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An n u al R e por t
f o r f i n an c i al y e a r e n d e d 2016
31 O c t o b e r 2016
Contents
02 Corporate Information
03 Group Corporate Structure
04 Chairman & Managing Directors Statement
07 Directors Profiles
09 Corporate Governance Statement
25 Audit Committee Report
29 Statement on Risk Management and Internal Control
32 Responsibility Statement by the Board of Directors
33 Financial Statements
97 List of Properties
98 Statistics of Shareholdings
101 Notice of Fourteenth Annual General Meeting
110 Location Map to AGM
Form of Proxy
2 ADVENTA BERHAD (618533-M)

Corporate Information

BOARD OF DIRECTORS COMPANY SECRETARIES

EDMOND CHEAH SWEE LENG CHUA SIEW CHUAN (MAICSA 0777689)


Chairman/Senior Independent Non-Executive Director PAN SENG WEE (MAICSA 7034299)

LOW CHIN GUAN


Managing Director REGISTERED OFFICE

KWEK SIEW LENG 21, Jalan Tandang 51/205A,


Executive Director Seksyen 51,
46050 Petaling Jaya,
TOH SENG THONG Selangor Darul Ehsan
Independent Non-Executive Director Tel : 03-7772 9321
Fax : 03-7772 9821
DATO DR. NORRAESAH BINTI HAJI MOHAMAD
Independent Non-Executive Director
SHARE REGISTRAR

AUDIT COMMITTEE Securities Services (Holdings) Sdn. Bhd.


Level 7, Menara Milenium, Jalan Damanlela
TOH SENG THONG Pusat Bandar Damansara
Chairman Damansara Heights
50490 Kuala Lumpur
EDMOND CHEAH SWEE LENG Tel : 03-2084 9000
Member Fax : 03-2094 9940

DATO DR. NORRAESAH BINTI HAJI MOHAMAD


Member PRINCIPAL BANKERS

OCBC Bank (Malaysia) Berhad


NOMINATION COMMITTEE Standard Chartered Saadiq Berhad

EDMOND CHEAH SWEE LENG


Chairman EXTERNAL AUDITORS

TOH SENG THONG Ernst & Young


Member Unit 10 D-J, Level 10, Menara Zenith,
Jalan Putra Square 6,
25200 Kuantan,
REMUNERATION COMMITTEE Pahang, Malaysia

EDMOND CHEAH SWEE LENG


Chairman INTERNAL AUDITORS

LOW CHIN GUAN PKF Advisory Sdn Bhd


Member Level 33, Menara 1MK,
Kompleks 1 Mont Kiara,
TOH SENG THONG No. 1, Jalan Kiara, Mont Kiara
Member 50480 Kuala Lumpur

STOCK EXCHANGE LISTING

Main Market of Bursa Malaysia Securities Berhad


ANNUAL REPORT 2016 3

Group Corporate Structure

Sun Healthcare (M) Sdn. Bhd.


100%

Distribution of medical and healthcare equipment,


appliances and medical disposal products

Electron Beam Sdn. Bhd.


100%

Industrial and commercial sterilisation, warehousing


and handling services

Lucenxia (M) Sdn. Bhd.


100%

Provision of home dialysis products for the treatment


of end stage renal disease and its related services

PTM Progress Trading & Marketing Sdn. Bhd.


100%

Provision of storage and warehousing services


4 ADVENTA BERHAD (618533-M)

Chairman & Managing Directors Statement

Dear Shareholders,

On behalf of the Board of Directors and Management, it is a privilege to present to you the Annual Report of Adventa
Berhad (the Company) for the nancial year ended (FYE) 31st October 2016.

Our year closed with mixed results. The Company performed to expectation in sterilization but peritoneal home dialysis
is still in the process of clearing through the required approvals in the Government administrative system. This had
dragged down the FYE 2016s results unexpectedly.

Peritoneal home dialysis

Nonetheless, the home dialysis program has had several successes with regulatory and healthcare provider approvals,
among others, is the Jabatan Perkhidmatan Awam, or Public Services Department, Malaysia. The Company is working hard
to secure a reasonable budget in the public health system, but the fact remains that the delay in budget provisions from the
Government is stalling the countrywide rollout scheduled for last year. The good news is that there are private patients
coming on board, in higher numbers than expected. This shows that the home dialysis concept is in demand with only the
payment factor being a constraint. The coming year should see an increase in patient count locally and with high probability,
overseas. Elsewhere there are inroads into export potentials in the regions. Our overseas programs are on track and are
expected to contribute significantly to the coming years results, compared to the current years results. As this is a medical
service provision that is mostly public funded, more time is needed to address the bureaucratic systems.
ANNUAL REPORT 2016 5

Chairman & Managing Directors Statement


contd

Healthcare Distribution PROSPECTS

The healthcare distribution business did not grow as what was With several new leadership changes in the world, we see
planned when the 2016 public healthcare budget was higher volatility in trading and probably more regulations
reduced drastically. The reduction of almost 30% from the towards international trade. This has also created unusual
budget translated into a restraint in the procurement system, fluctuations in foreign currencies, and the Ringgit is at one of
in particular hospital consumables which are deemed less its weakest levels. Protectionism may erode global open
critical than drugs. The slowdown in the economy streamed trade. The Company is putting up provisional plans to
more citizens to the public health system instead of private address such events if they happen.
healthcare, creating a bigger burden on the system. These
added costs were passed to the hospital consumables All these factors lead us to look cautiously at the coming year.
budget, among others, shrinking it further. As a result, the Continued low public spending will hamper local distribution
total government purchases for disposables fell by almost growth. The export market will be a focus to lift revenues and
half. Sun Healtcare (M) Sdn. Bhd. (Sun Healthcare)s public earnings. The Company is planning to increase overseas sales
healthcare business was highly affected accordingly. A quick to at least 30% of its revenue by 2018. Growth will be organic
change in strategy in the first quarter reduced the impact and and via acquisitions. Such diversification from the domestic
kept the business profitable, although below expectations. market will see better earnings sustainability in the future.

The unfavorable exchange rate since the second quarter The Management continues to hold a cautious-positive view
raised big premiums over imported products. The Companys for the coming year and is making extra efforts to bring
bottom line was impacted by the weaker Ringgit, losing more forward the home dialysis rollouts overseas. Cost reductions
than 18% on committed sales and supply agreements. across the group shall ease pressure on margins. Conditions
are challenging but the strength of the core businesses shall
maintain the prospects of the company and keep it on track
Sales PBT to achieve our visions and goals to be a key player in the
FYE 31 Oct 2015
RM30.6m RM0.78m healthcare industry regionally.

FYE 31 Oct 2016 RM27.3m RM0.88m ACKNOWLEDGEMENT AND APPRECIATION

In closing, we would like to thank all our business partners


and shareholders for their continuing support and look
Sterilization forward to further mutual growth and success in the coming
year. We would also like to commend and thank the Groups
The bright star of the Group is the sterilization business, personnel for their dedication and commitment in a difficult
which has surged above expectations, with better revenues environment.
and earnings coming from the equipment capacity upgrade
and process system automation. The growth is expected to
continue at a similar pace in the coming year. Adding to the
current system, the Company has embarked on another
sterilization modality that will add new revenue streams to the
Company. This is an exciting addition and the growth EDMOND CHEAH SWEE LENG
potential is thereby further enhanced. This reporting year has Chairman
seen a 10% growth in revenue and 11% in the EBITDA.
LOW CHIN GUAN
Managing Director
6 ADVENTA BERHAD (618533-M)

Directors Proles

Standing from left to right:


Dato Dr. Norraesah Binti Haji Mohamad
Toh Seng Thong
Kwek Siew Leng

Sitting from left to right:


Edmond Cheah Swee Leng
Low Chin Guan
ANNUAL REPORT 2016 7

Directors Proles
contd

EDMOND CHEAH SWEE LENG LOW CHIN GUAN


Chairman, Senior Independent Non-Executive Director Managing Director
Malaysian, male Key Senior Management
Malaysian, male
Mr. Edmond Cheah Swee Leng, aged 62, was appointed
to the Board of Adventa Berhad on 9 August 2004 and is Mr. Low Chin Guan, aged 57, was appointed to the Board
presently the Chairman of the Company. His last of Adventa Berhad on 12 April 2004 and is presently the
re-election as a director was on 24 April 2014. He is a Managing Director of the Company. His last re-election as
member of the Audit Committee and Chairman of the a director was on 29 March 2016. He is also a member of
Remuneration Committee and Nomination Committee. the Remuneration Committee.

He is a Chartered Accountant by profession and a He graduated as a Civil Engineer from the University of
member of the Malaysian Institute of Accountants and Manchester Institute of Science and Technology (UMIST),
Association of Chartered Accountants, England and United Kingdom.
Wales. He is also a certified financial planner. His
professional experience has been in the fields of audit, Mr. Low founded the initial subsidiary of the Group in
merchant banking, corporate & financial advising, 1988. He has years of experience in project management,
portfolio & investment management, unit trust operations of manufacturing and assembly plants, financial
management and financial planning. control, strategic planning and marketing. In 2004, he
formed Adventa Berhad to hold the various companies
His career started with a professional accounting firm in and manufacturing facilities under a single group
London where he was an Audit Manager. He was the management.
manager in charge of Portfolio Investment in a merchant
bank in Malaysia and subsequently in charge of the He now leads the Group in the areas of strategic planning,
corporate and planning division in a public listed business development, investments, acquisitions and key
company. Mr. Cheah was the Chief Executive personnel recruitment. He is also actively involved in
Officer/Executive Director and a member of the product development, particularly in technological
Investment Committee of Public Mutual Fund Berhad, the directions.
largest private unit trust management company in
Malaysia. He attended all four (4) Board Meetings held during the
financial year ended 31 October 2016.
He was also a council member and Chairman of the
Secretariat of the Federation of Investment Managers Mr. Low is the son of Madam Wong Koon Mei @ Wong
Malaysia (FIMM), and is a former Task Force Member on Kwan Mooi and the brother of Ms. Low Lea Kwan, who are
Islamic Finance for Labuan International Offshore substantial shareholders of the Company. He does not
Financial Centre (LOFSA), and a former member on the have any family relationship with any other director nor
Securities Market Consultation Panel in Bursa Malaysia any conflict of interest in any business arrangement
Securities Berhad. involving the Company, except as disclosed in the
Financial Statements.
He attended all four (4) Board Meetings held during the
financial year ended 31 October 2016.

Mr. Cheah sits on the Board of Nylex Malaysia Berhad,


Ancom Berhad and Ancom Logictics Berhad, all of which
are listed on Bursa Malaysia Securities Berhad. He is also
an Investment Committee Member and Director of
MAAKL Mutual Berhad.
8 ADVENTA BERHAD (618533-M)

Directors Proles
contd

KWEK SIEW LENG DATO DR. NORRAESAH BINTI HAJI MOHAMAD


Executive Director Independent Non-Executive Director
Key Senior Management Malaysian, female
Malaysian, female
Dato Dr. Norraesah Binti Haji Mohamad, aged 68, was
Ms. Kwek Siew Leng, aged 50, was appointed to the appointed to the Board of Adventa Berhad on 8
Board of Adventa Berhad on 12 April 2004 and is November 2005 as an Independent Non-Executive
presently an Executive Director of the Company. Her last Director of the Company. Her last re-election as a director
re-election as a director was on 21 April 2015. was on 21 April 2015. She is also a member of the Audit
Committee.
She is an Associate Member of the Chartered Institute of
Management Accountants (CIMA) and a Chartered Dato Dr. Norraesah holds a Doctorate Degree in
Accountant with the Malaysian Institute of Accountants Economics Science (International Economics and Finance)
(MIA). She has senior operations experience in audit and and a Masters in International Economics and Financial
accounting prior to joining the Adventa Bhd group. Her Relations from the University of Paris Pantheon-Sorbonne,
prior employment in public practice includes stints in France.
statutory and regulatory reporting, financial planning,
budgeting and forecasting, taxation, managerial skills as She has more than 44 years of working experience in
well as system development in various fields. banking, consultancy and international trade and
commerce. From 1972 to 1985, she worked with the
She joined one of the Companys subsidiaries as Finance International Trade Division of the Ministry of Trade and
Manager in 2002 and assumed the position of Group Industry and the Ministry of Finance before joining the
Finance Manager of Adventa Berhad in 2003. She was corporate sector.
subsequently promoted to Finance Director in 2004. She
is now responsible for the overall management and From 1988 to 1990, Dato Dr. Norraesah was the
operations of the accounts and finance departments. Communications Manager of ESSO Production Malaysia
Inc. and subsequently assumed the position of Managing
She attended all four (4) Board Meetings held during the Director with a consultant firm providing financial advisory
financial year ended 31 October 2016. services. She was also appointed as Chief Representative
of Credit Lyonnais Bank in Malaysia and was the Chairman
of Bank Rakyat from 2000 to 2003.
TOH SENG THONG
Independent Non-Executive Director She attended all four (4) Board Meetings held during the
financial year ended 31 October 2016.
Malaysian, male
Dato Dr. Norraesah currently also sits on the board of My
Mr. Toh Seng Thong, aged 58, was appointed to the E.G. Services Berhad, Malaysian Genomics Resource
Board of Adventa Berhad on 10 May 2004. His last Centre Berhad, Utusan Melayu (Malaysia) Berhad and
re-election as a director was on 29 March 2016. He is the Pecca Group Berhad, all listed on Bursa Malaysia Securities
Chairman of the Audit Committee and a member of the Berhad.
Remuneration Committee and Nomination Committee.

He graduated with a Bachelor of Commerce (Accounting) Save as disclosed, none of the Directors have:-
degree from the University of Canterbury, New Zealand in
1981. He is a Chartered Accountant by profession and a 1. Any other directorship in public companies and listed
member of the Malaysian Institute of Accountants, issuers;
Malaysian Institute of Certified Public Accountants, New
Zealand Institute of Chartered Accountants, a Fellow 2. Any family relationship with any Director and/or major
member of the Malaysian Institute of Taxation and an shareholder;
Associate member of the Harvard Business School Alumni
Club of Malaysia. 3. Any conflict of interest with the Company;

Mr Toh has over 27 years experience in auditing, taxation 4. Any convictions for offences within the past five (5)
and corporate advisory and financial advisory as a years other than traffic offences, if any; and
practicing Chartered Accountant of Malaysia. He started
his own practice under Messrs S T Toh & Co in 1997. 5. Any public sanction or penalty imposed by the relevant
regulatory bodies during the financial year.
He attended all four (4) Board Meetings held during the
financial year ended 31 October 2016.

He sits on the Board of Latitude Tree Holdings Berhad and


Malaysian Genomics Resource Centre Berhad, companies
listed on Bursa Malaysia Securities Berhad.
ANNUAL REPORT 2016 9

Corporate Governance Statement


contd

The Board of Directors (the Board) is committed to its policy of managing the affairs of the Group with transparency,
integrity and accountability by ensuring that a sound framework of best corporate practices is in place at all levels of the
Groups business and thus discharging its principal responsibility towards protecting and enhancing long-term
shareholders value and investors interest.

The Board is pleased to report to the Shareholders that the best practices of good corporate governance having regard
to the Recommendations stated under each Principle in the Malaysian Code on Corporate Governance 2012 (the
Code) have generally been practiced within the Group throughout the financial year ended 31 October 2016.

ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT

1.1. Board Composition

The Board consists of five (5) members, of which two (2) are Executive Directors and three (3) are Independent
Directors, thus fulfilling the Main Market Listing Requirements (MMLR) which stipulates that at least one-third of
the Board should comprise Independent Directors.

The Board is of the opinion that its composition reflects a balance of Executive and Non-Executive Directors, such
that the interests of not only the Company, but also its stakeholders and the general public are upheld in the
formulation and adoption of business strategies. Collectively, the Directors combine their diverse commercial,
regulatory, industry and financial experience to add value to the Board as a whole. There is also a clear division of
responsibilities between the Chairperson, who is a Senior Independent Director, and the Managing Director to
ensure that the Board remains balanced at all times.

The profiles of the members of the Board are set out in the relevant section of this Annual Report.

1.2. Duties and Responsibilities of the Board

The Board has primary responsibility for the governance and management of the Group and fiduciary responsibility
for the financial health of the Group. The Group acknowledges the importance of having an effective Board to lead
and control the Group. The principal responsibilities of the Board include:

a) Reviewing and adopting a strategic plan for the Group

The Board provides insights and guidance to the Managing Director and Management to achieve corporate
objectives of the Group. The Board reviews the strategic business plan presented by the Managing Director and
Management.

b) Overseeing the conduct of the Companys business to evaluate whether the business is being properly
managed

The Managing Director is accountable to the Board to ensure effective implementation of the Groups business
plan and policies approved by the Board as well as to manage the daily conduct of the business to ensure its
smooth operation. At each meeting, the Managing Director will report to the Board a summary report on the
performance and activities of the Group including specific proposals for capital expenditure and acquisitions, if
any. The role and responsibility of the Managing Director is distinct, separate and clearly defined. The Managing
Director, assisted by the Directors, has overall responsibility in working towards achieving strategic goal and
objectives for the Company together with the implementation of the Companys policies, corporate strategies
and decisions.

All Board members participate fully in decisions on key issues involving the Company. The Executive Directors are
responsible for implementing the policies and decisions of the Board and managing the day to day operations.
Together with Independent Non-Executive Directors, they ensure that strategies are fully discussed and
examined, taking into account the long-term interests of the various stakeholders including shareholders,
employees, customers, suppliers and the community.
10 ADVENTA BERHAD (618533-M)

Corporate Governance Statement


contd

ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT contd

1.2. Duties and Responsibilities of the Board contd

b) Overseeing the conduct of the Companys business to evaluate whether the business is being properly
managed contd

The Non-Executive Directors play an important role in providing unbiased and independent judgment to ensure
a balance and impartial Board decision-making process. The Board has designated Mr Edmond Cheah Swee
Leng, who is also the Chairperson of the Board, as the Senior Independent Non-Executive Director to whom any
concerns may be conveyed.

c) Identifying principal risks and ensure the implementation of appropriate systems to manage these risks

The oversight of the Groups risk management process is the responsibility of the Managing Director who is
assisted by the Head of Department of the respective operating companies. The Company has established a Risk
Management Committee (RMC) whom together with the Audit Committee, are responsible for ensuring more
effective and efficient identification, evaluation, management and reporting of Groups risks. Details on the
function of RMC are set out in the Statement on Risk Management and Internal Control on page 29 to 31 of this
Annual Report.

d) Succession planning, including appointing, training, xing the compensation of and where appropriate,
replacing Executive Directors and Management

The Board noted the importance of succession planning to the Group. The possibility of replacing Executive
Directors and Management will be addressed when circumstances required.

e) Developing and implementing an investor relations programme or shareholder communications policy


for the group

The Companys website, www.adventa.com.my, incorporates an Investor Relations section which provide all
relevant information on the Company and accessible by the public. The information available in the website
includes Financial Reports, Companys announcements as well the corporate and governance structure of the
Company.

f) Reviewing the adequacy and the integrity of the Groups internal control systems and management
information systems, including systems for compliance with applicable laws, regulations, rules, directives
and guidelines

The Board acknowledges the importance of establishing a sound system of internal control. A Risk Management
Framework has been established to manage risks and to safeguard shareholders investment and the Groups
assets. Details on the framework are set out in the Statement on Risk Management and Internal Control on page
29 to 31 of this Annual Report.

g) Determining the remuneration of Non-Executive Directors, with the individuals concerned abstaining
from discussions of their own remuneration

The determination of remuneration packages of Non-Executive Directors, including Non-Executive Chairman will
be a matter to be decided by the Board as a whole with the Director concerned abstaining from deliberations and
voting on decision in respect of his individual remuneration package. The Board recommends the Directors fees
payable to Non-Executive Directors on a yearly basis to the shareholders for approval at the AGM.

h) Ensuring that the Group adheres to high standards of ethics and corporate behaviour

The Group has established and adopted a Code of Business Conducts and Ethics for Directors and employees
(the Code). The Code has been circulated to all employees of the Group and each employee is contractually
bound to abide by the Code. Refer Note 1.3 below for summary of the Code for Directors.
ANNUAL REPORT 2016 11

Corporate Governance Statement


contd

ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT contd

1.2. Duties and Responsibilities of the Board contd

h) Ensuring that the Group adheres to high standards of ethics and corporate behaviour contd

To ensure the effective discharge of its functions and responsibilities, the Board has established and delegated
certain power and responsibilities to the Board Committees which have been set up, namely the Audit Committee,
Nomination Committee and Remuneration Committee.

The Board Committees are entrusted with specific powers and responsibilities to oversee the relevant matters, in
accordance with their respective Terms of References and operating procedures and the Board receives reports
of their proceedings and deliberations. The Chairman of the respective committees will report to the Board the
outcome of these meetings and such reports are incorporated into the Board papers. These committees were
formed in order to ensure an optimum structure for efficient and effective decision-making in the organisation.

1.3. Directors Code of Business Conducts and Ethics

Code of Ethics

The Board has adopted a Code of Conduct for the Directors of the Company, which covers a wide range of business
practices and procedures. The Code of Conduct describes the standards of business conduct and ethical behaviour
for Directors in the performance and exercise of their responsibilities as Directors of the Company or when
representing the Company.

The Code of Conduct sets out basic principles to guide all the Directors of the Company and its subsidiaries, on the
appropriate standards of conduct and ethical behavior for Directors. It covers the following areas:

Compliance with laws, rules and regulations


Corporate governance
Conduct of business and fair trading
Conflicts of interest
Use of non-public information and disclosure
Use of company funds, assets and information
Social responsibility and the environment
Proper records and communication
Spokesman
Whistleblowing
Breaches, waiver and review

Whistle Blowing

As part of the Companys continuous efforts to ensure that good corporate governance practices are being adopted,
the Company has established Whistle Blowing Policy to provide a clear line of communication and reporting of
concerns for employees at all levels.

1.4. Strategies promoting sustainability

The Group recognizes the importance of sustainability and its increasing impact to the business. The Group is
committed to understanding and implementing sustainable practices and exploring the benefits to the business
whilst attempting to achieve the right balance between the needs of the wider community the requirements of
shareholders and stakeholders and economic success. The Board has adopted a Sustainability/Environmental, Social
and Corporate Governance (ESG) Policy for the Group.
12 ADVENTA BERHAD (618533-M)

Corporate Governance Statement


contd

ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT contd

1.4. Strategies promoting sustainability contd

In promoting the Companys ESG, the Company aims to:-

(a) Conduct every aspect of our business with honesty, integrity and openness, respecting human rights and the
interests of our employees, customers and third parties;
(b) Respect the legitimate interests of third parties with whom we have dealings in the course of our business; and
(c) Maintain the highest standards of integrity.

