07 million from RM17.83 million as recorded in the previous financial year. Although there was slight improvement by 0.76% from 20.34% to 21.10% in current financial year’s profit margin, the other fixed operating costs did not decrease in line with the decrease in revenue. For instance, staff remuneration and staff related expenses had increased by 8.31% from previous financial year due to annual salary increment arise from performance appraisal. Furthermore, the strengthening of Ringgit Malaysia against foreign currency such as US Dollars had also contributed to the decrease in profit after taxation. The Group had incurred foreign exchange losses instead of gain as compared to last financial year.

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(INCORPORATED IN MALAYSIA) ANNUAL REPORT 2018 ANNUAL REPORT 2018

MANAGEMENT DISCUSSION AND ANALYSIS (continued) Profit for the Financial Year (continued) Due to above reasons, the Group’s earning per share had decreased from 22.29 sen to 13.84 sen over the financial year. Financial Position Total assets had decreased from RM276.66 million as at last financial year end to RM263.53 million as at current financial year end. A decrease of RM16.39 million in total current assets was mainly contributed by the decrease in cash and trade receivables by RM7.66 million and RM7.77 million. Both cash held on hand and cash collected from customers were later used for additional investment in quoted shares, payments for suppliers, and dividend payouts during the financial year. Total liabilities had decreased by RM3.49 million while the Group’s equity had decreased by RM9.63 million from previous financial year end. Net asset per share had reduced from RM3.17 to RM3.05 as at end of the current financial year. RISK OVERVIEW The Group is currently facing a few risk factors that might affect the Group’s profitability. Those risks include the following: (i) Labour Shortages The Group is currently experiencing labour shortages for its production activities, especially on end packaging causing the Group to face certain difficulties in meeting the production deadline. In order to reduce the negative impact arising from this issue, the Group is planning to have automated machineries to reduce high labour reliance in end packaging. (ii) Fluctuation of Raw Materials’ Prices The fluctuation of raw materials’ prices will have an impact on the Group’s profitability. The Group has taken steps in reducing the risk of price fluctuation by negotiating better terms with suppliers. Under the supervision of the Directors, Procurement Department monitors the prices closely and assures that the quality of materials is not compromised in line with lower purchase price. (iii) Fluctuation of Foreign Currency Exchange Rate Significant fluctuation of foreign currency exchange rate will impact the Group’s cash flow movement and profitability. The movement of the foreign currency exchange rate is closely monitored by the Group’s management. (iv) Changes in Consumer’s Preferences In this new era, consumers tend to consume healthy foods as compared to the olden days. The Group is aware of the shift in consumer preferences and understand that consumers nowadays prefer to consume healthier products with less sugar and sweetness. The Group will assess the risk and consider whether to produce more healthier products in the near future to prevent potential loss of health-conscious customers.

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36 APOLLO FOOD HOLDINGS BERHAD (291471-M) APOLLO FOOD HOLDINGS BERHAD (291471-M) (INCORPORATEDANNUAL IN MALAYSIA) REPORT 2018 ANNUAL REPORT 2018

MANAGEMENT DISCUSSION AND ANALYSIS (continued) RISK OVERVIEW (continued) (v) Quality of the Products Deterioration in quality of the product would bring negative impact to the Group’s public image and reputation. To prevent this from happening, the Group has implemented quality management systems and quality assurance procedures via HALAL and ISO accreditation. The Group also purchases top quality raw materials from reputable and reliable suppliers. OPERATION REVIEW The pre-requisites for the Group to remain competitive in this challenging market environment include continuous improvement in the Group's production planning, application of stringent quality control on the products manufactured. The Group also invests in the newer and modern production machineries. During the year, the Group has obtained approval from the Johor Government in extending one of its leasehold land titles situated at Larkin Industrial Area. This indicates that the Group is moving a step forward to achieve one of its plans - to own an automated robotic factory in the near future. The Group’s management plan to fully automate certain of its production line as its initial step. If the automation is proven to be efficient, the Group will continue its next step to fully automate the remaining production line. Simultaneously, the Group needs to provide internal training for its staff on technical know-how in using, operating and maintaining the automated machines. BUSINESS PROSPECT The Malaysian economy has remained resilient in this financial year. Despite the political unrest in certain regions and the slowing of growth in the emerging markets, the markets in which the Group operates remain relatively stable. In view of inflation on key raw material prices and the volatility of Ringgit Malaysia against foreign currencies, raw material prices are expected to be unstable in the forthcoming year. Coupled with the uncertainties in the global economy, the Group expects that the forthcoming year will become tougher and challenging. In order to maintain its profitability, the Group will focus its efforts to closely monitor the prices of raw materials and to review its business strategies when deem necessary. The Board is confident of improving the Group’s financial performance under the prevailing challenging business environment. The Group will strive to ensure that it continues to achieve satisfactory results by implementing prudent measures and improving operational efficiency so as to sustain the current margin without compromising the products’ quality. To improve its stream of revenue, the Group will put more efforts in focusing and enhancing its brands recognition and products portfolio profile for new business opportunities. DIVIDEND POLICY The Board of Directors recommend a first and final dividend of 20 sen under the single tier system (tax exempt) for the financial year ended 30 April 2018. The dividend rate will subject to the shareholders’ approval at the forthcoming Annual General Meeting to be held on 30 October 2018. The dividend will be paid on 9 January 2019 once it is approved.

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(INCORPORATED IN MALAYSIA) ANNUAL REPORT 2018 ANNUAL REPORT 2018

SUSTAINABILITY STATEMENT INTRODUCTION The Board recognises the importance of the sustainability reporting and the impacts of its business have on the economy, environment, and society (“EES”). In pursuant with the Practice Note 9 of the Bursa Malaysia Securities Berhad Main Market Listing Requirements, the sustainability statement is prepared to enable stakeholders to have a clear understanding of the EES risks and opportunities that are material to the Group’s business. SUSTAINABILITY GOVERNANCE STRUCTURE The Board currently is still working on the set up of sustainability frameworks and policies. In view of the importance of sustainability reporting, the Board has communicated to the Group’s risk management team and seeks their attention in managing the sustainability matters. Based on the key risk register maintained by the risk management team, material sustainability matters are identified and highlighted to the Audit Committee. The Board is primarily responsible for providing oversight and review to the Group’s sustainability performance and reporting. SCOPE OF THE STATEMENT The sustainability statement covers the Group’s operating business which is situated in Larkin Industrial Area. MATERIAL SUSTAINABILITY MATTERS Few material sustainability matters are identified and categorised as below: Sustainability Aspect Economic Environmental Social

Material Sustainability Matters Labour shortage Water consumption Quality of raw and packaging materials Waste management Workplace diversity Training and development Workplace safety Food safety

(i) Economic Sustainability Labour shortage Labour shortage is one of the material sustainability issues that will affect the Group’s production and business activities. The Group always encounters difficulty in getting more workers to run and operate its production activities in these recent years. Without sufficient labour resources, the Group is unable to provide and deliver products on time to its customers. As a consequence, the risk of losing customers to the competitor will become higher. In order to manage this sustainability issue, the Group is planning to have a fully automated factory in the near future so that high reliance on labour resources in running the production activities can be reduced.

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38 APOLLO FOOD HOLDINGS BERHAD (291471-M) APOLLO FOOD HOLDINGS BERHAD (291471-M) (INCORPORATEDANNUAL IN MALAYSIA) REPORT 2018 ANNUAL REPORT 2018

SUSTAINABILITY STATEMENT (continued) MATERIAL SUSTAINABILITY MATTERS (continued) (ii) Environmental Sustainability Water consumption Water is an important element for food industry in processing consumable goods. Poor water quality will affect the quality of end products produced by the factory. To prevent this from happening, the Group has installed water filtration system to maintain the quality of water use in foods processing. Regular cleaning of filter is required and performed by technicians. Water samples will be collected and sent to private lab regularly for testing. As water is one of the scarce resources in the world, the Group is concerned on the volume of water consumed for production. Data of water usage is collected and monitored closely by the Group’s management to prevent water wastage. Quality of raw and packaging materials The quality of raw and packaging materials will affect the quality of goods produced. Low quality of raw materials will affect the taste of wafers and layer cakes while low quality of packaging materials will affect the freshness of wafers and layer cakes. Hence, quality control inspection is implemented to assure that the quality of raw and packaging materials are there. The quality control department will report to purchasing department if there is any non-conformance of raw and packaging materials. Those non-conformance raw and packaging materials will then communicate and return to the supplier. Waste management Food wastes such as wafer powders and cake powders will be generated along the cooking and baking process. Instead of throwing it away, the Group has recycled and sold those foods wastes to external party who need it for animal feeds. The Group also plays its role well in protecting environment via reselling waste plastics, used egg trays, cartons, pallets, waste papers, sugar bags, and drums to scrap seller for recycle purpose. (iii) Social Sustainability Workplace diversity The Group promotes workplace diversity via gender, age group, and ethnicity as the Group believes that diversity will bring in more talents, skills, and experiences. All employees has the same opportunities in performing their daily duties and subject to equal chances for job progression or promotion. Every employee subjects to annual performance appraisal regardless of their background, age group, gender, and position. The Group strives to maintain a balance workforce as employees are more likely to feel comfortable in an environment where inclusivity is a priority. Age and gender discrimination is not allowed as discrimination will bring negative impact towards employee’s morale and team spirit. Training and development Human resources are the most important assets of an organization. The Group recognises the important of human resources and allows its employees to develop their skills and knowledge via various trainings provided. Without updated skills and knowledge, the workers will not have the capability to run those machineries according to the planned schedule. Without appropriate talents and competencies, the Group is unable to run its daily business activities.

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(INCORPORATED IN MALAYSIA) ANNUAL REPORT 2018 ANNUAL REPORT 2018

SUSTAINABILITY STATEMENT (continued) MATERIAL SUSTAINABILITY MATTERS (continued) (iv) Social Sustainability (continued) Training and development (continued) Therefore, the Group encourages its employees to seek training opportunities voluntarily and learn new knowledge which can enhance the Group’s daily operating activities. The head of department has to alert themselves whenever there is a need to update their staffs on the latest information in their respective fields. Human capital development has become part of the Group’s strategy. Workplace safety No one would like to stay at a workplace that would endanger his/her life. As such, health and safety officer plays important role in creating a working environment that is safe from hazards. Various safety practices and guidelines are existed and implemented by the health and safety officer to ensure workers work in a safe environment. Below are some of the practices monitored by the health and safety officer. • • • • •

•

Water sprinkler system has installed and done by external fire contractor. Selected employees attended fire-fighting course which was conducted by fireman. Exit sign and evacuation plan is in place in the factory. Hazard and warning lights are in place for precaution purpose. The use of ear plug is enforced in order to protect operators from excessive noise exposure. Noise monitoring test and audiometric test has been conducted annually as per Occupational Safety and Health Malaysia’s requirement. Safety driving practices and procedures are implemented in the factory.

Food safety Food safety refers to handling, preparing, and storing of foods in ways that prevent foodborne illness. The Group is very concerned on this sustainability matters as poor food safety will bring negative image to the Group’s public image. Principles such as properly cleaning the utensils and equipments, maintaining high level of hygiene behaviour, storing raw and packaging materials in appropriate temperature and environment, and implementing pest control have been undertaken by the Group years ago. In order to assure the quality of the foods is safe to consume by consumers, the Group has obtained ISO22000 Food Safety for its layer cakes production and GMP Codex Alimentarius: General Principles of Food Hygiene for its manufacturing of compound chocolate wafer products. The Group has also obtained HALAL certifications for all of its products produced. To assure the quality of foods export to foreign country, the Group has also complied with Indonesia’s HALAL requirement. Internal audits will be conducted few times in a year to ensure the products quality are assured and complied with ISO and HALAL requirements.

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APOLLO FOOD HOLDINGS BERHAD (291471-M) INCORPORATED IN MALAYSIA

FINANCIAL STATEMENTS CONTENTS ANNUAL REPORT 2018

41

DIRECTORS’ REPORT

47

STATEMENT BY DIRECTORS

47

STATUTORY DECLARATION

48

INDEPENDENT AUDITORS’ REPORT

55

STATEMENTS OF FINANCIAL POSITION

57

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

58

STATEMENTS OF CHANGES IN EQUITY

60

STATEMENTS OF CASH FLOWS

62

NOTES TO THE FINANCIAL STATEMENTS

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APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

DIRECTORS’ REPORT The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended 30 April 2018. PRINCIPAL ACTIVITIES The Company is principally engaged in investment holding and provision of management services to subsidiaries. The principal activities of the subsidiaries are set out in Note 10 to the financial statements. RESULTS

Group RM

Company RM

Profit for the financial year

11,071,841

16,166,632

Profit attributable to owners of the parent

11,071,841

16,166,632

DIVIDEND Dividend paid, declared or proposed by the Company since the end of the previous financial year was as follows: RM In respect of the financial year ended 30 April 2017: Final single tier dividend of 25 sen per ordinary share, paid on 9 January 2018

20,000,000

The Directors proposed a final single tier dividend of 20 sen per ordinary share, amounting to RM16,000,000 in respect of the financial year ended 30 April 2018, which is subject to the approval of members at the forthcoming Annual General Meeting. RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year. ISSUE OF SHARES AND DEBENTURES There were no new issues of shares or debentures during the financial year. OPTIONS GRANTED OVER UNISSUED SHARES No options were granted to any person to take up unissued ordinary shares of the Company during the financial year.

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APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

DIRECTORS’ REPORT (continued) DIRECTORS The Directors who have held office since the date of the last report are as follows: Apollo Food Holdings Berhad Liang Chiang Heng Liang Kim Poh Ng Chet Chiang @ Ng Chat Choon Abdul Rahim Bin Bunyamin Datin Paduka Hjh. Aminah Binti Hashim Foo Swee Eng Datuk Shireen Ann Zaharah Binti Muhiudeen Halid Bin Hasbullah Datuk P. Venugopal A/L V.K. Menon

(Appointed on 29 January 2018) (Appointed on 29 January 2018) (Appointed on 27 August 2018) (Resigned on 24 October 2017)

Subsidiaries of Apollo Food Holdings Berhad Liang Chiang Heng Liang Kim Poh Ng Chet Chiang @ Ng Chat Choon Abdul Rahim Bin Bunyamin Liang Kim Tee Liang Thong Guan DIRECTORS’ INTERESTS The Directors holding office at the end of the financial year and their beneficial interests in the ordinary shares of the Company and of its related corporations during the financial year ended 30 April 2018 as recorded in the Register of Directors’ Shareholdings kept by the Company under Section 59 of the Companies Act 2016 in Malaysia were as follows:

Shares in the Company Direct interests: Liang Chiang Heng Liang Kim Poh Ng Chet Chiang @ Ng Chat Choon Abdul Rahim Bin Bunyamin Indirect interests: Liang Chiang Heng Liang Kim Poh

[---------------------Number of ordinary shares---------------------] Balance as at Balance as at 1.5.2017 Bought Sold 30.4.2018 254,600 225,000 20,000 17,000

201,600 -

(17,000)

456,200 225,000 20,000 -

41,048,415 41,048,415

-

-

41,048,415 41,048,415

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APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

DIRECTORS’ REPORT (continued) DIRECTORS’ INTERESTS (continued)

Shares in the ultimate holding company Keynote Capital Sdn. Bhd. Direct interests: Liang Chiang Heng Liang Kim Poh

[---------------------Number of ordinary shares---------------------] Balance as at Balance as at 1.5.2017 Bought Sold 30.4.2018

270,350 232,506

-

-

270,350 232,506

By virtue of their interests in shares in the substantial shareholder, Keynote Capital Sdn. Bhd., a company incorporated in Malaysia, Liang Chiang Heng and Liang Kim Poh are deemed to have interests in the Company to the extent of the substantial shareholder’s interest in the Company, in accordance with Section 8(4) of the Companies Act 2016 in Malaysia. By virtue of Section 8(4) of the Companies Act 2016 in Malaysia, Liang Chiang Heng and Liang Kim Poh are also deemed to be interested in the ordinary shares of all the subsidiaries to the extent that the Company has an interest. The other Directors holding office at the end of the financial year did not held any interest in ordinary shares and options over ordinary shares in the Company or ordinary shares, options over ordinary shares and debentures of its related corporations during the financial year. DIRECTORS’ BENEFITS Since the end of the previous financial year, none of the Directors have received or become entitled to receive any benefit (other than those benefits included in the aggregate amount of remuneration 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 the Director is a member, or with a company in which the Director has a substantial financial interest other than deemed benefits arising from related party transactions as disclosed in Note 29 to the financial statements and remuneration received by certain Directors as Directors of holding company. There were no arrangement during and at the end of the financial year, to which the Company is a party, which had the object of enabling the Directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. DIRECTORS' REMUNERATION The details of Directors’ remuneration are disclosed in Note 22(a) to the financial statements. INDEMNITY AND INSURANCE FOR OFFICERS AND AUDITORS The Group and the Company effected Directors’ liability insurance during the financial year to protect the Directors of the Group and of the Company against potential costs and liabilities arising from claims brought against the Directors. The amount of insurance premium paid by the Group and of the Company for the financial year 2018 was RM12,624. There were no indemnity given to or insurance effected for the auditors of the Group and of the Company during the financial year. 43

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APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

DIRECTORS’ REPORT (continued) OTHER STATUTORY INFORMATION REGARDING THE GROUP AND THE COMPANY (I)

AS AT THE END OF THE FINANCIAL YEAR (a)

(b)

(II)

Before the financial statements of the Group and of the Company were prepared, the Directors took reasonable steps: (i)

to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and have satisfied themselves that there are no known bad debts to be written off and that provision need not be made for doubtful debts; and

(ii)

to ensure that any current assets other than debts, which were unlikely to realise their book values in the ordinary course of business had been written down to their estimated realisable values.

