Ire-Tex-Annual Report 2014.pdf

Annual Report 2014

IRE-TEX CORPORATION BERHAD 576121-A

VISIONTo be recognised as the world leader in global logistics in protective packaging.

MISSIONTo provide customers with proactive and cost effective solution.

02 Corporate Information

03 Group Corporate Structure

04 - 06 Profile of Board of Directors

07 - 08 Chairman’s Statement

09 - 16 Corporate Governance Statement

17 Corporate Social Responsibility Statement

18 Statement on Risk Management & Internal Control

19 - 22 Audit Committee Report

23 - 26 Other Information

27 - 111 Financial Statements

112 List of Properties

113 - 118 Analysis of Shareholdings

119 - 122 Notice of Annual General Meeting

123 Proxy Form

CONTENTS

IRE-TEX CORPORATION BERHADAnnual Report 2014 01

CORPORATE INFORMATION

AUDIT COMMITTEE

Abdul Rahim Bin Abdul Hamid (Chairman)Collin Goonting A/L O.S.GoontingSoo Tee Wei

REMUNERATION COMMITTEE

Collin Goonting A/L O.S.Goonting (Chairman)Abdul Rahim Bin Abdul HamidDato’ Dr. Yap Tatt Keat

NOMINATION COMMITTEE

Collin Goonting A/L O.S.Goonting (Chairman)Na Chiang SengSoo Tee Wei

COMPANY SECRETARIES

Lim Kim Teck (MAICSA 7010844)Kong Sown Kaey (MAICSA 7047655)

AUDITORS

UHY Chartered Accountants

BANKERS

CIMB Bank BerhadPublic Bank BerhadHong Leong Bank BerhadBangkok Bank BerhadStandard Chartered Bank Malaysia Berhad

REGISTERED OFFICE

35, 1st Floor, Jalan Kelisa Emas 1Taman Kelisa Emas13700 Seberang JayaPrai PenangTel : 04-3976 672Fax : 04-3976 675

REGISTRARS

Agriteum Share Registration Services Sdn Bhd2nd Floor, Wisma Penang Garden42 Jalan Sultan Ahmad Shah10050 PenangTel : 04-2282 321Fax : 04-2272 391

HEAD OFFICE

Plot 49 & 63, Lorong Perusahaan 2BKulim Industrial Estate09000 KulimKedahTel : 04-4924 422Fax : 04-4924 433Website : www.iretex.com.my

STOCK EXCHANGE LISTING

Main Market of Bursa Malaysia Securities BerhadSector : Industrial ProductsStock Name : IRETEXStock Code : 7183

BOARD OF DIRECTORS

Chairman - Independent Non-Executive DirectorAbdul Rahim Bin Abdul Hamid

Group Managing DirectorDato’ Dr. Yap Tatt Keat

Executive DirectorDr. Lai Chee Chuen

Independent Non-Executive DirectorsCollin Goonting A/L O.S.Goonting

Na Chiang SengSoo Tee Wei

IRE-TEX CORPORATION BERHADAnnual Report 201402

GROUP CORPORATE STRUCTURE

IRE-TEX CORPORATION BERHAD576121-A

100%

100%

100%

55%

100%

100%

100%

100%

100%

100%

100%

50.01%

70%

100%

70%

100%

100%

Cal-Test Laboratory Sdn Bhd (523396-U)

GH Packaging Sdn Bhd (251096-P)

Ire-Tex (Malaysia) Sdn Bhd (351185-T)

Ire-Tex (KL) Sdn Bhd (867981-M)

Ire-Tex Asset Management Sdn Bhd (1077874-U)

Ire-Tex Electronics Sdn Bhd (469196-A)

Ire-Tex Distribution Sdn Bhd (572601-U)

Ire-Tex Packaging Sdn Bhd (1012491-U) (Formerly known as Ire-Tex Paper Packaging Sdn Bhd)

Jumbo Universe Sdn Bhd (859413-M)

Zoomic Automation (M) Sdn Bhd (601589-W)

Zoomic Technology (M) Sdn Bhd (234714-U)

Ire-Tex (Johor) Sdn Bhd (497417-D)

TFH Corporate Sdn Bhd (873099-H)

Styrotex (Asia Pacific) Sdn Bhd (617998-X)

Suzhou Styrotex Plastic Co Ltd (016619)

Ire-Tex (Vietnam) Co Ltd (412043000350)

Aribar Investment Ltd


PROFILE OF BOARD OF DIRECTORS

Abdul Rahim Bin Abdul Hamid, aged 64, Malaysian.Chairman Independent Non-Executive Director

Abdul Rahim Bin Abdul Hamid was appointed as the Chairman of ITCB on 4 November 2014. He is also a Chairman of Audit Committee and Remuneration Committee.

En Abdul Rahim is a Fellow of the Association of Chartered Certified Accountants, Member of the Malaysian Institute of Certified Public Accountants and Member of the Malaysian Institute of Accountants. He started his career in Coopers & Lybrand (previously known as Cooper Brothers & Co.) in 1971. He rose in the firm to eventually become its Chief Executive in 1993. When the firm merged with Price Waterhouse in 1998 to form PricewaterhouseCoopers, he served as its Deputy Executive Chairman until he retired in June 2004. During the span of more than 3 decades in the firm, he was involved in audit, management consultancy and insolvency practice covering multiple industries including retail and manufacturing, construction, plantation, entertainment and banking in both public and private sectors. He was also appointed to the Council of the Malaysian Institute of Accountants (“MIA”) and his election by the Council to hold office as President. In the education sector, he is an Adjunct Professor of Accountancy at Universiti Malaysia Terengganu; a member of the Senate at Open University Malaysia; a member of Advisory Panel at Universiti Kebangsaan Malaysia and Universiti Putra Malaysia and Industry Adviser at Universiti Tunku Abdul Rahman. He served as President of the MIA (2005-2007 and 2009-2011) and as President of the ASEAN Federation of Accountants from 2010 to 2011.

En Abdul Rahim sits on the Board of Directors of MIDF Amanah Asset Management Berhad, AEON Co (M) Berhad, Malaysia Debt Ventures Berhad, Petra Energy Berhad, Malaysian Venture Capital Management Berhad, Encorp Berhad and Asian Finance Bank Berhad.

He does not have any family relationship with any directors and/or major shareholder of ITCB, nor any conflict of interest in any business arrangement involving the Company. He has had no convictions for any offences within the past ten (10) years.

Dato’ Dr. Yap Tatt Keat, aged 49, Malaysian.Group Managing Director

Dato’ Dr Yap Tatt Keat was appointed as the Group Managing Director of ITCB on 25 September 2003. He is also a member of Remuneration Committee.

Dato’ Dr Yap is a co-founder and Group Managing Director of the Ire-Tex Group. He graduated with a Bachelor of Science Degree in Business Administration from Ohio State University, Columbus, Ohio, US in 1989. In 2001, he obtained Doctorate Business Entrepreneurship from Ansted University, United Kingdom. Upon his graduation from State, he has been in employment with General Electronics (Malaysia) Sdn Bhd, Sony Electronics (Malaysia) Sdn Bhd and Franklin Porcelain Sdn Bhd. He has valuable experiences in the electronics industry gained from his previous employments.

In 1992, he left to set up Phoenix Base Sdn Bhd (“PBSB”), a company engaged in the manufacture of polyurethane foam. In 1995, he joint ventured with Austin Foam Plastics Inc (“AFP”) from United States and ILP Group Limited (“ILP”) from Ireland to establish Ire-Tex (Malaysia) Sdn Bhd (“ITMSB”). He has developed Ire-Tex Group to become a leading protective packaging solution provider in Asia Pacific Region. In addition, he also sits on the board of Directors of all the subsidiaries in ITCB Group and other private limited companies.

Dato’ Dr Yap was awarded The Outstanding Young Malaysian Award in 2000, Chivas Regal Achievement Unlimited Award in 2001, The Yazhou Zhoukan Young Chinese Entrepreneur Award in 2002 and Global Man of The Year Golden Rim Award in 2003. He was also bestowed the Darjah Setia Pangkuan Negeri (D.S.P.N.) by the Governor of Penang in 2004.

Dato’ does not have any family relationship with any directors and/or major shareholder of ITCB, nor any conflict of interest in any business arrangement involving the Company. He has had no convictions for any offences within the past ten (10) years.


PROFILE OF BOARD OF DIRECTORS (CONT'D)

Dr Lai Chee Chuen, aged 50, MalaysianExecutive Director

Dr Lai Chee Chuen was appointed to the Board of ITCB as an Executive Director on 4 November 2014.

Dr Lai obtained his MBA and Doctorate in Finance from Cass Business School, City University, London.

He is an Associate of the Chartered Institute of Management Accountants, Fellow of the Association of Chartered Certified Accountants, and Member of the Malaysian Institute of Accountants, Chartered Institute of Marketing and Association of Certified Fraud Examiners. A professional Accountant by training, he worked in auditing, banking and finance, corporate management and consulting for 28 years.

He was trained in London and practised accountancy both in professional accounting firms and with Barclays Bank Group, London. Upon returning to Malaysia, Dr Lai was attached to PwC Consulting before venturing into corporate management with a number of listed companies in capacities ranging from CEO, MD, Executive Director to Independent Non-Executive Director. Dr Lai returned to consulting from 2012 to Mid 2014 with Grant Thornton Consulting as Senior Director, Corporate Advisory. He had led assignments ranging from strategic reviews, mergers and acquisitions, receiverships, turnarounds, valuations, due diligence, independent business reviews to forensic investigations. He specialises in Corporate Restructuring and Turnaround since obtaining a research PhD in this field in 1996. Since then, he had undertaken the role of advisor for a variety of corporate exercises including corporate and debt restructuring, mergers, acquisitions, divestments and reverse takeovers of listed companies in sectors ranging from construction, property development, telecommunications, manufacturing, diversified industries to government linked companies and agencies. He is also an Executive Director of Malaysia Pacific Corporation Berhad.


Collin Goonting A/L O.S.Goonting, aged 67, Malaysian.Independent Non-Executive Director

Collin Goonting A/L O.S.Goonting was appointed to the Board of ITCB as an Independent Non-Executive Director on 31 October 2014. He is also a Chairman of Nomination Committee and a member of Audit Committee and Remuneration Committee.

He was admitted to the Honorable Society of the Inner Temple in London as a Barrister-at-Law in 1972 and has been in practice as an Advocate and Solicitor of the High Court of Malaya since. Besides litigation, Mr. Goonting has always been active in the Corporate and Financial Sectors both Internationally and in Malaysia. In litigation, he has acted as lead Counsel in many high profile criminal as well as civil cases for more than 20 years including but not limited to Court Martial’s. Overall, during his tenure he also acted for employers and employees alike in labour disputes and represented clients in the Industrial Courts. As a distinguished Senior Counsel, he had represented clients both in Civil as well as Criminal in the Federal Court, The highest Appellate Court in Malaysia. He is still in active practice as Counsel. In 1991, when Labuan (East Malaysia) was instituted by the Federal Government as the International Offshore Financial Centre (IOFC) the branch of Messrs Collin Goonting & Co was established to cater for the new industry. During the tenure of more than ten years, he represented International offshore Banks as well as foreign clients in financial matters especially in the setting up of Offshore Companies (SPV’S). The Firm was then active in legal services for the Islamic Financial services offered by the Local Offshore Banks.

Another sector in which he was actively involved in Labuan was in the Oil and Gas industry dealing with multinational offshore Oil Corporations in support of Off-shore drilling. The firm prepared and advised on cross border Joint Ventures for Oil corporations based on English and International Law. The firm also acts for major shipping companies in Malaysia including two Public Listed Companies and had represented a listed Company at the London Maritime Arbitration Centre.

From the International experience gained, he moved to Indonesia and in 2001 he set up a legal firm in Jakarta and he was appointed Legal Consultant to a company set up to build 5 x 60 MW Geothermal Power Plants. In the financial sector, he was involved and advised on private equity funding, restructuring of debts, recovery and liquidation by foreign Banks and Financial Institutions in Indonesia. He is still a consultant in Indonesia in the Oil and Gas Industry. He is also an Independent Non-Executive Director of Idimension Consolidated Bhd.



PROFILE OF BOARD OF DIRECTORS (CONT'D)

Na Chiang Seng, aged 38, Malaysian.Independent Non-Executive Director

Na Chiang Seng was appointed to the Board of ITCB as an Independent Non-Executive Director on 1 November 2013. He is also a member of Nomination Committee.

He graduated with a Bachelor of Engineering (Civil Engineering) from The University of Sydney, Australia in 2000, he is also obtained Master of Business Administration conferred by University of Heriot-Watt, U.K. Currently, he is a Project Director of Naing Sdn. Bhd. since year 2010 and the Senior Manager of Broadland Development Sdn. Bhd. since year 2003. Prior to that he was a Project Manager of Sunlight Engineering Sdn. Bhd. He is also an Independent Non-Executive Director of Asdion Berhad


Soo Tee Wei, aged 40, Malaysian.Independent Non-Executive Director

Soo Tee Wei was appointed to the Board of ITCB as an Independent Non-Executive Director on 9 January 2014. He is also a member of Audit Committee and Nomination Committee.

He graduated with a Diploma in Information Technology (IT) and Certificate in Financial Planning. He has many years of experience in IT industry. His expertise includes implementation of highly effective web applications, marketing and cost-effective management of innovative customer and technical support strategies.

His proven ability is to successfully analyze an organization’s online presence and branding requirements, identify deficiencies and potential opportunities, and develop innovative solutions for increasing online branding and improving productivity.

From 2003 to 2006, he was an associate partner of an independent financial advisor firm where he was responsible to provide training on IT and website marketing.

During his tenure with Grow IT Marketing from 2007 to 2012, he was a Search Engine Optimization Specialist cum Website Developer. His responsibility was to manage more than 50 websites. He was contracted to manage a local listed company’s website development and online marketing, a top trucks seller company’s website and a top retread tyres manufacturer in Malaysia. He was also a Curriculum Developer for the Web Development Programming course where he was responsible for course development, lecture preparation and development of practical application exercises for web development.

Currently, he is the Chief Executive Officer of Add Zee Media Sdn. Bhd. and Impress Publishing Sdn. Bhd. He is also an Independent Non-Executive Director of Hytex Integrated Berhad and Winsun Technologies Berhad.



CHAIRMAN’S STATEMENT

Dear Shareholders,

On behalf of the Board of Directors, I have great pleasure to present the Annual Report and the Financial Statements of the Group for the financial year ended 31 December 2014.

The slowdown in world economy caused the business environment for year 2014 continues to be competitive and challenging within the packaging industry. The increase in manufacturing and operation cost have made the businesses more vulnerable and competition more intense in the country.

However, with proper business strategies and concerted efforts from all, we managed to weather the difficult times and performed satisfactory. This is further complemented by our consolidation of operations, effective cost cutting measures, improvement in efficiency and productivity and initiatives to increase customer satisfaction.

Financial Review

Notwithstanding the keen challenges on highly competitive selling prices and increase in manufacturing and operation cost, the Group is still able to achieve a revenue of RM108.2 million, a minor decreased of 6.2% as compared to the previous year’s figure of RM 115.4 million. The Group reported loss after tax of RM6.4 million due to impairment loss for the financial year.

Dividends

The Board of Directors does not recommend any dividend for the financial year ended 31 December 2014 at the forthcoming Annual General Meeting.

Future Prospects

The Group expects the operating environment to remain very challenging and competitive due to weak global sentiments on crude oil and commodities prices. Weakening Ringgit Malaysia against United States Dollar has caused the raw materials and operation costs to increase and the replacement of current consumption tax of Sales and Services Tax (SST) to Goods and Services Tax (GST) in April 2015 has resulted the Malaysia economy to slow down. Given the continued uncertainties in the global economy with escalating production and operation costs, the Group will remain competitive by implementing cost cutting measures internally through consolidation of operation in the Kulim new plant for better synergy and increase in the productivity and efficiency of the manufacturing process through investment on machineries to automate the packaging materials manufacturing process.


CHAIRMAN’S STATEMENT (CONT'D)

Appreciation

The Board and the Company would like to extend a warm welcome to Mr. Collin Goonting A/L O.S.Goonting and Dr. Lai Chee Chuen who were appointed to the Board and would like to take this opportunity to say thank you to YM Raja Said Abidin Bin Raja Shahrome, See Toh Kean Yaw, Fazrin Azwar bin Dato' Md. Nor, Teh Eng Aun, Tey Por Yee and Teh Eng Huat who have left the Board and for their services rendered during their tenure as Directors of the Company.

On behalf of the Board, I wish to express our sincere appreciation to our valued customers and suppliers for their continued support and loyalty, to the relevant government authorities for their guidance and assistance, and to our associates, bankers and business partners for their continuous cooperation and trust.

I wish to convey my gratitude to my fellow Directors for their advice and support, to the management and staff for their dedication and commitment in performing their duties. Our achievements are a result of the concerted efforts and contribution from the entire team.

In closing, I would like to thank you, our shareholders, for your support and confidence in the Group and I wish to assure you that we will continue to strive hard and uphold your trust in us.

Abdul Rahim Bin Abdul Hamid Chairman


CORPORATE GOVERNANCE STATEMENT

The Board of Directors recognises the importance of good corporate governance and the need to ensure that the principles and recommendations on corporate governance are observed and practised throughout the Group. During the year, various steps has been undertaken to comply with the processes and recommendations as articulated in the Malaysian Code on Corporate Governance 2012 (“Code”). This Statement sets out the details on how the Group has applied the principles and the extent of compliance with recommendations of the Code.

BOARD OF DIRECTORS The Board recognizes that it is responsible for guiding and monitoring the Company on behalf of its shareholders. The Board has adopted a Board Charter that sets out the division of responsibilities between the Executive Directors, the Non- Executive Directors and the management team.

Roles and responsibilities In fulfilling its function the Board assumes among others the following main responsibilities:

• Reviewing and adopting a strategic plan • Overseeing the conduct of the business • Identifying principal risks and implementing appropriate internal controls and mitigating measures to manage risks

identified • Reviewing the adequacy and integrity of management information and internal control systems • Planning for succession • Overseeing the development and implementation of shareholder communication policy The Board as a whole sets the strategic direction of the Group. The Managing Director and the Executive Directors, assisted by the management team, are responsible for implementation of Board policies and decisions and day to day management of the business in line with the direction set by the Board. The Executive Directors are charged with the effective utilisation and management of the human, physical and financial resources of the Group to achieve the business objectives as set by the Board. In managing the day to day business, the Executive Directors set the key performance indicators to measure the performance of staff as well as the business. These performance indicators are monitored and reviewed periodically to assess performance of the business and corrective actions are taken as necessary. The Board measures Executive management’s performance in terms of revenue growth and profitability of the Group. For new investment proposals, the Board will consider whether the investment fits in with the strategic business plan and the likely return on the investment. The Board regards risk management as an integral part of business operations and the Group has in place an ongoing process to identify principal risks faced by the Group and to take appropriate measures to manage risks identified. The Group also has in place an ongoing process to review the effectiveness, adequacy and integrity of its system of internal controls.