The Company engages with the local community at a range of levels and its relationships with the various members
of the local community are very important to the Company and are an essential part in the growth of the Companys
business. In line with the Companys core values, the Company seeks to play a part in promoting socially inclusive
policies and our community approach incorporates the following elements:

Engagement with the local communities in which we operate on the quality of our services and any changes to
those services;
Working with local authorities, businesses and other interested parties to improve quality of life;
Offering employment opportunities to all sectors of the community through non-discriminatory policies and
promoting opportunities to disadvantaged and vulnerable groups;
Promoting engagement between our staff and the community; and
Supporting local community groups and charities such as the Malaysian Society of Nephrology and hospitals, in
both cash and kind.

As the Company strives to achieve continual improvement in environmental performance, the Company is
committed to:-

Reduce pollution and the overall impact of our operations on the environment;
Comply with, and where possible, exceed applicable legal requirements relating to the environment;
Actively promote improved energy efficiency within our business in order to reduce the Companys contribution
to climate change; and
Maintain high safety and health standards at work place.

1.5. Access to information and advice

The Board has full and timely access to information concerning the Company and the Group. The Board is provided
with the relevant agenda and board papers in sufficient time, at least 7 days, prior to the meetings to enable them
to obtain further explanation and clarification to facilitate informed decision-making. The Board papers include
reports on the Groups financial, operational and corporate development.

The Board has unrestricted access to all information within the Company, whether as a full board or in their individual
capacity, which is necessary for discharge of its responsibilities and may obtain independent professional advice at
the Companys expense in furtherance of their duties.

1.6. Qualied and competent Company Secretaries

Every Director has ready and unrestricted access to the advice and the services of the Company Secretaries in
ensuring the effective functioning of the Board. The Company Secretaries ensure that Board Policies and procedures
are both followed and reviewed regularly, and are legally responsible to ensure that each Director is made aware of
and provided with guidance as to his/her duties, responsibilities and powers.

The Board also are regularly updated and advised by the Company Secretaries on new statutory and regulatory
requirements, and the resultant implications to the Company and Directors in relation to their duties and
responsibilities. They are also responsible for ensuring the Groups compliance with the relevant statutory and
regulatory requirements.
ANNUAL REPORT 2016 13

Corporate Governance Statement


contd

ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT contd

1.6. Qualied and competent Company Secretaries contd

The Board ensures that the Company Secretaries appointed have relevant experience and skills. The responsibilities
carried out by the Company Secretaries include:

Preparation and submission of return forms under the Companies Act, 1965 to the Companies Commission
Malaysia;
Proper maintenance of statutory records;
Transmission/submissions of corporate announcements/replies to the Bursa Securities electronically via the
LINK;
Drafting all necessary notices, directors resolutions, minutes of directors meetings and shareholders
meetings and relevant documents under the direction and instruction of the Board of Directors;
Attendance of Annual General Meeting/Extraordinary General Meeting of shareholders;
Attendance of Meetings of Directors, Audit Committee and Nomination Committee and Remuneration
Committee;
Preparation of board papers for Directors meetings or any other meetings if required; and
Advising the Company and or Directors on matters pertaining to the statutory requirements prescribed
under the various Statutes, in particular, the Companies Act, 1965, the Listing Requirements of Bursa
Securities and in general, such other matters relating to secretarial practice.

1.7. Board Charter

The Board has adopted a Board Charter which provides guiding principles for the Board to achieve the vision and
mission of the Company and serves as a reference point for the Boards activities. In the Board Charter, the Board
has established a formal schedule of matters reserved to the Board for its deliberation and decision in order to
enhance the delineation of roles between the Board and management.

The Board will periodically review this Board Charter from time to time to ensure it remains consistent with the
Boards objectives and responsibilities and any new regulations that may have an impact on the discharge of the
Boards responsibilities. The Board Charter is available in the Companys website.

STRENGTHEN COMPOSITION OF THE BOARD

2.1. Nomination Committee

The Board has established a Nomination Committee, consisting of two (2) Directors who are Independent
Non-Executive Directors of the Company.

The principal objectives of the Nomination Committee in line with its Terms of Reference are:

To assist the Board of Directors in their responsibilities in nominating new nominees to the Board of
Directors.
To assess the Board in overseeing the selection of, and assessing the performance of, the Directors of
the Company on an on-going basis.

The Nomination Committee overseas matters relating to the nomination of new Directors, annually reviews the
required mix of skills, experience, independence, assessment of Independent Directors, reviews succession plans
and boardroom diversity, overseas training courses for Directors and other requisite qualities of Directors and also
conducts an annual assessment of the effectiveness of the Board as a whole, its Committees and the contribution of
each individual Director.

The members of the Nomination Committee during the financial year are as follows:-

Chairman: Mr. Edmond Cheah Swee Leng Senior Independent Non-Executive Director
Member: Mr. Toh Seng Thong Independent Non-Executive Director
14 ADVENTA BERHAD (618533-M)

Corporate Governance Statement


contd

STRENGTHEN COMPOSITION OF THE BOARD contd

2.1. Nomination Committee contd

During the financial year ended 31 October 2016, the Committee had one (1) meeting and details of attendance of
each committee member are as follows:-

No. of meetings
Name of Directors Position attended/held %

Mr. Edmond Cheah Swee Leng Chairman 1/1 100


Mr. Toh Seng Thong Member 1/1 100

2.2. Develop, maintain and review criteria for recruitment processes and annual assessment of Directors

Appointment Process

The Board, through the Nomination Committees annual appraisal, believes that the current composition of the
Board brings the required mix of skills and core competencies required for the Board to discharge its duties
effectively.

The Nomination Committee is also responsible for making recommendations to the Board on the suitability of
candidates nominated for appointment to the Board and Board Committees. A formal and transparent procedure
for appointment of directors is set out in the Terms of Reference of the Nomination Committee.

The decision as to who should be appointed is the responsibility of the full Board after considering the
recommendations of the Committee. The Company Secretaries will ensure that all appointments are properly made;
all the necessary information is obtained as well as all legal and regulatory obligations are met.

Appointments of Chairman and members of the Board or Board Committee are based on recommendations put
forth by the Nomination Committee. The Nomination Committee shall, prior to the appointment by the Board,
evaluate the balance and composition including mix of skills, independence, experience and diversity (including
diversity in gender, ethnicity and age) of the Board.

In making recommendation of suitable candidates, the Committee shall consider the following:-

(i) skills, knowledge and expertise, experience;


(ii) time commitment and contribution;
(iii) honesty, integrity, professional conduct and business ethics/practices;
(iv) specialized knowledge in line with the Companys strategy; and
(v) number of directorships in other companies and other external obligations which may affect his/her
commitment.

For the position of independent non-executive directors, the Nomination Committee shall evaluate the candidate,
at a minimum, with reference to the definition of Independent Director as stipulated by the Main Market Listing
Requirements (Main LR) of Bursa Malaysia Securities Berhad (Bursa Securities).

Re-election of Directors

Any Director appointed during the year is required under the Companys Articles of Association to retire and seek
re-election by the shareholders at the following Annual General Meeting (AGM) immediately after their
appointment. The Articles also require that one-third of the Directors including the Managing Director retire by
rotation and seek re-election at each AGM and that each Director shall submit himself/herself for re-election at least
once in every three (3) years.

The Directors to retire from office at the forthcoming AGM are Mr Edmond Cheah Swee Leng and Ms. Kwek
Siew Leng.
ANNUAL REPORT 2016 15

Corporate Governance Statement


contd

STRENGTHEN COMPOSITION OF THE BOARD contd

2.2. Develop, maintain and review criteria for recruitment processes and annual assessment of Directors contd

Board Evaluation

The Board regularly evaluates its performance and the governance processes that support the Boards work with the
aim of improving individual contributions, effectiveness of the Board and its committees and the Groups
performance.

The effectiveness of the Board is assessed in the areas of Board mix, composition and governance, quality of
monitoring and decision-making as well as Board responsibilities. The effectiveness of the committees of the Board
are assessed in terms of composition and governance, skills and competencies, and duties and responsibilities in
accordance with their respective Terms of Reference. The evaluation process also involved a self and peer review,
where the Directors will assess their own performance and that of their fellow Directors.

During the financial year under review, the Nomination Committee had reviewed:-

the effectiveness of the board as a whole and of the committees of the Board and the contribution and
performance of each individual Director;
the independence of the independent Directors; and
the Directors who are subject to retirement by rotation at the forthcoming AGM, and are eligible for re-election.

Board Diversity

The Board acknowledges the need to enhance Board diversity, as it is essential to the functioning of the Board and
indicates good governance practices. The Board endeavours to undertake diversification in terms of experience, skills,
expertise, competencies, gender, ethnicity and age to enable the Company to maximise its business and governance
performance.

The Board is presently of the view that there is no necessity yet to fix a specific gender diversity policy as the Board
has three (3) male and two (2) female directors. The appointment of any Director(s) should be based on their merit,
qualification and working experience.

2.3. Remuneration policies and procedures

Remuneration Committee

The members of the Remuneration Committee consist of two (2) Non-Executive Directors and one (1) Executive
Director and meet as and when required.

The principal function of the Remuneration Committee is to assist the Board in their responsibilities in assessing the
remuneration packages of the Executive Directors.

The Remuneration Committee oversees matters relating to the review and assessment of the remuneration packages
of the executive directors in all forms, with or without other independent professional advice or other outside advice,
ensure the levels of remuneration be sufficiently attractive and be able to retain directors needed to run the Company
successfully, structure the component parts of remuneration so as to link rewards to corporate and individual
performance and to assess the needs of the Company for talent at Board level at a particular time.

The members of the Remuneration Committee shall comprise wholly or mainly of Non-Executive Directors. The
current members of the Remuneration Committee are:-

Chairman: Mr. Edmond Cheah Swee Leng Senior Independent Non-Executive Director
Members: Mr. Toh Seng Thong Independent Non-Executive Director
Mr. Low Chin Guan Managing Director
16 ADVENTA BERHAD (618533-M)

Corporate Governance Statement


contd

STRENGTHEN COMPOSITION OF THE BOARD contd


2.3. Remuneration policies and procedures contd

Remuneration Committee contd

The Remuneration Committee may meet at least once a year or more frequently as deemed necessary.

During the financial year ended 31 October 2016, the Committee had one (1) meeting and details of attendance of
each Committee member are as follows:-

No. of meetings
Name of Directors Position attended/held %

Mr. Edmond Cheah Swee Leng Chairman 1/1 100


Mr. Toh Seng Thong Member 1/1 100
Mr. Low Chin Guan Member 1/1 100

During the financial year under review, the Remuneration Committee has deliberated on the remuneration packages
of the Executive Director and Managing Director.

Directors Remuneration

The objective of the Companys policy on Directors remuneration is to ensure that the level of remuneration is
sufficient to attract and retain high profile Directors with a wealth of industry experience.

The details of the total remuneration of the Executive Directors and Non-Executive Directors of the Company (both
the Company and the Group) for the financial year are as follows:-

Company

Other
Category Fees Salaries Emoluments Total
(RM) (RM) (RM) (RM)

Executive Directors 57,024 564,000 167,574 788,598


Non-Executive Directors 192,456 - - 192,456

Group

Other
Category Fees Salaries Emoluments Total
(RM) (RM) (RM) (RM)

Executive Directors 57,024 788,000 212,374 1,057,398


Non-Executive Directors 192,456 - - 192,456
ANNUAL REPORT 2016 17

Corporate Governance Statement


contd

STRENGTHEN COMPOSITION OF THE BOARD contd

2.3. Remuneration policies and procedures contd

Directors Remuneration contd

The number of Directors whose total remuneration falls within the following bands are as follows:-

Company

Non-Executive
Range of Remuneration Executive Directors Directors

RM50,001 - RM100,000 - 3
RM200,001 RM250,000 1 -
RM500,001 RM600,000 1 -

Group

Non-Executive
Range of Remuneration Executive Directors Directors

RM50,001 - RM100,000 - 3
RM200,001 RM250,000 1 -
RM250,001 RM300,000 1 -
RM500,001 RM600,000 1 -

2.4. Audit Committee

The Audit Committees composition, duties & responsibilities, terms of reference and activities are set out on pages
25 to 28 of this Annual Report.

REINFORCE INDEPENDENCE

3.1. Annual Assessment of Independence

The Board recognises the importance of independence and objectivity in the decision-making process. The
Independent Directors bring their respective knowledge and experience and provide independent judgement to the
Board. The Board is committed in ensuring that Independent Directors are capable and willing to make decisions in
the best interests of the Company and the shareholders free from interest or influence and are independent of the
Management.

The Independent Directors namely, Mr Edmond Cheah Swee Leng, Mr Toh Seng Thong and Dato Dr. Norraesah
Binti Haji Mohamad fulfilled the criteria of Independence as prescribed under the Main LR. The key criteria for the
appointment of an Independent Director is one who is not a member of the management (a Non-Executive Director)
and who is free of any business or other relationship which could interfere with the exercise of independent
judgement or the ability to act in the best interests of the Company. The Board composition complies with the Main
LR of Bursa Securities which requires that at least two (2) Directors or one-third (1/3) of the Board of the Company,
whichever is the higher, to be Independent Directors.
18 ADVENTA BERHAD (618533-M)

Corporate Governance Statement


contd

REINFORCE INDEPENDENCE contd

3.2. Tenure of Independent Directors

The Board opts to deviate from Recommendation 3.2 of the Code which states that 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 in the Board subject to the Directors re-designation as a
non-independent Director.

Both the Nomination Committee and the Board have assessed the independence of Mr. Edmond Cheah Swee Leng,
Mr. Toh Seng Thong and Dato Dr. Norraesah Binti Haji Mohamad and are satisfied with the skills, contribution and
independent judgment that the said Independent Non-Executive Directors bring to the Board in facilitating decision
processes of the Company. The Board is of the view that even though the tenure of Mr. Edmond Cheah Swee Leng,
Mr. Toh Seng Thong and Dato Dr. Norraesah Binti Haji Mohamad has exceeded nine (9) years, there are significant
advantages to be gained from long-serving Directors who not only possess tremendous insight but also in-depth
knowledge of the Companys business and affairs.

Key justifications for retaining them as Independent Non-Executive Directors are as follows:-

Mr. Edmond Cheah Swee Leng, Mr. Toh Seng Thong and Dato Dr. Norraesah Binti Haji Mohamad fulfill the
criteria under the definition on Independent Director as stated in the Main LR of Bursa Securities and therefore,
are able to bring independent and objective judgment to the Board;

Mr. Edmond Cheah Swee Leng, Mr. Toh Seng Thong and Dato Dr. Norraesah Binti Haji Mohamad understand
the Companys business operations which enable them to contribute actively and effectively during
deliberations or discussions at Audit Committee and Board meetings, as the case may be;

A chartered accountant by profession, Mr. Edmond Cheah Swee Lengs professional experience in the fields of
audit, merchant banking, corporate and financial advising, portfolio and investment management, unit trust
management and financial planning, would enable him to provide the Board and Board Committees, as the case
may be, with pertinent and a diverse set of expertise, skills and competence;

Mr. Toh Seng Thongs experience of over 27 years in auditing, taxation and corporate advisory and financial
advisory as a practicing Chartered Accountant of Malaysia would enable him to lead the Audit Committee and
serve the Board effectively by providing invaluable insight into the Companys business, thereby increasing his
contribution to the Company; and

Dato Dr. Norraesah Binti Haji Mohamad served the Government of Malaysia from 1972 to 1988 for a total of 16
years before leaving the public sector to join the private sector and her working experience of more than 44
years in banking, consultancy and international trade and commerce would enable her to contribute actively and
effectively in expressing her views and in participating in deliberations and decision making of the Audit
Committee and the Board.

3.3. Separation of position of the Chairman and Managing Director

The Board composition is in compliance with Paragraph 15.02(1) of the Main LR of Bursa Securities and
Recommendation 3.4 of the Code, wherein it states that the positions of Chairman and Chief Executive Officer (in
this case, the Managing Director) should be held by different individuals, and the Chairman must be a non-executive
member of the Board.

There is a clear division of responsibility between the Chairman and the Group Managing Director to ensure that
there is a balance of power and authority. The Chairman leads the Board and facilitates its work. He engages directly
with the Group Managing Director to understand and oversee the strategy implementation and performance
delivery. He is responsible for ensuring the processes of the Board are effective in carrying out its duties and
responsibilities, including the timely provision of sufficient relevant information on financial and non-financial
matters. The Chairman, in conjunction with the Managing Director and Company Secretary, sets agendas for the
meetings of the Board that focus in strategic direction and performance of the Group. The Group Managing Director
is responsible for the day to day management of the Groups operations and business as well as implementation of
the Boards policies and decisions.
ANNUAL REPORT 2016 19

Corporate Governance Statement


contd

REINFORCE INDEPENDENCE contd

3.4. Board composition and balance

The Board has five (5) members comprising:-

Two (2) Executive Directors including one (1) Managing Director and three (3) Non-Executive Directors, including
one (1) Senior Independent Non-Executive Chairman.

The Board members have a wide range of business, financial and technical experience. The mixed skills and
experiences are vital for the successful direction of the Group. A brief profile of each Director is presented on pages
04 to 08 of this Annual Report.

FOSTER COMMITMENT

4.1. Time Commitment

The Board meets on a quarterly basis and additionally as required. The general agenda of the meetings includes
discussion over minutes of previous meetings, quarterly financial results of the Group and any other issues requiring
the Boards deliberation and approval. The agenda for each Board meeting is circulated to all the Directors for their
perusal prior to the convening of each meeting to enable Directors to obtain further clarifications/explanations
prior to the meeting to ensure smooth proceeding of each meeting. The proceedings and resolutions reached
at each Board meeting are minuted and signed by Chairman of the meeting.

Besides Board meetings, the Board exercises control on matters that require Boards deliberation and approval
through circulation of Directors Resolutions.

The Board held four (4) meetings during the financial year.

Record of each Directors meeting attendance during the year under review is set out below:-

No. of meetings
Name of Directors attended/held %

Mr. Edmond Cheah Swee Leng 4/4 100


Mr. Low Chin Guan 4/4 100
Ms. Kwek Siew Leng 4/4 100
Mr. Toh Seng Thong 4/4 100
Dato Dr. Norraesah Binti Haji Mohamad 4/4 100

Time Commitment and Protocol for accepting new directorships

The Board is satisfied with the level of time commitment extended by the Directors in fulfilling their roles and
responsibilities as Directors of the Company. This is evidenced by the attendance record of the Directors at Board
meetings.

Directors are expected to have the relevant expertise in order to contribute positively to the Companys
performance and to give sufficient time and attention to carry out their responsibilities to the Company and Group.
The Board obtains this commitment from its new members at the time of appointment. The Board has established
policies and procedures where a Director should notify the Chairman officially, before accepting any new
directorship from any other company and the notification shall set out the expectation and an indication of time
commitment that will be spent on the new appointment. This is so that Directors are able to devote sufficient time
commitment to their roles and responsibilities as Directors of the Company. Any Board member shall not hold more
than five (5) directorships in listed companies at any one time.
20 ADVENTA BERHAD (618533-M)

Corporate Governance Statement


contd

FOSTER COMMITMENT contd

4.2. Directors Training

All the Board members have attended the Mandatory Accreditation Programme (MAP) as required by the Main
LR.

There continues to be an awareness of the importance and benefits of attending and participating in training and
continuing education programmes aimed at enhancing the Directors knowledge, skills and level of contribution to
the company.

During the financial year under review, the Directors attended the following training:-

1) Mr Edmond Cheah Swee Leng

On 31 May 2016 : Corporate Governance Review 2015 and amendments to listing requirements 2016

2) Mr Low Chin Guan

On 27 February 2016 to 1 March 2016 : 16th Congress of the International Society for Peritoneal Dialysis

3) Ms Kwek Siew Leng

On 6 September 2016 : Business Opportunity and Awareness Session with the World Bank Group in
collaboration with the Performance Management and Delivery Unit (PEMANDU)

4) Mr Toh Seng Thong

On 28 March 2016 : Independence Directors Programme: The Essence of Independence


On 7 April 2016 : Risk Management & Internal Control Workshop by Bursa Malaysia
On 29 & 30 August 2016 : GST Conference 2016

5) Dato Dr Norraesah Binti Haji Mohamad

On 3 November 2015 : 11th WIEF World Islamic Economic Forum organised by World Islamic Economic
Forum Foundation
On 21 March 2016 : WBN Alumni Tea Talk organised by WIEF Businesswomen Network (WBN)
On 31 March : World Halal Conference (WHC) 2016 - Panelist- Women's Empowerment organised by Halal
Industry Development Corporation HDC

UPHOLD INTERGRITY IN FINANCIAL REPORTING

5.1. Compliance with applicable nancial reporting standards

In presenting the annual audited financial statements and quarterly announcement of results to shareholders, the
Directors aim to present a balanced and understandable assessment of the Groups position and prospects.

The Audit Committee assists the Board by reviewing the information to be disclosed in the financial statements, to
ensure completeness, accuracy, adequacy and compliance with applicable financial reporting standards. The
composition and meetings, summary of work of the Audit Committee and summary of activities of the Audit
Committee can be found in the Audit Committee Report on pages 25 to 28 of this Annual Report.

The Statement of Directors Responsibility in respect of the Audited Financial Statements pursuant to paragraph
15.26(a) of the MMLR and pursuant to the Statement of Directors Responsibility of the Companies Act 1965 is set
out on page 32 of this Annual Report.
ANNUAL REPORT 2016 21

Corporate Governance Statement


contd

UPHOLD INTERGRITY IN FINANCIAL REPORTING contd

5.2. Assessment of suitability and independence of external auditors

Through the Audit Committee, the Company has established a transparent and appropriate relationship with the
Groups External Auditors. From time to time, the Auditors highlighted to the Audit Committee and the Board on
matters that require the Boards attention.

The External Auditors provide mainly audit-related services to the Company. Due to the familiarity of the Company,
the External Auditors also undertake certain non-audit services such as regulatory reviews and reporting and other
services.

The Company has always maintained a transparent relationship with its External Auditors in seeking professional
advice and ensuring compliance with applicable approved financial reporting standards in Malaysia.

A summary of the activities of the Audit Committee during the year is set out in the Audit Committee Report from
page 25 to 28 of this Annual Report.

The Audit Committee had also obtained a written assurance from the External Auditors confirming their
independence throughout the conduct of the audit engagement in accordance with the terms of all relevant
professional and regulatory requirements. The Audit Committee, has recommended the reappointment of Messrs.
Ernst and Young as External Auditors for the financial year ending 31 October 2017. The re-appointment of Messrs.
Ernst and Young will be presented for shareholders approval at the forthcoming AGM.

RECOGNISE AND MANAGE RISKS

6.1. Sound framework to manage risks

The Board has ultimate responsibility for reviewing the Companys risks, approving the risk management framework
and policy and overseeing the Companys strategic risk management and internal control framework.

The Company has in place an on-going process for identifying, evaluating and managing significant risks that may
affect the achievement of the business objective of the Group. The Board through the Audit Committee and Risk
Management Committee reviews the key risks identified on a regular basis to ensure proper management of risks
and that measures are taken to mitigate any weaknesses in the control environment.