In the opinion of the Directors, the results of the operations of the Group and of the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature except for the effects arising from the following as disclosed in Note 22 to the financial statements: (i)

Net realised and unrealised loss on foreign exchange, resulting in a decrease in the Group’s profit for the financial year by RM517,172 and RM1,597,207 respectively;

(ii)

impairment loss on other investments, resulting in a decrease in the Group’s and the Company’s profit for the financial year by RM794,740 and RM453,146 respectively; and

(iii)

gain on disposal of other investments, resulting in an increase in the Group’s and the Company’s profit for the financial year by RM1,320,330 and RM1,280,427 respectively.

FROM THE END OF THE FINANCIAL YEAR TO THE DATE OF THIS REPORT (c)

(d)

The Directors are not aware of any circumstances: (i)

which would necessitate the writing off of bad debts or the making of provision for doubtful debts in the financial statements of the Group and of the Company;

(ii)

which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; and

(iii)

which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

In the opinion of the Directors: (i)

there has not arisen any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made; and

(ii)

no contingent or other liability has become enforceable, or is likely to become enforceable, within the period of twelve (12) months after the end of the financial year which would or may affect the ability of the Group and of the Company to meet their obligations as and when they fall due. 44

45

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

DIRECTORS’ REPORT (continued) OTHER STATUTORY INFORMATION REGARDING THE GROUP AND THE COMPANY (continued) (III)

AS AT THE DATE OF THIS REPORT (e)

There are no charges on the assets of the Group and of the Company which have arisen since the end of the financial year to secure the liabilities of any other person.

(f)

There are no contingent liabilities of the Group and of the Company which have arisen since the end of the financial year.

(g)

The Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements of the Group and of the Company misleading.

SUBSIDIARIES Details of subsidiaries are set out in Note 10 to the financial statements. HOLDING COMPANY The Directors regard Keynote Capital Sdn. Bhd., a company incorporated in Malaysia, as the holding and ultimate holding company.

45

APOLLO FOOD HOLDINGS BERHAD (291471-M)

46 ANNUAL REPORT 2018

DIRECTORS’ REPORT (continued) AUDITORS The auditors, BDO, have expressed their willingness to continue in office. Details of auditors’ remuneration are set out in Note 22 to the financial statements. Signed on behalf of the Board in accordance with a resolution of the Directors.

..................................... Liang Chiang Heng Director Johor Bahru 27 August 2018

..................................... Liang Kim Poh Director

47

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

STATEMENT BY DIRECTORS In the opinion of the Directors, the financial statements set out on pages 55 to 115 have been drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the provisions of the Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 30 April 2018 and of the financial performance and cash flows of the Group and of the Company for the financial year then ended. On behalf of the Board,

..................................... Liang Chiang Heng Director

..................................... Liang Kim Poh Director

Johor Bahru 27 August 2018

STATUTORY DECLARATION I, Liang Chiang Heng, being the Director primarily responsible for the financial management of Apollo Food Holdings Berhad, do solemnly and sincerely declare that the financial statements set out on pages 55 to 115 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by the abovenamed at Johor Bahru, Johor this 27 August 2018

) ) ) )

Before me:

47

48

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

INDEPENDENT AUDITORS’ REPORT

TO THE MEMBERS OF APOLLO FOOD HOLDINGS BERHAD (Incorporated in Malaysia) Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Apollo Food Holdings Berhad, which comprise the statements of financial position as at 30 April 2018 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 55 to 115. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 30 April 2018, and of their financial performance and their cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. Basis for Opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence and Other Ethical Responsibilities We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

48

49

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

INDEPENDENT AUDITORS’ REPORT

TO THE MEMBERS OF APOLLO FOOD HOLDINGS BERHAD (continued) (Incorporated in Malaysia) Key Audit Matters (continued) Key Audit Matters of the Group (1)

Adequacy of write-down of inventories to net realisable value As disclosed in Note 12 to the financial statements, the Group held RM14,902,914 of inventories at the end of the reporting period. Write-down of inventories to net realisable value was mainly based on management’s estimates, which had been derived from expectation of current market prices and future demand. We focused on the audit risk that the carrying amount of inventories may not be stated at the lower of cost and net realisable value, the determination of which requires the management to exercise significant judgement in estimating the net realisable value of the inventories. In estimating the net realisable value of the inventories, the management considers the current economic trends and changes in customer preference of the respective inventories. Audit response Our audit procedures included the following: a)

discussed with management and obtained an understanding of the process implemented by management over the determination of lower of cost and net realisable value of inventories and inquired management on how management identified and assessed for inventories writedown;

b)

assessed and tested the design and operating effectiveness of the key controls over valuation of inventories; and

c)

assessed the net realisable value of slow-moving inventories by reference to the issue of raw materials to production and sales and selling prices of finished goods subsequent to year end.

49

50

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

INDEPENDENT AUDITORS’ REPORT

TO THE MEMBERS OF APOLLO FOOD HOLDINGS BERHAD (continued) (Incorporated in Malaysia) Key Audit Matters (continued) Key Audit Matters of the Group (continued) (2)

Recoverability of trade receivables As at 30 April 2018, trade receivables of the Group amounted to RM28,670,643. The details of trade receivables and their credit risks have been disclosed in Note 13 and Note 32 to the financial statements. Management recognises allowances for impairment losses on trade receivables based on specific known facts or circumstances or customers’ abilities to pay. The determination of whether the trade receivables are recoverable involves significant management judgement and inherent subjectivity given uncertainty regarding the ability of the trade receivables to settle their debts. We focused on the audit risk that the impairment losses on trade receivables may be understated and hence, further impairment losses may be required. Audit response Our audit procedures included the following: a)

obtained an understanding of the credit process operated by the management over the recoverability of trade receivables of the Group;

b)

assessed recoverability of trade receivables by reference to their historical bad debt expense, ageing profiles of the counter parties and past historical repayment trends; and

c)

assessed cash receipts subsequent to the end of the reporting period for its effect in reducing the amounts outstanding as at the end of the reporting period.

50

51

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

INDEPENDENT AUDITORS’ REPORT

TO THE MEMBERS OF APOLLO FOOD HOLDINGS BERHAD (continued) (Incorporated in Malaysia) Key Audit Matters (continued) Key Audit Matters of the Company (continued) (1)

Impairment assessment of the carrying amounts of costs of investments in a subsidiary and amount owing by a subsidiary As disclosed in Note 10 and Note 13 to the financial statements, the costs of investments in subsidiaries and amounts owing by subsidiaries to the Company amounted to RM59,378,234 and RM29,733,635 respectively as at 30 April 2018. Management used a Value in Use model to compute the present value of forecasted future cash flows for a subsidiary to determine if there is any impairment loss required on the cost of investment in a subsidiary amounting to RM13,723,938 and amount owing by the subsidiary of RM9,222,956. We have focused on the impairment assessment of the carrying amount of the cost of investment in this subsidiary and the amount owing by this subsidiary as the process is complex and the determination of whether or not an impairment loss is necessary involved significant judgements and estimates by the Directors about the future results and key assumptions applied to cash flow projections of the subsidiary in determining its recoverable amounts. These key assumptions include forecast growth in future revenues and operating profit margins, as well as determining an appropriate pre-tax discount rate and growth rates. Audit response Our audit procedures included the following: a)

compared cash flow forecast and projections against recent performance and assessed the reasonableness of the key assumptions used by management in the cash flow forecast and projections by comparing to actual historical operating profit margins and growth rates;

b)

compared prior period budgets and forecasts to current period’s actual results to assess the historical accuracy of the forecasts;

c)

assessed the suitability of the pre-tax discount rate used by the subsidiary by comparing to the weighted average cost of capital of the Group and relevant risk factors; and

d)

performed sensitivity analysis to stress test the key assumptions used by management in the impairment model.

51

52

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

INDEPENDENT AUDITORS’ REPORT

TO THE MEMBERS OF APOLLO FOOD HOLDINGS BERHAD (continued) (Incorporated in Malaysia)

Information Other than the Financial Statements and Auditors’ Report Thereon The Directors of the Company are responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon. Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not express any form of assurance or conclusion thereon. In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Statements The Directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error. In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so. Auditors’ Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

52

53

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

INDEPENDENT AUDITORS’ REPORT

TO THE MEMBERS OF APOLLO FOOD HOLDINGS BERHAD (continued) (Incorporated in Malaysia) Auditors’ Responsibilities for the Audit of the Financial Statements (continued) As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: (a)

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

(b)

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.

(c)

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

(d)

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

(e)

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

(f)

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

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

53

54

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

INDEPENDENT AUDITORS’ REPORT

TO THE MEMBERS OF APOLLO FOOD HOLDINGS BERHAD (continued) (Incorporated in Malaysia)

Auditors’ Responsibilities for the Audit of the Financial Statements (continued) From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Company for the current year and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Other Matters This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

BDO AF: 0206 Chartered Accountants

Chan Wai Leng 02893/08/2019 J Chartered Accountant

Kuala Lumpur 27 August 2018

54

55

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

STATEMENTS OF FINANCIAL POSITION AS AT 30 APRIL 2018 Group

2017 RM

2018 RM

Company

Note

2018 RM

2017 RM

7 8 9 10 11 19

103,163,507 13,769,342 3,686,044 -

98,005,840 13,983,132 653,846 4,710,116 -

59,378,234 1,597,972 64,800

39,378,234 4,080,096 61,440

120,618,893

117,352,934

61,041,006

43,519,770

14,902,914 29,553,782 1,441,285 2,250,928 94,766,556

15,847,951 37,934,506 839,423 2,179,277 102,503,750

29,804,389 13,706,489

40,896,199 24,787,899

142,915,465

159,304,907

43,510,878

65,684,098

263,534,358

276,657,841

104,551,884

109,203,868

80,000,000 163,615,822

80,000,000 173,250,424

80,000,000 23,984,818

80,000,000 28,549,524

243,615,822

253,250,424

103,984,818

108,549,524

ASSETS Non-current assets Property, plant and equipment Investment properties Prepaid lease payments for land Investments in subsidiaries Other investments Deferred tax assets

Current assets Inventories Trade and other receivables Current tax assets Short term fund Cash and bank balances

12 13 14 15

TOTAL ASSETS EQUITY AND LIABILITIES Equity attributable to owners of the parent Share capital Reserves TOTAL EQUITY

16 17

56

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

STATEMENTS OF FINANCIAL POSITION AS AT 30 APRIL 2018 (continued)

Note

Group

2018 RM

2017 RM

2018 RM

Company

2017 RM

LIABILITIES Non-current liabilities Retirement benefits obligations Deferred tax liabilities

18 19

2,389,937 9,525,243

2,096,302 11,092,079

-

-

11,915,180

13,188,381

-

-

7,938,413 64,943

10,092,515 126,521

545,250 21,816

570,000 84,344

8,003,356

10,219,036

567,066

654,344

19,918,536

23,407,417

567,066

654,344

263,534,358

276,657,841

104,551,884

109,203,868

Current liabilities Trade and other payables Current tax liabilities

TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES

20

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

56

57

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 30 APRIL 2018

Note Revenue

21

Group

2018 RM

2017 RM

2018 RM

Company

2017 RM

190,818,447

208,918,294

15,265,484

20,112,912

Cost of sales

(150,563,092)

(166,415,292)

-

-

Gross profit

40,255,355

42,503,002

15,265,484

20,112,912

4,780,300

9,913,468

2,048,248

1,310,349

(7,591,537)

(8,069,473)

-

-

(19,809,120)

(19,340,443)

(516,189)

(534,763)

(2,909,119)

(342,999)

(453,146)

-

Other income Distribution costs Administrative expenses Other expenses Profit before tax

22

14,725,879

24,663,555

16,344,397

20,888,498

Tax expense

23

(3,654,038)

(6,830,538)

(177,765)

(309,277)

11,071,841

17,833,017

16,166,632

20,579,221

408,632

1,890,956

361,199

1,636,854

(1,115,075)

(34,131)

(1,092,537)

-

(706,443)

1,856,825

(731,338)

1,636,854

Total comprehensive income

10,365,398

19,689,842

15,435,294

22,216,075

Profit attributable to owners of the parent

11,071,841

17,833,017

16,166,632

20,579,221

Total comprehensive income attributable to owners of the parent

10,365,398

19,689,842

15,435,294

22,216,075

13.84 13.84

22.29 22.29

Profit for the financial year Other comprehensive income Items that may be reclassified subsequently to profit or loss Other investments - fair value gain - reclassification to profit or loss upon disposal

11(a)

Total other comprehensive (loss)/income, net of tax

Earnings per ordinary share attributable to owners of the parent (sen): - Basic - Diluted

27 27

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

57

58

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 APRIL 2018

Group

Note

Balance as at 1 May 2016

-------Non-distributable --------→ AvailableShare Share for-sale capital premium reserve RM RM RM

Distributable Retained earnings RM

Total RM

80,000,000

4,325,454

-

-

-

-

1,890,956

-

1,890,956

-

-

(34,131)

-

(34,131)

-

-

1,856,825

17,833,017

19,689,842

-

-

(24,000,000)

(24,000,000)

Balance as at 30 April 2017

80,000,000

4,325,454

926,236 167,998,734

253,250,424

Balance as at 1 May 2017

80,000,000

4,325,454

926,236 167,998,734

253,250,424

-

-

-

11,071,841

11,071,841

-

-

408,632

-

408,632

-

-

(1,115,075)

-

-

(706,443)

-

-

-

80,000,000

4,325,454

219,793

Profit for the financial year Other comprehensive income Other investments - fair value gain 11(a) - reclassification to profit or loss upon disposal Total comprehensive income, net of tax Transaction with owners Dividend paid

24

Profit for the financial year Other comprehensive income Other investments - fair value gain 11(a) - reclassification to profit or loss upon disposal Total comprehensive (loss)/income, net of tax Transaction with owners Dividend paid Balance as at 30 April 2018

24

(930,589) 174,165,717 -

-

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

58

17,833,017

-

257,560,582 17,833,017

(1,115,075)