The Executive Directors periodically report back to the Board on the Group’s performance and where necessary obtain Board approval to implement recommendations on actions to be taken. The Board reviews the performance of the Executive Directors and rewards achievement accordingly.

Functions reserved for the Board The Board delegates the day-to-day management of the business to the Executive Directors and the management team. However, certain functions are specifically reserved for the Board which includes the following:

• establishing strategies for the Group in conjunction with management; • approving the Group’s annual business plan and budget; • approving specific items of material capital expenditure, investments and disinvestments; • appointing Directors to the Board; • appointing and approving the terms and conditions of appointment of the Managing Director; • approving any significant changes to accounting policies; • approving the quarterly financial statements; • approving the annual financial statements • approving any interim dividends and recommending any final dividends to shareholders; • approving all circulars, statements and corresponding documents sent to shareholders; • approving the terms of reference and membership of Board Committees; and • approving Company policies which may be developed from time to time.


CORPORATE GOVERNANCE STATEMENT (CONT'D)

Board Committees The Board has delegated certain responsibilities to other Board Committees which operate within approved Terms of Reference. These committees are the Audit Committee, Nominating Committee and Remuneration Committee.

The composition and functions of the Audit Committee are detailed in the Audit Committee Report on pages 19 to 22 while the composition and functions of the Nominating Committee and Remuneration Committee are set out within this Statement.

Board Charter The Board has formally adopted a Board Charter which provides guidance to the Board in the fulfillment of its roles, duties and responsibilities. The Board Charter was drawn up in line with and underlines the Board’s commitment to comply with relevant legislations, regulations and the principles of good corporate governance. The Board Charter outlines the composition and structure of the Board, the Board’s powers, duties and responsibilities including matters reserved for the Board and processes and procedures for Board meetings. The Board Charter is subject to periodic review and will be updated from time to time to reflect changes to the Company’s policies, procedures and processes as well as changes to legislations and regulations. The Board Charter is available on the Company’s website at http://www.iretex.com.my.

Code of conductIn carrying out the business of the Company, the Board is committed to uphold compliance with relevant requirements of laws and regulations including the Company’s Memorandum and Articles of Association and the Listing Requirements of Bursa Malaysia Securities Berhad (“Listing Requirements”). The Company and its operating subsidiaries have a code of conduct which sets out the standards of responsibilities, obligations and ethical conduct for employees of the Group. In addition, the Directors observe the Company Directors’ Code of Ethics established by the Companies Commission of Malaysia.

Sustainability In setting the Group’s overall business strategy, the Board took into consideration and implemented strategies and practices that would promote sustainable growth for the Group. These strategies are integrated into the Group’s Corporate Social Responsibility practices which cover the areas of the environment, community, marketplace and workplace. The efforts of the Group in these areas are detailed in the Corporate Social Responsibility Statement in this Annual Report.

APPOINTMENTS TO THE BOARD

Nominating Committee The Company has a Nominating Committee which is empowered to bring to the Board recommendations as to the appointment of any new Executive or Non-Executive Director and the Directors to fill the seats on Board Committees. This Committee comprises wholly Non-Executive Directors. The Nominating Committee will assess the effectiveness of the Board of Directors as a whole, the Board Committees and each individual Director on an annual basis. In developing such recommendations, the Nominating Committee will consult all directors and reflects that consultation in any recommendation of the Nominating Committee brought forward to the Board.

The Nominating Committee consists of three members which are Mr. Collin Goonting A/L O.S.Goonting, Mr. Na Chiang Seng and Mr. Soo Tee Wei.

The Nominating Committee has met five times during the financial year.

Encik Abdul Rahim Bin Abdul Hamid has been appointed as the Senior Independent Non-Executive Director to whom concerns may be conveyed.

Criteria used in recruitment and annual assessment The Nominating Committee’s responsibilities include the development and review of the criteria to be used in the recruitment of Board members and assessment of Directors. In recruiting potential Board candidates the Nominating Committee will consider the skills and experience appropriate for a candidate, having regard to those of the existing directors and the effect that the appointment would have on the overall balance of the composition of the Board. Upon identifying a potential candidate, the qualifications, competencies, other directorships and time availability of the candidate will be considered. In addition the independence of the candidate will also be assessed if an Independent Directors is being considered. Any candidate proposed must be approved by all existing Board members.



APPOINTMENTS TO THE BOARD (CONT'D)

Criteria used in recruitment and annual assessment (Cont'd)An assessment of the Board is undertaken annually following the completion of the financial year. The evaluation is carried out by way of questionnaires sent to each Director. The questionnaires cover the composition, role, procedures and practices of the Board as a whole and the assessment of each Director’s performance by each of his peers. The individual responses to the questionnaires are sent to the Chairman of the Nominating Committee and are confidential to each Director. Questionnaire responses are summarised for consideration by the Nominating Committee and subsequently reported back to the Board. An evaluation of the Board took place following the end of the financial year in accordance with the processes described above.

Annual assessment of Independent directors The role of the Independent Directors is to bring independent and objective judgment to the Board which mitigates risks arising from conflict of interest or undue influence from interested parties and protects the interest of minority shareholders. The Board recognizes that it is important to periodically assess whether a Director who is designated as independent continue to satisfy such designation.

An assessment of independence is carried out on each of the Independent Directors annually. Each Independent Director was required to declare his compliance with the criteria of independence as set out in the Listing Requirements. In addition all the Board members were required to evaluate whether each of the Independent Director had continued to show independent and objective judgment in deliberations at Board meetings as well as his conduct outside of Board meetings in matters relating to the Group’s affairs.

Tenure of independent directors and shareholders approval to retain independent directors The MCCG 2012 recommends that the tenure of an Independent Director should not exceed a cumulative term of nine years. Upon completion of the nine years, an Independent Director may continue to serve on the Board subject to the Director's re-designation as a Non-Independent Director. None of the existing Independent Directors has served on the Board of Directors for a cumulative terms of nine years.

Re-election of Directors In accordance with the Company’s Articles of Association at least one-third of the Directors are subject to retirement by rotation at each Annual General Meeting and all Directors shall retire from office at least once in every three years but shall be eligible for re-election. The Articles of Association also provide that all Directors appointed by the Board are subject to election by the shareholders at the next Annual General Meeting after their appointment.

Separation of position of Chairman and Managing Director The positions of the Chairman of the Board and the Managing Director are held by different individuals. The Chairman who is an Independent Non-Executive Director, is responsible for the conduct of Board meetings and ensures that Board deliberations are conducted in an environment that promotes open discussion to ensure that views from all Directors are considered before a decision is made. The Managing Director has the general responsibility for day-to-day running of the Group’s business, implementation of Board policies and making of operational decisions duly assisted by the management team.

Composition of the Board The Board presently has six (6) members which comprises two (2) Executive Directors and four (4) Independent Non-Executive Directors.

The Directors have a mix of business knowledge, skills and experience necessary for managing the Group's business ranging from exposure in the packaging industry, accounting and finance, legal and general management. A profile of each Director is presented on pages 4 to 6.

There is a clear division of responsibility between the Independent Non-Executive Chairman and the Group Managing Director to ensure the balance of power and authority. The presence of Independent and Non-Executive Directors on the Board provides a balanced and independent view and judgment on corporate issues dealt with at the Board level to safeguard the interest of public shareholders.

The size of the Board will be periodically reviewed taking into consideration the nature and scope of the Group’s operations.



APPOINTMENTS TO THE BOARD (CONT'D)

Board meetings and time commitment of directors The Board meets at least four times a year to review and approve the quarterly and year end financial results. Additional meetings are convened as necessary when there are urgent and important matters that require the Board’s deliberation. Board members may also be nominated to serve on Board Committees which hold their own meetings. Directors and Board Committee members are furnished with papers, reports and material relevant to the issues to be discussed prior to the meetings and are expected to review such material beforehand so that meaningful discussion can take place during meetings. This expectation of time commitment is communicated to new Board members before they are appointed. Directors should also notify the Chairman before accepting any new directorship in other listed companies to assess whether they will be able to devote sufficient time to the Company.

During the financial year ended 31 December 2014, eleven (11) meetings were held. The details of attendance of each Director at the Board meetings held during the financial year are as follows:

Abdul Rahim Bin Abdul Hamid (Appointed on 4 November 2014) 2/2Dato’ Dr. Yap Tatt Keat 10/11Dr. Lai Chee Chuen (Appointed on 4 November 2014) 2/2Collin Goonting A/L O.S.Goonting (Appointed on 31 October 2014) 3/3Na Chiang Seng 9/11Soo Tee Wei (Appointed on 9 January 2014) 9/10YM Raja Said Abidin Bin Raja Shahrome (Resigned on 3 November 2014) 8/8See Toh Kean Yaw (Resigned on 24 October 2014) 7/7Tey Por Yee (Appointed on and Resigned on 25 February 2015) 5/7Teh Eng Huat (Resigned on 25 February 2015) 10/11Fazrin Azwar Bin Dato’ Md. Nor (Resigned on 27 October 2014) 5/7Teh Eng Aun (Resigned on 3 November 2014) 8/8

Access to information and advice Board meetings are convened with an agenda of matters to be discussed. Each Director is provided with timely and relevant information to discharge their duties and responsibilities including quarterly and annual financial statements, minutes of meetings and board papers and reports relevant to the issues of the meetings covering financial and operational matters.

The Directors may access all information within the Group in furtherance of their duties. If required, the Directors may take independent professional advice in the furtherance of their duties at the Company’s expense. Before incurring the professional fee, the Director concerned must seek the approval of the Board.

Company Secretary The Directors have direct access to the advice and the services of the Company Secretaries to enable them to discharge their duties. The Company Secretaries convene all Board meetings and at least one of them attends all Board meetings to ensure that Board procedures are followed and accurate records of the proceedings and resolutions passed are maintained. The Company Secretaries also ensure that the statutory registers are properly maintained at the registered office of the Company.

The Company Secretaries update the Directors periodically when new statutes and requirements are issued by the regulatory authorities to ensure that the Directors are aware of regulatory developments that affect them in carrying out their responsibilities. The Company Secretaries also make announcements to Bursa Malaysia on behalf of the Company with the approval of the Board. The Board believes that the current Company Secretaries who are qualified and experienced are capable of carrying out their duties to assist the Board in ensuring adherence to Board policies and procedures.

Directors’ Training All Directors have attended and successfully completed the Mandatory Accreditation Programme prescribed by Bursa Malaysia. During the year, the Directors have attended and participated at seminars, workshops and conferences for the continuing enhancement of their knowledge and to keep abreast of developments in the market place. These seminars, workshops and conferences include the following:-

• Regional Manufacturing Conference - conducted by FMM• Workshop On Application Of Ms 2505: 2012 Guidelines For Sampling Of Household Solid Waste - conducted by Sirim



DIRECTORS’ REMUNERATION

Remuneration Committee

The Remuneration Committee which comprises mainly Non-Executive Directors recommends the remuneration for the Executive Directors. The determination of the remuneration of the Non-Executive Directors is a matter for the Board as a whole. Individual Directors abstain from discussing and being involved in deciding their own remuneration.

The Board recognises that remuneration packages should be sufficient to attract, retain and motivate Directors with the qualities needed to run the Group successfully. The remuneration of Directors is generally based on market conditions, responsibilities held and the Group’s overall financial performance. Decisions and recommendations of the Remuneration Committee are reported back to the Board for approval and where required by the rules and regulations governing the Company for approval of Shareholders at the Annual General Meeting.

The Remuneration Committee consists of three members which are Encik Abdul Rahim Bin Abdul Hamid, Dato’ Dr. Yap Tatt Keat and Mr. Collin Goonting A/L O.S.Goonting.

The Remuneration Committee has met twice during the financial year.

The details of the Directors' remuneration for the financial year ended 31 December 2014 are as follows:-

Aggregate remuneration (in RM) paid/payable to

Categorisation Executive Directors Non-Executive Directors

Directors' Fees 86,000 128,000

Other Emoluments:• Salary, bonus & allowance• Contribution by employer to Provident Fund• Benefit-in-kind (based on estimated money value)

2,346,935319,794

65,471

Total 2,818,200 128,000

The number of Directors whose remuneration for the financial year ended 31 December 2014 fall into the respective bands are as follows:-

Remuneration Band (in RM) Executive Directors Non-Executive Directors

Below 50,000 7

100,001 to 150,000 1

400,000 to 450,000 1

450,000 to 500,000 1

700,000 to 750,000 1

850,000 to 900,000 1

Total 5 7



SHAREHOLDERS Corporate disclosure policies and procedures The Board abides with the corporate disclosure policies as set out in the Listing Requirements. It is the policy of the Company that immediate disclosure is made of material information. Information is considered material if it is reasonable to expect that it will have a material effect on the price, value or market activity of the Company’s securities or it will affect the decision of an investor or holder of the Company’s securities in determining his choice of action. However, in exceptional circumstances, the Company may temporarily withhold the disclosure of material information to a more appropriate time such as instances where immediate disclosure would affect the ability of the Company to pursue its corporate objectives, when the facts of the matter at hand is in a state of flux or where company or securities laws may restrict the extent of permissible disclosure. Material information which is withheld will be restricted to persons on a strict need-to-know basis and all persons with such information will be informed of the requirement to maintain strict confidentiality. In the event that material information that has been withheld has or is believed to have been inadvertently disclosed or where the information has become generally available to the public, the Company will immediately announce the information.

The Company strives to ensure that information that is released is in a manner that would obtain wide public dissemination. Disclosure of material information by the Company is first made by an announcement to Bursa Malaysia. All announcements are also made available on the Company’s website. Press conferences may be held if the Board is of the opinion that it would draw better attention to the information that is to be disseminated. However, the Company will ensure that any such information will be first released or simultaneously released to Bursa Malaysia. The Company will ensure that material information will not be made on an individual or selective basis to any individual or group if it has not been disclosed and disseminated to the public.

While the Company endeavours to provide information to its shareholders and stakeholders it is also mindful of the requirement to refrain from misleading promotional disclosure activity.

All Board members and parties who are insiders are aware of the provisions of the Capital Markets and Services Act 2007 and the Companies Act, 1965 with regards to prohibition of trading in the securities of the Company on the basis of material information which is not known to the public. In addition, affected persons are notified of the restrictions in dealing in the Company’s securities while in possession of price-sensitive information and during closed periods unless the procedures for dealings during closed periods as set out in the Listing Requirements have been complied with.

Use of information technology to disseminate information Shareholders and investors are kept informed of all major development within the Group by way of announcements via the Bursa Malaysia’s LINK, the Company’s annual reports and where appropriate, circulars to shareholders. Other information about the Company is also made available at the Company’s website at http://www.iretex.com.my.

Use of information technology to disseminate information Shareholders and investors are kept informed of all major development within the Group by way of announcements via the Bursa Malaysia’s LINK, the Company’s annual reports and where appropriate, circulars to shareholders. Other information about the Company is also made available at the Company’s website at http://www.iretex.com.my.

Shareholder participation at general meetings The Annual General Meeting (“AGM”) is the principal forum for dialogue with shareholders. Notice of AGM and annual reports are sent to shareholders at least 21 days before the meeting.

The Board tables the annual report at each AGM and encourages shareholders to participate in a question and answer session. The Directors are available to provide responses to questions from the shareholders during the meeting.

In addition, Extraordinary General Meetings (“EGMs”) are held as and when needed to obtain shareholders’ approval on certain business or corporate proposals. Adequate notice of EGM, in compliance with regulatory requirements, are sent to shareholders together with comprehensive Circulars/Statements setting out details and explaining the rationale with regards to the matters for which shareholders approval are being sought.

Poll voting At the commencement of each general meeting the Chairman will inform the shareholders of their right to demand a poll vote. The Board will consider putting substantive resolutions to vote by poll if it feels that it is necessary to gauge the support of shareholders for particular resolutions. When a resolution has been put to vote by poll, the Chairman will announce the number of votes cast for and against the resolution at the general meeting and an announcement of such result will also be made to Bursa Malaysia. The Board will consider employing electronic means for poll voting when the infrastructure for employing such means becomes available at reasonable cost and taking into consideration the number of attendees who normally attend general meetings.



SHAREHOLDERS (CONT'D)

Communication and proactive engagement with shareholders AGMs and EGMs, where appropriate, remain the most common platform for the Company and the Board to have effective communication and engagement with shareholders about performance, corporate governance and other matters affecting shareholders’ interest. In addition, the Board may hold press conference where appropriate to keep shareholders informed of the Group’s affairs. Information released to the public will also be made available on the Company’s website for shareholders to have easy access.

ACCOUNTABILITY AND AUDIT

Compliance with applicable financial reporting standards The directors have a responsibility to present a fair assessment of the Group’s financial performance, position and prospects. This is achieved mainly by way of financial reporting through the quarterly reports to Bursa Malaysia and the annual report to shareholders.

Pursuant to the Companies Act, 1965, the Directors are required to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Group and of the Company as at the end of the financial year and of the results and cash flows of the Group and of the Company for the financial year then ended.

The Directors consider that, in preparing the financial statements, the Group has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates. The Directors also consider that all applicable approved accounting standards have been followed, and confirm that the financial statements have been prepared on a going concern basis.

The Directors are responsible for ensuring that the Group and the Company keep accounting records which disclose with reasonable accuracy at any time the financial position of the Group and of the Company and which enable them to ensure that the financial statements are properly drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965.

The Board aims to ensure that it fulfills its responsibility in the area of financial reporting by appointing a suitably qualified accountant to oversee the financial reporting function. The Board is also assisted by the Audit Committee to oversee the Group’s financial reporting process and the quality of its financial reporting. Towards this end the Audit Committee meets to discuss and review the quarterly results and the year end financial statements together with finance personnel and the external auditors where applicable before the financial reports are recommended to the Board for approval and public release.

Suitability and independence of external auditors The external auditors fulfill an essential role in giving assurance to the shareholders and other parties of the reliability of the financial statements of the Company. The Company has always maintained a formal and transparent relationship with the external auditors in ensuring the Company’s compliance with applicable approved accounting standards and statutory requirements.

The Audit Committee is responsible for recommending the appointment or re-appointment of external auditors. The role of the Audit Committee in relation to the external auditors is described in the Audit Committee's terms of reference as detailed on pages 19 to 22 of the Annual Report. In assessing the suitability of external auditors, the Audit Committee will ensure that only firms which have experience in the audit of listed companies and are registered with the Audit Oversight Board will be considered.