In addition, the Company developed its Risk Management Policy and Procedure Document with an embedded
Enterprise Risk Management (ERM) framework.

The ERM framework is designed to:-

establish the context for an embedded ERM framework within the Group;
formalize the ERM functions across the Group;
sensitize staff more strongly to risk identification, measurement, control, ongoing monitoring, responsibilities
and accountabilities;
coordinate and standardize the understanding and application of ERM within the Group; and
prove compliance by the Board of the Company with its organizational obligations and duties of care and
diligence in accordance with the Code via a structured documentation system.
22 ADVENTA BERHAD (618533-M)

Corporate Governance Statement


contd

RECOGNISE AND MANAGE RISKS contd

6.1. Sound framework to manage risks contd

The Risk Management Committee comprises the following members:-

Chairperson : Ms. Kwek Siew Leng

Members : Mr. Sing Min Xai


: Mr. Choy Wah Wei
: Mr. Oh Tiang Hoe

The key features of the Risk Management framework together with details of the Companys internal control system
and framework are set out in the Statement of Risk Management and Internal Control of the Company from page 29
to 31 of this Annual Report.

6.2. Internal audit function

The Board has established an internal audit function within the Company, which is led by the out-sourced Internal
Auditors, PKF Advisory Sdn Bhd, who reports directly to the Audit Committee.

Details of the internal audit function and activities as set out in the Audit Committee Report of this Annual Report.

ENSURE TIMELY AND HIGH QUALITY DISCLOSURE

7.1. Corporate Disclosure Policy

Information Disclosure

The Board has in place a policy to ensure disclosure of information is in accordance with the disclosure requirements
under the Main LR and other applicable laws.

7.2. Leverage on information technology for effective dissemination of information

The Group maintains a website at www.adventa.com.my where shareholders as well as members of the public are
invited to access the latest information on the Group. Alternatively, they may obtain the Groups latest Annual
Report and announcements via the Bursa Securities website at www.bursamalaysia.com.my. The Company will
upload the internal corporate policies in the Corporate Governance section at the Companys website in due course.

Information is disseminated via the Companys annual reports, circulars to shareholders, quarterly financial results,
press releases and various announcements made from time to time. The Policy on Corporate Communications and
Disclosure adopted by the Company is to ensure that the Company has in place efficient procedures for the
management of information which at the same time, will promote accountability in relation to the disclosure of
material information as well as to build good investor relations with the investing public that inspires trust and
confidence.

Shareholders and other interested parties may contact the Executive Director of the Company, to address any
concerns by writing or via telephone or facsimile as follows:-

Address : Adventa Berhad


No 21, Jalan Tandang,
51/205A, Seksyen 51,
40650 Petaling Jaya
Selangor, Malaysia

Tel : 603-7772 9321


Fax : 603-7772 9821
Website : www.adventa.com.my
ANNUAL REPORT 2016 23

Corporate Governance Statement


contd

STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS

8.1. Encourage shareholder participation at general meetings

The Board fully recognises the rights of shareholders and encourages them to exercise of their rights at the
Companys AGM.

The AGM remains the principal forum for dialogue with shareholders where they may seek clarifications on the
Companys business and reports. Shareholders are encouraged to meet and communicate with the Board at the
AGM and to vote on all resolutions. The Board will respond to any question raised during the meeting.

Notice of the AGM, annual reports and circular are sent out with sufficient notice before the date of the meeting to
enable the shareholders to have full information about the meeting to facilitate informed decision-making. The
explanatory notes on the proposed resolutions under Special Business are given to help the shareholders vote on the
resolutions.

8.2. Poll voting

Pursuant to the Main LR of Bursa Securities, any resolution set out in the notice of any general meeting, or in any
notice of resolution which may properly be moved and is intended to be moved at any general meeting, must be
voted by poll. Hence, voting for all the resolutions as set out in the forthcoming and future general meetings will be
conducted as such. An Independent scrutineer will be appointed to validate the votes cast at the general meetings.

8.3. Communication with Shareholders and Investors

The Company recognises the importance of keeping shareholders and investors informed of the Groups business
and corporate developments.

The AGM and Extraordinary General Meeting remains the principal forum for dialogue with shareholders where they
may seek clarifications on the Groups businesses. Shareholders are given reasonable time to ask questions
pertaining to issues in the Annual Report, corporate developments on the business of the Group and resolutions
proposed and to vote on all resolutions proposed. Shareholders are encouraged to meet and communicate with the
Board at the AGM and to vote on all resolutions. Those unable to attend are allowed to appoint proxies to attend
and vote on their behalf. During the meeting, the Managing Director and the Executive Director are prepared to
provide responses to queries and to receive feedback from the shareholders.

External Auditors are also present to provide their professional and independent clarification on issues of concern
raised by the shareholders, if any.

The shareholders are kept abreast of all important developments concerning the Group through regular and timely
dissemination of information via quarterly financial announcements through Bursa Securities website, distribution of
annual report and various other announcements made during the year. These will enable the shareholders, investors
and members of public to have an overview of the Groups performance and hence, will enable them to make any
informed investment decision relating to the Group.

The Companys website, www.adventa.com.my, provides an avenue for information, such as dedicated sections on
corporate information, including financial information and announcements. The website is continuously updated to
ensure that the information contained within is correct.
24 ADVENTA BERHAD (618533-M)

Corporate Governance Statement


contd

OTHER INFORMATION PURSUANT TO THE MAIN MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA
SECURITIES BERHAD
1. Utilisation of Proceeds

The Company did not raise any fund through any corporate proposal during the financial year.

2. Recurrent Related Party Transactions of Revenue Nature

At the Annual General Meeting held on 29 March 2016, the Company obtained a Shareholders Mandate to allow
the Group to enter into recurrent related party transactions of a revenue or trading nature.

In accordance with Section 3.1.5 of Practice Note 12 of the Bursa Securities Berhad Listing Requirements, the detail
of recurrent related party transactions conducted pursuant to the Shareholders Mandate are disclosed as follows:

Value of
Interest Director/ Transactions from
Interested Major 29 March 2016 up to
Related Party Shareholder Nature of Transaction 31 January 2017
RM000

Aspion Group Mr Low Chin Guan (a) Purchases of gloves from the Aspion Group 10,090
(b) Provision of sterilisation and warehouse and 6,987
handling services to the Aspion Group
(c) Sales of non-gloves products to the Aspion 53
Group

3. Audit and Non-Audit Fees

The audit and non-audit fees paid by the Group to external auditors or company affiliated to the external auditors
firm for the financial year ended 31 October 2016 are as follows:-

Company Group
(RM) (RM)

Audit services rendered 60,000 125,000


Non-audit services rendered 5,000 30,000

Total 65,000 155,000

4. Material Contracts Involving Directors and Major Shareholders

There were no material contracts entered into by the Company and its subsidiaries involving the Companys
Directors and/or major shareholders interests, either still subsisting at the end of the financial year ended 31
October 2016, or which were entered into since the end of the previous financial year.
ANNUAL REPORT 2016 25

Audit Committee Report

INTRODUCTION

The Board of Directors of the Company (the Board) is pleased to present the report of the Audit Committee (AC) for
the financial year ended 31 October 2016.

COMPOSITION AND MEETINGS

The Board shall appoint the AC members from amongst themselves, comprising no fewer than three (3) non-executive
directors. The majority of the AC members shall be independent directors.

In this respect, the Board adopts the definition of independent director as dened under Bursa Malaysia Securities
Berhads Main Market Listing Requirements (Main LR).

All members of the AC shall be financially literate and at least one (1) member of the AC must:-

(a) be a member of the Malaysian Institute of Accountants (MIA); or


(b) if he is not a member of the MIA, he must have at least three (3) years of working experience and:
i) he must have passed the examinations specified in Part I of the First Schedule of the Accountants Act
1967; or
ii) he must be a member of one of the associations of accountants specified in Part II of the First Schedule
of the Accountants Act 1967; or
(c) fulfill such other requirements as prescribed or approved by Bursa Securities.

No alternate director of the Board shall be appointed as a member of the AC.

The term of office and performance of the AC and each of its members shall be reviewed by the Nomination Committee
annually to determine whether such AC and members have carried out their duties in accordance with their terms of
reference.

During the financial year ended 31 October 2016, the AC conducted a total of four (4) meetings. The composition of the
AC and the attendance of the respective members at the meetings during the financial year ended 31 October 2016 are
disclosed as follows:-

Name Designation Directorship Attendance

Mr. Toh Seng Thong Chairman Independent NonExecutive Director 4/4

Mr. Edmond Cheah Swee Member Senior Independent NonExecutive Director 4/4
Leng

Dato Dr. Norraesah binti Member Independent Non-Executive Director 4/4


Haji Mohamad

The terms of reference of the Committee is available for reference on the Companys website at www.adventa.com.my
26 ADVENTA BERHAD (618533-M)

Audit Committee Report


contd

SUMMARY OF WORK OF THE AUDIT COMMITTEE

1. OVERSIGHT OF THE FINANCIAL REPORTING PROCESS

During the financial year ended 31 October 2016, the Audit Committee carried out its duties as set out in its Terms
of Reference. The Audit Committee discharged its oversight role by carrying out the following activities during the
financial year:

(a) Reviewed and discussed the interim and year-end financial statements, prior to recommendations to the Board.
The key areas of focus are the following:

any change in accounting policies and practices;

significant adjustments arising from the audit;

going concern assumption;

compliance with accounting standards and other legal requirements;

Significant matters highlighted in the financial statements; and

significant judgements made by the Management.

(b) The dates the AC met during the financial year to deliberate on financial reporting matters as detailed below:-

Date of meetings Financial Reporting Statements Reviewed

17 December 2015 Unaudited quarterly report on consolidated results of the Company and its Group
of Companies for the Fourth quarter ended 31 October 2015

29 March 2016 Unaudited quarterly report on consolidated results of the Company and its Group
of Companies for the First quarter ended 31 January 2016

28 June 2016 Unaudited quarterly report on consolidated results of the Company and its Group
of Companies for the Second quarter ended 30 April 2016

29 September 2016 Unaudited quarterly report on consolidated results of the Company and its Group
of Companies for the Third quarter ended 31 July 2016
ANNUAL REPORT 2016 27

Audit Committee Report


contd

2. OVERSIGHT OF EXTERNAL AUDIT FUNCTION

During the financial year, the AC:-

(a) Reviewed with the External Auditors, their audit plan including non-audit services for the financial year ended
31 October 2016, outlining the audit scope, methodology and timetable, audit materiality, area of focus, fraud
considerations and the risk of management override and also the new and revised auditors reporting standards.

(b) Discussed and considered the significant accounting adjustments, auditing issues and management letter arising
from the interim audit as well as the final audit with the External Auditors. The AC also had a private discussion
with the External Auditors on 17 December 2015 and 22 December 2016 without the presence of the
Management to review on issues relating to financial controls and operational efficiencies of the Company and
its subsidiaries.

Evaluated the performance of the External Auditors for the financial year ended 31 October 2016 covering areas
such as caliber, quality processes, audit team, audit scope, audit communication, audit governance and
independence as well as the audit fees of the External Auditors.

Messrs. Ernst & Young declared their independence and confirmed that they were not aware of any relationship
between Messrs. Ernst & Young and the Group that, in their professional judgement, might reasonably be thought
to impair their independence.

The AC having been satisfied with the independence, suitability and performance of EY, had recommend to the
Board for approval, the re-appointment of EY as External Auditors for the ensuing financial year of 31 October 2017.

3. OVERSIGHT OF INTERNAL AUDIT FUNCTION

In discharging its duties and responsibilities, the AC is supported by an independent and adequately resources
internal audit function. The internal audit function is outsourced to PKF Advisory Sdn Bhd (Internal Auditors), an
independent professional services firm which assesses the adequacy, efficiency and effectiveness of the Groups
internal control and risk management system.

During the financial year ended 31 October 2016, the internal audit function carried out audits in accordance with
the internal audit plan approved by the AC. The results of the internal audit reviews and the recommendations for
enhancement of existing controls were duly presented to the AC. The AC has full access to the Internal Auditors and
has received reports on audits performed.

The internal audits were performed using a risk based approach and focused on:-

(a) reviewing identified high risk areas for compliance with established policies, procedures, rules, guidelines, laws
and regulations;

(b) evaluating the adequacy of controls for safeguarding assets; and

(c) identifying business risks which have not been appropriately addressed.
28 ADVENTA BERHAD (618533-M)

Audit Committee Report


contd

3. OVERSIGHT OF INTERNAL AUDIT FUNCTION contd

During the financial year under review, the AC performed the following activities:

(a) Reviewed and approved the Internal Audit Plan prepared by Internal Auditors for the financial year ended 31
October 2016 to ensure there is adequate scope and comprehensive coverage over the activities of the
subsidiaries in the Group and that all the risk areas are audited annually.

(b) Reviewed the internal audit reports relating to Fixed Asset and Inventory Management of the Group.

(c) Reviewed the audit findings and recommendations to improve any weaknesses or non-compliance, and the
respective Managements response thereon, and monitored the implementation recommendations and action
plans.

(d) Reviewed the Risk Management Report prepared by the Management, requested for more information and
proposed amendments to the content to better address risk management best practices

(e) Sought and obtain periodic updates from Internal Auditors on the status of implementation of post-audit
recommendations from previous, as well as current, internal audit cycles.

(f) Met with the internal auditors on 28 June 2016 without the presence of the any executive Board members and
Management of the Group.

The professional fees incurred for the internal audit function in respect of financial year ended 31 October 2016
amounted to RM 15,000.

4. OTHER ACTIVITIES

4.1 Recurrent Related Party Transactions (RRPTs)

During the financial year, the following activities were carried out by the AC in relation to RRPTs:-

(a) Reviewed and recommended to the Board for approval on any material related party transactions and
recurrent related party transactions arising;

(b) Reviewed related party transactions and the adequacy of the Groups procedures and processes in
identifying, monitoring, reporting and reviewing related party transactions in a timely and orderly manner;
and

(c) Reviewed the draft Circular to Shareholders in relation to the Proposed Renewal of Shareholders
Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature and recommended
the same for Boards approval.

4.2 Annual Report

The AC reviewed and recommended the Audit Committee Report and Statement on Risk Management and
Internal Control in respect of the financial year ended 31 October 2016 to the Board for consideration and
approval for inclusion in the Annual Report.

BOARDS CONCLUSION

The Board is satisfied that the AC and its members have carried out their functions, duties and responsibilities in accor-
dance with the Terms of Reference of the AC and there were no material misstatements, frauds and deficiencies in the
systems of internal control not addressed by the management.
ANNUAL REPORT 2016 29

Statement on Risk Management


and Internal Control
INTRODUCTION

Pursuant to Paragraph 15.26 (b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (Listing
Requirements) and the Principles and Best Practices provisions relating to internal control provided in the Malaysian
Code on Corporate Governance 2012 (the MCCG 2012), the Board of Directors (the Board) of listed issuers are
required to include in their Annual Report a Statement on the state of its Risk Management and Internal Control. The
following Statement on Risk Management and Internal Control has also been prepared in accordance with the
Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers.

BOARD RESPONSIBILITIES

The Board affirms its overall responsibility for the Groups system of internal control which includes the establishment of
an appropriate control environment and risk management framework as well as reviewing its adequacy and integrity. Due
to the limitations that are inherent in any internal control system, the Groups system of internal control can only manage
rather than eliminate the risk of failure to achieve business objectives and therefore can only provide reasonable and not
absolute assurance against material misstatement, loss or fraud. Notwithstanding this, the Board requires that the
procedures and controls in place are subject to regular review as part of an ongoing process for identifying, evaluating
and managing the significant risks faced by the Group.

The Board has received assurance from the Managing Director, Finance Director and the management team of the Group
that the Groups risk management and internal control systems have been operating adequately and effectively, in all
material aspects, during the financial year under review and up to the date of this Statement.

The Board has extended the responsibilities of the Audit Committee (AC) to include the role of reviewing and
monitoring the effectiveness of the Groups internal control system. The AC receives assurance reports from the Internal
Auditors on findings from audits carried out at operating units, and the External Auditors on areas for improvement
identified during the course of statutory audit. The Reports of the AC is set out on pages 25 to 28 of the Annual Report.

RISK MANAGEMENT FRAMEWORK

The oversight of the Groups risk management process is the responsibility of the Managing Director who is assisted by
the heads of department of the respective operating companies. During the year, the Group monitored significant risks
and risk mitigation strategies on an ongoing basis through its management at the Risk Management Committee (RMC)
meetings and Board meetings. Under the purview of the RMC, the respective heads of each operating subsidiary and
department of the Group are empowered with the responsibility of managing their respective operations. Its functions
include, inter alia:

developing risk management framework;


coordinate the updating of the risk profile;
monitor the implementation of action plans; and
review and assess the applicability of the control environment in mitigating risk.

In view of a constantly changing environment and competitive landscape, the Board is committed in maintaining a system
of internal control that comprises the following environment, key processes and monitoring systems:

An annual risk assessment analysis that assists the management to continuously identify significant risks associated
with key processes within a changing business and operating environment;
The AC, through the RMC, reviews the adequacy and effectiveness of the Groups risk management and internal
control procedures as well as any internal control issues identified by the Internal and External Auditors. This also
involves identifying alternative controls to reduce risk identified;
The AC, through the Internal Audit the internal audit team from PKF Advisory Sdn Bhd, assess the potential financial
and non-financial impacts to the business risk identified and with the assistance of the RMC formulate and develop
action plan to address the risk with timeline.
The RMC updates the risk profile of operating companies and Group, monitor and update progress to the AC
annually.
30 ADVENTA BERHAD (618533-M)

Statement on Risk Management


and Internal Control
contd
RISK MANAGEMENT FRAMEWORK contd

Within the Enterprise Risk Management (ERM) framework, risks and control measures are documented and compiled
by the RMC to represent the risk profile of the operating companies which in turn are consolidated to form the risk profile
of the Group. Risk profiles are reviewed and updated on a yearly basis. Meetings are held at least once a year in which
the updated risk profile will be deliberated by the AC before reporting to the Board.

During the financial year under review, the Group has continued with its ERM efforts. The risk profile of the Group was
reviewed and updated to reflect the current conditions.

INTERNAL AUDIT

The internal audit function adopts a risk-based approach and prepares its strategies and plans for ACs approval prior to
execution of internal audit assessments. Internal audit reviews the internal controls in the key activities of the Groups
businesses.

The internal audit team from PKF Advisory Sdn. Bhd. (PKF), the independent consulting firm to which the internal audit
function has been outsourced, assesses the adequacy and effectiveness of the internal control system based on the scope
of work approved by the AC and reports to the AC on its findings and recommendations for improvement. The Internal
Auditor also reviews the extent to which its recommendations have been accepted and implemented by the
Management. The AC reviews internal audit reports and management responses thereto and ensures significant findings
especially control deficiencies are adequately addressed and rectified by the Management of the operating units
concern. The AC reviews internal control matters and update the Board on significant issues for the Boards attention and
action.

The Internal Auditors, which report directly to the AC, conducts reviews on the adequacy and effectiveness of the Groups
system of internal controls that the management has put in place. These internal auditors review the internal controls in
the key activities of the Groups business based on a 3-year detailed internal audit plan approved by the AC. Based on
these audits, the Internal Auditors provide the AC with annual reports highlighting observations, recommendations and
management action plans to improve the system of internal control.

During the financial year ended 31 October 2016, the AC with the assistance of the external professional consulting firm,
PKF, reviewed the adequacy and integrity of the Groups internal control systems relating to the following processes:-

Sales and Accounts Receivable; and


Procurement and Account Payable.

OTHER KEY ELEMENTS OF INTERNAL CONTROL

Apart from risk management and internal audit, the Groups system of internal controls comprises the following key
elements:-

a well defined organisational structure with clear reporting lines and accountabilities;
clearly defined internal policies and procedures for key processes to ensure full compliance by all operating units
and to minimise operating risks;
a close monthly monitoring and review of financial results and forecasts for all operating units by the Managing
Director; and
clear reporting structures to ensure proper monitoring of the Groups operations together with regular quarterly
reports which monitor the Groups performance.
ANNUAL REPORT 2016 31

Statement on Risk Management


and Internal Control
contd
OPINION OF THE BOARD

The improvement of the system of internal control is an ongoing process and the Board maintains an ongoing
commitment to strengthening the Groups internal control and risk management environment and processes.

Based on the internal processes which have been put into place by the Management, as well as the activities carried out
by and subsequent reports of the outsourced Internal Audit function, the Board is of the view that the Groups system of
internal control and risk management is sufficiently sound and adequate to safeguard the shareholders investments and
Groups assets for the financial year under review.

The Board has received assurance from the Managing Director and Financial Controller that the Groups internal control
and risk management system is operating adequately and effectively at the operating companies.

This statement is made in accordance with a resolution of the Board of Directors dated 17 February 2017 and has been
duly reviewed by the external auditors, pursuant to Paragraph 15.23 of the Main Market Listing Requirements of Bursa
Malaysia Securities Berhad.
32 ADVENTA BERHAD (618533-M)

Responsibility Statement
By the Board of Directors

In preparing the annual financial statements of the Group and of the Company, the Directors are collectively responsible
to ensure that these financial statements have been prepared to give a true and fair view of the state of affairs of the Group
and the Company at the end of the financial year and the results and cash flows of the Group and the Company in
accordance with applicable approved accounting standards in Malaysia, the provisions of the Companies Act 1965 and the
Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

In preparing the financial statements for the financial year ended 31 October 2016 set out on pages 40 to 96 of this Annual
Report, the Directors have applied appropriate accounting policies on a consistent basis and made judgments and
estimates that are reasonable and prudent.

The Directors have responsibility for ensuring that proper accounting records are kept which disclose with reasonable
accuracy the financial position of the Group and the Company and which enable them to ensure that the financial
statements comply with the Companies Act 1965.

The Directors have overall responsibility for taking such steps as are reasonably open to them to safeguard the assets of
the Group and to prevent and detect fraud and other irregularities.

This statement is made in accordance with a resolution of the Board of Directors dated 17 February 2017.
Financial Statements
34 Directors Report
37 Statement by Directors
37 Statutory Declaration
38 Independent Auditors Report
40 Statements of Comprehensive Income
41 Statements of Financial Position
43 Statements of Changes in Equity
45 Statements of Cash Flows
47 Notes to the Financial Statements
96 Supplementary Information
34 ADVENTA BERHAD (618533-M)

Directors Report

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

PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are described in
Note 14 to the nancial statements.

There have been no signicant changes in the nature of the principal activities during the nancial year.