11,071,841

10,365,398

(20,000,000)

(20,000,000)

159,070,575

243,615,822

59

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 APRIL 2018 (con�nued)

Company

Note

Balance as at 1 May 2016

---------Non-distributable ------ Distributable AvailableShare Share for-sale Retained capital premium reserve earnings RM RM RM RM

Total RM

80,000,000

4,325,454

(597,889)

26,605,884

110,333,449

-

-

-

20,579,221

20,579,221

-

-

1,636,854

-

1,636,854

-

-

1,636,854

20,579,221

22,216,075

-

-

-

(24,000,000)

(24,000,000)

Balance as at 30 April 2017

80,000,000

4,325,454

1,038,965

23,185,105

108,549,524

Balance as at 1 May 2017

80,000,000

4,325,454

1,038,965

23,185,105

108,549,524

-

-

-

16,166,632

16,166,632

-

-

361,199

-

361,199

-

-

(1,092,537)

-

(1,092,537)

-

-

(731,338)

16,166,632

15,435,294

-

-

-

(20,000,000)

(20,000,000)

80,000,000

4,325,454

307,627

19,351,737

103,984,818

Profit for the financial year Other comprehensive income Other investments - fair value gain 11(a) Total comprehensive income, net of tax Transac�on with owners Dividend paid

24

Profit for the financial year Other comprehensive income Other investments - fair value gain 11(a) - reclassifica�on to profit or loss upon disposal Total comprehensive (loss)/income, net of tax Transac�on with owners Dividend paid Balance as at 30 April 2018

24

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

60

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 APRIL 2018 Group

Company

2017 RM

2018 RM

14,725,879

24,663,555

16,344,397

20,888,498

9

-

115,385

-

-

8 7

213,790 9,640,557

213,794 9,168,566

-

-

Note

2018 RM

2017 RM

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments for: Amortisation of prepaid lease payments for land Depreciation of: - investment properties - property, plant and equipment Dividend income from: - subsidiaries - other investments Gain on disposals of: - property, plant and equipment - other investments Impairment loss on other investments Interest income Provision of retirement benefits Property, plant and equipment written off Net unrealised loss/(gain) on foreign exchange translations

21 21

11(a) 18 7

(79,284)

(115,764)

(15,200,000) (65,484)

(8,167) (1,320,330)

(4,835) (81,369)

(1,280,427)

794,740 (2,401,373) 293,635

342,999 (2,914,205) 391,581

453,146 (767,821) -

2,359 1,597,207

Operating profit/(loss) before changes in working capital

23,459,013

Changes in working capital: Inventories Trade and other receivables Trade and other payables

945,037 8,264,122 (2,155,309)

Cash generated from/(used in) operations

30,512,863

Interest received Tax paid Net cash from operating activities

1,028 (3,011,844) 28,768,891

(20,020,018) (92,894) (1,310,349) -

-

-

-

-

(516,189)

(534,763)

82,923 (24,750)

40,119 15,750

29,477,123

(458,016)

(478,894)

2,401,373 (5,884,314)

2,914,205 (9,340,740)

767,821 (243,653)

1,310,349 (340,047)

27,029,922

23,050,588

66,152

491,408

2,300,451 (663,135) (929,084)

61

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 APRIL 2018 (con�nued)

Note

2018 RM

Group

2017 RM

2018 RM

Company

2017 RM

CASH FLOWS FROM INVESTING ACTIVITIES Repayments from subsidiaries Dividends received Net (placement)/withdrawal of short term fund Proceeds from disposals of: - property, plant and equipment - other investments Purchase of: - property, plant and equipment - other investments

21

7 11(a)

Net cash (used in)/from inves�ng ac�vi�es

79,284 (71,651)

115,764 897,273

6,208,887 65,484 -

10,608,275 92,894 -

98,000 2,697,555

5,000 717,988

2,614,070

-

(14,236,570) (1,854,336)

(4,677,518) (524,561)

(13,287,718)

(3,466,054)

8,852,438

10,372,949

(20,000,000)

(24,000,000)

(20,000,000)

(24,000,000)

(20,000,000)

(24,000,000)

(20,000,000)

(24,000,000)

(6,257,796)

(4,415,466)

(11,081,410)

(13,135,643)

(1,479,398)

2,616,093

-

-

102,503,750

104,303,123

24,787,899

37,923,542

94,766,556

102,503,750

13,706,489

24,787,899

(36,003)

(328,220)

CASH FLOWS FROM FINANCING ACTIVITY Dividends paid

24

Net cash used in financing ac�vity Net decrease in cash and cash equivalents Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at beginning of financial year Cash and cash equivalents at end of financial year

15

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

62

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 1.

CORPORATE INFORMATION The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of the Bursa Malaysia Securities Berhad. The registered office of the Company is located at Suite 1301, 13 th Floor, City Plaza, Jalan Tebrau, 80300 Johor Bahru, Johor. The principal place of business is located at 70, Jalan Langkasuka, Larkin Industrial Area, 80350 Johor Bahru, Johor. The Directors regard Keynote Capital Sdn. Bhd., a company incorporated in Malaysia, as the holding and ultimate holding company. The consolidated financial statements for the financial year ended 30 April 2018 comprise the Company and its subsidiaries. These financial statements are presented in Ringgit Malaysia (‘RM’), which is also the Company’s functional currency. The financial statements were authorised for issue in accordance with a resolution by the Board of Directors on 27 August 2018.

2.

PRINCIPAL ACTIVITIES The Company is principally engaged in investment holding and provision of management services to subsidiaries. The principal activities of the subsidiaries are set out in Note 10 to the financial statements.

3.

BASIS OF PREPARATION The financial statements of the Group and of the Company set out on pages 55 to 115 have been prepared in accordance with Malaysian Financial Reporting Standards (‘MFRSs’), International Financial Reporting Standards (‘IFRSs’) and the provisions of the Companies Act 2016 in Malaysia.

4.

SIGNIFICANT ACCOUNTING POLICIES 4.1

Basis of accounting The financial statements of the Group and of the Company have been prepared under the historical cost convention except as otherwise stated in the financial statements. The preparation of financial statements in conformity with MFRSs and IFRSs requires the Directors to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and contingent liabilities. In addition, the Directors are also required to exercise their judgement in the process of applying the accounting policies. The areas involving such judgements, estimates and assumptions are disclosed in Note 6 to the financial statements. Although these estimates and assumptions are based on the Directors’ best knowledge of events and actions, actual results could differ from those estimates.

62

63

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 4.

SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2

Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and all its subsidiaries. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has: (a) (b) (c)

Power over the investee; Exposure, or rights, to variable returns from its involvement with the investee; and The ability to use its power over the investee to affect its returns.

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

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

Intragroup balances, transactions, income and expenses are eliminated on consolidation. Unrealised gains arising from transactions are also eliminated. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no impairment. The financial statements of the subsidiaries are prepared for the same reporting period as that of the Company, using consistent accounting policies. Where necessary, accounting policies of subsidiaries are changed to ensure consistency with the policies adopted by the other entities in the Group. The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Subsidiaries are consolidated from the date on which control is transferred to the Group up to the effective date on which control ceases, as appropriate. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the financial year are included in the statement of profit or loss and other comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary. Changes in the Company owners’ ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of consideration paid or received is recognised directly in equity and attributed to owners of the parent. If the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between: (i) (ii)

The aggregate of the fair value of the consideration received and the fair value of any retained interest; and The previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests.

63

64

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 4.

SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2

Basis of consolidation (continued) Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e. reclassified to profit or loss or transferred directly to retained earnings) in the same manner as would be required if the relevant assets or liabilities were disposed of. The fair value of any investments retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under MFRS 139 Financial Instruments: Recognition and Measurement or, where applicable, the cost on initial recognition of an investment in an associate or a joint venture.

4.3

Business combinations Business combinations are accounted for by applying the acquisition method of accounting. Identifiable assets acquired, liabilities and contingent liabilities assumed in a business combination are measured at their fair value at the acquisition date, except that: (a)

Deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with MFRS 112 Income Taxes and MFRS 119 Employee Benefits respectively;

(b)

Liabilities or equity instruments related to share-based payment transactions of the acquiree or the replacement by the Group of an acquiree’s share-based payment transactions are measured in accordance with MFRS 2 Share-based Payment at the acquisition date; and

(c)

Assets (or disposal groups) that are classified as held for sale in accordance with MFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the serviced are received. Any contingent consideration payable is recognised at fair value at the acquisition date. Measurement period adjustments to contingent consideration are dealt with as follows: (a)

If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity.

(b)

Subsequent changes to contingent consideration classified as an asset or liability that is a financial instrument within the scope of MFRS 139 are recognised either in profit or loss or in other comprehensive income in accordance with MFRS 139. All other subsequent changes are recognised in profit or loss.

In a business combination achieved in stages, previously held equity interests in the acquiree are re-measured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss.

64

65

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 4.

SIGNIFICANT ACCOUNTING POLICIES (continued) 4.3

Business combinations (continued) Components of non-controlling interests in the acquiree that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation are initially measured at fair value, or at the present ownership instruments’ proportionate share in the recognised amounts of the acquirer’s identifiable net assets. All other components of non-controlling interests shall be measured at their acquisition-date fair values, unless another measurement basis is required by MFRSs. The choice of measurement basis is made on a combination-by-combination basis. Subsequent to initial recognition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity. Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquire (if any), and the fair value of the Group’s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree’s identifiable assets and liabilities is recorded as goodwill in the statement of financial position. In instances where the latter amount exceeds the former, the excess is recognised as a gain on bargain purchase in profit or loss on the acquisition date.

4.4

Property, plant and equipment and depreciation All items of property, plant and equipment are initially measured at cost. Cost includes expenditure that is directly attributable to the acquisition of the asset. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when the cost is incurred and it is probable that the future economic benefits associated with the subsequent costs would flow to the Group and the cost of the asset can be measured reliably. The carrying amount of parts that are replaced is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. Cost also comprises the initial estimate of dismantling and removing the asset and restoring the site on which it is located for which the Group is obligated to incur when the asset is acquired, if applicable. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the asset and which has a different useful life, is depreciated separately. After initial recognition, property, plant and equipment are stated at cost less any accumulated depreciation and any accumulated impairment losses. Depreciation is calculated to write off the cost of the assets to their residual values on a straight line basis over their estimated useful lives. The principal annual depreciation periods and rates are as follows: Long term leasehold land Buildings and improvements Plant, machinery, tools and equipment Motor vehicles Office equipment, furniture and fittings Renovation

92 - 98 years 13 - 22 years 4% - 20% 20% 10% - 33.33% 10% - 20%

Construction-in-progress represents equipment under installation and is stated at cost. Construction-in-progress is not depreciated until such time when the asset is ready for use. 65

66

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 4.

SIGNIFICANT ACCOUNTING POLICIES (continued) 4.4

Property, plant and equipment and depreciation (continued) At the end of each reporting period, the carrying amount of an item of property, plant and equipment is assessed for impairment when events or changes in circumstances indicate that its carrying amount may not be recoverable. A write down is made if the carrying amount exceeds the recoverable amount (see Note 4.8 to the financial statements on impairment of non-financial assets). The residual values, useful lives and depreciation method are reviewed at the end of each reporting period to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment. If expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate. The carrying amount of an item of property, plant and equipment is derecognised on disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any, and the carrying amount is included in profit or loss.

4.5

Leases and hire purchase Leases of land and buildings For leases of land and buildings, the land and buildings elements are considered separately for the purpose of lease classification and these leases are classified as operating or finance leases in the same way as leases of other assets. The minimum lease payments including any lump-sum upfront payments made to acquire the interest in the land and buildings are allocated between the land and the buildings elements in proportion to the relative fair values of the leasehold interests in the land element and the buildings element of the lease at the inception of the lease. For a lease of land and buildings in which the amount that would initially be recognised for the land element is immaterial, the land and building are treated as a single unit for the purpose of lease classification and is accordingly classified as a finance or operating lease. In such a case, the economic life of the building is regarded as the economic life of the entire leased asset.

4.6

Investment properties Investment properties are properties which are held to earn rental yields or for capital appreciation or for both and are not occupied by the Group. Investment properties also include properties that are being constructed or developed for future use as investment properties. Investment properties are initially measured at cost, including transaction costs, less any accumulated depreciation and any accumulated impairment losses. Subsequent costs are included in the carrying amount of the investment properties or recognised as a separate asset, as appropriate, only when the cost is incurred and it is probable that future economic benefits associated with the cost would flow to the Group and the cost of the asset could be measured reliably. The carrying amount of parts that are replaced is derecognised. The costs of the day-to-day servicing of investment properties are recognised in profit or loss as incurred.

66

67

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 4.

SIGNIFICANT ACCOUNTING POLICIES (continued) 4.6

Investment properties (continued) After initial recognition, investment properties are stated at cost less any accumulated depreciation and any accumulated impairment losses. Depreciation is calculated to write off the cost of the investment properties to their residual values on a straight line basis over their estimated useful lives. The principal depreciation periods for the investments properties ranges between twenty-four (24) and fifty (50) years, except for freehold land which has an unlimited useful life and is not depreciated. At the end of each reporting period, the carrying amount of an item of investment properties is assessed for impairment when events or changes in circumstances indicate that its carrying amount may not be recoverable. A write down is made if the carrying amount exceeds the recoverable amount (see Note 4.8 to the financial statements on impairment of non-financial assets). The residual values, useful lives and depreciation method are reviewed at the end of each reporting period to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the investment properties. If expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate. Investment properties are derecognised when either they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The gains or losses arising from the retirement or disposal of investment property is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the asset and is recognised in profit or loss in the period of the retirement or disposal.

4.7

Investments Subsidiaries A subsidiary is an entity in which the Group and the Company are exposed, or have rights, to variable returns from its involvement with the subsidiary and have the ability to affect those returns through its power over the subsidiary. An investment in subsidiary, which is eliminated on consolidation, is stated in the separate financial statements of the Company at cost less impairment losses, if any. Investments accounted for at cost shall be accounted for in accordance with MFRS 5 Non-current Assets Held for Sale and Discontinued Operations when they are classified as held for sale (or included in a disposal group that is classified as held for sale). When control of a subsidiary is lost as a result of a transaction, event or other circumstance, the Group would derecognise all assets, liabilities and non-controlling interests at their carrying amount and recognise the fair value of the consideration received. Any retained interest in the former subsidiary is recognised at its fair value at the date when control is lost. The resulting difference is recognised as a gain or loss in profit or loss.

67

68

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 4.

SIGNIFICANT ACCOUNTING POLICIES (continued) 4.8

Impairment of non-financial assets The carrying amount of assets, except for financial assets (excluding investments in subsidiaries), inventories and deferred tax assets, are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. The recoverable amount of an asset is estimated for an individual asset. Where it is not possible to estimate the recoverable amount of the individual asset, the impairment test is carried out on the cash generating unit (‘CGU’) to which the asset belongs. The recoverable amount of an asset or CGU is the higher of its fair value less cost to sell and its value in use. In estimating value in use, the estimated future cash inflows and outflows to be derived from continuing use of the asset and from its ultimate disposal 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 for which the future cash flow estimates have not been adjusted. An impairment loss is recognised in profit or loss when the carrying amount of the asset or the CGU exceeds the recoverable amount of the asset or the CGU. The total impairment loss is allocated to reduce the carrying amount of the assets of the CGU on a pro-rata basis of the carrying amount of each asset in the CGU. The impairment loss is recognised in profit or loss immediately. An impairment loss for assets is reversed if, and only if, there has been a change in the estimates used to determine the assets’ 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. Such reversals are recognised as income immediately in profit or loss.

4.9

Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out formula. Cost of raw materials comprises all costs of purchase, cost of conversion plus other costs incurred in bringing the inventories to their present location and condition. Cost of work-in-progress includes the cost of raw materials. Cost of finished goods includes the cost of raw materials, direct labour, other direct costs and a proportion of production overheads based on normal operating capacity of the production facilities. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

4.10

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

68

69

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 4.

