SOLID AUTOMOTIVE BERHAD

(Company No: 1016725-P)

ANNUAL
REPORT 2017

SOLID AUTOMOTIVE BERHAD (COMPANY NO: 1016725-P)

ANNUAL REPORT 2017

SOLID AUTOMOTIVE BERHAD (Company No: 1016725-P)

PLO 436, Jalan Gangsa, Kawasan Perindustrian Pasir Gudang
81700 Pasir Gudang, Johor Darul Takzim, Malaysia. The Specialist in Automotive Parts
Tel No : (+607) 288 1313 Fax No : (+607) 251 4668
www.solidautomotive.com Delivering Superior Value, Quality and Service
 TABLE OF CONTENTS
Values, Vision and Mission
1 Corporate Information
2

Corporate Structure
3 Directors’ Profile
4

Key Senior Management

6 Financial Highlights
7

Exhibitions and
Company Events 8 Corporate
Governance Statement 13

Statement of
Audit Committee Report
30 Risk Management
and Internal Control 34

Management Discussion and

Analysis Statement 40 Financial Statements
44

List of Properties
125 Analysis of Shareholdings
- Ordinary Shares 128

Analysis of Shareholdings
- Warrants 131 Notice of 5th Annual General
Meeting 134

Statement Accompanying
the Notice of the
5th Annual General Meeting
137 Form of Proxy
 VALUES

Passion for
Excellence

support for sHAre our

Sustainability Success

To be the most successful and market leading

VISION automotive aftermarket parts provider.

• To create value for our stakeholders through profitable

growth and sustainability.
• To relentlessly focus on value, quality and comprehensive
automotive aftermarket parts.
• To excel in customer service.
• To constantly seek and develop markets for our
automotive aftermarket parts. mission
• To actively engaged in our employees development.
• To continuously improve and inspire innovation.
• To leverage on technology to be at the leading edge of the
automotive aftermarket parts industry.
• To operate with passion and share our success.

Annual Report 2017 1

 CORPORATE
INFORMATION

MR.
KER MIN CHOO
Managing Director

MS. MR.
TAN LAY BENG KER MONG KENG
Independent Non- Executive Director
Executive Director

MR.
BOARD OF DIRECTORS KEK KOK SWEE
Independent Non-Executive
Chairman

MR. MR.
AZAHAR BIN KER MENG OI
BAHARUDIN Executive Director
Independent Non-
Executive Director

MR.
ONG KHENG SWEE
Executive Director

COMPANY SECRETARIES HEAD OFFICE

Ms. Ang Mui Kiow (LS0001886) PLO 436, Jalan Gangsa
Ms. Chen Yew Ting (MAICSA0869733) Kawasan Perindustrian Pasir Gudang
81700 Pasir Gudang
SHARE REGISTRAR Johor Darul Takzim, Malaysia
Tricor Investor & Issuing House Services Tel: (607) 288 1313
Sdn Bhd Fax: (607) 251 4668
Unit 32-01, Level 32, Tower A Website: www.solidautomotive.com
Vertical Business Suite, Avenue 3 Email: [email protected]
Bangsar South, No. 8, Jalan Kerinchi
59200 Kuala Lumpur, Malaysia PRINCIPAL BANKERS
Tel No : 03-27839299 OCBC Bank (Malaysia) Berhad
Fax No: 03-27839222 Hong Leong Bank Berhad
AmBank (M) Berhad
REGISTERED OFFICE
Suite 7E, Level 7 AUDITORS
Menara Ansar Crowe Horwath (AF1018)
65, Jalan Trus E-2-3, Pusat Komersial Bayu Tasek
80000 Johor Bahru Persiaran Southkey 1, Kota Southkey
Johor Darul Takzim, Malaysia 80150 Johor Bahru, Johor Darul Takzim,
Tel: (607) 224 1035 Malaysia
Fax: (607) 221 0891
STOCK EXCHANGE LISTING
Main Market of the Bursa Malaysia
Securities Berhad (“Bursa Securities”)
Sector : Trading/Services
Stock name : SOLID
Stock Code : 5242

2 SOLID AUTOMOTIVE BERHAD (1016725-P)

 CORPORATE
STRUCTURE

Automotive Automotive Property and

Electrical Engine and Investment
Mechanical Holding

100% 100% 100% 100%

SOLID CORPORATION TWINCO FAR EAST AUTO EMPIRE SOLID AUTOTECH SDN BHD
SDN BHD SDN BHD IMPEX PTE LTD

100% 100% 100% 70%

LUKAS MARKETING SDN BHD JBS AUTO-TECH SDN BHD HKT AUTO ELECTRICAL AUTOWORLD PARTS
PARTS SDN BHD SERVICES SDN BHD

Annual Report 2017 3

 DIRECTORS’
PROFILE

MR. Kek Kok Swee MR. KER MONG KENG

Independent Non-Executive Chairman Executive Director
Malaysian, aged 63 Malaysian, aged 62

Kek Kok Swee is our Independent Non-Executive Ker Mong Keng is our Executive Director. He was
Chairman. He was appointed to the Board on 9 appointed to the Board on 9 October 2012 and is
October 2012. He is also a member of the Audit one of the founding members of our Group.
Committee and the Chairman of the Remuneration
Committee and Nominating Committee. He has extensive exposure in the local automotive
aftermarket for parts and components used in
He holds a Bachelor’s Degree in Commerce and commercial and heavy-duty vehicles.
Administration from Victoria University of Wellington,
Ker Mong Keng does not have any family relationship
New Zealand. He is a member of the Malaysian
with any Director or substantial shareholder of the
Institute of Accountants.
Company except for Ker Min Choo and Ker Meng
Oi (directors of the Company) and Ker Boon Kee
He has vast experience and exposure in the field
(a substantial shareholder) who are his siblings, nor
of accounting, finance and consulting in various
does he have any conflict of interest with the Group.
countries, namely New Zealand, Singapore, China,
He has not been convicted of any offences within the
Cambodia and Malaysia.
past five (5) years.
Kek Kok Swee does not have any family relationship He attended 3 out of 4 Board meetings during the
with any Director or substantial shareholder of the financial year ended 30 April 2017.
Company, nor does he have any conflict of interest
with the Group. He has not been convicted of any
offences within the past five (5) years.

He attended 4 out of 4 Board meetings during the

financial year ended 30 April 2017.

MR. KER MIN CHOO MR. KER MENG OI

Managing Director Executive Director
Malaysian, aged 55 Malaysian, aged 53

Ker Min Choo is our Managing Director. He was Ker Meng Oi is our Executive Director. He was
appointed to the Board on 9 October 2012 and is appointed to the Board on 9 October 2012.
one of the founding members of our Group.
He graduated from Boise State University, USA with
He has extensive experience and in-depth knowledge a Bachelor of Business Administration. He went
of the automotive electrical parts trade in Malaysia to Japan in 1987 to pursue Japanese studies and
as well as overseas. He has been actively involved worked as a Store Assistant on a part-time basis
in the automotive aftermarket for electrical parts and in a Tokyo-based automotive parts manufacturing
components in Malaysia for over 30 years. company. He returned to Malaysia in 1989 and joined
Solid Corporation Sdn Bhd.
Ker Min Choo does not have any family relationship
with any Director or substantial shareholder of the Ker Meng Oi does not have any family relationship
Company except for Ker Mong Keng and Ker Meng with any Director or substantial shareholder of the
Oi (directors of the Company) and Ker Boon Kee Company except for Ker Min Choo and Ker Mong
(a substantial shareholder) who are his siblings, nor Keng (directors of the Company) and Ker Boon Kee
does he have any conflict of interest with the Group. (a substantial shareholder) who are his siblings, nor
He has not been convicted of any offences within the does he have any conflict of interest with the Group.
past five (5) years. He has not been convicted of any offences within the
past five (5) years.
He attended 4 out of 4 Board meetings during the
financial year ended 30 April 2017. He attended 4 out of 4 Board meetings during the
financial year ended 30 April 2017.

4 SOLID AUTOMOTIVE BERHAD (1016725-P)

 DIRECTORS’
PROFILE
cont’d

Azahar bin Baharudin does not have any family

MR. ONG KHENG SWEE relationship with any Director or substantial
Executive Director shareholder of the Company, nor does he have any
Malaysian, aged 59 conflict of interest with the Group. He has not been
convicted of any offences within the past five (5)
years.
Ong Kheng Swee is our Executive Director and Chief
Financial Officer. He is a Director since incorporation He attended 4 out of 4 Board meetings during the
of our Company on 12 September 2012. financial year ended 30 April 2017.

He is a Fellow of the Association of Chartered

Certified Accountants of United Kingdom, a member
MS. TAN LAY BENG
of the Malaysian Institute of Accountants and a
Independent Non-Executive Director
Fellow of the Chartered Tax Institute of Malaysia. He
Malaysian, aged 63
held various senior positions in both the professional
sector (having worked with two major international
accounting firms) and in the commercial sector Tan Lay Beng is our Independent Non-Executive
as financial controller, group finance director and Director. She was appointed to the Board on 18
management consultant in various industries August 2014. She is also a member of the Audit
including petrochemicals, ceramic tiles, minerals and Committee and Nominating Committee.
glass. He is currently an Independent Non-Executive
Director of Power Root Berhad, a company listed on She is a Fellow of the Association of Chartered
the Main Market of Bursa Malaysia Securities Berhad. Certified Accountants of United Kingdom, a member
of the Malaysian Institute of Accountants and a
Ong Kheng Swee does not have any family Fellow of the Chartered Tax Institute of Malaysia.
relationship with any Director or substantial
shareholder of the Company, nor does he have any She has wide experience in accounting, audit and tax
conflict of interest with the Group. He has not been having worked with a mid-size and an international
convicted of any offences within the past five (5) accounting firm before starting her own consulting
years. practice in 1999.
He attended 4 out of 4 Board meetings during the Tan Lay Beng does not have any family relationship
financial year ended 30 April 2017. with any Director or substantial shareholder of the
Company, nor does she have any conflict of interest
with the Group. She has not been convicted of any
offences within the past five (5) years.
MR. AZAHAR BIN BAHARUDIN
Independent Non-Executive Director She attended all the 4 out of 4 Board meetings held
Malaysian, aged 61 during the financial year ended 30 April 2017.

Azahar Bin Baharudin is our Independent Non-

Executive Director. He was appointed to the Board
on 9 October 2012. He is also a Chairman of the
Audit Committee and Remuneration Committee.

He is a graduate from MARA Institute of Technology.

He has considerable experience in the banking

and finance field with his tenure at two Malaysian
financial institutions and subsequently as
business development head and consultant in the
manufacturing and financial services sector.

He is currently an Independent Non-Executive

Director of Power Root Berhad and Gromutual
Berhad, both of which are listed on the Main Market
of Bursa Malaysia Securities Berhad.

Annual Report 2017 5

 KEY
SENIOR MANAGEMENT

Mr. Keddy Ker does not hold any directorships in

Mr. Liew Cheong Seng public companies or listed issuers. He is the nephew
Chief Operating Officer of Mr Ker Min Choo, Mr. Ker Mong Keng and Mr.
Malaysian, aged 39 Ker Meng Oi and is the son of Mr. Ker Boon Kee,
a substantial shareholder. He does not have any
conflict of interest with the Group and has not been
Date Appointed as Key Senior Management: convicted of any offences within the last five (5) years.
Year 2015
Qualification Mr. Ker Hong
Bachelor of Economics, University of Malaya, Malaysia
Head – Procurement and Quality Assurance
Working Experience Malaysian, aged 30
Solid Corporation Sdn Bhd since 2002
Mr. Liew does not hold any directorships in public Date Appointed as Key Senior Management:
companies or listed issuers. He does not have any Year 2014
family relationship with any Director or substantial
shareholder of the Company, nor does he have any Qualifications
conflict of interest with the Group. He has not been Bachelor of Engineering, University of Adelaide,
convicted of any offences within the last five (5) years. Australia

Working Experience
Mr. Ker Kai Xiang Test Engineer – Molex Singapore Pte Ltd, Singapore
Sales and Marketing Director Auto Empire Impex Pte Ltd / JBS Auto-Tech Sdn
Malaysian, aged 34 Bhd / Solid Corporation Sdn Bhd – since 2012

Mr. Ker Hong does not hold any directorships in public

Date Appointed as Key Senior Management: companies or listed issuers. He is the son of Mr. Ker
Year 2015 Min Choo and the nephew of Mr. Ker Mong Keng,
Mr. Ker Meng Oi and Mr. Ker Boon Kee, a substantial
Qualifications shareholder. He does not have any conflict of interest
Bachelor of Mechanical Engineering, Mannheim with the Group and has not been convicted of any
University of Applied Sciences, Germany offences within the last five (5) years.
Masters of Business Administration, Sabi University, Paris
Working Experience Mr. Ker Shiloong
Solid Corporation Sdn Bhd since 2007 Executive Director / General Manager - Auto Empire Impex
Mr. Ker Kai Xiang does not hold any directorships in Pte Ltd, Singapore Malaysian, aged 29
public companies or listed issuers. He is the nephew
of Mr. Ker Min Choo, Mr. Ker Mong Keng and Mr
Date Appointed as Key Senior Management:
Ker Meng Oi and is the son of Mr. Ker Boon Kee,
Year 2014
a substantial shareholder. He does not have any
conflict of interest with the Group and has not been Qualifications
convicted of any offences within the last five (5) years. BSc. Business – University of London (London School
of Economics & Political Science)
Mr. Ker Keddy
Working Experience
Executive Director – Twinco Far East Sdn Bhd Auto Empire Impex Pte Ltd (since 2011)
Malaysian, aged 36
Mr. Ker Shiloong does not hold any directorships
in public companies or listed issuers. He is the son
Date Appointed as Key Senior Management: of Mr. Ker Mong Keng and the nephew of Mr. Ker
Year 2010 Min Choo, Mr. Ker Meng Oi and Mr. Ker Boon Kee,
a substantial shareholder. He does not have any
Qualification
conflict of interest with the Group and has not been
Bachelor of Management, University of Kinki, Japan
convicted of any offences within the last five (5) years.
Working Experience
Overseas Business Development – Transcosmos Inc.
Japan, Japan
Twinco Far East Sdn Bhd (since 2008)

6 SOLID AUTOMOTIVE BERHAD (1016725-P)

 FINANCIAL
HIGHLIGHTS

Financial Year Ended 30 April

2013 2014 2015 2016 2017
RM’ 000 RM’ 000 RM’ 000 RM’ 000 RM’ 000

Revenue 108,793 118,081 133,399 120,953 125,447

Earnings Before Interest, Tax,

Depreciation & Amortisation (EBITDA) 14,848 14,512 16,147 11,663 11,038

Profit After Tax 9,403 7,446 9,494 5,561 5,093

Shareholders’ Equity 65,486 90,301 97,259 134,107 138,483

Net Assets 66,003 90,795 97,668 134,107 138,583

Net Assets Per Share (sen) N/A 0.61 0.65 0.81 0.83

Basic Earnings Per Share (sen) 8.19 5.44 6.36 3.51 3.08

Dividend Per Share (sen) N/A 2.60 3.20 1.60 0.80

Revenue (RM’000) Earnings Before Interest, Tax,

Depreciation & Amortisation
2013 2014 2015 2016 2017 (EBITDA) (RM’000)
160,000
140,000 2013 2014 2015 2016 2017
120,000 20,000
100,000
15,000
80,000
60,000 10,000
108,793

118,081

133,399

120,953

125,447

40,000
14,848

14,512

16,147

11,663

11,038

5,000
20,000
0 0

Financial Year Ended 30 April Financial Year Ended 30 April

Profit After Tax (RM’000) Net Assets (RM’000)

2013 2014 2015 2016 2017
2013 2014 2015 2016 2017 160,000
10,000
140,000
8,000 120,000
100,000
6,000
80,000
4,000 60,000
134,107

138,583
66,003

90,795

97,668

40,000
9,403

7,446

9,494

5,561

5,093

2,000 20,000
0 0

Financial Year Ended 30 April Financial Year Ended 30 April

Annual Report 2017 7

 EXHIBITIONS

8 SOLID AUTOMOTIVE BERHAD (1016725-P)

 EXHIBITIONS
cont’d

Exhibition

Annual Report 2017 9

 COMPANY EVENTS

COMPANY EVENTS

10 SOLID AUTOMOTIVE BERHAD (1016725-P)

COMPANY EVENTS cont’d

Annual Report 2017 11

 COMPANY EVENTS cont’d

12 SOLID AUTOMOTIVE BERHAD (1016725-P)

 CORPORATE GOVERNANCE STATEMENT

The Board of Directors (“Board”) of Solid Automotive Berhad (“Solid” or “the Company”) is committed to ensuring that
the principles and practices of good corporate governance are adopted throughout the Company and its subsidiaries
(“the Group”).

The Board, pursuant to paragraph 15.25 and Practice Note 9 of the Main Market Listing Requirements (“MMLR”) of
Bursa Malaysia Securities Berhad (“Bursa Securities”), sets out below the manner in which the Company has applied the
principles and recommendations of the Malaysian Code of Corporate Governance 2012 (“the Code”) and the extent of
compliance with the principles and recommendations of the Code advocated therein and pursuant to Paragraph 15.25
and practice Note 9 of the MMLR of Bursa Securities for the financial year ended 30 April 2017.

1: BOARD OF DIRECTORS

The Board is responsible for the overall performance of the Group and has the key role in setting the Group’s
strategic direction, strategic management and business performance, enterprise risk management and internal
controls, standards of conduct, corporate governance and sustainability, effective communication with shareholders
and investors and key business decisions.

The Board consist of directors with varied knowledge, skills and expertise to effectively lead and manage the
Group. The Board comprises of a mix of directors who are entrepreneurs and highly knowledgeable in the Group’s
business industry and in areas including business management, finance and accountancy, and whose combined
skills and knowledge enables the Board to function effectively in discharging its fiduciary and leadership functions.

Board Charter

The Board has established the Board Charter which outlines the duties and responsibilities of directors, including
the division of responsibilities and authorities between the Board and the Executive Management as well as between
the Chairman of the Board and the Managing Director with matters reserved for the Board for review and decision
clearly defined. The charter sets out the purpose, Board’s strategic intent, responsibilities and authorities as well
as terms of reference.

The Board Charter also acts as a source of reference and primary induction literature in providing insights to Board
members and senior management.

The salient features of the Board Charter are available for viewing at the “Investor Relations” section of www.
solidautomotive.com.

Clear Functions and Responsibilities

It is the responsibility of the Board to manage and lead the Group towards its strategic corporate objectives. The
Board is responsible for the success of the Group by providing the strategic leadership as well as management
oversight and ensuring financial reporting and regulatory compliance. The Managing Director is delegated with the
responsibility to ensure proper execution of corporate strategies and effective and efficient operations throughout
the Group.

With oversight and guidance from the Board and Managing Director, the Management is responsible for the
day-to-day business operations and implementing tactical objectives set out to achieve the Group’s strategic
objectives.

Annual Report 2017 13

 CORPORATE GOVERNANCE STATEMENT
cont’d

1: BOARD OF DIRECTORS (CONT’D)

Clear Functions and Responsibilities (Cont’d)

The Board assumed, among others, six (6) core responsibilities as follows:

• Reviewing and adopting the strategic plan for the Group

The Board reviews and approves Management’s proposal on the strategic plan for the Group and receives
updates from the Management on specific business environment and future business trend as well as
factors affecting the performance and strategies of the Group on a quarterly basis. Any new developments
regarding the current strategies and actions taken are discussed during the Board Meetings with the
proposed strategic direction deliberated and decided by the Board. In addition, any material investment
contemplated by the Group is proposed by the Executive Director(s) to the Board for deliberation to ensure
that it is in line with the Group’s strategic direction and all key risks are properly assessed and addressed.

• Overseeing the conduct and performance management of the Group

On a quarterly basis, the financial results are presented by the Management to the Board for review. In
addition, key business indicators, such as, customers’ (domestic and export) ageing analysis, inventory
ageing analysis and trade payables ageing analysis, are tabled to the Audit Committee for their review and
subsequent reporting to the Board on quarterly basis. Key business and financial issues identified and
raised are deliberated by the Board to ensure that the issues in question are properly addressed and the
associated risks adequately managed. On a quarterly basis, the outsourced internal audit function table
their internal audit findings to the Audit Committee.

• Reviewing and managing principal risks affecting the Group

The Board is kept appraised of any emergence of new or changes of the key risks faced by the Group and
the steps taken to manage these risks by the Executive Directors and the Management during the scheduled
meetings. Through the use of the internal audit function, the Board ensures that the risk management and
internal controls systems are in place and operating as laid down. Further explanation on such processes
are disclosed in the Statement of Risk Management and Internal Control on pages 33 to 38.

• Succession Planning and Overseeing Human Capital Development

The Board has adopted a formal Succession Planning policy to ensure that candidates appointed to senior
management positions are of sufficient calibre and competency. The Group has in place succession planning
procedures whereby competent and suitably qualified staff is identified by the Managing Director and
Executive Directors for key functions within the Group. The development of the identified staff is managed
through on-the-job training and guidance as well as external trainings to close the competency gap required.

On an annual basis the Nominating Committee assesses the performance of the individual directors (including
the Managing Director and Executive Directors) and identified their training requirements to ensure that all
directors possess the necessary skills and knowledge to discharge their fiduciary duties and responsibilities.
In addition the Remuneration Committee meets on an annual basis to review the remuneration package
and fees of the executive directors to ensure that it is commensurate with the performance and contribution
of each director. The results of the review and recommendations by the Nominating Committee and the
Remuneration Committee are tabled at the Board meeting for deliberation and approval.

Further details on the roles and responsibilities of the Nominating Committee and Remuneration Committee
are disclosed in pages 19 to 22 of this statement.

14 SOLID AUTOMOTIVE BERHAD (1016725-P)

 CORPORATE GOVERNANCE STATEMENT
cont’d

1: BOARD OF DIRECTORS (CONT’D)

Clear Functions and Responsibilities (Cont’d)

The Board assumed, among others, six (6) core responsibilities as follows (Cont’d):

• Reviewing the adequacy and integrity of the Group management information and internal control systems

The Board has established an internal audit function to assist it in ensuring that the risk management and
internal control systems are in place, adequate and operating as laid down. The Internal Audit function is
performed by an outsourced independent professional firm, which reports directly to the Audit Committee
and performs their work based on internal audit plan approved by the Audit Committee. The internal audit
report together with findings, recommendations and management action plans are presented to the Audit
Committee quarterly and the results reported to the Board.

Further details on the Group’s Internal Audit functions are disclosed in the Statement on Risk Management
and Internal Control on pages 34 to 39.

• Reviewing policies relating to investor relations and shareholder communication

The Board has established a formal Corporate Disclosure Policy to ensure timely, factual, accurate
and comprehensive communication of material events to the regulatory authorities, shareholders and
stakeholders.

The principles adopted by the Board on corporate disclosure are transparency and accountability,
compliance with relevant laws and regulations, confidential and timely disclosure as well as fair and equitable
access to information. Proper governance structure and processes are established within the Corporate
Disclosure Policy to guide the proper disclosure of material information as well as confidentiality preservation
requirements.

In carrying out the Board’s responsibilities, the key matters reserved for the Board’s approval, include among
others, material new ventures, corporate planning programmes, material acquisitions and disposals, material
investments, changes in the major activities, major borrowings, major agreements/contracts, changes to the
management and control structure and compliance with relevant laws and regulations. In addition, the authorisation
requirements delegated to the Management are incorporated in the key business processes and stated in the
Group’s Authorisation Limit policy.

In order for the Board to operate effectively, each Board member is expected to devote sufficient time and effort
in the discharge of their individual responsibilities. To ensure the time commitment from each director, and to
facilitate planning, individual meeting dates for each financial year are scheduled during the Board meetings held
before the start of the financial year.

To ensure sufficient time commitment all Board members shall notify the Chairman of the Board before accepting
any new directorship and include an indication of the time that will be spent on the new appointment.

Annual Report 2017 15

 CORPORATE GOVERNANCE STATEMENT
cont’d

1: BOARD OF DIRECTORS (CONT’D)

Composition of the Board

At present, the Board comprises of seven (7) members of whom four (4) are Executive Directors and three (3) are
Independent Non-Executive Directors. The profile of each Director is presented on pages 4 and 5 of this Annual
Report. The composition of independent non-executive directors is in compliance with the minimum prescribed
in the MMLR and the Code to ensure that there is sufficient independent element in the Board to provide the
necessary check and balance within the Board.

It is the responsibility of the Board to ensure that all members of the Board possess the necessary leadership
experience, knowledge, skilled and diverse background, integrity and professionalism to discharge its duties and
responsibilities effectively. It is the Board’s responsibility to ensure that the diversity within the Board is preserved
so that the required mix of knowledge, skills, expertise and experience are brought to the Board. The Board is
satisfied that, through the annual performance evaluation of the Board, board committees and individual directors,
the current board composition fairly represents the appropriate mix of knowledge, skills and experience required
to discharge the Board’s duties and responsibilities effectively. The existing board composition is also structured
in such a way that no individual or small groups of individuals dominate the Board’s decision-making process.

To reflect the unique ethnic diversity and mitigating the risk of population ageing and new generation of workforce,
the Board is promoting the right mix of gender, ethnic and age group at the all level of the Group and the composition
of the Board to mitigate such risks. Currently, the Board does not have a formal gender diversity policy. Whilst
the Board supports gender diversity, the Board firmly believes in recruiting and retaining the right talent for every
position, regardless of gender, and taking into account the requisite knowledge, skill set, and experience required.
The Board comprises of seven (7) members, one of which is a woman director.

As at the date of this annual report, none of the Directors holds directorships in more than five (5) public listed
companies as required under paragraph 15.06 of MMLR.

Chairman and Managing Director

To ensure that there is a balance of power and authority within the Board, as per the Board Charter, the position
of the Chairman and the Managing Director is separated and there is a clear division of responsibility between
the Chairman who is an independent non-executive director and the Managing Director of the Company.

During the financial year, the independent non-executive Chairman acted for governance, orderly conduct and
effectiveness of the Board. In addition, the Chairman represents the Board at general meetings and ensures an
effective two-way communication with the shareholders. The Chairman acts as facilitator at the meetings of the
Board to ensure that no board member dominates the discussion, and that appropriate discussion takes place
and relevant opinion among Board members are forthcoming.

With the assistance from the Executive Directors, the Managing Director develops corporate strategies for the
Board’s approval and implement approved corporate strategies accordingly. It is his responsibility to provide
leadership on the vision, management philosophy and business strategies as well as day-to-day operations of
the Group in accordance with the authority and delegations authorised by the Board. The duty to ensure the
compliance with the relevant laws and regulations are delegated to the Managing Director by the Board.

Further details of the role and responsibilities of the Board, Chairman and the Managing Director set out in the
salient features of the Board Charter published in the Investor Relations section at www.solidautomotive.com.

16 SOLID AUTOMOTIVE BERHAD (1016725-P)

 CORPORATE GOVERNANCE STATEMENT
cont’d

1: BOARD OF DIRECTORS (CONT’D)

Reinforce Independence

Presently, the composition of Independent Non-Executive Directors is in compliance with Paragraph 15.02 of
MMLR of Bursa Securities on Board composition whereby three (3) directors out of total seven (7) members of
the Board are Independent Non-Executive Directors.

In order to ensure independent and objective judgment are brought to the Board’s deliberation by the independent
directors and to ensure conflict of interest or undue influence from interested parties is well taken care of, the
Board is committed to ensuring that the independence of the independent directors are assessed and preserved,
through criteria established in the Independent Directors’ Self-Assessment Form by the Nominating Committee and
reporting of the same to the Board for consideration. When assessing independence, the Nominating Committee
focuses beyond the Director’s background, economic and family relationships and consider also independent and
objective judgment brought by the independent director to board deliberations.

During the financial year under review, the independence assessment of independent directors was carried out
by the Nominating Committee during the annual performance evaluation of the contribution of individual directors.
The Board is of the opinion that all independent directors remains objective and independent in participating in
the deliberations and decision making of the Board and Board Committees.

None of the Independent Directors has served on the Board for a period of more than nine (9) years.

Appointment to the Board and Re-election of Directors

It is the policy of the Board that highly qualified candidates with sufficient and relevant knowledge, skills and
competency are sought to serve as members of the Board to effectively discharge its responsibilities and duties
and contribute to the governance of the Group while at the same time gender and ethnic balance are being upheld
within the Board should such a potential candidate be available.

All Board members who are newly appointed are subject to retirement at the subsequent Annual General Meeting
of the Company. All Directors (including the Managing Director) will retire at regular intervals by rotation at least
once every three years and shall be eligible for re-election.

During the financial year under review, there were no resignations from or new appointments to the Board.

Board Meetings

The Board retains full and effective control of the Group. This includes responsibility for determining the Group’s
overall strategic direction as well as management of the Group. Key matters, such as approval of annual and
interim results, acquisitions and disposals, as well as material agreements are reserved for the Board. The Board
met at regular intervals during the financial year under review in order to discharge its functions and responsibilities
effectively.

To carry out its functions and responsibilities, the Board met four (4) times during the financial year ended 30 April
2017 and the attendance of each Director at the Board Meetings is as follows:

Annual Report 2017 17

 CORPORATE GOVERNANCE STATEMENT
cont’d

1: BOARD OF DIRECTORS (CONT’D)

Board Meetings (Cont’d)

Director Designation No. of Meetings

Attended
Mr. Kek Kok Swee Chairman, Independent Non-Executive Director 4/4
Mr. Ker Min Choo Managing Director 4/4
Mr. Ker Mong Keng Executive Director 3/4
Mr. Ker Meng Oi Executive Director 4/4
Mr. Ong Kheng Swee Executive Director 4/4
Mr. Azahar Bin Baharudin Independent Non-Executive Director 4/4
Ms. Tan Lay Beng Independent Non-Executive Director 4/4

The Board plans to meet at least four (4) times a year at quarterly intervals, with additional meetings convened
when urgent and important decisions are required to be made between the scheduled meetings. All meetings of
the Board are duly recorded in the Board minutes by the Company Secretary. The Company Secretary attended
all the Board Meetings of the Company. The Company Secretary ensures that all Board meetings are properly
convened and that accurate and proper records of the deliberations, proceedings and resolutions passed are
recorded and maintained in the statutory register kept at the registered office of the Company.

Company Secretary

It is the policy of the Company that a professionally and competent company secretary is appointed per the Board
Charter.

The Board appointed professional and competent Company Secretaries (a member of the Malaysian Institute of
Chartered Secretaries and Administrators and a Licensed Company Secretary respectively) to discharge its functions
with their attendance at all Board and Board Committee meetings. The Company Secretary is responsible for
ensuring the Board procedures are followed, that the applicable rules and regulations for the conduct of the affairs of
the Board are complied with and for all matters associated with the maintenance of the Board or otherwise required
for its efficient operation. The Company Secretary advises the Board on issues relating to corporate governance,
compliance with laws, rules, procedures and regulatory requirements. The Company Secretary ensures that there
is good information flow within the Board and between the Board, Board Committees and Senior Management.
The Company Secretary also ensures that all Board and Board Committee meetings are properly convened and
that accurate and proper records of the proceedings and resolutions passed are taken and maintained in the
statutory records and registers of the Company, with minutes of the previous meeting distributed for perusal and
confirmation by the Directors at the Board and Board Committee meetings.

The Company Secretary attended briefings and updates provided by the relevant regulatory bodies or professional
firms in order to keep abreast with the latest development in the relevant regulatory requirements, codes or
guidance and legislations in order to ensure timely compliance with relevant laws and regulations.

Board Committees

In discharging its fiduciary duties, the Board has delegated specific responsibilities to three (3) subcommittees,
namely, Audit Committee, Remuneration Committee and Nominating Committee. These Committees are responsible
to examine particular issues delegated and report to the Board on their findings and recommendations. The
ultimate responsibility for the final decision on all matters, however, lies with the Board.