The Audit Committee recognizes that the regular provision of non-audit services by the external auditors may lead to impairment of the external auditors' independence and objectivity. The external auditors are therefore not normally engaged for non-audit related services. However, the external auditors may be engaged for services related to corporate exercises carried out by the Group from time to time or special assignments, which are not regular in nature, for which the engagement of the external auditors may be deemed to be more effective for the Group. During the financial year, no non-audit fees were paid to the external auditors of the Company.

The external auditors have affirmed that members of their engagement team and the firm have complied with the relevant ethical requirements regarding independence in the conduct of their audit engagement of the Group for the financial year ended 31 December 2014.



ACCOUNTABILITY AND AUDIT (CONT'D)

Framework to manage risks The Board acknowledges that it is responsible for establishing a sound framework to manage risks and maintaining a sound system of internal controls to safeguard shareholders' investment and the Company's assets. The Directors also have a general responsibility for taking reasonable steps to prevent and detect fraud and other irregularities. An overview of risk management and the state of internal control within the Group is set out in the Statement on Risk Management and Internal Control on page 18 of this Annual Report.

Internal audit function Owing to the changes to the membership of the Audit Committee, the Internal Audit Function has not been as effective as it could be. The present Board is in the process of outsourcing the Internal Audit Function to a firm of Public Accountants which will report to the Audit Committee.

Compliance Statement Save as disclosed throughout the financial year ended 31 December 2014, the Group has complied with all the principles and recommendations of the MCCG 2012.

This statement was made in accordance with a Board of Directors' resolution dated 24 April 2015.


CORPORATE SOCIAL RESPONSIBILITY STATEMENT

The Group is driven by the belief that in pursuit of any business objective we need to strike a balance between profitability and contributions to the social and environmental responsibilities which in the long run will ensure sustainability for the Group. With such belief, the Group is committed and uses it best endeavor, on ongoing basis, to integrate Corporate Social Responsibility (“CSR”) practices into its business strategies and day to day business operations to ensure sustainable growth for the Group. Our CSR practices cover the areas of the environment, community, marketplace and workplace.

COMMUNITY

As a responsible corporate citizen, the Group strives to give back to the community in which it operates. The Group focuses its attention on the areas of education and caring for the well being of the under privileged. Towards this end the Group has made cash donations to schools and the activities of various charitable societies and organizations. The Group also supports internship programs from various local universities/colleges. Students from these universities/colleges are placed as interns in various positions in the Group’s operations with the aim of giving practical training to these students in their particular job area as well as to let them gain insight into how business organizations operate in general. Such internship program also enables the Group to tap into the talent pool available in local universities/colleges upon their graduation.

ENVIRONMENT

The Group strives to adopt eco-friendly practices in its manufacturing process to protect the environment such as promoting 3R (Reduce, Reuse and Recycle) concept on the usage of raw materials like paper and polymer compounds in the production process and minimizing the use of hazardous compound. Waste water and sludge from production are treated before being discharged and noise and air pollution levels are in compliance with environmental regulations and laws.

In doing its part to conserve depleting energy resources the Group is continuously implementing energy conservation projects throughout the organisation. The Group is also involved in the business of collection, treatment and sale of sludge palm oil for use as biodiesel by third parties.

MARKETPLACE

The Group maintains an online platform via its website which provides information on the Group encompassing quarterly and financial annual results and updates on the Group’s performance as well as formal announcements on developments in the Group with the objective of fostering and maintaining good relations with and providing timely information to various stakeholders of the Group.

WORKPLACE

Our employees are the most valuable assets of the Group and their interests and safety are our priority. The Group cultivates awareness among its employees on the importance of learning from personal development to occupational safety and health as enacted by the law. Workshops and courses on the latest technology are provided to enhance employees’ job-related skills and knowledge. The Group also promotes safety and health among its employees through external as well as internal programs on occupational safety and health.

To enhance the quality of life and better social interaction, Inter-company or Inter-Department sports competition (such as Futsal Competition, Badminton Competition and etc) are also being organized to foster closer relationship within the Group of companies, customers and suppliers while at the same time creating a healthy lifestyle and culture.


STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL

Pursuant to Paragraph 15.26(b) of the Bursa Malaysia Securities Berhad (“Bursa Malaysia”) Listing Requirements, the Board of Directors (“the Board”) is pleased to provide the following statement on risk management and internal control of the Group which had been prepared in accordance with the “Statement on Risk Management and Internal Control : Guide lines for Directors of Listed Issuers” (the “Internal Control Guidelines”) as adopted by the Bursa Malaysia.

Responsibility

The Board recognizes the importance of maintaining a sound internal control system covering risk management and the financial, operational and compliance controls to safeguard shareholders’ investments and the Group’s assets. The Board acknowledges that it is responsible for the Group’s risk management and internal control system to safeguard shareholders’ investments and the Group’s assets and for the continuing review of their adequacy and integrity. The internal control system is designed to cater for the Group’s needs and to manage the risks to which it is exposed. It should be noted that such systems are designed to manage rather than to eliminate the risk of failure to achieve business objectives and can only provide reasonable but not absolute assurance against material misstatement or loss. The Group has in place an on going process to review the effectiveness, adequacy and integrity of the system of internal controls.

Risk Management and Internal Control System

The Board regards risk management as an integral part of business operations. The Board undertakes to identify potential risks faced by the Group through a risk assessment and evaluation framework, where the following factors are considered:

• The nature and extent of risks faced by the Group; • The extent and categories of risk which are regarded as acceptable to the Group; • The likelihood of the risks concerned materializing; • The Group’s ability to reduce the incidence of risks that may materialize and their impact on the business; and • The costs of operating particular controls relative to the benefit thereby obtained in managing the related risks. The

key elements of the framework of risk management and internal control system of the Group are as follows: • Operating procedures that set out the policies procedures and practices adopted in the Group are properly

documented and communicated to staff member so as to ensure clear accountabilities. The effectiveness of internal control procedures are subject to continuous assessments reviews and improvements;

• The organizational structure is well defined, with clear line of responsibilities and delegation of authorities. Key responsibilities are properly segregated;

• The Board meets regularly and is kept updated on the Group’s activities and operations and significant changes in the business and external environment, if any, which may result in significant risks;

• Financial results, including key performance indicators are reviewed quarterly by the Board and the Audit Committee; • Executive Directors and Heads of Departments meet regularly to discuss operational, corporate, financial and key

management issues; • Effective reporting system, which provides for a documented and auditable trail of accountability to ensure timely

information for management review, has been put in place, and • The Group is strongly committed to an environment of sound governance, sound internal controls and culture that

will safeguard stakeholders’ interest and the Group’s assets.

Conclusion

The external auditors have reviewed this Statement on Risk Management and Internal Control pursuant to paragraph 15.23 of the Listing Requirements of Bursa Malaysia, and have reported to the Board that it appropriately reflects the processes that the Board has adopted in reviewing the adequacy and integrity of the risk management and internal control system. The Board is of the opinion that based on the current level of activities, the Group’s risk management and internal control system is adequate and accords with the guide lines provided by the Internal Control Guide lines adopted by Bursa Malaysia except for Zoomic Automation (M) Sdn Bhd.

The Board has received assurance from the top management and CEO that the company’s risk management and internal control system is operating adequately and effectively except for Zoomic Automation (M) Sdn Bhd, in all material aspects based on the risk management and internal control system of the Company.

Statement made in accordance with a resolution dated 14 May 2015.


AUDIT COMMITTEE REPORT

MEMBERS OF THE AUDIT COMMITTEE

The present members of the Audit Committee are as follows:-

Chairman : Abdul Rahim Bin Abdul Hamid - Independent Non-Executive Director (Appointed on 4 November 2014) YM Raja Said Abidin Bin Raja Shahrome - Independent Non-Executive Director (Resigned on 3 November 2014)Members : Collin Goonting A/L O.S.Goonting - Independent Non-Executive Director (Appointed on 31 October 2014) : Soo Tee Wei - Independent Non-Executive Director (Appointed on 31 October 2014) : Teh Eng Aun - Independent Non-Executive Director (Resigned on 3 November 2014) : Fazrin Azwar Bin Dato’ Md. Nor - Independent Non-Executive Director (Resigned on 27 October 2014)

TERMS OF REFERENCE

The Directors have approved and adopted the following Terms of Reference, which set out the roles and responsibilities of the Audit Committee.

OBJECTIVES

• To assist the Board of Directors in discharging their responsibilities as they relate to the Group’s management including risk management, internal controls, financial reporting and compliance with statutory and legal requirements;

• To provide, by way of regular meetings, a direct line of communication between the Board of Directors, senior management, external and internal auditors;

• To oversee and review the quality of the audits conducted by the external and internal auditors; and

• To enhance the perceptions of interested parties, such as shareholders, regulators, creditors and employees, of the credibility and objectivity of the financial reports.

COMPOSITION

• The Audit Committee shall be appointed by the Board of Directors from amongst the Directors of the Company and shall consist of not less than three (3) members, all of whom shall be Non-Executive Directors with a majority being Independent Non-Executive Directors. No Alternate Directors shall be appointed a member of the Audit Committee.

• At least one member of the Audit Committee:-

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

(ii) If he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years’ working

experience and

- he must have passed the examination specified in Part I of the 1st Schedule of the Accountants Act, 1967; or

- he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act, 1967.

(iii) fulfils such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad (“Bursa Malaysia”),

• If the membership for any reason falls below three members, the Board of Directors must fill the vacancy within three months.


COMPOSITION (CONT'D)

Chairman • The Chairman shall be an independent director elected by the members of the Audit Committee.

Secretary • The Secretary of the Audit Committee shall be the Company Secretary of the Board of Directors.

Quorum • A quorum shall be two (2) members and a majority of the members present must be Independent Directors. In the absence of the Chairman, the members present shall elect a chairman for the meeting from amongst the members present.

Meetings • The Audit Committee shall regulate its own proceedings. The Committee shall meet at least four (4) times a year.

The Audit Committee has the discretion to invite relevant personnel to their meeting. The presence of senior management, external and internal auditors may be requested, if required. Other members of the Board of Directors may attend meetings upon the invitation of the Audit Committee. The external and internal auditors may request a meeting by notifying the Secretary of the Audit Committee if they consider it necessary.

Authority • The Audit Committee is authorised by the Board of Directors to investigate any matter within its terms of reference.

The Committee shall have the resources which are required to perform its duties and have full and unrestricted access to any information and personnel pertaining to the Group. The Committee has a direct communication channel with the external and internal auditors and may obtain independent professional advice as and when necessary to discharge their duties. .

Functions

The functions of the Audit Committee shall be:

• To review and discuss with the external auditors the following:-

(i) the audit plan (including the nature and scope of audit);

(ii) their audit report;

(iii) their evaluation of the system of internal control;

(iv) problems and reservations arising from the external audits, and any matters the external auditors may wish to discuss (in the absence of management, where necessary); and

(v) their management letter and management’s response;

• Consider and recommend the nomination, appointment and re-appointment of external auditors, their fees and any

questions on resignation and dismissal;

• Review the quarterly results and year end financial statements, prior to submission to the Board of Directors for approval, focusing particularly on:-

(i) going concern assumptions;

(ii) changes in major accounting policies and practices;

(iii) major judgemental areas, significant and unusual events;

(iv) significant adjustments arising from the audit; and

(v) compliance with approved accounting standards, regulatory and other legal requirements;

AUDIT COMMITTEE REPORT (CONT'D)



COMPOSITION (CONT'D)

Functions (Cont'd)

• Review any related party transaction and conflict of interest situation that may arise within the Company or the Group, including any transaction, procedure or course of conduct that raises questions of management integrity, and to ensure that the Directors report such transactions annually to the shareholders via the Annual Report;

• Review and approve the draft Annual Report prior to presentation to the Board of Directors for approval;

• Review the following in respect of the internal audit functions:-

(i) approval of the internal audit plan;

(ii) adequacy of the scope, functions and resources of the internal audit functions and whether it has the necessary authority to carry out its work;

(iii) scope of internal audit programme, the results of the internal audit findings, and the adequacy of management’s response and corrective actions to be taken;

(iv) effectiveness of the internal audit function; and

(v) approve any appointment or termination of internal auditors and to provide the opportunity for the internal auditors to submit his reasons for resigning;

• Prepare reports, if the circumstances arise or at least once a year, to the Board of Directors summarising the work performed in fulfilling the Audit Committee’s primary responsibilities; and

• Act on any matters as may be directed by the Board of Directors.

SUMMARY OF ACTIVITIES

The Audit Committee met nine (9) times during the financial year ended 31 December 2014 and details of attendance are as follows:-.

Audit Committee Member Designation Attendance

Abdul Rahim Bin Abdul Hamid(Appointed on 4 November 2014)

Independent Non-Executive Director 2/2

Collin Goonting A/L O.S.Goonting(Appointed on 31 October 2014)


Soo Tee Wei(Appointed on 31 October 2014)


YM Raja Said Abidin Bin Raja Shahrome(Resigned on 3 November 2014)


Teh Eng Aun(Resigned on 3 November 2014)


Fazrin Azwar Bin Dato’ Md. Nor(Resigned on 27 October 2014)


In discharging its functions and duties, the Committee has considered, reviewed and discussed the following:-

• Reviewed the quarterly and yearly results/announcements of the Company and ensured compliance with approved accounting standards and adherence to other legal and regulatory requirements as well as making relevant recommendations to the Board for approval;

• Reviewed and discussed the unusual and significant related parties transactions;

• Reviewed the Audit Planning Memorandum presented by the external auditors;

• Discussed the external audit plan with the external auditors;



SUMMARY OF ACTIVITIES (CONT'D)

• Reviewed and considered the assistance given by the company’s officers and staff to the external auditors;

• Assessed the findings of the external auditors and their reports;

• Evaluated and approved the audit plan of the Internal Auditors;

• Reviewed and appraised the audit reports prepared by the Internal Auditors and the risk management and internal control system in place;

• Reviewed corporate governance statement, statement on risk management and internal control and audit committee report and recommended the same to the Board for inclusion in the Annual Report; and

• Appraised and evaluated the performance of external auditor and recommended their re-appointment to the Board of Directors of the Company.

INTERNAL AUDIT FUNCTION Owing to the changes to the membership of the Audit Committee, the Internal Audit Function has not been as effective as it could be. The present Board is in the process of outsourcing the Internal Audit Function to a firm of Public Accountants which will report to the Audit Committee.


Material Contracts

Save as disclosed below, there were no material contracts involving Directors’ and major shareholders’ interests, either still subsisting at the end of the year ended 31 December 2014 or, if not then subsisting, entered into since the end of the previous financial period:-

(a) A conditional Sale and Purchase Agreement dated 18 November 2013 between Ire-Tex Corporation Berhad (“ITCB”), Teh Eng Huat and Khoo Hun Sniah in relation to the acquisition by ITCB of the entire issued and paid-up share capital of Zoomic Automation (M) Sdn. Bhd. from Teh Eng Huat and Khoo Hun Sniah for a cash consideration of RM8,200,000 and the acquisition by ITCB of the entire issued and paid-up share capital of Zoomic Technology (M) Sdn. Bhd. from Teh Eng Huat and Khoo Hun Sniah for a cash consideration of RM16,400,000 (“SPA 1”).

(b) A Supplemental Sale and Purchase Agreement dated 7 February 2014 between ITCB, Teh Eng Huat and Khoo Hun Sniah to vary certain terms and conditions of the SPA 1.

(c) A Supplemental Sale and Purchase Agreement dated 23 April 2014 between ITCB, Teh Eng Huat and Khoo Hun Sniah to vary certain terms and conditions of the SPA 1.

(d) A further Supplemental Agreement to the Sale and Purchase Agreement dated 14 April 2015 between ITCB, Teh Eng Huat and Khoo Hun Sniah to vary certain terms and conditions of the SPA 1.

Material Contracts Relating to Loans The Company and its subsidiaries do not have any material contracts relating to loan involving the interest of its Directors and major shareholders.

Share Buy-Backs

During the financial year, there were no share buy-backs by the Company.

Option, Warrants or Convertible Securities

The Company’s the Company’s Employee Share Option Scheme (“ESOS”) had lapsed on 16 January 2014. Details of options granted, exercised and lapsed/forfeited pursuant to the ESOS up to 16 January 2014 are as follows :-

Number of Share Options

Grant date Expiry date Exercise

price (RM) Balance at01.01.2014

Granted and

Accepted Exercised Lapsed/

Forfeited Balance at16.01.2014

17.02.2004 16.01.2014 1.40 469,500 - (311,500) (158,000) -

24.08.2007 16.01.2014 1.00 764,000 - (471,000) (293,000) -

Details of ESOS granted to the Chief Executive and Directors during the period up to 16 January 2014 are as follows :-

Number of Options over ordinary Shares of RM1.00 each

Balance at 01.01.2014 Granted Exercised

Balance at 16.01.2014

Chief Executive Dato’ Dr. Yap Tatt Keat 309,000 - (309,000) -

See Toh Kean Yaw(Resigned on 24 October 2014) 166,500 - (166,500) -

OTHER INFORMATION


Option, Warrants or Convertible Securities (Cont'd)

During the financial year the Company had issued convertible securities as set out in the tables below :

5-Year 1% Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) of RM0.075 each

Balance as at 16.06.2014#

Total No. of ICULS converted to ordinary shares of RM0.40 each

during the financial year Balance as at 31.12.2014

470,014,000 (45,538,988) 424,475,012

Warrants

Balance as at 16.06.2014#Total No. of Warrants exercised

during the financial year Balance as at 31.12.2014

58,751,722 - 58,751,722

# As at the date of issuance

Depository Receipt Programme

The Company does not sponsor any depository receipt programme.

Imposition of Sanction / Penalties

There was no sanction and / or penalties imposed on the Company and its subsidiaries, directors or management by the relevant regulatory bodies during the financial year.