SIGNIFICANT ACCOUNTING POLICIES (continued) 4.10

Financial instruments (continued) A financial asset is any asset that is cash, an equity instrument of another enterprise, a contractual right to receive cash or another financial asset from another enterprise, or a contractual right to exchange financial assets or financial liabilities with another enterprise under conditions that are potentially favorable to the Group. A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another enterprise, or a contractual obligation to exchange financial assets or financial liabilities with another enterprise under conditions that are potentially unfavorable to the Group. Financial instruments are recognised on the statement of financial position when the Group has become a party to the contractual provisions of the instrument. At initial recognition, a financial instrument is recognised at 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 issuance of the financial instrument. An embedded derivative is separated from the host contract and accounted for as a derivative if, and only if the economic characteristics and risks of the embedded derivative is not closely related to the economic characteristic and risks of the host contract, a separate instrument with the same terms as the embedded derivative meets the definition of a derivative, and the hybrid instrument is not measured at fair value through profit and loss. (a)

Financial assets A financial asset is classified into the following four (4) categories after initial recognition for the purpose of subsequent measurement: (i)

Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss comprise financial assets that are held for trading (i.e. financial assets acquired principally for the purpose of resale in the near term), derivatives (both, freestanding and embedded) and financial assets that were specifically designated into this classification upon initial recognition. Subsequent to initial recognition, financial assets classified as at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in the fair value of financial assets classified as at fair value through profit or loss are recognised in profit or loss. However, derivatives that is linked to and must be settled by delivery of unquoted equity instruments that do not have a quoted market price in an active market are recognised at cost.

(ii)

Held-to-maturity investments Financial assets classified as held-to-maturity comprise non-derivative financial assets with fixed or determinable payments and fixed maturity that the Group has the positive intention and ability to hold to maturity.

69

70

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 4.

SIGNIFICANT ACCOUTING POLICIES (continued) 4.10

Financial instruments (continued) (a)

Financial assets (continued) (ii)

Held-to-maturity investments (continued) Subsequent to initial recognition, financial assets classified as held-to-maturity are measured at amortised cost using the effective interest method. Gains or losses on financial assets classified as held-to-maturity are recognised in profit or loss when the financial assets are derecognised or impaired, and through the amortisation process.

(iii) Loans and receivables Financial assets classified as loans and receivables comprise non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Subsequent to initial recognition, financial assets classified as loans and receivables are measured at amortised cost using the effective interest method. Gains or losses on financial assets classified as loans and receivables are recognised in profit or loss when the financial assets are derecognised or impaired, and through the amortisation process. (iv) Available-for-sale financial assets Financial assets classified as available-for-sale comprise non-derivative financial assets that are designated as available for sale or are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss. Subsequent to initial recognition, financial assets classified as available-for-sale are measured at fair value. Any gains or losses arising from changes in the fair value of financial assets classified as available-for-sale are recognised directly in other comprehensive income, except for impairment losses and foreign exchange gains and losses, until the financial asset is derecognised, at which time the cumulative gains or losses previously recognised in other comprehensive income are recognised in profit or loss. However, interest calculated using the effective interest method is recognised in profit or loss whilst dividends on available-for-sale equity instruments are recognised in profit or loss when the Group’s right to receive payment is established. Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in fair value with original maturities of three (3) months or less, and are used by Group and the Company in the management of their short term commitments. For the purpose of the statements of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits, if any. A financial asset is derecognised when the contractual right to receive cash flows from the financial asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised directly in other comprehensive income shall be recognised in profit or loss.

70

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APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 4.

SIGNIFICANT ACCOUNTING POLICIES (continued) 4.10

Financial instruments (continued) (a)

Financial assets (continued) A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or marketplace convention. A regular way purchase or sale of financial assets shall be recognised and derecognised, as applicable, using trade date accounting.

(b)

Financial liabilities Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. A financial liability is classified into the following two (2) categories after initial recognition for the purpose of subsequent measurement: (i)

Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss comprise financial liabilities that are held for trading, derivatives (both, freestanding and embedded) and financial liabilities that were specifically designated into this classification upon initial recognition. Subsequent to initial recognition, financial liabilities classified as at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in the fair value of financial liabilities classified as at fair value through profit or loss are recognised in profit or loss.

(ii)

Other financial liabilities Financial liabilities classified as other financial liabilities comprise non-derivative financial liabilities that are neither held for trading nor initially designated as at fair value through profit or loss. Subsequent to initial recognition, other financial liabilities are measured at amortised cost using the effective interest method. Gains or losses on other financial liabilities are recognised in profit or loss when the financial liabilities are derecognised and through the amortisation process.

A financial liability is derecognised when, and only when, it is extinguished, i.e. when the obligation specified in the contract is discharged or cancelled or expired. An exchange between an existing borrower and lender of debt instruments with substantially different terms are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Any difference between the carrying amount of a 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.

71

72

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 4.

SIGNIFICANT ACCOUNTING POLICIES (continued) 4.10

Financial instruments (continued) (c)

Financial guarantee contracts A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are amortised to profit or loss using the straight-line method over the contractual period or, when there is no specified contractual period, recognised in profit or loss upon discharge, cancellation or expiration of the guarantee. When settlement of a financial guarantee contract becomes probable, an estimate of the obligation is made in accordance with MFRS 137 Provisions, Contingent Liabilities and Contingent Assets. If the carrying amount of the financial guarantee is lower than the obligation estimated, the carrying value is adjusted to the obligation amount and accounted for as a provision.

(d)

Equity 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 classified as equity instruments. Ordinary shares are recorded at the proceeds received at issuance and classified as equity. Transaction costs directly related to the issuance of equity instrument are accounted for as a deduction from equity, net of any related income tax benefit. Otherwise, they are charged to profit or loss. Interim dividends to shareholders are recognised in equity in the period in which they are declared. Final dividends are recognised upon the approval of shareholders in a general meeting.

4.11

Impairment of financial assets The Group assesses whether there is any objective evidence that a financial asset is impaired at the end of each reporting period. (a)

Loans and receivables The Group collectively considers factors such as the probability of bankruptcy or significant financial difficulties of the receivable, and default or significant delay in payments to determine whether there is objective evidence that an impairment loss on loans and receivables has occurred. Other objective evidence of impairment include historical collection rates determined on an individual basis and observable changes in national or local economic conditions that are directly correlated with the historical default rates of receivables. If any such objective evidence exists, the amount of impairment loss is measured as the difference between the financial asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss. 72

73

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 4.

SIGNIFICANT ACCOUNTING POLICIES (continued) 4.11

Impairment of financial assets (continued) (a)

Loans and receivables (continued) The carrying amount of loans and receivables is reduced through the use of an allowance account. If in a subsequent period, the amount of the impairment loss decreases and it objectively relates to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of impairment reversed is recognised in profit or loss.

(b)

Available-for-sale financial assets The Group collectively considers factors such as significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market as objective evidence that available-for-sale financial assets are impaired. If any such objective evidence exists, an amount comprising the difference between the financial asset’s cost (net of any principal payment and amortisation) and current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to profit or loss. Impairment losses 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 on available-for-sale equity investments are not reversed in profit or loss in subsequent periods. Instead, any increase in the fair value subsequent to the impairment loss is recognised in other comprehensive income. Impairment losses on available-for-sale debt investments are subsequently reversed to profit or loss if the increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in profit or loss.

4.12

Income taxes Income taxes include all domestic taxes on taxable profit. Income taxes also include other taxes, such as real property gains taxes payable on disposal of properties. Taxes in the statements of profit or loss and other comprehensive income comprise current tax and deferred tax. (a)

Current tax Current tax expenses are determined according to the tax laws of the jurisdiction in which the Group operates and include all taxes based upon the taxable profits and real property gains taxes payable on disposal of properties, if any.

73

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APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 4.

SIGNIFICANT ACCOUNTING POLICIES (continued) 4.12

Income taxes (continued) (b) Deferred tax Deferred tax is recognised in full using the liability method on temporary differences arising between the carrying amount of an asset or liability in the statement of financial position and its tax base. Deferred tax is recognised for all temporary differences, unless the deferred tax arises from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of transaction, affects neither accounting profit nor taxable profit. A deferred tax asset is recognised only to the extent that it is probable that taxable profit would be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. The carrying amount of a deferred tax asset is reviewed at the end of each reporting period. If it is no longer probable that sufficient taxable profit would be available to allow the benefit of part or all of that entire deferred tax asset to be utilised, the carrying amount of the deferred tax asset would be reduced accordingly. When it becomes probable that sufficient taxable profit would be available, such reductions would be reversed to the extent of the taxable profit. 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 the deferred income taxes relate to the same taxation authority on either: (i)

the same taxable entity; or

(ii)

different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Deferred tax would be recognised as income or expense and included in profit or loss for the period unless the tax relates to items that are credited or charged, in the same or a different period, directly to equity, in which case the deferred tax would be charged or credited directly to equity. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on the announcement of tax rates and tax laws by the Government in the annual budgets which have the substantive effect of actual enactment by the end of each reporting period. 4.13

Employee benefits (a) Short term employee benefits Wages, salaries, social security contributions, paid annual leave, paid sick leave, bonuses and non-monetary benefits are measured on an undiscounted basis and are expensed when employees have rendered their services to the Group.

74

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APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 4.

SIGNIFICANT ACCOUNTING POLICIES (continued) 4.13

Employee benefits (continued) (a) Short term employee benefits (continued) Short term accumulating compensated absences such as paid annual leave are recognised as an expense when employees render services that increase their entitlement to future compensated absences. Short term non-accumulating compensated absences such as sick leave are recognised when the absences occur and they lapse if the current period’s entitlement is not used in full and do not entitle employees to a cash payment for unused entitlement on leaving the Group. Bonuses are recognised as an expense when there is a present, legal or constructive obligation to make such payments, as a result of past events and when a reliable estimate can be made of the amount of the obligation. (b) Defined contribution plan The Company and its subsidiaries incorporated in Malaysia make contributions to a statutory provident fund. The contributions are recognised as a liability after deducting any contributions already paid and as an expense in the period in which the employees render their services. (c)

Defined benefit plan The Group operates an unfunded defined benefit plan for eligible employees of the Group. The recognition and measurement of the defined benefits plan involve: (i)

Determining the deficit or surplus by: (a)

Using an actuarial technique, the projected unit credit method, to make a reliable estimate of the ultimate cost to the Group of the benefit that employees have earned in return for their service in the current and prior periods;

(b)

Discounting that benefit in order to determine the present value of the defined benefit obligation and the current service cost; and

(c)

Deducting the fair value of any plan assets from the present value of the defined benefit obligation.

(ii)

Determining the amount of the net defined benefit liability as the amount of the deficit or surplus as determined above, adjusted for any effect of limiting a net defined benefit asset to the asset ceiling; and

(iii)

Determining amounts to be recognised in profit or loss, i.e. current service cost, any past service cost and gain or loss on settlement and net interest on the net defined benefit liability.

The Group determines the net defined benefit liability annually so that the amounts recognised in the financial statements do not differ materially from the amounts that would be determined at the end of the reporting period.

75

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APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 4.

SIGNIFICANT ACCOUNTING POLICIES (continued) 4.13

Employee benefits (continued) (c)

Defined benefit plan (continued) The Group recognises the net defined benefit liability in the statements of financial position. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method. The Group uses the yield rate of high quality government or corporate bonds to discount the post-employment benefit obligations. The currency and term of the government bonds (corporate bonds) are consistent with the currency and estimated term of the postemployment benefit obligations of the Group. The remeasurement of the net defined obligation are recognised directly within equity. The remeasurement include: (i) Actuarial gains and losses; (ii) Return on plan assets, excluding interest; and (iii) Any asset ceiling effects, excluding interest. Services costs are recognised in profit or loss, and include current and past service costs as well as gains and losses on curtailments. Net interest expense is recognised in profit or loss, and is calculated by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the balance of the net defined benefit obligation, considering the effects of contributions and benefit payments during the reporting period. Gains or losses arising from changes to scheme benefits or scheme curtailment are recognised immediately in profit or loss. Settlement of defined benefit schemes are recognised in the period when the settlement occurs. If the Group has an unconditional right to a refund during the life of the plan, it would recognise an asset measured as the amount of the surplus at the end of the reporting period that it has a right to receive a refund which would be the fair value of the plan assets less the present value of the defined benefits obligation, less any associated costs, such as taxes. If the amount of a refund is determined as the full amount or a proportion of the surplus, rather than a fixed amount, the Group would make no adjustment for the time value of money, even if the refund is realisable only at a future date. If there is no minimum funding requirement for contributions relating to future service, the economic benefit available as a reduction in future contributions is the present value of future service cost to the entity at the end of each reporting period over the shorter of the expected life of the plan and the expected life of the entity. The Group would assume no change to the benefits provided by a plan in the future until the plan is amended and shall assume a stable workforce in the future unless it is demonstrably committed at the end of the reporting period to make a reduction in the number of employees covered by the plan.

76

77

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 4.

SIGNIFICANT ACCOUNTING POLICIES (continued) 4.14

Foreign currencies (a) Functional and presentation currency Items included in the financial statements of each of the entities of the Group are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Ringgit Malaysia, which is the functional and presentation currency of the Company. (b) Foreign currency translations and balances Transactions in foreign currencies are converted into functional currency at rates of exchange ruling at the transaction dates. Monetary assets and liabilities in foreign currencies at the end of the reporting period are translated into functional currency at rates of exchange ruling at that date. All exchange differences arising from the settlement of foreign currency transactions and from the translation of foreign currency monetary assets and liabilities are included in profit or loss in the period in which they arise. Non-monetary items initially denominated in foreign currencies, which are carried at historical cost, are translated using the historical rate as of the date of acquisition, and non-monetary items, which are carried at fair value are translated using the exchange rate that existed when the values were determined for presentation purposes.

4.15

Revenue recognition Revenue is measured at the fair value of the consideration received or receivables, net of discounts and rebates. Revenue is recognised to the extent that it is probable that the economic benefits associated with the transaction would flow to the Group, and the amount of revenue and the cost incurred or to be incurred in respect of the transaction can be reliably measured and specific recognition criteria have been met for each of the activities of the Group as follows: (a) Sale of goods Revenue from sale of goods is recognised when significant risks and rewards of ownership of the goods have been transferred to the customer and where the Group retains no continuing managerial involvement over the goods, which coincides with the delivery of goods and services and acceptance by customers. (b) Dividend income Dividend income is recognised when the shareholders’ right to receive payment is established. (c) Other income (i)

Interest income Interest income is recognised as it accrues, using the effective interest method.

77

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APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 4.

SIGNIFICANT ACCOUNTING POLICIES (continued) 4.15

Revenue recognition (continued) (c) Other income (continued) (ii)

Rental income Rental income is accounted for on a straight line basis over the lease term of an ongoing lease.

4.16

Provisions Provisions are recognised when there is a present obligation, legal or constructive, as a result of a past event, and when it is probable that an outflow of resources embodying economic benefits would be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, the amount of a provision would be discounted to its present value at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits would be required to settle the obligation, the provision would be reversed. Provisions are not recognised for future operating losses. If the Group has a contract that is onerous, the present obligation under the contract shall be recognised and measured as a provision.

4.17

Contingent liabilities and contingent assets A contingent liability is a possible obligation that arises from past events whose existence would be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources would be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Group does not recognise such contingent liabilities but discloses their existence in the financial statements. A contingent asset is a possible asset that arises from past events whose existence would be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group. The Group does not recognise a contingent asset but discloses its existence where the inflows of economic benefits are probable, but not virtually certain. In the acquisition of subsidiaries by the Group under business combinations, contingent liabilities assumed are measured initially at their fair value at the acquisition date.

78

79

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 4.