All committees have written terms of reference and/or authorities and responsibilities and the Board receives
reports on their proceedings and deliberations. The Chairman of the respective committees will brief the Board
on the matters discussed at the committee meetings and minutes of these meetings are circulated at the Board
meetings.

18 SOLID AUTOMOTIVE BERHAD (1016725-P)

 CORPORATE GOVERNANCE STATEMENT
cont’d

1: BOARD OF DIRECTORS (CONT’D)

Audit Committee

The details of the members of the Audit Committee, the number of meetings held during the financial year, the
attendance of each member and activities of Audit Committee can be found on pages 30 to 33 of the Audit
Committee Report.

Nominating Committee

The Board, through the Nominating Committee, ensures that all members of the Board possess the necessary
leadership experience, skill set and diverse background, integrity and professionalism that brings value to the
Board so as to be able to discharge its duties and responsibilities diligently and effectively.

The Nominating Committee comprises of the following directors during the financial year under review:-

Chairman Mr. Kek Kok Swee (Independent Non-Executive Director)

Members: Mr. Azahar Bin Baharudin (Independent Non-Executive Director)

Ms. Tan Lay Beng (Independent Non-Executive Director)

The Nominating Committee, in compliance with paragraph 15.08A of MMLR of Bursa Securities, comprises
exclusively of non-executive directors, all of whom are independent and is guided by written terms of reference
duly approved by the Board with rights, authorities and responsibilities clearly spelt out. The Nominating Committee
is accorded the right to recommend to the Board the engagement of the services of the relevant advisers as it
deems necessary to fulfil its duties.

The Board has not nominate a Senior Independent Non-Executive Director to chair the Nominating Committee
as the Board is satisfied that the Independent Non-Executive Chairman of the Committee possesses the required
skills, knowledge and experience to lead the Nominating Committee to ensure effective and well-balanced board
composition that meets the needs of the Company and the Group businesses.

The terms of reference of the Nominating Committee is published in the Investors Relations section of the company’s
website at www.solidautomotive.com.

The Nominating Committee has established a formal orientation program for new directors as well as annual
procedures for the evaluation of the performance of Board, Board committees and individual directors. The criterias
include, among others, Board effectiveness, composition of the Board and Board committees and contribution
of individual Board members at meetings.

For the financial year ended 30 April 2017, the Nominating Committee met once to review the compliance of the
composition requirement of the Nominating Committee in accordance with MMLR of Bursa Securities and the
annual assessments process. The Nominating Committee conducted evaluations of the effectiveness of the Board
as a whole, the committees of the Board and the contribution of each individual director as well as independence
assessments on the Independent Non-Executive Directors. The Nominating Committee also reviewed the
independence, competencies, contributions and suitability of directors seeking re-election and re-appointments
before recommending them to the Board prior to submission of their names to shareholders for approval at the
Annual General Meeting.

In addition, peer review of fellow directors is required to be performed by each director based on recommended
evaluation criteria per the Corporate Governance Guide issued by Bursa Malaysia Berhad, whereby the criteria
in terms of fit and proper as well as contribution and performance of fellow directors are assessed.

As for the performance evaluation of board committees, the Board assesses the performance of the Audit
Committee, Nominating Committee and Remuneration Committee based on the recommended evaluation criteria
adopted from the Corporate Governance Guide issued by Bursa Malaysia Berhad, which includes committees’
composition, contribution to the board’s decision making, expertise, appointment as well as timeliness and quality
of communication and minutes.

Annual Report 2017 19

 CORPORATE GOVERNANCE STATEMENT
cont’d

1: BOARD OF DIRECTORS (CONT’D)

Nominating Committee (Cont’d)

On an annual basis, the relevant assessment and review forms/ questionnaires in relation to the aforementioned
assessments/ reviews are circulated to each director with sufficient time to complete in advance and the
assessment/ review results are collected for the Nominating Committee to review.

With the above processes, the Board, through the Nominating Committee, reviews and assesses its required mix
of skills and experience and other qualities, including core competencies which directors should bring to the Board,
and the size and composition of the Board to ensure that it has the appropriate mix of skills and competencies
to lead the Group effectively.

For the financial year ended 30 April 2017, the Nominating Committee met once with full attendance of its members.
For the financial year under review, the Nominating Committee conducted evaluations/reviews of the performance
of the Board, the Board committees and individual directors based on the processes and evaluation/ review criteria
as described above. The Nominating Committee reported the results of all the evaluations/ reviews to the Board
for review and deliberation to enable effective actions, including the suggested trainings to be attended, to be
formulated and implemented for the proper and effective functioning of the Board and its committees.

Appointment of new Directors to the Board or Board Committee is recommended by the Nominating Committee
for consideration and approved by the Board. All Board members who are newly appointed shall hold office only
until the next following annual general meeting, and shall then be eligible for re-election. There were no resignation
or new appointment of directors during the financial year under review.

Remuneration Committee

The Board recognises the need for fair remuneration in order to attract, retain and motivate Directors that carry
out their responsibilities, expertise that benefits the Group’s business activities. The Board takes cognisance that
Directors remuneration should be aligned with the business strategy and long-term objectives of the Group and
is reflective of their experience and level of responsibilities.

The Remuneration Committee comprises of three (3) members, majority of whom are Non-Executive Directors.
The Remuneration Committee is governed by written terms of reference approved by the Board.

The Remuneration Committee comprises of the following Directors during the financial year under review:-

Chairman: Mr. Kek Kok Swee (Independent Non-Executive Director)

Members: Mr. Azahar Bin Baharudin (Independent Non-Executive Director)
Mr. Ker Min Choo (Managing Director)

The Board has put in place a formal Board Remuneration Policy as a guidance to the Remuneration Committee
in the review and consideration of the proposed remuneration package of the members of the Board. Major
components of the remuneration package for executive directors and non-executive directors are identified for
review based on criteria established in the formal policy.

The objectives of the formal Board Remuneration Policy are as follows: -

• to enable the Company to attract and retain highly qualified members to enable the Company to provide a
well-balanced and competitive directors compensation package.
• to ensure that the interests of Executive Directors are aligned with the business strategy, risk tolerance,
values and medium to long-term interests of the Group and is consistent with the “pay-for-performance”
principle.
• to promote strong teamwork culture among the Executive Directors.
• to instil transparency and openness in the review and approval of compensation package of the Board’s
members.

20 SOLID AUTOMOTIVE BERHAD (1016725-P)

 CORPORATE GOVERNANCE STATEMENT
cont’d

1: BOARD OF DIRECTORS (CONT’D)

Remuneration Committee (Cont’d)

The duties of the Remuneration Committee per the approved terms of reference are:

a) Review, recommend and advise on all forms of directors’ remuneration e.g.

• Basic Salary
• Profit-Sharing Schemes (if any)
• Share Options (if any)
• Fees
• Any other benefits
b) Establish a formal and transparent procedure for developing a policy on executive remuneration and for
fixing the remuneration packages of individual directors;
c) To structure the component parts of the Executive Directors’ remuneration so as to link rewards to corporate
and individual performance; whereas, in the case of Non-Executive Directors, the level of remuneration
should reflect the experience and level of responsibilities undertaken by the particular Non-Executive Director
concerned;
d) Conduct continued assessment of individual Executive Directors to ensure that remuneration is directly
related to performance over time;
e) To monitor and assess, if any, the suitability of such proposed performance related formula (e.g. whether
the formula is based on individual performance, company profit performance, earnings per share, etc.) and
to see that awards under the Company’s share option schemes to the Directors are consistent with the
Company’s overall performance and provide an additional incentive to management;
f) To provide an objective and independent assessment of the benefits granted to Executive Directors;
g) To consider what other details of Executive Directors’ remuneration to be reported in addition to the existing
legal requirements, and how these details should be presented in the Annual Report;
h) To furnish a report to the Board of any findings of the Committee;
i) Engage or appoint such other competent and professional advisers/ consultants as may be deemed fit to
assist the Remuneration Committee in the smooth discharge of its duties herein; and
j) Generally, to decide and implement such other matters as may be delegated by the Company’s Board of
Directors from time to time.

The Remuneration Committee met once during the financial year ended 30 April 2017 with the attendance of all
members to review the proposed remuneration package of executive directors submitted by the Executive Directors
to ensure that it is performance-based and in line with the performance of the Group. The interested director
abstained from any deliberations regarding his remuneration package or fees. The Remuneration Committee’s
recommended remuneration packages were submitted to the Board for approval. The Board as a whole determines
the remuneration of the non-executive directors and individual non-executive director abstained from deliberation
and approval of his own remuneration.

Director’s Remuneration

The Board assumes the overall responsibility to establish and implement an effective remuneration review practice
for the members of the Board in order to attract, retain and motivate directors positively in pursue of the medium
to long term objectives of the Group and are reflective of their experience and level of responsibilities. The Board
had put in place a formal Board Remuneration Policy for adoption by the Remuneration Committee in the review
and consideration of proposed remuneration package of the members of the Board. Major components of the
remuneration package for executive directors and non-executive directors are identified for review based on criteria
established in the formal policy.

Principal components of the remuneration of the Executive Directors are fixed salary, variable compensations,
equity-based remuneration and other fringe benefits while the principal components of the remuneration of the
Non-Executive Directors are annual director’s fees.

Annual Report 2017 21

 CORPORATE GOVERNANCE STATEMENT
cont’d

1: BOARD OF DIRECTORS (CONT’D)

Director’s Remuneration (Cont’d)

The Remuneration Committee is responsible for recommending to the Board the remuneration packages of
the Executive Directors. None of the Executive Directors participated in any way in determining their individual
remuneration. The Board as a whole determines the remuneration of the non-executive directors and individual
non-executive director abstained from deliberation and approval of his own remuneration.

A summary of the remuneration of Directors during the financial year ended 30 April 2017, distinguishing between
Executive and Non-Executive Directors in aggregate, with categorisation into appropriate components and the
number of Directors whose remuneration falls into each successive bands of RM50,000 are disclosed below:-

Company Group
Basic Salary, Basic Salary,
Bonus, Bonus,
Incentives, Incentives,
Allowance, Allowance,
EPF, SOCSO Fees Others EPF, SOCSO Fees Others
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Executive – 180 – 4,592 271 –
Non-Executive – 132 – – 132 –
– 312 – 4,592 403 –

The number of Directors whose remuneration fall into the following bands are as follows:-

 Company Group
Remuneration bands per annum Executive Non-Executive Executive Non-Executive

Below RM50,000 – 2 2 2
RM50,001 to RM100,000 – 1 – 1
RM150,001 to RM200,000 – – 2 –
RM250,001 to RM300,000 – – 1 –
RM300,001 to RM350,000 – – 3 –
RM350,001 to RM400,000 – – 1 –
RM400,001 to RM450,000 – – 1 –
RM500,001 to RM550,000 2 – 2 –
RM600,001 to RM650,000 1 – 1 –
RM700,001 to RM750,000 1 – 1 –

Detailed disclosure is not made for each director’s remuneration as it is the view of the Board that the transparency
and accountability are adequately addressed by the band disclosure as prescribed by the MMLR.

22 SOLID AUTOMOTIVE BERHAD (1016725-P)

 CORPORATE GOVERNANCE STATEMENT
cont’d

1: BOARD OF DIRECTORS (CONT’D)

Directors’ Training

All executive directors have been with the Company for several years and are familiar with their duties and
responsibilities as Directors. In addition, any newly appointed directors will be given briefings and orientation by
the Executive Directors and senior management of the Company on the business activities of the Group and its
strategic directions, as well as their duties and responsibilities as directors.

All the Directors have completed the Mandatory Accreditation Programme prescribed by Bursa Securities and
are mindful that they should receive appropriate continuous training and to attend seminars and briefings in order
to broaden their perspective and to keep abreast with new developments for the furtherance of their duties.

During the financial year ended 30 April 2017, all Directors received regular briefings and updates on the Group’s
business and operations, as well as being updated on new regulations and statutory requirements.

The Directors are encouraged to review their individual training requirements, as they deem necessary to enhance
their knowledge and to keep abreast of developments in the market environment, regulatory and statutory
requirements.

During the financial year, all Directors have attended the seminars and briefings conducted by regulatory bodies
or professional organizations as follows:

Name of Directors Seminars and Briefing Attended

Ker Min Choo • Team Building & Leadership Program
• Automechanika Shanghai 2016
Ker Mong Keng • Automechanika Dubai 2016
• Automechanika Frankfurt 2016
• Automechanika Shanghai 2016
Ker Meng Oi • Team Building & Leadership Program
• Executive Talk – Driving Business Results with Financial Strategy
Ong Kheng Swee • Team Building & Leadership Program;
• Audit Committee Institute (ACI) Breakfast Roundtable;
• 2017 Tax and Budget Conference;
• Executive Talk – Driving Business Results with Financial Strategy;
• Business Sustainability and Reporting – Key to Business Success Today
Kek Kok Swee • 2017 Tax and Budget Conference
Azahar Bin Baharudin • Management Discussion and Analysis Statement and Business Sustainability
Tan Lay Beng • Transfer Pricing Conference 2016
• Analysing GST Audit File (GAF)
• 2017 Tax and Budget Conference
• Seminar Percukaian Kebangsaan 2016
• GST Post Implementation Issues – Latest DG Decision and Orders

It is the Board’s commitment to ensure that all Directors are equipped with the right level of knowledge and skills
through structured and unstructured training in order for them to fulfil their fiduciary duties and responsibilities and
all directors shall continue to undergo relevant training programs and seminars as and when required and from
time to time to update their knowledge and skills.

Annual Report 2017 23

 CORPORATE GOVERNANCE STATEMENT
cont’d

1: BOARD OF DIRECTORS (CONT’D)

Supply of Information

The Board members in their individual capacity have unrestricted access to complete information on a timely
basis in the form and quality necessary for them to discharge their duties and responsibilities. Prior to each Board
meeting, all Board members are furnished with the relevant documents and sufficient information no later than seven
(7) days before the meeting to enable them to have sufficient time in obtaining a comprehensive understanding
of the issues to be deliberated upon in order to arrive at an informed decision.

In addition to quantitative information, the directors are also provided with updates on other areas such as market
developments, industry trend, business strategy and risk management.

All Directors have direct access to the Senior Management. During the Board meeting, Senior Management
are invited to attend the board meetings to present and discuss on the quarterly financial report, non-financial
information and market / industry development. Besides direct access to Senior Management, external independent
professional advisers are also available to render their independent views and advice to the Board, whenever
deemed necessary and in appropriate circumstances, at the Company’s expense.

The Directors also have access to the advice and services of the Company Secretary who is responsible for
ensuring that the Board’s meeting procedures are adhered to.

Code of Conduct

The Board is fully committed to the highest standards of integrity, transparency and accountability in the conduct
of the Group’s business and operations to ensure business sustainability through their conduct, individually or
collectively, by way of the Code of Conduct approved by the Board that is applied to every employee, customer
and vendor worldwide. The Code of Conduct focuses on the key principles of respecting others, serving our
customers with integrity, avoiding conflict of interest, preserving confidentiality and privacy, effective channel of
communication and corporate citizenship.

For employees, the acceptable conduct expected from them is stated in the Terms and Conditions of Employment
established by the Group and briefings are conducted with them during induction training.

The Board has established a formal Whistle-Blowing Policy to foster an environment where integrity and ethical
behaviour are maintained and any illegal or improper action and/or wrongdoing in the Company may be exposed.
The formal Whistle-Blowing Policy provides a mechanism for employees and other interested parties to confidentially
bring to the attention of the members of the Audit Committee any concerns related to matters covered by the
Group Code of Conduct, legal issues and financial, accounting or audit matters. The policy is also designed
in such a way that any improper conduct (misconduct or criminal offence) is reported to representative of the
Audit Committee directly. The whistle-blower will be accorded with protection of confidentiality of identity and be
protected against any adverse and detrimental actions for disclosing any improper conduct committed or about
to be committed, to the extent reasonably practicable.

The Whistle-Blowing Policy is published on the Company’s website at the Investor Relations section at www.
solidautomotive.com.

Sustainability

The Board recognises the importance of sustainability to the Group’s business operations and has formalised
strategies to promote sustainability in all aspects of the conduct of its business including governance, environmental
and social factors.

The Group’s sustainability policy is published on the Company’s website at the Investor Relations section at www.
solidautomotive.com.

During the year under review, the Group conducted two (2) visits to an orphanage and a home for handicapped
children, organised donation collections among the employees in the Group and made contributions in kind as
well. The Group also contributed to the sponsorship of T- shirts for participants at the annual Chingay celebration
in Johor Bahru.

24 SOLID AUTOMOTIVE BERHAD (1016725-P)

 CORPORATE GOVERNANCE STATEMENT
cont’d

2: ACCOUNTABILITY AND AUDIT

Financial Reporting

The Board ensures that timely balanced, clear, accurate and meaningful financial reporting on the Group is made
to shareholders, investors and the regulatory authorities. All financial statements, including the quarterly financial
results and annual financial statements for shareholders are reviewed and approved by the Audit Committee
and approved by the Board to ensure accuracy, adequacy and completeness and compliance with the relevant
accounting standards and legislation prior to the release to the regulatory authorities and investing public.

A summary of the activities of the Audit Committee during the financial year is set out in the Audit Committee
Report on pages 30 to 33 of this Annual Report.

The Directors are responsible for ensuring that the annual financial statements of the Group and the Company
are prepared in accordance with the provisions of the Companies Act 2016 and applicable approved accounting
standards of Malaysia so as to give a true and fair view of the state of affairs of the Group and the Company as
at 30 April 2017, and of the results of their operations and cash flows for the financial year ended on that date.

In preparing the Group’s financial statements, the Directors have:

• applied the appropriate and relevant accounting policies on a consistent basis;
• made judgments and estimates that are reasonable and prudent; and
• prepared the annual audited statements on a going concern basis.

The Directors also have the responsibility for taking reasonable steps to safeguard the assets of the Group and
to prevent and detect fraud and other irregularities.

Relationship with External Auditors

Through the Audit Committee, the Board maintains a transparent and professional relationship with the external
auditors and outsourced internal auditors in seeking professional advice and ensuring compliance with the approved
company policies and procedures, approved accounting standards and relevant rules and regulations in Malaysia.

The role and responsibilities of the Audit Committee in relation to the external auditors are described in the Audit
Committee’s terms of reference.

The terms of engagement of the external auditors are set out in their engagement letter, which includes among
others, the scope of coverage, responsibilities of the external auditors, confidentiality, independence and proposed
fees.

Prior to the commencement of the external audit, the external auditors presented the Audit Planning Memorandum
to the Audit Committee which states the engagement and reporting requirements, audit approach, areas of
audit emphasis, communication with management, engagement team, reporting and deliverables and proposed
audit fees for the Audit Committee’s review. In addition the Audit Committee met with the external auditors twice
during the year without the presence of the executive directors or management to discuss on any areas, which
the external auditors may wish to highlight and for the members to discuss on accounting or other matters.

The external auditors, upon completion of the audit, presented their Audit Review Memorandum, which highlights
among other matters, significant audit findings, significant deficiencies in control, status of audit, independence
and communications with the Audit Committee, for the Audit Committees’ review.

A summary of the activities of the Audit Committee involving the external auditors and outsourced internal auditors
is set out in the Audit Committee Report on pages 30 to 33 and the Statement on Risk Management and Internal
Control on pages 34 to 39.

After having considered that the current external auditors has been performing the audit services for the Company
since the incorporation of the Company on 12 September 2012, the mandatory rotation of audit partners every
five (5) years, coupled with the firm’s internal quality control process, the Audit Committee is of the opinion that
the external auditors is suitable and capable to deliver the assurance, professionally with a sufficient level of
independence under the relevant legislations and regulations and recommends their reappointment to the Board,
and upon which shareholders approval will be sought at the forthcoming Annual General Meeting.

Annual Report 2017 25

 CORPORATE GOVERNANCE STATEMENT
cont’d

2: ACCOUNTABILITY AND AUDIT (CONT’D)

Independence of External Auditors

The Board recognises the importance of the independence and capability of external auditors on the reliability
and quality to the annual financial statements prepared for the stakeholders. No formal policy has been adopted
to assess the independence of the external auditors. Based on the review of the external auditors reports and
declaration of independence, the Audit Committee is satisfied that the current external auditors are independent
and possess the capabilities and resources to fulfil the terms of engagement.

On an annual basis prior to the commencement of the audit engagement, through the presentation of the Audit
Planning Memorandum and subsequently, the Audit Review Memorandum, the external auditors of the Group
confirm to the Audit Committee their independence in relation to the audit work to be performed and their
commitment to communicate to the Audit Committee on their independence status on an on-going manner.

During the financial year, the Audit Committee reviewed the external auditors’ independence, objectivity and the
services (including non-audit services) prior to the commencement of audit work and the Audit Committee and
the Board are satisfied that the external auditors are independent.

3: Recognise and Manage Risks

Sound framework to manage risk

The Board acknowledges its overall responsibility for maintaining a sound system of internal controls and robust
risk management framework to safeguard shareholders’ investment and the Group’s assets.

The Statement on Risk Management and Internal Control made in pursuance of paragraph 15.26(b) of the Listing
Requirements of Bursa Securities is separately set out on pages 34 to 39 of this Annual Report.

4: CORPORATE DISCLOSURE

The Board is committed to maintain effective communications with its shareholders and investors. The main
communication channels with shareholders and investors are the announcements made through Bursa Securities
and the Annual Report. All material announcements to be made through Bursa Securities are approved by the Board
prior to its release to Bursa Securities. The Board observes all disclosure requirements as laid down by MMLR
and the Capital Markets and Services Act 2007 with regard to dissemination of material corporate information
and announcements on a timely basis. To further enhance the corporate disclosure, the Chairman of the Board,
the Managing Director and a designated Executive Director are delegated with the role as authorised speaker for
the Company to ensure consistent, factual and accurate disclosure.

The Board has a formal Corporate Disclosure Policy which sets out the policies and procedures for disclosure
of material information of the Group and which is applicable to all Directors and employees of the Group. The
management of the corporate disclosure is delegated to a designated Executive Director with responsibilities,
authorities and resources clearly defined. The proper procedures for responses to market rumors and disclosures of
material information are clearly stated in the policy. The policy includes internal control procedures on confidentiality
to ensure that confidential information is handled in a proper manner to avoid leakages and improper use of such
information.

For transparent, quick and effective dissemination of material information, the Company’s website incorporates
an “Investor Relations” section which provides all relevant information on the Company and is accessible by the
public via www.solidautomotive.com. This Investor Relations section includes links to announcements made by
the company and the quarterly results and annual reports for the public to access. Further, an email address is
provided in “Investor Relations” section of Company’s website to which request of any investor can be forwarded
to.

26 SOLID AUTOMOTIVE BERHAD (1016725-P)

 CORPORATE GOVERNANCE STATEMENT
cont’d

5: SHAREHOLDERS

Annual General Meeting

The Annual General Meeting is the principal forum for dialogue with shareholders. The shareholders are given the
opportunity and are encouraged to participate in general meetings of the Company. Notice of the Annual General
Meeting and Annual Reports are sent out to shareholders at least 21 days before the date of the meeting.

Shareholders are kept well informed of developments and performances of the Group through announcements
made to Bursa Securities and press releases (where appropriate) as well as the Annual Report. The Annual Report
provides information and disclosures on the Group and complies with the relevant regulations and guidelines.

Adequate time is reserved during the Annual and Extraordinary General Meetings to encourage and allow the
shareholders to seek clarifications or ask questions on pertinent and relevant matters.

Poll Voting

In compliance with the MMLR, all resolutions put forth for shareholders’ approval at the 4th Annual General Meeting
held on 27 September 2016 were voted by way of poll voting to promote exercise by shareholders of their rights
under the Constitution and to enhance shareholders’ participation.

Additional Compliance Information

• Utilisation of Proceeds

Rights Issue of Warrants

The net proceeds from the Rights Issue of Warrants, completed on 23 December 2015, was utilised as
follows:

Actual
Purpose Utilization to
Utilization 30 April 2017 Deviation Balance
Proposed RM’000 RM’000 RM’000 RM’000

i) Working Capital 15,915 (12,090) 175 4,000

ii) Estimated expenses 585 (410) (175) –

Total gross proceeds 16,500 (12,500) – 4,000

• Material Contracts involving Directors and Major Shareholders’ Interests

There were no material contracts entered into by the Company and its subsidiaries involving directors and
major shareholders’ interests still subsisting at the end of the financial year ended 30 April 2017.

• Sanctions and/or Penalties imposed

The Company and its subsidiaries, Directors and management have not been imposed with any sanctions
and/or penalties by regulatory bodies.

• Share buy-backs

There was no share buy-back by the Company during the financial year.

Annual Report 2017 27

 CORPORATE GOVERNANCE STATEMENT
cont’d

5: SHAREHOLDERS (CONT’D)

Additional Compliance Information (Cont’d)

• Options, Warrants or Convertible Securities Exercised

Other than disclosed elsewhere in this report, there were no outstanding convertible securities pending
exercise during the financial year ended 30 April 2017.

• American Depository Receipt (ADR) or Global Depository Receipt (GDR) programme

The Company has not sponsored any ADR or GDR programme for the financial year ended 30 April 2017.

• Non-audit fees

During the financial year ended 30 April 2017, the non-audit fee incurred for services rendered by external
auditors to the Group amounted to RM4,000 for work performed in relation to the review of the Statement
on Risk Management and Internal Control.

• Variation of Results

There were no profit estimations, forecasts or projections made or released by the Company during the
financial year.

The audited financial results for the financial year ended 30 April 2017 did not differ by 10% or more from
the unaudited full year’s results previously announced on 30 June 2017 to Bursa Securities.

• Profit Guarantee

The Company did not give any profit guarantee during the financial year.

• Recurrent Related Party Transactions (“RRPT”)

The nature of transactions with the Related Parties which are necessary for the day-to-day operations of the
Group and are based on normal commercial terms that are not more favourable to its related parties than
those generally available to the public, involving the interest of the Major Shareholders and Directors of the
Company, namely Mr. Ker Min Choo (“KMC”), Mr. Ker Mong Keng (“KMK”) and Mr. Ker Meng Oi (“KMO”)
and the following person connected to them are as follows:

1) Mr. Ker Boon Kee (“KBK”), a Substantial Shareholder of the Company is the sibling of KMC, KMK
and KMO.

Nature of Transacted
Transacting Nature of Recurrent Value
Parties relationship Transactions RM
a Ker Boon Kee (“KBK”), KMK and KMC are Rental of warehouse and office 245,300
Ker Mong Keng (“KMK”) Directors and Major owned by KBK, KMK and KMC to
and Shareholders of a subsidiary company, Auto Empire
Ker Min Choo (“KMC”) Solid. Impex Pte Ltd:-

Ker Meng Oi (“KMO”) • 10 Admiralty Street #01-64,

is Director and North Link Building, Singapore
Shareholder of Solid. 757695

KBK is a substantial
shareholder of the
Solid and the brother
of KMK, KMC and
KMO.

28 SOLID AUTOMOTIVE BERHAD (1016725-P)

 CORPORATE GOVERNANCE STATEMENT
cont’d

5: SHAREHOLDERS (CONT’D)

Additional Compliance Information (Cont’d)

• Recurrent Related Party Transactions (“RRPT”) (Cont’d)

Nature of Transacted
Transacting Nature of Recurrent Value
Parties relationship Transactions RM
b KBK KBK is the brother of Rental of warehouse and office 208,689
KMK, KMC and KMO owned by KBK to a subsidiary
who are Directors company, Auto Empire Impex Pte
and Shareholders of Ltd:-
Solid.
• 10 Admiralty Street #01-86,
North Link Building, Singapore
757695

c Tampoi Enterprise K B K i s a m a j o r Rental of warehouse and office 45,600

Sdn Bhd (“TE”) s h a r e h o l d e r a n d owned by TE to a subsidiary
director of TE. company, Twinco Far East Sdn Bhd:

KBK is the brother of • No. 53, Jalan 2/57B, Segambut

KMK, KMC and KMO Light Industries, 51200
who are Directors Segambut, Kuala Lumpur
and Shareholders of
Solid.
d Tampoi Auto Supply K M C , K M K a n d Rental of shop lot and office owned 70,200
Sdn Bhd (“TAS”) K B K a r e m a j o r by TAS to a subsidiary company,
shareholders and Twinco Far East Sdn Bhd:
directors of TAS.
• No 77, Jalan Glasir, Taman
KMO is a shareholder Tasek, 80200 Johor Bahru,
of TAS. Johor, Malaysia

KMK, KMC and

KMO are Directors
and Shareholders of
Solid.

Annual Report 2017 29

 AUDIT COMMITTEE REPORT

A. ESTABLISHMENT AND COMPOSITION

The Audit Committee comprises the following members:-

Chairman:
Mr. Azahar Bin Baharudin (Independent Non-Executive Director)

Members:
Mr. Kek Kok Swee (Independent Non-Executive Director)
Ms. Tan Lay Beng (Independent Non-Executive Director)

The composition of the Audit Committee is in compliance with paragraph 15.09 of the Main Market Listing
Requirements (“MMLR”) where the Audit Committee consists of three (3) Independent Non-Executive Directors
and two (2) of the members the Audit Committee, namely Mr. Kek Kok Swee and Ms. Tan Lay Beng, are members
of the Malaysian Institute of Accountants which fulfils the requirements under Paragraph 15.09 (c) and paragraph
7.1 of Practice Notes 13 of MMLR.

B. TERMS OF REFERENCE

The terms of reference of the Committee is available for viewing on the Company’s website at the “Investors
Relations” section of www.solidautomotive.com.

C. MEETINGS

During the financial year ended 30 April 2017, the Audit Committee held four (4) meetings. Details of each member’s
meeting attendances are as follows:-

Name of Members No. of Meetings Attended

Mr. Azahar Bin Baharudin 4/4
Mr. Kek Kok Swee 4/4
Ms. Tan Lay Beng 4/4

The meetings were conducted with sufficient quorum under the Audit Committee’s terms of reference.

The meetings were appropriately structured through the use of agendas, which were distributed to the members,
together with the minutes of meetings and relevant papers and reports at least seven (7) days before the meeting,
prior to the meetings with sufficient notification and time to allow for review by the members for the proper discharge
of their duties and responsibilities. The secretary of the Company, the appointed secretary of the Committee
attended all the meetings during the financial year under review.

The executive directors, chief financial officer (“CFO”), chief operating officer, representatives of the external auditors
and internal auditors, and key management, at the invitation of the Committee, may attend the Committee meetings
to present their reports and/or findings or required information and explanations for the proper deliberation of the
matters on hand.

30 SOLID AUTOMOTIVE BERHAD (1016725-P)

 AUDIT COMMITTEE REPORT
cont’d

D. SUMMARY OF ACTIVITIES DURING THE FINANCIAL YEAR

The Committee carried out its duties in accordance with its terms of reference during the year. The main activities
undertaken by the Audit Committee during the financial year included the following:-

1. Reviewed the quarterly financial results announcement

During the year under review, the CFO presented the draft unaudited quarterly results for the Audit
Committee’s review and briefed the Committee on the contents of the results and notes, answered all queries
raised and clarifications sought by the Audit Committee. The review focused mainly on key financial results
and comparison to the immediate preceding quarter and corresponding quarter of the preceding year with
reasons for major variances explained by the CFO. In addition, the business prospect of the Group for the
remainder of the financial year was presented by the Management to the Audit Committee for discussion.

The review of the quarterly financial results performed by the Audit Committee was done in conjunction with
a review of the key financial information (such as trade receivables age analysis, inventory age analysis and
impairment provision for inventories, trade payables age analysis and major expenses) as well as comparison
of actual results with budgeted financial results. The Audit Committee further assessed the reasonableness
of the assumptions and estimates made in the draft quarterly financial statements based on the updates
by management on the operations and proposed business strategies and business expansion.