RESULTS

Group Company
RM RM

Profit net of tax 684,150 27,421

Profit attributable to:


Owners of the parent 684,150 27,421
Non-controlling interest - -

684,150 27,421

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

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

DIVIDENDS

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

DIRECTORS

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

Low Chin Guan


Kwek Siew Leng
Toh Seng Thong
Edmond Cheah Swee Leng
Dato Dr. Norraesah Binti Haji Mohamad
ANNUAL REPORT 2016 35

Directors Report
contd

DIRECTORS BENEFITS

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

Since the end of the previous nancial year, no director has received or become entitled to receive a benet (other
than benets included in the aggregate amount of emoluments received or due and receivable by the directors or
the xed salary of a full-time employee of the Company as shown in Notes 10 to the nancial statements) by reason
of a contract made by the Company or a related corporation with a director or with a rm of which he is a member,
or with a company in which he has a substantial nancial interest, except as disclosed in Note 26 to the nancial
statements.

DIRECTORS INTERESTS

According to the register of directors shareholdings, the interests of directors in ofce at the end of the nancial year
in shares in the Company during the nancial year were as follows:

Number of ordinary shares of RM0.35 each


1.11.2015 Acquired Sold 31.10.2016

Direct interest
Low Chin Guan 58,446,552 - - 58,446,552
Kwek Siew Leng 1,000,000 - - 1,000,000
Toh Seng Thong 200,000 - - 200,000
Edmond Cheah Swee Leng 140,000 - - 140,000
Dato Dr. Norraesah Binti Haji Mohamad 140,000 - - 140,000

Indirect interest
Low Chin Guan #
7,960,960 - - 7,960,960
#
By virtue of shareholdings by his family members

Low Chin Guan by virtue of his interest in shares of the Company is also deemed interested in shares of all the
Companys subsidiaries to the extent the Company has an interest.

OTHER STATUTORY INFORMATION

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

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making
of provision for doubtful debts and satised themselves that there were no known bad debts and that
adequate provision had been made for doubtful debts; and

(ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting
records in the ordinary course of business had been written down to an amount which they might be
expected so to realise.
36 ADVENTA BERHAD
ADVENTA (618533-M)
BERHAD (618533-M)

Directors Report
contd

OTHER STATUTORY INFORMATION contd

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

(i) it necessary to write off any bad debts or the amount of the provision for doubtful debts in the nancial
statements of the Group and the Company inadequate to any substantial extent; and

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

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

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

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

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

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

(f) In the opinion of the directors:

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

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end
of the nancial year and the date of this report which is likely to affect substantially the results of the
operations of the Group or of the Company for the nancial year in which this report is made.

AUDITORS

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

Signed on behalf of the Board in accordance with a resolution of the directors dated 17 February 2017.

LOW CHIN GUAN KWEK SIEW LENG


ANNUAL REPORT
ANNUAL 2015 2016
REPORT 37

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

We, Low Chin Guan and Kwek Siew Leng, being two of the directors of Adventa Berhad, do hereby state that, in the
opinion of the directors, the accompanying financial statements set out on pages 40 to 95 are drawn up in accordance
with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the
Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the
Company as at 31 October 2016 and of their financial performance and cash flows for the year then ended.

The information set out in Note 33 to the financial statements have been prepared in accordance with the Guidance on
Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to
Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Signed on behalf of the Board in accordance with a resolution of the directors dated 17 February 2017.

LOW CHIN GUAN KWEK SIEW LENG

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

I, Kwek Siew Leng, being the director primarily responsible for the financial management of Adventa Berhad, do solemnly
and sincerely declare that the accompanying financial statements set out on pages 40 to 96 are in my opinion correct, and
I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the
Statutory Declarations Act, 1960.

Subscribed and solemnly declared by


the abovenamed Kwek Siew Leng
at Kuala Lumpur in the Federal Territory
on 17 February 2017. KWEK SIEW LENG

Before me,
38 ADVENTA BERHAD (618533-M)

Independent Auditors Report


to the members of Adventa Berhad
(Incorporated in Malaysia)

REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of Adventa Berhad, which comprise the statements of financial position as at
31 October 2016 of the Group and of the Company, statements of comprehensive income, statements of changes in
equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary
of significant accounting policies and other explanatory information, as set out on pages 40 to 95.

Directors' responsibility for the financial statements

The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view
in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the
requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the
directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.

Auditors' responsibility

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

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

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

Opinion

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

Report on other legal and regulatory requirements

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

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

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

(c) The auditors reports on the financial statements of the subsidiaries were not subject to any qualification material
to the consolidated financial statements and did not include any comment required to be made under Section
174(3) of the Act.
ANNUAL ANNUAL REPORT 2016
REPORT 2015 39

Independent Auditors Report


to the members of Adventa Berhad
(Incorporated in Malaysia)
contd
OTHER REPORTING RESPONSIBILITIES

The supplementary information set out in Note 33 on page 96 is disclosed to meet the requirement of Bursa Malaysia
Securities Berhad. The directors are responsible for the preparation of the supplementary information in accordance with
Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of
Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of
Accountants ("MIA Guidance") and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary
information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia
Securities Berhad.

OTHER MATTERS

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

ERNST & YOUNG SANDRA SEGARAN A/L MUNIANDY@KRISHNAN


AF: 0039 02882/01/2019 J
Chartered Accountants Chartered Accountant

Kuantan, Pahang Darul Makmur, Malaysia


17 February 2017
40 ADVENTA BERHAD (618533-M)

Statements of Comprehensive Income


For the financial year ended 31 October 2016

Group Company
Note 2016 2015 2016 2015
RM RM RM RM

Revenue 4 39,930,973 41,881,364 - -


Cost of sales 5 (25,318,396) (27,194,718) - -

Gross prot 14,612,577 14,686,646 - -


Other income 6 693,670 664,727 1,500,025 929,814
Other items of expense
Administrative expenses (4,948,192) (4,111,665) (1,393,366) (921,977)
Selling and marketing expenses (3,118,499) (3,703,362) - -
Other operating expenses (3,253,893) (1,700,693) (27,218) (95,485)
Finance costs 7 (1,587,892) (977,775) - -

Prot/(loss) before tax 8 2,397,771 4,857,878 79,441 (87,648)


Income tax expense 11 (1,713,621) (1,767,881) (52,020) (29,643)

Prot/(loss) for the year, representing total


comprehensive income/(loss) for the year 684,150 3,089,997 27,421 (117,291)

Prot/(loss) attributable to:


Owners of the parent 684,150 3,089,997 27,421 (117,291)
Non-controlling interest - - - -

684,150 3,089,997 27,421 (117,291)

Total comprehensive income/(loss)


attributable to:
Owners of the parent 684,150 3,089,997 27,421 (117,291)
Non-controlling interest - - - -

684,150 3,089,997 27,421 (117,291)

Earnings per share attributable to owners of


the parent (sen per share)
Basic 12 0.45 2.02

The accompanying accounting policies and explanatory information form an integral part of the nancial statements.
ANNUAL REPORT 2016 41

Statements of Financial Position


As at 31 October 2016

Group Company
Note 2016 2015 2016 2015
RM RM RM RM

Assets

Non-current assets
Property, plant and equipment 13 53,595,035 51,175,746 3,787 4,222
Investment in subsidiaries 14 - - 23,056,726 23,056,726
Intangible assets 15 31,592,763 28,759,910 - -
Deferred tax assets 16 424,162 1,805,060 226,434 226,721
Amounts due from subsidiaries 17 - - 27,429,596 25,196,785

85,611,960 81,740,716 50,716,543 48,484,454

Current assets
Inventories 18 15,318,129 11,582,034 - -
Trade and other receivables 19 12,378,887 17,955,037 - -
Other current assets 20 825,487 387,605 3,733 8,454
Tax recoverable 4,145 14,156 4,145 12,137
Cash and bank balances 21 21,001,608 22,122,205 18,192,894 20,340,701

49,528,256 52,061,037 18,200,772 20,361,292

Total assets 135,140,216 133,801,753 68,917,315 68,845,746

Equity and Liabilities

Current liabilities
Trade and other payables 22 12,976,419 14,847,698 235,542 191,394
Income tax payables 122,108 19 - -
Loans and borrowings 23 9,403,471 10,444,758 - -

22,501,998 25,292,475 235,542 191,394

Non-current liabilities
Loans and borrowings 23 31,531,615 28,086,825 - -

Total liabilities 54,033,613 53,379,300 235,542 191,394

Net assets 81,106,603 80,422,453 68,681,773 68,654,352


42 ADVENTA BERHADBERHAD
ADVENTA (618533-M)
(618533-M)

Statements of Financial Position


As at 31 October 2016
contd

Group Company
Note 2016 2015 2016 2015
RM RM RM RM

Equity attributable to owners of the parent


Share capital 24 53,475,020 53,475,020 53,475,020 53,475,020
Share premium 24 4,829,789 4,829,789 4,829,789 4,829,789
Retained earnings 25 22,801,794 22,117,644 10,376,964 10,349,543

Total equity 81,106,603 80,422,453 68,681,773 68,654,352

Total equity and liabilities 135,140,216 133,801,753 68,917,315 68,845,746

The accompanying accounting policies and explanatory information form an integral part of the nancial statements.
ANNUALANNUAL
REPORT REPORT
2015 2016 43

Statements of Changes in Equity


For the nancial year ended 31 October 2016

Attributable to owners of the parent


Non-distributable Distributable
Total Share Share Retained
equity capital premium earnings
RM RM RM RM

2016
Group

Opening balance at 1 November 2015 80,422,453 53,475,020 4,829,789 22,117,644

Total comprehensive income 684,150 - - 684,150

Closing balance at 31 October 2016 81,106,603 53,475,020 4,829,789 22,801,794

2015
Group

Opening balance at 1 November 2014 77,332,456 53,475,020 4,829,789 19,027,647

Total comprehensive income 3,089,997 - - 3,089,997

Closing balance at 31 October 2015 80,422,453 53,475,020 4,829,789 22,117,644


44 ADVENTA BERHAD
ADVENTA (618533-M)
BERHAD (618533-M)

Statements of Changes in Equity


For the nancial year ended 31 October 2016
contd

Non-distributable Distributable
Total Share Share Retained
equity capital premium earnings
RM RM RM RM

2016
Company

Opening balance at 1 November 2015 68,654,352 53,475,020 4,829,789 10,349,543

Total comprehensive income 27,421 - - 27,421

Closing balance at 31 October 2016 68,681,773 53,475,020 4,829,789 10,376,964

2015
Company

Opening balance at 1 November 2014 68,771,643 53,475,020 4,829,789 10,466,834

Total comprehensive loss (117,291) - - (117,291)

Closing balance at 31 October 2015 68,654,352 53,475,020 4,829,789 10,349,543

The accompanying accounting policies and explanatory information form an integral part of the nancial statements.
ANNUAL REPORT
ANNUAL 2015 2015
REPORT 45

Statements of Cash Flows


For the nancial year ended 31 October 2015

Group Company
Note 2016 2015 2016 2015
RM RM RM RM

Operating activities
Prot/(loss) before tax 2,397,771 4,857,878 79,441 (87,648)

Adjustments for:

Depreciation of property, plant and equipment 8 1,892,458 1,641,982 1,860 1,548


Loss on disposal of property, plant and 8 - 297 - -
equipment
Property, plant and equipment written off 8 - 142 - -
Amortisation of development costs 8 864,112 - - -
Impairment loss on trade receivables 8 1,147 168,409 - -
Inventories written down 8 24,645 - - -
Interest income 6 (605,851) (336,231) (1,500,025) (929,814)
Interest expense 7 1,587,892 977,775 - -
Net loss/(gain) on unrealised foreign exchange 8 145,092 (202,107) - -

Total adjustments 3,909,495 2,250,267 (1,498,165) (928,266)


Operating cash flows before changes in
working capital 6,307,266 7,108,145 (1,418,724) (1,015,914)

Changes in working capital

Increase in inventories (3,760,740) (2,302,537) - -


Decrease/(increase) in trade and other
receivables 5,517,659 (4,929,582) (2,232,810) 16,559,585
(Increase)/decrease in other current assets (437,883) 2,303,090 4,721 (5,661)
(Decrease)/increase in trade and other
payables (1,923,206) 1,673,049 44,144 32,426

Total changes in working capital (604,170) (3,255,980) (2,183,945) 16,586,350

Cash ows from/(used in) operations 5,703,096 3,852,165 (3,602,669) 15,570,436


Interest paid (1,587,892) (780,993) - -
Income taxes refunded - 13,217 - -
Income taxes paid (200,623) (488,731) (43,738) (300,243)

Net cash ows from/(used in) operating


activities 3,914,581 2,595,658 (3,646,407) 15,270,193
46 ADVENTA BERHAD (618533-M)

Statements of Cash Flows


For the nancial year ended 31 October 2016
contd

Group Company
2016 2015 2016 2015
RM RM RM RM

Investing activities
Interest received 605,851 336,231 1,500,025 929,814
Payment for deferred development costs (3,696,965) (10,581,548) - -
Proceeds from disposal of property, plant and - 146,200 - -
equipment
Purchase of property, plant and equipment (4,311,747) (8,269,405) (1,425) (3,055)

Net cash ows (used in)/from investing activities (7,402,861) (18,368,522) 1,498,600 926,759

Financing activities
Drawdown of loans and borrowings 11,260,479 40,954,408 - -
Repayment of loans and borrowings (8,856,975) (8,920,088) - -

Net cash ows from nancing activities 2,403,504 32,034,320 - -

Net (decrease)/increase in cash and cash equivalents (1,084,776) 16,261,456 (2,147,807) 16,196,952
Effect of exchange rate changes on cash and cash
equivalents (35,821) 10,926 - -
Cash and cash equivalents at 1 November 22,122,205 5,849,823 20,340,701 4,143,749

Cash and cash equivalents at 31 October ( Note 21) 21,001,608 22,122,205 18,192,894 20,340,701

The accompanying accounting policies and explanatory information form an integral part of the nancial statements.
ANNUAL
ANNUAL REPORTREPORT
2015 2016 47

Notes to the Financial Statements


For the nancial year ended 31 October 2016

1. CORPORATE INFORMATION

Adventa Berhad ("the Company") is a public limited liability company, incorporated and domiciled in Malaysia
and is listed on the Bursa Malaysia Securities Berhad. The registered office of the Company is located at No. 21,
Jalan Tandang 51/205A, Seksyen 51, 46050 Petaling Jaya, Selangor Darul Ehsan.

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are
described in Note 14. There have been no significant changes in the nature of the principal activities during the
financial year.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

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

The financial statements have also been prepared on a historical basis, unless otherwise indicated in the
accounting policies below.

The financial statements are presented in Ringgit Malaysia (RM).

2.2 Standards issued but not yet effective

The standards and interpretations that are issued but not yet effective up to the date of issuance of the
Groups and the Companys financial statements are disclosed below. The Group and the Company intend
to adopt these standards, if applicable, when they become effective.
Effective for annual
periods beginning on
Description or after
Annual Improvements to MFRSs 2012-2014 Cycle 1 January 2016
Amendments to MFRS 116 and MFRS 138:
1 January 2016
Clarification of Acceptable Methods of Depreciation and Amortisation
Amendments to MFRS 116 and MFRS 141: Agriculture: Bearer Plants 1 January 2016
Amendments to MFRS 11:
Accounting for Acquisitions of Interests in Joint Operations 1 January 2016
Amendments to MFRS 127:
1 January 2016
Equity Method in Separate Financial Statements
Amendments to MFRS 101: Disclosure Initiatives 1 January 2016
Amendments to MFRS 10, MFRS 12 and MFRS 128:
Investment Entities: Applying the Consolidation Exception 1 January 2016
MFRS 14: Regulatory Deferral Accounts 1 January 2016
Amendments to MFRS 107: Disclosure Initiatives 1 January 2017
Amendments to MFRS 112: Recognition of Deferred Tax
Assets for Unrealised Losses (Amendments to MFRS 112) 1 January 2017
MFRS 2: Classification and Measurement of Share-based Payment Transactions
(Amendments to MFRS 2) 1 January 2018
MFRS 15: Revenue from Contracts with Customers 1 January 2018
MFRS 9: Financial Instruments 1 January 2018
MFRS 16: Leases 1 January 2019
Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture Deferred
48 ADVENTA BERHAD (618533-M)

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES contd

2.2 Standards issued but not yet effective cont'd

Amendments to MFRS 116 and MFRS 138: Clarification of Acceptable Methods of Depreciation and
Amortisation

The amendments clarify that revenue reflects a pattern of economic benefits that are generated from
operating a business (of which the asset forms part of the business) rather than the economic benefits that
are consumed through the use of an asset. As a result, a revenue-based method cannot be used to depreciate
property, plant and equipment and may only be used in very limited circumstances to amortise intangible
assets.

The amendments do not have any impact to the Group as the Group has not used a revenue-based method
to depreciate its non-current assets.

Amendments to MFRS 11 Joint Arrangements: Accounting for Acquisitions of Interests in Joint Operations

The amendments to MFRS 11 require that a joint operator which acquires an interest in a joint operations
which constitute a business to apply the relevant MFRS 3 Business Combinations principles for business
combinations accounting. The amendments also clarify that a previously held interest in a joint operation is
not remeasured on the acquisition of an additional interest in the same joint operation while joint control is
retained. In addition, a scope exclusion has been added to MFRS 11 to specify that the amendments do not
apply when the parties sharing joint control, including the reporting entity, are under common control of the
same ultimate controlling party.

These amendments are not expected to have any impact on the Groups consolidated financial statements as
there has been no interest acquired in a joint operation.

Amendments to MFRS 127: Equity Method in Separate Financial Statements

The amendments will allow entities to use the equity method to account for investments in subsidiaries, joint
ventures and associate in their separate financial statements. Entities already applying MFRS and electing to
change to the equity method in its separate financial statements will have to apply this change
retrospectively. For first-time adopters of MFRS electing to use the equity method in its separate financial
statements, they will be required to apply this method from the date of transition to MFRS. These
amendments do not have any impact on the Groups and the Companys financial statements.

Amendments to MFRS 101: Disclosure Initiatives

The amendments to MFRS 101 include narrow-focus improvements in the following five areas:
- Materiality
- Disaggregation and subtotals
- Notes structure
- Disclosure of accounting policies
- Presentation of items of other comprehensive income arising from equity accounted investments

The amendments do not have any impact on the Groups and the Companys financial statements.
ANNUAL REPORT 2016 49

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES contd

2.2 Standards issued but not yet effective cont'd

Amendments to MFRS 10, MFRS 12 and MFRS 128: Investment Entities: Applying the Consolidation
Exception

The amendments clarify that the exemption from presenting consolidated financial statements applies to a
parent entity that is a subsidiary of an investment entity, when the investment entity measures all of its
subsidiaries at fair value. The amendments further clarify that only a subsidiary that is not an investment entity
itself and provides support services to the investment entity is consolidated. In addition, the amendments
also provides that if an entity that is not itself an investment entity has an interest in an associate or joint
venture that is an investment entity, the entity may, when applying the equity method, retain the fair value
measurement applied by that investment entity associate or joint venture to the investment entity associates
or joint ventures interests in subsidiaries.

The amendments do not have any impact on the Groups financial statements as the Group does not apply
the consolidation exception.

Annual Improvements to MFRS 20122014 Cycle

The Annual Improvements to MFRSs 2012-2014 Cycle include a number of amendments to various MFRSs,
which are summarised below. These amendments do not have a significant impact on the Groups and the
Companys financial statements.

Standards Descriptions

MFRS 5 The amendment to MFRS 5 clarifies that changing from one disposal method
Non-current to the other should not be considered to be a new plan of disposal, rather it is
Assets Held for a continuation of the original plan. There is therefore no interruption of the
Sale and Discontinued application of the requirements in MFRS 5.
Operations
The amendment also clarifies that changing the disposal method does not
change the date of classification. This amendment is applied prospectively.

MFRS 7 The amendment clarifies that a servicing contract that includes a fee can
Financial constitute continuing involvement in a financial asset. An entity must assess the
Instruments: nature of the fee and arrangement against the guidance for continuing
Disclosures involvement in MFRS 7 in order to assess whether the disclosures are required.

In addition, the amendment also clarifies that the disclosures in respect of


offsetting of financial assets and financial liabilities are not required in the
condensed interim financial report. This amendment is applied retrospectively.

MFRS 119 The amendment to MFRS 119 clarifies that market depth of high quality
Employee Benets corporate bonds is assessed based on the currency in which the obligation is
denominated, rather than the country where the obligation is located. When
there is no deep market for high quality corporate bonds in that currency,
government bond rates must be used. This amendment is applied
prospectively.

MFRS 134 The amendment states that the required interim disclosures must either be in
Interim Financial the interim financial statements or incorporated by cross-reference between
Reporting the interim financial statements and wherever they are included within the
greater interim financial report (e.g., in the management commentary or risk
report). The other information within the interim financial report must be
available to users on the same terms as the interim financial statements and at
the same time. This amendment is applied retrospectively.
50 ADVENTA BERHAD (618533-M)

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES contd

2.2 Standards issued but not yet effective cont'd

Amendments to MFRS107: Disclosures Initiatives

The amendments to MFRS 107 Statement of Cash Flows require an entity to provide disclosures that enable
users of financial statements to evaluate changes in liabilities arising from financing activities, including both
changes arising from cash flows and non-cash changes. On initial application of this amendment, entities are
not required to provide comparative information for preceding periods. These amendments are effective for
annual periods beginning on or after 1 January 2017, with early application permitted. Application of
amendments will result in additional disclosures to be provided by the Group and the Company.

Amendments to MFRS 112: Recognition of Deferred Tax for Unrealised Losses

The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable
profits against which it may make deductions on the reversal of that deductible temporary difference.
Furthermore, the amendments provide guidance on how an entity should determine future taxable profits
and explain the circumstances in which taxable profit may include the recovery of some assets for more than
their carrying amount.

Entities are required to apply the amendments retrospectively. However, on initial application of the
amendments, the change in the opening equity of the earliest comparative period may be recognised in
opening retained earnings (or in another component of equity, as appropriate), without allocating the change
between retained earnings and other components of equity. Entities applying this relief must disclose that
fact.

These amendments are effective for annual periods beginning on or after 1 January 2017 with early
application permitted. If an entity applies this amendments for an earlier period, it must disclose that fact.
These amendments are not expected to have any impact on the Group and on the Company.

MFRS 15 Revenue from Contracts with Customers

MFRS 15 establishes a new five-step model that will apply to revenue arising from contracts with customers.
MFRS 15 will supersede the current revenue recognition guidance including MFRS 118 Revenue, MFRS 111
Construction Contracts and the related interpretations when it becomes effective.

The core principle of MFRS 15 is that an entity should recognise revenue which depict the transfer of
promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services.

Under MFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e when
control of the goods or services underlying the particular performance obligation is transferred to the
customer.

Either a full or modified retrospective application is required for annual periods beginning on or after 1
January 2018 with early adoption permitted. The Directors anticipate that the application of MFRS 15 will
have a material impact on the amounts reported and disclosures made in the Groups and the Companys
financial statements. The Group is currently assessing the impact of MFRS 15 and plans to adopt the new
standard on the required effective date.
ANNUAL REPORT 2016 51

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES contd

2.2 Standards issued but not yet effective cont'd

MFRS 9 Financial Instruments

In November 2014, MASB issued the final version of MFRS 9 Financial Instruments which reflects all phases
of the financial instruments project and replaces MFRS 139 Financial Instruments: Recognition and
Measurement and all previous versions of MFRS 9. The standard introduces new requirements for
classification and measurement, impairment and hedge accounting. MFRS 9 is effective for annual periods
beginning on or after 1 January 2018, with early application permitted. Retrospective application is required,
but comparative information is not compulsory. The adoption of MFRS 9 will have an effect on the
classification and measurement of the Groups financial assets, but no impact on the classification and
measurement of the Groups financial liabilities.