Profit forecast or profit guarantee

Save as disclosed below, there were no profit forecast given or profit guarantee received by the Company in respect of the financial year ended 31 December 2014 except as below:-

On 24 April 2014, the Company has acquired Zoomic Automation (M) Sdn. Bhd and Zoomic Technology (M) Sdn. Bhd (collectively referred to as Zoomic) which had resulted in the vendors of Zoomic providing the Company with 2 years Profit Guarantee. Specifically, the Profit After Tax for the financial years ended 31 December 2013 and 31 December 2014of Zoomic shall not be less than a total sum of RM 5,000,000.00

Utilisation of Proceeds raised from Corporate Proposal

A total sum of RM35,251,000 which was received from the rights issue arising issuance of Five (5)-Year 1% Irredeemable Convertible Unsecured Loan Stocks during the financial year has been utilized as follows :

Purpose

As per Abridged Prospectus

RM’000

Utilised as at 31 December 2014

RM’000

Working Capital requirement 17,751 17,751

Repayment of bank Borrowings 1,500 0

Part finance the construction costs for new business premises in Kulim, Kedah 9,000 9,000

Purchase of machineries and equipment 6,000 6,000

Expenses relating to the Corporate Exercise 1,000 1,000

Total 35,251 33,751

OTHER INFORMATION (CONT'D)



Variation in Results

There were material variation of 320% between the audited results for the financial year ended 31 December 2014 and the unaudited results for the quarter ended 31 December 2014 of the Group due to reclassification of Research & Development (“R&D”) from other receivable to cost of sales, reversal of profit guarantee to goodwill in other income, impairment of trade receivables, other receivables and goodwill, adjustment of R&D expenses and minority interest.

Recurrent Related Party Transactions

Set out below are the recurrent related party transactions of the Group for the financial year ended 31 December 2014 that were carried out in the normal course of business on an arm’s length basis:-

Nature of Transaction

Company in the Group involved

Interested Related Party

Interested Directors/ Major Shareholders and persons connected RM

Purchase of expanded polyurethane foam and protective packaging products from PBSB

ITMSBITJSBGHPSB

PBSB (1)

PBSB (1)

PBSB (1)

Dato’ Dr. Yap Tatt Keat (1) 1,667,856 875,133

27,593

Sale of packaging materials to PBSB

ITMSB PBSB (1) Dato’ Dr. Yap Tatt Keat (1) 18,349

Purchase of electronics components and standardparts by ZASB fromIEEMSB

ZASB IEEMSB (2) Teh Eng Huat andLim Liew Hong (2)

5,227

Purchase of precision parts, fabrication and assembly services by ZASB from MPTSB

ZASB MPTSB (3) Teh Eng Huat (3) 210,940

Purchase of CNC miling and auto lathe products and services by ZASB from ZTCL

ZASB ZTCL (4) Teh Eng Huat (4) 1,300

Sales of automated equipment, parts and machineries by ZASB to ZISB

ZASB ZISB (5) Teh Eng Huat, Khoo Hun Sniah, Teh Gaik Tiang, Lim Swee Hua, Loke Chong Leng, Ooi Shu Rhui and Tan Chee Keong (5)

2,445,790

Advance payments made by ZASB to ZISB

ZASB ZISB (5) Teh Eng Huat, Khoo Hun Sniah, Teh Gaik Tiang, Lim Swee Hua, Loke Chong Leng, Ooi Shu Rhui and Tan Chee Keong (5)

320,000

Sales of manufactured light-emitting diode (LED) tube and automation machinery by ZASB to FSP

ZASB FSP (6) Teh Eng Huat, Khoo Hun Sniah, Lim Swee Hua and Khaw Kheng Wooi (6)

2,561,441

Notes

(1) Dato’ Dr. Yap Tatt Keat is a Director of ITMSB, ITJSB, GHPSB and a Director and major shareholder of ITCB. He is also a shareholder who holds 4.76% direct interest in PBSB. The principal activity of PBSB is manufacturing of polyurethane.

(2) Teh Eng Huat is a Director of ZASB and he was a Director of ITCB until 25 February 2015 and also shareholder of ITCB. Lim Liew Hong is a Director and also a shareholder who holds 57.14% direct interest in IEEMSB. Lim Liew Hong is a person connected to Teh Eng Huat as she is the spouse of Teh Eng Huat. The principal activity of IEEMSB is trading of electronic components.



Recurrent Related Party Transactions (Cont'd)

Notes (cont'd)

(3) Teh Eng Huat is a Director of ZASB. He was a Director of ITCB until 25 February 2015 and is also shareholder of ITCB. He is also a Director of MPTSB. MPTSB is a wholly owned subsidiary of MQTB, a company which is listed on the ACE Market of Bursa Malaysia. Teh Eng Huat is a Director of MQTB and holds 5.91% direct interest in MQTB. The principal activity of MPTSB is design, development and manufacture of advanced automation.

(4) Teh Eng Huat is a Director of ZASB. He was a Director of ITCB until 25 February 2015 and is also shareholder of ITCB. He is also a Director and major shareholder of ZTCL who holds 90% direct interest in ZTCL. The principal activity of ZTCL is precision tooling.

(5) Teh Eng Huat and Khoo Hun Sniah are both Directors of ZASB and are also shareholders of ITCB. Teh Eng Huat was also a Director of ITCB until 25 February 2015. Teh Gaik Tiang is an employee of ZASB holding the position Material Manager and she is also a shareholder of ZISB who holds 70% direct interest in ZISB. Teh Gaik Tiang is a person connected to Teh Eng Huat and Khoo Hun Sniah as she is the sister of Teh Eng Huat and the spouse of Khoo Hun Sniah. Lim Swee Hua, Loke Chong Leng, Ooi Shu Rhui and Tan Chee Keong are all shareholders of ZISB who holds 5%, 4%, 4% and 4% direct interest in ZISB respectively and they are also employees of ZASB. The principal activity of ZISB is providing assembly services for the electrical and electronic industries.

(6) Teh Eng Huat and Khoo Hun Sniah are both Directors of ZASB and are also shareholders of ITCB. Teh Eng Huat was also a Director of ITCB until 25 February 2015. Lim Swee Hua is a shareholder of FSP who holds 3% direct interest in FSP and he is also an employee of ZASB. Khaw Kheng Wooi is a Director and shareholder of FSP who holds 37% direct interest in FSP and he is also an employee of ZASB. FSP is principally engaged as assemblers, maintainers and dealers in electronics components.

Definitions

FSP : FSP Business Link Sdn. Bhd.GHPSB : GH Packaging Sdn. Bhd.IEEMSB : IE Electronics (M) Sdn. Bhd.ITCB : Ire-Tex Corporation Berhad ITJSB : Ire-Tex (Johor) Sdn. Bhd. ITMSB : Ire-Tex (Malaysia) Sdn. Bhd.MPTSB : Mircolead Precision Technology Sdn. Bhd.MQTB : MQ Technology Berhad PBSB : Phoenix Base Sdn. Bhd. ZASB : Zoomic Automation (M) Sdn. Bhd.ZISB : Zestek Integration Sdn. Bhd.ZTCL : Zoomic Technology (Thailand) Co. Ltd


28 -33 Directors’ Report

34 Directors’ Statement

34 Statutory Declaration

35 - 36 Independent Auditors’ Report To The Members

37 Statements of Financial Position

38 Statements Of Profit Or Loss And Other Comprehensive Income

39 - 41 Statements of Changes In Equity

42 - 43 Statements of Cash Flows

44 - 110 Notes To The Financial Statements

111 Supplementary Information

FINANCIAL STATEMENTS


DIRECTORS’ REPORTFOR THE YEAR ENDED 31 DECEMBER 2014

The Directors hereby present their report together with the audited financial statements of the Group and the Company for the financial year ended 31 December 2014.

Principal Activities

The principal activities of the Company consist of the provision of management services and investment holding. The principal activities of its subsidiary companies are disclosed in Note 7 to the financial statements.

There have been no significant changes in the nature of these activities during the financial year.

Financial Results

GROUPRM

COMPANYRM

Net loss for the financial year (6,401,627) (4,724,401)

Attributable to:Owners of the Parent (6,154,546) (4,724,401)Non-controlling interests (247,081) -

(6,401,627) (4,724,401)

Reserves and Provisions

All material transfers to or from reserves and provisions during the financial year are as disclosed in Note 18 to the financial statements.

Dividends

There were no dividends proposed, declared or paid by the Company since the end of the previous financial year. The Board of Directors does not recommend any dividend in respect of the current financial year.

Issue of Shares and Debentures

During the financial year, the Company increased its authorised ordinary share capital from RM50,000,000 to RM500,000,000 through the creation of 1,125,000,000 ordinary shares of RM0.40 each.

During the financial year, the Company issued:

(a) 14,303,938 new ordinary shares of RM0.40 each at RM5,721,575 for a total cash consideration of RM5,166,939 for working capital purposes arising from conversion of 1% 5-Year Irredeemable Convertible Unsecured Loan Stocks.

(b) 782,500 new ordinary shares of RM1.00 each for cash arising from the exercise of employees’ share options at a weighted average exercise price of RM1.16 per ordinary share.

(c) the issued and paid-up share capital of the Company had been subdivided into RM47,001,400 from 47,001,400 ordinary shares of RM1.00 each to 117,503,500 ordinary shares of RM0.40 each. These subdivided shares were listed on the Main Market of Bursa Securities on 14 April 2014.

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


DIRECTORS’ REPORTFOR THE YEAR ENDED 31 DECEMBER 2014 (CONT'D)

Options Granted Over Unissued Shares

No options were granted to any person to take up unissued shares of the Company during the financial year apart from the issue of options pursuant to the Employees Shares Option Scheme (“ESOS”).

Pursuant to the ESOS which become effective on 17 February 2004, options to subscribe for ordinary shares of RM1.00 each were granted to eligible employees and executive directors of the Group. The Company has extended the existing ESOS for another five years until 16 January 2014 in accordance with terms of the ESOS By-Laws.

The salient features and other terms of the ESOS are disclosed in the Note 28 to the financial statements.

As at 31 December 2014, the options offered to take up unissued ordinary shares of RM1.00 each and the exercise prices are as follows:

Number of share options Grant Expiry Exercise At Lapsed/ Atdate date price 1.1.2014 Exercised Forfeited 31.12.2014

RM

17.2.2004 16.1.2014 1.40 469,500 (311,500) (158,000) -24.8.2007 16.1.2014 1.00 764,000 (471,000) (293,000) -

Rights Issue of Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) and Warrants

On 16 June 2014, the Company issued 470,014,000 units of 1% 5-year Rights Issues of ICULS of RM0.075 nominal value on the basis of four (4) Rights ICULS for every one (1) ordinary shares of RM0.40 each together with 58,751,722 free detachable warrants on the basis of one (1) warrants for every eight (8) Rights ICULS subscribed for. The details of the ICULS and warrant are disclosed in Notes 18 and 19 of the financial statements respectively.

Directors

The Directors in office since the date of the last report are:

Dato’ Dr. Yap Tatt Keat

Na Chiang Seng

Soo Tee Wei (appointed on 9.1.2014)

Collin Goonting A/L O.S.Goonting (appointed on 31.10.2014)

Abdul Rahim Bin Abdul Hamid (appointed on 4.11.2014)

Dr. Lai Chee Chuen (appointed on 4.11.2014)

See Toh Kean Yaw (resigned on 24.10.2014)

Fazrin Azwar Bin Dato’ Md. Nor (resigned on 27.10.2014)

YM Raja Said Abidin Bin Raja Shahrome (resigned on 3.11.2014)

Teh Eng Aun (resigned on 3.11.2014)

Teh Eng Huat (resigned on 25.2.2015)

Tey Por Yee (appointed on 30.5.2014 and resigned on 25.2.2015)



Directors’ Interests

The interests and deemed interests in the shares and options over shares of the Company and of its related corporations (other than wholly-owned subsidiary companies) of those who were Directors at financial year end (including their spouses or children) according to the Register of Directors’ Shareholdings are as follows:

Number of ordinary shares of RM1.00 each

AtBalance

prior1.1.2014 Bought Sold to share split

Interest in the CompanyDirect InterestsYM Raja Said Abidin Bin Raja Shahrome * 100,000 - (20,000) 80,000Dato’ Dr. Yap Tatt Keat 5,505,354 309,000 - 5,814,354See Toh Kean Yaw * 43,500 166,500 - 210,000Teh Eng Huat 1,930,500 - - 1,930,500Na Chiang Seng 1,714,285 - - 1,714,285Fazrin Azwar Bin Dato’Md. Nor * 10,100 - - 10,100

Indirect InterestsSee Toh Kean Yaw #* 150,000 - - 150,000Teh Eng Huat # 643,300 - - 643,300

Number of ordinary shares of RM0.40 eachBalance

after Atshare split Bought Sold 31.12.2014

Interest in the CompanyDirect InterestsYM Raja Said Abidin Bin Raja Shahrome * 200,000 - - -Dato’ Dr. Yap Tatt Keat 14,535,887 - - 14,535,887See Toh Kean Yaw * 525,000 100,000 (189,300) -Teh Eng Huat 4,826,250 1,034,250 - 5,860,500Na Chiang Seng 4,285,712 - (71,000) 4,214,712Fazrin Azwar Bin Dato’ Md. Nor * 25,250 - - -Tey Por Yee ^ 32,517,500 - - 32,517,500

Indirect InterestsSee Toh Kean Yaw #* 375,000 - (375,000) -Teh Eng Huat # 1,608,250 - (733,250) 875,000

# deemed interest by virtue of shares held by spouse.^ at date of appointment. * at date of resignation.

By virtue of his interest in the shares of the Company, Tey Por Yee is also deemed interested in the shares of all the subsidiary companies during the financial year to the extent that the Company has an interest under Section 6A of the Companies Act, 1965 in Malaysia.

Save as disclosed above, none of the other Directors in office at the end of the financial year had any interest in shares in the Company or its related corporations during the financial year.



Directors’ Interests (Cont’d)

Details of ESOS granted to executive directors are as follow:

Number of share options over ordinary shares of RM1.00 each

At Lapsed/ At1.1.2014 Exercised Forfeited 31.12.2014

Interest in the CompanyDato’ Dr. Yap Tatt Keat 309,000 (309,000) - -See Toh Kean Yaw 166,500 (166,500) - -

Number of 1% ICULS 2014/2019 of RM0.075 nominal value each

At At16.6.2014 Bought Sold 31.12.2014

Interest in the CompanyDirect InterestsSee Toh Kean Yaw * 2,457,500 - (1,057,500) 1,400,000Na Chiang Seng 17,142,848 - (17,142,848) -Teh Eng Huat 19,305,000 - (19,305,000) -Tey Por Yee 130,070,000 - (130,070,000) -

Indirect InterestsSee Toh Kean Yaw #* 1,500,000 - (1,500,000) -Teh Eng Huat # 6,433,000 - (6,433,000) -

Number of warrantsAt At

16.6.2014 Bought Sold 31.12.2014

Interest in the CompanyDirect InterestsSee Toh Kean Yaw * 307,187 - (283,100) 24,087Na Chiang Seng 2,142,856 - (2,142,856) -Teh Eng Huat 2,413,125 - (2,413,125) -Tey Por Yee 16,258,750 - (16,250,000) 8,750

Indirect InterestsSee Toh Kean Yaw #* 187,500 - (187,500) -Teh Eng Huat # 804,125 - (804,125) -

# deemed interest by virtue of shares held by spouse. * at date of resignation.

Directors’ Benefits

Since the end of the previous financial year, no Director of the Company has received or become entitled to receive a benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest, except as disclosed in Note 33 to the financial statements.



Directors’ Benefits (Cont’d)

Neither during nor at the end of the financial year, was the Company a party to any arrangement whose object was 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, other than those arising from the share options granted under the ESOS, ICULS and warrant.

Other Statutory Information

(a) Before the statements of financial position and statements of profit or loss and other comprehensive income of the Group and the Company were made out, the Directors took reasonable steps:

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

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

(b) At the date of this report, the Directors are not aware of any circumstances:

(i) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and the Company inadequate to any substantial extent; or

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

(iii) not otherwise dealt with in this report or the financial statements of the Group and the Company which would render any amount stated in the financial statements misleading; or

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

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

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

(ii) any contingent liability in respect of the Group or the Company which has arisen since the end of the financial year other than those arising in the normal course of business of the Group and the Company.

(d) In the opinion of the Directors:

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

(ii) the results of the operations of the Group and the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature, except as disclosed in the notes to the financial statements; and

(iii) except for those disclosed in Note 38 to the financial statements, the financial performance of the Group and the Company for the financial year ended 31 December 2014 have not been substantially affected by any item, transaction or event of a material and unusual nature, occurred in the interval between the end of the financial year and the date of this report.

Significant Events during the Financial Year

Details of the significant events are disclosed in Note 37 to the financial statements.



Subsequent Event

Details of the significant events are disclosed in Note 38 to the financial statements.

Auditors

The Auditors, Messrs UHY, have expressed their willingness to continue in office.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors dated 30 April 2015.

DATO’ DR. YAP TATT KEAT DR. LAI CHEE CHUEN

PENANG


We, the undersigned, being two of the Directors of the Company, do hereby state that, in the opinion of the Directors, the financial statements set out on pages 37 to 110 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and the Company as at 31 December 2014 and of their financial performance and cash flows for the financial year then ended.

The supplementary information set out in Note 42 to the financial statements on page 111 have been compiled in accordance with Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures 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 on behalf of the Board of Directors in accordance with a resolution of the Directors dated 30 April 2015.

DATO’ DR. YAP TATT KEAT DR. LAI CHEE CHUEN

PENANG

STATUTORY DECLARATIONPursuant to Section 169(16) of the Companies Act, 1965

I, TAN SIEW HOOI, being the officer primarily responsible for the financial management of Ire-Tex Corporation Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 37 to 110 are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed at Georgetown in the State of Penang on 30 April 2015

)))

TAN SIEW HOOI

Before me,

Commissioner for Oaths

STATEMENT BY DIRECTORSPursuant to Section 169(15) of the Companies Act, 1965


INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF IRE-TEX CORPORATION BERHAD

Report on the Financial Statements

We have audited the financial statements of Ire-Tex Corporation Berhad, which comprise the statements of financial position as at 31 December 2014 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 a summary of significant accounting policies and other explanatory information, as set out on pages 37 to 110.

Directors’ Responsibility for the Financial Statements

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

Auditors’ Responsibility

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

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

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

Basis for Qualified Opinion

During the financial year, we noted the Company’s wholly owned subsidiary company, Zoomic Automation (M) Sdn. Bhd. (“ZASB”) had sold goods to two related parties amounting to approximately RM5.0 million. The trade receivables arising from these sales amounting to RM5.0 million and advances of RM0.8 million were subsequently impaired by the management as at financial year end. Due to insufficient appropriate audit evidence, we are unable to satisfy ourselves as to the validity and existence of these sales and whether there were other consequential adjustments to be made to the accompanying financial statements including cost of sales and gross profit.

Qualified Opinion

In our opinion, except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph, the financial statements give a true and fair view of the financial position of the Group and the Company as at 31 December 2014 and of their financial performance and 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, 1965 in Malaysia.