The unaudited quarterly results reviewed by the Audit Committee were then recommended to the Board
for approval prior to announcement to Bursa Malaysia Securities Berhad (“Bursa Securities”).

2. Review the Company’s compliance with Regulatory, Statutory and Accounting Standards

During the quarterly Audit Committee meeting, with respect of the quarterly and annual financial statements,
the Audit Committee reviewed the Company’s compliance with the MMLR, accounting standards
promulgated by Malaysian Accounting Standards Board and other legal and regulatory requirements.

3. Reviewed the latest changes of pronouncements issued by the accountancy, statutory and regulatory
bodies.

At such quarterly meetings, the Audit Committee sought clarification of the application and impact of new
and revised accounting standards with the external auditors as necessary. The Audit Committee members
also underwent training conducted by external trainers on the updates and changes in MMLR, tax regime
and proposed changes in Malaysia Code on Corporate Governance during the financial year under review
to keep themselves updated on the latest developments and to assess the impact on the financial reporting
and corporate governance compliance requirements.

The Audit Committee reported to and updated the Board on significant issues and matters discussed
and any recommendations to the Board, where appropriate, made during the Committee’s meetings. The
minutes of the Committee’s meetings were made available to all Board Members for review and to seek
clarification and confirmation from the Audit Committee Chairman where necessary.

4. Reviewed the External Auditors’ Audit Plan, Scope of Work and Audit Fee

During the financial year, the external auditors presented their Audit Planning Memorandum to the Audit
Committee for review and comment prior to the commencement of the audit to ensure that the audit scope
is adequate and reasonable time was allowed to ensure the audit was carried out effectively and not under
undue time pressure. The audit plan presented includes the audit approach, audit area of emphasis, and
reporting timetable. The audit plan for the financial year was discussed and clarifications sought from the
external auditors prior to approval of the said plan by the Audit Committee. During the same meeting, the
audit fees and non-audit fees as disclosed in Note 27 to the financial statements were presented by the
external auditors for review by Audit Committee, which were then recommended to the Board for approval.

Annual Report 2017 31

 AUDIT COMMITTEE REPORT
cont’d

D. SUMMARY OF ACTIVITIES DURING THE FINANCIAL YEAR (CONT’D)

5. Reviewed the Audited Financial Statements and Audit Results with External Auditors

Prior to announcement of the final quarterly financial statements, the external auditors presented their Audit
Review Memorandum and briefed the Audit Committee on the audit findings for the current financial year
under review.

During the meeting, the audit findings on the significant risk areas, deficiencies in internal control and status
of the audit were presented to the Audit Committee and after deliberations and approval of the audit findings,
were presented to the Board by the Chairman of the Audit Committee.

The Audit Committee reviewed the audited statutory financial statements of the Company and the Group for
the financial year ended 30 April 2017 and satisfied itself that the audit had been adequately carried out in
accordance with the approved audit plan and approved auditing standards and that the presentation of the
financial statements was in compliance with statutory requirements and applicable accounting standards.
The Audit Committee then recommended the audited financial statements for the Board’s approval and
adoption.

6. Private Sessions with External Auditors

For the financial year ended 30 April 2017, the Audit Committee has met with the External Auditors a total
of two (2) times without the presence of the executive directors and management in order for the Audit
Committee and the external auditors to freely exchange views and opinions between both parties.

7. Reviewed the Independence and Objectivity of the External Auditors

During the financial year, confirmation on the independence of the external auditor was obtained by the
Audit Committee. In addition, the Audit Committee reviewed the independence and objectivity of the
external auditors and the services provided, including non-audit services and noted that the non-audit fee
is immaterial, justifiable and does not impair the independence and objectivity of the external auditors.

8. Reviewed the Internal Audit Function

During the financial year, the Audit Committee received internal audit reports presented by the outsourced
internal auditor that contain the findings, recommendations and agreed management action plans for the
internal audits conducted based on approved internal audit plan. Aside from reporting on the audit findings,
the status of agreed management action plans for previous internal audit findings and the status of the
approved internal audit plan was also presented to the Audit Committee. Additionally, the Audit Committee
had assessed the adequacy and effectiveness of the outsourced internal audit function through the review
of the resources, experience and continuous professional development of the outsourced internal auditor.

During the financial year, the internal audit plan and subsequent changes were presented by the outsourced
internal auditor for the review and approval by the Audit Committee.

The oversight role of Audit Committee on the internal audit function is contained in the Statement on Risk
Management and Internal Control set out on pages 34 to 39 of this Annual Report.

9. Reviewed Related Party Transactions

During the scheduled quarterly meetings, the Audit Committee conducted the review of related party
transactions (including recurring related party transactions) entered into by the Group with related parties
and ensured all transactions are conducted at arms length’s basis on normal commercial terms and are
not prejudicial to the interest of the company or its minority shareholders.

The Audit Committee also reviewed the Circular to Shareholders dated 26 August 2016 in relation to the
proposed renewal of shareholders mandate for recurrent related party transactions of a revenue or trading
nature and recommending to the Board for approval.

32 SOLID AUTOMOTIVE BERHAD (1016725-P)

 AUDIT COMMITTEE REPORT
cont’d

D. SUMMARY OF ACTIVITIES DURING THE FINANCIAL YEAR (CONT’D)

10. Reviewed the Annual Report

For the financial year under review, the Audit Committee reviewed the Annual Report (which includes the
Corporate Governance Statement, Audit Committee Report, Statement on Risk Management and Internal
Control) and the audited financial statement of the Group and recommended to the Board for approval.

E. INTERNAL AUDIT FUNCTION

The internal audit function of the Group is outsourced to a professional consulting firm to undertake independent,
objective, regular and systematic reviews of the internal controls system of the Group. The outsourced internal
auditors report directly to the Audit Committee.

The Audit Committee reviews the internal audit plan tabled to ensure the adequacy of the audit scope and coverage
in relation to the risk management framework, key business risk exposure and risk appetite of the Group prior to its
approval for execution. The internal audit plan is duly executed by the internal audit function with any subsequent
changes to the plan reviewed and approved by the Audit Committee. Further, the Committee regularly reviewed
the internal audit plans during the financial year to take into account any changes in the prevailing business
environment, business structure and composition and its associated risks to ensure the continuing relevance of
the approved internal audit plans, adequacy of the scope and resources being allocated to the outsourced internal
audit function and any changes are approved by the Committee prior to execution.

The outsourced internal auditor tables the results of their review to the Audit Committee at their scheduled meetings,
highlighting their findings, recommendations, areas of improvement opportunities, management response and
action plan. In addition, the outsourced internal audit function performed follow up reviews to ascertain the status
of implementation of agreed management action plans. The results of the follow up reviews were reported to the
Audit Committee for their review and deliberation.

The areas of review conducted by the outsourced internal auditor are disclosed in the Statement on Risk
Management and Internal Control set out on pages 34 to 39 of this annual report.

The Audit Committee ensures the effectiveness and adequacy of the outsourced internal audit function, its
competency and resources allocated to the internal audit function through the review of the outsourced internal
auditor’s resources and the qualifications, working experience and continuous professional development of the
personnel of the outsourced internal audit function which was tabled by the outsourced internal audit function at
the Audit Committee meetings during the financial year under review.

The cost incurred in connection with the internal audit function during the financial year amounted to RM62,350.

Annual Report 2017 33

 STATEMENT ON RISK MANAGEMENT
AND INTERNAL CONTROL

INTRODUCTION

The Board of Directors (“the Board”) of Solid Automotive Berhad (“the Company”) (collectively with its subsidiaries, “the
Group”) is pleased to present the statement on the risk management and internal control of the Group for the financial
year ended 30 April 2017, pursuant to paragraph 15.26(b) and Practice Note 9 of the Bursa Malaysia Securities Berhad
Main Market Listing Requirements (“MMLR”) and as guided by the Statement on Risk Management and Internal Control:
Guidelines for Directors of Listed Issuers (“the Guidelines”),

BOARD RESPONSIBILITY

The Board affirms its responsibility to maintain a sound risk management and internal control system and for reviewing
their adequacy and effectiveness to safeguard its stakeholders’ interests and the Group’s assets. The Board has delegated
these aforementioned responsibilities to the Audit Committee whereby the Audit Committee is assigned with the duty,
through its terms of reference approved by the Board, to review and consider the adequacy and effectiveness of the
risk management and internal control system of the Group. Through the Audit Committee, the Board is kept informed
of all significant control issues brought to the attention of the Audit Committee by the management, the internal audit
function and the external auditors.

However, the Board recognises that, in view of the limitations that are inherent in any system of internal controls, the
system of internal controls is designed to manage, rather than to eliminate, the risk of failure to achieve the Group’s
business objectives. Accordingly, the system of internal controls can only provide reasonable and not absolute assurance
against material misstatement of losses and fraud.

KEY ELEMENTS OF THE RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM

RISK MANAGEMENT

The Board recognise that an effective risk management process is key to good corporate governance in pursuit of the
Group’s strategic business objectives and there is a continuous process to identify, evaluate and manage significant
risks faced by the Group systematically during the financial year under review.

The Board has adopted a systematic risk management framework which are embedded into the Group processes and
structure.

The Board has a formal risk management reporting structure of the Board, the Audit Committee and management to
ensure effective risk management as set out below:

Internal Audit

The Board Audit Committee

Risk Management
Risk Owners
Committee

The Risk Management of the Group is delegated to the Risk Management Committee comprising an Executive Director
and Senior Management to assess and monitor the Group’s risk as well as to discuss, evaluate and address matters
associated with strategic, financial, operational and governance aspects of the Group.

The systematic risk management framework encompasses risk identification, risk assessment, control identification,
risk treatment and control activities. Risk assessment are guided by the likelihood rating and impact rating established
by the Board. Based on the risk management process, key risks profile was compiled, with relevant key risks identified
and rated based on an agreed upon risk rating. The key risk profile is used for the identification of high residual risks
which are above the risk appetite of the Group that require the Management and the Board’s immediate attention for
risk treatment as well as for future risk monitoring.

34 SOLID AUTOMOTIVE BERHAD (1016725-P)

 STATEMENT ON RISK MANAGEMENT
AND INTERNAL CONTROL
cont’d

KEY ELEMENTS OF THE RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM (CONT’D)

RISK MANAGEMENT (CONT’D)

The roles and responsibilities of the Executive Directors includes the following:

(a) Implementation of risk management framework as approved by the Board;

(b) Develop and implement the risk management process;
(c) Ensure that risk management exercise are aligned with the Group’s strategies (e.g. vision/mission, corporate
strategies and goals);
(d) Periodic review and update of Key Risks Register;
(e) Update the Audit Committee on changes to the Key Risks Register on periodical basis

While the roles and responsibilities of operational management as defined in the Risk Management Policy are as follow:

(a) Manage the risks under his/her control;

(b) Assess risks and evaluate existing control to identify areas with controls that were ineffective, inadequate or non-
existent, he/she shall then report to the Executive Directors and assists the Executive Directors in the development
of the management action plans and implementation of the action plans formulated;
(c) Assist Executive Director with the periodic update on the changes in the Key Risk Registers;

The systematic risk management process as defined in the Risk Management Policy is employed by the Executive
Directors and the Management for risk identification, risk assessment, control identification, risk treatment and control
activities. Risk assessment, at gross and residual level, are guided by the likelihood rating and impact rating established
based on the risk appetite approved by the Board. Based on the risk management process, key risk registers were
compiled by the Executive Directors and the Management, with the relevant key risks identified rated based on the
agreed upon risk rating. The key risk registers are used for the identification of high residual risks which are above the
risk appetite of the Group that requires the Management and the Board’s immediate attention and risk treatment as
well as for future risk monitoring.

As an important risk monitoring mechanism, the Executive Directors and the Management reviews the key risk registers
of key operating subsidiaries and assessment of emerging risks identified at strategic and operational level on an annual
basis or on more frequent basis (if circumstances required) and reports (if circumstances required) to the Audit Committee
on the results of the review and assessment.

During the financial year under review, the Executive Directors and the Management conducted a review and assessment
exercise whereby existing strategic, governance and key operational risks of key subsidiaries were reviewed with emerging
risks identified assessed and incorporated into the key risk registers for on-going risk monitoring and assessment, after
taking into consideration the internal audit findings. The key risks profile, which consists of strategic risks and key
operational risks, was compiled from the key risk registers and tabled to the Audit Committee for review and deliberation
and for its reporting to the Board, which assumes the primary responsibility of the risk management of the Group.

At the strategic level, business plans, strategies and investment proposals with risks consideration are formulated by the
Managing Director and Senior Management and presented to the Board for review and deliberation to ensure proposed
plans and strategies are in line with the Group’s risk appetite. In addition, specific strategic and key operational risks
are highlighted and deliberated by the Audit Committee and the Board during the review of the financial performance
of the Group in the scheduled meetings.

At the operational level, the respective head of departments/divisions are responsible for managing the risks under their
responsibilities. The respective heads of departments are responsible for adequate and effective operational monitoring
and management by way of maintaining adequate and effective internal controls and executing risk and control
procedures on a day-to-day basis. Changes in the key operational risks or emergence of new key business risks are
identified through daily operational management and controls as well as review of financial and operational reports by
respective level of Management. The respective heads of departments/divisions are responsible to assess the changes
to the existing operational risks and new risks and to determine the risk treatment and implement effective controls to
manage the risks, if applicable. Critical and material risks are highlighted to the Executive Directors for final decision on
the risk treatment and implementation as well as its reporting to the Audit Committee and the Board.

Annual Report 2017 35

 STATEMENT ON RISK MANAGEMENT
AND INTERNAL CONTROL
cont’d

KEY ELEMENTS OF THE RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM (CONT’D)

RISK MANAGEMENT (CONT’D)

The monitoring of the risk management process by the Group is enhanced by the internal audits carried out by the
internal audit function with specific audit objectives and business risks identified for each internal audit cycle based on
the internal audit plan approved by the Audit Committee.

The above process has been practiced by the Group for the financial year under review and up to the date of approval
of this statement.

Please refer to the “Risk Factors Exposure” of the Management Discussion and Analysis for the significant risks faced
by the Group and the mitigation plans implemented.

INTERNAL AUDIT FUNCTION

The Audit Committee, in carrying out its responsibilities, is supported by the internal audit function to ensure the adequacy
and effectiveness of the Group’s risk management and internal control systems.

The Group’s internal audit function is outsourced to an independent professional firm. The internal audit function reports
to the Audit Committee directly and is governed by the engagement letter detailing the scope of works, accountability/
responsibility, authority, independence and confidentiality.

The Group relies on the internal audit function to provide the Board with the required level of assurance that its systems
of internal controls are operating adequately and effectively in order to provide reasonable assurance that the business
objectives of the Group are achievable.

The Group’s outsourced internal audit function adopts a risk based approach and prepares its internal audit plan based
on the Group’s key risks profile.

The risk-based internal audit plan takes into consideration of the existing and emergent key business risks identified in
the Group’s key risk profile. The audit plan and any subsequent amendment are reviewed and approved by the Audit
Committee prior to their execution.

The internal control review procedures performed by the internal audit function are designed to understand, document
and evaluate risks and related controls to determine the adequacy and effectiveness of governance, risk and control
structures and processes and to formulate recommendations for improvement thereon. The internal audit procedures
applied principally consisted of process evaluations through interviews with relevant personnel involved in the process
under review, review of the Standard Operating Procedures and/or process flows provided and observations of the
functioning of processes in compliance with results of interviews and/or documented Standard Operating Procedures
and/or process flows. Thereafter, testing of controls for the respective audit areas through the review of the samples
selected based on sample sizes calculated in accordance to a predetermined formula, subject to the nature of testing
and verification of the samples.

Regular internal audit reviews are performed based on the internal audit plan approved by the Audit Committee. For
the financial year under review, the outsourced internal auditor conducted reviews for inventory management, branch
management, procurement management and corporate governance. Upon completion of the internal audit work, the
internal audit reports are presented to the Audit Committee during its quarterly meetings. During these meetings, the
internal audit findings and recommendations as well as management responses and action plans are presented and
deliberated. Updates on the status of action plans as identified in the previous internal audit reports were also presented
for the Audit Committee’s review and deliberation for the financial year under review. The Audit Committee reports the
results of the review and deliberation to the Board in order for the Board to discharge its responsibility to ensure that
there sound internal controls are in place to manage the risks within the risk appetite of the Group and for regulatory
compliance.

The cost incurred in maintaining the outsource Internal audit function for the financial year ended 30 April 2017 amounted
to RM62,350.

36 SOLID AUTOMOTIVE BERHAD (1016725-P)

 STATEMENT ON RISK MANAGEMENT
AND INTERNAL CONTROL
cont’d

OTHER KEY ELEMENTS OF THE INTERNAL CONTROL SYSTEM

The other key features of the Group’s internal control systems are described below:

• Board of Directors/Board Committees

Board Committees (i.e. Audit Committee, Remuneration Committee and Nominating Committee) have been
established to carry out duties and responsibilities delegated by the Board are governed by written terms of
reference.

Meetings of Board of Directors and respective Board Committees are carried out on scheduled basis to review
the business plans, business strategies and performance of the Group, from financial and operational perspective.
Business plans and business strategies are proposed by the Managing Director to the Board for their review and
approval after taking into account risk consideration and responses.

• Integrity and Ethical Value

The tone from the top on integrity and ethical value are enshrined in formal Code of Conduct established and
approved by the Board. This formal code forms the foundation of integrity and ethical value for the Group.

Integrity and ethical value expected from the employees are incorporated in the Human Resources Policy whereby
the ethical behaviours expected with the customers, suppliers, employees, society and environment are stated.
Codes of conduct expected from employees to carry out their duties and responsibilities assigned are also
established and formalised in the Human Resources Policy.

• Organisation Structure and Authorisation Procedures

The Group has a well-defined organisation structure with clear reporting line in place to ensure appropriate level of
authorities and responsibilities are delegated accordingly to competent staffs in achieving operational effectiveness
and efficiency. The Group has established authorisation and approval levels for management to follow including
those requiring approval from the Board.

• Policies and Procedures

The Group has documented policies and procedures for key business processes that are regularly reviewed and
updated to ensure its relevance in support of the Group’s business activities and business objectives. Standard
operating procedures and work instructions are established by Solid Corporation Sdn Bhd in compliance with
the International Standard Organisation (“ISO”) certification.

The Group has a whistle blowing policy to provide employees with a transparent and confidential process to
report instances of corruption, fraud, misconduct, abuse of rules and regulations, misuse of company assets or
resources within the Group.

• Annual Budget

A summarised and brief Annual Budget for the Group is presented and approved by the Board on an annual basis
and form one of the basis to monitor the actual performances and to identify significant variances for prompt
actions to be taken.

• Human Resource Management

Formal human resource policies are in place to ensure the Group’s ability to employ and retain adequate level of
suitably qualfied and competent employees possessing necessary knowledge, skill and experience to carry out
their duties and responsibilities effectively and efficiently.

Performance evaluations are carried out for all levels of staff to identify performance gaps, for training needs
identification and talent management.

Annual Report 2017 37

 STATEMENT ON RISK MANAGEMENT
AND INTERNAL CONTROL
cont’d

OTHER KEY ELEMENTS OF THE INTERNAL CONTROL SYSTEM (CONT’D)

• Information and Communication

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

The Group has in place effective and efficient information and communication infrastructures and channels,
i.e. computerized enterprise resources planning systems, secured intranet, electronic mail system and modern
telecommunication, so that operational data and management information can be communicated securely to the
respective personnel within the Group for timely decision making and for communication with relevant external
stakeholders. Relevant financial, operational and management reports are generated to cater to the varying
requirements of the different level of management within the Group for information and decision making. The
management and board meetings are regularly held for effective two-way communication of information at the
different level of management and the Board.

• Monitoring and Review

The Executive Directors being closely involved in the daily operations regularly reviews the operational information
including sales, inventory and financial information. The quarterly financial results containing key financial results
and comparisons and management commentaries are presented to the Board for their review.

Further, internal audits are scheduled and carried out by the outsourced internal auditor on key areas identified
based on the key risk profile of the Group and report their findings, recommendations, management responses
and action plans directly to the Audit Committee.

The internal audit functions assess the adequacy and effectiveness of internal controls in relation to specific
governance, risk and control processes and highlights potential risks and implications of its observations that
may impact the Group as well as recommend improvements on the observations made to minimise the risks.
The results and recommendations of the internal audits are reported to the Audit Committee.

ASSURANCE PROVIDED BY THE MANAGING DIRECTOR AND CHIEF FINANCIAL OFFICER

In compliance with the Guidelines, the Managing Director, being highest ranking executive in the Company and the
Chief Financial Officer, being the person primarily responsible for the management of the financial affairs of the Company
have provided assurance to the Board that the Group’s risk management and internal control systems have operated
adequately and effectively, in all material aspects, during the financial year under review.

38 SOLID AUTOMOTIVE BERHAD (1016725-P)

 STATEMENT ON RISK MANAGEMENT
AND INTERNAL CONTROL
cont’d

REVIEW OF STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL BY EXTERNAL

AUDITORS

The external auditors have reviewed this Statement on Risk Management and Internal Control pursuant to Paragraph
15.23 of the Listing Requirements and in accordance with the Recommended Practice Guide (“RPG”) 5 (Revised 2015),
Guidance for Auditors on Engagements to Report on the Statement on Risk Management and Internal Control included
in the Annual Report issued by the Malaysian Institute of Accountants (“MIA”) for inclusion in the annual report of the
Group for the year ended 30 April 2017 and reported to the Board that nothing has come to their attention that cause
them to believe that the statement intended to be included in the annual report of the Group, in all material respects:

(a) has not been prepared in accordance with the disclosures required by paragraphs 41 and 42 of the Statement
on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers, or
(b) is factually inaccurate.

RPG 5 (Revised 2015) does not require the external auditors to consider whether the Directors’ Statement on Risk
Management and Internal Control covers all risks and controls, or to form an opinion on the adequacy and effectiveness
of the Group’s risk management and internal control system including the assessment and opinion by the Board of
Directors and management thereon. The auditors are also not required to consider whether the processes described to
deal with material internal control aspects of any significant problems disclosed in the annual report will, in fact, remedy
the problems.

OPINION AND CONCLUSION

The Board believes that the Group’s risk management and internal control systems provide reasonable, but not absolute,
assurance that weaknesses or deficiencies are identified on a timely basis and dealt with appropriately.

Based on the review of risk management process and internal control system as well as the monitoring and review
mechanism stipulated above coupled with the assurance provided by the Managing Director and the Chief Financial
Officer, the Board is of the view that the risk management and internal control systems are operating satisfactory and
have not resulted in any material losses, contingencies or uncertainties that would require disclosure in the Group’s annual
report. The Board continues to take measures to review and, where necessary, enhance the Group’s risk management
and internal control systems to meet the Group’s strategic objectives.

The Board is committed towards maintaining a sound system of internal control and an effective risk management
throughout the Group and reaffirms its commitment to continuously review and where necessary, enhance further the
risk management and internal controls system.

This Statement on Risk Management and Internal Control is made in accordance with the resolution of the Board of
Directors dated 11 August 2017.

Annual Report 2017 39

 MANAGEMENT DISCUSSION AND
ANALYSIS STATEMENT

Overview

Solid Automotive Berhad (“Solid” or “The Group”) was incorporated on 12 September 2012 and is principally an
investment holding company. The subsidiary companies are involved in the trading and distribution of automotive spare
parts and components.

The Group’s main business activities is categorised into the following categories:

1) Automotive Electrical parts and components (“AE”) for passenger and commercial vehicles;

2) Automotive Engine and Mechanical parts and components (“AE&M”) for commercial vehicles.

Operating Activities

As at the end of the financial under review, the Group has fifteen (15) branches / stores (each with a warehouse and
office) throughout Malaysia and one subsidiary company in Singapore. During the financial year ended 30 April 2017
(“FYE 2017”), the Group opened three (3) new branches / stores in Puchong (Wilayah Persekutuan), Seremban (Negeri
Sembilan) and Kota Kinabalu (Sabah).

The revenue for the year was derived from our automotive electrical parts segment, which contributed approximately
78% of our total revenue, while the automotive engine and mechanical parts and others contributed approximately 22%.
On a geographical basis, our domestic market contributed approximately 63% while exports contributed 37%. The
main market for our exports continues to be the Middle East and Africa. The Group’s key markets are Malaysia (63%),
Middle East and Africa (27%) and others (10%). The Group currently owns 19 trademarks including Hansa Parts, KIS,
Mandy for automotive products across several trademark classes.

During the financial year under review, the Group moved its headquarters to a 10.0 acres site located at Pasir Gudang
Industrial Estate, Pasir Gudang, Johor. The site comprises of 2 blocks of adjoining multi-storey factory buildings with a
total built up area of approximately 350,000 square feet and vacant land of approximately 5.5 acres. As at 30 April 2017,
the Group has occupied one block of the building, while the other block is undergoing renovations and when completed
in the later part of 2017, is intended to be rented out to third parties, as it is currently excess to the Group’s requirements.

Financial Results

5 years Revenue and Profit Before Tax snapshot:

40 SOLID AUTOMOTIVE BERHAD (1016725-P)

 MANAGEMENT DISCUSSION AND
ANALYSIS STATEMENT
cont’d

The Group’s revenue for FYE 2017 rose to RM125.45 million (from RM120.95 million in the previous financial year) due
to increase in domestic sales, which can be attributable to our continuing sales and marketing initiatives and opening
of new branches / stores to enhance our market presence and improved our sales service lead time to our customers.
Our export market for FYE 2017 showed a decrease in sales by RM2.27 million to RM46.15 million due to the lackluster
economic conditions especially in the Middle East and Africa, which is our main export market.

The Group’s profit before tax showed a decrease of 4.1% to RM8.12 million for FYE 2017 compared to RM8.47
million in the preceding year despite the higher revenue achieved, which was mainly due to the higher impairment on
inventories combined with higher expenses arising from the opening of new branches / stores in FYE 2017. The higher
expenses include increase staff costs and rentals for the new branches / stores and higher operating expenses for the
new headquarters at Pasir Gudang, Johor.

Trade receivables showed an increase of RM4.97 million to RM34.46 million during the financial year under review. This
was in line with the higher sales for the current year and relatively unchanged collection period.

Inventories increased by RM6.92 million for the year under review, due mainly to the stocking of products for the new
branches / stores.

Trade payables increased by RM0.94 million to RM9.47 million from RM8.53 million in the preceding year. This was
primarily due to the increase in purchases in line with the higher sales.

As at 30 April 2017, the Group had cash and cash equivalent of RM14.83 million and RM3.17 million in short term
investments, whilst total borrowings stood at RM7.49 million. During the financial year under review, the total amount
of proceeds from the new issue of shares from the exercise of warrants was RM0.57 million.

The Group’s gearing ratio (total borrowings over total equity) was 0.05 times as at the end of FYE 2017. The Group
continues to exercise prudence in its financial management as part of its strategic objectives of building and maintaining
a strong financial position.

ANTICIPATED OR KNOWN RISKS

A. Competition Risk

The automotive aftermarket for parts and components in Malaysia (which includes the automotive aftermarket for
electrical and non-electrical parts and components) is huge and provides market opportunities to a large and wide
range of participants. The Group faces competition from existing players as well as new entrants to the industry
that may offer similar products of varying quality and price range. High product availability, wide range of reliable
and quality products offering excellent value to our customers and branding are key factors to our continued
profitability and growth.

With the above key factors, the Group has implemented strategic sales and marketing initiatives as well as enhancing
our supply chain management to increase our market share and increase revenue from sales to existing and new
customers and increase our competitive advantage and edge in the automotive aftermarket.

Annual Report 2017 41

 MANAGEMENT DISCUSSION AND
ANALYSIS STATEMENT
cont’d

ANTICIPATED OR KNOWN RISKS (CONT’D)

B. Technology Risk

Existing automotive parts and components are constantly being improved or innovated from the advancement in
automotive technologies while new materials are also being explored for their potential usages in the manufacture
of automotive parts and components that can offer cost savings and better performance.

As such, the automotive aftermarket parts and components industry that our Group participates in requires us
to keep abreast with the latest models of automotive parts and components introduced to the market. This is
important to our efforts in staying competitive by enabling us to expand our products range, increase our market
share and penetrate into new markets.

Our Group strives to keep abreast with the latest development in the industry. In addition, we have been participating
in various international trade fairs and exhibitions to get the necessary industry exposures. We also actively seek
feedback from our customers in respect of their new product requirements.

C. Foreign Exchange Risk

We are exposed to the foreign currency risk as a significant portion of our sales and purchases are transacted in
foreign currencies namely the United States Dollar (USD), Euro (EUR) and Japanese Yen (JPY).

To mitigate this risk, we maintain foreign currency accounts for the purpose of holding foreign currencies for future
payments on purchases to be transacted in foreign currencies and/or for future receipts from export sales. We
use the foreign currency denominated proceeds from our export sales to pay for our imports when possible. We
constantly monitor our foreign exchange exposure and will continue to evaluate the requirement for hedging our
foreign currency exposure taking into account the foreign currency, transaction cost and period amongst other
factors.

However, there can be no assurance that any future fluctuations in the foreign exchange will not adversely impact
our Group’s operating and financial performance.

D. Political, Economic and Regulatory risk

Given that the Group purchases and sells our products in both the local and overseas markets, any adverse
development in the political, economic and regulatory environment in the countries involved may adversely affect
the financial and operational conditions as well as the overall profitability of the Group.

Political, economic and regulatory uncertainties include but are not limited to changes in general economic and
business conditions, government legislations and policies affecting our industry, inflation, fluctuations in foreign
exchange rates and interest rates, political or social development, risks of war, expropriation, nationalisation,
renegotiation or nullification of existing contracts, methods of taxation and currency exchange controls.

The Group will continue to adopt prudent management and precautionary measures but there can be no assurance
that these measures are sufficient to address any future changes in the political, economic and regulatory
environment in the countries involved.

E. Dependence on Key Management Personnel

The Group’s continued success depends, to a significant extent, upon the capabilities, skill, knowledge and
continued efforts of its key management personnel to lead the Group to achieve its business and corporate
objectives. The loss of key management personnel may adversely affect the Group’s performance.

The Group recognise the importance of attracting and retaining key management personnel and have in place
competitive compensation packages and reward schemes. Further, the Group has a formal Succession Policy in
place to ensure that a systematic succession planning process is in place to identify, recruit and groom candidates
for our management team to meet the Group’s plans for the future.

Nevertheless, there can be no assurance that the above measures will always be successful in retaining key
management or ensuring smooth succession should changes occur.

42 SOLID AUTOMOTIVE BERHAD (1016725-P)

 MANAGEMENT DISCUSSION AND
ANALYSIS STATEMENT
cont’d

Forward Looking Statement

The Malaysian economy continues to face concerns about business uncertainties and the rising cost of doing business
and cost of living, while our export market is affected by the global economic weakness and uncertainties especially in
the Middle East and Europe.

To meet these challenges, the Group will focus its sales and marketing activities on increasing our market presence by
opening additional new outlets in strategic locations in Malaysia. We will also continue to improve operational efficiencies,
productivity, cost management and strengthening our supply chain management.

The Group will continue to focus on its sales and marketing strategies to promote our in-house brands by leverage on
the reputation and strength of these established brands to achieve greater market penetration both domestically and
overseas. For the domestic market, the Group intends to increase our market presence throughout Malaysia by adding
several new stores in the coming year in the larger cities and towns. For the overseas market, we are expanding into
new markets including South America, South Africa and refocusing on ASEAN countries as well as continue with our
participation at international automotive exhibitions to promote our products and brand names. In addition, the Group
will actively seek to expand its product range to provide our customers with the widest range of automotive aftermarket
parts. During the financial year under review the Group added automotive lubricants and batteries to its products portfolio.