MFRS 16 Leases

MFRS 16 will replace MFRS 117 Leases, IC Interpretation 4 Determining whether an Arrangement contains a
Lease, IC Interpretation 115 Operating Lease-Incentives and IC Interpretation 127 Evaluating the Substance
of Transactions Involving the Legal Form of a Lease. MFRS 16 sets out the principles for the recognition,
measurement, presentation and disclosure of leases and requires lessees to account for all leases under a
single on-balance sheet model similar to the accounting for finance leases under MFRS 117.

At the commencement date of a lease, a lessee will recognise a liability to make lease payments and an asset
representing the right to use the underlying asset during the lease term. Lessees will be required to recognise
interest expense on the lease liability and the depreciation expense on the right-of-use asset.

Lessor accounting under MFRS 16 is substantially the same as the accounting under MFRS 117. Lessors will
continue to classify all leases using the same classification principle as in MFRS 117 and distinguish between
two types of leases: operating and finance leases.

MFRS 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted
but not before an entity applies MFRS 15. A lessee can choose to apply the standard using either a full
retrospective or a modified retrospective approach. The Group plans to assess the potential effect of MFRS
16 on its financial statements in year 2017.

Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its Associate
or Joint Venture

The amendments clarify that:

gains and losses resulting from transactions involving assets that do not constitute a business, between
investor and its associate or joint venture are recognised in the entitys financial statements only to the
extent of unrelated investors interests in the associate or joint venture; and

gains and losses resulting from transactions involving the sale or contribution of assets to an associate of a
joint venture that constitute a business are recognised in full.

The amendments are to be applied prospectively to the sale or contribution of assets occurring in annual
periods beginning on or after a date to be determined by Malaysian Accounting Standards Board. Earlier
application is permitted. These amendments are not expected to have any impact on the Group.
52 ADVENTA BERHAD (618533-M)

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES contd

2.3 Basis of consolidation

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

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

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

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

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

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

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

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


Derecognises the carrying amount of any non-controlling interests;
Derecognises the cumulative translation differences recorded in equity;
Recognises the fair value of the consideration received;
Recognises the fair value of any investment retained;
Recognises any surplus or deficit in profit or loss; and
Reclassifies the parents share of components previously recognised in OCI to profit or loss or retained
earnings, as appropriate, as would be required if the Group had directly disposed of the related assets
or liabilities.
ANNUAL REPORT 2016 53

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES contd

2.4 Business combinations and goodwill

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

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

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

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

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and
the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable
assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate
consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired
and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised
at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired
over the aggregate consideration transferred, then the gain is recognised in profit or loss.

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

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

2.5 Current versus non-current classication

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

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


Held primarily for the purpose of trading;
Expected to be realised within twelve months after the reporting period; or
Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least
twelve months after the reporting period.
54 ADVENTA BERHAD (618533-M)

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES contd

2.5 Current versus non-current classication contd

All other assets are classified as non-current. A liability is current when:

It is expected to be settled in normal operating cycle;


It is held primarily for the purpose of trading;
It is due to be settled within twelve months after the reporting period; or
There is no unconditional right to defer the settlement of the liability for at least 12 months after the
reporting period.

All other liabilities are classified as non-current.

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

2.6 Fair value measurement

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

In the principal market for the asset or liability; or


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

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

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

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

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

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

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable

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

Policies and procedures are determined by senior management for both recurring fair value measurement
and for non-recurring measurement.
ANNUAL REPORT 2016 55

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES contd

2.6 Fair value measurement contd

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

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

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

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

2.7 Foreign currencies

(a) Functional and presentation currency

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

(b) Transactions and balances

Transactions in foreign currencies are initially recorded by the Group's entities at the functional
currency spot rates at the date the transaction first qualifies for recognition.

Monetary assets and liabilities denominated in foreign currencies are translated at the functional
currency spot rates of exchange at the reporting date.

Differences arising on settlement or translation of monetary items are recognised in profit or loss with
the exception of monetary items that are designated as part of the hedge of the Group's net
investment of a foreign operation. These are recognised in other comprehensive income until the net
investment is disposed of, at which time, the cumulative amount is reclassified to profit or loss. Tax
charges and credits attributable to exchange differences on those monetary items are also recorded in
other comprehensive income.

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

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the
carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of
the foreign operation and translated at the spot rate of exchange at the reporting date.
56 ADVENTA BERHAD (618533-M)

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES contd

2.8 Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and
the Company and the revenue can be reliably measured, regardless of when the payment is being made.
Revenue is measured at the fair value of the consideration received or receivable, taking into account
contractually defined terms of payment and excluding taxes or duty.

The Company and its subsidiaries assess their revenue arrangements against specific criteria in order to
determine if the Company and its subsidiaries are acting as principal or agent. The Group and its subsidiaries
have concluded that they are acting as a principal in all of its revenue arrangements.

The following specific recognition criteria must also be met before revenue is recognised:

(a) Sale of goods

Revenue from sale of goods is recognised upon the transfer of significant risks and rewards of
ownership to the customer. Revenue is not recognised to the extent where there are significant
uncertainties regarding recovery of the consideration due, associated costs or the possible return of
goods.

(b) Management fees

Management fees are recognised when services are rendered.

(c) Interest income

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

(d) Warehouse handling services

Revenue from service rendered is recognised when rendering of services has been completed.

(e) Lease of dialysis machines

Lease income is recognised on an acrrual basis.

2.9 Employee benets

(a) Short term benets

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

(b) Dened contribution plans

The Group makes contributions to the Employees Provident Fund in Malaysia, a defined contribution
pension scheme. Contributions to defined contribution pension schemes are recognised as an expense
in the period in which the related service is performed.
ANNUAL REPORT 2016 57

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES contd

2.10 Income taxes

(a) Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid
to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted by the reporting date.

Current taxes are recognised in profit or loss except to the extent that the tax relates to items
recognised outside profit or loss, either in other comprehensive income or directly in equity.

(b) Deferred tax

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

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

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

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

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

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

(c) Goods and Services Tax ("GST")

The net amount of GST, being the difference between output and input of GST, payable to or
receivable from the respective authorities at the reporting date, is included in trade and other payables
or trade and other receivables in the statements of financial position.

2.11 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that
necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part
of the cost of the respective assets. All other borrowing costs are expensed in the period they occur.
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of
funds.
58 ADVENTA BERHAD (618533-M)

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES contd

2.12 Leases

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

(a) As lessee

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

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable
certainty that ownership will be obtained by the end of the lease term, the asset is depreciated over
the shorter of the estimated useful life of the asset and the lease term.

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

(b) As lessor

Leases in which the Group or the Company do not transfer substantially all the risks and benefits of
ownership of an asset are classified as operating leases. Initial direct costs incurred in negotiating an
operating lease are added to the carrying amount of the leased asset and recognised over the lease
term on the same basis as rental income. Contingent rents are recognised as revenue in the period in
which they are earned.

2.13 Property, plant and equipment

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

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

Long term leasehold land is depreciated over the period of the respective leases that range from 41 to 89
years. Depreciation of other property, plant and equipment is computed on a straight-line basis over the
estimated useful lives of the assets as follows:

Buildings: 40 - 50 years
Plant and equipment: 5 to 30 years
Motor vehicles: 10 years
Office equipment, furniture and fittings and renovation: 5 to 10 years
ANNUAL REPORT 2016 59

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES contd

2.13 Property, plant and equipment

The carrying values or property, plant and equipment are reviewed for impairment when event or changes
in circumstances indicate that the carrying value may not be recoverable.

The residual values, useful life and depreciation method are reviewed at each financial year end and
adjusted prospectively if appropriate.

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

2.14 Intangible assets

Intangible assets acquired separately are measured initially at cost. Following initial acquisition, intangible
assets are measured at cost less any accumulated amortisation and accumulated impairment losses.

Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for
impairment whenever there is an indication that the intangible asset may be impaired. The amortisation
period and the amortisation method are reviewed at least at each financial year-end. Changes in the
expected useful life or the expected pattern of consumption of future economic benefits embodied in the
asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as
changes in accounting estimates. The amortisation expense on intangible assets with finite lives is
recognised in profit or loss.

Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually,
or more frequently if the events and circumstances indicate that the carrying value may be impaired either
individually or at the cash-generating unit level. Such intangible assets are not amortised. The useful life of
an intangible asset with an indefinite useful life is reviewed annually to determine whether the useful life
assessment continues to be supportable. If not, the change in useful life from indefinite to finite is made on
a prospective basis.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the
net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the
asset is derecognised.

Development costs

Research costs are expensed as incurred. Development costs arising from development expenditure on an
individual project are recognised when the Group can demonstrate the technical feasibility of completing
the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use
or sell the asset, how the asset will generate future economic benefits, the availability of resources to
complete and the ability to measure reliably the expenditures during development. Development costs have
a finite useful life of 20 years and are amortised over the period of expected sales from the related project
on a straight line basis.

2.15 Investment in subsidiaries

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

In the Companys separate financial statements, investment in subsidiaries is accounted for at cost less
impairment losses.
60 ADVENTA BERHAD (618533-M)

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES contd

2.16 Inventories

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

Costs incurred in bringing inventories to their present location and condition are accounted for as purchase
costs on a weighted average basis.

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.

2.17 Cash and short-term deposits

Cash and short-term deposits in the statements of financial position comprise cash at banks and on hand and
short-term deposits with a maturity of three months or less. For the purposes of the statements of cash
flows, cash and cash equivalents consist of cash and short-term deposits, net of any outstanding bank
overdrafts.

2.18 Impairment of non-nancial assets

The Group and the Company assess at each reporting date whether there is an indication that an asset may
be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required,
the Group and the Company make an estimate of the assets recoverable amount.

An assets recoverable amount is the higher of an assets fair value less costs to sell and its value in use. For
the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units (CGU)).

In assessing value in use, the estimated future cash flows expected to be generated by the asset 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. Where the carrying amount of an asset exceeds
its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised
in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill
allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the
unit or groups of units on a pro-rata basis.

Impairment losses are recognised in profit or loss.

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

For assets other than goodwill, an assessment is made at each reporting date to determine whether
there is an indication that previously recognised impairment losses no longer exist or have decreased. If
such indication exists, the recoverable amount of the asset or CGU is estimated. A previously recognised
impairment loss is reversed only if there has been a change in the assumptions used to determine the
assets recoverable amount since the last impairment loss was recognised. The reversal is limited so that
the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount
that would have been determined, net of depreciation, had no impairment loss been recognised for the
asset in prior years. Such reversal is recognised in prot or loss.
ANNUAL REPORT 2016 61

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES contd

2.19 Financial assets

Financial assets are recognised in the statements of financial position when, and only when, the Group and
the Company become a party to the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial
assets not at fair value through profit or loss, directly attributable transaction costs.

The Group and the Company determine the classification of their financial assets at initial recognition, and
the categories include financial assets at fair value through profit or loss, loans and receivables,
held-to-maturity investments and available-for-sale financial assets.

The Group and the Company do not have any held-to-maturity and available-for-sale financial assets.

(a) Financial assets at fair value through prot or loss

Financial assets are classified as financial assets at fair value through profit or loss if they are held for
trading or are designated as such upon initial recognition. Financial assets held for trading are
derivatives (including separated embedded derivatives) or financial assets acquired principally for the
purpose of selling in the near term.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair
value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains
or net losses on financial assets at fair value through profit or loss do not include exchange differences,
interest and dividend income. Exchange differences, interest and dividend income on financial assets
at fair value through profit or loss are recognised separately in profit or loss as part of other losses or
other income.

Financial assets at fair value through profit or loss could be presented as current or non-current.
Financial assets that is held primarily for trading purposes are presented as current whereas financial
assets that is not held primarily for trading purposes are presented as current or non-current based on
the settlement date.

(b) Loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are
classified as loans and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the
effective interest method. Gains and losses are recognised in profit or loss when the loans and
receivables are derecognised or impaired, and through the amortisation process.

Loans and receivables are classified as current assets, except for those having maturity dates later than
12 months after the reporting date which are classified as non-current.

A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired.
On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum
of the consideration received and any cumulative gain or loss that had been recognised in other
comprehensive income is recognised in profit or loss.

Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within
the period generally established by regulation or convention in the marketplace concerned. All regular way
purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that
the Group and the Company commit to purchase or sell the asset.
62 ADVENTA BERHAD (618533-M)

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES contd

2.19 Financial assets contd

(c) Impairment of nancial assets

At each reporting date, an assessment is made as to whether there is objective evidence that a financial
asset or a group of financial assets is impaired. An impairment exists if one or more events that has
occurred since the initial recognition of the asset (an incurred loss event), has an impact on the
estimated future cash flows of the financial asset or the group of financial assets that can be reliably
estimated. Evidence of impairment may include indications that the debtors or a group of debtors is
experiencing significant financial difficulty, default or delinquency in interest or principal payments, the
probability that they will enter bankruptcy or other financial reorganisation and observable data
indicating that there is a measurable decrease in the estimated future cash flows, such as changes in
arrears or economic conditions that correlate with defaults.

(i) Financial assets carried at amortised cost

For financial assets carried at amortised cost, an assessment is made as to whether impairment
exists individually (for financial assets that are individually significant) or collectively (for financial
assets that are not individually significant). If it is determined that no objective evidence of
impairment exists for an individually assessed financial asset, whether significant or not, the asset
is included in a group of financial assets with similar credit risk characteristics and collectively
assessed for impairment. Assets that are individually assessed for impairment and for which an
impairment loss is, or continues to be, recognised are not included in a collective assessment of
impairment.

The amount of any impairment loss identified is measured as the difference between the assets
carrying amount and the present value of estimated future cash flows (excluding future expected
credit losses that have not yet been incurred). The present value of the estimated future cash flows
is discounted at the financial assets original effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the loss
is recognised in statement of profit or loss. Interest income (recorded as finance income in the
statement of profit or loss) continues to be accrued on the reduced carrying amount and is accrued
using the rate of interest used to discount the future cash flows for the purpose of measuring the
impairment loss. Loans together with the associated allowance are written off when there is no
realistic prospect of future recovery and all collateral has been realised or has been transferred to
the Group and the Company. If, in a subsequent year, the amount of the estimated impairment
loss increases or decreases because of an event occurring after the impairment was recognised,
the previously recognised impairment loss is increased or reduced by adjusting the allowance
account. If a write-off is later recovered, the recovery is credited to finance costs in the statement
of profit or loss.

2.20 Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into
and the definitions of a financial liability.

Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial position
when, and only when, the Group and the Company become a party to the contractual provisions of the
financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit
or loss or other financial liabilities.

The Group and the Company have classified its financial liabilities include trade and other payables, loans
and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
ANNUAL REPORT 2016 63

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES contd

2.20 Financial liabilities contd

Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and
subsequently measured at amortised cost using the effective interest method.

Borrowing is recognised initially at fair value, net of transaction costs incurred, and subsequently measured
at amortised cost using the effective interest method. Borrowing is classified as current liabilities unless the
Group and the Company have an unconditional right to defer settlement of the liability for at least 12
months after the reporting date.

For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are
derecognised, and through the amortisation process.

2.21 Provisions

Provisions are recognised when there is a present obligation (legal or constructive) as a result of a past event
and it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation. When it is expected that
some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is
recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to
a provision is presented in the statements of profit or loss net of any reimbursement.

2.22 Share capital and share issuance expenses

An equity instrument is any contract that evidences a residual interest in the assets of the Group and of the
Company after deducting all of its liabilities. Ordinary shares are equity instruments and are recorded at the
proceeds received, net of directly attributable incremental transaction costs.

2.23 Cash dividend and non-cash distribution to equity holders of the parent

The Company recognises a liability to make cash or non-cash distributions to equity holders of the parent
when the distribution is authorised and the distribution is no longer at the discretion of the Company. A
distribution is authorised when it is approved by the shareholders and a corresponding amount is recognised
directly in equity.

Non-cash distributions are measured at the fair value of the assets to be distributed with fair value
re-measurement recognised directly in equity.

Upon distribution of non-cash assets, any difference between the carrying amount of the liability and the
carrying amount of the assets distributed is recognised in the statement of profit or loss.

2.24 Contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose
existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly
within the control of the Group and of the Company.

Contingent liabilities and assets are not recognised in the statements of financial position of the Group and
of the Company.
64 ADVENTA BERHAD (618533-M)

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES contd

2.25 Segment reporting

For management purposes, the Group is organised into operating segments based on their products and
services which are independently managed by the respective segment managers responsible for the
performance of the respective segments under their charge. The segment managers report directly to the
management of the Company who regularly review the segment results in order to allocate resources to the
segments and to assess the segment performance. Additional disclosures on each of these segments are
shown in Note 31, including the factors used to identify the reportable segments and the measurement basis
of segment information.

3. SIGNIFICANT ACCOUNTING JUDGEMENT AND ESTIMATES

The preparation of financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities
at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that
could require a material adjustment to the carrying amount of the asset or liability affected in the future periods.

3.1 Judgements made in applying accounting policies

In the process of applying the Group's accounting policies, management has not made any critical
judgements, apart from those involving estimations, which could have a significant effect on the amounts
recognised in the financial statements.

3.2 Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting
date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are described below. The Group based its assumptions and estimates
on parameters available when the financial statements were prepared. Existing circumstances and
assumptions about future developments, however, may change due to market changes or circumstances
arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

(a) Useful lives of plant and equipment

The cost of plant and equipment of the Group is depreciated on a straight-line basis over the assets
estimated economic useful lives. Management estimates the useful lives of these plant and equipment to
be between 5 to 30 years. Changes in the expected level of usage and technological developments
could impact the economic useful lives and the residual values of these assets, therefore future
depreciation charges could be revised.

(b) Impairment of Goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an
estimation of the value in use of the cash-generating units (CGU) to which goodwill are allocated.
Estimating a value in use amount requires management to make an estimate of the expected future cash
flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of
those cash flows. The carrying amount of goodwill as at 31 October 2016 was RM5,017,193 (2015:
RM5,017,193).
ANNUAL REPORT 2016 65

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

3. SIGNIFICANT ACCOUNTING JUDGEMENT AND ESTIMATES contd

3.2 Estimates and assumptions contd

(c) Impairment of development costs

The Group determines whether development costs are impaired at least on an annual basis. This require
an estimation of the value-in-use of the cash-generating units ("CGU") to which development costs are
allocated. Estimating the value- in-use requires the Group to make an estimate of the expected future
cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present
value of those cash flows.

The carrying amount of development costs was RM26,575,570 (2015: RM23,742,717) for the Group as at
31 October 2016.

The development costs are related to development of home dialysis machines including patient care
management system.

(d) Amortisation of development costs

The cost for development costs is amortised on a straight line basis over its useful life. The management
estimates the useful life of development costs to be 20 years. This is a common life expectancy in the
healthcare industry. Changes in the technology could impact the economic useful life of these assets.
Therefore, the future amortisation charges could be revised.

(e) Deferred tax assets

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

Assumptions about generation of future taxable profits depend on managements estimates of future
cash flows. These depends on estimates of future production and sales volume, operating costs, capital
expenditure, dividends and other capital management transactions. Judgement is also required about
application of income tax legislation. These judgements and assumptions are subject to risks and
uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may
impact the amount of deferred tax assets recognised in the statements of financial position and the
amount of unrecognised tax losses and unrecognised temporary differences.

The carrying amounts of the Group's deferred tax assets at the reporting date are disclosed in Note 16.
66 ADVENTA BERHAD (618533-M)

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

4. REVENUE

Group Company
2016 2015 2016 2015
RM RM RM RM

Sale of goods, net of discounts 39,843,473 41,881,364 - -


Warehouse handling services 87,500 - - -

39,930,973 41,881,364 - -

5. COST OF SALES

Cost of sales represents cost of inventories sold.