SIGNIFICANT ACCOUNTING POLICIES (continued) 4.18

Operating segments Operating segments are defined as components of the Group that: (a) engages in business activities from which it may earn revenue and incur expenses (including revenue and expenses relating to transactions with other components of the Group); (b) whose operating results are regularly reviewed by the chief operating decision makers of the Group (i.e. the Group’s Executive Director) in making decisions about resources to be allocated to the segment and assessing its performance; and (c) for which discrete financial information is available. An operating segment may engage in business activities for which it has yet to earn revenues. The Group reports separately information about each operating segment that meets any of the following quantitative thresholds: (a) Its reported revenue, including both sales to external customers and intersegment sales or transfers, is ten percent (10%) or more of the combined revenue, internal and external, of all operating segments. (b) The absolute amount of its reported profit or loss is ten percent (10%) or more of the greater, in absolute amount of: (i)

the combined reported profit of all operating segments that did not report a loss; and

(ii)

the combined reported loss of all operating segments that reported a loss.

(c) Its assets are ten percent (10%) or more of the combined assets of all operating segments. Operating segments that do not meet any of the quantitative thresholds may be considered reportable, and separately disclosed, if the management believes that information about the segment would be useful to users of the financial statements. Total external revenue reported by operating segments shall constitute at least seventy-five percent (75%) of the Group’s revenue. Operating segments identified as reportable segments in the current financial year in accordance with the quantitative thresholds, if any, would result in a restatement of prior period segment data for comparative purposes.

79

80

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 4.

SIGNIFICANT ACCOUNTING POLICIES (continued) 4.19

Earnings per share (a) Basic Basic earnings per ordinary share for the financial year is calculated by dividing the profit for the financial year attributable to equity holders of the parent by the weighted average number of ordinary shares outstanding during the financial year. (b) Diluted Diluted earnings per ordinary share for the financial year is calculated by dividing the profit for the financial year attributable to equity holders of the parent by the weighted average number of ordinary shares outstanding during the financial year adjusted for the effects of dilutive potential ordinary shares.

4.20

Fair value measurements The fair value of an asset or a liability, except for lease transactions, is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement method adopted assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market. The Group measures the fair value of an asset or a liability by taking into account the characteristics of the asset or liability if market participants would take these characteristics into account when pricing the asset or liability. The Group has considered the following characteristics when determining fair value: (a) The condition and location of the asset; and (b) Restrictions, if any, on the sale or use of the asset. The fair value measurement for a non-financial asset takes into account the ability of the market participant to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The fair value of a financial or non-financial liability or an entity’s own equity instrument assumes that: (a) A liability would remain outstanding and the market participant transferee would be required to fulfil the obligation. The liability would not be settled with the counterparty or otherwise extinguished on the measurement date; and (b) An entity’s own equity instrument would remain outstanding and the market participant transferee would take on the rights and responsibilities associated with the instrument. The instrument would not be cancelled or otherwise extinguished on the measurement date.

80

81

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 5.

ADOPTION OF NEW MFRSs AND AMENDMENTS TO MFRSs 5.1

New MFRSs adopted during the current financial year The Group and the Company adopted the following Standards of the MFRS Framework that were issued by the Malaysian Accounting Standards Board (“MASB”) during the financial year. Title

Effective Date

Amendments to MFRS 112 Recognition of Deferred Tax Assets for Unrealised Losses Amendments to MFRS 107 Disclosure Initiative Amendments to MFRS 12 Annual Improvements to MFRS Standards 2014 2016 Cycle

1 January 2017 1 January 2017 1 January 2017

Adoption of the above Standards did not have any material effect on the financial performance or position of the Group and of the Company. 5.2

New MFRSs that have been issued, but only effective for annual periods beginning on or after 1 January 2018 The following are Standards of the MFRS Framework that have been issued by the MASB but have not been early adopted by the Group and the Company: Title

Effective Date

Amendments to MFRS 1 Annual Improvements to MFRS Standards 2014 2016 Cycle MFRS 15 Revenue from Contracts with Customers Clarifications to MFRS 15 MFRS 9 Financial Instruments (IFRS 9 as issued by IASB in July 2014) Amendments to MFRS 2 Classification and Measurement of Share-based Payment Transactions Amendments to MFRS 128 Annual Improvements to MFRS Standards 2014 2016 Cycle IC Interpretation 22 Foreign Currency Transactions and Advance Consideration Amendments to MFRS 140 Transfers of Investment Property Amendments to MFRS 4 Applying MFRS 9 Financial Instruments with MFRS 4 Insurance Contracts MFRS 16 Leases IC Interpretation 23 Uncertainty over Income Tax Treatments Amendments to MFRS 128 Long-term Interests in Associates and Joint Ventures Amendments to MFRS 9 Prepayment Features with Negative Compensation Amendments to MFRS 3 Annual Improvements to MFRS Standards 2015– 2017 Cycle Amendments to MFRS 11 Annual Improvements to MFRS Standards 2015– 2017 Cycle Amendments to MFRS 112 Annual Improvements to MFRS Standards 2015–2017 Cycle

81

1 January 2018 1 January 2018 1 January 2018 1 January 2018 1 January 2018 1 January 2018 1 January 2018 1 January 2018 See MFRS 4 Paragraphs 46 and 48 1 January 2019 1 January 2019 1 January 2019 1 January 2019 1 January 2019 1 January 2019 1 January 2019

82

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 5.

ADOPTION OF NEW MFRSs AND AMENDMENTS TO MFRSs (continued) 5.2

New MFRSs that have been issued, but only effective for annual periods beginning on or after 1 January 2018 (continued) Amendments to MFRS 123 Annual Improvements to MFRS Standards 2015– 2017 Cycle Amendments to MFRS 119 Plan Amendment, Curtailment or Settlement Amendments to References to the Conceptual Framework in MFRS Standards MFRS 17 Insurance Contracts Amendments to MFRS 10 and MFRS 128 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

1 January 2019 1 January 2019 1 January 2020 1 January 2021 Deferred

The Group and the Company are in the process of assessing the impact of implementing these Standards and Amendments since the effects would only be observable for future financial years. 6.

SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS Estimates and judgements are continually evaluated by the management of the Group and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The management makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. To enhance the information content of the estimates, certain key variables that are anticipated to have a material impact to the Group’s results and financial position are tested for sensitivity to changes in the underlying parameters. The estimates and assumptions that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below: (a)

Adequacy of write-down of inventories to net realisable value Write-down of inventories to net realisable value was mainly based on management’s estimates, which had been derived from expectation of current market prices and future demand. Management focused on the risk that the carrying amount of inventories may not be stated at the lower of cost and net realisable value, the determination of which requires the management to exercise significant judgement in estimating the net realisable value of the inventories. In estimating the net realisable value of the inventories, the management considers the current economic trends and changes in customer preference of the respective inventories.

82

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APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 6.

SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued) (b)

Recoverability of trade receivables Management recognises allowances for impairment losses on trade receivables based on specific known facts or circumstances or customers’ abilities to pay. The determination of whether the trade receivables are recoverable involves significant management judgement and inherent subjectivity given uncertainty regarding the ability of the trade receivables to settle their debts. Management focused on the risk that the impairment losses on trade receivables may be understated and hence, further impairment losses may be required.

(c)

Impairment assessment of the carrying amounts of cost of investment in a subsidiary and amount owing by a subsidiary Management used a Value in Use model to compute the present value of forecasted future cash flows for a subsidiary to determine if there is any impairment loss required on the cost of investment in a subsidiary and amount owing by the subsidiary. Management has focused on the impairment assessment of the carrying amount of the cost of investment in this subsidiary and the amount owing by this subsidiary as the process is complex and the determination of whether or not an impairment loss is necessary involved significant judgements and estimates by the Directors about the future results and key assumptions applied to cash flow projections of the subsidiary in determining its recoverable amounts. These key assumptions include forecast growth in future revenues and operating profit margins, as well as determining an appropriate pre-tax discount rate and growth rates.

83

7.

Long term leasehold land Buildings and improvements Plant, machinery, tools and equipment Motor vehicles Office equipment, furniture and fittings Renovation Construction-in-progress

Long term leasehold land Buildings and improvements Plant, machinery, tools and equipment Motor vehicles Office equipment, furniture and fittings Renovation Construction-in-progress

Carrying amount

Group

2,821,323 9,322,812 336,000 280,435 1,472,000 4,000 14,236,570

50,377,872 368,026 1,437,082 9,182,076 1,847,569 98,005,840

Additions RM

20,820,062 13,973,153

Balance as at 1.5.2017 RM

PROPERTY, PLANT AND EQUIPMENT

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued)

-

84

(89,833)

-

(89,833)

Disposal RM

-

1,626,638 (1,626,638)

-

-

Reclassification RM

-

-

(2,359)

(2,359) -

Written off RM

653,846

-

-

653,846 -

Transfer from prepaid lease payments for land (Note 9) RM

103,163,507

1,428,503 10,808,484 224,931

53,346,645 501,243

24,038,799 12,814,902

Balance as at 30.4.2018 RM

(3,015,581) (9,994,454) (117,053,601) (2,093,441) (4,531,745) (4,611,250) (141,300,072)

27,054,380 24,731,467 170,400,246 2,594,684 5,960,248 15,419,734 224,931 246,385,690

(1,922,111)

(1,922,111) -

103,163,507

24,038,799 12,814,902 53,346,645 501,243 1,428,503 10,808,484 224,931

<---------------------------------At 30.4.2018 ------------------------------> Accumulated Accumulated impairment Carrying Cost depreciation loss amount RM RM RM RM

(9,640,557)

(286,655) (1,472,230) -

(6,354,039) (112,950)

(256,432) (1,158,251)

Depreciation charge for the financial year RM

APOLLO FOOD HOLDINGS BERHAD (291471-M)

84

ANNUAL REPORT 2018

7.

Long term leasehold land Buildings and improvements Plant, machinery, tools and equipment Motor vehicles Office equipment, furniture and fittings Renovation Construction-in-progress

Long term leasehold land Buildings and improvements Plant, machinery, tools and equipment Motor vehicles Office equipment, furniture and fittings Renovation Construction-in-progress

Carrying amount

Group

PROPERTY, PLANT AND EQUIPMENT (continued)

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued)

4,677,518

102,498,081

85

1,800,859 347,196 256,733 1,897,818 374,912

Additions RM

21,033,717 15,135,035 54,862,546 57,342 1,496,888 8,439,896 1,472,657

Balance as at 1.5.2016 RM

(9,168,566)

(213,655) (1,161,882) (6,285,533) (36,512) (315,346) (1,155,638) -

(1,028)

(1,028) -

Written off

98,005,840

20,820,062 13,973,153 50,377,872 368,026 1,437,082 9,182,076 1,847,569

Balance as at 30.4.2017 RM

(1,912,995) (8,836,203) (110,699,562) (1,988,658) (4,252,131) (3,139,020) (130,828,569)

22,733,057 24,731,467 161,077,434 2,356,684 5,689,213 12,321,096 1,847,569 230,756,520

(1,922,111)

(1,922,111) -

98,005,840

20,820,062 13,973,153 50,377,872 368,026 1,437,082 9,182,076 1,847,569

<---------------------------------At 30.4.2017 ------------------------------> Accumulated Accumulated impairment Carrying Cost depreciation loss amount RM RM RM RM

(165)

(165) -

Disposal RM

Depreciation charge for the financial year RM

APOLLO FOOD HOLDINGS BERHAD (291471-M)

85

ANNUAL REPORT 2018

86

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 8. INVESTMENT PROPERTIES

Group

Balance as at 1.5.2017 RM

Depreciation charge for the financial year RM

Balance as at 30.4.2018 RM

Carrying amount Freehold land Freehold buildings Leasehold land and building

12,280,246 264,678 1,438,208

(8,332) (205,458)

12,280,246 256,346 1,232,750

13,983,132

(213,790)

13,769,342

<--------------------At 30.4.2018 --------------------> Accumulated Carrying Cost depreciation amount RM RM RM Freehold land Freehold buildings Leasehold land and building

Group

12,280,246 416,587 4,931,000

(160,241) (3,698,250)

12,280,246 256,346 1,232,750

17,627,833

(3,858,491)

13,769,342

Balance as at 1.5.2016 RM

Depreciation charge for the financial year RM

Balance as at 30.4.2017 RM

Carrying amount Freehold land Freehold buildings Leasehold land and building

12,280,246 273,015 1,643,665

(8,337) (205,457)

12,280,246 264,678 1,438,208

14,196,926

(213,794)

13,983,132

<---------------------At 30.4.2017 --------------------> Accumulated Carrying Cost depreciation amount RM RM RM Freehold land Freehold buildings Leasehold land and building

12,280,246 416,587 4,931,000

(151,909) (3,492,792)

12,280,246 264,678 1,438,208

17,627,833

(3,644,701)

13,983,132

87

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 8. INVESTMENT PROPERTIES (continued) Direct operating expenses arising from investment properties during the financial year are as follows: 2018 RM Quit rent and assessment - generating rental income - not generating rental income Insurance - generating rental income

Group

2017 RM

16,703 49,838

16,703 49,838

4,023

3,901

The fair value of the investment properties of approximately RM23,800,000 (2017: RM23,800,000) was assessed by the Directors as at the end of the reporting period based on the recommendation by external and independent valuer, having appropriate recognised professional qualification and recent experience in the location and category of property being valued using the “Cost Approach of Valuation”. 9.

PREPAID LEASE PAYMENTS FOR LAND Transfer to property, plant and equipment (Note 7) RM

Balance as at 1.5.2017 RM

Group Carrying amount Short term leasehold land

653,846

Balance as at 30.4.2018 RM

(653,846)

-

<---------------At 30.4.2018 ----------------> Accumulated Carrying Cost amortisation amount RM RM RM Short term leasehold land

Balance as at 1.5.2016 RM

Group Carrying amount Short term leasehold land

769,231

Amortisation charge for the financial year RM (115,385)

Balance as at 30.4.2017 RM 653,846

<---------------At 30.4.2017 ----------------> Accumulated Carrying Cost amortisation amount RM RM RM Short term leasehold land

1,500,000 87

(846,154)

653,846

88

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 9.

PREPAID LEASE PAYMENTS FOR LAND (continued) During the financial year, the lease term of the land had been granted with an extension until year 2109.

10. INVESTMENTS IN SUBSIDIARIES 2018 RM Unquoted equity shares, at cost Equity loan

Company

2017 RM

39,378,234 20,000,000

39,378,234 -

59,378,234

39,378,234

The Directors of the Company have reassessed the nature of the amounts owing by subsidiaries and determined that an outstanding balance amounting to RM20,000,000 (2017: Nil) shall constitute an equity loan to a subsidiary as it is unsecured, interest free and settlement is neither planned nor likely to occur in the foreseeable future and is considered to be part of the investment of the Company providing the subsidiary with a long term source of additional capital. The details of the subsidiaries are as follows: Name of company

Effective interest in equity 2018 2017 % %

Country of incorporation

Principal activities

Apollo Food Industries (M) Sdn. Bhd.#

Malaysia

100

100

Manufacturing of compound chocolates, chocolate confectionery products and cakes.