With the move to our new corporate headquarters and central warehouse, the Group is consolidating its various
functions of warehousing, quality testing and repackaging in one central location for optimal operational efficiency and
effectiveness. The Group will continue to enhance its supply chain management, productivity and cost management in
pursuit of its corporate vision, mission and strategic objectives.

Dividend Policy

The Board of Directors has followed an informal dividend pay out policy of approximately 40% of the net profit after
tax (excluding any exceptional / non recurring items) for each financial year and shall be dependent on factors such as
working capital requirements, capital expenditure, general economic conditions, and other factors to be considered
before proposing any dividend payments.

For FYE 2017, on 28 February 2017, the Company paid an interim single tier dividend of 0.3 sen per ordinary share
amounting to RM0.50 million. The Board recommended a final single tier dividend of 0.5 sen per ordinary share amounting
to approximately RM0.83 million for FYE 2017, subject to the approval of the shareholders at the forthcoming Annual
General Meeting to be held on 24 October 2017. The total dividends for FYE 2017 would be 0.8 cent per ordinary share
amounting to RM1.33 million and representing a dividend pay-out ratio of approximately 27.2%.

APPRECIATION

On behalf of the Board, I would like to take this opportunity to convey our appreciation to our shareholders as well
as other stakeholders for their continuous trust and support. I would also like to thank my Board of Directors for their
guidance, and the management and staff of the Solid Group for their continuous commitment and dedication without
which we would not be where we are today.

MR. KER MIN CHOO

Managing Director

Annual Report 2017 43

 FINANCIAL STATEMENTS

Directors’ Report
45 Statement by Directors
50

Statutory Declaration
50 Independent Auditors’ Report
51

Statements of Profit or Loss

Statements of
Financial Position 55 and
Other Comprehensive Income
57

Statements of Changes
in Equity 59 Statements of Cash Flows
65

Notes to the
Financial Statements 68

44 SOLID AUTOMOTIVE BERHAD (1016725-P)

 DIRECTORS’ REPORT

The directors hereby submit their report and the audited financial statements of the Group and of the Company for the
financial year ended 30 April 2017.

PRINCIPAL ACTIVITIES

The Company is principally engaged in the business of investment holding and the provision of management services.

The principal activities of the subsidiaries are set out in Note 5 to the financial statements.

RESULTS

The The
Group Company
RM RM

Profit after tax for the financial year 5,093,027 437,881

Attributable to:-
Owners of the Company 5,112,994 437,881
Non-controlling interests (19,967) –

5,093,027 437,881

DIVIDENDS

Since the end of previous financial year, the amount of dividends paid by the Company were as follows:-

A final dividend of 1.0 sen per ordinary share, amounting to RM1,661,178 for the financial year ended 30 April 2016 was
approved by the shareholders of the Annual General Meeting held on 27 September 2016 and paid on 21 October 2016.

An interim tax exempt dividend of 0.3 sen per ordinary share, amounting to RM499,380 for current financial year was
paid on 28 February 2017.

At the forthcoming Annual General Meeting, a final dividend of 0.5 sen per ordinary share amounting to approximately
RM834,000 in respect of the current financial year will be proposed for shareholders’ approval. The financial statements
for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will
be accounted for as a liability in the financial year ending 30 April 2018.

RESERVES AND PROVISIONS

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

ISSUES OF SHARES AND DEBENTURES

During the financial year:-

(a) there were no changes in the issued and paid-up share capital of the Company; and

(b) there were no issues of debentures by the Company.

Annual Report 2017 45

 DIRECTORS’ REPORT
cont’d

OPTIONS GRANTED OVER UNISSUED SHARES

During the financial year, no options were granted by the Company to any person to take up any unissued shares in the
Company except for the issue of Warrants pursuant to the Rights Issue of Warrants.

Warrants

On 17 December 2015, 82,500,000 Warrants were issued pursuant to the Rights Issue of Warrants on the basis of one
Warrant for every two existing ordinary shares subscribed by entitled shareholders at an issue price of RM0.20 per Warrant.

The salient terms of the Warrants 2015/2020 are disclosed in Note 18.5 to the financial statements. The movements of
the Warrants since the listing and quotation thereof are as follows:-

< ----------------- Entitlement for Ordinary Shares ----------------- >

At At
1.5.2016 Issued Exercised 30.4.2017

Number of unexercised Warrants 81,893,200 – (1,131,300) 80,761,900

BAD AND DOUBTFUL DEBTS

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to
ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for impairment
losses on receivables, and satisfied themselves that there are no known bad debts and that adequate allowance had
been made for impairment losses on receivables.

At the date of this report, the directors are not aware of any circumstances that would require the writing off of bad
debts, or the making of additional allowance for impairment losses on receivables in the financial statements of the
Group and of the Company.

CURRENT ASSETS

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps
to ensure that any current assets, which were unlikely to be realised in the ordinary course of business, including their
value as shown in the accounting records of the Group and of the Company, have been written down to an amount
which they might be expected so to realise.

At the date of this report, the directors are not aware of any circumstances which would render the values attributed to
the current assets in the financial statements misleading.

VALUATION METHODS

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

46 SOLID AUTOMOTIVE BERHAD (1016725-P)

 DIRECTORS’ REPORT
cont’d

CONTINGENT AND OTHER LIABILITIES

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

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

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

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

CHANGE OF CIRCUMSTANCES

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

ITEMS OF AN UNUSUAL NATURE

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

There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction
or event of a material and unusual nature likely, in the opinion of the directors, to affect substantially the results of the
operations of the Group and of the Company for the financial year in which this report is made.

DIRECTORS

The names of directors of the Company who served during the financial year until the date of this report are as follows:-

Ker Min Choo

Ong Kheng Swee
Azahar Bin Baharudin
Kek Kok Swee
Ker Meng Oi
Ker Mong Keng
Tan Lay Beng

The names of directors of the Company’s subsidiaries who served during the financial year until the date of this report,
not including those directors mentioned above, are as follows:-

Chang San Hor Eng Choon Kwang

Ker Hong Ker Kai Xiang
Ker Keddy Ker Shiloong
Ker Soo Ha Ker Verena
Ker Young Ker Yun
Lee Heng Haw Lee Kok Ping
Liew Cheong Seng Lim Boon Siong
Loh Sai Kiang Tan Meng Huat
Yee Sui Meng Yong Kok Jin

Annual Report 2017 47

 DIRECTORS’ REPORT
cont’d

DIRECTORS’ INTERESTS

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

< ------------------ Number of Ordinary Shares ------------------ >

At At
1.5.2016 Bought Sold 30.4.2017

Direct Interests in the Company
Ker Min Choo 40,450,113 – – 40,450,113
Ong Kheng Swee 2,064,486 – – 2,064,486
Kek Kok Swee 1,500,000 – – 1,500,000
Ker Meng Oi 5,530,541 – – 5,530,541
Ker Mong Keng 36,725,075 – – 36,725,075

Indirect Interests in the Company *

Ker Min Choo 37,546 1,190,500 – 1,228,046
Ong Kheng Swee 1,050,000 – – 1,050,000
Kek Kok Swee 4,500,000 – – 4,500,000
Ker Mong Keng 24,000 – – 24,000

Direct Interests in the Subsidiary

Autoworld Parts Services Sdn. Bhd.
Lee Kok Ping – 80,000 – 80,000
Lim Boon Siong – 40,000 – 40,000

Number of Warrant 2015/2020 issued pursuant

to the Deed Poll dated 11 November 2015
< -----exercisable of any time from 17 December 2015 ----- >
to 16 December 2020
At At
1.5.2016 Bought Exercised 30.4.2017

Direct Interests in the Company
Ker Min Choo 20,225,056 – – 20,225,056
Ong Kheng Swee 1,079,600 – – 1,079,600
Kek Kok Swee 750,000 – – 750,000
Ker Meng Oi 2,765,270 – – 2,765,270
Ker Mong Keng 18,362,537 – – 18,362,537

Indirect Interests in the Company *

Ker Min Choo 19,473 1,603,650 – 1,623,123
Ong Kheng Swee 549,000 – – 549,000
Kek Kok Swee 2,353,200 – – 2,353,200
Ker Mong Keng 12,500 – – 12,500

* Held through spouse or children

By virtue of their shareholdings in the Company, Ker Min Choo and Ker Mong Keng are deemed to have interests in
shares in its related corporations during the financial year to the extent of the Company’s interests, in accordance with
Section 8 of the Companies Act 2016.

The other directors holding office at the end of the financial year had no interest in shares and options over shares of
the Company or its related corporations during the financial year.

48 SOLID AUTOMOTIVE BERHAD (1016725-P)

 DIRECTORS’ REPORT
cont’d

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director has received or become entitled to receive any benefit (other
than a benefit included in the aggregate amount of remuneration received or due and receivable by directors shown in
the financial statements or the fixed salary of a full-time employee of the Company or related corporations) by reason
of a contract made by the Company or a related corporation with the director or with a firm of which the director is a
member, or with a company in which the director has a substantial financial interest except for any benefits which may
be deemed to arise from transactions entered into in the ordinary course of business with companies in which certain
directors have substantial financial interests as disclosed in Note 36 to the financial statements.

Neither during nor at the end of the financial year was the Group or the Company a party to any arrangements whose
object is to enable the directors to acquire benefits by means of the acquisition of shares in or debentures of the Company
or any other body corporate.

DIRECTORS’ REMUNERATION

The details of the directors’ remuneration paid or payable to the directors of the Group and of the Company during the
financial year are disclosed in Note 35 to the financial statements.

SUBSIDIARIES

The details of the Company’s subsidiaries are disclosed in Note 5 to the financial statements.

SIGNIFICANT EVENT OCCURRING AFTER THE REPORTING PERIOD

The significant event occurring after the reporting period are disclosed in Note 40 to the financial statements.

AUDITORS

The auditors, Messrs. Crowe Horwath, have expressed their willingness to continue in office.

The details of the auditors’ remuneration are disclosed in Note 27 to the financial statements.

To the extent permitted by law, the Company has agreed to indemnify its auditors as part of the terms of its audit
engagement against any claims by third parties arising from the audit. No payment has been made to indemnify the
auditors during or since the financial year.

Signed in accordance with a resolution of the directors dated 11 August 2017.

Ker Min Choo

Ong Kheng Swee

Annual Report 2017 49

 STATEMENT BY DIRECTORS
PURSUANT TO SECTION 251(2) OF THE COMPANIES ACT 2016

We, Ker Min Choo and Ong Kheng Swee, being two of the directors of Solid Automotive Berhad, state that, in the
opinion of the directors, the financial statements set out on pages 55 to 123 are drawn up in accordance with Malaysian
Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act
2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 30
April 2017 and of their financial performance and cash flows for the financial year ended on that date.

The supplementary information set out in Note 41 on page 124, which is not part of the financial statements, is prepared
in all material respects, 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 and the directive of Bursa Malaysia Securities Berhad.

Signed in accordance with a resolution of the directors dated 11 August 2017.

Ker Min Choo Ong Kheng Swee

STATUTORY DECLARATION
PURSUANT TO SECTION 251(1)(b) OF THE COMPANIES ACT 2016

I, Ong Kheng Swee, being the director primarily responsible for the financial management of Solid Automotive Berhad, do
solemnly and sincerely declare that the financial statements set out on pages 55 to 123 are, to the best of my knowledge
and belief, correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of
the provisions of the Statutory Declarations Act 1960.

Subscribed and solemnly declared by

Ong Kheng Swee, at Johor Bahru in the State of Johor
on this 11 August 2017.

Before me Ong Kheng Swee

Nur Sabrina binti Abdullah

Commissioner for Oaths
No. J276

50 SOLID AUTOMOTIVE BERHAD (1016725-P)

 INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF SOLID AUTOMOTIVE BERHAD
(Incorporated in Malaysia)
Company No: 1016725-P

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

We have audited the financial statements of Solid Automotive Berhad, which comprise the statements of financial position
as at 30 April 2017 of the Group and of the Company, and the statements of profit or loss and other comprehensive
income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial
year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set
out on pages 55 to 123.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and
of the Company as at 30 April 2017, and of their financial performance and their cash flows for the financial year then
ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and
the requirements of the Companies Act 2016 in Malaysia.

Basis for Opinion

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

Independence and Other Ethical Responsibilities

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

Key Audit Matters

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

Slow-Moving And Obsolete Inventories

Refer to Note 10 to the financial statements
Key Audit Matter How our audit addressed the Key Audit Matter
The Group is in the business of trading and distribution Our procedures included, amongst others:-
of automotive parts and components. The balance of • Performing aging test on inventories aging report
inventories as at 30 April 2017 was RM50,142,060, upon by selecting samples and checking to the date of
netting off allowance for impairment losses on slow-moving stock-in (purchase date) to the appropriate age
and obsolescence inventories of RM6,880,232. band.
• Testing the mathematical accuracy of management’s
The Directors determine the amount of allowance for method by re-performing the calculations, using the
impairment for slow-moving inventories based upon the inventories aging report.
age of the inventories as well as the estimated future • Assessing the reasonableness of the assumptions
sales projections against the inventories level held as at used to derive the level of future sales activity.
the financial year end. The determination of the amount • Ensuring slow moving stocks are written down in
involves subjective estimates based on detailed analysis on accordance with Group’s policy.
the age of the inventories and is influenced by assumptions • Assessing if the Group’s stock write-down policy is
concerning the level of sales activity derived from historical consistently and correctly adopted and applied by
sales data. the subsidiaries.
• Selecting samples of inventories and test the selling
We have identified this as a risk area in view of the current
price of inventories sold subsequent to the financial
more challenging economic environment which resulted in
year end against its carrying value to assess whether
the decrease in demand and the significant judgements
inventories are held at the lower of cost or net
required in making provisions by the Directors.
realisable value.

Annual Report 2017 51

 INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF SOLID AUTOMOTIVE BERHAD
(Incorporated in Malaysia)
Company No: 1016725-P
cont’d

Information Other than the Financial Statements and Auditors’ Report Thereon

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

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

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

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

Responsibilities of the Directors for the Financial Statements

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

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

Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

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

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

52 SOLID AUTOMOTIVE BERHAD (1016725-P)

 INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF SOLID AUTOMOTIVE BERHAD
(Incorporated in Malaysia)
Company No: 1016725-P
cont’d

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

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

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

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

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

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

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

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

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirements of the Companies Act 2016 in Malaysia, we report that the subsidiary of which we
have not acted as auditors, is disclosed in Note 5 to the financial statements.

Annual Report 2017 53

 INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF SOLID AUTOMOTIVE BERHAD
(Incorporated in Malaysia)
Company No: 1016725-P
cont’d

OTHER REPORTING RESPONSIBILITIES

The supplementary information set out in Note 41 on page 124 is disclosed to meet the requirement of Bursa Malaysia
Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the
supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised
Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as
issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad.
In our opinion, the supplementary information 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 266 of the Companies
Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content
of this report.

Crowe Horwath Fong Kiat Keong

Firm No: AF 1018 Approval No: 03048/06/2019 J
Chartered Accountants Chartered Accountant

11 August 2017

Johor Bahru

54 SOLID AUTOMOTIVE BERHAD (1016725-P)

 STATEMENTS OF FINANCIAL POSITION
AT 30 APRIL 2017

The Group The Company

2017 2016 2017 2016
Note RM RM RM RM

ASSETS

NON-CURRENT ASSETS
Investments in subsidiaries 5 – – 76,754,365 76,754,365
Property, plant and equipment 6 40,864,347 38,207,993 – –
Investment properties 7 11,215,793 11,128,545 – –
Other investment 8 102,610 102,610 – –
Deferred tax assets 9 558,511 506,844 – –

52,741,261 49,945,992 76,754,365 76,754,365

CURRENT ASSETS
Inventories 10 50,142,060 43,219,189 – –
Trade receivables 11 34,462,110 29,489,767 – –
Other receivables, deposits and
  prepayments 12 3,470,300 4,474,050 5,000 5,000
Amounts owing by subsidiaries 13 – – 30,595,866 21,945,575
Short-term investment 14 3,172,550 2,185,840 3,172,550 2,185,840
Current tax assets 785,012 282,656 – –
Derivative asset 15 756,274 318,943 – –
Fixed deposits with licensed
  banks 16 4,067,446 16,126,625 4,067,446 15,126,625
Cash and bank balances 10,759,922 11,175,655 715,992 625,948

107,615,674 107,272,725 38,556,854 39,888,988

TOTAL ASSETS 160,356,935 157,218,717 115,311,219 116,643,353

The annexed notes form an integral part of these financial statements.

Annual Report 2017 55

 STATEMENTS OF FINANCIAL POSITION
AT 30 APRIL 2017
cont’d

The Group The Company

2017 2016 2017 2016
Note RM RM RM RM

EQUITY AND LIABILITIES

EQUITY
Share capital 17 97,503,167 82,803,400 97,503,167 82,803,400
Reserves 18 40,980,251 51,303,440 17,456,658 33,313,452

Equity attributable to owners

  of the Company 138,483,418 134,106,840 114,959,825 116,116,852

Non-controlling interests 100,033 – – –

TOTAL EQUITY 138,583,451 134,106,840 114,959,825 116,116,852

NON-CURRENT LIABILITY
Long-term borrowings 19 2,570,080 5,999,216 – –

CURRENT LIABILITIES
Trade payables 22 9,473,445 8,531,277 – –
Other payables and accruals 23 4,649,397 4,311,862 351,394 526,501
Short-term borrowings 24 4,922,785 3,741,799 – –
Current tax liabilities 15,577 261,523 – –
Provision for warranty 25 142,200 266,200 – –

19,203,404 17,112,661 351,394 526,501

TOTAL LIABILITIES 21,773,484 23,111,877 351,394 526,501

TOTAL EQUITY AND LIABILITIES 160,356,935 157,218,717 115,311,219 116,643,353

The annexed notes form an integral part of these financial statements.

56 SOLID AUTOMOTIVE BERHAD (1016725-P)

 STATEMENTS OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 30 APRIL 2017

The Group The Company

2017 2016 2017 2016
Note RM RM RM RM

REVENUE 26 125,446,543 120,952,899 – 3,568,715

COST OF SALES (90,639,561) (87,922,678) – –

GROSS PROFIT 34,806,982 33,030,221 – 3,568,715

OTHER INCOME 3,173,392 3,808,208 1,356,434 875,585

ADMINISTRATIVE EXPENSES (13,950,148) (13,804,390) (615,109) (794,226)

SELLING AND DISTRIBUTION

 EXPENSES (15,240,175) (13,604,519) – –

FINANCE COSTS (668,066) (956,844) (1,440) (773)

PROFIT BEFORE TAX 27 8,121,985 8,472,676 739,885 3,649,301

INCOME TAX EXPENSE 28 (3,028,958) (2,911,674) (302,004) (80,055)

PROFIT AFTER TAX 5,093,027 5,561,002 437,881 3,569,246

OTHER COMPREHENSIVE
  INCOME 29
  Items that May be
   Reclassified Subsequently
   to Profit or Loss

   Foreign currency translation

    differences 858,492 870,686 – –
   Cash flow hedge – (266,017) – –

TOTAL OTHER COMPREHENSIVE

  INCOME 858,492 604,669 – –

TOTAL COMPREHENSIVE INCOME

  FOR THE FINANCIAL YEAR 5,951,519 6,165,671 437,881 3,569,246

The annexed notes form an integral part of these financial statements.

Annual Report 2017 57

 STATEMENTS OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 30 APRIL 2017
cont’d

The Group The Company

2017 2016 2017 2016
Note RM RM RM RM

PROFIT AFTER TAX

  ATTRIBUTABLE TO:-
 Owners of the Company 5,112,994 5,706,882 437,881 3,569,246
 Non-controlling interests (19,967) (145,880) – –

5,093,027 5,561,002 437,881 3,569,246

TOTAL COMPREHENSIVE
  INCOME ATTRIBUTABLE TO:-
 Owners of the Company 5,971,486 6,311,551 437,881 3,569,246
 Non-controlling interests (19,967) (145,880) – –

5,951,519 6,165,671 437,881 3,569,246

EARNINGS PER SHARE (SEN)

  Basic 30 3.08 3.51

  Diluted 30 2.37 3.02

The annexed notes form an integral part of these financial statements.

58 SOLID AUTOMOTIVE BERHAD (1016725-P)

 Foreign Attributable
Exchange to Owners Non-
Share Share Merger Translation Warrants Hedge Retained of the controlling Total
Capital Premium Deficit Reserve Reserve Reserve Profits Company Interests Equity
The Group Note RM RM RM RM RM RM RM RM RM RM

Balance at 1.5.2015 75,000,000 1,306,997 (43,360,988) 1,113,103 – – 63,199,398 97,258,510 409,765 97,668,275

Profit after tax for the

  financial year – – – – – – 5,706,882 5,706,882 (145,880) 5,561,002

Other comprehensive
  income for the financial year
  - Foreign currency
    translation differences – – – 870,686 – – – 870,686 – 870,686
  - Cash flow hedge – – – – – (266,017) – (266,017) – (266,017)

Total comprehensive
  income for the financial year – – – 870,686 – (266,017) 5,706,882 6,311,551 (145,880) 6,165,671

Contributions by and distributions

  to owners of the Company:
  - Issuance of shares 17 &
   - Private placement 18 7,500,000 12,600,000 – – – – – 20,100,000 – 20,100,000
   - Rights issue of Warrants – – – – 16,500,000 – – 16,500,000 – 16,500,000
   - Exercise of Warrants 303,400 121,360 – – (121,360) – – 303,400 – 303,400

  - Expenses relating to
   issuance of shares:
   - Private placement – (120,500) – – – – – (120,500) – (120,500)
   - Rights issue of
    Warrants – – – – (410,363) – – (410,363) – (410,363)

Sub-total of transactions with

  owners carried forward 7,803,400 12,600,860 – – 15,968,277 – – 36,372,537 – 36,372,537

Balance carried forward 75,000,000 1,306,997 (43,360,988) 1,983,789 – (266,017) 68,906,280 103,570,061 263,885 103,833,946

Annual Report 2017

FOR THE FINANCIAL YEAR ENDED 30 APRIL 2017
STATEMENTS OF CHANGES IN EQUITY

The annexed notes form an integral part of these financial statements.

59
60
Foreign Attributable
Exchange to Owners Non- cont’d
Share Share Merger Translation Warrants Hedge Retained of the controlling Total
Capital Premium Deficit Reserve Reserve Reserve Profits Company Interests Equity
The Group Note RM RM RM RM RM RM RM RM RM RM

Balance brought forward 75,000,000 1,306,997 (43,360,988) 1,983,789 - (266,017) 68,906,280 103,570,061 263,885 103,833,946

Contributions by and
  distributions to owners
  of the Company (Cont’d):

Sub-total of transactions
  with owners brought
  forward 7,803,400 12,600,860 - - 15,968,277 - - 36,372,537 - 36,372,537

- Changes in subsidiaries’s
  ownership interests
  that do not result in
  a loss of control - - - - - - (42,117) (42,117) (263,885) (306,002)
FOR THE FINANCIAL YEAR ENDED 30 APRIL 2017

- Dividends:
  - by the Company 32 - - - - - - (5,793,641) (5,793,641) - (5,793,641)

Total transactions
  with owners 7,803,400 12,600,860 - - 15,968,277 - (5,835,758) 30,536,779 (263,885) 30,272,894

Balance at 30.4.2016 82,803,400 13,907,857 (43,360,988) 1,983,789 15,968,277 (266,017) 63,070,522 134,106,840 - 134,106,840
STATEMENTS OF CHANGES IN EQUITY

SOLID AUTOMOTIVE BERHAD (1016725-P)

The annexed notes form an integral part of these financial statements.
 Foreign Attributable
Exchange to Owners Non-
Share Share Merger Translation Warrants Hedge Retained of the controlling Total
Capital Premium Deficit Reserve Reserve Reserve Profits Company Interests Equity
The Group Note RM RM RM RM RM RM RM RM RM RM

Balance at
30.4.2016/1.5.2016 82,803,400 13,907,857 (43,360,988) 1,983,789 15,968,277 (266,017) 63,070,522 134,106,840 – 134,106,840

Profit after tax for the

  financial year – – – – – – 5,112,994 5,112,994 (19,967) 5,093,027

Other comprehensive
  income for the
  financial year
  - Foreign currency
   translation differences   – – – 858,492 – – – 858,492 – 858,492

Total comprehensive
  income for the
  financial year – – – 858,492 – – 5,112,994 5,971,486 (19,967) 5,951,519

Contributions by and
  distributions to owners
  of the Company:

- Issuance of shares 17 & 18

  - Exercise of Warrants 565,650 226,260 – – (226,260) – – 565,650 – 565,650

- Contribution from – – –
  non-controlling interests
  in a newly incorporated
  subsidiary – – – – – – – – 120,000 120,000

- Dividends:
  - by the Company 32 – – – – – – (2,160,558) (2,160,558) – (2,160,558)

Sub-total of transactions
  with owners carried
  forward 565,650 226,260 – – (226,260) – (2,160,558) (1,594,908) 120,000 (1,474,908)

Balance carried forward 82,803,400 13,907,857 (43,360,988) 2,842,281 15,968,277 (266,017) 68,183,516 140,078,326 (19,967) 140,058,359

Annual Report 2017

cont’d
FOR THE FINANCIAL YEAR ENDED 30 APRIL 2017
STATEMENTS OF CHANGES IN EQUITY

The annexed notes form an integral part of these financial statements.

61
62
Foreign Attributable
Exchange to Owners Non- cont’d
Share Share Merger Translation Warrants Hedge Retained of the controlling Total
Capital Premium Deficit Reserve Reserve Reserve Profits Company Interests Equity
The Group Note RM RM RM RM RM RM RM RM RM RM

Balance brought forward 82,803,400 13,907,857 (43,360,988) 2,842,281 15,968,277 (266,017) 68,183,516 140,078,326 (19,967) 140,058,359

Contributions by and
  distributions to owners
  of the Company (Cont’d):

Sub-total of transactions
  with owners brought
  forward 565,650 226,260 - - (226,260) - (2,160,558) (1,594,908) 120,000 (1,474,908)

- Transfer to share 17
  capital upon
  adoption of the
  Companies Act 2016 14,134,117 (14,134,117) - - - - - - - -
FOR THE FINANCIAL YEAR ENDED 30 APRIL 2017

Total transactions with owners 14,699,767 (13,907,857) - - (226,260) - (2,160,558) (1,594,908) 120,000 (1,474,908)

Balance at 30.4.2017 97,503,167 - (43,360,988) 2,842,281 15,742,017 (266,017) 66,022,958 138,483,418 100,033 138,583,451
STATEMENTS OF CHANGES IN EQUITY

SOLID AUTOMOTIVE BERHAD (1016725-P)

The annexed notes form an integral part of these financial statements.
 Share Share Warrants Retained Total
Capital Premium Reserve Profits Equity
The Company Note RM RM RM RM RM

Balance at 1.5.2015 75,000,000 1,306,997 – 5,661,713 81,968,710

Profit after tax/Total comprehensive income

  for the financial year – – – 3,569,246 3,569,246

Contribution by and distribution to owners

  of the Company:

- Issuance of shares 17 & 18

  - Private placement 7,500,000 12,600,000 – – 20,100,000
  - Rights issue of Warrants – – 16,500,000 – 16,500,000
  - Exercise of warrants 303,400 121,360 (121,360) – 303,400

- Expenses relating to issuance of shares:

  - Private placement – (120,500) – – (120,500)
  - Rights issue of Warrants – – (410,363) – (410,363)

- Dividends 32 – – – (5,793,641) (5,793,641)

Total transactions with owners 7,803,400 12,600,860 15,968,277 (5,793,641) 30,578,896

Balance at 30.4.2016 82,803,400 13,907,857 15,968,277 3,437,318 116,116,852

Annual Report 2017

cont’d
FOR THE FINANCIAL YEAR ENDED 30 APRIL 2017
STATEMENTS OF CHANGES IN EQUITY

The annexed notes form an integral part of these financial statements.

63
64
Share Share Warrants Retained Total
Capital Premium Reserve Profits Equity cont’d
The Company Note RM RM RM RM RM

Balance at 30.4.2016/1.5.2016 82,803,400 13,907,857 15,968,277 3,437,318 116,116,852

Profit after tax/Total comprehensive income

  for the financial year – – – 437,881 437,881

Contribution by and distribution to owners

  of the Company:

- Issuance of shares 17 & 18

  - Exercise of warrants 565,650 226,260 (226,260) – 565,650

- Dividends 32 – – – (2,160,558) (2,160,558)

Total transactions with owners 565,650 226,260 (226,260) (2,160,558) (1,594,908)

Transfer to share capital upon adoption of

FOR THE FINANCIAL YEAR ENDED 30 APRIL 2017

  the Companies Act 2016 17 14,134,117 (14,134,117) – – –

Balance at 30.4.2017 97,503,167 – 15,742,017 1,714,641 114,959,825

STATEMENTS OF CHANGES IN EQUITY

SOLID AUTOMOTIVE BERHAD (1016725-P)

The annexed notes form an integral part of these financial statements.
 STATEMENTS OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 30 APRIL 2017

The Group The Company

2017 2016 2017 2016
Note RM RM RM RM

CASH FLOWS (FOR)/FROM

 OPERATING ACTIVITIES

Profit before tax 8,121,985 8,472,676 739,885 3,649,301

Adjustments for:-
Depreciation of:
- investment properties 7 233,313 229,472 – –
- property, plant and equipment 6 2,014,226 2,004,414 – –
Dividend income – – – (3,568,715)
Fair value gain on derivative (437,331) – – –
Fair value loss/(gain) on
  short-term investments 29,208 (15,739) 29,208 (15,739)
Gain on disposal of property,
  plant and equipment (221,969) (558,216) – –
Unrealised gain on foreign
  exchange (27,097) (34,808) – –
Unrealised loss on foreign
  exchange 20,989 154,174 – –
Impairment loss on trade
  receivables 11 416,898 289,460 – –
Interest expenses 498,595 794,241 – –
Interest income (867,073) (539,470) (1,356,434) (856,570)
Inventories written down 10 3,249,478 1,642,077 – –
Property, plant and equipment
  written off 6 119,350 7,665 – –
Provision of warranty 25 904,960 546,958 – –
Reversal of impairment losses on
  trade receivables 11 (199,285) (194,183) – –
Reversal of inventories
  written down 10 – (127,172) – –
Reversal of provision
  for warranty 25 – (492,633) – –

Operating profit/(loss) before

  working capital changes 13,856,247 12,178,916 (587,341) (791,723)
Increase in inventories (10,172,349) (100,683) – –
Increase in trade and
  other receivables (4,320,942) (27,740) – (2,000)
Increase/(Decrease) in trade
  and other payables 1,420,547 (755,751) (175,107) 198,587
Warranty claimed 25 (1,028,960) (647,958) – –

CASH FLOWS (FOR)/FROM

 OPERATIONS/BALANCE
  CARRIED FORWARD (245,457) 10,646,784 (762,448) (595,136)

The annexed notes form an integral part of these financial statements.

Annual Report 2017 65

 STATEMENTS OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 30 APRIL 2017
cont’d

The Group The Company

2017 2016 2017 2016
Note RM RM RM RM

CASH FLOWS (FOR)/FROM

 OPERATING ACTIVITIES
 (CONT’D)

BALANCE BROUGHT FORWARD (245,457) 10,646,784 (762,448) (595,136)

Income tax paid (3,942,429) (3,918,294) (302,004) (80,055)

Income tax refunded 111,811 205,457 – –
Interest paid (3,110) (5,589) – –
Interest received 289,099 187,041 18,274 10,804

NET CASH (FOR)/FROM

 OPERATING ACTIVITIES (3,790,086) 7,115,399 (1,046,178) (664,387)

CASH FLOWS FOR INVESTING

 ACTIVITIES
Advances to subsidiaries – – (7,880,925) (12,279,041)
Dividends received – – – 232,545
Interest income received 577,974 352,429 568,794 352,429
Withrawal/(Placement) of fixed
  deposits with maturity period
  more than 90 days 5,000,000 (5,000,000) 5,000,000 (5,000,000)
Proceeds from disposal of property,
  plant and equipment 567,370 769,189 – –
Purchase of short term investment (1,015,918) (2,170,101) (1,015,918) (2,170,101)
Purchase of property, plant and
  equipment 33 (5,212,368) (3,098,169) – –
Subsequent expenditure on
  investment properties 7 (204,791) – – –

NET CASH FOR INVESTING

  ACTIVITIES (287,733) (9,146,652) (3,328,049) (18,864,168)

The annexed notes form an integral part of these financial statements.