Emphasis of Matter

Without qualifying our opinion, we draw attention to Note 12 to the financial statements on the following matters:

1. During the financial year, ZASB entered into an agreement with a supplier for the purchase of machinery amounting to RM16.5 million. Included in other receivables as at 31 December 2014 of the Group is an amount of RM11.5 million which represents payment made to the supplier. Subsequent to the financial year end, the agreement was terminated due to unsatisfied performance obligation of the supplier.

Subsequently, the Group entered into an agreement with a separate supplier to revamp and upgrade the existing machines amounting to RM16.0 million. The Group also entered into a tripartite agreement to assign the debt of RM10.7 million owing from the initial supplier to the new supplier. The debt of RM10.7 million is derived from RM11.5 million less a cancellation penalty of RM0.8 million. As at the date of this report, the new supplier has yet to fulfil its performance obligations under the agreement.


INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF IRE-TEX CORPORATION BERHAD (CONT'D)

Emphasis of Matter (Cont’d)

2. During the financial year, the Company entered into an agreement with a supplier for the implementation of a Lean Manufacturing Program amounted to RM2.0 million which would improve the production efficiency of the Group. No specified timeline for delivery of the project deliverables was stated in the agreement. Included in other receivables as at 31 December 2014 of the Group and the Company is an amount of RM1.0 million which represents advance payment made to the supplier. As at the date of this report, the supplier has yet to complete its performance obligations under the agreement.

After considering all facts and circumstances, the Directors of the Group are confident that the performance obligations with these suppliers shall be fulfilled and no allowance of impairment loss is required as of the date of this report. However, we would like to highlight that the recoverability of such significant amounts would depend on satisfaction of performance obligations by the suppliers.

Report on Other Legal and Regulatory Requirements

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

(a) In our opinion, except for matters described in the Basis for Qualified Opinion above and ZASB, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiary companies of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the financial statements and the auditors’ reports of all the subsidiary companies of which we have not acted as auditors, which are indicated in Note 7 to the financial statements.

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

(d) Except for ZASB, the audit reports on the financial statements of the subsidiary companies did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

Other Reporting Responsibilities

The supplementary information set out in Note 42 on page 111 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 Disclosures 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

The financial statements of the Group and the Company for the financial year ended 31 December 2013 were audited by another auditor who expressed an unqualified opinion on those statements on 25 April 2014.

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

UHYFirm Number: AF 1411Chartered Accountants

LOH CHYE TEIKApproved Number: 1652/08/16(J)Chartered Accountant

PENANG30 April 2015


STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2014

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

GROUP COMPANY

NOTE2014

RM2013

RM2014

RM2013

RM

ASSETSNon-current assetsProperty, plant and equipment 4 44,744,323 18,302,051 131,245 14,052 Investment properties 5 27,317,830 5,317,830 - - Goodwill on consolidation 6 1,531,947 - - - Investment in subsidiary companies 7 - - 45,571,830 20,861,677 Other investments 8 549,243 2,029,023 549,243 549,243 Deferred tax assets 9 294,537 229,000 294,537 -

74,437,880 25,877,904 46,546,855 21,424,972

Current assetsInventories 10 11,230,207 6,649,311 - - Trade receivables 11 32,512,707 22,795,815 - - Other receivables 12 19,127,415 7,801,604 3,504,706 5,203,806 Amount due from subsidiary companies 13 - - 26,035,373 11,301,651 Tax recoverable 629,262 460,000 21,064 40,000 Fixed deposits with licensed banks 14 4,424,723 4,826,211 - - Cash and bank balances 15 11,608,956 12,477,457 2,042,340 4,243,022

79,533,270 55,010,398 31,603,483 20,788,479 Non-current assets held for sale 16 - 12,273,702 - -

79,533,270 67,284,100 31,603,483 20,788,479 Total assets 153,971,150 93,162,004 78,150,338 42,213,451

EQUITYShare capital 17 52,722,975 46,218,900 52,722,975 46,218,900 Reserves 18 30,658,871 4,903,501 22,665,326 (4,800,921)Equity attributable to owners of the parent 83,381,846 51,122,401 75,388,301 41,417,979 Non-controlling interests 926 31,262 - - Total equity 83,382,772 51,153,663 75,388,301 41,417,979

LIABILITIESNon-current liabilitiesLoans and borrowings 19 16,804,784 7,204,928 1,227,237 - Other payables 20 504,979 - - - Deferred tax liabilities 9 1,029,762 431,000 - -

18,339,525 7,635,928 1,227,237 -

Current liabilitiesLoans and borrowings 19 27,501,274 20,553,649 - - Trade payables 21 16,825,999 7,252,202 - - Other payables 20 7,817,580 6,308,337 791,250 470,614 Amount due to subsidiary companies 13 - - 743,550 324,858 Derivative financial liabilities 22 - 202,225 - - Provision for taxation 104,000 56,000 - -

52,248,853 34,372,413 1,534,800 795,472 Total liabilities 70,588,378 42,008,341 2,762,037 795,472

Total equity and liabilities 153,971,150 93,162,004 78,150,338 42,213,451


STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014


GROUP COMPANY

NOTE2014

RM2013

RM2014

RM2013

RM

Revenue 23 108,158,051 115,440,082 1,803,500 2,202,000

Cost of sales (94,586,488) (95,417,177) - -

Gross profit 13,571,563 20,022,905 1,803,500 2,202,000

Other income 13,087,729 2,214,867 69,141 155,993

Administrative expenses (23,648,468) (10,721,119) (6,444,573) (2,279,259)

Loss on disposal of investment in

subsidiary companies - (682,922) - (319,738)

Distribution costs (7,013,617) (7,131,587) - -

(Loss)/Profit from operation (4,002,793) 3,702,144 (4,571,932) (241,004)

Finance costs 24 (1,888,480) (1,412,945) (49,828) -

(Loss)/Profit before tax 25 (5,891,273) 2,289,199 (4,621,760) (241,004)

Taxation 26 (510,354) (426,173) (102,641) (1,801)

(Loss)/Profit for the financial

year, representing total

comprehensive income/(loss)

for the financial year (6,401,627) 1,863,026 (4,724,401) (242,805)

Total comprehensive

(loss)/income attributable to:

Owners of the parent (6,154,546) 1,022,693 (4,724,401) (242,805)

Non-controlling interests (247,081) 840,333 - -

(6,401,627) 1,863,026 (4,724,401) (242,805)

Earnings per share

Basic (loss)/earnings

per share (sen) 27(a) (5.04) 2.25

Diluted earnings per share (sen) 27(b) - 2.24


STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

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STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014 (CONT'D)

Attributable to owners of the parent

Non-distributable

Group Note

Share capital

RM

Share premium

RM

Employee share

option reserves

RM

Accumulated losses

RM Total

RM

Non- controlling

interests RM

Total equity

RM

At 1 January 2013 45,011,000 4,443,101 679,721 (667,154) 49,466,668 2,483,403 51,950,071

Profit for the financial year, representing total comprehensive income for the financial year - - - 1,022,693 1,022,693 840,333 1,863,026

Transactions with owners:

Shares issued under ESOS 17, 18 1,207,900 109,560 - - 1,317,460 - 1,317,460

Exercise of employee share options 18 - 369,104 (369,104) - - - -

Lapsed of ESOS 18 - - (8,694) 8,694 - - -

Dividends to owners of the Company 29 - - - (684,420) (684,420) - (684,420)

Disposal of equity interests

in subsidiaries - - - - - (3,292,474) (3,292,474)

Total transactions with owners 1,207,900 478,664 (377,798) (675,726) 633,040 (3,292,474) (2,659,434)

At 31 December 2013 46,218,900 4,921,765 301,923 (320,187) 51,122,401 31,262 51,153,663

Attributable to owners of the parent

Non-distributable

Company Note

Share capital

RM

Share premium

RM

Equity components

of ICULS RM

Employee share

option reserves

RM

Warrant reserve

RM

Accumulated losses

RM

Total equity

RM

At 1 January 2014 46,218,900 4,921,765 - 301,923 - (10,024,609) 41,417,979

Loss for the financial year, representing total comprehensive loss for the financial year - - - - - (4,724,401) (4,724,401)

Transactions with owners:

Exercise of employee share options 17, 18 782,500 124,600 - - - - 907,100

Rights issue of ICULS 17, 18 5,721,575 1,930,130 - - - - 7,651,705

Lapsed of ESOS 18 - - - (301,923) - 301,923 -

Issuance of ICULS 19 - - 21,802,809 - - - 21,802,809

Issuance of warrants 18 - - - - 9,959,897 - 9,959,897

Share issue expenses (1,626,788) - - - - (1,626,788)

Total transactions with owners 6,504,075 427,942 21,802,809 (301,923) 9,959,897 301,923 38,694,723

At 31 December 2014 52,722,975 5,349,707 21,802,809 - 9,959,897 (14,447,087) 75,388,301


STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014 (CONT'D)


Attributable to owners of the parentNon-distributable

Company Note

Share capital

RM

Share premium

RM

Employee share

option reserves

RM

Accumulated losses

RM Total

RM

At 1 January 2013 45,011,000 4,443,101 679,721 (9,106,078) 41,027,744

Loss for the financial year, representing total comprehensive loss for the financial year - - - (242,805) (242,805)

Transactions with owners:Shares issued under ESOS 17, 18 1,207,900 109,560 - - 1,317,460 Exercise of employee share options 18 - 369,104 (369,104) - - Lapsed of ESOS 18 - - (8,694) 8,694 - Dividends to owners of the Company 29 - - - (684,420) (684,420)Total transactions with owners 1,207,900 478,664 (377,798) (675,726) 633,040

At 31 December 2013 46,218,900 4,921,765 301,923 (10,024,609) 41,417,979


STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

GROUP COMPANY

NOTE2014

RM2013

RM2014

RM2013

RM

Cash flows from operating activities(Loss)/Profit before tax (5,891,273) 2,289,199 (4,621,760) (241,004)Adjustment for: Bad debts written off 269,440 56,033 - - Deposit forfeited - 50,000 - - Depreciation of property, plant and equipment 3,200,887 4,377,405 41,736 34,614 Fair value (gain)/loss of: - Derivative financial instruments (202,225) 202,225 - - - Investment properties - (256,806) - - (Gain)/Loss on disposal of: - Investment in subsidiary companies - 682,922 - 319,738 - Property, plant and equipment (11,270,898) 19,145 (14,999) - - Other investments (128,376) - - - Impairment loss on: - Inventories 693,607 - - - - Investment in subsidiary companies - - 690,000 - - Goodwill 124,687 - - - - Other investments - 295,000 - 295,000 - Trade receivables 5,799,404 - - - - Other receivables 825,000 - - - Finance costs 1,888,480 1,412,945 49,828 - Finance income (161,047) (154,272) (52,732) (130,987) Property, plant and equipment written off 122,332 665 - - Unrealised gain on foreign exchange (80,389) (171,904) - - Operating (loss)/profit before working capital changes (4,810,371) 8,802,557 (3,907,927) 277,361 Changes in working capital: Directors (724,732) - - - Inventories (3,083,548) 4,092,969 - - Receivables (17,720,301) (6,197,012) 11,904,278 (5,137,353) Payables (4,867,805) 6,721,008 574,726 (87,083)Cash (used in)/generated from operations (31,206,757) 13,419,522 8,571,077 (4,947,075)Interest paid (1,888,480) (1,412,945) (49,828) - Tax (paid)/refund (911,532) (802,764) (16,136) (41,801)Net cash (used in)/generated from operating activities (34,006,769) 11,203,813 8,505,113 (4,988,876)

Cash flows from investing activitiesAcquisition of property, plant and equipment 4(b) (24,467,107) (13,001,262) (159,000) (4,182)Acquisition of subsidiary companies 7(a) (22,207,692) - - - Acquisition of interest of non-controlling interest 7(c) (80,000) - - - Interest received 79,974 76,661 52,732 130,987 Investment in subsidiary companies - - (25,400,153) (1,900,000)Net cash inflow from disposal of subsidiary companies 7(d) - 1,102,829 - - Proceeds from disposal of other investments 1,608,156 - - - Proceeds from disposal of property, plant and equipment 24,192,070 20,473 15,070 - Proceeds from disposal of subsidiary companies - - - 2,713,439 Withdrawal of pledged fixed deposits 100,000 - - - Net cash (used in)/generated from investing activities (20,774,599) (11,801,299) (25,491,351) 940,244


STATEMENTS OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014 (CONT'D)


GROUP COMPANY

NOTE2014

RM2013

RM2014

RM2013

RM

Cash flows from financing activitiesDividends paid - (684,420) - (684,420)Proceeds from exercise of employee share options 907,100 1,317,460 907,100 1,317,460 Proceeds from finance lease liabilities - 567,000 - - Proceed from bankers acceptance 3,432,000 5,003,000 - - Payment of finance lease liabilities (1,141,160) (819,248) - - Repayment of trust receipts - (98,467) - - (Advance to)/Repayment from subsidiary companies

- - (24,912,745) 7,172,785

Proceed from term loans 8,711,155 5,200,000 - - Repayment of term loans - (460,372) - - Share issuance expenses (1,626,788) - (1,626,788) - Issuance of ICULS 35,251,050 - 35,251,050 - Proceeds from conversion of ICULS 5,166,939 - 5,166,939 - Net cash generated from operating activities 50,700,296 10,024,953 14,785,556 7,805,825

Net (decrease)/increase in cash and cash equivalents (4,081,072) 9,427,467 (2,200,682) 3,757,193 Cash and cash equivalents at the beginning of the financial year 14,460,620 4,945,258 4,243,022 485,829 Effect of exchange translation differences on cash and cash equivalents 16,013 87,895 - - Cash and cash equivalents at the end of the financial year 10,395,561 14,460,620 2,042,340 4,243,022

Cash and cash equivalents at the end of the financial year comprises:Cash and bank balances 15 11,608,956 12,477,457 2,042,340 4,243,022 Fixed deposits with licensed banks 14 4,424,723 4,826,211 - - Bank overdrafts 19 (2,690,318) (233,931) - -

13,343,361 17,069,737 2,042,340 4,243,022 Less: Fixed deposits pledged with licensed banks 14 (2,947,800) (2,609,117) - -

10,395,561 14,460,620 2,042,340 4,243,022


NOTES TO THE FINANCIAL STATEMENTS31 DECEMBER 2014

1. Corporate Information

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

The principal place of business of the Company is located at Plot 49 & 63, Lorong Perusahaan 2B, Kulim Industrial Estate, 09000 Kulim, Kedah Darul Aman.

The registered office of the Company is located at 35, 1st Floor, Jalan Kelisa Emas 1, Taman Kelisa Emas, 13700 Seberang Jaya, Penang.

The principal activities of the Company consist of the provision of management services and investment holding. The principal activities of its subsidiary companies are disclosed in Note 7 to the financial statements. There have been no significant changes in the nature of these activities of the Company and its subsidiary companies during the financial year.

2. Basis of Preparation

(a) Statement of Compliance

The financial statements of the Group and the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

The financial statements of the Group and the Company have been prepared under the historical cost convention, unless otherwise indicated in the significant accounting policies below.

Adoption of new and amended standards and IC Interpretation

During the financial year, the Group and the Company have adopted the following amendments to MFRSs and IC Interpretation issued by the Malaysian Accounting Standards Board (“MASB”) that are mandatory for current financial year:

Amendments to MFRS 10, MFRS 12 and MFRS 127

Investment Entities

Amendments to MFRS 132 Offsetting Financial Assets and Financial LiabilitiesAmendments to MFRS 136 Recoverable Amount Disclosures for Non-Financial AssetsAmendments to MFRS 139 Novation of Derivatives and Continuation of Hedge AccountingIC Interpretation 21 Levies

Adoption of above amendments to MFRSs and IC Interpretation did not have any significant impact on the financial statements of the Group and the Company.

Standards issued but not yet effective

The Group and the Company have not applied the following new MFRSs and amendments to MFRSs that have been issued by the MASB but are not yet effective for the Group and the Company:

Effective dates for financial periods

beginning on or afterAmendments to MFRS 119 Defined Benefits Plans: Employee Contributions 1 July 2014Annual Improvements to MFRSs 2010 – 2012 Cycle 1 July 2014Annual Improvements to MFRSs 2011 – 2013 Cycle 1 July 2014MFRS 14 Regulatory Deferral Accounts 1 January 2016Amendments to MFRS 11 Accounting for Acquisitions of Interests in Joint

Operations1 January 2016

Amendments to MFRS 116 and MFRS 138

Clarification of Acceptable Methods of Depreciation and Amortisation

1 January 2016


NOTES TO THE FINANCIAL STATEMENTS31 DECEMBER 2014 (CONT'D)

2. Basis of Preparation (Cont’d)

(a) Statement of Compliance (Cont’d)

Standards issued but not yet effective (Cont’d)

Effective dates for financial periods

beginning on or afterAmendments to MFRS 116 and

MFRS 141Agriculture: Bearer Plants 1 January 2016

Amendments to MFRS 127 Equity Method in Separate Financial Statements 1 January 2016Amendments to MFRS 10 and

MFRS 128Sale or Contribution of Assets between an Investor

and its Associate or Joint Venture1 January 2016

Annual Improvements to MFRSs 2012 – 2014 Cycle 1 January 2016Amendments to MFRS 10, MFRS

12 and MFRS 128Investment Entities: Applying the Consolidation

Exception1 January 2016

MFRS 15 Revenue from Contracts with Customers 1 January 2017MFRS 9 Financial Instruments (IFRS 9 issued by IASB in July

2014)1 January 2018

The Group and the Company intend to adopt the MFRSs when they become effective.

The initial applications of the abovementioned MFRSs are not expected to have any significant impacts on the financial statements of the Group and the Company except as mentioned below:

MFRS 9 Financial Instruments (IFRS 9 issued by IASB in July 2014)

MFRS 9 (IFRS 9 issued by IASB in July 2014) replaces earlier versions of MFRS 9 and introduces a package of improvements which includes a classification and measurement model, a single forward looking ‘expected loss’ impairment model and a substantially reformed approach to hedge accounting. MFRS 9 when effective will replace MFRS 139 Financial Instruments: Recognition and Measurement.

MFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income and fair value through profit or loss. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in other comprehensive income not recycling. There is now a new expected credit losses model that replaces the incurred loss impairment model used in MFRS 139. For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. MFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the ‘hedged ratio’ to be the same as the one management actually use for risk management purposes. Contemporaneous documentation is still required but is different to that currently prepared under MFRS 139.

The adoption of MFRS 9 will result in a change in accounting policy. The Group is currently examining the financial impact of adopting MFRS 9.

MFRS 15 Revenue from Contracts with Customers

MFRS 15 deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The Standard replaces MFRS 118 Revenue, MFRS 111 Construction Contracts and related IC Interpretations. The Group is in the process of assessing the impact of this Standard.