Hap Huat Food Industries Sdn. Bhd.#

Malaysia

100

100

Investment holding

#

Subsidiaries audited by BDO Malaysia

11. OTHER INVESTMENTS 2018 RM

Group

2017 RM

2018 RM

Company

2017 RM

Available-for-sale financial assets - quoted shares in Malaysia - unquoted shares in Malaysia

3,685,044 1,000

4,709,116 1,000

1,597,972 -

4,080,096 -

Total other investments

3,686,044

4,710,116

1,597,972

4,080,096

88

89

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 11. OTHER INVESTMENTS (continued) (a) The reconciliation of movements in the other investments are as follows: 2018 RM

Group

2017 RM

2018 RM

Company

2017 RM

Balance as at beginning of financial year Additions Disposals Fair value gain Impairment loss

4,710,116 1,854,336 (2,492,300) 408,632 (794,740)

3,308,348 524,561 (670,750) 1,890,956 (342,999)

4,080,096 36,003 (2,426,180) 361,199 (453,146)

2,115,022 328,220 1,636,854 -

Balance as at end of financial year

3,686,044

4,710,116

1,597,972

4,080,096

(b) Information on the fair value hierarchy is disclosed in Note 31 to the financial statements. (c) Information on financial risks of other investments is disclosed in Note 32 to the financial statements. 12. INVENTORIES

At cost Raw materials Work-in-progress Finished goods Packaging materials

2018 RM

Group

2017 RM

4,915,130 1,086,716 5,088,980 3,812,088

7,309,203 1,209,787 3,414,424 3,914,537

14,902,914

15,847,951

During the financial year, inventories of the Group recognised as cost of sales amounted to RM112,273,770 (2017: RM130,981,461).

90

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 13. TRADE AND OTHER RECEIVABLES 2018 RM Trade receivables Third parties Other receivables Other receivables Amounts owing by subsidiaries Interest receivable from deposits with licensed banks Deposits

Loans and receivables Deposits and prepayments Deposits Prepayments

Group

2017 RM

2018 RM

Company

2017 RM

28,670,643

36,437,505

-

-

148,194 -

215,334 -

29,733,635

40,742,522

106,930 350,751

212,185 351,035

55,271 2,150

138,194 2,150

605,875

778,554

29,791,056

40,882,866

29,276,518

37,216,059

29,791,056

40,882,866

164,077 113,187

562,774 155,673

13,333

13,333

277,264

718,447

13,333

13,333

29,553,782

37,934,506

29,804,389

40,896,199

(a) Trade receivables are non-interest bearing and the normal trade terms granted by the Group ranges from 30 days to 90 days (2017: 30 days to 90 days) from the date of invoice. They are recognised at their original invoice amounts, which represent their fair values on initial recognition. (b) Amounts owing by subsidiaries are unsecured, interest-free and receivable upon demand in cash and cash equivalents. (c) The currency exposure profile of loans and receivables are as follows: 2018 RM Ringgit Malaysia United States Dollar Singapore Dollar

Group

2017 RM

2018 RM

Company

2017 RM

18,783,124 10,483,267 10,127

18,522,037 18,694,022 -

29,791,056 -

40,882,866 -

29,276,518

37,216,059

29,791,056

40,882,866

90

91

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 13. TRADE AND OTHER RECEIVABLES (continued) (d) The ageing analysis of trade receivables of the Group is as follows: 2018 RM Neither past due nor impaired Past due, not impaired 1 to 30 days 31 to 60 days More than 61 days

Group

2017 RM

21,062,492

23,694,938

6,594,566 411,359 602,226

9,188,283 2,770,540 783,744

7,608,151

12,742,567

28,670,643

36,437,505

Receivables that are neither past due nor impaired Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group. Based on past experience, the Board believes that no allowance for impairment is necessary in respect of those balances. None of the trade receivables of the Group that are neither past due nor impaired have been renegotiated during the financial year. Receivables that are past due but not impaired Trade receivables that are past due but not impaired mainly arose from active customers with ongoing business relationship, in which the management is of the view that the amounts are recoverable based on past payments history. Trade receivables of the Group that are past due but not impaired are unsecured in nature. (e) Information on financial risks of trade and other receivables is disclosed in Note 32 to the financial statements. 14. SHORT TERM FUND

At fair value through profit or loss Investments in trust fund in Malaysia

2018 RM

Group

2,250,928

2017 RM

2,179,277

2018 RM

Company

-

2017 RM

-

(a) Investments in trust fund in Malaysia represent investments in highly liquid money market instruments, which are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.

91

92

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 14. SHORT TERM FUND (continued) (b) Short term fund is denominated in Ringgit Malaysia (‘RM’). (c) Information on financial risks of short term fund is disclosed in Note 32 to the financial statements. 15. CASH AND BANK BALANCES 2018 RM Cash and bank balances Deposits with licensed banks

Group

2017 RM

2018 RM

Company

2017 RM

37,206,720 57,559,836

40,380,105 62,123,645

69,201 13,637,288

138,269 24,649,630

94,766,556

102,503,750

13,706,489

24,787,899

(a) The currency exposure profile of cash and bank balances are as follows: 2018 RM Euro Ringgit Malaysia United States Dollar

Group

2017 RM

2018 RM

Company

2017 RM

18,387,838 57,494,929 18,883,789

26,603,095 67,479,292 8,421,363

13,706,489 -

24,787,899 -

94,766,556

102,503,750

13,706,489

24,787,899

(b) Information on financial risks of cash and bank balances is disclosed in Note 32 to the financial statements.

92

93

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 16. SHARE CAPITAL 2018

Number of shares Issued and fully paid up ordinary shares At beginning/end of financial year

Group and Company RM

80,000,000

80,000,000

Number of shares

2017 RM

80,000,000

80,000,000

The owners of the parent of ordinary shares are entitled to receive dividends as and when declared by the Company and are entitled to one (1) vote per ordinary share at meetings of the Company. All ordinary shares rank pari passu with regard to the Company’s residual assets. With the introduction of the Companies Act 2016 effective 31 January 2017, the concepts of authorised share capital and par value of share capital have been abolished. There is no impact on the number of ordinary shares in issue or the relative entitlement of any of the members as a result of the adoption of the Companies Act 2016. 17. RESERVES 2018 RM Non-distributable: Share premium Available-for-sale reserve Distributable: Retained earnings

Group

2017 RM

2018 RM

Company

2017 RM

4,325,454 219,793

4,325,454 926,236

4,325,454 307,627

4,325,454 1,038,965

4,545,247

5,251,690

4,633,081

5,364,419

159,070,575

167,998,734

19,351,737

23,185,105

163,615,822

173,250,424

23,984,818

28,549,524

(a) Share premium Companies Act 2016 (“CA2016”) has come into effect on 31 January 2017. Following the adoption of CA2016, the share premium account will now be merged with the Company’s share capital. Notwithstanding that, Section 618 of CA2016 provides a transitional period of twenty four (24) months to utilise the amounts in the share premium account. Therefore, the Company has not consolidated the share premium into share capital until the expiry of the transitional period. (b) Available-for-sale reserve This reserve arose from fair value gains or losses of financial assets classified as other investments.

93

94

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 18. RETIREMENT BENEFITS OBLIGATIONS (a) The Group operates an unfunded defined benefits retirement plan for its eligible employees and Directors. Under the plan, employees and Executive Directors with a minimum period of five (5) years services with the Group are entitled to retirement benefits based on their last drawn final salary and length of service on attainment of the retirement age of 60. (b) The amounts recognised in the statements of financial position are determined as follows: 2018 RM

Group

2017 RM

Present value of defined benefit obligations

2,389,937

2,096,302

Analysed as follows: Non-current liabilities

2,389,937

2,096,302

(c) The following table sets out the reconciliation of defined benefit plan: 2018 RM

Group Balance as at beginning of financial year

2017 RM

2,096,302

1,704,721

Current service costs Past service costs Interest costs

227,723 (37,051) 102,963

145,596 153,094 92,891

Included in profit or loss

293,635

391,581

2,389,937

2,096,302

Balance as at end of financial year (d) The principal actuarial assumptions used are as follows:

2018 % Discount rate Expected rate of salary increases

Group

5.0 5.5

94

2017 % 5.0 5.5

95

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 19. DEFERRED TAX LIABILITIES/(ASSETS) (a) The deferred tax assets and liabilities are made up of the following: 2018 RM Balance as at beginning of financial year Recognised in profit or loss (Note 23)

Group

2017 RM

2018 RM

Company

2017 RM

11,092,079

11,894,074

(61,440)

(57,600)

(1,566,836)

(801,995)

(3,360)

(3,840)

9,525,243

11,092,079

(64,800)

(61,440)

Deferred tax liabilities Deferred tax assets

11,014,813 (1,489,570)

12,141,391 (1,049,312)

(64,800)

(61,440)

At end of financial year

9,525,243

11,092,079

(64,800)

(61,440)

Balance as at end of financial year Presented after appropriate offsetting

(b) The components and movements of deferred tax assets and liabilities during the financial year prior to offsetting are as follows: Deferred tax assets of the Group Property, plant and equipment RM

Payables RM

Others RM

Total RM

Balance as at 1 May 2017 Recognised in profit or loss

(46,228) 3,981

(1,003,084) (60,909)

(383,330)

(1,049,312) (440,258)

Balance as at 30 April 2018

(42,247)

(1,063,993)

(383,330)

(1,489,570)

Balance as at 1 May 2016 Recognised in profit or loss

(26,632) (19,596)

(215,876) (787,208)

-

(242,508) (806,804)

Balance as at 30 April 2017

(46,228)

(1,003,084)

-

(1,049,312)

95

96

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 19. DEFERRED TAX LIABILITIES/(ASSETS) (continued) (b) The components and movements of deferred tax assets and liabilities during the financial year prior to offsetting are as follows: (continued) Deferred tax liabilities of the Group Property, plant and equipment RM Balance as at 1 May 2017 Recognised in profit or loss

11,418,549 (403,736)

Balance as at 30 April 2018

11,014,813

Balance as at 1 May 2016 Recognised in profit or loss Balance as at 30 April 2017

Others RM

Total RM

722,842 (722,842)

12,141,391 (1,126,578)

-

11,014,813

12,136,582 (718,033)

722,842

12,136,582 4,809

11,418,549

722,842

12,141,391

Deferred tax assets of the Company

Payables RM

Balance as at 1 May 2017 Recognised in profit or loss

(61,440) (3,360)

Balance as at 30 April 2018

(64,800)

Balance as at 1 May 2016 Recognised in profit or loss

(57,600) (3,840)

Balance as at 30 April 2017

(61,440)

20. TRADE AND OTHER PAYABLES 2018 RM

Group

2017 RM

2018 RM

Company

2017 RM

Trade payables Third parties

2,484,829

4,378,174

-

-

Other payables Other payables Accruals Deposits received

826,199 4,509,885 117,500

942,686 4,654,155 117,500

545,250 -

570,000 -

5,453,584

5,714,341

545,250

570,000

7,938,413

10,092,515

545,250

570,000

96

97

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 20. TRADE AND OTHER PAYABLES (continued) (a) Trade payables are non-interest bearing and the normal trade terms granted to the Group range from 7 days to 60 days (2017: 7 days to 60 days) from the date of invoice. (b) The currency exposure profile of trade and other payables are as follows: 2018 RM Ringgit Malaysia United States Dollar

Group

2017 RM

2018 RM

Company

2017 RM

7,588,401 350,012

9,465,345 627,170

545,250 -

570,000 -

7,938,413

10,092,515

545,250

570,000

(c) Information on financial risks of trade and other payables is disclosed in Note 32 to the financial statements. 21. REVENUE 2018 RM Sale of goods Dividend income - subsidiaries - others

Group

2017 RM

2018 RM

Company

2017 RM

190,739,163

208,802,530

-

-

79,284

115,764

15,200,000 65,484

20,020,018 92,894

79,284

115,764

15,265,484

20,112,912

190,818,447

208,918,294

15,265,484

20,112,912

97

98

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 22. PROFIT BEFORE TAX Other than those disclosed elsewhere in the financial statements, profit before tax is arrived at:

After charging: Auditors’ remuneration Impairment loss on other investments Net loss on foreign exchange - realised - unrealised Rental of premises

2018 RM

Group

2017 RM

2018 RM

Company

2017 RM

88,000

88,000

30,000

30,000

794,740

342,999

453,146

-

517,172 1,597,207 57,600

62,400

-

-

8,167 1,320,330

4,835 81,369

1,280,427

-

2,401,373

2,914,205

767,821

1,310,349

416,700

409,000

-

-

-

2,811,630 3,011,844

-

-

And after crediting: Gain on disposals of: - property, plant and equipment - other investments Interest income from financial institutions Rental income from investment properties Net gain on foreign exchange - realised - unrealised (a) Directors’ remuneration

Directors’ remuneration paid and payable to Directors: - Directors’ fees: - paid and payable by the Company - paid and payable by the subsidiaries - Other emoluments: - paid and payable by the Company - paid and payable by the subsidiaries

2018 RM

Group

2017 RM

2018 RM

Company

2017 RM

225,000

268,000

225,000

268,000

36,000

36,000

-

-

54,500

51,250

54,500

51,250

9,559,994

9,777,172

-

-

9,875,494

10,132,422

279,500

319,250

99

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 23. TAX EXPENSE 2018 RM Income tax - current year - (over)/under-provision in prior years

Group

5,535,370 (314,496) 5,220,874

Deferred tax (Note 19) - origination and reversal of temporary differences - (over)/under-provision in prior years

(1,561,071) (5,765) (1,566,836) 3,654,038

2017 RM 7,645,137 (12,604) 7,632,533

(918,297)

2018 RM

6,830,538

2017 RM

181,738

310,624

(613)

2,493

181,125

313,117

(3,360)

(3,840)

-

-

(3,360)

(3,840)

177,765

309,277

116,302 (801,995)

Company

(a) The Malaysian income tax is calculated at the statutory tax rate of 24% (2017: 24%) of the estimated taxable profit for the fiscal year. (b) The numerical reconciliations between the tax expense and the product of accounting profit multiplied by the applicable tax rates of the Group and of the Company are as follows: 2018 RM Profit before tax Tax expense at the applicable tax rate of 24% (2017: 24%)

Group

2017 RM

2018 RM

Company

2017 RM

14,725,879

24,663,555

16,344,397

20,888,498

3,534,211

5,919,253

3,922,656

5,013,240

225,471 (3,969,749)

119,022 (4,825,478)

Tax effects in respect of: Non-allowable expenses Non-taxable income (Over)/Under-provision in prior years - income tax - deferred tax

845,148 (405,060) 3,974,299 (314,496) (5,765) 3,654,038

99

923,824 (116,237) 6,726,840 (12,604) 116,302 6,830,538

178,378 (613) 177,765

306,784 2,493 309,277

100

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 23. TAX EXPENSE (continued) (c) Tax on each component of other comprehensive income is as follows:

Group Items that may be reclassified subsequently to profit or loss

Before tax RM

Tax effect RM

After tax RM

2018 Other investments - fair value gain - reclassification to profit or loss upon disposal

408,632 (1,115,075)

-

408,632 (1,115,075)

(706,443)

-

(706,443)

1,890,956 (34,131)

-

1,890,956 (34,131)

1,856,825

-

1,856,825

361,199 (1,092,537)

-

361,199 (1,092,537)

(731,338)

-

(731,338)

2017 Other investments - fair value gain - reclassification to profit or loss upon disposal

Company Items that may be reclassified subsequently to profit or loss 2018 Other investments - fair value gain - reclassification to profit or loss upon disposal

2017 Fair value gain on other investments

1,636,854

-

1,636,854

101

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 24. DIVIDENDS

In respect of the financial year ended 30 April 2017

Group and Company 2018 2017 Gross dividend Amount of Gross dividend Amount of per share dividend per share dividend sen RM sen RM

Final single tier dividend

25

20,000,000

-

-

-

-

30

24,000,000

In respect of the financial year ended 30 April 2016 Final single tier dividend

A final single tier dividend in respect of the financial year ended 30 April 2018 of 20 sen per ordinary share, amounting to RM16,000,000 has been proposed by the Directors after the end of reporting period for shareholders’ approval at the forthcoming Annual General Meeting. The financial statements for the current financial year do not reflect this proposed dividend. This dividend, if approved by shareholders, would be accounted for as an appropriation of retained earnings in the financial year ending 30 April 2019. 25. EMPLOYEE BENEFITS 2018 RM Salaries, wages and bonuses Contributions to defined contribution plan Defined benefit plan Social security contribution Other benefits

Group

2017 RM

2018 RM

Company

2017 RM

32,115,683

30,226,325

54,500

51,250

2,826,597 293,635 248,799 117,587

2,568,319 391,581 218,898 97,823

-

-

35,602,301

33,502,946

54,500

51,250

Included in the employee benefits of the Group and of the Company are Directors’ remuneration amounting to RM9,614,494 (2017: RM9,828,422) and RM54,500 (2017: RM51,250) respectively. 26. COMMITMENTS 2018 RM Capital expenditure in respect of purchase of property, plant and equipment: Contracted but not provided for 101

Group

312,616

2017 RM

6,181,000

102

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 27. EARNINGS PER ORDINARY SHARE (a) Basic Basic earnings per ordinary share for the financial year is calculated by dividing profit for the financial year attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the financial year. 2018 RM

Group

2017 RM

Profit attributable to equity holders of the parent (‘RM’)

11,071,841

17,833,017

Weighted average number of ordinary shares in issue (units)

80,000,000

80,000,000

13.84

22.29

Basic earnings per ordinary share (sen) (b) Diluted

Diluted earnings per ordinary share for the current and previous financial years is equal to the basic earnings per ordinary share for the respective financial year as there were no outstanding dilutive potential ordinary shares at the end of each reporting period. 28. CONTINGENT LIABILITIES On-going litigation In the previous financial year on 7 April 2017, Apollo Food Industries (M) Sdn. Bhd. (“AFI”), a wholly owned subsidiary of Apollo Food Holdings Berhad, received a Writ of Summon from Mondelez Europe GMBH (“Mondelez”), seeking to restrain AFI from selling one of their product on the basis that such product infringes Mondelez’s rights. The Directors have consulted legal counsel and no court trial date has been fixed as there was a mediation between the parties held on 11 April 2018 and 7 June 2018. Subsequent to the mediation meetings, both parties have agreed to settle the matter and are currently working on the details of the settlement. Based on the advice of the solicitors, the details of the settlement is primarily focused on both parties to bear their own legal costs without further claims on each party. The Directors are of the view that other than the legal professional consultancy fees incurred of RM66,000 which had been accrued for in the Group’s financial statements, the Directors are not aware of any contractual obligation, guarantee or otherwise which may affect the Group as a result of this litigation.