6. OTHER INCOME

Group Company
2016 2015 2016 2015
RM RM RM RM

Interest income 605,851 336,231 1,500,025 929,814


Realised gain on foreign exchange 68,465 87,244 -
Sundry income 17,969 38,883 - -
Unrealised gain on foreign exchange 1,385 202,369 - -
693,670 664,727 1,500,025 929,814

7. FINANCE COSTS

Group Company
2016 2015 2016 2015
RM RM RM RM

Interest expense on:


- Bank overdraft 59,977 17,999 - -
- Bank loans 482,507 639,490 - -
- Obligations under nance leases 12,666 15,679 - -
- Revolving credits 1,032,742 304,607 - -

1,587,892 977,775 - -
ANNUAL REPORT 2016 67

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

8. PROFIT/(LOSS) BEFORE TAX

The following amounts have been included in arriving at prot/(loss) before tax:

Group Company
2016 2015 2016 2015
RM RM RM RM

Auditors remuneration
- Statutory audit 125,000 92,000 60,000 50,000
Depreciation of property, plant and equipment
(Note 13) 1,892,458 1,641,982 1,860 1,548
Loss on disposal of property, plant and
- 297 - -
equipment (Note 13)
Property, plant and equipment written off
- 142 - -
(Note 13)
Amortisation of development costs
864,112 - - -
(Note 15)
Inventories written down 24,645 - - -
Impairment loss on trade receivables
(Note 19) 1,147 168,409 - -
Non-executive directors remuneration
excluding benefits-in-kind (Note 10) 192,456 192,456 192,456 192,456
Employee benefits expenses
(Note 9) 4,988,296 3,737,782 1,225,009 717,396
Loss/(gain) on foreign exchange, net 78,206 (250,602) - -
- Realised (66,886) (48,494) - -
- Unrealised 145,092 (202,107) - -
Rental expenses 606,500 564,600 - -

9. EMPLOYEE BENEFITS EXPENSES

Group Company
2016 2015 2016 2015
RM RM RM RM

Salaries and wages 4,318,072 3,343,973 1,079,895 650,421


Contributions to dened contribution plan 520,661 361,051 140,792 65,016
Social security contributions 38,481 26,640 2,328 878
Other benets 111,082 6,118 1,994 1,081

4,988,296 3,737,782 1,225,009 717,396

Included in employee benets expense of the Group and of the Company are executive directors remuneration
amounting to RM1,057,398 (2015: RM642,329) and RM788,598 (2015: RM368,472) respectively as further
disclosed in Note 10.
68 ADVENTA BERHAD (618533-M)

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

10. DIRECTORS REMUNERATION

Group Company
2016 2015 2016 2015
RM RM RM RM

Executive directors remuneration (Note 9):


Fees 57,024 57,024 57,024 57,024
Other emoluments 1,000,374 585,305 731,574 311,448

1,057,398 642,329 788,598 368,472


Non-executive directors remuneration (Note 8):
Fees 192,456 192,456 192,456 192,456

Total directors remuneration 1,249,854 834,785 981,054 560,928

The details of remuneration of directors of the Company are analysed as follows:

Group Company
2016 2015 2016 2015
RM RM RM RM

Executive:
Salaries and other emoluments 911,024 563,641 671,024 318,224
Contributions to dened contribution plan 145,460 78,068 116,660 49,628
Social security contributions 914 620 914 620

1,057,398 642,329 788,598 368,472


Non-executive:
Fees 192,456 192,456 192,456 192,456

Total 1,249,854 834,785 981,054 560,928

The number of directors of the Company whose total remuneration during the nancial year fell within the
following bands is analysed below:

Number of directors
2016 2015

Executive directors:
RM100,001 - RM150,000 - 1
RM200,001 - RM250,000 1 1
RM500,001 - RM600,000 1 -

Non-executive directors:
RM50,001 - RM100,000 3 3
ANNUAL REPORT 2016 69

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd
11. INCOME TAX EXPENSE

Group Company
2016 2015 2016 2015
RM RM RM RM

Statement of comprehensive income:

Current year tax 328,540 196,045 50,625 26,814


Under provision in prior years 4,183 160,683 1,108 182,550

332,723 356,728 51,733 209,364

Deferred income tax (Note 16):

Relating to origination and reversal of temporary


differences 1,398,142 1,329,837 287 (179,721)
Relate to changes in tax rate - 65,691 - -
(Over)/under provision in prior years (17,244) 15,625 - -

1,380,898 1,411,153 287 (179,721)


Income tax expense recognised in prot or loss 1,713,621 1,767,881 52,020 29,643
70 ADVENTA BERHAD (618533-M)

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

11. INCOME TAX EXPENSE contd

Reconciliation between tax expense and accounting prot

The reconciliation between tax expense and the product of accounting prot multiplied by the applicable
corporate tax rate for the years ended 31 October 2016 and 2015 are as follows:

2016 2015
RM RM

Group

Prot before tax 2,397,771 4,857,878

Income tax at Malaysian statutory tax rate of 24% (2015: 25%) 575,465 1,214,470
Effect of income not subject to tax - (4)
Effect on opening deferred tax of reduction in Malaysian income tax rate - 126,145
Deferred tax recognised at different tax rates - (60,454)
Effect of expenses not deductible for tax purposes 1,243,472 480,229
Deferred tax assets recognised on unabsorbed capital allowances and unused
tax losses (92,255) (268,359)
Deferred tax assets not recognised on unutilised business losses - 99,546
(Over)/under provision of deferred tax in prior years (17,244) 15,625
Under provision of income tax in prior years 4,183 160,683

Income tax expense recognised in prot or loss 1,713,621 1,767,881

Company

Profit/(loss) before tax 79,441 (87,648)

Income tax at Malaysian statutory tax rate of 24% (2015: 25%) 19,066 (21,912)
Effect of expenses not deductible for tax purposes 123,814 194,905
Deferred tax assets recognised on unabsorbed capital allowances and unused
tax losses (91,968) (325,900)
Under provision of income tax in prior years 1,108 182,550

Income tax expense recognised in prot or loss 52,020 29,643

Domestic current income tax is calculated at the statutory tax rate of 24% (2015: 25%) of the estimated
assessable prot for the nancial year.
ANNUAL REPORT 2016 71

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

12. EARNINGS PER SHARE

(a) Basic

Basic earnings per share amounts are calculated by dividing prot for the year, net of tax, attributable to
owners of the parent by the weighted average number of ordinary shares outstanding during the nancial
year.

The following tables reect the prot and share data used in the computation of basic earnings per share
for the years ended 31 October:

Group
2016 2015
RM RM

Prot net of tax attributable to owner of the parent used in the


computation of basic earnings per share 684,150 3,089,997

Number of Number of
shares shares

Weighted average number of ordinary shares for basic earnings per share
computation 152,785,770 152,785,770

sen sen
per share per share

Basic earnings per share: 0.45 2.02

(b) Diluted

No diluted earnings per share were presented as there were no potential dilutive ordinary shares
oustanding as at 31 October 2016.
72 ADVENTA BERHAD (618533-M)

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

13. PROPERTY, PLANT AND EQUIPMENT

Long term
leasehold Plant and Other
land Buildings equipment assets* Total
RM RM RM RM RM

Group

Cost
At 1 November 2014 10,996,760 16,381,827 21,833,471 1,781,710 50,993,768
Additions - 6,934,748 1,096,857 435,300 8,466,905
Disposal - - - (204,399) (204,399)
Written off - - - (160) (160)

At 31 October 2015 and


1 November 2015 10,996,760 23,316,575 22,930,328 2,012,451 59,256,114
Additions - 17,798 4,136,975 156,974 4,311,747

At 31 October 2016 10,996,760 23,334,373 27,067,303 2,169,425 63,567,861

Accumulated depreciation
At 1 November 2014 241,517 1,965,821 3,874,263 414,705 6,496,306
Charge for the year (Note 8) 41,256 558,478 755,649 286,599 1,641,982
Disposal - - - (57,902) (57,902)
Written off - - - (18) (18)

At 31 October 2015 and


282,773 2,524,299 4,629,912 643,384 8,080,368
1 November 2015
Charge for the year (Note 8) 41,256 688,578 819,737 342,887 1,892,458

At 31 October 2016 324,029 3,212,877 5,449,649 986,271 9,972,826

Net carrying amount


At 31 October 2015 10,713,987 20,792,276 18,300,416 1,369,067 51,175,746

At 31 October 2016 10,672,731 20,121,496 21,617,654 1,183,154 53,595,035

* Other assets comprise of motor vehicles, ofce equipment, furniture and ttings and renovation.
ANNUAL REPORT 2016 73

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

13. PROPERTY, PLANT AND EQUIPMENT contd

Ofce
equipment,
furniture
and ttings
RM

Company

Cost
At 1 November 2014 3,893
Additions 3,055

At 31 October 2015 and 1 November 2015 6,948


Additions 1,425

At 31 October 2016 8,373

Accumulated depreciation
At 1 November 2014 1,178
Charge for the year (Note 8) 1,548

At 31 October 2015 and 1 November 2015 2,726


Charge for the year (Note 8) 1,860

At 31 October 2016 4,586

Net carrying amount

At 31 October 2015 4,222

At 31 October 2016 3,787

(a) During the financial year, the Group and the Company acquired property, plant and equipment at
aggregate costs of RM4,311,747 (2015: RM8,466,905) and RM1,425 (2015: RM3,055) respectively of
which RM Nil (2015: RM197,500) respectively were acquired by means of hire purchase arrangements.
The carrying amounts of property, plant and equipment held under hire purchase arrangements are as
follows:

Group
2016 2015
RM RM

Motor vehicles 283,404 375,112


74 ADVENTA BERHAD (618533-M)

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

13. PROPERTY, PLANT AND EQUIPMENT contd

(b) The net carrying amounts of property, plant and equipment pledged as securities for loans and
borrowings (Note 23) are as follows:

Group
2016 2015
RM RM

Long term leasehold land 10,672,731 10,713,987


Buildings 20,121,496 20,792,276
Plant and equipment 14,920,603 15,587,131

45,714,830 47,093,394

14. INVESTMENT IN SUBSIDIARIES

Company
2016 2015
RM RM

Unquoted shares, at cost 23,056,726 23,056,726

Details of subsidiaries

Country of Proportion of
Names of subsidiaries incorporation Principal activities ownership interest
2016 2015

Sun Healthcare (M) Malaysia Distribution of medical and 100% 100%


Sdn. Bhd. (SH) healthcare equipment and
appliances

Electron Beam Sdn. Bhd. Malaysia Providing industrial and 100% 100%
(EB) commercial sterilisation,
warehousing and handling
services

Luxencia (M) Sdn. Bhd. Malaysia Provision of home dialysis 100% 100%
(LCX) products for the treatment
of end stage renal disease
and its related services

PTM Progress Trading & Malaysia Provision of storage and 100% 100%
Marketing Sdn. Bhd. warehousing
(PTM)
ANNUAL REPORT 2016 75

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

15. INTANGIBLE ASSETS

Group
Development
Goodwill costs Total
RM RM RM

Cost

At 1 November 2014 5,017,193 13,161,169 18,178,362


Addition in internal development - 10,581,548 10,581,548

At 31 October 2015 and 1 November 2015 5,017,193 23,742,717 28,759,910


Addition in internal development - 3,696,965 3,696,965

At 31 October 2016 5,017,193 27,439,682 32,456,875

Accumulated amortisation
At 1 November 2014/2015 - - -

Charge for the year (Note 8) - 864,112 864,112


At 31 October 2016 - 864,112 864,112

Net carrying amount 5,017,193 26,575,570 31,592,763

Development costs
Development costs relate to development of home dialysis machines are amortised over a period of 20 years.
76 ADVENTA BERHAD (618533-M)

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

15. INTANGIBLE ASSETS contd

Impairment testing of goodwill

Goodwill arising from business combinations has been allocated to three individual cash-generating units (CGU)
for impairment testing as follows:

- Healthcare products
- Home dialysis products and services
- Sterilisation provider

The carrying amounts of goodwill allocated to each cash-generating unit ("CGU") are as follows:

Group
2016 2015
RM RM
Restated
Healthcare products 54,870 54,870
Home dialysis products and services 193,169 193,169
Sterilisation provider 4,769,154 4,769,154
5,017,193 5,017,193

The recoverable amounts of the CGUs have been determined based on value in use calculations using cash flow
projections from financial budgets approved by management covering a five-year period for SH and EB, and
twenty-year period for LCX. The pre-tax discount rates (per annum) applied to the cash flow projections are as
follows:
Pre-tax
discount rates
2016 2015

Healthcare products 6.60% 6.85%


Home dialysis products and services 6.60% 6.85%
Sterilisation provider 6.60% 6.85%

The calculations of value in use for the CGUs are most sensitive to the following assumptions:

Pre-tax discount rates - Discount rates reflect the current market assessment of the risks specific to each CGU. This
is the benchmark used by management to assess operating performance and to evaluate future investment
proposals.
ADVENTA BERHAD (618533-M)
ANNUAL REPORT 2016 77

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

16. DEFERRED TAX

Group Company
2016 2015 2016 2015
RM RM RM RM

At beginning of year (1,805,060) (3,216,213) (226,721) (47,000)


Recognised in prot or loss (Note 11) 1,380,898 1,411,153 287 (179,721)

At end of year (424,162) (1,805,060) (226,434) (226,721)

Presented after appropriate offsetting as follows:


Deferred tax assets (5,129,306) (6,701,334) (227,343) (227,734)
Deferred tax liabilities 4,705,144 4,896,274 909 1,013

(424,162) (1,805,060) (226,434) (226,721)

The components and movements of deferred tax liabilities and assets during the nancial year prior to offsetting
are as follows:

Deferred tax liabilities of the Group:

Property,
plant and
equipment
RM

At 1 November 2014 4,792,261


Recognised in prot or loss 104,013

At 31 October 2015 4,896,274


Recognised in prot or loss (191,130)

At 31 October 2016 4,705,144

Deferred tax assets of the Group:

Unutilised
tax
losses and
Unutilised unabsorbed
reinvestment capital
allowances allowances Others Total
RM RM RM RM

At 1 November 2014 (5,466,718) (2,532,473) (9,283) (8,008,474)


Recognised in prot or loss 218,669 1,036,828 51,643 1,307,140

At 31 October 2015 (5,248,049) (1,495,645) 42,360 (6,701,334)


Recognised in prot or loss 537,109 1,077,279 (42,360) 1,572,028

At 31 October 2016 (4,710,940) (418,366) - (5,129,306)


ANNUAL REPORT 2015
78 ADVENTA BERHAD (618533-M)

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd
16. DEFERRED TAX contd

Deferred tax liabilities/(assets) of the Company:

Unutilised
tax
losses and
Property, unabsorbed
plant and capital
equipment allowances Total
RM RM RM

At 1 November 2014 679 (47,679) (47,000)


Recognised in prot or loss 334 (180,055) (179,721)

At 31 October 2015 1,013 (227,734) (226,721)


Recognised in prot or loss (104) 391 287

At 31 October 2016 909 (227,343) (226,434)

17. AMOUNT DUE FROM SUBSIDIARIES

The amounts due from subsidiaries are unsecured, interest bearing range from 3.25% to 4.00% (2015: 3.25% to
4.00%) per annum and are not expected to be repayable within twelve months from the reporting date.

18. INVENTORIES

Group
2016 2015
RM RM

Cost
Trading goods 14,119,844 10,385,836
Spare parts 1,198,285 1,196,198

15,318,129 11,582,034
ADVENTA BERHAD (618533-M)
ANNUAL REPORT 2016 79

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd
19. TRADE AND OTHER RECEIVABLES

Group Company
2016 2015 2016 2015
RM RM RM RM

Current
Trade receivables
Third parties 10,350,566 12,703,743 - -

Less : Allowance for impairment (third parties) (328,809) (327,662) - -

Trade receivables, net 10,021,757 12,376,081 - -

Other receivables
Other receivables 2,172,586 5,391,732 - -
Deposits 184,544 187,224 - -

2,357,130 5,578,956 - -

12,378,887 17,955,037 - -

Total trade and other receivables 12,378,887 17,955,037 - -


Add: Cash and bank balances (Note 21) 21,001,608 22,122,205 18,192,894 20,340,701

Total loans and receivables 33,380,495 40,077,242 18,192,894 20,340,701

(a) Trade receivables

The Groups normal trade credit term ranges from 30 to 120 days. Other credit terms are assessed and
approved on a case-by-case basis. They are recognised at their original invoice amounts which represent
their fair values on initial recognition.

Ageing analysis of trade receivables

Group
2016 2015
RM RM

Neither past due nor impaired 5,866,245 5,785,756

1 to 30 days past due not impaired 451,863 2,017,239


31 to 60 days past due not impaired 598,335 1,818,561
61 to 90 days past due not impaired 643,286 1,011,272
More than 91 days past due not impaired 2,462,028 1,743,253

4,155,512 6,590,325
Impaired 328,809 327,662

10,350,566 12,703,743
80 ADVENTA BERHAD (618533-M)

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd
19. TRADE AND OTHER RECEIVABLES contd

(a) Trade receivables contd

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.

None of the Groups trade receivables that are neither past due nor impaired have been renegotiated
during the nancial year.

Receivables that are past due but not impaired

The Group has trade receivables amounting to RM4,155,512 (2015: RM6,590,325) that are past due at the
reporting date but not impaired. These receivables are unsecured in nature.

Based on past experience and no adverse information to date, the Directors of the Group are of the opinion
that no provision for impairment is necessary in respect of these balances as there has not been a significant
change in the credit quality and the balances are still considered fully recoverable.

Receivables that are impaired

Movement in allowance accounts:

Group
2016 2015
RM RM

At 1 November 327,662 159,253


Charge for the year (Note 8) 1,147 168,409

At 31 October 328,809 327,662

Trade receivables that are individually determined to be impaired at the reporting date relate to debtors
that are in signicant nancial difculties and have defaulted on payments. These receivables are not
secured by any collateral or credit enhancement.

(b) Related party balances

Amounts due from subsidiaries and companies in which certain directors have interest are unsecured, non-
interest bearing and are repayable upon demand.

20. OTHER CURRENT ASSETS

Group Company
2016 2015 2016 2015
RM RM RM RM

Prepaid operating expenses 189,967 89,537 3,733 8,454


Advances to suppliers of trading inventories 635,520 298,068 - -

825,487 387,605 3,733 8,454


ADVENTA BERHAD (618533-M) ANNUAL REPORT 2016 81

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

21. CASH AND CASH EQUVALENTS

Group Company
2016 2015 2016 2015
RM RM RM RM

Cash in hand and at banks 21,001,608 3,122,205 18,192,894 1,340,701


Deposits with licensed banks - 19,000,000 - 19,000,000

Cash and bank balances 21,001,608 22,122,205 18,192,894 20,340,701

Short-term deposits are made with maturity of less than three months depending on the immediate cash
requirements of the Group and earn interest at the respective short-term deposit rates. The weighted average
effective interest rates as at 31 October 2016 for the Group was 2.90% (2015: 2.90%) per annum.

22. TRADE AND OTHER PAYABLES

Group Company
2016 2015 2016 2015
RM RM RM RM

Trade payables
Third parties 1,790,959 1,194,264 - -
Due to companies in which certain directors
have interest 7,987,048 9,378,746 - -

9,778,007 10,573,010 - -

Other payables
Other payables 1,605,662 1,275,865 2,613 25,011
Accruals 1,592,750 2,998,823 232,929 166,383
3,198,412 4,274,688 235,542 191,394

12,976,419 14,847,698 235,542 191,394

Total trade and other payables 12,976,419 14,847,698 235,542 191,394


Add: Loans and borrowings (Note 23) 40,935,086 38,531,583 - -

Total nancial liabilities carried at amortised cost 53,911,505 53,379,281 235,542 191,394

(a) Trade payables

Trade payables are non-interest bearing and the normal trade credit terms granted to the Group range
from 30 to 120 days.
82 ADVENTA BERHAD (618533-M)

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

22. TRADE AND OTHER PAYABLES contd

(b) Other payables

Other payables are non-interest bearing and the normal trade credit terms granted to the Group range
from 30 to 120 days.

(c) Related party balances

Amounts due to subsidiaries and companies in which certain directors have interest are non-interest
bearing and are repayable on demand. The amounts are unsecured and are to be settled in cash.

23. LOANS AND BORROWINGS

Group
2016 2015
Maturity RM RM

Current
Secured:
Obligations under nance leases (Note 27(a)) 2017 73,828 75,882
Bank loans:
- RM loan at BFR +1.75% per annum 2017 800,000 800,000
- RM loan at BFR +1.50% per annum 2017 5,000,000 5,000,000
- Bankers acceptances at 4.61% per annum 2017 423,000 1,572,913
- RM loan at BFR -1.50% per annum 2017 3,106,643 2,995,963

9,403,471 10,444,758
Non-current
Secured:
Obligations under nance leases (Note 27(a)) 2018 - 2020 91,533 165,360
Bank loans:
- RM loan at BFR +1.75% per annum 2018 - 2022 9,000,000 9,800,000
- RM loan at BFR +1.25% per annum 2018 - 2021 10,000,000 3,570,000
- RM loan at BFR -1.50% per annum 2018 - 2023 12,440,082 14,551,465

31,531,615 28,086,825

Total borrowings
Obligations under nance leases (Note 27(a)) 165,361 241,242
Bank loans:
- RM loan at BFR +1.75% per annum 9,800,000 10,600,000
- RM loan at BFR +1.50% per annum 5,000,000 5,000,000
- Bankers acceptances at 4.61% per annum 423,000 1,572,913
- RM loan at BFR +1.25% per annum 10,000,000 3,570,000
- RM loan at BFR -1.50% per annum 15,546,725 17,547,428

40,935,086 38,531,583
ADVENTA BERHAD (618533-M) ANNUAL REPORT 2016 83

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

23. LOANS AND BORROWINGS contd

The remaining maturities of the loans and borrowings are as follows:

Group
2016 2015
RM RM

On demand or not later than 1 year 9,403,471 10,444,758


Later than 1 year and not later than 2 years 5,400,677 6,100,442
Later than 2 years and not later than 5 years 22,740,064 15,325,637
Later than 5 years 3,390,874 6,660,746

40,935,086 38,531,583

The interest rates (per annum) at the reporting date for borrowings, excluding obligations under nance lease,
were as follows:

Group
2016 2015
% %

RM loan at BFR +1.75% per annum 6.55 5.57


RM loan at BFR +1.50% per annum 6.10 5.40
RM loan at BFR +1.25% per annum 5.85 5.24
RM loan at BFR -1.50% per annum 3.30 5.35

* BFR: Based Financing Rates

The banking facilities and term loans are secured by the following:

(a) legal charge over certain assets of the Group as disclosed in Note 13; and

(b) corporate guarantees by the Company.


84 ADVENTA BERHAD (618533-M)

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

24. SHARE CAPITAL AND PREMIUM

Number of
ordinary Amount
shares of
RM0.35 each Share
Share capital capital
(issued and (issued and Share
fully paid) fully paid) premium Total
RM RM RM

At 1 November/31 October 152,785,770 53,475,020 4,829,789 58,304,809

Number of ordinary
shares of RM0.35
each Amount
2016 2015 2016 2015
RM RM

Authorised share capital


At 1 November/31 October 200,000,000 200,000,000 70,000,000 70,000,000

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All
ordinary shares carry one vote per share without restriction and rank equally with regard to the Company
residual assets.

25. RETAINED EARNINGS

The Company may distribute dividends out of its entire retained earnings as at 31 October 2016 under the
single tier system.
ANNUAL REPORT 2016 85

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

26. RELATED PARTY TRANSACTIONS

(a) In addition to the transactions detailed elsewhere in the nancial statements, the Group and the Company
had the following transactions with related parties during the nancial year:

2016 2015
RM RM

Group
Related parties:*
Purchases of goods 14,217,341 14,197,883
Sales of goods 7,186,747 6,872,849

Company
Interest charged to subsidiaries 905,983 594,439

* Related parties are companies in which certain directors have interests.

The directors are of the opinion that all the transactions above have been entered into in the normal
course of business and have been established on terms and conditions that are not materially different
from those obtainable in transactions with unrelated parties.

(b) Compensation of key management personnel

The remuneration of directors and other members of key management during the year was as follow:

Group Company
2016 2015 2016 2015
RM RM RM RM

Short-term employee benets 911,938 564,261 671,938 318,844


Dened contribution plan 145,460 78,068 116,660 49,628

1,057,398 642,329 788,598 368,472

Included in the total remuneration of key management personnel are:

Group Company
2016 2015 2016 2015
RM RM RM RM

Directors remuneration (Note 10) 1,249,854 834,785 981,054 560,928


ANNUAL REPORT 2015
86 ADVENTA BERHAD (618533-M)

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

27. COMMITMENTS

(a) Finance lease commitments

Group
2016 2015
RM RM

Minimum lease payments:


Not later than 1 year 81,696 88,396
Later than 1 year and not later than 2 years 66,716 81,696
Later than 2 years and not later than 5 years 29,225 95,940

Total minimum future payments 177,637 266,032


Future nance charges (12,276) (24,790)

165,361 241,242

Present value of payments:


Not later than 1 year 73,828 75,882
Later than 1 year and not later than 2 years 63,248 73,826
Later than 2 years and not later than 5 years 28,285 91,534

165,361 241,242

Analysed as:
Due within 12 months (Note 23) 73,828 75,882
Due after 12 months (Note 23) 91,533 165,360

165,361 241,242

The nance lease liabilities bore interest at the reporting date of between 3.20% - 3.28% (2015: 3.23% -
3.49%) per annum.