(b) Functional and presentation currency

The financial statements are presented in Ringgit Malaysia (“RM”) which is the Group’s and the Company’s functional currency and all values have been rounded to the nearest RM except when otherwise stated.

(c) Significant accounting judgements, estimates and assumptions

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

Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next reporting period are set out below:

Useful lives of property, plant and equipment

The Group regularly reviews the estimated useful lives of property, plant and equipment based on factors such as business plan and strategies, expected level of usage and future technological developments. Future results of operations could be materially affected by changes in these estimates brought about by changes in the factors mentioned above. A reduction in the estimated useful lives of property, plant and equipment would increase the recorded depreciation and decrease the value of property, plant and equipment.

Revaluation of investment properties

The Group carries its investment properties at fair value, with changes in fair value being recognised in profit or loss. Fair value of investment properties was estimated by the directors based on internal appraisal of market values of comparable properties.

The fair value of the properties is provided in Note 5.

Impairment of goodwill on consolidation

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value-in-use of the cash-generating units to which the goodwill is allocated. Estimating the value-in-use amount requires the Group to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The impairment assessment of goodwill is disclosed in Note 6.

Impairment of investment in subsidiary companies

The Company has recognised impairment loss in respect of its investment in subsidiary companies. The Company carried out the impairment test based on the estimation of the higher of the value-in-use or the fair value less cost to sell of the cash-generating units to which the investment in subsidiary companies belong to. Estimating the recoverable amount requires the Company to make an estimate of the expected future cash flows from the cash-generating units and also to determine a suitable discount rate in order to calculate the present value of those cash flows.

The carrying amount at the reporting date for investment in subsidiary companies is disclosed in Note 7.

Fair value measurement of contingent consideration asset

Contingent consideration asset, resulting from business combination, is valued at fair value at the acquisition date as part of the business combination. It is subsequently remeasured to fair value at each reporting date. The determination of the fair value is based on discounted cash flows. The key assumptions taken into consideration include the probability of meeting each performance target and the discounted factor. The carrying amount of contingent consideration asset is disclosed in Note 7.




(c) Significant accounting judgements, estimates and assumptions (Cont’d)

Key sources of estimation uncertainty (Cont’d)

Deferred tax assets

Deferred tax assets are recognised for all unused tax losses, unabsorbed capital allowances and other deductible temporary differences to the extent that it is probable that taxable profit will be available against which the unused tax losses, unabsorbed capital allowances and other deductible temporary differences can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. Details of deferred tax assets are disclosed in Note 9.

Inventories valuation

Inventories are measured at the lower of cost and net realisable value. The Group estimates the net realisable value of inventories based on an assessment of expected sales prices. Demand levels and pricing competition could change from time to time. If such factors result in an adverse effect on the Group’s products, the Group might be required to reduce the value of its inventories. Details of inventories are disclosed in Note 10.

Impairment of loans and receivables

The Group assesses at end of each reporting period whether there is any objective evidence that a receivable is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the receivable and default or significant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amounts at the reporting date for loans and receivables are disclosed in Notes 11, 12 and 13 respectively.

Employee share options

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also require determining the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. Details of assumptions made in respect of the share-based payment scheme are disclosed in Note 28.

Income taxes

Judgment is involved in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business.

The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. Details of income tax expense are disclosed in Note 26.

Contingent liabilities

Determination of the treatment of contingent liabilities is based on management’s view of the expected outcome of the contingencies after consulting legal counsel for litigation cases and internal and external experts to the Group, for matters in the ordinary course of business. Details of contingent liabilities are disclosed in Note 32.




(c) Significant accounting judgements, estimates and assumptions (Cont’d)

Key sources of estimation uncertainty (Cont’d)

Fair value of financial instruments

Management uses valuation techniques in measuring the fair value of financial instruments where active market quotes are not available. Details of the assumptions used are given in the Note 35(c) regarding financial assets and liabilities. In applying the valuation techniques management makes maximum use of market inputs, and uses estimates and assumptions that are, as far as possible, consistent with observable data that market participants would use in pricing the instrument. Where applicable data is not observable, management uses its best estimate about the assumptions that market participants would make. These estimates may vary from the actual prices that would be achieved in an arm’s length transaction at the end of the reporting period.

3. Significant Accounting Policies

The Group and the Company apply the significant accounting policies set out below, consistently throughout all periods presented in the financial statements unless otherwise stated.

(a) Basis of consolidation

(i) Subsidiary companies

Subsidiary companies are all entities (including structured entities) over which the Group has control. 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. Subsidiary companies are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.

Acquisition-related costs are expensed off in profit or loss as incurred.

If the business combination is achieved in stages, previously held equity interest in the acquiree is re-measured at its acquisition date fair value and the resulting gain or loss is recognised in profit or loss.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with MFRS 139 Financial Instruments: Recognition and Measurement either in profit or loss or other comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

Inter-company transactions, balances and unrealised gains or losses on transactions between Group companies are eliminated. Unrealised losses are eliminated only if there is no indication of impairment. Where necessary, accounting policies of subsidiary companies have been changed to ensure consistency with the policies adopted by the Group.

In the Company’s separate financial statements, investment in subsidiary companies are stated at cost less accumulated impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts are recognised in profit or loss. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. See accounting policy Note 3(l) to the financial statements on impairment of non-financial assets.



3. Significant Accounting Policies (Cont’d)

(a) Basis of consolidation (Cont’d)

(ii) Changes in ownership interests in subsidiary companies without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions - that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary company is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

(iii) Disposal of subsidiary companies

If the Group control of a subsidiary companies, the assets and liabilities of the subsidiary company, including any goodwill, and non-controlling interest are derecognised at their carrying value on the date that control is lost. Any remaining investment in the entity is recognised at fair value. The difference between the fair value of consideration received and the amounts derecognised and the remaining fair value of the investment is recognised as a gain or loss on disposal in profit or loss. Any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities.

(iv) Goodwill on consolidation

The excess of the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total consideration transferred, non-controlling interest recognised and previously held interest measured at fair value is less than the fair value of the net assets of the subsidiary company acquired (ie. a bargain purchase), the gain is recognised in profit or loss.

Following the initial recognition, goodwill is measured at cost less accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment annually or more frequent when there is objective evidence that the carrying value may be impaired. See accounting policy Note 3(l) to the financial statements on impairment of non-financial assets.

(b) Foreign currency translation

(i) Foreign currency transactions and balances

Transactions in foreign currency are recorded in the functional currency of the respective Group entities using the exchange rates prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are included in profit or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation. These are initially taken directly to the foreign currency translation reserve within equity until the disposal of the foreign operations, at which time they are recognised in profit or loss. Exchange differences arising on monetary items that form part of the Company’s net investment in foreign operation are recognised in profit or loss in the Company’s financial statements or the individual financial statements of the foreign operation, as appropriate.

Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the reporting period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised in other comprehensive income. Exchange differences arising from such non-monetary items are also recognised in other comprehensive income.




(b) Foreign currency translation (Cont’d)

(ii) Foreign operations

The assets and liabilities of foreign operations denominated in functional currencies other than RM, including goodwill and fair value adjustments arising on acquisition, are translated to RM at the rate of exchange prevailing at the reporting date, except for goodwill and fair value adjustments arising from business combinations before 1 January 2012 (the date of transition to MFRS) which are treated as assets and liabilities of the Company. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to RM at exchange rates at the dates of the transactions.

Foreign currency differences are recognised in other comprehensive income and accumulated in the foreign currency translation reserve (“FCTR”) in equity. However, if the operation is a non-wholly owned subsidiary company, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed off such that control, significant influence or joint control is lost, the cumulative amount in the FCTR related that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.

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

(c) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. The policy of recognition and measurement of impairment losses is in accordance with Note 3(l).

(i) Recognition and measurement

Cost includes expenditures that are directly attributable to the acquisition of the assets and any other costs directly attributable to bringing the asset to working condition for its intended use, cost of replacing component parts of the assets, and the present value of the expected cost for the decommissioning of the assets after their use. The cost of self-constructed assets also includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs. All other repair and maintenance costs are recognised in profit or loss as incurred.

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

When 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.

Property, plant and equipment are derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss.

Capital work-in-progress consists of buildings and plant and machinery under construction/installation for intended use as production facilities. The amount is stated at cost and includes capitalisation of interest incurred on borrowings related to property, plant and equipment under construction/installation until the property, plant and equipment are ready for their intended use.




(c) Property, plant and equipment (Cont’d)

(ii) Subsequent costs

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

(iii) Depreciation

Depreciation is recognised in the profit or loss on straight line basis to write off the cost or valuation of each asset to its residual value over its estimated useful life. Leased assets are depreciated over the shorter of the lease term and their useful lives. Property, plant and equipment under construction are not depreciated until the assets are ready for its intended use.

Property, plant and equipment are depreciated based on the estimated useful lives of the assets as follows:

Leasehold land Over remaining leaseFactory buildings 1.89%Factory extension 2% - 10%Plant, machinery and equipment 10% - 20%Furniture, fittings and office equipment 10% - 50%Renovation 1.89% - 10%Electrical installation 10% - 20%Motor vehicles 10% - 20%

Leasehold land refers to land with an unexpired lease period of less than fifty years determined at the end of reporting period.

The residual values, useful lives and depreciation method are reviewed at each reporting period and to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in property, plant and equipment.

(d) Leases

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

As lessee

(i) Finance lease

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

Minimum lease payments made under finance leases are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the profit or loss. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.




(d) Leases (Cont’d)

As lessee (Cont’d)

(i) Finance lease (Cont’d)

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

(ii) Operating lease

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

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

Leasehold land which in substance is an operating lease is classified as prepaid land lease payments.

As lessor

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

(e) Investment properties

Investment properties are properties held either to earn rental income or for capital appreciation or for both. Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value. Gains or losses arising from changes in the fair values of investment properties are recognised in profit or loss in the reporting period in which they arise. The fair values are determined by external professional valuers with sufficient experience with respect to both the location and the nature of the investment property and supported by market evidence.

Investment properties are derecognised when either they are disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from the disposal. Any gain or loss on the retirement or disposal of an investment property is recognised in the profit or loss in the reporting period of retirement or disposal.

(f) Intangible assets

(i) Intangible assets acquired in a business combination

Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair values at the acquisition date (which is regarded as their cost).

Subsequently to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.




(f) Intangible assets (Cont’d)

(ii) Derecognition of intangible assets

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

See accounting policy Note 3(l) to the financial statements on impairment of non-financial assets for intangible assets.

(g) Financial assets

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

Financial assets are initially recognised at fair value plus transaction costs except for financial assets at fair value through profit or loss, which are recognised at fair value. Transaction costs for financial assets at fair value through profit or loss are recognised immediately in profit or loss.

The Group and the Company classify their financial assets depends on the purpose for which the financial assets were acquired at initial recognition, into the following categories:

(i) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those maturing later than 12 months after the end of the reporting period which are classified as non-current assets.

After initial recognition, financial assets categorised as loans and receivables are measured at amortised cost using the effective interest method, less impairment losses. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

(ii) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of the assets within 12 months after the end of the reporting period.

After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial asset are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends from an available-for-sale equity instrument are recognised in profit or loss when the Group’s and the Company’s right to receive payment is established.

Investment in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost less impairment loss.

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




(g) Financial assets (Cont’d)

(ii) Available-for-sale financial assets (Cont’d)

A financial asset is derecognised when the contractual rights to receive cash flows from the financial asset has expired or has been transferred and the Group and the Company have transferred substantially all risks and rewards of ownership. On derecognition of a financial asset, the difference between the carrying amount and the sum of consideration received and any cumulative gains or loss that had been recognised in equity is recognised in profit or loss.

(h) Financial liabilities

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

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

The Group and the Company classify their financial liabilities at initial recognition, into the following categories:

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

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated into this category upon initial recognition.

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivatives financial instruments that are not designated as effective hedging instruments. Separated embedded derivatives are also categorised as held for trading unless they are designated as effective hedging instruments.

Gains or losses on financial liabilities held for trading are recognised in profit or loss.

(ii) Other financial liabilities measured at amortised cost

The Group’s and the Company’s other financial liabilities comprise trade and other payables and loans and borrowings.

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

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings 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.

Gains and losses on financial liabilities measured at amortised cost are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

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

Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount recognised less cumulative amortisation.

A financial liability is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.




(i) Offsetting of financial instruments

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

(j) Inventories

Raw materials, work-in-progress and finished goods are stated at the lower of cost and net realisable value.

Cost of raw material is determined on a first-in-first out (or weighted average) basis. Cost of finished goods and work-in-progress consists of direct material, direct labour and an appropriate proportion of production overheads (based on normal operating capacity).

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

(k) Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, bank overdrafts and highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. For the purpose of statements of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

(l) Impairment of assets

(i) Non-financial assets

The carrying amounts of non-financial assets (except for inventories, deferred tax assets, assets arising from employee benefits, investment property measured at fair value and non-current assets classified as held for sale) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite useful lives, or that are not yet available for use, the recoverable amount is estimated each period at the same time.

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

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

An impairment loss is recognised if the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount. Impairment loss is recognised in profit or loss, unless the asset is carried at a revalued amount, in which such impairment loss is recognised directly against any revaluation surplus for the asset to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same asset. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (group of cash-generating units) and then to reduce the carrying amounts of the other assets in the cash-generating unit (group of cash-generating units) on a pro rata basis.




(l) Impairment of assets (Cont’d)

(i) Non-financial assets (Cont’d)

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed only if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation or amortisation, had no impairment loss been recognised for asset in prior years. Such reversal is recognised in the profit or loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.

(ii) Financial assets

All financial assets, other than those categorised as fair value through profit or loss, investments in subsidiary companies, are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset.

Financial assets carried at amortised cost

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group considers factors such as the probability of insolvency or significant financial difficulties of the receivable and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with defaults on receivables.

If any such evidence exists, the amount of impairment loss is measured as the difference between the assets’ carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of impairment loss is recognised in profit or loss. Receivables together with the associated allowance are written off when there is no realistic prospect of future recovery.

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

Available-for-sale financial assets

Significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired. A significant or prolonged decline in the fair value of investments in equity instruments below its cost is also an objective evidence of impairment.

If an available-for-sale financial asset is impaired, the amount of impairment loss 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. When a decline in the fair value of an available-for-sale financial asset has been recognised in other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity to profit or loss.

Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Increase in fair value of equity instrument, if any, subsequent to impairment loss is recognised other comprehensive income. For available-for-sale debt investments, impairment losses are subsequently reversed in profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in profit or loss.




(l) Impairment of assets (Cont’d)

(ii) Financial assets (Cont’d)

Unquoted equity securities carried at cost

If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial asset carried at cost has been incurred, the amount of the loss is measured as the difference between the carrying amount of the financial asset and the Group’s share of net assets or 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.

(m) Share capital

(i) Ordinary shares

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

Dividends on ordinary shares are accounted for in equity as appropriation of retained earnings and recognised as a liability in period in which they are declared.

(n) Compound financial instruments

A compound financial instrument is a non-derivative financial instrument that contains both a liability and an equity component. Compound financial instruments issued by the Group comprise convertible notes that can be converted to share capital at the option of the holder, and the number of shares to be issued does not vary with changes in their fair value.

The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition except on conversion or expiry.

(o) Provisions

Provisions are recognised when there is a present legal or constructive obligation as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provisions are reviewed at each end of the reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Any reimbursement that the Group and the Company can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision. The relating expense relating to any provision is presented in the statements of profit or loss and other comprehensive income net of any reimbursement.




(p) Employee benefits

(i) Short term employee benefits

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

The expected cost of accumulating compensated absences is measured as additional amount expected to be paid as a result of the unused entitlement that has accumulated at the end of the reporting period.

(ii) Defined contribution plans

As required by law, companies in Malaysia contributions to the state pension scheme, the Employee Provident Fund (“EPF”). Some of the Group’s foreign subsidiary companies also make contributions to their respective countries’ statutory pension schemes. Such contributions are recognised as an expense in the profit or loss as incurred. Once the contributions have been paid, the Group and the Company have no further payment obligations.

(iii) Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either terminate the employment of current employees according to a detailed plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. In the case of an offer made to encourage voluntary redundancy, the measurement of termination benefits is based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after end of the reporting period are discounted to present value.

(iv) Share-based payment transactions

Equity-settled Share-based Payment Transaction

The Group operates an equity-settled, share-based compensation plan for the employees of the Group. Employee services received in exchange for the grant of the share options is recognised as an expense in the profit or loss over the vesting periods of the grant with a corresponding increase in equity.

For options granted to the employees of the subsidiary companies, the fair value of the options granted is recognised as cost of investment in the subsidiary companies over the vesting period with a corresponding adjustment to equity in the Company’s financial statements.

The total amount to be expensed over the vesting period is determined by reference to the fair value of the share options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to be vested. At the end of each reporting date, the Group revises its estimates of the number of share options that are expected to be vested. It recognises the impact of the revision of original estimates, if any, in the profit or loss, with a corresponding adjustment to equity.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.




(q) Revenue

(i) Sale of goods

Revenue is measured at the fair value of consideration received or receivable, net of returns and allowances, trade discount and volume rebates. Revenue from sale of goods is recognised when the transfer of significant risk and rewards of ownership of the goods to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods.

(ii) Rendering of services

Revenue from services rendered is recognised in the profit or loss based on the value of services performed and invoiced to customers during the period.

(iii) Rental income

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

(iv) Interest income

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

(v) Commissions

When the Group acts in the capacity of an agent rather than as the principal in a transaction, the revenue recognised is the net amount of commission made by the Group.

(vi) Management fee

Management fee is recognised on accrual basis when the services are rendered.

(r) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of the assets, which are assets that necessarily take a substantial period of time to get ready for theirs intended use or sale, are capitalised as part of the cost of those assets. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.

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

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

(s) Income taxes

Tax expense in profit or loss comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.




(s) Income taxes (Cont’d)

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the liability method for all temporary differences between the carrying amounts of assets and liabilities in the statements of financial position and their tax bases. Deferred tax is not recognised for the temporary differences arising from the initial recognition of goodwill, the initial recognition of assets and liabilities in a transaction which is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

The measurement of deferred tax is based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, at the end of the reporting period, except for investment properties carried at fair value model. Where investment properties measured using fair value model, the amount of deferred tax recognised is measured using the tax rates that would apply on sale of those assets at their carrying amounts at the reporting date unless the property is depreciable and is held with the objective to consume substantially all of the economic benefits embodied in the property over time, rather than through sale. Deferred tax assets and liabilities are not discounted.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities

and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Unutilised reinvestment allowance and investment tax allowance, being tax incentives that is not a tax base of an asset, is recognised as a deferred tax asset to the extent that it is probable that the future taxable profits will be available against the unutilised tax incentive can be utilised.