102

103

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 29. RELATED PARTY DISCLOSURES (a) Identities of related parties Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties could be individuals or other entities. The Company has controlling related party relationships with its subsidiaries and its holding company. (b) In addition to the transactions and balances detailed elsewhere in the financial statements, the Company had the following transactions with the related parties during the financial year: 2018 RM

Subsidiaries: Dividend income

Company

15,200,000

2017 RM

20,020,018

The related party transaction described above was carried out based on negotiated terms and conditions and mutually agreed with the related parties. (c) Compensation of key management personnel Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the entity, directly and indirectly, including any Director (whether executive or otherwise) of the Group and the Company. The remuneration of Directors during the financial year was as follows: 2018 RM Short term employee benefits Contributions to defined contribution plan Defined benefit plan

Fees

Group

2017 RM

2018 RM

Company

2017 RM

8,486,974

8,789,718

54,500

51,250

1,017,825 109,695

994,097 44,607

-

-

9,614,494

9,828,422

54,500

51,250

261,000

304,000

225,000

268,000

9,875,494

10,132,422

279,500

319,250

103

104

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 30. OPERATING SEGMENTS Apollo Food Holdings Berhad and its subsidiaries are principally engaged in investment holding, manufacturing, distributing and trading in compound chocolates, chocolate confectionery products and cakes. Apollo Food Holdings Berhad has arrived at two (2) reportable segments that are organised and managed separately according to the nature of products and services, specific expertise and technologies requirements, which requires different business and marketing strategies. The reportable segments are summarised as follows: (i)

Investment holding division

(ii)

Manufacturing, marketing and distribution Manufacturing, marketing and distribution of compound chocolates, chocolate confectionery products and cakes.

The accounting policies of operating segments are the same as those described in the summary of significant accounting policies. Segment performance is evaluated based on operating profit, excluding non-recurring losses, and in certain respect as explained in the table below, it is measured differently from operating profit in consolidated financial statements. Inter-segment revenue is priced along the same lines as sales to external customers and is eliminated in the consolidated financial statements. These policies have been applied constantly throughout the current and previous financial years. Segment assets exclude tax assets. Segment liabilities exclude tax liabilities. Details are provided in the reconciliations from segment assets and liabilities to the position of the Group.

104

105

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 30. OPERATING SEGMENTS (continued) Details are provided in the reconciliations from segment assets and liabilities to the position of the Group. All the assets and capital expenditure of the Group are located within Malaysia.

2018

Investment holding RM

Manufacturing, marketing and distribution RM

Elimination RM

Total RM

Revenue Revenue from external customers Inter-segment revenue

79,284 15,200,000

190,739,163 -

(15,200,000)

190,818,447 -

Total revenue

15,279,284

190,739,163

(15,200,000)

190,818,447

1,127,371

13,598,508

-

14,725,879

Interest income

962,495

1,438,878

-

2,401,373

Rental income

396,000

20,700

-

416,700

(230,020) 1,320,330 (794,740) -

(9,624,327) (1,597,207)

-

(9,854,347) 1,320,330 (794,740) (1,597,207)

-

14,236,570

-

14,236,570

113,881,643

237,323,299

(89,111,869)

262,093,073

661,872

9,666,478

-

10,328,350

Segment profit before income tax

Other material non-cash items: - depreciation and amotisation - gain on disposals of other investments - impairment loss on other investments - net unrealised loss in foreign exchange Additions to non-current assets other than financial instruments and deferred tax assets Segment assets Segment liabilities

105

106

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 30. OPERATING SEGMENTS (continued) Investment holding RM

Manufacturing, marketing and distribution RM

Revenue Revenue from external customers Inter-segment revenue

115,764 20,020,018

208,802,530 -

(20,020,018)

208,918,294 -

Total revenue

20,135,782

208,802,530

(20,020,018)

208,918,294

866,717

23,796,838

-

24,663,555

1,465,241

1,448,964

-

2,914,205

391,000

18,000

-

409,000

(230,020) 81,369 (342,999) -

(9,267,725) 3,011,844

-

(9,497,745) 81,369 (342,999) 3,011,844

-

4,677,518

-

4,677,518

117,119,141

238,820,033

(80,120,756)

275,818,418

686,326

11,502,491

2017

Segment profit before income tax Interest income Rental income Other material non-cash items: - depreciation and amortisation - gain on disposals of other investments - impairment loss on other investments - net unrealised gain in foreign exchange Additions to non-current assets other than financial instruments and deferred tax assets Segment assets Segment liabilities

Elimination RM

Total RM

12,188,817

(a) Reconciliations of reportable segment revenue, profit or loss, assets and liabilities to the corresponding amounts of the Group are as follows:

Revenue Total revenue for reportable segments - Investment holding - Manufacturing, marketing and distribution

2018 RM

2017 RM

15,279,284 190,739,163 206,018,447

20,135,782 208,802,530 228,938,312

Inter-segment revenue

(15,200,000)

(20,020,018)

Revenue from external customers

190,818,447

208,918,294

Profit for the financial year Total profit or loss for reportable segments Tax expense

14,725,879 (3,654,038)

24,663,555 (6,830,538)

Profit for the financial year of the Group per consolidated statement of profit or loss and other comprehensive income

11,071,841

17,833,017

106

107

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 30. OPERATING SEGMENTS (continued) (a) Reconciliations of reportable segment revenue, profit or loss, assets and liabilities to the corresponding amounts of the Group are as follows: (continued) 2018 RM

2017 RM

Total assets for reportable segments Tax assets

262,093,073 1,441,285

275,818,418 839,423

Assets of the Group per consolidated statement of financial position

263,534,358

276,657,841

Total liabilities for reportable segments Tax liabilities

10,328,350 9,590,186

12,188,817 11,218,600

Liabilities of the Group per consolidated statement of financial position

19,918,536

23,407,417

(b) Geographical segments In presenting information on the basis of geographical areas, segment revenue is based on the geographical location of the Group’s customers. 2018 RM

Revenue from external customers Malaysia Asean (excluding Malaysia) Others

2017 RM

129,236,182 54,700,252 6,882,013

134,063,900 66,596,228 8,258,166

190,818,447

208,918,294

(c) Major customers Revenue from a customer from sales of products represent approximately RM39,544,274 (2017: RM48,462,002) of the Group revenue. 31. FINANCIAL INSTRUMENTS (a) Capital management The primary objective of the Group’s capital management is to ensure that the Group continues as going concern while maximising the return to shareholders through the optimisation of the debt and equity balance. The overall strategy of the Group remains unchanged from previous financial year. The Group’s capital structure is represented by the equity of the Company. No changes were made in the objectives, policies or processes during the financial years ended 30 April 2018 and 30 April 2017.

107

108

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 31. FINANCIAL INSTRUMENTS (continued) (a)

Capital management (continued) Pursuant to the requirements of Practice Note No. 17/2005 of the Bursa Malaysia Securities, the Group is required to maintain a consolidated shareholders’ equity equal to or not less than the twenty-five percent (25%) of the issued and paid-up capital and such shareholders’ equity is not less than RM40,000,000. The Company has complied with this requirement for the financial year ended 30 April 2018. The Group is not subject to any other externally imposed capital requirements.

(b)

Financial instruments Categories of financial instruments Group

2018 RM

2017 RM

Available-for-sale Other investments

3,686,044

4,710,116

Fair value through profit or loss Short term fund

2,250,928

2,179,277

29,276,518 94,766,556

37,216,059 102,503,750

124,043,074

139,719,809

129,980,046

146,609,202

7,938,413

10,092,515

Financial assets

Loans and receivables Trade and other receivables Cash and bank balances

Financial liabilities Other financial liabilities Trade and other payables Company Financial assets Available-for-sale Other investments Loans and receivables Trade and other receivables Cash and bank balances

108

2018 RM

2017 RM

1,597,972

4,080,096

29,791,056 13,706,489 49,791,056

40,882,866 24,787,899 40,882,866

43,497,545

65,670,765

45,095,517

69,750,861

109

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 31. FINANCIAL INSTRUMENTS (continued) (b)

Financial instruments (continued) Categories of financial instruments (continued) Company

2018 RM

Financial liabilities Other financial liabilities Other payables and accruals (c)

545,250

2017 RM

570,000

Methods and assumptions used to estimate fair value The fair values of financial assets and financial liabilities are determined as follows: (i)

Financial instruments that are not carried at fair values and whose carrying amounts are a reasonable approximation of fair values The carrying amounts of financial assets and financial liabilities such as trade and other receivables, current portion of amounts owing by subsidiaries, and trade and other payables, are reasonable approximation of fair values due to their short-term nature.

(ii)

Quoted shares The fair value of quoted investments in Malaysia is determined by reference to the exchange quoted market bid prices at the close of the business at the end of the reporting period.

(iii) Unquoted shares In view of the insignificant financial effect on the Group’s profit net of tax with the possible change in fair value, the effect of fair value was not disclosed in the financial statements. (iv)

Financial guarantees The Company provides corporate guarantees to a financial institution for banking facilities granted to a subsidiary. The fair value of such financial corporate guarantees is negligible as the probability of the subsidiary defaulting on the banking facilities is remote.

(d)

Fair value hierarchy Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3 fair value measurements are those derived from inputs for the asset or liability that are not based on observable market data (unobservable inputs).

109

(d)

2,250,928

Fair value through profit or loss Short term fund

Available-for-sale financial assets Other investments

2017

Available-for-sale financial assets Other investments

110

4,080,096

1,597,972

2,179,277

Fair value through profit or loss Short term fund

Company 2018

4,709,116

Available-for-sale financial assets Other investments

2017

3,685,044

Level 1 RM

Available-for-sale financial assets Other investments

Group 2018

-

-

-

-

-

-

-

-

-

1,000

-

1,000

Fair value of financial instruments carried at fair value Level 2 Level 3 RM RM

4,080,096

1,597,972

2,179,277

4,710,116

2,250,928

3,686,044

Total RM

4,080,096

1,597,972

2,179,277

4,710,116

2,250,928

3,686,044

Total fair value RM

4,080,096

1,597,972

2,179,277

4,710,116

2,250,928

3,686,044

Carrying amount RM

The financial instruments of the Group and of the Company that are carried at fair value and whose carrying amounts approximate its fair value are as follows:

Fair value hierarchy (continued)

31. FINANCIAL INSTRUMENTS (continued)

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued)

APOLLO FOOD HOLDINGS BERHAD (291471-M)

110

ANNUAL REPORT 2018

111

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 32. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group’s financial risk management objective is to optimise value creation for its shareholders whilst minimising the potential adverse impact arising from fluctuations in foreign currency exchange and interest rates. It is, and has been throughout the period under review, the Group’s policy that no trading and speculation in derivative financial instruments shall be undertaken. The Group is exposed mainly to credit risk, foreign currency risk, interest rate risk, liquidity and cash flow risk as well as market price risk. Information on the management of the related exposures are detailed below. (i)

Credit risk Cash deposits and trade receivables could give rise to credit risk, which requires the loss to be recognised if a counter party fails to perform as contracted. The counter parties are licensed financial institutions and creditworthy customers. It is the policy of the Group to monitor the financial standing of these counter parties on an ongoing basis to ensure that the Group is exposed to minimal credit risk. The Group’s primary exposure to credit risk arises through its trade and other receivables while the Company’s primary exposure is through the amounts owing by subsidiaries. The Group’s trading terms with its customers are mainly on credit. The credit period is generally for a period of 30 to 90 days (2017: 30 to 90 days). Each customer has a maximum credit limit and the Group seeks to maintain strict control over its outstanding receivables via a credit control officer to minimise credit risk. Overdue balances are reviewed regularly by senior management. Exposure to credit risk At the end of each reporting period, the maximum exposure of the Group and of the Company to credit risk is represented by the carrying amount of each class of financial assets recognised in the statements of financial position. Credit risk concentration profile At the end of each reporting period: (a)

Approximately 30% (2017: 46%) of the Group’s trade receivables were due from a customer; and

(b)

The Company does not have any significant concentration of credit risk as at the end of the reporting period other than the amounts owing by subsidiaries of RM29,733,635 (2017: RM40,742,522).

Financial assets that are neither past due nor impaired Information regarding trade and other receivables that are neither past due nor impaired is disclosed in Note 13 to the financial statements. Bank balances and deposits that are neither past due nor impaired are placed with reputable financial institutions with good standing. Financial assets that are past due but not impaired Information regarding financial assets that are past due but not impaired is disclosed in Note 13 to the financial statements.

111

112

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 32. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) (i)

Credit risk (continued) The maximum exposure to credit risk without taking into consideration any collateral held or other credit enhancement is represented by the carrying amount of financial assets in the financial statements, net of impairment losses and granting of corporate guarantees to a subsidiary as follows: 2018 RM

Corporate guarantees - unsecured Issued to bank for facilities granted to a subsidiary - limit of guarantee - amount utilised (ii)

Company

2017 RM

10,000,000

10,000,000

878,603

794,096

Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument would fluctuate because of changes in foreign exchange rates. The Group is exposed to foreign exchange risk on sales and purchases that are denominated in foreign currencies. The Group also hold cash and bank balances denominated in foreign currencies for working capital purposes. Foreign currency risk is monitored closely and managed to an acceptable level. Sensitivity analysis for foreign currency risk The following table demonstrates the sensitivity analysis of the Group to a reasonably possible change in United States Dollar (‘USD’), Euro (‘EUR’) and Singapore Dollar (‘SGD’) exchange rates against the respective functional currencies of the Group entities, with all other variables held constant: 2018 RM

Profit after tax

Group

2017 RM

USD/RM

- strengthen by 2% (2017: 2%) - weaken by 2% (2017: 2%)

441,100 (441,100)

402,600 (402,600)

EUR/RM

- strengthen by 2% (2017: 2%) - weaken by 2% (2017: 2%)

279,500 (279,500)

404,400 (404,400)

SGD/RM

- strengthen by 2% (2017: 2%) - weaken by 2% (2017: 2%)

200 (200)

112

-

113

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 32. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) (iii) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of the Group’s and of the Company’s financial instruments would fluctuate because of changes in market interest rates. The Group’s and the Company’s exposures to market risk of changes in interest rates relates primarily to the Group’s deposits with investment banks and commercial banks. There is no formal hedging policy with respect to interest rate exposure. The following table sets out the carrying amounts, the weighted average effective interest rates as at the reporting date and the remaining maturities of the Group’s and the Company’s financial assets that are exposed to interest rate risk.