66 SOLID AUTOMOTIVE BERHAD (1016725-P)

 STATEMENTS OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 30 APRIL 2017
cont’d

The Group The Company

2017 2016 2017 2016
Note RM RM RM RM

CASH FLOWS (FOR)/FROM

  FINANCING ACTIVITIES

Acquisition of shares from the

non-controlling interests 31 – (306,002) – (306,002)
Dividends paid 32 (2,160,558) (5,793,641) (2,160,558) (5,793,641)
Drawdown of foreign currency
  loans 1,870,218 480,142 – –
Repayment of bankers’
  acceptance – (12,121,000) – –
Net proceeds from issuance
  of warrants – 16,089,637 – 16,089,637
Interest paid (495,485) (788,652) – –
Proceeds from issuance of
  ordinary shares 17 565,650 20,282,900 565,650 20,282,900
Contribution from non-controlling
  interests in a newly
  incorporated subsidiary 120,000 – – –
Repayment of hire purchase
  obligations (120,718) (314,949) – –
Repayment of term loans (3,997,650) (3,102,604) – –

NET CASH (FOR)/FROM

  FINANCING ACTIVITIES (4,218,543) 14,425,831 (1,594,908) 30,272,894

NET (DECREASE)/INCREASE
  IN CASH AND CASH
 EQUIVALENTS (8,296,362) 12,394,578 (5,969,135) 10,744,339

EFFECT OF FOREIGN
 EXCHANGE TRANSLATION 821,450 843,914 – –

CASH AND CASH EQUIVALENTS

  AT BEGINNING OF THE
  FINANCIAL YEAR 22,302,280 9,063,788 10,752,573 8,234

CASH AND CASH EQUIVALENTS

  AT END OF THE
  FINANCIAL YEAR 34 14,827,368 22,302,280 4,783,438 10,752,573

The annexed notes form an integral part of these financial statements.

Annual Report 2017 67

 NOTES TO THE FINANCIAL STATEMENTS

1. GENERAL INFORMATION

The Company is a public limited company, incorporated and domiciled in Malaysia. The registered office and
principal place of business are as follows:-

Registered office : Suite 7E, Level 7, Menara Ansar

65, Jalan Trus
80000 Johor Bahru
Johor

Principal place of business : PLO 436, Jalan Gangsa

Kawasan Perindustrian Pasir Gudang
81700 Pasir Gudang
Johor

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of
the directors dated 11 August 2017.

2. PRINCIPAL ACTIVITIES

The Company is principally engaged in the business of investment holding and the provision of management
services.

The principal activities of the subsidiaries are set out in Note 5 to the financial statements.

3. BASIS OF PREPARATION

The financial statements of the Group are prepared under the historical cost convention and modified to include
other bases of valuation as disclosed in other sections under significant accounting policies, and in compliance
with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards and the
requirements of the Companies Act 2016 in Malaysia.

3.1 During the current financial year, the Group has adopted the following applicable new accounting standards
(including the consequential amendments, if any):-

MFRSs (Including The Consequential Amendments)

Amendments to MFRS 10, MFRS 12 and MFRS 128: Investment Entities – Applying the Consolidation
Exception
Amendments to MFRS 101: Disclosure Initiative
Amendments to MFRS 116 and MFRS 138: Clarification of Acceptable Methods of Depreciation and
Amortisation
Amendments to MFRS 127: Equity Method in Separate Financial Statements
Annual Improvements to MFRSs 2012 – 2014 Cycle

The adoption of the above accounting standards (including the consequential amendments, if any) did not
have any material impact on the Group’s financial statements.

68 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

3. BASIS OF PREPARATION (CONT’D)

3.2 The Group has not applied in advance the following applicable accounting standards and/or interpretation
(including the consequential amendments, if any) that have been issued by the Malaysian Accounting
Standards Board (MASB) but are not yet effective for the current financial year:-

MFRSs and/or IC Interpretation (Including The Consequential Amendments) Effective Date

MFRS 9 Financial Instruments (IFRS 9 issued by IASB in July 2014) 1 January 2018
MFRS 15 Revenue from Contracts with Customers 1 January 2018
MFRS 16 Leases 1 January 2019
IC Interpretation 22 Foreign Currency Transactions and Advance Consideration 1 January 2018
Amendments to MFRS 15: Effective Date of MFRS 15 1 January 2018
Amendments to MFRS 15: Clarifications to MFRS 15 ‘Revenue from Contracts
with Customers’ 1 January 2018
Amendments to MFRS 107: Disclosure Initiative 1 January 2017
Amendments to MFRS 112: Recognition of Deferred Tax Assets for Unrealised Losses 1 January 2017
Amendments to MFRS 140 – Transfers of Investment Property 1 January 2018

The adoption of the above accounting standards and/or interpretation (including the consequential
amendments, if any) is expected to have no material impact on the financial statements of the Group upon
their initial application.

4. SIGNIFICANT ACCOUNTING POLICIES

4.1 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated by the directors and management and are based
on historical experience and other factors, including expectations of future events that are believed to
be reasonable under the circumstances. The estimates and judgements that affect the application of the
Group’s accounting policies and disclosures, and have a significant risk of causing a material adjustment
to the carrying amounts of assets, liabilities, income and expenses are discussed below:-

(a) Depreciation of Property, Plant and Equipment

The estimates for the residual values, useful lives and related depreciation charges for the property,
plant and equipment are based on commercial factors which could change significantly as a result
of technical innovations and competitors’ actions in response to the market conditions. The Group
anticipates that the residual values of its property, plant and equipment will be insignificant. As a
result, residual values are not being taken into consideration for the computation of the depreciable
amount. Changes in the expected level of usage and technological development could impact the
economic useful lives and the residual values of these assets, therefore future depreciation charges
could be revised.

(b) Income Taxes

There are certain transactions and computations for which the ultimate tax determination may be
different from the initial estimate. The Group recognises tax liabilities based on its understanding of
the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of
business. Where the final outcome of these matters is different from the amounts that were initially
recognised, such difference will impact the income tax expense and deferred tax balances in the year
in which such determination is made.

Annual Report 2017 69

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

4.1 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONT’D)

(c) Impairment of Non-Financial Assets

When the recoverable amount of an asset is determined based on the estimate of the value in use
of the cash-generating unit to which the asset is allocated, the management is required to make an
estimate of the expected future cash flows from the cash-generating unit and also to apply a suitable
discount rate in order to determine the present value of those cash flows.

(d) Write-down of Inventories

Reviews are made periodically by management on damaged, obsolete and slow-moving inventories.
These reviews require management to consider the future demand for the products and subsequent
events. The Group also adopts the written down policy for slow-moving inventories by marking down
the carrying amount of those slow-moving inventories which are aged more than 2 years by using
certain predetermined percentages which are derived based on the past historical movement trend
of the inventories and judgement of the directors and management.

In general, such as evaluation process requires significant judgement and estimates. Possible changes
in these estimates could result in revisions to the valuation of inventories.

(e) Classification between Investment Properties and Owner-occupied Properties

Some properties comprise a portion that is held to earn rentals or for capital appreciation and another
portion that is held for use in the production or supply of goods or services or for administrative
purposes. If these portions could be sold separately (or leased out separately under a finance lease),
the Group accounts for the portions separately. If the portions could not be sold separately, the
property is an investment property only if an insignificant portion is held for use in the production or
supply of goods or services or for administrative purposes.

Judgement is made on an individual property basis to determine whether ancillary services are so
significant that a property does not qualify as investment property.

(f) Impairment of Trade Receivables

An impairment loss is recognised when there is objective evidence that a financial asset is impaired.
Management specifically reviews its loans and receivables financial assets and analyses historical bad
debts, customer concentrations, customer creditworthiness, current economic trends and changes in
the customer payment terms when making a judgement to evaluate the adequacy of the allowance
for impairment losses. Where there is objective evidence of impairment, the amount and timing of
future cash flows are estimated based on historical loss experience for assets with similar credit risk
characteristics. If the expectation is different from the estimation, such difference will impact the
carrying value of receivables.

(g) Impairment of Available-for-sale Financial Assets

The Group reviews its available-for-sale financial assets at the end of each reporting period to assess
whether they are impaired. The Group also records impairment loss on available-for-sale equity
investments when there has been a significant or prolonged decline in the fair value below their cost.
The determination of what is “significant’ or “prolonged” requires judgement. In making this judgement,
the Group evaluates, among other factors, historical share price movements and the duration and
extent to which the fair value of an investment is less than its cost.

70 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

4.1 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONT’D)

(h) Classification of Leasehold Land

The classification of leasehold land as a finance lease or an operating lease requires the use of
judgement in determining the extent to which risks and rewards incidental to its ownership lie. Despite
the fact that there will be no transfer of ownership by the end of the lease term and that the lease term
does not constitute the major part of the indefinite economic life of the land, management considered
that the present value of the minimum lease payments approximated to the fair value of the land at
the inception of the lease. Accordingly, management judged that the Group has acquired substantially
all the risks and rewards incidental to the ownership of the land through a finance lease.

(i) Fair Value Estimates for Certain Financial Assets and Financial Liabilities

The Group carries certain financial assets and financial liabilities at fair value, which requires extensive
use of accounting estimates and judgement. While significant components of fair value measurement
were determined using verifiable objective evidence, the amount of changes in fair value would differ
if the Group uses different valuation methodologies. Any changes in fair value of these assets and
liabilities would affect profit and/or equity.

(j) Provision for warranty

Judgement has been applied in determining the provision for warranty for products sold under warranty
terms of one year from the date of sale. The provision is computed based on the return percentage on
products sold with defects which cannot be claimed from suppliers. Based on the past experience,
it is probable that certain claims will be made within the given warranty period.

(k) Held-to-maturity Financial Assets

The Group classifies fixed deposits with licensed banks as held-to-maturity investments when it has
a positive intention and ability to hold the investments to maturity. Management exercises judgement
based on the Group’s treasury objective and financial risk management policy to determine whether
the financial assets are to be classified as held-to-maturity.

4.2 BASIS OF CONSOLIDATION

The consolidated financial statements include the financial statements of the Company and its subsidiaries
made up to the end of the reporting period.

Subsidiaries are entities controlled by the Group. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity. Potential voting rights are considered when assessing control
only when such rights are substantive. The Group also considers it has de facto power over an investee
when, despite not having the majority of voting rights, it has the current ability to direct the activities of the
investee that significantly affect the investee’s return.

Subsidiaries are consolidated from the date on which control is transferred to the Group up to the effective
date on which control ceases, as appropriate.

Intragroup transactions, balances, income and expenses are eliminated on consolidation. Intragroup losses
may indicate an impairment that requires recognition in the consolidated financial statements. Where
necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of
accounting policies with those of the Group.

Annual Report 2017 71

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

4.2 BASIS OF CONSOLIDATION (CONT’D)

(a) Business Combinations

A business combination involving entities under common control is a business combination in which
all the combining entities or business are ultimately controlled by the same party or parties both before
and after the business combination, and that control is not transitory.

An acquisition that resulted in a business combination involving common control entities is outside
the scope of MFRS 3 Business Combinations. For such common control combinations, the merger
accounting principles are used to include the assets, liabilities, results, equity changes and cash flows
of the combining entities in the audited financial statements.

In applying merger accounting, financial statements items of the combining entities or businesses for
the reporting period in which common control combination occurs are included in the audited financial
statements of the Group as if the combination had occurred from the date when the combining entities
or business come under the control of the controlling party or parties.

Under merger accounting, the Group recognises the assets, liabilities and equity of the combining
entities or businesses at the carrying amount as if such audited financial statements had been
prepared by the controlling party including adjustments required for conforming to the Groups’
accounting policies and applying those policies to all period presented. There is no recognition of
any goodwill or a gain from a bargain purchase at the time of the common control combination. The
effect of all transactions and balances between combining entities, whether occurring before or after
the combination, are eliminated in preparing the audited financial statements of the Group.

However, in the future, acquisitions of businesses are accounted for using the acquisition method.
Under the acquisition method, the consideration transferred for acquisition of a subsidiary is the fair
value of the assets transferred, liabilities incurred and the equity interests issued by the Group at the
acquisition date. The consideration transferred includes the fair value of any asset or liability resulting
from a contingent consideration arrangement. Acquisition-related costs, other than the costs to issue
debt or equity securities, are recognised in profit or loss when incurred.

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

Non-controlling interests in the acquiree may be initially measured either at fair value or at the non-
controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets at
the date of acquisition. The choice of measurement basis is made on a transaction-by-transaction
basis.

(b) Non-Controlling Interests

Non-controlling interests are presented within equity in the consolidated statement of financial
position, separately from the equity attributable to owners of the Company. Profit or loss and each
component of other comprehensive income are attributed to the owners of the Company and to the
non-controlling interests. Total comprehensive income is attributed to non-controlling interests even
if this results in the non-controlling interests having a deficit balance.

72 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

4.2 BASIS OF CONSOLIDATION (CONT’D)

(c) Changes in Ownership Interests in Subsidiaries Without Change of Control

All changes in the parent’s ownership interest in a subsidiary that do not result in a loss of control are
accounted for as equity transactions. Any difference between the amount by which the non-controlling
interest is adjusted and the fair value of consideration paid or received is recognised directly in equity
of the Group.

(d) Loss of Control

Upon the loss of control of a subsidiary, the Group recognises any gain or loss on disposal in profit
or loss which is calculated as the difference between:-

(i) the aggregate of the fair value of the consideration received and the fair value of any retained
interest in the former subsidiary; and

(ii) the previous carrying amount of the assets (including goodwill), and liabilities of the former
subsidiary and any non-controlling interests.

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

4.3 FUNCTIONAL AND FOREIGN CURRENCIES

(a) Functional and Presentation Currency

The individual financial statements of each entity in the Group are presented in the currency of the
primary economic environment in which the entity operates, which is the functional currency.

The consolidated financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s
functional and presentation currency.

(b) Foreign Currency Transactions and Balances

Transactions in foreign currencies are converted into the respective functional currencies on initial
recognition, using the exchange rates at the transaction dates. Monetary assets and liabilities at the
end of the reporting period are translated at the exchange rates ruling as of that date. Non-monetary
assets and liabilities are translated using exchange rates that existed when the values were determined.
All exchange differences are recognised in profit or loss.

(c) Foreign Operations

Assets and liabilities of foreign operations (including any goodwill and fair value adjustments arising
on acquisition) are translated to the Group’s presentation currency at the exchange rates at the end
of the reporting period. Income, expenses and other comprehensive income of foreign operations are
translated at exchange rates at the dates of the transactions. All exchange differences arising from
translation are taken directly to other comprehensive income and accumulated in equity; attributed
to the owners of the Company and non-controlling interests, as appropriate.

Annual Report 2017 73

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

4.3 FUNCTIONAL AND FOREIGN CURRENCIES (CONT’D)

(c) Foreign Operations (Cont’d)

On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign subsidiary,
or a partial disposal involving loss of control over a subsidiary that includes a foreign operation, or a
partial disposal of an interest in an associate that includes a foreign operation of which the retained
interest becomes a financial asset), all of the exchange differences accumulated in equity in respect
of that foreign operation attributable to the owners of the Company are reclassified to profit or loss as
part of the gain or loss on disposal. The portion that related to non-controlling interests is derecognised
but is not reclassified to profit or loss.

In addition, in relation to a partial disposal of a subsidiary that does not result in the Group losing control
over the subsidiary, the proportionate share of accumulated exchange differences are reattributed
to non-controlling interests and are not recognised in profit or loss. When the Group disposes of
only part of its investment in an associate that includes a foreign operation while retaining significant
influence, the proportionate share of the accumulative exchange differences is reclassified to profit
or loss.

In the consolidated financial statements, when settlement of an intragroup loan is neither planned nor
likely to occur in the foreseeable future, the exchange differences arising from translating such monetary
item are considered to form part of a net investment in the foreign operation and are recognised in
other comprehensive income.

4.4 FINANCIAL INSTRUMENTS

Financial assets and financial liabilities are recognised in the statements of financial position when the Group
has become a party to the contractual provisions of the instruments.

Financial instruments are classified as financial assets, financial liabilities or equity instruments in accordance
with the substance of the contractual arrangement and their definitions in MFRS 132. Interest, dividends,
gains and losses relating to a financial instrument classified as a liability are reported as an expense or
income. Distributions to holders of financial instruments classified as equity are charged directly to equity.

Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle
either on a net basis or to realise the asset and settle the liability simultaneously.

A financial instrument is recognised initially at its fair value. Transaction costs that are directly attributable
to the acquisition or issue of the financial instrument (other than a financial instrument at fair value through
profit or loss) are added to/deducted from the fair value on initial recognition, as appropriate. Transaction
costs on the financial instrument at fair value through profit or loss are recognised immediately in profit or
loss.

Financial instruments recognised in the statements of financial position are disclosed in the individual policy
statement associated with each item.

74 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

4.4 FINANCIAL INSTRUMENTS (CONT’D)

(a) Financial Assets

On initial recognition, financial assets are classified as either financial assets at fair value through profit
or loss, held-to-maturity investments, loans and receivables financial assets, or available-for-sale
financial assets, as appropriate.

(i) Financial Assets at Fair Value through Profit or Loss

Financial assets are classified as financial assets at fair value through profit or loss when the
financial asset is either held for trading or is designated to eliminate or significantly reduce a
measurement or recognition inconsistency that would otherwise arise. Derivatives are also
classified as held for trading unless they are designated as hedges.

Financial assets at fair value through profit or loss are stated at fair value, with any gains or
losses arising on remeasurement recognised in profit or loss. Dividend income from this category
of financial assets is recognised in profit or loss when the Group’s right to receive payment is
established.

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

(ii) Held-to-maturity Investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable

payments and fixed maturities that the management has the positive intention and ability to hold
to maturity. Held-to-maturity investments are measured at amortised cost using the effective
interest method less any impairment loss, with interest income recognised in profit or loss on
an effective yield basis.

Held-to-maturity investments are classified as non-current assets, except for those having
maturity within 12 months after the reporting date which are classified as current assets.

(iii) Loans and Receivables Financial Assets

Trade receivables and other receivables that have fixed or determinable payments that are not
quoted in an active market are classified as loans and receivables financial assets. Loans and
receivables financial assets are measured at amortised cost using the effective interest method,
less any impairment loss. Interest income is recognised by applying the effective interest rate,
except for short-term receivables when the recognition of interest would be immaterial.

The effective interest method is a method of calculating the amortised cost of a financial asset
and of allocating interest income over the relevant period. The effective interest rate is the rate
that discounts estimated future cash receipts (including all fees and points paid or received
that form an integral part of the effective interest rate, transaction costs and other premiums
or discounts) through the expected life of the financial asset, or (where appropriate) a shorter
period, to the net carrying amount on initial recognition.

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

Annual Report 2017 75

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

4.4 FINANCIAL INSTRUMENTS (CONT’D)

(a) Financial Assets (Cont’d)

(iv) Available-for-sale Financial Assets

Available-for-sale financial assets are non-derivative financial assets that are designated in this
category or are not classified in any of the other categories.

After initial recognition, available-for-sale financial assets are remeasured to their fair values
at the end of each reporting period. Gains and losses arising from changes in fair value are
recognised in other comprehensive income and accumulated in the fair value reserve, with
the exception of impairment losses. On derecognition, the cumulative gain or loss previously
accumulated in the fair value reserve is reclassified from equity into profit or loss.

Dividends on available-for-sale equity instruments are recognised in profit or loss when the
Group’s right to receive payments is established.

Investments in equity instruments whose fair value cannot be reliably measured are measured
at cost less accumulated impairment losses, if any.

Available-for-sale financial assets are classified as non-current assets unless they are expected
to be realised within 12 months after the reporting date.

(b) Financial Liabilities

(i) Financial Liabilities at Fair Value through Profit or Loss

Fair value through profit or loss category comprises financial liabilities that are either held for
trading or are designated to eliminate or significantly reduce a measurement or recognition
inconsistency that would otherwise arise. Derivatives are also classified as held for trading
unless they are designated as hedges.

(ii) Other Financial Liabilities

Other financial liabilities are initially measured at fair value plus directly attributable transaction
costs and subsequently measured at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability
and of allocating interest expense over the relevant period. The effective interest rate is the
rate that exactly discounts estimated future cash payments through the expected life of the
financial liability, or, where appropriate, a shorter period.

Financial liabilities are classified as current liabilities unless the Group has an unconditional right to
defer settlement of the liability for at least 12 months after the reporting date.

(c) Equity Instruments

Equity instruments classified as equity are measured initially at cost and are not remeasured
subsequently. Incremental costs directly attributable to the issue of new ordinary shares are shown
in equity as a deduction, net of tax, from proceeds. Dividends on ordinary shares are recognised as
liabilities when approved for appropriation.

76 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

4.4 FINANCIAL INSTRUMENTS (CONT’D)

(d) Derivative Financial Instruments

Derivative financial instruments are initially recognised at fair value on the date on which a derivative
contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as
financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in fair value on derivatives during the reporting period, other
than those accounted for under hedge accounting, are recognised directly in profit or loss.

An embedded derivative is recognised separately from the host contract and accounted for as a
derivative if, and only if, it is not closely related to the economic characteristics and risks of the host
contract and the host contract is categorised as at fair value through profit or loss. The host contract,
in the event an embedded derivative is recognised separately, is accounted for in accordance with
policy applicable to the host contract.

(e) Derecognition

A financial asset or part of it is derecognised when, and only when, the contractual rights to the cash
flows from the financial asset expire or the financial asset is transferred to another party without retaining
control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the
difference between the carrying amount and the sum of the consideration received (including any
new asset obtained less any new liability assumed) and any cumulative gain or loss that had been
recognised in equity is recognised in profit or loss.

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

(f) Financial Guarantee Contracts

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

Financial guarantee contracts are recognised initially as liabilities at fair value, net of transaction costs.
Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit
or loss over the period of the guarantee or, when there is no specific contractual period, recognised
in profit or loss upon discharge of the guarantee. If the debtor fails to make payment relating to a
financial guarantee contract when it is due and the Company, as the issuer, is required to reimburse
the holder for the associated loss, the liability is measured at the higher of the best estimate of the
expenditure required to settle the present obligation at the end of the reporting period and the amount
initially recognised less cumulative amortisation.

Annual Report 2017 77

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

4.4 FINANCIAL INSTRUMENTS (CONT’D)

(g) Hedge Activities

The Group enters into a variety of derivative financial instruments to manage its exposure to interest
rate and foreign exchange rate risks, including cross currency swap and interest rate swap.

The Group designates the derivative as hedges of highly probable forecast transactions or hedges
of foreign currency risk of firm commitments (cash flow hedges).

(i) Cash Flow Hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify
as cash flow hedges is recognised in other comprehensive income. The gain or loss relating
to the ineffective portion is recognised immediately in profit or loss.

Subsequently, the cumulative gain or loss recognised in other comprehensive income is

reclassified from equity into profit or loss in the same period or periods during which the hedged
forecast cash flows affects profit or loss. If the hedged item is a non-financial asset or liability,
the associated gain or loss recognised in other comprehensive income is transferred from equity
and included in the initial amount of the asset or liability. However, loss recognised in other
comprehensive income that will not be recovered in one or more future periods is reclassified
from equity into profit or loss.

Hedge accounting is discontinued prospectively when the Group revokes the hedging
relationship, when the hedging instrument expires or is sold, terminated, or exercised, or it
no longer qualifies for hedge accounting. Any gain or loss accumulated in equity at that time
remains in equity and is recognised when the forecast transaction is ultimately recognised in
profit or loss. When a forecast transaction is no longer expected to occur, the gain or loss
accumulated in equity is recognised immediately in profit or loss.

4.5 INVESTMENTS IN SUBSIDIARIES

Investments in subsidiaries are stated at cost in the statement of financial position of the Company, and are
reviewed for impairment at the end of the reporting period if events or changes in circumstances indicate
that the carrying values may not be recoverable. The cost of the investments includes transaction costs.

On the disposal of the investments in subsidiaries, the difference between the net disposal proceeds and
the carrying amount of the investments is recognised in profit or loss.

4.6 PROPERTY, PLANT AND EQUIPMENT

All items of property, plant and equipment are initially measured at cost. Cost includes expenditure that are
directly attributable to the acquisition of the asset and other costs directly attributable to bringing the asset
to working condition for its intended use, and the costs dismantling and removing the items and restoring
that site on which they are located.

Subsequent to initial recognition, all property, plant and equipment, other than freehold land, are stated at
cost less accumulated depreciation and any impairment losses.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when the cost is incurred and it is probable that the future economic benefits associated
with the asset will flow to the Group and the cost of the asset can be measured reliably. The carrying amount
of parts that are replaced is derecognised. The costs of the day-to-day servicing of property, plant and
equipment are recognised in profit or loss as incurred.

78 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

4.6 PROPERTY, PLANT AND EQUIPMENT (CONT’D)

Freehold land is not depreciated. Depreciation on other property, plant and equipment is charged to profit
or loss (unless it is included in the carrying amount of another asset) on a straight-line method to write off
the depreciable amount of the assets over their estimated useful lives. Depreciation of an asset does not
cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated. The
principal annual rates used for this purpose are:-

Leasehold land Over the lease period of 50 to 99 years

Buildings 2%
Fixture, furniture and equipment 10% to 25%
Motor vehicles 20%
Plant and machinery 10% to 15%
Renovation 10%

Capital work-in-progress included in property, plant and equipment are not depreciated as these assets
are not yet available for use.

The depreciation method, useful lives and residual values are reviewed, and adjusted if appropriate, at the
end of each reporting period to ensure that the amounts, method and periods of depreciation are consistent
with previous estimates and the expected pattern of consumption of the future economic benefits embodied
in the items of the property, plant and equipment. Any changes are accounted for as a change in estimate.

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

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits
are expected from its use. Any gain or loss arising from derecognition of the asset, being the difference
between the net disposal proceeds and the carrying amount, is recognised in profit or loss.

4.7 INVESTMENT PROPERTIES

Investment properties are properties which are owned or held under a leasehold interest to earn rental
income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the
production or supply of goods or services or for administrative purposes.

Investment properties are initially measured at cost. Cost includes expenditure that is directly attributable
to the acquisition of the investment property.

Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation
and impairment losses, if any.

Depreciation is charged to profit or loss on a straight-line method over the estimated useful lives of the
investment properties. Freehold land is not depreciated. The estimated useful lives of the investment
properties are within 7 years to 50 years.

Investment properties are derecognised when they have either been disposed of or when the investment
property is permanently withdrawn from use and no future benefit is expected from its disposal.

On the derecognition of an investment property, the difference between the net disposal proceeds and the
carrying amount is recognised in profit or loss.

Transfers are made to or from investment property only when there is a change in use. All transfers do not
change the carrying amount of the property reclassified.

Annual Report 2017 79

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

4.8 IMPAIRMENT

(a) Impairment of Financial Assets

All financial assets (other than those categorised at fair value through profit or loss and investments
in subsidiaries), are assessed at the end of each reporting period whether there is any objective
evidence of impairment as a result of one or more events having an impact on the estimated future
cash flows of the asset. For an equity instrument, a significant or prolonged decline in the fair value
below its cost is considered to be objective evidence of impairment.

An impairment loss in respect of held-to-maturity investments and loans and receivables financial
assets is recognised in profit or loss and is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows, discounted at the financial asset’s
original effective interest rate.

An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is
measured as the difference between its cost (net of any principal payment and amortisation) and its
current fair value, less any impairment loss previously recognised in the fair value reserve. In addition,
the cumulative loss recognised in other comprehensive income and accumulated in equity under fair
value reserve, is reclassified from equity into profit or loss.

With the exception of available-for-sale debt instruments, if, in a subsequent period, the amount of
the impairment loss decreases and the decrease can be related objectively to an event occurring
after the impairment was recognised, the previously recognised impairment loss is reversed through
profit or loss to the extent that the carrying amount of the financial asset at the date the impairment
is reversed does not exceed what the amortised cost would have been had the impairment not been
recognised. In respect of available-for-sale equity instruments, impairment losses previously recognised
in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an
impairment loss made is recognised in other comprehensive income.

An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in
profit or loss and is measured as the difference between the financial asset’s carrying amount and
the present value of estimated future cash flows discounted at the current market rate of return for
a similar financial asset. Such impairment losses are not reversed in subsequent periods.

(b) Impairment of Non-financial Assets

The carrying values of assets, other than those to which MFRS 136 - Impairment of Assets does not
apply, are reviewed at the end of each reporting period for impairment when an annual impairment
assessment is compulsory or there is an indication that the assets might be impaired. Impairment
is measured by comparing the carrying values of the assets with their recoverable amounts. When
the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its
recoverable amount and an impairment loss shall be recognised. The recoverable amount of an asset
is the higher of the asset’s fair value less costs to sell and its value in use, which is measured by
reference to discounted future cash flows 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 it is not possible
to estimate the recoverable amount of an individual asset, the Group determines the recoverable
amount of the cash-generating unit to which the asset belongs.

An impairment loss is recognised in profit or loss.

When there is a change in the estimates used to determine the recoverable amount, a subsequent
increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss
and is recognised to the extent of the carrying amount of the asset that would have been determined
(net of amortisation and depreciation) had no impairment loss been recognised. The reversal is
recognised in profit or loss immediately.

80 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

4.9 LEASED ASSETS

Finance Lease

A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards
incidental to ownership. Upon initial recognition, the leased asset is measured at an amount equal to the lower
of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the
asset is accounted for in accordance with the accounting policy applicable to that asset. The corresponding
liability is included in the statement of financial position as hire purchase payables.

Minimum lease payments made under finance leases are apportioned between the finance costs and the
reduction of the outstanding liability. The finance costs, which represent the difference between the total
leasing commitments and the fair value of the assets acquired, are recognised in the profit or loss and
allocated over the lease term so as to produce a constant periodic rate of interest on the remaining balance
of the liability for each accounting period.

Leasehold land which in substance is a finance lease is classified as property, plant and equipment.

4.10 INVENTORIES

Inventories are stated at the lower of cost and net realisable value. Cost of trading goods are determined on
the weighted average cost method, and comprises the purchase price and incidentals incurred in bringing
the inventories to their present location and condition.

Net realisable value represents the estimated selling price less the estimated costs of completion and the
estimated costs necessary to make the sale.

4.11 CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash in hand, bank balances and demand deposits that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value
with original maturity periods of three months or less. For the purpose of the statement of cash flows, cash
and cash equivalents are presented net of bank overdrafts.

4.12 PROVISIONS

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of past
events, when it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation, and when a reliable estimate of the amount can be made. Provisions are reviewed at
the end of each reporting period and adjusted to reflect the current best estimate. Where the effect of the
time value of money is material, the provision is the present value of the estimated expenditure required to
settle the obligation. The unwinding of the discount is recognised as interest expense in profit or loss.

(a) Warranty

A provision for warranty is recognised based on the best estimated liabilities to repair or replace
products when the underlying products or services are sold. The estimated liabilities are based on
historical warranty data.

Annual Report 2017 81

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

4.13 EMPLOYEE BENEFITS

(a) Short-term Benefits

Wages, salaries, paid annual leave and bonuses are measured on an undiscounted basis and are
recognised in profit or loss in the period in which the associated services are rendered by employees
of the Group.