(t) Segments reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-makers are responsible for allocating resources and assessing performance of the operating segments and make overall strategic decisions. The Group’s operating segments are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.

(u) Contingencies

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




(v) Non-current assets held for sale Non-current assets are classified as held for sale if their carrying amount will be recovered principally through

a sale transaction rather than through continuing use. Such non-current assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.

The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sale of such asset. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

Property, plant and equipment are not depreciated or amortised once classified as held for sale.

A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which: • represents a separate major line of business or geographical area of operations; • is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area

of operations; or • is a subsidiary acquired exclusively with a view to resale.

Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held for sale.

When an operation is classified as a discontinued operation, the comparative statements of profit or loss and other comprehensive income is re-represented as if the operation had been discontinued from the start of the comparative period.



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ls -

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r 6

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4,74

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4.

Pro

per

ty, p

lant

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eq

uip

men

t (C

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Gro

up

Lea

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la

nd

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RM

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2013

At 1

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3 4

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1,76

1,44

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4. Property, plant and equipment (Cont’d)

Company

Furniture,fittings

and office equipment

RM

Motorvehicles

RMTotal

RM2014CostAt 1 January 2014 49,406 315,323 364,729 Additions 159,000 - 159,000 Disposals (1,200) (315,323) (316,523)At 31 December 2014 207,206 - 207,206

Accumulated depreciationAt 1 January 2014 43,386 307,291 350,677 Charge for the financial year 33,705 8,031 41,736 Disposals (1,130) (315,322) (316,452)At 31 December 2014 75,961 - 75,961

Carrying amountAt 31 December 2014 131,245 - 131,245

2013CostAt 1 January 2013 45,224 315,323 360,547 Additions 4,182 - 4,182 At 31 December 2013 49,406 315,323 364,729

Accumulated depreciationAt 1 January 2013 40,304 275,759 316,063 Charge for the financial year 3,082 31,532 34,614 At 31 December 2013 43,386 307,291 350,677

Carrying amountAt 31 December 2013 6,020 8,032 14,052

(a) Assets pledged as securities to financial institutions

The carrying amount of property, plant and equipment of the Group pledged as securities for bank borrowings are as disclosed in Note 19 to the financial statements as follows:

Group

2014 2013

RM RM

Leasehold land 2,157,246 2,224,897

Leasehold buildings 29,807,655 2,504,235

31,964,901 4,729,132



4. Property, plant and equipment (Cont’d)

(b) Assets acquired by means of finance leases The aggregate additional cost for the property, plant and equipment of the Group and the Company during the

financial year under cash payment and finance leases are as follows:

Group Company

2014 2013 2014 2013

RM RM RM RM

Cost of property, plant and equipment purchased 26,177,467 14,117,540 159,000 4,182

Less: finance leases (1,714,788) (461,278) - -

Reclassified from other receivables, deposits and prepayments - (655,000) - -

Foreign currency translation differences 4,428 - - -

Cash payment 24,467,107 13,001,262 159,000 4,182

(c) Assets held under finance lease

As at the financial year end, the carrying amounts of leased plant and equipment are as follows:

Group

2014 2013

RM RM

Plant, machinery and equipment 2,510,429 2,080,245

Motor vehicles 1,812,432 883,323

4,322,861 2,963,568

5. Investment properties

Group

2014 2013

RM RM

At 1 January 5,317,830 5,061,024

Acquisition of business combination 22,000,000 -

Change in fair value recognised in profit or loss - 256,806

At 31 December 27,317,830 5,317,830



5. Investment properties (Cont’d)

Included in the above are:

Short termleasehold

landRM

Long termleasehold

landRM

Leaseholdfactory

buildingRM

TotalRM

2014

At fair value

At 1 January - 1,460,562 3,857,268 5,317,830

Acquisition through business combinations 8,000,000 - 14,000,000 22,000,000

At 31 December 8,000,000 1,460,562 17,857,268 27,317,830

2013

At fair value

At 1 January - 1,300,058 3,760,966 5,061,024

Change in fair value recognised in profit or loss - 160,504 96,302 256,806

At 31 December - 1,460,562 3,857,268 5,317,830

Leasehold land refers to land with remaining lease period of 37 to 53 years as at the end of the reporting period.

Fair value basis of investment properties

Fair value of investment properties was estimated by the directors based on internal appraisal of market values of comparable properties. The fair values are within level 2 of the fair value hierarchy.

The increase in the fair values of RM Nil (2013: RM256,806) has been recognised in the profit or loss during the financial year.

Policy on transfer between levels

The fair value of an asset to be transferred between levels is determined as of the date of the event or change in circumstances that caused the transfer. There were no transfers between levels during current and previous financial years.

(c) Income and expenses recognised in profit or loss

Group

2014 2013

RM RM

Rental income 1,002,076 635,600

Direct operating expenses:

- Income generating investment properties 236,317 45,526

(d) Investment properties pledged as securities to financial institutions

Investment properties of the Group amounting to RM22,000,000 (2013: RM Nil) have been pledged to secure banking facilities granted to the Group as disclosed in Note 19 to the financial statements.



6. Goodwill on consolidation

Group

2014 2013

RM RM

Cost

Acquisition through business combination/At 31 December 1,656,634 -

Impairment loss

Impairment loss/At 31 December 124,687 -

Carrying amount

At 31 December 1,531,947 -

Impairment testing for cash-generating units (“CGU”) containing goodwill

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

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

2014 2013

RM RM

Group

China manufacturing - -

Automation and investment properties 1,531,947 -

1,531,947 -

China manufacturing

During the financial year, as a result of the unexpected poor performance in China manufacturing, the Group carried out a review of the recoverable amount of the unit.

The recoverable amount of the China manufacturing unit was based on its value-in-use, determined by discounting future cash flow to be generated by the unit. The carrying amount of the unit amounting to approximately RM2.655 million was determined to be higher than its recoverable amount of RM2.530 million and an impairment loss of RM124,687 was recognised. The impairment loss is recorded within administrative expenses in the statements of profit or loss and other comprehensive income.

Value-in-use was determined by discounting the future cash flows expected to be generated from the continuing use of the unit and was based on the following key assumptions:

(i) Cash flows were projected based on actual operating results and a three-year business plan.

(ii) A pre-tax discount rate of 7% was applied in determining the recoverable amount of the unit. The discount rate was estimated based on the weighted average cost of capital of the Group plus a reasonable risk premium.

The management believes that no reasonably possible changes in any of the key assumptions would cause the carrying values of this unit to differ materially from its recoverable amount.



6. Goodwill on consolidation (Cont’d)

Automation and investment properties

The recoverable amounts for the these CGUs were based on their value-in-use and were determined by discounting the future cash flows generated from the continuing use of these CGUs and were based on the following key assumptions:

(i) Cash flows were projected based on actual operating results and a three-year business plan.

(ii) Revenue was projected at anticipated annual revenue growth of approximately 10% per annum.

(iii) Expenses were projected at annual increase of approximately 9% per annum.

(iv) A pre-tax discount rate of 7% was applied in determining the recoverable amount of the unit. The discount rate was estimated based on the weighted average cost of capital of the Group plus a reasonable risk premium.

The management believes that no reasonably possible changes in any of the key assumptions would cause the carrying values of this unit to differ materially from its recoverable amount.

The values assigned to the key assumptions represent management’s assessment of future trends in the industry and are based on both external sources and internal sources.

7. Investment in subsidiary companies

Company

2014 2013

RM RM

In Malaysia:

At cost

Unquoted share 47,896,207 25,716,207

Less: Impairment loss (4,854,530) (4,854,530)

43,041,677 20,861,677

Outside Malaysia:

At cost

Unquoted share 3,220,153 -

Less: Impairment loss (690,000) -

2,530,153 -

45,571,830 20,861,677

During the financial year, as a result of the unexpected poor performance, the Group carried out a review of the recoverable amount of Suzhou Styrotex Plastic Co. Ltd., a wholly-owned subsidiary company in the Manufacturing segment.

The recoverable amount of the Company’s investment in Suzhou Styrotex Plastic Co. Ltd. estimated based on value-in-use method was approximately RM2.530 million. An impairment loss amounting to RM690,000 was recognised during the financial year. In determining value-in-use for Suzhou Styrotex Plastic Co. Ltd., the cash flows were discounted at a rate of 7% on a pre-tax basis.

The impairment loss was recognised in administrative expenses in the statements of profit or loss and other comprehensive income.



7. Investment in subsidiary companies (Cont’d)

Details of the subsidiary companies are as follows:

Country of Effective interest (%)

Name of company Incorporation 2014 2013 Principal activities

Direct holding:

Ire-Tex (Malaysia) Sdn. Bhd. Malaysia 100 100 Design and manufacture of protective packing materials and other related products and investment holding.

Ire-Tex Electronics Sdn. Bhd. Malaysia 100 100 Contract manufacturing services.

Ire-Tex (Johor) Sdn. Bhd. Malaysia 70 70 Design and manufacture of packaging materials and other related products.

Cal-Test Laboratory Sdn. Bhd. Malaysia 100 100 Provide services of calibration and testing of equipment and general products.

GH Packaging Sdn. Bhd. Malaysia 100 100 Manufacture of corrugated packaging materials and other related products.

Styrotex (Asia Pacific) Sdn. Bhd.

Malaysia 50.01 50.01 Investment holding and sales commission agent.

TFH Corporate Sdn. Bhd. Malaysia 55 55 Sales and marketing of agricultural waste related Products.

Jumbo Universe Sdn. Bhd. Malaysia 100 70 Manufacturing of wooden crates, pallets and other related wood products.

Ire-Tex (Vietnam) Co. Ltd. (Incorporated in Vietnam) *

Malaysia 100 100 Dormant

Ire-Tex Packaging Sdn. Bhd. (Formerly known as Ire-Tex

Paper Packaging Sdn. Bhd.)

Malaysia 100 100 Manufacturing of corrugated packaging materials and other related products.

Ire-Tex Asset Management Sdn. Bhd.

Malaysia 100 - Providing car rental services.

Suzhou Styrotex Plastic Co. Ltd. *

China 100 - Design and manufacture of protective packaging materials.




Details of the subsidiary companies are as follows (Cont’d):

Country of Effective interest (%)Name of company Incorporation 2014 2013 Principal activities

Direct holding:

Zoomic Automation (M) Sdn. Bhd.

Malaysia 100 - Design, manufacturer and systems consultant for all types of industrial, automation systems and manufacturer of LED.

Zoomic Technology (M) Sdn. Bhd.

Malaysia 100 - Investment holding company.

Held throughIre-Tex (Malaysia) Sdn. Bhd.Ire-Tex (KL) Sdn. Bhd. Malaysia 70 70 Design and manufacture of protective

packaging materials and other related products.

Held throughIre-Tex Electronics Sdn. Bhd.Ire-Tex Distribution Sdn. Sdn. Malaysia 100 100 Sourcing, distributing and trading of raw

materials, components and finished products.

* Subsidiary companies not audited by UHY

The Group’s subsidiary companies which have non-controlling interests are not material individually or in aggregate to the financial position, financial performance and cash flows of the Group.

(a) Acquisition of subsidiary companies

Suzhou Styrotex Plastic Co. Ltd.

On 31 January 2014, the Company acquired all the shares in Suzhou Styrotex Plastic Co. Ltd. (“SSPL”) for a cash consideration of RM3,220,153. SSPL is an approved enterprise with foreign investment in the People’s Republic of China. The principal activity of SSPL is design and manufacture of protective packaging materials. The acquisition of SSPL would enable the Group to improve its business in China.

Zoomic Automation (M) Sdn. Bhd. and

On 24 April 2014, the Company acquired all the shares in Zoomic Automation (M) Sdn. Bhd. (“ZASB”) for a cash consideration of RM8,200,000. ZASB is principally a designer, manufacturer and systems consultant for all types of industrial machinery and automation systems and provision of turnkey solutions to electrical and electronic industries. The acquisition of ZASB would enable the Group ventures into the Industrial Automation Business and other electrical and electronic related manufacturing business, hence diversify its earnings base so as to strengthen the financial position of the Group without relying solely on its existing packaging material manufacturing business.

Zoomic Technology (M) Sdn. Bhd.

On 24 April 2014, the Company acquired all the shares in Zoomic Technology (M) Sdn. Bhd. (“ZTSB”) for a cash consideration of RM16,400,000. ZTSB is an investment holding company where it owns and manages investment properties. The acquisition of ZTSB would facilitate a smooth integration of ZASB’s business into the Group pursuant to the acquisition of ZASB without any disruptions to ZASB’s on-going business operations in view that ZASB would be able to continue to occupy the ZTSB’s property for its business operations. This would also allow the Group to save on relocation costs which would otherwise be incurred should the acquisition of ZTSB not be undertaken.

The following summarises the major classes of consideration transferred, and the recognised amounts of assets acquired and liabilities assumed at the acquisition date:




(a) Acquisition of subsidiary companies (Cont’d)

Fair value of consideration transferred

ZASB & ZTSB SSPL Total

RM RM RM

Cash and cash equivalents 24,600,000 3,220,153 27,820,153

Contingent consideration asset (2,500,000) - (2,500,000)

Total consideration transferred 22,100,000 3,220,153 25,320,153

Fair value of identifiable assets acquired and liabilities assumed


RM RM RM

Property, plant and equipment 3,400,955 830,112 4,231,067

Investment properties 22,000,000 - 22,000,000

Inventories 1,719,474 471,481 2,190,955

Trade an other receivables 7,839,447 2,296,410 10,135,857

Cash and cash equivalents 1,102,402 2,367,669 3,470,071

Trade and other payables (14,171,902) (2,870,207) (17,042,109)

Provision for taxation (165,985) - (165,985)

Finance lease liabilities (147,075) - (147,075)

Deferred tax liabilities (1,009,262) - (1,009,262)

Total identifiable assets and liabilities 20,568,054 3,095,465 23,663,519

The fair value of trade and other receivables is RM10,135,857 and includes trade receivables with a fair value of RM9,422,559. The gross contractual amount for trade receivables due is RM26,366,984 of which RM16,944,425 is expected to be uncollectible.

Contingent consideration asset

In consideration of the Company acquired all the shares of ZASB and ZTSB owned by the Teh Eng Huat and Khoo Hun Sniah (“Vendors”), the vendors jointly and severally guarantees and covenants with the Company that:

(i) the aggregate of the audited after tax profits (“PAT”) of ZASB and ZTSB for the 2013 financial year shall

not be less than RM2,000,000 (“2013 Guaranteed Amount”);

(ii) the aggregate of the PAT of ZASB and ZTSB for the 2014 financial year shall not be less than RM3,000,000 (“2014 Guaranteed Amount”);

(iii) if the 2013 PAT and/or the 2014 PAT amount to less than the 2013 Guaranteed Amount and 2014 Guaranteed Amount (collectively, the “Guaranteed Profits”) respectively, the vendors shall compensate the Company:

(a) within 7 days upon the receipt of a demand from the Company, such amount equivalent to the difference between the 2013 PAT and the 2013 Guaranteed Amount, or in the event ZASB and ZTSB suffer a loss in 2013 financial year, then it shall be the sum equivalent to the total amount of loss after tax for the 2013 financial year and the 2013 Guaranteed Amount; and/or

(b) within 7 days upon the receipt of a demand from the Company, such amount equivalent to the difference between the 2014 PAT and the 2014 Guaranteed Amount, or in the event ZASB and ZTSB suffer a loss in 2014 financial year, then it shall be the sum equivalent to the total amount of loss after tax for the 2014 financial year and the 2014 Guaranteed Amount.





Contingent consideration asset (Cont’d)

(iv) In the event that the 2013 PAT tax is equivalent to or shall exceed the 2013 Guaranteed Amount, the Company and the vendors agree that such surplus amount equivalent to the difference between the 2013 PAT and the 2013 Guaranteed Amount shall be carried forward to the 2014 financial year and constitute part of the 2014 PAT in the event the 2014 PAT is less than the 2014 Guaranteed Amount.

(v) If the total Guaranteed Profits is achieved in the 2013 financial year, the vendors will be deemed to have met its obligations and the Company and the vendors shall be forthwith deemed released from undertaking any further actions.

(vi) If the 2013 PAT exceeds the 2013 Guaranteed Amount, the Company shall agree to allow the Vendors to withdraw up to such amount from Profit Guarantee Security, to be determined by the following formula:

x RM2,500,000 =The amount to be released to the

Vendors from the Profit Guarantee Security after 2013 PAT is finalised

2013 PAT

Guaranteed Profits

The Profit Guarantee Security is a sum of RM2,500,000, being a sum equivalent to 50% of the Guaranteed Profits to be retained by a David Lai & Tan, being the solicitors for the Company in relation to the agreement, from the Balance Total Purchase Price as security for the Guaranteed Profits.

(vii) The balance of the Profit Guarantee Security upon such amount released shall be dealt with in the following manner:

(a) if the aggregate of the 2013 PAT and 2014 PAT amount to less than the Guaranteed Profits, to be utilised to set off against the shortfall and the balance, if any, shall be paid to the vendors;

(b) if the aggregate of the 2013 PAT and 2014 PAT amount to more than the Guaranteed Profits, the full amount shall be paid to the vendors.

For the avoidance of doubt, the 2013 PAT and 2014 PAT shall exclude any gains or losses resulting from reversals of provision for doubtful debts, recovery of bad debts written off or reversals of any deferred tax assets, if any.

At the acquisition date, the fair value of the contingent consideration asset was estimated to be RM2,500,000. There has been no change in the fair value since the acquisition date.

Net cash outflow arising from acquisition of subsidiary companies


RM RM RM

Purchase consideration settled in cash 22,100,000 3,220,153 25,320,153

Cash and cash equivalents acquired (744,792) (2,367,669) (3,112,461)

21,355,208 852,484 22,207,692





Goodwill arising from business combinations

Goodwill was recognised as a result of the acquisition as follows:


RM RM RM

Total consideration transferred 22,100,000 3,220,153 25,320,153

Fair value of identifiable assets acquired and liabilities assumed (20,568,053) (3,095,466) (23,663,519)

Goodwill 1,531,947 124,687 1,656,634

The goodwill recognised on the acquisition is attributable mainly to the skills and technical talent of the acquired business’s work force and the synergies expected to be achieved from integrating the subsidiary companies into the Group’s existing business.

Acquisition-related costs

The Group incurred acquisition-related costs of RM160,000 related to external legal fees and due diligence costs. The expenses have been included in other operating expenses in the profit or loss.