As at 30 April 2018 Group

Weighted average effective interest Note rate %

Within 1 year RM

More than 5 years RM

1-5 years RM

Total RM

Fixed rates Deposits with licensed banks

15

3.68

57,559,836

-

-

57,559,836

Floating rates Short term fund

14

3.31

2,250,928

-

-

2,250,928

15

3.57

13,637,288

-

-

13,637,288

Fixed rates Deposits with licensed banks

15

3.41

62,123,645

-

-

62,123,645

Floating rates Short term fund

14

3.18

2,179,277

-

-

2,179,277

15

3.49

24,649,630

-

-

24,649,630

Company Fixed rates Deposits with licensed banks As at 30 April 2017 Group

Company Fixed rates Deposits with licensed banks

114

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 32. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) (iii)

Interest rate risk (continued) Sensitivity analysis for interest rate risk The following table demonstrates the sensitivity analysis of the Group and of the Company if interest rates at the end of reporting period changed by 100 basis points with all other variables held constant.

Profit after tax - Increase by 1% (2017: 1%) - Decrease by 1% (2017: 1%)

2018 RM

Group

455,000 (455,000)

Company

2017 RM

2018 RM

489,000 (489,000)

104,000 (104,000)

2017 RM 187,000 (187,000)

The sensitivity is lower in 2018 than in 2017 because of a decrease in deposits with investment banks and commercial banks during the financial year. The assumed movement in basis points for interest rate sensitivity analysis is based on current observable market environment. (iv)

Liquidity and cash flow risk Liquidity risk and cash flow risk arises from the Group’s management of working capital. It is the risk that the Group would encounter difficulty in meeting its financial obligations when due. The Group monitors and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows. The table below summarises the maturity profile of the liabilities of the Group and of the Company at the end of each reporting date based on contractual undiscounted repayment obligations.

As at 30 April 2018

On demand or within one year RM

One to five years RM

Over five years RM

Total RM

Group Financial liabilities Trade and other payables

7,938,413

-

-

7,938,413

Total undiscounted financial liabilities

7,938,413

-

-

7,938,413

Company Financial liabilities Trade and other payables Financial guarantees*

545,250 10,000,000

-

-

545,250 10,000,000

Total undiscounted financial liabilities

10,545,250

-

-

10,545,250

114

115

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2018 (continued) 32. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) (iv)

Liquidity and cash flow risk (continued)

As at 30 April 2017

On demand or within one year RM

One to five years RM

Over five years RM

Total RM

Group Financial liabilities Trade and other payables

10,092,515

-

-

10,092,515

Total undiscounted financial liabilities

10,092,515

-

-

10,092,515

Company Financial liabilities Trade and other payables Financial guarantees*

570,000 10,000,000

-

-

570,000 10,000,000

Total undiscounted financial liabilities

10,570,000

-

-

10,570,000

*This disclosure represents the maximum liquidity risk exposure. (v)

Market price risk Market risk is the risk that the fair value of future cash flows of the financial instruments of the Group would fluctuate because of changes in market prices (other than interest or exchange rates). The Group is exposed to equity price risks arising from quoted investments held by the Group. Quoted equity instruments in Malaysia are listed on the Bursa Malaysia Securities Berhad. These instruments are classified as financial assets available for sale. There has been no changes to the Group’s exposure to market risks or the manner in which these risks are managed and measured. Sensitivity analysis for market price risk The Group has considered the sensitivity of the financial instruments to market risks and is of the view that its impact is insignificant.

115

116

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

ANALYSIS OF SHAREHOLDINGS AS AT 31 JULY 2018 Statement of shareholdings according to the record of depositors as at 31 July 2018 TOTAL NUMBER OF ISSUED SHARES ISSUED SHARE CAPITAL CLASS OF SHARES NO OF SHAREHOLDERS VOTING RIGHTS A)

: : : : :

80,000,000 RM80,000,000 Ordinary shares 3,426 One vote per ordinary share

List of Substantial Shareholders Direct No. 1. 2. 3. 4. 5. 6.

Name Of Shareholders Keynote Capital Sdn Bhd Amanahraya Trustees Berhad - Amanah Saham Bumiputera Liang Chiang Heng Liang Kim Poh Tan Song Cheng Tan Kok Guan

No. of shares

%

Deemed interest in shares No. of shares %

41,048,415

51.31

-

-

12,132,700

15.17

-

-

461,000 225,000 66,000 -

0.58 0.28 0.08 -

41,048,415* 41,048,415* 41,048,415* 41,048,415*

51.31 51.31 51.31 51.31

Note : * By virtue of their interest in Keynote Capital Sdn Bhd B)

List of directors’ shareholdings in the Company Direct No. 1. 2. 3. 4. 5. 6. 7.

Name Of Directors

No. of shares

Liang Chiang Heng Liang Kim Poh Ng Chat Choon @ Ng Chet Chiang Abdul Rahim Bin Bunyamin Datin Paduka Hjh. Aminah Binti Hashim Datuk Shireen Ann Zaharah Binti Muhiudeen Foo Swee Eng

%

461,000 225,000 20,000 -

0.58 0.28 0.03 -

-

-

-

-

-

-

-

-

-

-

-

-

Note : * By virtue of their interest in Keynote Capital Sdn Bhd

116

Deemed interest in shares No. of shares % 41,048,415* 41,048,415* -

51.31 51.31 -

117

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

ANALYSIS OF SHAREHOLDINGS (continued) C)

List of 30 largest securities account holders No. Name 1. Keynote Capital Sdn Bhd 2. Amanahraya Trustees Berhad - Amanah Saham Bumiputera 3. Kam Loong Mining Sdn Bhd 4. HSBC Nominees (Asing) Sdn Bhd - Exempt AN For Credit Suisse (SG BR-TST-Asing) 5. Shoptra Jaya (M) Sdn Bhd 6. Liang Chiang Heng 7. Foo Khen Ling 8. Amanahraya Trustees Berhad - Public Islamic Opportunities Fund 9. HSBC Nominees (Asing) Sdn Bhd - Exempt AN For Bank Julius Baer & Co. Ltd. (Singapore Bch) 10. Cartaban Nominees (Asing) Sdn Bhd - SSBT Fund F9EX For Fidelity Northstar Fund 11. Denver Capital Sdn Bhd 12. Affin Hwang Nominees (Tempatan) Sdn. Bhd. - Lion Group Medical Assistance Fund 13. Chai Koon Khow 14. Lim Seng Qwee 15. Kam Loong Credit Sdn Bhd 16. Liang Kim Poh 17. Amanahraya Trustees Berhad - Public Islamic Emerging Opportunities Fund 18. Lam Ee Lin 19. Amanahraya Trustees Berhad - Public Ehsan Mixed Assets Growth Fund 20. Lee Toong Hian 21. Choy Wee Chiap 22. Siew Kim Man 23. Yap Kum Ming 24. Tan How Kheng 25. Tan Sing Kah 26. Fong Ah Bah @ Pang Ah Bar 27. Sharayu Sundararaj 28. Sow Tiap 29. Gan Theng Puat @ Yeow Theng Puat 30. HSBC Nominees (Asing) Sdn Bhd - Exempt AN For BNP Paribas Singapore Branch (A/C ClientsFGN) Total

117

No. of Shares Held 41,048,415

Percentage (%) 51.31

12,132,700

15.17

2,568,000

3.21

1,028,800

1.29

887,000 461,000 388,000

1.11 0.58 0.49

384,900

0.48

352,500

0.44

300,000

0.38

300,000

0.38

285,400

0.36

271,600 265,900 232,000 225,000

0.34 0.33 0.29 0.28

214,400

0.27

189,000

0.24

158,400

0.20

158,000 154,900 145,000 143,000 139,000 137,800 133,000 120,000 110,000 108,800

0.20 0.19 0.18 0.18 0.17 0.17 0.17 0.15 0.14 0.14

100,500

0.13

63,143,015

78.97

118

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

ANALYSIS OF SHAREHOLDINGS (continued) D)

Distribution of shareholdings Holdings Less than 100 100 to 1,000 1,001 to 10,000 10,001 to 100,000 100,001 to less than 5% of issued shares 5% and above of issued shares Total

No. of Holders 52 948 2,079 317 28 2 3,426

Total Holdings 585 777,925 7,829,525 8,248,950 9,961,900 53,181,115 80,000,000

Percentage (%) 0.00 0.97 9.79 10.31 12.45 66.48 100.00

119

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

LIST OF PROPERTIES AS AT 30 APRIL 2018 Loca�on

Exis�ng Use

Tenure

Approximate Age of Building (Years)

Land Area (square meters)

70, Jalan Langkasuka Larkin Industrial Area 80350 Johor Bahru, Johor

Factory building / Corporate office

58 , Jalan Langkasuka Larkin Industrial Area 80350 Johor Bahru, Johor

99 years leasehold expiring on 08.08.2109

29

7,762

5,940

Factory building rented out

60 years leasehold expiring on 14.01.2024

27

10,066

1,233

GM170 Lot 138 & GM100 Lot 139 Jalan JB – Kota Tinggi Plentong 81800 Ulu Tiram, Johor

Vacant land

Freehold

-

53,620

8,285

HS(M) 2718 PTD 120622, Jalan JB – Kota Tinggi Plentong 81800 Ulu Tiram, Johor

Vacant land

Freehold

-

14,482

3,995

47 & 49, Jalan Saga 14 Taman Desa Cemerlang 81800 Ulu Tiram, Johor

2 units of intermediate double storey terrace house rented out

Freehold

21

328

3, 3A & 3B, Jalan Kilang Larkin Industrial Area 80350 Johor Bahru, Johor

Factory building / Cake Produc�on

99 years leasehold expiring on 08.08.2109

49

8,377

3,812

4, 4A & 4B, Jalan Petaling Larkin Industrial Area 80350 Johor Bahru, Johor

Factory building / Waffle produc�on & warehouse

99 years leasehold expiring on 08.08.2109

50

7,661

4,272

5, Jalan Kilang Larkin Industrial Area 80350 Johor Bahru, Johor

Factory building / Cake warehouse

99 years leasehold expiring on 08.08.2109

51

7,751

3,152

Lot 6398, 3 Jalan Asas Larkin Industrial Area 80350 Johor Bahru, Johor

Factory building / Waffle produc�on & warehouse

99 years leasehold expiring on 08.08.2109

12

11,914

6,339

Balance c/f to next page

Carrying Amount At 30 April 2018 (RM '000)

256

37,284

119

120

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

LIST OF PROPERTIES (con�nued) AS AT 30 APRIL 2018 Loca�on

Exis�ng Use

Tenure

Approximate Age of Building (Years)

Land Area (square meters)

Balance b/f from previous page

Carrying Amount At 30 April 2018 (RM '000) 37,284

HS(D) 15991 TLO 786A Larkin Industrial Area 80350 Johor Bahru, Johor

Vacant land

99 years leasehold expiring on 17.09.2111

-

4,046

1,606

No. 6, Jalan Petaling, Larkin Industrial Estate, 80350 Johor Bahru, Johor

To be occupied as factory

92 years leasehold expiring on 21.08.2109

43

11,659

5,938

No. 1, Jalan Asas, Larkin Industrial Estate, 80350 Johor Bahru, Jonor

Workshop & store

99 years leasehold expiring on 18.12.2110

43

9,510

4,022

No. 8, Jalan Petaling, Larkin Industrial Estate, 80350 Johor Bahru, Johor

Factory building

99 years leasehold expiring on 11.04.2111

28

5,042

1,773

Total

50,623

120

121

APOLLO FOOD HOLDINGS BERHAD (291471-M)

ANNUAL REPORT 2018

FORM OF PROXY

CDS ACCOUNT NO.

NO. OF SHARES HELD

I/We_______________________________________________________ [NRIC NO:_________________________________________] of _________________________________________________________________________________________being a member/members of APOLLO FOOD HOLDINGS BERHAD (Co. No. 291471-M) do hereby appoint : Full Name (in Block)

NRIC/Passport No.

Proportion of Shareholdings No. of Shares %

NRIC/Passport No.

Proportion of Shareholdings No. of Shares %

Address and / or (delete as appropriate) Full Name (in Block) Address

failing him, the Chairman of the meeting as * my/our proxy to attend and to vote for * me/us on * my/our behalf at the 24th Annual General Meeting of the Company to be held on Tuesday, the 30th day of October, 2018 at 10.00 a.m. at Delima Room, Level 2, The Puteri Pacific Hotel, Jalan Abdullah Ibrahim, 80730 Johor Bahru, Johor Darul Takzim and at any adjournment thereof. Please indicate with a cross (X) in the spaces whether you wish your votes to be cast for or against the resolution. In the absence of such specific directions, your proxy will vote or abstain as he thinks fit RESOLUTIONS NO

FOR

AGAINST

Ordinary Business: 1.

Approval of First and Final Single Tier Dividend

2.

Approval of Directors' Fees

3.

Approval of payment of Directors’ Benefit

4.

Re-election of Director – Mr. Liang Kim Poh

5.

Re-election of Director – Datin Paduka Hjh. Aminah Binti Hashim

6.

Re-election of Director – Datuk Shireen Ann Zaharah Binti Muhiudeen

7.

Re-election of Director – Ms. Foo Swee Eng

8.

Re-election of Director – En. Halid Bin Hasbullah

9.

Re-appointment of Messrs BDO as Auditors

Special Business: 10. 11.

Approval for Datin Paduka Hjh Aminah Binti Hashim to continue in office as Independent Non-Executive Director Approval of Gratuity Payment for Datuk P. Venugopal A/L V.K. Menon

12.

Approval of Gratuity Payment for Mr Ng Chet Chiang @ Ng Chat Choon

13.

Approval of Gratuity Payment for En. Abdul Rahim Bin Bunyamin

*Strike out whichever not applicable Dated this

day of

2018

__________________________________ Signature of Member(s)/Common Seal __________________________________ Contact No (during office hours)

Notes 1. 2. 3. 4. 5. 6. 7.

A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy may but need not be a member of the Company. There shall be no restriction as to the qualification of the proxy. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportion of his holdings to be represented by each proxy. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint not more than two (2) proxies in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. Where the Proxy Form is executed by a corporation, it must be either under its Common Seal or under the hand of an officer or attorney duly authorised. The Proxy Form must be deposited at the Registered Office of the Company situated at Suite 1301, 13th Floor, City Plaza, Jalan Tebrau, 80300 Johor Bahru, Johor Darul Takzim not less than 48 hours before the time set for the Meeting. For the purpose of determining a member who shall be entitled to attend the 24 th Annual General Meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd, in accordance with Article 81(2) of the Company’s Constitution and Section 34(1) of the Securities Industry (Central Depositories) Act, 1991 to issue a general meeting Record of Depositor as at 19 October 2018. Only a depositor whose name appears therein shall be entitled to attend the said meeting or appoint a proxy to attend and/or vote on his stead.

121

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Fold along this line (1)

The Company Secretary Apollo Food Holdings Berhad (291471-M) Suite 1301, 13th Floor City Plaza, Jalan Tebrau 80300 Johor Bahru Johor Darul Ta’zim

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Postage

(291471-M)

70, Jalan Langkasuka, Larkin Industrial Area, 80350 Johor Bahru, Johor, Malaysia. Tel: 607- 236 5096 / 607- 236 5097 Fax: 607- 237 4748 Email: [email protected]