(b) Defined Contribution Plans

The Group’s contributions to defined contribution plans are recognised in profit or loss in the period to
which they relate. Once the contributions have been paid, the Group has no further liability in respect
of the defined contribution plans.

4.14 INCOME TAXES

(a) Current Tax

Current tax assets and liabilities are expected amount of income tax recoverable or payable to the
taxation authorities.

Current taxes are measured using tax rates and tax laws that have been enacted or substantively
enacted at the end of the reporting period and 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 are recognised using the liability method for all temporary differences other than those
that arise from goodwill or from the initial recognition of an asset or liability in a transaction which is
not a business combination and at the time of the transaction, affects neither accounting profit nor
taxable profit.

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

Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and
unused tax credits to the extent that it is probable that future taxable profits will be available against
which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.
The carrying amounts of deferred tax assets are reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable that the related tax benefits will be realised.

Current and deferred tax items are recognised in correlation to the underlying transactions either in profit
or loss, other comprehensive income or directly in equity. Deferred tax arising from a business combination
is adjusted against goodwill or negative goodwill.

Current tax assets and liabilities or deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes
relate to the same taxable entity (or on different tax entities but they intend to settle current tax assets and
liabilities on a net basis) and the same taxation authority.

82 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

4.14 INCOME TAXES (CONT’D)

(c) Goods and Services Tax (“GST”)

Revenues, expenses and assets are recognised net of GST except for the GST in a purchase of
assets or services which are not recoverable from the taxation authorities, the GST are included as
part of the costs of the assets acquired or as part of the expense item whichever is applicable.

In addition, receivables and payables are also stated with the amount of GST included (where
applicable).

The net amount of the GST recoverable from or payable to the taxation authorities at the end of the
reporting period is included in other receivables or other payables.

4.15 RELATED PARTIES

A party is related to an entity (referred to as the “reporting entity”) if:-

(a) A person or a close member of that person’s family is related to a reporting entity if that person:-

(i) has control or joint control over the reporting entity;

(ii) has significant influence over the reporting entity; or
(iii) is a member of the key management personnel of the reporting entity or of a parent of the
reporting entity.

Close members of the family of a person are those family members who may be expected to influence,
or be influenced by, that person in their dealings with the reporting entity.

(b) An entity is related to a reporting entity if any of the following conditions applies:-

(i) The entity and the reporting entity are members of the same group (which means that each
parent, subsidiary and fellow subsidiary is related to the others).
(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture
of a member of a group of which the other entity is a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third
entity.
(v) The entity is a post-employment benefit plan for the benefit of employees of either the reporting
entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the
sponsoring employers are also related to the reporting entity.
(vi) The entity is controlled or jointly controlled by a person identified in (a) above.
(vii) A person identified in (a)(i) above has significant influence over the entity or is a member of the
key management personnel of the entity (or of a parent of the entity).
(viii) The entity, or any member of a group of which it is a part, provides key management personnel
services to the reporting entity or to the parent of the reporting entity.

Related parties also include key management personnel defined as those persons having authority
and responsibility for planning, directing and controlling the activities of the reporting entity either
directly or indirectly, including any director (whether executive or otherwise) of that entity.

Annual Report 2017 83

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

4.16 CONTINGENT LIABILITIES

A contingent liability is a possible obligation that arises from past events and whose existence will only be
confirmed by the occurrence of one or more uncertain future events not wholly within the control of the
Group. It can also be a present obligation arising from past events that is not recognised because it is not
probable that an outflow of economic resources will be required or the amount of obligation cannot be
measured reliably.

A contingent liability is not recognised but is disclosed in the notes to the financial statements, unless the
probability of outflow of economic benefits is remote. When a change in the probability of an outflow occurs
so that the outflow is probable, it will then be recognised as a provision.

4.17 OPERATING SEGMENTS

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

4.18 EARNINGS PER ORDINARY SHARE

Basic earnings per ordinary share is calculated by dividing the consolidated profit or loss attributable to
ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding
during the reporting period, adjusted for own shares held.

Diluted earnings per ordinary share is determined by adjusting the consolidated profit or loss attributable to
ordinary shareholders of the Company and the weighted average number of ordinary shares outstanding,
for the effects of all dilutive potential ordinary shares, which comprise Warrants.

4.19 FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date, regardless of whether that price is
directly observable or estimated using a valuation technique. The measurement assumes that the transaction
takes place either in the principal market or in the absence of a principal market, in the most advantageous
market. For non-financial asset, the fair value measurement 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.

For financial reporting purposes, the fair value measurements are analysed into level 1 to level 3 as follows:-

Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liability that the
entity can access at the measurement date;

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

Level 3: Inputs are unobservable inputs for the asset or liability.

The transfer of fair value between levels is determined as of the date of the event or change in circumstances
that caused the transfer.

84 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

4.20 REVENUE AND OTHER INCOME

Revenue is measured at the fair value of the consideration received or receivable, net of returns, goods and
services tax, cash and trade discounts.

(a) Sale of Goods

Revenue from sale of goods is recognised when significant risks and rewards of ownership of the
goods have been transferred to the buyer and where the Group does not have continuing managerial
involvement and effective control over the goods sold.

(b) Interest Income

Interest income is recognised on an accrual basis using the effective interest method.

(c) Dividend Income

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

(d) Rental Income

Rental income is accounted for on a straight-line method over the lease term.

5. INVESTMENTS IN SUBSIDIARIES

The Company
2017 2016
RM RM

Unquoted shares, at cost

- in Malaysia 67,242,865 67,242,865
- outside Malaysia 9,511,500 9,511,500

76,754,365 76,754,365

The details of the subsidiaries are as follows:-

Principal Place Percentage of
of Business/ Issued Share
Country of Capital Held by
Name of Subsidiaries Incorporation Parent Principal Activities
2017 2016
% %
Subsidiaries of the Company

Solid Corporation Sdn. Bhd. Malaysia 100.00 100.00 Trading and distribution of
(“Solid Corporation”) automotive electrical parts and
components

Twinco Far East Sdn. Bhd. Malaysia 100.00 100.00 Trading and distribution of
automotive engine and mechanical
parts and components

Annual Report 2017 85

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

5. INVESTMENTS IN SUBSIDIARIES (CONT’D)

The details of the subsidiaries are as follows (Cont’d):-

Principal Place Percentage of

of Business/ Issued Share
Country of Capital Held by
Name of Subsidiaries Incorporation Parent Principal Activities
2017 2016
% %
Solid Autotech Sdn. Bhd. Malaysia 100.00 100.00 Property and investment holding

Auto Empire Impex Pte. Ltd.* Singapore 100.00 100.00 Trading and distribution of
automotive engine and mechanical
parts and components

Subsidiaries of Solid Corporation

JBS Auto-Tech Sdn. Bhd. Malaysia 100.00 100.00 Trading and distribution of
 (“JBS”) automotive spare parts

Lukas Marketing Sdn. Bhd. Malaysia 100.00 100.00 Trading and distribution of
automotive electrical parts and
components

HKT Auto Electrical Parts Malaysia 100.00 100.00 Trading and distribution of
  Sdn. Bhd. automotive spare parts, lubricants
and batteries

Autoworld Parts Services Malaysia 70.00 – Trading, repairing and servicing

  Sdn. Bhd. (“Autoworld”) of automotive electrical parts and
components

* This subsidiary is audited by other firm of chartered accountants.

(a) During the current financial year, the Solid Corporation has incorporated a subsidiary under the name
Autoworld Parts Services Sdn. Bhd. (“Autoworld”) with an issued and paid up capital of RM1,000 divided
into 1,000 ordinary shares. Solid Corporation subscribed 999 ordinary shares for a cash consideration of
RM999. Solid Corporation further subscribed 279,001 ordinary shares for a cash consideration amounting
to RM279,001.

(b) In the previous financial year, the Company acquired an additional 0.44% equity interest in Solid Corporation
and 20% equity interest in JBS via Solid Corporation from the non-controlling interests. Following the
completion of the acquisition, both the aforesaid companies become the wholly owned subsidiaries of the
Company. The details of the acquisition are disclosed in Note 31 to the financial statements.

(c) The non-controlling interests at the end of the reporting period comprise the following:

Effective Equity Interest The Group

2017 2016 2017 2016
% % RM RM

Autoworld 30.00 – 120,000 –

(d) Summarised financial information of non-controlling interests has not been presented as the non-controlling
interests of the subsidiary is not material to the Group.

86 SOLID AUTOMOTIVE BERHAD (1016725-P)

 6. PROPERTY, PLANT AND EQUIPMENT

Transfer to
Investment
At Additions Properties Translation Depreciation Reclassi- At
1.5.2016 (Note 33) Disposals Written Off (Note 7) Differences Charges fication 30.4.2017
The Group RM RM RM RM RM RM RM RM RM

2017

Net Book Value

Freehold land 6,006,328 – – – – – – – 6,006,328

Leasehold land 14,187,938 – – – – – (207,742) – 13,980,196
Buildings 12,433,677 – – – (115,770) – (333,424) 1,738,801 13,723,284
Building under
  construction 922,000 1,126,769 – – – – – (1,738,801) 309,968
Fixtures, furniture and
  equipment 1,970,171 2,247,090 (32,597) (112,161) – 12,836 (561,993) 3 3,523,349
Motor vehicles 2,214,835 1,715,385 (40,343) – – 25,897 (881,557) (3) 3,034,214
Plant and machinery 297,698 – (272,461) (7,189) – – (4,316) – 13,732
Renovation 175,346 123,124 – – – – (25,194) – 273,276

38,207,993 5,212,368 (345,401) (119,350) (115,770) 38,733 (2,014,226) – 40,864,347

Annual Report 2017

cont’d
NOTES TO THE FINANCIAL STATEMENTS

87
88
6. PROPERTY, PLANT AND EQUIPMENT (CONT’D) cont’d

At Additions Translation Depreciation At

1.5.2015 (Note 33) Disposals Written Off Differences Charges 30.4.2016
The Group RM RM RM RM RM RM RM

2016

Net Book Value

Freehold land 6,006,328 – – – – – 6,006,328

Leasehold land 14,396,929 – – – – (208,991) 14,187,938
Buildings 12,619,778 227,631 – – – (413,732) 12,433,677
Building under construction – 922,000 – – – – 922,000
Fixtures, furniture and equipment 1,724,119 733,708 (1,099) (7,665) 12,899 (491,791) 1,970,171
Motor vehicles 1,939,645 1,218,455 (129,732) – 13,714 (827,247) 2,214,835
Plant and machinery 429,631 – (80,142) – – (51,791) 297,698
Renovation – 186,208 – – – (10,862) 175,346

37,116,430 3,288,002 (210,973) (7,665) 26,613 (2,004,414) 38,207,993

NOTES TO THE FINANCIAL STATEMENTS

SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

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

Accumulated Accumulated Net Book

At Cost Impairment Depreciation Value
The Group RM RM RM RM

2017

Freehold land 6,006,328 – – 6,006,328

Leasehold land 15,453,979 – (1,473,783) 13,980,196
Buildings 50,710,193 (19,077,919) (17,908,990) 13,723,284
Building under construction 309,968 – – 309,968
Fixtures, furniture and equipment 20,102,526 (1,105,232) (15,473,945) 3,523,349
Motor vehicles 9,954,701 (77,558) (6,842,929) 3,034,214
Plant and machinery 41,000 – (27,268) 13,732
Renovation 309,332 – (36,056) 273,276

102,888,027 (20,260,709) (41,762,971) 40,864,347

2016

Freehold land 6,006,328 – – 6,006,328

Leasehold land 15,453,979 – (1,266,041) 14,187,938
Buildings 49,087,162 (19,077,919) (17,575,566) 12,433,677
Building under construction 922,000 – – 922,000
Fixtures, furniture and equipment 17,960,606 (1,105,232) (14,885,203) 1,970,171
Motor vehicles 9,457,803 (77,558) (7,165,410) 2,214,835
Plant and machinery 495,750 – (198,052) 297,698
Renovation 186,208 – (10,862) 175,346

99,569,836 (20,260,709) (41,101,134) 38,207,993

(a) Included in the net book value of the property, plant and equipment of the Group are the following assets
acquired under hire purchase terms:-

The Group
2017 2016
RM RM

Motor vehicles 451,291 659,696

Annual Report 2017 89

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

7. INVESTMENT PROPERTIES

The Group
2017 2016
RM RM

Cost:-
At 1 May 2016/2015 55,108,726 55,108,726
Subsequent expenditure 204,791 –
Transfer from property, plant and equipment (Note 6) 376,000 –

At 30 April 2017/2016 55,689,517 55,108,726

Accumulated depreciation:-
At 1 May 2016/2015 (21,030,747) (20,801,275)
Depreciation during the financial year (233,313) (229,472)
Transfer from property, plant and equipment (Note 6) (260,230) –

At 30 April 2017/2016 (21,524,290) (21,030,747)

Accumulated impairment loss:-

At 30 April 2017/2016 (22,949,434) (22,949,434)

11,215,793 11,128,545

Represented by:-
Freehold land 587,365 587,365
Leasehold land 4,954,930 4,983,173
Buildings 5,673,498 5,558,007

At 30 April 2017/2016 11,215,793 11,128,545

Fair value:-
Freehold land 720,000 720,000
Leasehold land 6,446,588 6,446,588
Buildings 6,627,025 6,303,025

At 30 April 2017/2016 13,793,613 13,469,613

Recognised in profit or loss:-

Rental income 250,600 172,460
Direct operating expenses
- income generating investment properties 581,697 584,345
- non-income generating investment properties – 65,567

The fair values of the investment properties are within level 2 of the fair value hierarchy and are arrived at by
reference to market evidence of transaction prices for similar properties and are performed by registered valuers
having appropriate recognised professional qualification and recent experience in the locations and category of
properties being valued. The most significant input into this valuation approach is the price per square foot of
comparable properties.

90 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

8. OTHER INVESTMENT

The Group
2017 2016
RM RM

Transferable golf club memberships, at cost 102,610 102,610

Other investment of the Group are designated as available-for-sale assets but are stated at cost as their fair values
cannot be reliably measured using valuation techniques due to the lack of marketability of the investment.

9. DEFERRED TAX ASSETS

Recognised in
At Profit or Loss At
1.5.2016 (Note 28) 30.4.2017
RM RM RM
The Group

2017

Deferred Tax Liabilities

Accerelated capital allowances (277,900) (125,500) (403,400)

Unrealised foreign exchange gain (8,400) 2,400 (6,000)
Fair value gain on derivative – (105,000) (105,000)

(286,300) (228,100) (514,400)

Deferred Tax Assets

Impairment losses on trade receivables 137,500 63,000 200,500

Inventories written down 452,700 260,600 713,300
Provision for warranty 63,900 (29,800) 34,100
Unrealised foreign exchange loss 29,400 (29,400) –
Other 109,644 15,367 125,011

793,144 279,767 1,072,911

506,844 51,667 558,511

Annual Report 2017 91

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

9. DEFERRED TAX ASSETS (CONT’D)

Recognised in
At Profit or Loss At
1.5.2015 (Note 28) 30.4.2016
RM RM RM
The Group

2016

Deferred Tax Liabilities

Accerelated caital allowances (176,600) (101,300) (277,900)

Unrealised foreign exchange gain (106,500) 98,100 (8,400)

(283,100) (3,200) (286,300)

Deferred Tax Assets

Impairment losses on trade receivables 133,600 3,900 137,500

Inventories written down 166,600 286,100 452,700
Provision for warranty 88,100 (24,200) 63,900
Unabsorbed capital allowances 4,800 (4,800) –
Unrealised foreign exchange loss – 29,400 29,400
Other 73,155 36,489 109,644

466,255 326,889 793,144

183,155 323,689 506,844

No deferred tax assets are recognised in respect of the following items as it is not probable that taxable profits of
the subsidiaries will be available against which the deductible temporary differences can be utilised:-

The Group
2017 2016
RM RM

Unabsorbed capital allowances 178,025 30,500

Unused tax losses 2,879,319 449,100
Unrealised foreign exchange loss – 7,600
Impairment losses on trade receivables 500 500
Inventories written down 828,840 –

3,886,684 487,700

The unabsorbed capital allowances, unused tax losses, unrealised foreign exchange loss, impairment losses on
trade receivables and inventories written down do not expire under current tax legislation. However, the availability
of unused tax losses for offsetting against future taxable profits of the respective subsidiaries in Malaysia are subject
to no substantial changes in shareholdings of those subsidiaries under the Income Tax Act 1967 and guidelines
issued by the tax authority.

92 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

10. INVENTORIES

The Group
2017 2016
RM RM

Raw materials 280,627 645,455
Finished goods – 1,113,823
Goods-in-transit 4,356,115 3,518,677
Trading goods 45,505,318 37,941,234

50,142,060 43,219,189

Recognised in profit or loss:-

Inventories recognised as cost of sales 90,462,311 84,757,842
Amount written down to net realisable value (Note 27) 3,249,478 1,642,077
Reversal of written down (Note 27) – (127,172)

11. TRADE RECEIVABLES

The Group
2017 2016
RM RM

Trade receivables 36,057,562 30,865,454
Allowance for impairment losses (1,595,452) (1,375,687)

34,462,110 29,489,767

Allowance for impairment losses:-

At 1 May 2016/2015 1,375,687 1,280,410
Addition during the financial year (Note 27) 416,898 289,460
Reversal during the financial year (Note 27) (199,285) (194,183)
Foreign exchange translation differences 2,152 –

At 30 April 2017/2016 1,595,452 1,375,687

The Group’s normal trade credit terms ranging from 30 to 150 (2016 – 30 to 150) days. Late payment interest is
charged at 1.50% (2016 – 1.50%) per annum on the overdue balance.

Annual Report 2017 93

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

12. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

The Group The Company

2017 2016 2017 2016
RM RM RM RM

Other receivables:-
GST receivable 563,606 48,616 – –
Other receivables 744,842 456,524 – –

1,308,448 505,140 – –
Deposits 1,468,896 3,234,317 5,000 5,000
Prepayments 692,956 734,593 – –

3,470,300 4,474,050 5,000 5,000

13. AMOUNTS OWING BY SUBSIDIARIES

The Company
2017 2016
RM RM
Current

Trade balances – 3,336,170

Non-trade balances 30,595,866 18,609,405

30,595,866 21,945,575

(a) The trade balances are subject to the normal credit terms ranging from 30 to 60 (2016 – 30 to 60) days.
The amounts owing are to be settled in cash.

(b) The non-trade balances represent unsecured advances and payments made on behalf. Late payment
interest is charged at 3.72% (2016 – 4.02%) per annum on the outstanding balance. The amounts owing
are repayable on demand and are to be settled in cash.

14. SHORT-TERM INVESTMENT

The Group/The Company

2017 2016
Carrying Market Carrying Market
Amount Value Amount Value
RM RM RM RM

Equity fund unit trusts in Malaysia,

  at fair value 3,172,550 3,172,550 2,185,840 2,185,840

94 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

15. DERIVATIVE ASSET

Contract/Notional Amount The Group

2017 2016 2017 2016
RM RM RM RM

Cross currency interest rate swap 4,380,600 9,408,000 756,274 318,943

(a) The cross currency interest rate swap is used to hedge cash flow interest rate risk arising from the floating
rate term loans amounting to RM4,380,600 (2016 – RM9,408,000). This cross currency interest rate swap
receives United States Dollar at a floating interest equal to 3 months LIBOR + 1.75%, pays Ringgit Malaysia
at a fixed rate interest of 5.30% plus the differential between LIBOR + 1.75% and Cost of Funds + 1.75%
and has the same maturity terms with the term loans as disclosed in Note 21 to the financial statements.

(b) The Group has recognised a gain/(loss) of RM437,331 (2016 – (RM266,017)) arising from fair value changes
of derivative during the financial year. The fair value changes were attributed to changes in the foreign
exchange spot and forward rates. The method and assumptions applied in determining the fair values of
derivative is disclosed in Note 39.4 (a)(i)(2) to the financial statements.

(c) The Group opts to discontinue prospectively the hedge accounting during the financial year as there is no
accounting mismatch. In this case, the loss on the hedging instrument that has been recognised in other
comprehensive expense from the period when the hedge was effective shall remain separately in equity
until the forecast transaction occurs.

16. FIXED DEPOSITS WITH LICENSED BANKS

The fixed deposits with licensed banks of the Group and of the Company at the end of the reporting period bore
effective interest rate of 3.90% (2016 – 4.00% to 4.10%) per annum and 3.90% (2016 – 4.00% to 4.10%) per
annum respectively. The fixed deposits maturity period is 90 (2016 – 60 to 180) days and 90 (2016 – 60 to 180)
days for the Group and the Company respectively.

17. SHARE CAPITAL

The movements in the authorised and paid-up share capital of the Group and of the Company are as follows:-

The Group/The Company
2017 2016 2017 2016
Number of Shares RM RM

Authorised

Ordinary shares of RM0.50 each

At 1 May 2016/2015 N/A 200,000,000 N/A 100,000,000
Addition during the year N/A 800,000,000 N/A 400,000,000

At 30 April 2017/2016 N/A 1,000,000,000 N/A 500,000,000

N/A Not applicable due to the adoption of the Companies Act 2016 as disclosed in item (ii) below.

Annual Report 2017 95

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

17. SHARE CAPITAL (CONT’D)

The movements in the authorised and paid-up share capital of the Group and of the Company are as follows
(Cont’d):-

The Group/The Company

2017 2016 2017 2016
Number of Shares RM RM

Issued and Fully Paid-Up

Ordinary shares with no par value
(2016 - par value of RM0.50 each)
At 1 May 2016/2015 165,606,800 150,000,000 82,803,400 75,000,000
Transfer from share premium
  account – – 14,134,117 –
Issuance of shares pursuant to:-
  - Private placement – 15,000,000 – 7,500,000
  - Exercise of warrants 1,131,300 606,800 565,650 303,400

At 30 April 2017/2016 166,738,100 165,606,800 97,503,167 82,803,400

(i) The holders of ordinary shares are entitled to receive dividends as and when declared by the Company,
and are entitled to one vote per ordinary share at meetings of the Company.

(ii) On 31 January 2017, the concepts of authorised share capital and par value of share capital were abolished
in accordance with the Companies Act 2016. Consequently, the amount standing to the credit of the Group’s
share premium account became part of the Group’s share capital pursuant to the transitional provisions set
out in Section 618(2) of the Companies Act 2016. There is no impact on the numbers of ordinary shares
and warrants in issue or the relative entitlement of any of the members as a result of this transition.

18. RESERVES

The Group The Company

2017 2016 2017 2016
RM RM RM RM

Share premium – 13,907,857 – 13,907,857

Foreign exchange translation
  reserve 2,842,281 1,983,789 – –
Hedge reserve (266,017) (266,017) – –
Merger deficit (43,360,988) (43,360,988) – –
Warrants reserve 15,742,017 15,968,277 15,742,017 15,968,277
Retained profits 66,022,958 63,070,522 1,714,641 3,437,318

40,980,251 51,303,440 17,456,658 33,313,452

The natures and purposes of reserves are as below:-

18.1 SHARE PREMIUM

The share premium reserve represents the premium paid on subscription of ordinary shares in the Company
over and above the par value of the shares issued, net of transaction costs (if any). On 31 January 2017,
the concepts of par value of share capital were abolished in accordance with the Companies Act 2016, as
a result, the share premium was transferred to share capital balance.

96 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

18. RESERVES (CONT’D)

The natures and purposes of reserves are as below (Cont’d):-

18.2 FOREIGN EXCHANGE TRANSLATION RESERVE

The foreign exchange translation reserve arose from the translation of the financial statements of a foreign
subsidiary.

18.3 HEDGE RESERVE

The hedge reserve represents the effective portion of the cumulative gains or losses on the hedging
instrument. The Group opts to discontinue prospectively the hedge accounting during the financial year as
there is no accounting mismatch. In this case, the hedge reserve shall remain separately in equity until the
forecast transaction occurs.

18.4 MERGER DEFICIT

The merger deficit represents the difference between the carrying value of the investment in subsidiaries and
the nominal value of shares of the Company’s subsidiaries upon consolidation under the merger accounting
principle.

18.5 WARRANTS RESERVE

The Warrants Reserve arose from proceeds received from the issuance of the warrants at RM0.20 per
Warrant.

The movements of the Warrants Reserve are as follows:-

The Group/The Company

2017 2016
RM RM

At 1 May 2016/2015 15,968,277 –
Arising from rights issue of warrants – 16,500,000
Applied for warrants issue expenses – (410,363)
Exercise of warrants (226,260) (121,360)

At 30 April 2017/2016 15,742,017 15,968,277

The salient terms of the Warrants are as follows:-

(a) The Warrants are constituted by a Deed Poll executed on 11 November 2015;

(b) The Warrants are traded separately;

(c) The Warrants are exercisable any time during the tenure of 5 years commencing the date of issue
of 17 December 2015 to 16 December 2020 (“Exercise Period”) at an exercise price of RM0.50 per
Warrant. Warrants not exercised during the Exercise Period will lapse and cease to be valid;

(d) The exercise price is RM0.50 per Warrant. The exercise price and the number of outstanding Warrants
may be subject to adjustments that may be required during the exercise period in accordance with
the terms and provisions of the Deed Poll;

Annual Report 2017 97

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

18. RESERVES (CONT’D)

The natures and purpose of reserves are as below (Cont’d):-

18.5 WARRANTS RESERVE (CONT’D)

(e) Subject to the provisions in the Deed Poll, the exercise price and the number of Warrants held by
each Warrant holder may from time to time be adjusted by the Company in consultation with the
approved adviser and certified by the auditors appointed by the Company; and

(f) Subject to the provisions in the Deed Poll, the Company is at liberty to issue shares or other securities
convertible to shares to shareholders either for cash or as a bonus distribution and further subscription
rights upon such terms and conditions as the Company sees fit but the Warrant holders will not have
any participating rights in such issues unless and until the Warrant holders exercise their Warrants
into new shares of the Company or otherwise resolved by the Company in general meeting.

19. LONG-TERM BORROWINGS

The Group
2017 2016
RM RM

Hire purchase payables (Note 20) 118,220 166,277
Term loans (Note 21) 2,451,860 5,832,939

2,570,080 5,999,216

20. HIRE PURCHASE PAYABLES (SECURED)

The Group
2017 2016
RM RM

Minimum hire purchase payments:

- not later than 1 year 66,333 144,309
- later than 1 year and not later than 5 years 126,850 181,433

193,183 325,742
Less: Future finance charges (16,238) (28,079)

Present value of hire purchase payables 176,945 297,663

Current (Note 24)

Not later than 1 year 58,725 131,386

Non-current (Note 19)

Later than 1 year and not later than 5 years 118,220 166,277

176,945 297,663

(a) The hire purchase payables of the Group are secured by the Group’s motor vehicles under finance leases
as disclosed in Note 6(a) to the financial statements. The hire purchase arrangements are expiring from 1
to 4 (2016 – 1 to 5) years.

(b) The hire purchase payables of the Group at the end of the reporting period bore effective interest rates
ranging from 5.25% to 6.89% (2016 – 4.50% to 6.89%) per annum. The interest rates are fixed at the
inception of the hire purchase arrangements.

98 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

21. TERM LOANS (SECURED)

The Group
2017 2016
RM RM

Current (Note 24)

Not later than 1 year 2,513,700 3,130,271

Non-current (Note 19)

Later than 1 year and not later than 2 years 2,451,860 3,159,239
Later than 2 years and not later than 5 years – 2,673,700

2,451,860 5,832,939

4,965,560 8,963,210

(a) The term loans at the end of the reporting period are secured by corporate guarantee provided by the
Company.

(b) The interest rate profile of the term loans is summarised below:-

The Group
Effective Interest Rate 2017 2016
% RM RM

Semi-fixed rate term loans 5.30 4,965,560 7,479,260

Floating rate term loan – – 1,483,950

(c) The semi-fixed rate term loans of RM4,965,560 (2016 – RM7,479,260) has been hedged by a cross currency
interest rate swap as disclosed in Note 15 to the financial statements.

22. TRADE PAYABLES

The normal trade credit terms granted to the Group ranging from 30 to 120 (2016 – 30 to 120) days.

23. OTHER PAYABLES AND ACCRUALS

The Group The Company

2017 2016 2017 2016
RM RM RM RM

Other payables:-

GST payable 45,930 135,942 – –

Related party 31,051 – – –
Third parties 1,044,194 1,279,591 2,394 196,651

1,121,175 1,415,533 2,394 196,651

Accruals 2,007,091 1,610,428 349,000 329,850
Deposits received 1,258,356 1,070,084 – –
Payroll liabilities 262,775 215,817 – –

4,649,397 4,311,862 351,394 526,501

Annual Report 2017 99

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

23. OTHER PAYABLES AND ACCRUALS (CONT’D)

The amount owing to related party represents unsecured interest-free advances from the Directors of a subsidiary.
The amount is repayable on demand and is to be settled in cash.

24. SHORT-TERM BORROWINGS

The Group
2017 2016
RM RM

Foreign currency loans 2,350,360 480,142

Hire purchase payables (Note 20) 58,725 131,386
Term loans (Note 21) 2,513,700 3,130,271

4,922,785 3,741,799

(a) Foreign currency loans are drawn for a period from 49 to 118 (2016 – 90) days and bore interest ranging
from 1.75% to 2.05% (2016 – 1.50%) per annum.

(b) The foreign currency loans are secured by corporate guarantee provided by the Company.

25. PROVISION FOR WARRANTY

The Group
2017 2016
RM RM

At 1 May 2016/2015 266,200 859,833

Provision made during the financial year (Note 27) 904,960 546,958
Provision reversed during the financial year (Note 27) – (492,633)
Claimed during the financial year (1,028,960) (647,958)

At 30 April 2017/2016 142,200 266,200

The provision for warranty relates to goods bearing in-house brand names sold in the past one (1) year. The
provision is computed based on the return percentage on products sold with defects which cannot be claimed
from suppliers. Based on the past experience, it is probable that certain claims will be made within the given
warranty period.

26. REVENUE

Revenue is measured at the fair value of the consideration received or receivable, net of returns, goods and
services tax, cash and trade discounts.