(b) Operating lease commitments - as lessor

One of the subsidiaries, LCX has entered into commercial leases on its machinery. The lease terms are upon
agreement between LCX and its customer and it is cancellable upon agreement within 30 days notice.

No contigent rent recognised as income during the year.


ANNUAL REPORT 2016 87

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

28. FAIR VALUE OF FINANCIAL INSTRUMENTS

Determination of fair value

Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation
of fair value

The following are classes of nancial instruments that are not carried at fair value and whose carrying amounts
are reasonable approximation of fair value:

Note

Trade and other receivables (current) 19


Trade and other payables (current) 22
Loans and borrowings (current) 23
Loans and borrowings (non-current) 23

The carrying amounts of these nancial assets and liabilities are reasonable approximation of fair values, either
due to their short-term nature or that they are oating rate instruments that are re-priced to market interest
rates on or near the reporting date.

The carrying amounts of the current portion of loans and borrowings are reasonable approximations of fair
values due to the insignicant impact of discounting.

The fair values of loans and borrowings are estimated by discounting expected future cash ows at market
incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date.

29. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Financial liabilities, comprise loans and borrowings, trade and other payables, and nancial guarantee contracts.
The main purpose of these nancial liabilities is to nance the Groups and the Companys operations and to
provide guarantees to support its operations. Financial assets include trade and other receivables and cash and
short-term deposits that derive directly from its operations.

The Group is exposed to market risk, interest risk, foreign currency risk, credit risk and liquidity risk. The
Groups senior management oversees the management of these risks and ensures that the Groups nancial risk
activities are governed by appropriate policies and procedures and that nancial risks are identied, measured
and managed in accordance with the Groups policies and risk objectives. All derivative activities for risk
management purposes are carried out by senior management who have the appropriate skills, experience and
supervision. It is the Groups policy that no trading in derivatives for speculative purposes may be undertaken.
The Group does not apply hedge accounting. The Board of Directors reviews and agrees policies for managing
each of these risks, which are summarised below

(a) Market risk

Market risk is the risk that the fair value of future cash ows of a nancial instrument will uctuate because
of changes in market prices. Market risk comprises interest rate risk and foreign exchange currency risk.
Financial instruments affected by market risk include deposits, loans and borrowings.

(b) Interest rate risk

Cash ow interest rate risk is the risk that the future cash ows of a nancial instrument will uctuate
because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a
nancial instrument will uctuate due to changes in market interest rates. As the Group and the Company
have no signicant interest-bearing nancial assets, the Groups and the Companys income and operating
cash ows are substantially independent of changes in market interest rates.
88 ADVENTA BERHAD (618533-M)

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

29. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES contd

(c) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash ows of a nancial instrument will uctuate
because of changes in foreign exchange rates.

The Group is exposed to transactional currency risk primarily through sales and purchases that are
denominated in a currency other than the functional currency of the operations to which they relate. The
currencies giving rise to this risk are primarily United States Dollars (USD), Euro (EUR), Singapore
Dollars (SGD), Pound Sterling (GBP) and Chinese Yuen Renmimbi (RMB). Such transactions are kept
to an acceptable level. Material foreign currency transaction exposures are hedged, mainly with
derivative nancial instruments such as forward foreign exchange contracts.

The net unhedged nancial assets/(liabilities) of the Group that are not denominated in their functional
currencies are as follows:
Group
2016 2015
RM RM

USD 130,705 749,872


EUR 13,970 15,228
SGD 1,104,253 914,799
GBP (15,803) -
RMB (102,677) -
1,130,448 1,679,899

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the Groups prot net of tax to a reasonably possible
change in the USD, EUR, SGD, GBP and RMB exchange rates against the respective functional currencies of
the Group entities, with all other variables held constant.
Group
2016 2015
RM RM
Prot net of tax

USD/RM
- strengthened 5% 6,535 (46,437)
- weakened 5% (6,535) 46,437
EUR/RM
- strengthened 5% 698 (729)
- weakened 5% (698) 729
SGD/RM
- strengthened 5% 55,213 -
- weakened 5% (55,213) -
GBP/RM
- strengthened 5% (790) (47,202)
- weakened 5% 790 47,202
RMB/RM
- strengthened 5% (5,134) -
- weakened 5% 5,134 -
ADVENTA BERHAD (618533-M)
ANNUAL REPORT 2016 89

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

29. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES contd

(d) Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a nancial instrument or
customer contract, leading to a nancial loss. Exposure to credit risk relates to operating activities
(primarily trade receivables) and from nancing activities, including deposits with banks and nancial
institutions, foreign exchange transactions and other nancial instruments.

(i) Trade receivables

Customer credit risk is managed according to established policy, procedures and control relating
to customer credit risk management. Credit quality of a customer is assessed and approved by the
directors who sets out the individual credit limits. Outstanding customer receivables are regularly
monitored and nancial standings of major customers are continuously reviewed.

At the reporting date, approximately 74% (2015: 77%) of the Groups gross trade receivables were
due from 7 (2015: 6) major customers.

An impairment analysis is performed at each reporting date on an individual basis and in addition,
minor receivables are grouped into homogenous groups and assessed for impairment collectively.
The calculation is based on actual incurred historical data. The Group does not hold collateral as
security.

Exposure to credit risk

At the reporting date, the Groups and the Companys maximum exposure to credit risk is
represented by:

- The carrying amount of each class of nancial assets recognised in the statements of nancial
position.

- A nominal amount of RM41,088,000 (2015: RM36,717,000) relating to a bank guarantee


provided by the Company to nancial institutions for credit facilities granted to subsidiaries.

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 19.

Financial assets that are either past due or impaired

Information regarding trade and other receivables that are either past due or impaired is disclosed
in Note 19.

(ii) Cash and short-term deposits

Cash is normally maintained at minimum levels and surplus cash are placed as short-term deposits
with licensed banks and nancial institutions. Such funds are reviewed by the Directors on a
monthly basis and amounts placed as short-term deposits may be revised throughout the year.
This is to minimise the concentration of risks and therefore mitigate nancial loss through potential
counterpartys failure to make payments. Deposits with banks that are neither past due nor impaired
are placed with or entered into with reputable nancial institutions with no history of default.
90 ADVENTA BERHAD (618533-M)

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

29. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES contd

(e) Liquidity risk

Liquidity risk is the risk that the Group or the Company will encounter difculty in meeting nancial
obligations due to shortage of funds. The Groups and the Companys exposure to liquidity risk arises
primarily from mismatches of the maturities of nancial assets and liabilities. The Groups and the
Companys objective is to maintain a balance between continuity of funding and exibility through the use
of stand-by credit facilities.

The Group and the Company manage its debt maturity prole, operating cash ows and the availability
of funding so as to ensure that renancing, repayment and funding needs are met. As part of its overall
liquidity management, the Group and the Company maintain sufcient levels of cash to meet its working
capital requirements. In addition, the Group and the Company strive to maintain available banking facilities
at a reasonable level to its overall debt position.

Analysis of nancial instruments by remaining contractual maturities

The table below summarises the maturity prole of the Groups and the Companys liabilities at the
reporting date based on contractual undiscounted repayment obligations.

2016
On demand
or within One to Over ve
one year ve years years Total
RM RM RM RM

Group
Financial liabilities:
Trade and other payables 12,976,419 - - 12,976,419
Loans and borrowings 9,403,471 31,334,902 196,713 40,935,086

Total undiscounted nancial liabilities 22,379,890 31,334,902 196,713 53,911,505

Company
Financial liabilities:
Trade and other payables 235,542 - - 235,542

Total undiscounted nancial liabilities 235,542 - - 235,542


ANNUAL REPORT 2016 91

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

29. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES contd

(e) Liquidity risk contd

Analysis of nancial instruments by remaining contractual maturities contd

2015
On demand
or within One to Over ve
one year ve years years Total
RM RM RM RM

Group
Financial liabilities:
Trade and other payables 14,847,698 - - 14,847,698
Loans and borrowings 10,457,272 21,245,103 6,660,747 38,363,122

Total undiscounted nancial liabilities 25,304,970 21,245,103 6,660,747 53,210,820

Company
Financial liabilities:
Trade and other payables 191,394 - - 191,394

Total undiscounted nancial liabilities 191,394 - - 191,394

30. CAPITAL MANAGEMENT

The primary objective of the Groups capital management is to ensure that it maintains a strong credit rating and
healthy capital ratios in order to support its business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic
conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to
shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives,
policies or processes during the years ended 31 October 2016 and 31 October 2015.

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The
Group includes within net debt, loans and borrowings, trade and other payables, less cash and bank balances.
Capital represents equity attributable to the owners of the parent.
92 ADVENTA BERHAD (618533-M) ANNUAL REPORT 2015

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

30. CAPITAL MANAGEMENT contd

Group Company
2016 2015 2016 2015
Note RM RM RM RM

Trade and other payables 22 12,976,419 14,847,698 235,542 191,394


Loans and borrowings 23 40,935,086 38,531,583 - -
Less: Cash and bank balances 21 (21,001,608) (22,122,205) (18,192,894) (20,340,701)

Net debt 32,909,897 31,257,076 (17,957,352) (20,149,307)

Equity attributable to the owners of the


parent, representing total capital 81,106,603 80,422,453 68,681,773 68,654,352

Capital and net debt 114,016,500 111,679,529 50,724,421 48,505,045

Gearing ratio 29% 28% - -

31. SEGMENT INFORMATION

For management purposes, the Group is organised into business units based on its products and services, and
has four reportable operating segments as follows:

I. The healthcare products segment is a manufacturer, distributor and trader of healthcare products.

II. The sterilisation provider is provision of industrial and commercial sterilisation services, warehousing and
handling services.

III. The home dialysis products and services is the provision of home dialysis products for the treatment of end
stage renal disease and its related services.

IV. The corporate segment is involved in Group-level corporate services, treasury functions and provision of
management services to subsidiaries.

Except as indicated above, no operating segments have been aggregated to form the above reportable
operating segments.

Management monitors the operating results of its business units separately for the purpose of making decisions
about resource allocation and performance assessment. Segment performance is evaluated based on operating
prot or loss which, in certain respects as explained in the table below, is measured differently from operating
prot or loss in the consolidated nancial statements. Group nancing (including nance costs) and income taxes
are managed on a group basis and are not allocated to operating segments.

Transfer prices between operating segments are on an arms length basis in a manner similar to transactions with
third parties.
93 ADVENTA BERHAD (618533-M)

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

31. SEGMENT INFORMATION contd


Sterilisation Home dialysis products Adjustments and Per consolidated
Healthcare products provider and services Corporate eliminations nancial statements
2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015
RM RM RM RM RM RM RM RM RM RM Note RM RM

Revenue:
External customers 27,324,669 30,477,897 12,615,307 11,403,467 121,213 - - - (130,216) - 39,930,973 41,881,364
Inter-segment - - 877,415 - - - - - (877,415) - A - -
Total revenue 27,324,669 30,477,897 13,492,722 11,403,467 121,213 - - - (1,007,631) - 39,930,973 41,881,364
Results:
Interest income 5,082 856 5,250 - 1,477 - 1,500,025 929,814 (905,983) (594,439) 605,851 336,231
Depreciation 243,009 262,092 1,545,073 1,378,342 102,516 - 1,860 1,548 - - 1,892,458 1,641,982
Segment profit/(loss) 879,094 193,699 5,096,159 4,982,000 (3,277,644) - 79,441 (87,650) (379,279) (230,171) B 2,397,771 4,857,878

Assets:
Additions to
non-current assets 81,788 413,776 271,037 8,050,074 7,676,132 - 1,425 3,055 (21,670) - 8,008,712 8,466,905

Segment assets 29,885,721 54,892,764 54,832,406 58,543,999 32,247,140 - 70,848,498 68,845,747 (52,673,549) (48,480,757) C 135,140,216 133,801,753

Segment liabilities 27,782,084 43,539,269 32,414,382 39,816,605 25,651,907 - 2,166,725 191,398 (33,981,485) (30,167,972) D 54,033,613 53,379,300
ANNUAL REPORT 2016 94

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

31. SEGMENT INFORMATION contd

A The amounts relating to the certain products within healthcare products, energy provider and corporate
segment have been excluded to arrive at amounts shown in the consolidated statement of comprehensive
income as they are presented separately in the statement of comprehensive income within one line item,
profit from discontinued operations, net of tax.

A Inter-segment revenues are eliminated on consolidation.

B The following items are deducted from segment profit to arrive at Profit before tax from continuing
operations presented in the consolidated statement of comprehensive income:

2016 2015
RM RM

Prot from inter-segment sales (379,279) (230,171)

C The following items are deducted from segment assets to arrive at total assets reported in the
consolidated statement of nancial position:

2016 2015
RM RM

Inter-segment assets (52,673,549) (48,480,757)

D The following items are deducted from segment liabilities to arrive at total liabilities reported in the
consolidated statement of nancial position:

2016 2015
RM RM

Inter-segment liabilities (33,981,485) (30,167,972)

Geographical information

Revenue and non-current assets information based on the geographical location of customers and assets
respectively are as follows:

Revenue Non-current assets


2016 2015 2016 2015
RM RM RM RM

Malaysia 39,309,742 40,623,807 85,611,960 81,740,716


Pakistan 621,231 594,325 - -
Sri Lanka - 663,232 - -

39,930,973 41,881,364 85,611,960 81,740,716


95 ADVENTA ADVENTA BERHAD (618533-M)
BERHAD (618533-M)

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

31. SEGMENT INFORMATION contd

Geographical information contd

Non-current assets information presented above consist of the following items as presented in the consolidated
statement of nancial position:

2016 2015
RM RM

Property, plant and equipment 53,595,035 51,175,746


Intangible assets 31,592,763 28,759,910
Deferred tax assets 424,162 1,805,060

85,611,960 81,740,716

32. AUTHORISATION OF FINANCIAL STATEMENTS FOR ISSUE

The nancial statements for the year ended 31 October 2016 were authorised for issue in accordance with a
resolution of the directors on 17 February 2017.
ANNUAL2015
ANNUAL REPORT REPORT 2016 96

Notes to the Financial Statements


For the nancial year ended 31 October 2016
contd

33. SUPPLEMENTARY INFORMATION - BREAKDOWN OF RETAINED PROFITS INTO REALISED AND UNREALISED

The breakdown of the retained prots of the Group and of the Company as at 31 October 2016 into realised
and unrealised prots is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad
dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of
Realised and Unrealised Prots or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities
Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Group Company
2016 2015 2016 2015
RM RM RM RM

Total retained earnings of Adventa Berhad and


its subsidiaries
- Realised 24,228,920 22,923,260 10,150,530 10,122,819
- Unrealised 1,764,936 2,007,169 226,434 226,724

25,993,856 24,930,429 10,376,964 10,349,543


Less: Consolidation adjustments (3,192,062) (2,812,785) - -

Retained earnings as per nancial statements 22,801,794 22,117,644 10,376,964 10,349,543


97 ADVENTA BERHAD (618533-M)

List of Properties
For the year ended 31 October 2016

Age of Net Book Date of


Land Area Building Value as at Revaluation
(square No. of 31.10.2016 Or
Address/Location Description/Use metres) Tenure Years RM000 Acquisition

Electon Beam Sdn. Bhd.


Lot PT 121634 Sterilisation 17,098 99 years 8 16,933 23 July 2012
HSD 119754 plant, warehouse leasehold
Mukim of Klang and ofce expiring on
District of Klang 24.02.2097
Selangor

PTM Progress Trading & Marketing Sdn. Bhd.


Lot PT17 Warehouse 8,090 60 years 7 13,861 22 December
HSM 9655 leasehold 2014
Mukim of Sungai Buluh expiring on
District of Petaling 29.12.2055
Selangor
ANNUAL REPORT 2016 98

Statistics of Shareholdings
As at 31 January 2017

Authorised Share Capital : RM70,000,000/-


Issued and Paid-Up Capital : RM53,475,020 - comprising 152,785,770 Ordinary Shares of RM0.35 each
Class of Shares : Ordinary Shares of RM0.35 each
On a poll : One vote per Ordinary Share held

ANALYSIS OF SHAREHOLDINGS

A. DISTRIBUTION OF SHAREHOLDINGS

Number of Number of
Range of Shareholdings Shareholders % Shares %

1- 99 140 5.88 6,150 0.00


100 - 1,000 474 19.93 380,407 0.25
1,001 - 10,000 1,285 54.02 5,796,448 3.80
10,001 - 100,000 405 17.02 12,998,261 8.51
100,001 to less than 5% of issued shares 70 2.94 37,649,852 24.64
5% and above of issued shares 5 0.21 95,954,652 62.80

Total 2,379 100.00 152,785,770 100.00

B. SUBSTANTIAL SHAREHOLDERS
(as shown in the Register of Substantial Shareholders)

Direct Indirect
No. Name No. of Shares % No. of Shares %

1. Low Chin Guan 58,446,552 38.25 (1)


7,960,960 5.21
2. Wong Koon Mei @ Wong Kwan Mooi - - (2)
66,407,512 43.46
3. Low Lea Kwan 7,960,960 5.21 (3)
58,446,552 38.25
4. Lembaga Tabung Haji 14,335,900 9.38 - -
(1)
Deemed interested by virtue of the family relationship between Mr. Low Chin Guan and Ms. Low Lea Kwan, who is his sister.

(2)
Deemed interested by virtue of the family relationship between Madam Wong Koon Mei @ Wong Kwan Mooi and Mr. Low
Chin Guan, who is her son and Ms. Low Lea Kwan, who is her daughter.

(3)
Deemed interested by virtue of the family relationship between Ms. Low Lea Kwan and Mr. Low Chin Guan, who is her
brother.
99 ADVENTA BERHAD
ADVENTA (618533-M)
BERHAD (618533-M)

Statistics of Shareholdings
As at 31 January 2017
contd

C. DIRECTORS SHAREHOLDINGS
(as shown in the Register of Directors Shareholdings)

Direct Indirect
No. Name No. of Shares % No. of Shares %

1. Low Chin Guan 58,446,552 38.25 (1)


7,960,960 5.21
2. Kwek Siew Leng 1,000,000 0.65 - -
3. Toh Seng Thong 200,000 0.13 - -
4. Edmond Cheah Swee Leng 140,000 0.09 - -
5. Dato Dr. Norraesah binti Haji Mohamad 140,000 0.09 - -
(1)
Deemed interested by virtue of the family relationship between Mr. Low Chin Guan and Ms. Low Lea Kwan, who is his sister.

Mr. Low Chin Guan, by virtue of his total direct and indirect interests of 66,407,512 shares in the Company, and
pursuant to Section 8(4)(c) of the Companies Act, 2016, is deemed interested in the shares in all of the Companys
subsidiary companies to the extent that the Company has interests.

D. THIRTY (30) LARGEST SECURITIES ACCOUNT HOLDERS

No. Shareholders Number of Shares %

1. Low Chin Guan 44,446,552 29.09


2. HSBC Nominees (Asing) Sdn Bhd 15,416,200 10.09
Exempt AN for Clearstream Banking S.A.
3. Lembaga Tabung Haji 14,335,900 9.38
4. AllianceGroup Nominees (Tempatan) Sdn Bhd 14,000,000 9.16
Pledged Securities Account for
Low Chin Guan
5. Low Lea Kwan 7,756,000 5.08
6. Aphesus Limited 7,635,200 5.00
7. Sin Tong Meng 3,309,800 2.17
8. Public Nominees (Tempatan) Sdn Bhd 1,888,000 1.24
Pledged Securities Account for Wong Yoke Fong @ Wong Nyok Fing (JRC)
9. CIMSEC Nominees (Tempatan) Sdn Bhd 1,577,328 1.03
CIMB Bank for Lai Kim Fook (MY0637)
10. Wong Yoke Fong @ Wong Nyok Fing 1,193,500 0.78
11. Kenanga Nominees (Tempatan) Sdn Bhd 1,163,000 0.76
Pledged Securities Account for Mak Tian Meng
12. CIMSEC Nominees (Tempatan) Sdn Bhd 1,156,000 0.76
CIMB Bank for Mak Tian Meng (MY0343)
13. Wee Ye Yee 1,146,000 0.75
14. TA Nominees (Tempatan) Sdn Bhd 1,135,000 0.74
Pledged Securities Account for Lau Kooi See
15. Amanahraya Trustees Berhad 1,000,000 0.65
16. Kwek Siew Leng 1,000,000 0.65
17. Theang Koh Keng 629,400 0.41
18. Liew Chuan Hau 614,264 0.40
19. TASEC Nominees (Tempatan) Sdn Bhd 604,000 0.40
Pledged Securities Account for Sin Tong Meng
ANNUAL REPORT
ANNUAL 20152016
REPORT 100

Statistics of Shareholdings
As at 31 January 2017
contd

D. THIRTY (30) LARGEST SECURITIES ACCOUNT HOLDERS contd

No. Shareholders Number of Shares %

20. Emerson & CO.S.R.L. 553,500 0.36


21. Lee Kok Hin 546,300 0.36
22. Yim Sing Chiew 544,200 0.36
23. Chin Swee Ming 491,000 0.32
24. Lee Siew Chow 485,300 0.32
25. Foo Chooh Leong 460,000 0.30
26. Wee Ye Yee 438,000 0.29
27. Leang Saw Ying @ Leong Moh Yin 430,000 0.28
28. Loo Chee Lain 415,000 0.27
29. Wong Yoke Fong @ Wong Nyok Fing 410,000 0.27
30. M.Baaden bin Asasmulia 400,000 0.26

125,179,444 81.93
101 ADVENTA
ADVENTA
BERHAD
BERHAD
(618533-M)
(618533-M)

Notice of Fourteenth Annual General Meeting

NOTICE IS HEREBY GIVEN that the Fourteenth Annual General Meeting of the Company will be held at 21,
Jalan Tandang 51/205A, Seksyen 51, 46050 Petaling Jaya, Selangor Darul Ehsan on Tuesday, 28 March 2017 at
10:30 a.m. for the following purposes:-

AGENDA

1. To receive the Audited Financial Statements for the nancial year ended 31 October [Please refer to
2016 together with the Reports of the Directors and the Auditors thereon. Explanatory Note (i)]

2. To approve the payment of Directors fees and benefits for the nancial year ended (Resolution 1)
31 October 2016.

3. To re-elect the following Directors who retire pursuant to Article 114 of the Companys
Articles of Association and being eligible, have offered themselves for re-election:-

(a) Mr Edmond Cheah Swee Leng; and (Resolution 2)


(b) Ms Kwek Siew Leng. (Resolution 3)

4. To re-appoint Messrs. Ernst & Young as Auditors of the Company until the conclusion (Resolution 4)
of the next Annual General Meeting and to authorise the Directors to fix their
remuneration.