100 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

27. PROFIT BEFORE TAX

The Group The Company

2017 2016 2017 2016
RM RM RM RM

Profit before tax is arrived at

  after charging:-

Auditors’ remuneration
- Statutory audit
  - current year 157,806 149,923 32,000 28,000
  - underprovision in the previous
   financial year 11,100 4,600 – 5,000
- Non-statutory audit 4,000 53,000 4,000 53,000
Depreciation of:
- investment properties (Note 7) 233,313 229,472 – –
- property, plant and equipment
  (Note 6) 2,014,226 2,004,414 – –
Directors’ remuneration (Note 35(a)) 4,994,036 5,100,075 312,000 312,000
Fair value loss on short-term
  investment 29,208 – 29,208 –
Impairment loss on trade
  receivables (Note 11) 416,898 289,460 – –
Interest expense on financial liabilities
  not at fair value through profit or loss
- bank overdrafts 3,110 5,589 – –
- bankers’ acceptance 76,389 226,117 – –
- hire purchase 13,375 23,894 – –
- term loans 405,721 538,641 – –
Inventories written down (Note 10) 3,249,478 1,642,077 – –
Loss on foreign exchange
- realised 245 33,766 245 –
- unrealised 20,989 154,174 – –
Property, plant and equipment
  written off (Note 6) 119,350 7,665 – –
Provision for warranty (Note 25) 904,960 546,958 – –
Staff costs:
- defined contribution plan 1,194,419 1,091,152 – –
- salaries and other benefits 10,110,805 9,953,322 – –

After crediting:-

Bad debts recovered 841 – – –

Dividend income – – – 3,568,715
Fair value gain on derivative 437,331 – – –
Fair value gain on short-term
  investment – 15,739 – 15,739
Gain on foreign exchange
- realised 350,900 1,311,851 – 3,276
- unrealised 27,097 34,808 – –
Interest income of financial assets not
  at fair value through profit or loss
- bank interest 105,985 94,072 19,191 10,804
- fixed deposit interest 427,246 253,603 417,149 253,603
- imputed interest on trade receivables 183,114 92,969 – –
- imputed interest on advances to
  subsidiaries – – 769,366 493,337

Annual Report 2017 101

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

27. PROFIT BEFORE TAX (CONT’D)

The Group The Company

2017 2016 2017 2016
RM RM RM RM

Profit before tax is arrived at

  after crediting (Cont’d):-

Interest income of financial asset at

  fair value through profit or loss (Cont’d)
  - short-term investment 150,728 98,826 150,728 98,826
Reversal of impairment loss on
  trade receivables (Note 11) 199,285 194,183 – –
Reversal of inventories written off
  (Note 10) – 127,172 – –
Reversal of provision of warranty
  (Note 25) – 492,633 – –

28. INCOME TAX EXPENSE

The Group The Company

2017 2016 2017 2016
RM RM RM RM

Income tax:
- Malaysian tax 3,029,866 3,273,710 199,166 67,500
- Foreign tax – 14,603 – –

3,029,866 3,288,313 199,166 67,500

- under/(over)provision in the
  previous financial year 50,759 (52,950) 102,838 12,555

3,080,625 3,235,363 302,004 80,055

Deferred tax asset (Note 9)

- reversal of temporary differences (15,867) (402,189) – –
- (under)/overprovision in the
previous financial year (35,800) 78,500 – –

(51,667) (323,689) – –

3,028,958 2,911,674 302,004 80,055

102 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

28. INCOME TAX EXPENSE (CONT’D)

A reconciliation of income tax expense applicable to the profit before tax at the statutory tax rate to income tax
expense at the effective tax rate of the Group and the Company is as follows:-

The Group The Company

2017 2016 2017 2016
RM RM RM RM

Profit before tax 8,121,985 8,472,676 739,885 3,649,301

Tax expense at the statutory

tax rate of 24% (2016 - 24%) 1,949,276 2,033,443 177,572 875,832

Tax effects of:-

Tax-exempt income – (34,409) – –
Non-taxable income (10,000) (18,052) (36,175) (880,210)
Non-deductible expenses 588,918 701,206 57,769 71,878
Deferred tax assets not
  recognised during the
  financial year 404,426 223,611 – –
Utilisation of deferred tax assets
  previously not recognised (2,850) (5,663) – –
Effects of differential in tax
  rates of a subsidiary 84,229 (14,012) – –
Under/(Over)provision of income
  tax in the previous financial year 50,759 (52,950) 102,838 12,555
(Under)/Overprovision of
  deferred tax asset in the
  previous financial year (35,800) 78,500 – –

Income tax expense for the

  financial year 3,028,958 2,911,674 302,004 80,055

29. OTHER COMPREHENSIVE INCOME

The Group
2017 2016
RM RM

Items that May be Reclassified Subsequently to Profit or Loss

Foreign currency translation differences 858,492 870,686

Cash flow hedge:

- changes during the financial year – (266,017)

858,492 604,669

Annual Report 2017 103

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

30. EARNINGS PER SHARE

The Group
2017 2016

Profit attributable to owners of the Company (RM) 5,112,994 5,706,882

Weighted average number of ordinary shares in issue:-

Ordinary shares at 1 May 2016/2015 165,606,800 150,000,000

Effect of private placement – 12,500,000
Effect of exercise of Warrants 516,500 189,167

Weighted average number of ordinary shares at 30 April 2017/2016 166,123,300 162,689,167

Basic earnings per share (Sen) 3.08 3.51

Profit attributable to owners of the Company (RM) 5,112,994 5,706,882

Weighted average number of ordinary shares in issue:-

Ordinary shares at 1 May 2016/2015 165,606,800 150,000,000

Effect of private placement – 12,500,000
Effect of exercise of Warrants 516,500 189,167
Effect of rights issue of Warrants 50,070,524 26,483,840

Weighted average number of ordinary shares at 30 April 2017/2016 216,193,824 189,173,007

Diluted earnings per share (Sen) 2.37 3.02

31. ACQUISITION OF SHARE FROM NON-CONTROLLING INTERESTS

On 4 August 2015, the Company acquired an additional 0.44% equity interests in Solid Corporation Sdn. Bhd. for
RM306,002 in cash, increasing its ownership from 99.56% to 100%. The carrying amount of Solid Corporation
Sdn. Bhd.’s net assets in the Group’s financial statements on that date was RM53,915,363. The Group recognised
a decrease in non-controlling interests of RM263,885 and a decrease in retained profits of RM42,117.

The following summarises the effect of changes in the equity interests in Solid Corporation Sdn. Bhd. that is
attributable to the owners of the Company in previous financial year:-

The Group
2016
RM

Equity interest at 1 May 2015 409,765

Share of losses up to the date of disposal (145,880)
Effect of increase in the Company’s ownership interest (263,885)

Equity interest at 30 April 2016 –

104 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

32. DIVIDENDS

The Company
2017 2016
RM RM

Final dividends of 1.0 (2016: 2.0) sen per ordinary share in respect of
  the financial year ended 30 April 2016/30 April 2015 1,661,178 3,300,000

Interim dividends of 1.0 sen per ordinary share in respect of

  the financial year ended 30 April 2015 – 1,500,000

Interim dividends of 0.3 (2016 - 0.6) sen per ordinary share

  in respect of the financial year ended 30 April 2017/ 30 April 2016 499,380 993,641

2,160,558 5,793,641

At the forthcoming Annual General Meeting, a final dividend of 0.5 sen per ordinary share amounting to approximately
RM834,000 in respect of the current financial year will be proposed for shareholders’ approval. The financial
statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the
shareholders, will be accounted for as a liability in the financial year ending 30 April 2018.

33. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

The Group
2017 2016
RM RM

Cost of property, plant and equipment purchased (Note 6) 5,212,368 3,288,002

Amount financed through hire purchase – (189,833)

Cash disbursed for purchase of property, plant and equipment 5,212,368 3,098,169

34. CASH AND CASH EQUIVALENTS

For the purpose of the statements of cash flows, cash and cash equivalents comprise the following:-

The Group The Company

2017 2016 2017 2016
RM RM RM RM

Cash and bank balances 10,759,922 11,175,655 715,992 625,948

Fixed deposits with licensed banks 4,067,446 16,126,625 4,067,446 15,126,625

14,827,368 27,302,280 4,783,438 15,752,573

Less: Fixed deposits with maturity
    period more than 90 days – (5,000,000) – (5,000,000)

14,827,368 22,302,280 4,783,438 10,752,573

Annual Report 2017 105

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

35. KEY MANAGEMENT PERSONNEL COMPENSATION

The key management personnel of the Group and of the Company include executive directors and non-executive
directors.

(a) The key management personnel compensation during the financial year are as follows:-

The Group The Company

2017 2016 2017 2016
RM RM RM RM

Directors
Directors of the Company
Executive Directors

Short-term employee benefits:

- fees 180,000 180,000 180,000 180,000
- salaries, bonuses and
  other benefits 1,954,045 1,770,043 – –

2,134,045 1,950,043 180,000 180,000

Defined contribution benefits 222,960 212,360 – –

2,357,005 2,162,403 180,000 180,000

Non-executive Directors

Short-term employee benefits:

- fees 132,000 132,000 132,000 132,000

2,489,005 2,294,403 312,000 312,000

Directors of the Subsidiaries

Executive Directors

Short-term employee benefits:

- fees 90,510 104,789 – –
- salaries, bonuses and other
  benefits 2,151,582 2,390,219 – –

2,242,092 2,495,008 – –
Defined contribution benefits 262,939 310,664 – –

2,505,031 2,805,672 – –

Total directors’ remuneration

  (Note 27) 4,994,036 5,100,075 312,000 312,000

106 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

35. KEY MANAGEMENT PERSONNEL COMPENSATION (CONT’D)

(b) The number of the Company’s directors with total remuneration falling in bands of RM50,000 are as follows:-

The Company
2017 2016
Number of Directors

Executive Directors

RM450,001 - RM500,000 – 2
RM500,001 - RM550,000 2 –
RM550,001 - RM600,000 – 1
RM600,001 - RM650,000 1 1
RM700,001 - RM750,000 1 –

Non-executive Directors

Below RM50,000 2 2
RM50,001 - RM100,000 1 1

7 7

36. RELATED PARTY DISCLOSURES

(a) Identities of Related Parties

Parties are considered to be related to the Group if the Group or the Company has the ability, directly or
indirectly, to control or jointly control the party or exercise significant influence over the party in making
financial and operating decisions, or vice versa, or where the Group or the Company and the party are
subject to common control.

In addition to the information detailed elsewhere in the financial statements, the Group has related party
relationships with its directors, key management personnel, entities in which certain directors have substantial
financial interests and entities within the same group of companies.

(b) Significant Related Party Transactions and Balances

Other than those disclosed elsewhere in the financial statements, the Group and the Company also carried
out the following significant transactions with the related parties during the financial year:-

The Group
2017 2016
RM RM
A company in which certain directors have
  substantial financial interests
- sale of goods – 11,080
- transport charges paid/payable – 390,828
- rental of premises paid/payable 115,800 30,400
- sub-contract charges paid/payable – 18,943

Directors and a family member

- rental of premise paid/payable 453,989 387,237

Annual Report 2017 107

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

36. RELATED PARTY DISCLOSURES (CONT’D)

(b) Significant Related Party Transactions and Balances (Cont’d)

The Company
2017 2016
RM RM

Subsidiaries
- advances granted 17,389,000 20,830,835
- interest charged 769,366 493,337

The significant outstanding balances of the related parties together with their terms and conditions are
disclosed in the respective notes to the financial statements.

37. OPERATING SEGMENTS

Operating segments are prepared in a manner consistent with the internal reporting provided to the Managing
Director and Chief Financial Officer as its chief operating decision makers in order to allocate resources to segments
and to assess their performance on a monthly basis. For management purposes, the Group is organised into
business units based on their products and services provided.

The Group is organised into the 3 main reportable segments as follows:-

• Automotive electrical parts - involved in the trading and distribution of automotive electrical parts
and components;

• Automotive engine and - involved in the trading and distribution of automotive engine and
  mechanical parts mechanical parts and components; and

• Others - involved in the property and investment holding and provision of
management services.

(a) The Managing Director and Chief Financial Officer assess the performance of the reportable segments
based on their profit before interest expenses and tax. The accounting policies of the reportable segments
are the same as the Group’s accounting policies.

(b) Each reportable segment assets is measured based on all assets of the segment.

(c) Each reportable segment liabilities is measured based on all liabilities of the segment other than borrowings.

(d) Assets, liabilities and expenses which are common and cannot be meaningfully allocated to the reportable
segments are presented under unallocated items. Unallocated items comprise mainly corporate assets
(primarily the Company’s headquarters) and head office expenses.

Transactions between reportable segments are carried out on agreed terms between both parties. The effects of
such inter-segment transactions are eliminated on consolidation.

108 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

37. OPERATING SEGMENTS (CONT’D)

BUSINESS SEGMENTS

Automotive
Automotive Engine and
Electrical Mechanical
Parts Parts Others Group
2017 RM RM RM RM

Revenue

External revenue 97,317,209 27,971,734 – 125,288,943
Inter-segment revenue 176,958 65,055 248,000 490,013
Rental income – – 157,600 157,600

97,494,167 28,036,789 405,600 125,936,556

Consolidated adjustments (490,013)

Consolidated revenue
125,446,543

Results

Segment profit before interest and tax 9,989,059 (133,337) 382,831 10,238,553
Finance costs (1,437,432)
Unallocated expenses (615,109)
Consolidation adjustments (64,027)

Consolidated profit before tax 8,121,985

Segment profit before interest

  and tax includes the followings:-

Fair value gain on derivative 437,331 – – 437,331
Gain on foreign exchange
- realised 275,120 75,780 – 350,900
- unrealised 26,457 640 – 27,097
Gain on disposal of property, plant
  and equipment 207,472 7,498 6,999 221,969
Reversal of allowance for impairment
  losses on trade receivables 146,932 52,353 – 199,285
Interest income 255,598 23,140 588,335 867,073
Depreciation of property, plant and
  equipment (1,470,155) (379,174) (164,897) (2,014,226)
Depreciation of investment properties (13,162) – (220,151) (233,313)
Impairment loss on trade receivables (176,804) (240,094) – (416,898)
Inventories written down (1,040,527) (2,208,951) – (3,249,478)
Loss on foreign exchange
- realised – – (245) (245)
- unrealised (907) (20,082) – (20,989)
Provision for warranty (904,960) – – (904,960)

Annual Report 2017 109

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

37. OPERATING SEGMENTS (CONT’D)

BUSINESS SEGMENTS (CONT’D)

Automotive
Automotive Engine and
Electrical Mechanical
Parts Parts Others Group
2017 RM RM RM RM

Assets

Segment assets 103,270,514 34,963,160 129,084,460 267,318,134

Unallocated assets:
- current tax assets 785,012
- deferred tax assets 433,500
- assets used for general enterprised
  or head office purpose 133,796
Consolidation adjustments (108,313,507)

Consolidated total assets 160,356,935

Additions to non-current assets

other than financial instruments:-

Property, plant and equipment 4,413,361 658,558 140,449 5,212,368

Liabilities

Segment liabilities 34,871,964 11,846,959 4,106,529 50,825,452

Unallocated liabilities:
- current tax liabilities 15,577
- foreign currency loans 2,350,360
- hire purchase payables 176,945
- term loans 4,965,560
Consolidation adjustments (36,560,410)

Consolidated total liabilities 21,773,484

110 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

37. OPERATING SEGMENTS (CONT’D)

BUSINESS SEGMENTS (CONT’D)

Automotive
Automotive Engine and
Electrical Mechanical
Parts Parts Others Group
2016 RM RM RM RM

Revenue

External revenue 92,628,970 26,020,679 2,223,790 120,873,439

Inter-segment revenue 2,363,436 2,626,882 1,915,737 6,906,055
Rental income – – 79,460 79,460
Dividend income – – 3,568,715 3,568,715

94,992,406 28,647,561 7,787,702 131,427,669

Consolidated adjustments (10,474,770)

Consolidated revenue
120,952,899

Results

Segment profit before interest and tax 7,649,741 3,456,168 2,501,819 13,607,728
Finance costs (1,466,780)
Unallocated expenses (794,226)
Consolidation adjustments (2,874,046)

Consolidated profit before tax 8,472,676

Segment profit before interest

  and tax includes the followings:-

Gain on foreign exchange

- realised 1,112,880 196,540 2,431 1,311,851
- unrealised – 34,808 – 34,808
Gain on disposal of property, plant
  and equipment 10,616 29,820 517,780 558,216
Reversal of inventories written off – – 127,172 127,172
Reversal of allowance for impairment
  losses on trade receivables 113,103 19,902 61,178 194,183
Reversal of provision of warranty – – 492,633 492,633
Interest income 160,234 14,774 364,462 539,470
Depreciation of property, plant and
  equipment (1,407,886) (315,995) (280,533) (2,004,414)
Depreciation of investment properties (41,906) – (187,566) (229,472)
Impairment loss on trade receivables (285,093) (4,367) – (289,460)
Inventories written down (972,366) (669,711) – (1,642,077)
Loss on foreign exchange
- realised – – (33,766) (33,766)
- unrealised (122,524) – (31,650) (154,174)
Provision for warranty (546,958) – – (546,958)

Annual Report 2017 111

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

37. OPERATING SEGMENTS (CONT’D)

BUSINESS SEGMENTS (CONT’D)

Automotive
Automotive Engine and
Electrical Mechanical
Parts Parts Others Group
2016 RM RM RM RM

Assets

Segment assets 86,161,693 32,922,523 133,335,967 252,420,183

Unallocated assets:
- current tax assets 282,656
- deferred tax assets 397,200
- assets used for general enterprised
  or head office purpose 9
Consolidation adjustments (95,881,331)

Consolidated total assets 157,218,717

Additions to non-current assets

other than financial instruments:-

Property, plant and equipment 2,258,904 1,029,098 – 3,288,002

Liabilities

Segment liabilities 21,951,119 9,332,876 6,282,238 37,566,233

Unallocated liabilities:
- current tax liabilities 261,523
- foreign currency loan 480,142
- hire purchase payables 297,663
- term loans 8,963,210
Consolidation adjustments (24,456,894)

Consolidated total liabilities 23,111,877

112 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

37. OPERATING SEGMENTS (CONT’D)

GEOGRAPHICAL INFORMATION

Revenue is based on the country in which the customers are located.

Non-current assets are determined according to the country where these assets are located. The amounts of
non-current assets do not include financial instruments.

Revenue Non-Current Assets

2017 2016 2017 2016
Group RM RM RM RM

Malaysia 79,300,824 72,537,828 52,233,322 49,340,298

Middle East and Africa 34,265,605 37,901,883 – –
Others 11,880,114 10,513,188 507,939 605,694

125,446,543 120,952,899 52,741,261 49,945,992

MAJOR CUSTOMERS

There is no single customer that contributed 10% or more to the Group’s revenue.

38. CAPITAL COMMITMENTS

The Group
2017 2016
RM RM

Authorised but not Contracted for

Purchase of property, plant and equipment 6,000,000 –

Contracted but not Provided for

Purchase of property, plant and equipment 3,831,942 –

Subsequent expenditure on investment properties 245,102 –

4,077,044 –

Annual Report 2017 113

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

39. FINANCIAL INSTRUMENTS

The Group’s activities are exposed to a variety of market risks (including foreign currency risk, interest rate risk
and equity price risk), credit risk and liquidity risk. The Group’s overall financial risk management policy focuses on
the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial
performance.

39.1 FINANCIAL RISK MANAGEMENT POLICIES

The Group’s policies in respect of the major areas of treasury activity are as follows:-

(a) Market Risk

(i) Foreign Currency Risk

The Group is exposed to foreign currency risk on transactions and balances that are
denominated in currencies other than the respective functional currencies of entities within the
Group. The currencies giving rise to this risk are primarily, United States Dollar (“USD”), Euro
(“EUR”) and Japanese Yen (“JPY”). Foreign currency risk is monitored closely on an ongoing
basis to ensure that the net exposure is at an acceptable level. Financial liabilities in foreign
currency are hedged with derivative instrument such as cross currency interest rate swap. The
Group also holds cash and cash equivalents denominated in foreign currencies for working
capital purposes. The Group maintains a natural hedge, whenever is possible, by matching
the receivables and the payables in the same currency.

The Group’s exposure to foreign currency risk (a currency which is other than the functional
currencies of the entities within the Group) based on the carrying amounts of the financial
instruments at the end of the reporting period is summarised below:-

Foreign Currency Exposure

USD EUR
The Group RM RM

2017

Financial Assets
Trade receivables 7,833,007 –
Other receivables, deposits and prepayments 160,023 6,571
Cash and bank balances 809,176 159,653

8,802,206 166,224

Financial Liabilities
Trade payables (2,794,388) (1,193,511)
Other payables and accruals (112,996) –
Short-tem borrowings (2,350,360) –

(5,257,744) (1,193,511)

Currency Exposure 3,544,462 (1,027,287)

114 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

39. FINANCIAL INSTRUMENTS (CONT’D)

39.1 FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(a) Market Risk (Cont’d)

(i) Foreign Currency Risk (Cont’d)

Foreign Currency Exposure (Cont’d)

USD JPY
The Group RM RM

2016

Financial Assets
Trade receivables 6,570,589 –
Other receivables, deposits and prepayments 63,094 –
Cash and bank balances 2,675,094 150,067

9,308,777 150,067

Financial Liabilities
Trade payables (2,202,064) (733,170)
Other payables and accruals (190,743) –

(2,392,807) (733,170)

Currency Exposure 6,915,970 (583,103)

Foreign Currency Risk Sensitivity Analysis

The following table details the sensitivity analysis to a reasonably possible change in the foreign
currencies at the end of the reporting period, with all other variables held constant:-

The Group
2017 2016
RM RM

Effects on Profit After Tax

USD/RM - strengthened by 15% (2016 - 25%) 411,239 1,316,366

- weakened by 15% (2016 - 25%) (411,239) (1,316,366)

EUR/RM - strengthened by 9% (70,139) –

- weakened by 9% 70,139 –

JPY/RM - strengthened by 28% – (124,330)

- weakened by 28% – 124,330

Annual Report 2017 115

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

39. FINANCIAL INSTRUMENTS (CONT’D)

39.1 FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(a) Market Risk (Cont’d)

(i) Foreign Currency Risk (Cont’d)

Foreign Currency Risk Sensitivity Analysis (Cont’d)

The following table details the sensitivity analysis to a reasonably possible change in the foreign
currencies at the end of the reporting period, with all other variables held constant (Cont’d):-

The Group
2017 2016
RM RM

Effects on Other Comprehensive Income

SGD/RM - strengthened by 8% (2016 - 16%) 1,298,047 1,939,747

- weakened by 8% (2016 - 16%) (1,298,047) (1,939,747)

(ii) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market interest rates. The Group’s exposure to interest rate
risk arises mainly from long-term borrowings with semi-fixed rate. The Group’s policy is to
obtain the most favourable interest rates available and by maintaining a balanced portfolio mix
of fixed and floating rate borrowings.

The Group’s fixed deposits with licensed banks are carried at amortised cost. Therefore, they
are not subject to interest rate risk as defined in MFRS 7 since neither the carrying amount nor
the future cash flows will fluctuate because of a change in market interest rates.

The Group’s exposure to interest rate risk based on the carrying amounts of the financial
instruments at the end of the reporting period is disclosed in Notes 21 and 24 to the financial
statements.

The Group enters into cross currency interest rate swaps to achieve an appropriate mix of fixed
and floating interest rate exposure and to hedge the foreign currency exposure.

Interest Rate Risk Sensitivity Analysis

Any reasonably possible change in the interest rates of semi-fixed rate term loans at the end of the
reporting period does not have material impact on the profit after tax and other comprehensive
income of the Group and of the Company and hence, no sensitivity analysis is presented.

(iii) Equity Price Risk

The Group does not have any quoted investments and hence, is not exposed to equity price
risk.

Short-term investment represents fund invested in the money market of which is subject to
insignificant risk of changes in value.

116 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

39. FINANCIAL INSTRUMENTS (CONT’D)

39.1 FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(b) Credit Risk

The Group’s exposure to credit risk, or the risk of counterparties defaulting, arises mainly from trade
and other receivables. The Group manages its exposure to credit risk by the application of credit
approvals, credit limits and monitoring procedures on an ongoing basis. For other financial assets
(including cash and bank balances), the Group minimises credit risk by dealing exclusively with high
credit rating counterparties.

The Groups uses ageing analysis to monitor the credit quality of the trade receivables. Any receivables
having significant balances past due or more than 270 days, which are deemed to have higher credit
risk, are monitored individually.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in
respect of the trade and other receivables as appropriate. The main components of this allowance are
a specific loss component that relates to individually significant exposures. Impairment is estimated
by management based on prior experience and the current economic environment.

The Company provides financial guarantee to financial institutions for credit facilities granted to certain
subsidiaries. The Company monitors the results of these subsidiaries regularly and repayments made
by the subsidiaries.

(i) Credit Risk Concentration Profile

The Group does not have any major concentration of credit risk related to any individual customer
or counterparty.

In addition, the Group also determines concentration of credit risk by monitoring the geographical
region of its trade receivables on an ongoing basis. The credit risk concentration profile of trade
receivables at the end of the reporting period is as follows:-

The Group
2017 2016
RM RM

Malaysia 26,446,624 22,738,390

Middle East and Africa 5,705,127 4,746,547
Others 2,310,359 2,004,830

34,462,110 29,489,767

(ii) Exposure to Credit Risk

At the end of the reporting period, the maximum exposure to credit risk is represented by the
carrying amount of each class of financial assets recognised in the statements of financial
position of the Group after deducting any allowance for impairment losses (where applicable).

In addition, the Company’s maximum exposure to credit risk also includes corporate guarantees
provided to its subsidiaries as disclosed under the ‘Maturity Analysis’ of item (c) below,
representing the outstanding banking facilities of the subsidiaries as at the end of the reporting
period. These corporate guarantees have not been recognised in the Company’s financial
statements since their fair value on initial recognition were not material. As at the end of the
reporting period, there was no indication that any subsidiary would default on repayment.

Annual Report 2017 117

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

39. FINANCIAL INSTRUMENTS (CONT’D)

39.1 FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(b) Credit Risk (Cont’d)

(iii) Ageing Analysis

The ageing analysis of trade receivables is as follows:-

Gross Individual Translation Carrying

Amount Impairment Difference Amount
RM RM RM RM
The Group

2017

Not past due 24,882,108 – – 24,882,108

Past due:
- less than 3 months 5,753,303 – – 5,753,303
- 3 to 6 months 2,034,370 (93,204) – 1,941,166
- more than 6 months 1,911,636 (50,811) – 1,860,825
- more than 1 year 1,476,145 (1,449,285) (2,152) 24,708

36,057,562 (1,593,300) (2,152) 34,462,110

Gross Individual Carrying

Amount Impairment Amount
RM RM RM
The Group

2016

Not past due 21,847,371 (146) 21,847,225

Past due:
- less than 3 months 6,304,040 (3,837) 6,300,203
- 3 to 6 months 811,810 (42,888) 768,922
- more than 6 months 591,122 (53,989) 537,133
- more than 1 year 1,311,111 (1,274,827) 36,284

30,865,454 (1,375,687) 29,489,767

At the end of the reporting period, trade receivables that are individually impaired were those
in significant financial difficulties and have defaulted on payments. These receivables are not
secured by any collateral or credit enhancement.

The Group believes that no additional impairment allowance is necessary in respect of trade
receivables that are past due but not impaired because they are companies with good collection
track record and no recent history of default.

118 SOLID AUTOMOTIVE BERHAD (1016725-P)

 39. FINANCIAL INSTRUMENTS (CONT’D)

39.1 FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(c) Liquidity Risk

Liquidity risk arises mainly from general funding and business activities. The Group practises prudent risk management by maintaining sufficient
cash balances and the availability of funding through certain committed credit facilities.

Maturity Analysis

The following table sets out the maturity profile of the financial liabilities at the end of the reporting period based on contractual undiscounted cash
flows (including interest payments computed using contractual rates or, if floating, based on the rates at the end of the reporting period):-

Contractual Contractual
Interest Carrying Undiscounted Within 1–5
Rate Amount Cash Flows 1 Year Years
The Group % RM RM RM RM

2017

Non-derivative Financial Liabilities

Trade payables – 9,473,445 9,473,445 9,473,445 –
Other payables and accruals – 4,603,467 4,603,467 4,603,467 –
Hire purchase payables 2.78 – 3.66 176,945 193,183 66,333 126,850
Term loans 4.95 – 5.30 4,965,560 5,358,684 2,776,875 2,581,809
Foreign currency loans 1.75 – 2.05 2,350,360 2,350,360 2,350,360 –

21,569,777 21,979,139 19,270,480 2,708,659

2016

Non-derivative Financial Liabilities

Trade payables – 8,531,277 8,531,277 8,531,277 –
Other payables and accruals – 4,175,920 4,175,920 4,175,920 –
Hire purchase payables 2.36 – 3.66 297,663 325,742 144,309 181,433
Term loans 4.95 – 5.30 8,963,210 9,882,631 3,582,893 6,299,738
Foreign currency loan 1.50 480,142 480,142 480,142 –

22,448,212 23,395,712 16,914,541 6,481,171

Annual Report 2017

cont’d
NOTES TO THE FINANCIAL STATEMENTS

119
 NOTES TO THE FINANCIAL STATEMENTS
cont’d

39. FINANCIAL INSTRUMENTS (CONT’D)

39.1 FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(c) Liquidity Risk (Cont’d)

Maturity Analysis (Cont’d)

The following table sets out the maturity profile of the financial liabilities at the end of the reporting
period based on contractual undiscounted cash flows (including interest payments computed using
contractual rates or, if floating, based on the rates at the end of the reporting period) (Cont’d):-

Contractual
Carrying Undiscounted Within
Amount Cash Flows 1 Year
The Company RM RM RM

2017

Non-derivative Financial Liabilities

Other payables and accruals 351,394 351,394 351,394
Financial guarantee contracts
  in relation to corporate guarantee
  given to subsidiaries * 7,709,044 7,709,044

351,394 8,060,438 8,060,438

2016

Non-derivative Financial Liabilities

Other payables and accruals 526,501 526,501 526,501
Financial guarantee contracts
  in relation to corporate guarantee
  given to subsidiaries * 10,362,773 10,362,773

526,501 10,889,274 10,889,274

* The contractual undiscounted cash flows represent the outstanding credit facilities of the
subsidiaries at the end of the reporting period. The financial guarantees have not been
recognised since their fair value on initial recognition were not material.

39.2 CAPITAL RISK MANAGEMENT

The Group manages its capital to ensure that entities within the Group will be able to maintain an optimal
capital structure so as to support its businesses and maximise shareholders value. To achieve this objective,
the Group may make adjustments to the capital structure in view of changes in economic conditions, such
as adjusting the amount of dividend payment, returning of capital to shareholders or issuing new shares.

The Group manages its capital based on debt-to-equity ratio. The debt-to-equity ratio of the Group at the
end of the reporting period is not presented as its cash and cash equivalents exceeded the total external
borrowings.

120 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

39. FINANCIAL INSTRUMENTS (CONT’D)

39.3 CLASSIFICATION OF FINANCIAL INSTRUMENTS

The Group The Company

2017 2016 2017 2016
RM RM RM RM

Financial Assets

Available-for-sales
  Financial Assets
Other investment (Note 8) 102,610 102,610 – –

Loans and Receivables

  Financial Assets
Trade receivables (Note 11) 34,462,110 29,489,767 – –
Other receivables and
  deposits (Note 12) 2,213,738 3,690,841 5,000 5,000
Amount owing by
  subsidiaries (Note 13) – – 30,595,866 21,945,575
Cash and bank balances 10,759,922 11,175,655 715,992 625,948

47,435,770 44,356,263 31,316,858 22,576,523

Held-to-maturity
Derivative asset (Note 15) – 318,943 – –
Fixed deposits with
  licensed banks (Note 16) 4,067,446 16,126,625 4,067,446 15,126,625

4,067,446 16,445,568 4,067,446 15,126,625

Fair Value through Profit

  or Loss: Held-for-trading
Derivative asset (Note 15) 756,274 – – –
Short-term investment
  (Note 14) 3,172,550 2,185,840 3,172,550 2,185,840

3,928,824 2,185,840 3,172,550 2,185,840

Financial Liabilities

Other Financial Liabilities

Trade payables (Note 22) 9,473,445 8,531,277 – –
Other payables and
  accruals (Note 23) 4,603,467 4,175,920 351,394 526,501
Hire purchase payables
  (Note 20) 176,945 297,663 – –
Term loans (Note 21) 4,965,560 8,963,210 – –
Foreign currency loans
  (Note 24) 2,350,360 480,142 – –

21,569,777 22,448,212 351,394 526,501

Annual Report 2017 121

122
39. FINANCIAL INSTRUMENTS (CONT’D) cont’d

39.4 FAIR VALUE INFORMATION

The fair values of the financial assets and financial liabilities of the Group which are maturing within the next 12 months approximated their carrying
amounts due to the relatively short-term maturity of the financial instruments.