5. As Special Business

To consider and, if thought t, to pass the following Ordinary and Special Resolutions:-

ORDINARY RESOLUTION 1
- AUTHORITY TO ISSUE SHARES PURSUANT TO SECTION 75 OF THE COMPANIES (Resolution 5)
ACT 2016

THAT subject to Section 75 of the Companies Act, 2016 and approvals of the
relevant governmental/regulatory authorities, the Directors be and are hereby
empowered to issue and allot shares in the Company, at any time to such persons
and upon such terms and conditions and for such purposes as the Directors may, in
their absolute discretion, deem t, provided that the aggregate number of shares
issued pursuant to this resolution does not exceed ten per centum (10%) of the
total number of issued s h a r e s o f t h e Company for the time being and the Directors
be and are also empowered to obtain the approval for the listing of and quotation
for the additional shares so issued on Bursa Malaysia Securities Berhad; AND THAT
such authority shall commence immediately upon the passing of this resolution and
continue to be in force until the conclusion of the next Annual General Meeting of the
Company in accordance with Section 76 of the Companies Act 2016.

ORDINARY RESOLUTION 2
- PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR RECURRENT RELATED (Resolution 6)
PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

THAT approval be and is hereby given to Adventa Berhad Group ( the Group)
to enter into and to give effect to specied recurrent related party transactions of a
revenue or trading nature with the Related Parties as stated in Part A Section 1.5 of
the Circular to Shareholders dated 28 February 2017, which are necessary for its day
-to-day operations, to be entered into by the Group on the basis that this transaction
is entered into on terms which are not more favorable to the Related Party involved than
generally available to the public and are not detrimental to the minority shareholders
of the Company (hereinafter referred to as the Proposed Renewal of Shareholders
Mandate);
ANNUAL REPORT
ANNUAL 2015 2016 102
REPORT

Notice of Fourteenth Annual General Meeting


contd

THAT the Proposed Renewal of Shareholders Mandate is subject to annual renewal.


In this respect, any authority conferred by the Proposed Renewal of Shareholders
Mandate, shall only continue to be in force until:-

(a) the conclusion of the next Annual General Meeting (AGM) of the Company
following the general meeting at which the Proposed Renewal of Shareholders
Mandate was passed, at which time it will lapse, unless by resolution passed at
the general meeting, the authority is renewed; or

(b) the expiration of the period within which the AGM after that date is required to
be held pursuant to Section 340(2) of the Companies Act 2016 (but shall not
extend to such extension as may be allowed pursuant to Section 340(4) of the
Companies Act 2016); or

(c) revoked or varied by resolution passed by the shareholders of the Company in


general meeting,

whichever is the earlier;

AND THAT the Directors and/or any of them be and are hereby authorised to
complete and do all such acts and things (including executing such documents as may
be required) to give effect to the Proposed Renewal of Shareholders Mandate.

ORDINARY RESOLUTION 3
- PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY OF UP TO 10% OF THE (Resolution 7)
TOTAL NUMBER OF ISSUED SHARES OF ADVENTA BERHAD (PROPOSED
RENEWAL OF AUTHORITY FOR SHARE BUY-BACK)

THAT, subject to the compliance with Section 127 of the Companies Act 2016 and
all other applicable laws, rules and regulations, approval be and is hereby given to the
Company, to purchase such amount of ordinary shares of RM0.35 each in the Company
(Shares) as may be determined by the Directors of the Company from time to time
through Bursa Malaysia Securities Berhad (Bursa Securities) as the Directors may
deem t and expedient in the interest of the Company provided that the aggregate
number of Shares to be purchased and held pursuant to this resolution does not
exceed 10% of the existing total number of issued shares of the Company including
the Shares previously purchased and retained as treasury shares (if any), upon such
terms and conditions as set out in Part B of the Circular to the Shareholders dated 28
February 2017.

AND THAT such authority shall commence immediately upon the passing of this
ordinary resolution and until the conclusion of the next Annual General Meeting of the
Company or the expiry of the period within which the next Annual General Meeting
is required by law to be held unless revoked or varied by ordinary resolution in the
general meeting of the Company but so as not to prejudice the completion of a
purchase made before such expiry date, in any event in accordance with the provisions
of the Main Market Listing Requirements of Bursa Securities and any other relevant
authorities.

AND THAT the maximum amount of funds to be utilised for the purpose of the
Proposed Renewal of Authority for Share Buy-Back shall not exceed the Companys
retained prots based on the latest audited nancial statements and/or the latest
management accounts of the Company (where applicable) available at the time of the
purchase(s).
103 ADVENTAADVENTA
BERHAD (618533-M)
BERHAD (618533-M)

Notice of Fourteenth Annual General Meeting


contd

AND THAT authority be and is hereby given to the Directors of the Company to decide
in their absolute discretion to retain the Shares in the Company so purchased by the
Company as treasury shares and/or to cancel them and/or to resell them and/or to
distribute them as share dividends in such manner as may be permitted and prescribed
by the provisions of the Main Market Listing Requirements of Bursa Securities and any
other relevant authorities.

AND THAT authority be and is hereby given to the Directors of the Company to take all
such steps as are necessary to enter into any agreements, arrangements and guarantees
with any party or parties to implement, nalise and give full effect to the aforesaid
with full power to assent to any conditions, modications, variations and/or amendments
(if any) as may be imposed by the relevant authorities and to do all such acts and things as
the Directors may deem t and expedient in the interests of the Company.

SPECIAL RESOLUTION
- PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY (Resolution 8)

THAT the Proposed Amendments to the Companys Articles of Association as set


out in Appendix I in the Annual Report in respect of the financial year ended 31 October
2016 be and are hereby approved and adopted and that the Directors and Secretaries of the
Company be and are hereby authorised to take all steps as are necessary and expedient in
order to implement, finalise and give full effect to the Proposed Amendments to the
Companys Articles of Association.

6. To transact any other ordinary business of which due notice has been given.

By Order of the Board

CHUA SIEW CHUAN (MAICSA 0777689)


PAN SENG WEE (MAICSA 7034299)
Company Secretaries

Kuala Lumpur
Dated: 28 February 2017
ANNUAL2015
ANNUAL REPORT REPORT 2016 104

Notice of Fourteenth Annual General Meeting


contd

Notes:

1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 22 March 2017
(General Meeting Record of Depositors) shall be eligible to attend the Meeting.

2. A member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same meeting and
where two (2) proxies are appointed, a member shall specify the proportion of his holdings to be represented by each
proxy, failing which the appointment shall be invalid provided that where a member of the Company is an authorised
nominee as dened in accordance with the provisions of the Securities Industry (Central Depositories) Act 1991, it
may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company
standing to the credit of the said securities account.

3. There shall be no restriction as to the qualication of the proxy. A proxy appointed to attend and vote at the Meeting
shall have the same rights as the member to participate, speak and vote at the Meeting.

4. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly
appointed under a power of attorney or if such appointer is a corporation, either under its common seal or under the
hand of an ofcer or attorney duly appointed under a Power of Attorney.

5. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for
multiple benecial 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.

6. The instrument appointing a proxy must be deposited at Securities Services (Holdings) Sdn. Bhd., Level 7, Menara
Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, 50490 Kuala Lumpur not less than 48 hours
before the time for holding the Meeting or at any adjournment thereof.

Explanatory Notes to Ordinary and Special Business:

i) Item 1 of the Agenda

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

ii) Ordinary Resolution 1


- Authority to issue shares pursuant to Section 75 of the Companies Act 2016

The Company wishes to renew the mandate on the authority to issue shares pursuant to Section 75 of the
Companies Act 2016 at the Fourteenth Annual General Meeting of the Company (hereinafter referred to as the
General Mandate).

The Company had been granted a general mandate by its shareholders at the Thirteenth Annual General Meeting of
the Company held on 29 March 2016 (the Previous Mandate).

As at the date of this notice, the Previous Mandate granted by the shareholders had not been utilised and hence no
proceeds were raised therefrom.

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

iii) Ordinary Resolution 2


- Proposed Renewal of Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

The proposed adoption of the Ordinary Resolution in respect of the Proposed Renewal of Shareholders Mandate for
Recurrent Related Party Transactions of a Revenue or Trading Nature is intended to facilitate transactions in the normal
course of business of the Group which are transacted from time to time with the specied classes of related parties,
provided that they are carried out on an arms length basis and on the Groups normal commercial terms and are not
prejudicial to the shareholders on terms not more favourable to the related parties than those generally available to
the public and are not to the detriment of the minority shareholders.
105 ADVENTA BERHAD (618533-M)

Notice of Fourteenth Annual General Meeting


contd

iv) Ordinary Resolution 3


- Proposed Renewal of Authority for Share Buy-Back

The proposed adoption of the Ordinary Resolution in respect of the Proposed Renewal of Authority for Share Buy-Back
is to renew the authority granted by the shareholders of the Company at the Thirteenth Annual General Meeting held on
29 March 2016. The proposed renewal will allow your Directors to exercise the power of the Company to purchase not
more than 10% of the total number of issued shares of the Company any time within the time period stipulated in
Bursa Malaysia Securities Berhad Main Market Listing Requirements.

v) Special Resolution
- Proposed Amendments to Articles of Association of the Company

The Proposed Amendments are to streamline the Companys Articles of Association to be aligned with the
amendments to the Bursa Malaysia Securities Berhad Main Market Listing Requirements and to incorporate the
necessary amendments to ensure clarity and consistency with the relevant regulatory provisions.

Please refer to Appendix I in the Annual Report for more information.


ANNUAL REPORT 2016 106

Appendix I
Proposed Amendments to the Articles of Association

Article No. Existing Articles Proposed Amendments

81(1) How resolution to be voted at meeting How resolution to be voted at meeting

At any general meeting a resolution put to At any general meeting a resolution put to the
the vote of the meeting shall be decided on a vote of the meeting shall be decided on a show
show of hands unless a poll (before or on the of hands unless a poll (before or on the
declaration of the result of the show of hands declaration of the result of the show of hands is
is demanded):- demanded):-

(a) by the Chairman of the meeting; (a) by the Chairman of the meeting;

(b) by at least 3 members present in (b) by at least 3 members present in person (or
person (or in the case of a company, by in the case of a company, by representative)
representative) or by proxy; or by proxy;

(c) by a member or members present in (c) by a member or members present in person


person or by proxy or by representative or by proxy or by representative and
and representing not less than representing not less than one-tenth of the
one-tenth of the total voting rights of total voting rights of all the members
all the members present in person or by present in person or by proxy or by
proxy or by representative at the representative at the meeting; or
meeting; or

(d) by a member or members holding (d) by a member or members holding shares in


shares in the Company conferring a the Company conferring a right to vote at
right to vote at the meeting being the meeting being shares on which an
shares on which an aggregate sum has aggregate sum has been paid up equal to
been paid up equal to not less than not less than one-tenth of the total sum paid
one-tenth of the total sum paid up on up on all the shares held by all the members
all the shares held by all the members present in person or by proxy or by
present in person or by proxy or by representative at the meeting.
representative at the meeting.
At any general meeting, a resolution put to the
vote of the meeting shall be decided by poll.
The Company must appoint at least one (1)
scrutineer to validate the votes cast at the
general meeting. Such scrutineer must not be
an ofcer of the Company or its related
corporation, and must be independent of the
person undertaking the polling process. If such
scrutineer is interested in a resolution to be
passed at the general meeting, the scrutineer
must refrain from acting as the scrutineer for
that resolution. For this purpose, ofcer and
related corporation shall have the meaning
assigned to them in Section 2 of the
Companies Act 2016.
107 ADVENTA BERHAD (618533-M)

Appendix I
Proposed Amendments to the Articles of Association
contd

Article No. Existing Articles Proposed Amendments

81(2) How resolution to be voted at meeting How resolution to be voted at meeting

Unless a poll is so demanded, a declaration Unless a poll is so demanded, a declaration by


by the Chairman that a resolution has on a the Chairman that a resolution has on a show of
show of hands been carried or carried hands been carried or carried unanimously, or by
unanimously, or by a particular majority, or a particular majority, or lost, and an entry to that
lost, and an entry to that effect in the book effect in the book containing the minutes of the
containing the minutes of the proceedings of proceedings of the Company, is conclusive
the Company, is conclusive evidence of the evidence of the fact without proof of the number
fact without proof of the number or or proportion of the votes recorded in favour of
proportion of the votes recorded in favour of or against the resolution.
or against the resolution.

81(3) Business may proceed notwithstanding Business may proceed notwithstanding


demand for poll demand for poll

The demand for a poll shall not prevent the The demand for a poll shall not prevent the
continuance of a meeting for the transaction continuance of a meeting for the transaction of
of any business other than the question on any business other than the question on which a
which a poll has been demanded. poll has been demanded.

81(4) The demand for a poll may be withdrawn. The demand for a poll may be withdrawn.

81(5) Chairman to have casting vote Chairman to have casting vote

In case of an equality of votes, the Chairman In case of an equality of votes, the Chairman
(unless he is not the Chairman of the Board of (unless he is not the Chairman of the Board of
Directors) shall, both on a show of hands and Directors) shall, both on a show of hands and on
on a poll, have a casting vote except when a poll, have a casting vote except when only two
only two (2) members form a quorum at a (2) members form a quorum at a meeting or
meeting or where only two (2) members are where only two (2) members are competent to
competent to vote on the question at issue in vote on the question at issue in which event the
which event the Chairman shall not have a Chairman shall not have a second or casting vote
second or casting vote and the question and the question arising at the meeting shall be
arising at the meeting shall be deemed to deemed to have been lost or not carried.
have been lost or not carried.
Renumbered to 81(2)

82(1) In what cases poll taken without In what cases poll taken without adjournment
adjournment
If a poll is duly demanded it shall then be taken in
If a poll is duly demanded it shall then be such manner and either at once or after an
taken in such manner and either at once or interval or adjournment or otherwise as the
after an interval or adjournment or otherwise Chairman directs. The result of the poll shall be
as the Chairman directs. The result of the poll the resolution of the meeting at which the poll
shall be the resolution of the meeting at was demanded. The poll shall be taken in such
which the poll was demanded. No poll shall manner and either at once or after an interval
be demanded on the election of a Chairman or adjournment or otherwise as the Chairman
or on a question of adjournment. of the meeting directs, and the result of the
poll shall be the resolution of the meeting. No
poll shall be demanded on the election of a
Chairman or on a question of adjournment.
ANNUAL REPORT 2016 108

Appendix I
Proposed Amendments to the Articles of Association
contd

Article No. Existing Articles Proposed Amendments

82(3) The demand for a poll shall not prevent the The demand for a poll shall not prevent the
continuance of a meeting for the transaction continuance of a meeting for the transaction of
of any business other than the question on any business other than the question on which
which the poll has been demanded. The the poll has been demanded. The Chairman of
Chairman of the meeting may (and if so the meeting may (and if so directed by the
directed by the meeting shall) appoint meeting shall) appoint scrutineers and may in
scrutineers and may in addition to the addition to the powers of adjourning meetings
powers of adjourning meetings contained in contained in these Articles adjourn the meeting
these Articles adjourn the meeting to some to some place and time fixed for the purpose of
place and time fixed for the purpose of declaring the result of the poll.
declaring the result of the poll.

83(1)(b) Votes of Members Votes of Members

On a show of hands every person who is a On a show of hands every person who is a
member, a proxy or a representative of a member, a proxy or a representative of a
member has one vote, and on a poll every member has one vote, and on a poll every person
person present in person or by proxy or present in person or by proxy or representative
representative has one vote for each share he has one vote for each share he holds; and
holds; and

83(1)(c) Votes of Members Votes of Members

On a show of hands, any member who is a On a show of hands, any member who is a proxy
proxy for another member, and any person for another member, and any person who is a
who is a proxy for more than one member proxy for more than one member shall have only
shall have only one vote. one vote.

83(1)(d) Votes of Members Votes of Members

On a resolution to be decided on a show of On a resolution to be decided on a show of


hands, a holder of ordinary shares or hands, a holder of ordinary shares or preference
preference shares who is personally present shares who is personally present and entitled to
and entitled to vote shall be entitled to one vote shall be entitled to one (1) vote.
(1) vote.

84 Number of proxies permitted Number of proxies permitted

A member shall not be entitled to appoint A member shall not be entitled to appoint more
more than two (2) proxies to attend and vote than two (2) proxies to attend and vote at the
at the same meeting and where (2) proxies same meeting and where (2) proxies are
are appointed, a member shall specify the appointed, a member shall specify the
proportions of his holdings to be proportions of his holdings to be represented by
represented by each proxy, failing which the each proxy, failing which the appointment shall
appointment shall be invalid PROVIDED be invalid PROVIDED THAT where a member of
THAT where a member of the Company is an the Company is an authorised nominee as
authorised nominee as defined in accordance defined in accordance with the provisions of the
with the provisions of the Central Central Depositories Act, it may appoint at least
Depositories Act, it may appoint at least one one proxy in respect of each securities account it
proxy in respect of each securities account it holds with ordinary shares standing to the credit
holds with ordinary shares standing to the of the said securities account. If a member
credit of the said securities account. If a appoints two (2) proxies, he must specify which
member appoints two (2) proxies, he must proxy is entitled to vote on a show of hands.
specify which proxy is entitled to vote on a Only one of those proxies is entitled to vote on a
show of hands. Only one of those proxies is show of hands.
entitled to vote on a show of hands.
109 ADVENTA BERHAD (618533-M)

Appendix I
Proposed Amendments to the Articles of Association
contd

Article No. Existing Articles Proposed Amendments

85 Member of unsound mind


Member of unsound mind
A member who is of unsound mind or whose
A member who is of unsound mind or whose
person or estate is liable to be dealt with in
person or estate is liable to be dealt with in any
any way under the law relating to mental
way under the law relating to mental disorder
disorder may vote, whether on a show of
may vote, whether on a show of hands or on a
hands or on a poll, by his committee or by
poll, by his committee or by such other person as
such other person as properly has the
properly has the management of his estate, and
management of his estate, and any such
any such committee or other person may vote by
committee or other person may vote by
proxy.
proxy.

88(3) Instrument appointing proxy to be in Instrument appointing proxy to be in writing


writing
The instrument appointing a proxy shall be
The instrument appointing a proxy shall be deemed to confer authority to demand or join in
deemed to confer authority to demand or demanding a poll.
join in demanding a poll.

88(4) Instrument appointing proxy to be in Instrument appointing proxy to be in writing


writing
Renumbered to 88(3)
Where a proxy is appointed by a member
who is a depositor, the Company shall be
entitled and bound:

(a) to reject any instrument of proxy lodged


if the depositor is not shown to have any
shares entered against his name in the
record of Depositors; and

(b) to accept as the maximum number of


votes which in aggregate the proxy or
proxies appointed by the depositor are
able to cast on a poll, a number which is
the number of shares entered against
the name of that depositor in the
Record of Depositors whether that
number is greater or smaller than the
number specified in any instrument of
proxy executed by or on behalf of that
depositor
ANNUAL REPORT 2016 110

Location Map to AGM

Kuala Federal Highway


Lumpur SPRINT Highway
NKVE
Tropicana

P1 Green Packet
Jalan Templer Assunta Hospital
)
222 EON Top
Jln
n an (
aya Mart
Nar
PP
alan Jalan 217

Jalan 215

Jalan 213
J

Jalan Kilang 51/206

Campbell
Soup
Federal Highway

Jalan Kilang 51/205

Jalan Penchala
21, Jalan Tandang 51/205A, Jalan 204B
Seksyen 51,
46050 Petaling Jaya,
Jalan 204A
Jalan 203

Selangor Darul Ehsan

a ng
GDEX Tand
Nestle Jalan
MML

Pantai Baru Highway

KESAS
Subang, Shah Alam LDP
& Klang Puchong
111 ADVENTA BERHAD (618533-M)

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Form of Proxy
Number of
Shares Held
(Incorporated in Malaysia)
CDS Account No.

*I/We
(Full Name In Capital Letters)
of
(Full Address)
being a Member of ADVENTA BERHAD, do hereby appoint
(Full Name In Capital Letters)
of
(Full Address)
or failing him/her
(Full Name In Capital Letters)
of
(Full Address)

or failing him/her, the CHAIRMAN OF THE MEETING, as *my/our proxy to attend and vote for *me/us and on *my/our behalf
at the Fourteenth Annual General Meeting of the Company to be held at 21, Jalan Tandang 51/205A, Seksyen 51, 46050
Petaling Jaya, Selangor Darul Ehsan on Tuesday, 28 March 2017 at 10:30 a.m. and at any adjournment thereof.
Please indicate with an X in the space provided below how you wish your votes to be cast. If no specic direction as to voting is given,
the Proxy will vote or abstain from voting at his discretion.

Item Agenda
1. To receive the Audited Financial Statements for the nancial year ended 31 October
2016 together with the Reports of the Directors and the Auditors thereon.
Resolution For Against
2. To approve the payment of Directors fees and benefits for the nancial 1
year ended 31 October 2016.
3. To re-elect the Director, Mr. Edmond Cheah Swee Leng who retires pursuant 2
to Article 114 of the Companys Articles of Association.
4. To re-elect the Director, Ms. Kwek Siew Leng who retires pursuant to Article 114 3
of the Companys Articles of Association.
5. To re-appoint Messrs. Ernst & Young as Auditors of the Company until the 4
conclusion of the next Annual General Meeting and to authorise the Directors
to x their remuneration.
6. Special Business 5
Ordinary Resolution 1
- Authority to issue shares pursuant to Section 75 of the Companies Act 2016.

7. Ordinary Resolution 2 6
- Proposed Renewal of Shareholders Mandate for Recurrent Related Party Transactions
of a Revenue or Trading Nature.
8. Ordinary Resolution 3 7
- Proposed Renewal of Authority for Share Buy-Back.
9. Special Resolution 8
- Proposed Amendments to Articles of Association of the Company

* Strike out whichever not applicable.


As witness my/our hand this day of 2017

Signature of Member/Common Seal


Notes:
1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 22 March 2017 (General Meeting Record of Depositors)
shall be eligible to attend the Meeting.
2. A member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same meeting and where two (2) proxies are appointed, a
member shall specify the proportion of his holdings to be represented by each proxy, failing which the appointment shall be invalid provided that where a
member of the Company is an authorised nominee as dened in accordance with the provisions of the Securities Industry (Central Depositories) Act 1991, it
may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities
account.
3. There shall be no restriction as to the qualication of the proxy. A proxy appointed to attend and vote at the Meeting shall have the same rights as the member
to participate, speak and vote at the Meeting.
4. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly appointed under a power of attorney or if such
appointer is a corporation, either under its common seal or under the hand of an ofcer or attorney duly appointed under a Power of Attorney.
5. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple benecial 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.
6. The instrument appointing a proxy must be deposited at Securities Services (Holdings) Sdn. Bhd., Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar
Damansara, Damansara Heights, 50490 Kuala Lumpur not less than 48 hours before the time for holding the Meeting or at any adjournment thereof.
Fold This Flap For Sealing

Then Fold Here

AFFIX
STAMP

The Secretary
ADVENTA BERHAD (618533-M)

c/o Securities Services (Holdings) Sdn. Bhd.


Level 7, Menara Milenium
Jalan Damanlela
Pusat Bandar Damansara
Damansara Heights
50490 Kuala Lumpur

1st Fold Here