The following table sets out the fair value profile of financial instruments that are carried at fair value and those not carried at fair value at the end of the
reporting period:-

Fair Value of Financial Instruments Fair Value of Financial Instruments

Carried at Fair Value not Carried at Fair Value Total Fair Carrying
Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Value Amount
The Group RM RM RM RM RM RM RM RM

2017

Financial Assets
Short-term investment 3,172,550 – – – – – 3,172,550 3,172,550
Derivative asset:
- cross currency interest rate swap – 756,274 – – – – 756,274 756,274

Financial Liabilities
Hire purchase payables – – – – 184,183 – 184,183 176,945
Term loans – – – – 4,842,152 – 4,842,152 4,965,560

2016
NOTES TO THE FINANCIAL STATEMENTS

Financial Assets
Short-term investment 2,185,840 – – – – – 2,185,840 2,185,840
Derivative asset:
- cross currency interest rate swap – 318,943 – – – – 318,943 318,943

Financial Liabilities
Hire purchase payables – – – – 310,678 – 310,678 297,663
Term loans – 1,430,740 – – 7,112,135 – 8,542,875 8,963,210

SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

39. FINANCIAL INSTRUMENTS (CONT’D)

39.4 FAIR VALUE INFORMATION (CONT’D)

(a) Fair Value of Financial Instruments Carried at Fair Value

(i) The fair values above have been determined using the following basis:-

(1) The fair value of the short-term investment is determined at its prevailing value in the money
market at the end of the reporting period.

(2) The fair value of cross currency interest rate swap is the calculated present value of the
estimated future cash flows derived from the observable yield curves.

(3) The fair values of term loans are determined by discounting relevant cash flows using
discount rate that reflects the Group’s borrowing rate as at the end of the reporting period.

(ii) There were no transfer between level 1 and level 2 during the financial year.

(b) Fair Value of Financial Instruments not Carried at Fair Value

The fair values, which are for disclosure purposes, have been determined using the following basis:-

(i) The fair values of hire purchase payables and term loans are determined by discounting the
relevant cash flows using current market interest rates for similar instruments at the end of the
reporting period. The interest rates used to discount the estimated cash flows are as follows:-

The Group
2017 2016
% %

Hire purchase payables 2.78 - 2.80 2.78 - 2.90

Term loans 5.30 5.30

40. SIGNIFICANT EVENT OCCURRING AFTER THE REPORTING PERIOD

On 5 May 2017, Auto Empire Impex Pte. Ltd., a wholly-owned subsidiary of the Company, entered into a Sale
& Purchase Agreement with a substantial shareholder to acquire a leasehold warehouse premise situated at
Admiralty Street, Singapore, for a total cash consideration of SGD1,230,000.

Annual Report 2017 123

 NOTES TO THE FINANCIAL STATEMENTS
cont’d

41. SUPPLEMENTARY INFORMATION – DISCLOSURE OF REALISED AND UNREALISED PROFITS

The breakdown of the retained profits of the Group and of the Company at the end of the financial year into
realised and unrealised profits/(losses) are presented in accordance with the directive issued by Bursa Malaysia
Securities Berhad and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised
and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing
Requirements, as issued by the Malaysian Institute of Accountants, as follows:-

The Group The Company

2017 2016 2017 2016
RM RM RM RM

Total retained profits of the Company

  and its subsidiaries
- realised 65,928,240 63,406,095 1,714,641 3,437,318
- unrealised 490,585 11,634 – –

66,418,825 63,417,729 1,714,641 3,437,318

Consolidated adjustments (395,867) (347,207) – –

At 30 April 2017/2016 66,022,958 63,070,522 1,714,641 3,437,318

124 SOLID AUTOMOTIVE BERHAD (1016725-P)

 LIST OF PROPERTIES
as at 30 April 2017

Land
area/
Tenure of built up Net Book
Existing land/ Age of area Value Year of
No. Title/Address use building (sq feet) RM’000 Acquisition

1. H.S.(D) 160852, PTD 28180 Warehouse Freehold/ 43,559/ 2,497 2005

Mukim of Tebrau cum office 25 years 41,360
District of Johor Bahru
State of Johor Darul Takzim /
No. 5, Jalan Dataran 5 Taman Kempas
81200 Johor Bahru
Johor Darul Takzim
2. H.S.(D) 160851, PTD 28179 Warehouse Freehold/ 43,560/ 4,116 2011
Mukim of Tebrau cum office 23 years 23,025
District of Johor Bahru
State of Johor Darul Takzim /
No. 7, Jalan Dataran 5, Taman Kempas,
81200 Johor Bahru,
Johor Darul Takzim
3. H.S.(D) 11901, PTB 4970 Vacant 60 years 115,432/ 1,531 2009
Bandar of Johor Bahru warehouse, leasehold 43,527
District of Johor Bahru factory expiring on
State of Johor Darul Takzim / cum 06.10.2034/
No. 17, Jalan Kukuh office 33 years
Off Jalan Tampoi,
Kawasan Perusahaan Tampoi, Larkin
80350 Johor Bahru,
Johor Darul Takzim
4. PN 30973, Vacant 99 years 11,198/ 955 2008
Lot 16493 Warehouse leasehold 6,068
Mukim of Batu, cum office expiring on
District of Kuala Lumpur, 16.06.2067/
State of Wilayah Persekutuan/ 43 years
No. 30, Persiaran Segambut Tengah
51200 Kuala Lumpur
5. PN 108, Vacant 99 years 11,198/ 3,636 2013
Lot 16494 Warehouse leasehold 6,350
Mukim of Batu, cum office expiring on
District of Kuala Lumpur, 16.06.2067/
State of Wilayah Persekutuan/ 45 years
No. 28, Persiaran Segambut Tengah
51200 Kuala Lumpur

Annual Report 2017 125

 LIST OF PROPERTIES
as at 30 April 2017
cont’d

Land
area/
Tenure of built up Net Book
Existing land/ Age of area Value Year of
No. Title/Address use building (sq feet) RM’000 Acquisition

6. PN 197652, Warehouse 99 years 7,201/ 274 2004

Lot 318007 Mukim of Hulu Kinta, cum office leasehold 5,400
District of Kinta, expiring on
State of Perak Darul Ridzuan / 18.06.2098/
No. 10, Laluan Perusahaan Menglembu 6, 12 years
Kawasan Perusahaan Menglembu,
31450 Menglembu
Perak Darul Ridzuan
7. GM 3636, Lot 4740 Rented to Freehold/ 6,265/ 593 2008
Place of Payar Makbar, third party 8 years 7,470
Mukim of Kuala Kuantan,
District of Kuantan
State of Pahang Darul Makmur /
Lot 4740, Jalan Wong Ah Jang,
25100 Kuantan
Pahang Darul Makmur
8. H.S.M 72578, Warehouse Freehold/ 1,345/ 787 2011
PT 104549 cum office 6 years 3,887
Place of Payar Makbar,
Mukim of Kuala Kuantan,
District of Kuantan
State of Pahang Darul Makmur /
A249, Jalan Wong Ah Jang,
25100 Kuantan
Pahang Darul Makmur
9. PM 3775/M1/1/1 (Lot 4360), Warehouse 99 years N/A/ 647 2008
PM3776/M1/1/1 (Lot 4361), cum office leasehold 1,206
PM3777/M1/1/1 (Lot 4362) & expiring on each
PM3778/M1/1/1 (Lot 4363), 12.04.2081/
Bangunan M1, Tingkat 1, Petak 1, 17 years
Mukim of Bachang
District of Melaka Tengah
State of Melaka /
G4, G5, G6 & G7, Blok B4
Jln Rahmat 3
Taman Malim Jaya
75250 Melaka
10. H.S.(D) 27733 & 27734, PT 533 & 534 Warehouse Freehold/ 1,432 1,641 2010
Seksyen 4 Bandar Butterworth cum office 6 years each/
District of Seberang Perai Utara, 3,894
State of Pulau Pinang / each
No.3 & 5 Lorong Limbungan Indah 1
Taman Limbungan Indah
12100 Butterworth
Pulau Pinang

126 SOLID AUTOMOTIVE BERHAD (1016725-P)

 LIST OF PROPERTIES
as at 30 April 2017
cont’d

Land
area/
Tenure of built up Net Book
Existing land/ Age of area Value Year of
No. Title/Address use building (sq feet) RM’000 Acquisition

11. H.S.(M) 44365, PT 3663 (29, 29A, 29B) Warehouse Freehold/ 1,604/ 756 2011
Place of Telok Gadong Besar cum office 8 years 4,750
Bandar of Klang
District of Klang
State of Selangor /
No.29, Jalan Jelai 10/KS1
Taman Teluk Gadong Besar
41200 Port Klang
12. HS(D) 79442 PT 11320 Warehouse 99 years 8,808 7,225 2014
Mukim Bandar Selayang, Daerah Gombak, cum Office leasehold 14,000
Negeri Selangor Darul Eshan expiring on
Lot 27, Jalan Perusahaan 1 10.02.2113/
Pusat Industri Amari 3 years
Kawasan Perindustrian Batu Caves
68100 Batu Caves
Selangor Darul Eshan
13. H.S.(D) 500355, PTD 101353 Warehouse 60 years 435,605/ 18,523 2015
Mukim of Plentong cum office leasehold 352,193
District of Johor Bahru expiring on
State of Johor Darul Takzim / 29.03.2051/
PLO 436, Jalan Gangsa, 26 years
Kawasan Perindustrian Pasir Gudang
81700 Pasir Gudang
Johor Darul Takzim
14. H.S.(D) 500354, PTD 71016 Residential 99 years 16,619 / 1,437 2015
Mukim of Plentong Flat leasehold 24,705
District of Johor Bahru expiring on
State of Johor Darul Takzim / 02.11.2085/
Block 76, Jalan Tembusu, 24 years
Taman Air Biru
81700 Pasir Gudang
Johor Darul Takzim
15. Parcel No 05-66; 05-68; 05-70; 05-72; Residential 99 years N/A/ 308 2015
05-74; 05-76;05-78 & 05-80 Flat leasehold 5,568
(under Parent Lot PTD No. 71045) expiring on
Mukim Plentong 22.02.2087/
District of Johor Bahru 26 years
State of Johor Darul Takzim /
Unit No 05-66; 05-68; 05-70; 05-72;
05-74; 05-76;05-78 & 05-80
Block Mawar 7, Jalan Mawar Putih,
Taman Mawar
81700 Pasir Gudang
Johor Darul Takzim

Annual Report 2017 127

 ANALYSIS OF SHAREHOLDINGS
as at 1 August 2017

Total Number of Issued Shares : 167,355,900

Paid-Up Share Capital : RM 83,677,950
Class of Shares : Ordinary Shares
Voting Rights : One (1) Vote Per Ordinary Share
Number of Shareholders : 1,305

DISTRIBUTION OF SHAREHOLDINGS

Number of Number of
Category
Shareholders % Shares Held %

1 - 99 6 0.460 90 0.000
100 - 1,000 480 36.782 199,201 0.119
1,001 - 10,000 435 33.333 2,395,400 1.431
10,001 - 100,000 276 21.149 9,961,723 5.953
100,001 - 8,367,794 * 106 8.123 77,623,752 46.382
8,367,795 and above ** 2 0.153 77,175,734 46.115

Total 1,305 100.000 167,355,900 100.000

* less than 5% of issued shares
** 5% and above of issued shares

DIRECTORS’ SHAREHOLDINGS
as at 1 August 2017

Direct Indirect
No Name of Director Shareholding % Shareholding %

1 Ker Min Choo 40,450,659 24.170 1,882,500 # 1.125

2 Ker Mong Keng 36,725,075 21.944 24,000 ^ 0.014
3 Ker Meng Oi 5,530,541 3.305 – –
4 Ong Kheng Swee 2,064,486 1.234 1,250,000 @ 0.747
5 Kek Kok Swee 1,500,000 0.896 4,500,000 ^ 2.689
6 Azahar Bin Baharudin – – – –
7 Tan Lay Beng – – – –

# Deemed interest in shares held by his spouse and children

^ Deemend interest in shares held by his children
@ Deemed interest in shares held by his spouse

128 SOLID AUTOMOTIVE BERHAD (1016725-P)

 ANALYSIS OF SHAREHOLDINGS
as at 1 August 2017
cont’d

LIST OF SUBSTANTIAL SHAREHOLDERS

as at 1 August 2017

Direct Indirect
No Name Shareholding % Shareholding %

1 Ker Min Choo 40,450,659 24.170 1,882,500 # 1.125

2 Ker Mong Keng 36,725,075 21.944 24,000 ^ 0.014
3 Ker Boon Kee 13,117,336 7.838 683,000 @ 0.408

# Deemed interest in shares held by his spouse and children

^ Deemend interest in shares held by his son
@ Deemed interest in shares held by his spouse

THIRTY LARGEST SHAREHOLDERS

as at 1 August 2017

NUMBER OF
NO. NAME SHARES HELD %
1 KER MIN CHOO 40,450,659 24.170

2 KER MONG KENG 36,725,075 21.944

3 KER SOO HA 7,214,988 4.311

4 CIMSEC NOMINEES (TEMPATAN) SDN BHD

CIMB BANK FOR KER BOON KEE (MY0847) 6,574,936 3.929

5 PUBLIC NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR KER BOON KEE (E-JBU) 4,546,800 2.717

6 KEK MENG KAI, KENNICK 4,500,000 2.688

7 KER MENG OI 4,030,541 2.409

8 CIMSEC NOMINEES (TEMPATAN) SDN BHD
CIMB BANK FOR LEE MIEN YONG (MY2322) 2,601,500 1.554

9 CIMSEC NOMINEES (TEMPATAN) SDN BHD

CIMB BANK FOR YEO ANN SECK (MY0696) 2,300,000 1.374

10 ONG KHENG SWEE 2,064,486 1.234

11 KER BOON KEE 1,995,600 1.192

12 MERSEC NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR SIOW WONG YEN
@ SIOW KWANG HWA 1,936,000 1.156

Annual Report 2017 129

 ANALYSIS OF SHAREHOLDINGS
as at 1 August 2017
cont’d

THIRTY LARGEST SHAREHOLDERS (CONT’D)

as at 1 August 2017

NUMBER OF
NO. NAME SHARES HELD %

13 NG CHIT PIN 1,900,100 1.135

14 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR KER MENG OI (8123728) 1,500,000 0.896

15 KEK KOK SWEE 1,500,000 0.896

16 THEU BOON OOI 1,353,000 0.808

17 CIMSEC NOMINEES (TEMPATAN) SDN BHD

CIMB BANK FOR LIEW SEET THENG (MY1670) 1,340,600 0.801

18 FOO YIT LAN 1,250,000 0.746

19 MALACCA EQUITY NOMINEES (TEMPATAN) SDN BHD PLEDGED

SECURITIES ACCOUNT FOR LIM LI WEI 1,009,500 0.603

20 KOPERASI PERMODALAN FELDA MALAYSIA BERHAD 1,000,000 0.597

21 MALACCA EQUITY NOMINEES (TEMPATAN) SDN BHD

EXEMPT AN FOR PHILLIP CAPITAL MANAGEMENT SDN BHD (EPF) 977,700 0.584

22 PUBLIC NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR KER SOO HA (E-JBU) 907,000 0.541

23 MERSEC NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR LIM LI WEI 906,500 0.541

24 MERSEC NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR NG AIK SERN 900,000 0.537

25 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR LEE HENG HAW (8112533) 890,423 0.532

26 ALLIANCEGROUP NOMINEES (ASING) SDN BHD

HAN XIANJUN (8111906) 800,000 0.478

27 KER KAI XIANG 787,000 0.470

28 TEO LAY YOKE 780,000 0.466

29 CIMSEC NOMINEES (TEMPATAN) SDN BHD

CIMB BANK FOR TAN MENG SENG (MY1542) 750,000 0.448

30 PUBLIC NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR TAN MARY (JBU-UOB) 682,900 0.408

130 SOLID AUTOMOTIVE BERHAD (1016725-P)

 ANALYSIS OF WARRANT HOLDINGS
as at 1 August 2017

Number of Unexercised Warrants : 80,144,100

Exercise Price : RM0.50 per warrant
Warrants Issue Date : 17 December 2015
Expiry Date : 16 December 2020
Number of Warrant Holders : 565

DISTRIBUTION OF WARRANT HOLDINGS

Number of Number of
Category Warrant Holders % Warrants Held %

1 - 99 11 1.947 501 0.001
100 - 1,000 116 20.531 68,651 0.085
1,001 - 10,000 200 35.398 997,900 1.245
10,001 - 100,000 172 30.443 6,462,500 8.064
100,001 - 4,007,204 * 64 11.327 35,426,682 44.204
4,007,205 and above ** 2 0.354 37,187,866 46.401

Total 565 100.000 80,144,100 100.000

* less than 5% of issued shares

** 5% and above of issued shares

DIRECTORS’ WARRANT HOLDINGS

as at 1 August 2017

Direct Indirect
No Name of Director Warrant Holding % Warrant Holding %

1 Ker Min Choo 20,225,329 25.236 1,622,850 # 2.025

2 Ker Mong Keng 18,362,537 22.912 12,500 ^ 0.016
3 Ker Meng Oi 2,765,270 3.450 – –
4 Ong Kheng Swee 1,079,600 1.347 349,000 @ 0.435
5 Kek Kok Swee 750,000 0.936 2,353,200 ^ 2.936
6 Azahar Bin Baharudin – – – –
7 Tan Lay Beng – – – –

# Deemed interest in shares held by his spouse and children

^ Deemend interest in shares held by his children
@ Deemed interest in shares held by his spouse

Annual Report 2017 131

 ANALYSIS OF WARRANT HOLDINGS
as at 1 August 2017
cont’d

THIRTY LARGEST WARRANT HOLDERS

as at 1 August 2017

NUMBER OF
WARRANT
NO. NAME HOLDINGS %

1 KER MIN CHOO 18,825,329 23.489

2 KER MONG KENG 18,362,537 22.912

3 KER SOO HA 3,607,494 4.501

4 CIMSEC NOMINEES (TEMPATAN) SDN BHD

CIMB BANK FOR KER BOON KEE (MY0847) 2,707,818 3.378

5 KEK MENG KAI, KENNICK 2,353,200 2.936

6 KER MENG OI 2,015,270 2.514

7 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR KER MIN CHOO (8109400) 1,400,000 1.747

8 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR KER HONG (6000688) 1,384,100 1.727

9 CIMSEC NOMINEES (TEMPATAN) SDN BHD

CIMB BANK FOR LEE MIEN YONG (MY2322) 1,237,000 1.543

10 ONG KHENG SWEE 1,079,600 1.347

11 NG CHIT PIN 998,200 1.245

12 CIMSEC NOMINEES (TEMPATAN) SDN BHD

CIMB BANK FOR YEO ANN SECK (MY0696) 960,000 1.197

13 CIMSEC NOMINEES (TEMPATAN) SDN BHD

CIMB BANK FOR TAN MENG SENG (MY1542) 950,000 1.185
14 MERSEC NOMINEES (TEMPATAN) SDN BHD
PLEDGED SECURITIES ACCOUNT FOR SIOW WONG YEN
@ SIOW KWANG HWA 913,500 1.139

15 MERSEC NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR LIM LI WEI 870,000 1.085

16 MALACCA EQUITY NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR LIM LI WEI 854,000 1.065

17 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR KER MENG OI (8123728) 750,000 0.936

132 SOLID AUTOMOTIVE BERHAD (1016725-P)

 ANALYSIS OF WARRANT HOLDINGS
as at 1 August 2017
cont’d

THIRTY LARGEST WARRANT HOLDERS (CONT’D)

as at 1 August 2017

NUMBER OF
WARRANT
NO. NAME HOLDINGS %

18 KEK KOK SWEE 750,000 0.936

19 THEU BOON OOI 713,600 0.890

20 CIMSEC NOMINEES (TEMPATAN) SDN BHD

CIMB BANK FOR LIEW SEET THENG (MY1670) 665,800 0.830

21 MERSEC NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR NG AIK SERN 500,000 0.623

22 BEH ENG PAR 492,100 0.614

23 PUBLIC NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR TAN MARY (JBU/UOB) 472,600 0.589
24 PUBLIC NOMINEES (TEMPATAN) SDN BHD
PLEDGED SECURITIES ACCOUNT FOR ANG YONG SOON 416,100 0.519

25 MERSEC NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR TAN SIN HWA 404,000 0.504

26 ALLIANCEGROUP NOMINEES (ASING) SDN BHD

HAN XIANJUN (8111906) 400,000 0.499

27 TEO LAY YOKE 400,000 0.499

28 KER KAI XIANG 394,000 0.491

29 RHB NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR LOH YONG HUAT 380,100 0.474

30 FOO YIT LAN 349,000 0.435

Annual Report 2017 133

 NOTICE OF FIFTH ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Fifth Annual General Meeting (“5th AGM”) of Solid Automotive Berhad (“Solid”
or “the Company”) will be held at PLO 436, Jalan Gangsa, Kawasan Perindustrian Pasir Gudang, 81700 Pasir Gudang,
Johor, Malaysia on Tuesday, 24th October 2017 at 10.00 a.m. for the following purposes:-

ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the financial year ended 30 April 2017 (Please refer to
together with the Directors’ and Auditors’ reports thereon. Note 1)

2. To approve the payment of a final single tier dividend of 0.5 sen per ordinary share
for the financial year ended 30 April 2017. RESOLUTION 1

3. To approve the payment of Directors’ fees for the financial year ended 30 April
2017. RESOLUTION 2

4. To re-elect the following Directors who retire by rotation in accordance with Regulation
106(b) of the Company’s Constitution of the Company:

4.1 Ker Min Choo RESOLUTION 3
4.2 Tan Lay Beng RESOLUTION 4

5. To re-appoint the retiring Auditors, Messrs Crowe Horwath as Auditors and to authorise
the Directors to fix their remuneration. RESOLUTION 5

SPECIAL BUSINESS

To consider and, if thought fit, to pass the following Ordinary Resolutions:

6. Ordinary Resolution
Proposed Authority to Issue Shares Pursuant to Section 75 of the Companies
Act 2016

“THAT, subject always to the Companies Act 2016 (“the Act”), the Constitution of the
Company and the approvals of the relevant government / regulatory authorities, the
Directors be and are hereby authorised, pursuant to Section 75 of the Act, to allot
and issue shares in the Company at any time until the conclusion of the next Annual
General Meeting and to such person or persons, upon such terms and conditions and
for such purposes as the Directors may, in their absolute discretion deemed fit, provided
that the aggregate number of shares to be issued does not exceed 10% of the total
number of issued shares of the Company for the time being and that the Directors are
also empowered to obtain the approval from the Bursa Malaysia Securities Berhad
for the listing and quotation for the additional shares to be issued.” RESOLUTION 6

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

134 SOLID AUTOMOTIVE BERHAD (1016725-P)

 NOTICE OF FIFTH ANNUAL GENERAL MEETING
cont’d

FURTHER NOTICE IS HEREBY GIVEN that for the purpose of determining who shall be entitled to attend the 5th AGM,
the Company shall be requesting Bursa Malaysia Depository Sdn. Bhd. to make available to the Company pursuant to
Paragraph 7.16(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, a Record of Depositors
as at 13 October 2017 and only a Depositor whose name appears on such Record of Depositors shall be entitled to
attend the said meeting or appoint proxies to attend and/or vote on his/her behalf.

By Order of the Board

ANG MUI KIOW

CHEN YEW TING
Company Secretaries

Johor Bahru
30 August 2017

NOTES:

1. Audited Financial Statements

The audited financial statements are laid in accordance with Section 340(1)(a) of the Companies Act 2016 for
discussion only under Agenda 1. They do not require shareholders’ approval and hence, will not be put forward
for voting.

2. Form of Proxy

i. A member of the Company entitled to attend and vote at the above meeting is entitled to appoint not
more than two (2) proxies to attend and vote in his stead. A proxy may but need not be a member of the
Company. There shall be no restriction as to the qualification of the proxy.

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

iii. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly
authorised in writing or, if the appointor is a corporation, either under Seal or under the hand of an officer
or attorney duly authorised. A proxy appointed to attend and vote at a meeting of the Company shall have
the same rights as the member to speak at the meeting.

iv. Where a Member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the
Company for multiple beneficial owners in one securities account (“Omnibus Account”), there is no limit to
the number of proxies which the Exempt Authorised Nominee may appoint in respect of each Omnibus
Account it holds.

Where a Member or authorised nominee appoints two (2) proxies, or where an Exempt Authorised Nominee
appoints two (2) or more proxies, the appointments shall be invalid unless he specifies the proportions of
his holdings to be represented by each proxy.

v. All forms of proxy must be deposited at the Registered Office of the Company situated at Suite 7E, Level
7, Menara Ansar, 65, Jalan Trus, 80000 Johor Bahru, Johor, Malaysia not less than 48 hours before the
time appointed for holding the meeting or any adjournment thereof.

Annual Report 2017 135

 NOTICE OF FIFTH ANNUAL GENERAL MEETING
cont’d

3. Explanatory Notes on Special Business

i. Ordinary Resolution 6 - Proposed Authority to Issue Shares Pursuant to Section 75 of the

Companies Act 2016

The proposed Ordinary Resolution 6, if passed, will give the Directors of the Company, from the date of the
above Annual General Meeting, authority to issue and allot shares from the unissued capital of the Company
up to an amount not exceeding in total ten percent (10%) of the total issued and paid-up share capital of
the Company for such purposes and to such person or persons as the Directors in their absolute discretion
consider to be in the interest of the Company. This authority, unless revoked or varied at a general meeting,
will expire at the next Annual General Meeting of the Company.

The mandate sought under Ordinary Resolution 6 above is a renewal of an existing mandate and there was
no proceed raised from the previous mandate up to the last practicable date, 15 August 2017.

The renewed general mandate will provide flexibility to the Company for any possible fund raising activities,
including but not limited to further placing of shares, for purpose of funding future investment, working
capital, acquisitions and/or paring down borrowings.

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT

NOTICE IS HEREBY GIVEN THAT a final single tier dividend of 0.5 sen per ordinary share for the financial year ended
30 April 2017, if approved by the shareholders at the forthcoming Fifth Annual General Meeting, will be paid on 22
November 2017 to depositors registered in the Record of Depositors at the close of business on 6 November 2017.

A depositor shall qualify for entitlement only in respect of:

(a) Shares transferred into the depositors securities account before 4.00 p.m. on 6 November 2017 in respect of
transfer; and

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

PERSONAL DATA PRIVACY

By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the Annual
General Meeting and/or any adjournment thereof, a member of the Company (i) consents to the collection, use and
disclosure of the member’s personal data by the Company (or its agents) for the purpose of the processing and
administration by the Company (or its agents) of proxies and representatives appointed for the Annual General Meeting
(including any adjournment thereof) and the preparation and compilation of the attendance lists, minutes and other
documents relating to the Annual General Meeting (including any adjournment thereof) and in order for the Company (or
its agents) to comply with any applicable laws, listing rules, regulations and/or guidelines (collectively, the “Purposes”),
(ii) warrants that where the member discloses the personal data of the member’s proxy(ies) and/or representative(s)
to the Company (or its agents), the member has obtained the prior consent of such proxy(ies) and/or representatives
for the collection, use and disclosure by the Company (or its agents) of the personal data of such proxy(ies) and/or
representative(s) for the Purposes, and (iii) agrees that the member will indemnify the Company in respect of any penalties,
liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.

136 SOLID AUTOMOTIVE BERHAD (1016725-P)

 Statement Accompanying Notice of
Fifth Annual General Meeting
Pursuant to Paragraph 8.27(2) of the Bursa Malaysia Securities Berhad Listing Requirements

The Directors who are standing for re-election are as follows:

(a) Mr. Ker Min Choo (RESOLUTION 3)

(b) Ms. Tan Lay Beng (RESOLUTION 4)

Further details of the above named Directors and their interest in the securities of the Company are set out in the Profile
of Directors on page 4, 5, 128 and 131 of the annual report respectively.

Annual Report 2017 137

THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK
 SOLID AUTOMOTIVE BERHAD
(Company No : 1016725-P)
(Incorporated in Malaysia)
No of shares held :..........................
CDS Account No :...........................

FORM OF PROXY
I/We _______________________________________IC/Passport/Co No. ________________________________________
of___________________________________________________________________________________________________
being a member/members of SOLID AUTOMOTIVE BERHAD (Company No. 1016725-P) do hereby ______________
appoint _______________________________________ IC/Passport No. ________________________________________
___________________ of________________________________________________________________________________
or failing him/her ________________________________ IC/Passport No.________________________________________
of___________________________________________________________________________________________________
____________________________________________________________________________________________________

or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Fifth Annual
General Meeting of the Company to be held at PLO 436, Jalan Gangsa, Kawasan Perindustrian Pasir Gudang, 81700
Pasir Gudang, Johor, Malaysia on Tuesday, 24th October 2017 at 10.00 a.m. and at any adjournment thereof.

My/Our proxy is to vote as indicated below:

No. RESOLUTIONS FOR AGAINST

1 Declaration of a final single tier dividend of 0.5 sen per ordinary share
2 Payment of Directors’ fees for the financial year ended 30 April 2017
3 Re-election of Retiring Director – Ker Min Choo
4 Re-election of Retiring Director – Tan Lay Beng
5 Re-appointment of Retiring Auditors, Crowe Horwath
6 Authority to issue shares pursuant to Section 75 of the Companies Act 2016

(Please indicate with a cross (X) in the spaces provided above how you wish your votes to be cast. In the absence of
such specific directions, your proxy will vote or abstain from voting as he/she thinks fit.)

Number of ordinary shares held

Signature

Dated this______________day of____________________________ 2017

Notes:

1. A member of the Company entitled to attend and vote at the above meeting is entitled to appoint not more than two (2) proxies to attend
and vote in his stead. A proxy may but need not be a member of the Company. There shall be no restriction as to the qualification of
the proxy.
2. Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportions of his shareholdings
to be represented by each proxy.
3. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if
the appointor is a corporation, either under Seal or under the hand of an officer or attorney duly authorised. A proxy appointed to attend
and vote at a meeting of the Company shall have the same rights as the member to speak at the meeting.
4. Where a Member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial
owners in one securities account (“Omnibus Account”), there is no limit to the number of proxies which the Exempt Authorised Nominee
may appoint in respect of each Omnibus Account it holds.
Where a Member or authorised nominee appoints two (2) proxies, or where an Exempt Authorised Nominee appoints two (2) or more
proxies, the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.
5. All forms of proxy must be deposited at the Registered Office of the Company situated at Suite 7E, Level 7, Menara Ansar, 65, Jalan
Trus, 80000 Johor Bahru, Johor, Malaysia not less than 48 hours before the time appointed for holding the meeting or any adjournment
thereof.
6. For the purpose of determining who shall be entitled to attend the 5th AGM, the Company shall be requesting Bursa Malaysia Depository
Sdn. Bhd. to make available to the Company pursuant to Paragraph 7.16(2) of the Main Market Listing Requirements of Bursa Malaysia
Securities Berhad, a Record of Depositors as at 13 October 2017 and only a Depositor whose name appears on such Record of
Depositors shall be entitled to attend the said meeting or appoint proxies to attend and/or vote on his/her behalf.

PERSONAL DATA PRIVACY

By submitting an instrument appointing a proxy(ies) and/or representative(s), the member accepts and agrees to the personal data privacy terms
set out in the Notice of Annual General Meeting dated 30 August 2017.
✄
Then fold here

AFFIX
STAMP

The Company Secretary

SOLID AUTOMOTIVE BERHAD (Company No. 1016725-P)
Suite 7E, Level 7, Menara Ansar
65, Jalan Trus
80000 Johor Bahru
Johor Darul Takzim.

1st fold here

 SOLID AUTOMOTIVE BERHAD
(Company No: 1016725-P)

ANNUAL
REPORT 2017

SOLID AUTOMOTIVE BERHAD (COMPANY NO: 1016725-P)

ANNUAL REPORT 2017

SOLID AUTOMOTIVE BERHAD (Company No: 1016725-P)

PLO 436, Jalan Gangsa, Kawasan Perindustrian Pasir Gudang
81700 Pasir Gudang, Johor Darul Takzim, Malaysia. The Specialist in Automotive Parts
Tel No : (+607) 288 1313 Fax No : (+607) 251 4668
www.solidautomotive.com Delivering Superior Value, Quality and Service