Impact of the acquisition on the statements of profit or loss and other comprehensive income

From the date of acquisition, acquired subsidiary companies have contributed revenue of RM17,279,863 and loss before tax of RM7,653,099. If the combination had taken place at the beginning of 2014, the consolidated statements of profit or loss and other comprehensive income would have included revenue of RM22,317,221 and loss before tax of RM6,729,660.

There was no acquisition in the previous financial year.

(b) Incorporation of a new subsidiary company

On 16 January 2014, the Company subscribed for 2 ordinary shares of RM1.00 each representing 100% of the total issued and paid-up capital of Ire-Tex Asset Management Sdn. Bhd. (“ITAMSB”) for a cash consideration of RM2.00.

(c) Acquisition of non-controlling interests

On 29 August 2014, the Company acquired an additional 30% equity interest in Jumbo Universe Sdn. Bhd. (“JUSB”) for RM80,000 in cash, increased its ownership from 70% to 100%. The carrying amount of JUSB’s net assets in the Group’s financial statements on the date of acquisition was RM722,482. The Group recognised a decreased in non-controlling interests of RM216,745 and a decreased in retained profits of RM296,745.

The effect of changes in the equity interest in Jumbo Universe Sdn. Bhd. that is attributable to owners of the Company:

RM

Carrying amount of non-controlling interest acquired 216,745

Consideration paid to non-controlling interest 80,000

Decrease recognised in accumulated losses 296,745




(d) Disposal of a subsidiary companies

2013

On 11 November 2013, the Company entered into sale of shares agreements with the non-controlling interest of Eppor-Pack Sdn. Bhd. and Powertude Sdn. Bhd., Renotex Group Inc., to dispose of its remaining 51% equity interests in both subsidiary companies for a total cash consideration of RM2,199,725 and RM513,714 respectively, which had resulted a loss of RM682,922. Eppor-Pack Sdn. Bhd. and Powertude Sdn. Bhd. were reported as part of the manufacture and energy supply segment respectively.

The effect of the disposal of Eppor-Pack Sdn. Bhd. and Powertude Sdn. Bhd. on the financial position of the Group as at the date of disposal was as follows:

RM

Property, plant and equipment 10,950,583

Inventories 916,192

Receivables 9,634,837

Cash and bank balances 2,200,718

Payables (11,465,828)

Borrowings (4,938,223)

Bank overdraft (590,108)

Provision for taxation (19,336)

Net assets 6,688,835

Non-controlling interests (3,292,474)

Loss on disposal on investment on subsidiaries (682,922)

Total disposal consideration 2,713,439

Less: Cash and cash equivalents (1,610,610)

Net cash inflow from disposal 1,102,829

There are no significant restrictions on the ability of the subsidiary companies to transfer funds to the Group in the form of cash dividends or repayment of loans and advances. Generally, for all subsidiary companies which are not wholly-owned by the Company, non-controlling shareholders hold protective rights restricting the Company’s ability to use the assets of the subsidiary companies and settle the liabilities of the Group, unless approval is obtained from non-controlling shareholders.

8. Other investments

Group Company

2014 2013 2014 2013

RM RM RM RM

Available-for-sale financial assets

Unquoted shares, at cost 844,243 2,324,023 844,243 844,243

Less: Impairment loss (295,000) (295,000) (295,000) (295,000)

549,243 2,029,023 549,243 549,243



9. Deferred tax assets/(liabilities)

Group Company2014 2013 2014 2013

RM RM RM RM

Deferred tax assetsAt 1 January 229,000 40,000 - -Recognised in profit or loss (228,000) (242,000) - -Equity component of ICULS 294,537 - 294,537 -(Over)/Under provisionin prior years (1,000) 431,000 - -At 31 December 294,537 229,000 294,537 -

Deferred tax liabilitiesAt 1 January 431,000 492,000 - -Recognised in profit or loss (406,500) (46,000) - -Acquisition of subsidiaries 1,009,262 - - -Under/(Over) provision in prior years (4,000) (15,000) - -At 31 December 1,029,762 431,000 - -

The net deferred tax assets and liabilities shown on the statements of financial position after appropriate offsetting are as follows:

Group Company2014 2013 2014 2013

RM RM RM RM

Deferred tax assets (1,631,021) (274,280) (327,136) - Deferred tax liabilities 2,366,246 476,280 32,599 -

735,225 202,000 (294,537) -

The components and movements of deferred tax assets and liabilities are as follows:

Group Unutilised

capital allowances

RM

Reinvestment allowance

RM Others

RM Total

RM Deferred tax assetsAt 1 January 2013 (40,000) (100,750) - - (140,750)Recognised in profit or loss (76,000) 59,470 - (117,000) (133,530)At 31 December 2013 (116,000) (41,280) - (117,000) (274,280)Recognised directly in equity - - - (362,106) (362,106)Recognised in profit or loss 67,134 (963,362) (282,976) 184,569 (994,635)At 31 December 2014 (48,866) (1,004,642) (282,976) (294,537) (1,631,021)

Accelerated capital

allowance RM

Revaluation of assets

RM Provisions

RM Total

RM Deferred tax liabilitiesAt 1 January 2013 594,900 - - 594,900 Recognised in profit or loss (100,620) - - (118,620)At 31 December 2013 494,280 - - 476,280 Recognised in profit or loss 847,465 18,000 15,239 880,704 Acquired in business

combination 681,000 328,262 - 1,009,262 At 31 December 2014 2,022,745 346,262 15,239 2,366,246



9. Deferred tax assets/(liabilities) (Cont’d)

Company

Unutilisedtax losses

RMOthers

RMTotal

RMDeferred tax assetsAt 1 January 2014 - - -Recognised directly in equity - (362,106) (362,106)Recognised in profit or loss (32,599) 67,569 34,970At 31 December 2014 (32,599) (294,537) (327,136)

Acceleratedcapital

allowanceRM

TotalRM

Deferred tax liabilitiesAt 1 January 2014 - -Recognised in profit or loss 32,599 32,599At 31 December 2014 32,599 32,599

Deferred tax assets have not been recognised in respect of the following temporary difference due to uncertainty of its recoverability:

Group Company2014 2013 2014 2013

RM RM RM RM

Unutilised tax losses 17,101,818 12,357,140 5,850,267 3,670,292Unutilised capital allowance 3,512,543 1,975,422 13,972 -Unutilised reinvestment allowance 1,578,287 1,717,517 - -Others 38,566 201,459 - -

22,231,214 16,251,538 5,864,239 3,670,292

Deferred tax assets have not been recognised in respect of these items as they may not have sufficient taxable profits to be used to offset or they have arisen in subsidiary companies that have a recent history of losses.

10. Inventories

Group2014 2013

RM RM

CostRaw materials 4,220,311 1,582,816Work-in-progress 414,533 982,914Finished goods 3,338,734 2,914,925Packing materials 161,506 167,478

8,135,084 5,648,133

Net realisable valueRaw materials 404,066 950,958Work-in-progress 443,677 50,220Finished goods 2,247,380 -

3,095,123 1,001,17811,230,207 6,649,311



11. Trade receivables

Group2014 2013

RM RM

Trade receivables 49,439,434 22,754,877Amounts due from related parties 5,817,102 40,938

55,256,536 22,795,815Less: Accumulated impairment losses-Trade receivables (16,944,425) --Amounts due from related parties (5,799,404) -

32,512,707 22,795,815

Trade receivables are non-interest bearing and are generally on 30 to 90 days (2013: 30 to 90 days) term. They are recognised at their original invoice amounts which represent their fair values on initial recognition.

Amounts due from related parties are unsecured.

Movements in the allowance for impairment losses of trade receivables are as follows:

Group2014 2013

RM RM

At 1 January - -Impairment losses recognised 5,799,404 -Acquired in business combinations 16,944,425 -At 31 December 22,743,829 -

Analysis of the trade receivables ageing as at the end of the financial year is as follow:

Group2014 2013

RM RM

Neither past due nor impaired 28,182,435 17,193,839Past due not impaired:Less than 30 days 2,737,069 3,597,52731 to 60 days 908,113 656,55561 to 90 days 323,650 1,347,894More than 90 days 361,440 -

4,330,272 5,601,97632,512,707 22,795,815

Impaired 22,743,829 -55,256,536 22,795,815

Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with

the Group.

As at 31 December 2014, trade receivables of RM4,330,272 (2013: RM5,601,976) were past due but not impaired. These relate to a number of independent customers from whom there is no recent history of default.

The trade receivables of the Group that are individually assessed to be impaired amounting to RM22,743,829 (2013: RM Nil), related to customers that are in financial difficulties and have defaulted on payments.



12. Other receivables

Group Company2014 2013 2014 2013

RM RM RM RM

Other receivables 12,456,382 497,485 3,606 14,734Less: Accumulated impairment loss (825,000) - - -

11,631,382 497,485 3,606 14,734Contingent consideration assets (Note 7) 2,500,000 - 2,500,000 -Refundable deposits 857,088 903,676 1,100 2,148Deposit for purchase of:- plant and machinery 7,001 45,000 - -- motor vehicle 74,081 - - -- land and building 556,986 - - -Prepayments 3,500,877 6,355,443 1,000,000 5,186,924

19,127,415 7,801,604 3,504,706 5,203,806

Movements in the allowance for impairment losses of trade receivables are as follows:

Group2014 2013

RM RM

Impairment loss recognised/At 31 December 825,000 -

(a) As disclosed in Note 37 to the financial statements, on 3 June 2014, the Company’s wholly owned subsidiary company, Zoomic Automation (M) Sdn. Bhd. (“ZASB”) entered into an agreement with Future Rank Sdn. Bhd. (“FRSB”) for the purchase of machinery amounting to RM16,500,000. Included in other receivables of the Group is an amount of RM11,500,000 (2013: RM Nil) which represents payment made to FRSB. Subsequent to the financial year end, the agreement was terminated due to unsatisfied performance obligation of the supplier.

Subsequently, the Group entered into an agreement with a separate supplier to revamp and upgrade the existing machines amounting to RM15,986,900. The Group also entered into a tripartite agreement to assign the debt of RM10,675,000 owing from FRSB to the new supplier. The debt of RM10,675,000 is derived from RM11,500,000 less a cancellation penalty of RM825,000. As at the date of this report, the new supplier has yet to fulfil its performance obligations under the agreement.

(b) As disclosed in Note 37 to the financial statements, on 6 June 2014, the Company entered into an agreement with Midstream Resources Sdn. Bhd. for the implementation of a Lean Manufacturing Program amounted to RM2,000,000 which would improve the production efficiency of the Group. No specified timeline for delivery of the project deliverables was stated in the agreement. Included in other receivables of the Group and of the Company is an amount of RM1,000,000 (2013: RM Nil) which represents advance payment made to the supplier. As at the date of this report, the supplier has yet to complete its performance obligations under the agreement.

After considering all facts and circumstances, the Directors of the Group are confident that the performance obligations with these suppliers shall be fulfilled and no allowance of impairment loss is required as of the date of this report.



13. Amount due from/(to) subsidiary companies

Company2014 2013

RM RM

Amount due from subsidiary companies Trade related Non-interest bearing 106,500 -

Non-trade related Interest bearing 1,000,000 - Non-interest bearing 24,928,873 11,301,651

25,928,873 11,301,65126,035,373 11,301,651

Amount due to subsidiary companies Non-trade related Non-interest bearing 743,550 324,858

Amount due from subsidiary companies are unsecured, bear interest at 7.85% p.a. (2013: Nil).

Amount due from/(to) subsidiary companies with non-interest bearing are unsecured and repayable on demand.

14. Fixed deposits with licensed banks

Group2014 2013

RM RM

Unencumbered 1,476,923 2,217,094Encumbered 2,947,800 2,609,117

4,424,723 4,826,211

Fixed deposits with licensed institutions amounting to RM2,947,800 (2013: RM2,609,117) are pledged as securities for banking facilities granted to subsidiary companies and hence are not available for general use.

The effective interest rates and maturities of fixed deposits of the Group as at the end of the reporting period range from 2.90% to 3.30% (2013: 2.90% to 3.30%) per annum and 1 to 12 months (2013: 1 to 12 months) respectively.

15. Cash and bank balances

Group Company2014 2013 2014 2013

RM RM RM RM

Cash and bank balances 7,923,306 7,191,807 1,659,693 560,375Short-term deposits with licensed institutions 3,685,650 5,285,650 382,647 3,682,647

11,608,956 12,477,457 2,042,340 4,243,022



15. Cash and bank balances (Cont’d)

The effective interest rates and maturities of short-term deposits of the Group and the Company as at the end of the reporting period are as follows:

Group Company2014 2013 2014 2013

RM RM RM RM

Interest rate (%) 2.88 to 2.95 2.88 to 2.95 2.88 to 2.95 2.88 to 2.95Maturities (Days) 1 to 30 1 to 30 1 1

16. Non-current assets held for sale

Group2014 2013

RM RM

Reclassified from property, plant and equipment - 12,273,702

The non-current assets held for sale consist of:-Short term leasehold land - 3,923,875-Building - 3,837,627-Factory extension - 759,700-renovation - 3,752,500

- 12,273,702

On 18 November 2013, a wholly-owned subsidiary, Ire-Tex (Malaysia) Sdn. Bhd., entered into a sale and purchase agreement with a third party to dispose of the above mentioned assets. The disposal was completed during current financial year.

17. Share capital

Group and Company2014 2013

RM RM

Authorised:At 1 January ^ 50,000,000 50,000,000Created during the financial year 450,000,000 -At 31 December * 500,000,000 50,000,000

Issued and fully paid sharesAt 1 January ^ 46,218,900 45,011,000Issuance of shares pursuant to ESOS 782,500 1,207,900Conversion of ICULS 5,721,575 -At 31 December * 52,722,975 46,218,900

^ Ordinary shares of RM1.00 each * Ordinary shares of RM0.40 each

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

During the financial year, the Company has undertaken a share split involving the subdivision of every one (1) existing share of RM1.00 each in the Company into two and a half (2.5) ordinary shares of RM0.40 each (“Share Split”).



18. Reserves

Group Company2014 2013 2014 2013

Note RM RM RM RM

Non-distributable

Share premium (a) 5,349,707 4,921,765 5,349,707 4,921,765Employee share option reserve (b) - 301,923 - 301,923Accumulated losses (6,469,555) (320,187) (14,447,087) (10,024,609)Warrant reserve (c) 9,959,897 - 9,959,897 -ICULS- Equity portion 19(c) 21,802,809 - 21,802,809 -Foreign currency translation reserve (d) 16,013 - - -

30,658,871 4,903,501 22,665,326 (4,800,921)

The nature of reserves of the Group and the Company are as follows:

(a) Share premium


RM RM

At 1 January 4,921,765 4,443,101Issuance of shares pursuant to ESOS 124,600 109,560Transfer from share option reserve upon exercise of ESOS - 369,104Conversion of ICULS 1,930,130 -Share issue expenses (1,626,788) -At 31 December 5,349,707 4,921,765

Share premium comprises the premium paid on subscription of shares in the Company over and above the par value of the shares.

(b) Employee share option reserve


RM RM

At 1 January 301,923 679,721Transfer to share premium - (369,104)Lapsed of ESOS (301,923) (8,694)At 31 December - 301,923

Employee share option reserve represents the equity-settled share options granted to employees. The reserve is made up of the cumulative value of services received from employees recorded over the vesting period commencing from the grant date of equity-settled share options, and is reduced by the expiry or exercise of the share options.

Employee share option is disclosed in Note 28.



18. Reserves (Cont’d)

The nature of reserves of the Group and the Company are as follows: (Cont’d)

(c) Warrant reserve


RM RM

Arising from Right Issue with Warrants/At 31 December 9,959,897 -

During the financial year, the Company allotted 58,751,722 free warrants to subscribers of Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) pursuant to a renounceable rights issue of 470,014,000 or RM35,251,050 nominal value of five (5)-year, 1%, ICULS at 100% of the nominal value of RM0.075 each (“Rights ICULS”) on the basis of four (4) RM0.075 nominal value of Rights ICULS for every one (1) ordinary share of RM0.40 each of the Company held together with free detachable warrants on the basis of one (1) warrant for every eight (8) Rights ICULS subscribed.

The fair value of the Warrants is RM0.331 each estimated using the Trinomial option pricing model, taking into account the terms and conditions upon which the Warrants are issued. The fair value of the Warrants measured at issuance date and the assumptions are as follows:

Tenure 5 yearsExercise price RM0.80Theoretical ex-all price RM0.746Volatility rate 51.55%Risk-free interest rate, per annum 4.09%Expected dividend yield 0.82%Period of volatility assessment Last 50 market days to 16 June 2014

(d) Foreign currency translation reserve

The foreign currency translation reserve represents exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency.

19. Loans and borrowings

Group Company2014 2013 2014 2013

RM RM RM RM

SecuredTerm loans (Note a) 15,327,360 6,616,205 - -Finance lease liabilities (Note b) 2,863,143 2,142,441 - -Bankers acceptance (Note a) 22,198,000 18,766,000 - -Bank overdrafts (Note a) 2,690,318 233,931 - -

43,078,821 27,758,577 - -

UnsecuredICULS – liability component (Note c) 1,227,237 - 1,227,237 -

44,306,058 27,758,577 1,227,237 -



19. Loans and borrowings (Cont’d)

Group Company2014 2013 2014 2013

RM RM RM RM

Non-currentTerm loans 13,707,427 6,002,279 - -Finance lease liabilities 1,870,120 1,202,649 - -ICULS – liability component 1,227,237 - 1,227,237 -

16,804,784 7,204,928 1,227,237 -

CurrentTerm loans 1,619,933 613,926 - -Finance lease liabilities 993,023 939,792 - -Bankers acceptance 22,198,000 18,766,000 - -Bank overdrafts 2,690,318 233,931 - -

27,501,274 20,553,649 - -44,306,058 27,758,577 1,227,237 -

(a) Bank borrowings

The term loans, bankers acceptance and bank overdrafts are secured by the following:

(i) First and third party legal charge over the leasehold land and building of the subsidiary companies as disclosed in Notes 4 and 5 to the financial statements;

(ii) Facilities Agreements as principal instrument;

(iii) Letter of undertaking cum indemnity with respect to the bankers acceptance;

(iv) Certain fixed deposits of the subsidiary companies as disclosed in Note 14 to the financial statements; and

(v) Corporate guarantee by the Company.

The average effective interest rates per annum are as follows:

Group Company2014 2013 2014 2013

% % % %

Bank overdrafts 7.10 to 7.85 7.60 to 7.85 - -Bankers acceptance 3.85 to 5.15 3.50 to 4.65 - -Finance lease liabilities 2.25 to 4.56 2.73 to 4.56 - - ICULS 6.20 6.20 6.20 6.20Term loans 5.10 to 5.85 5.10 to 5.60 - -




(b) Finance lease liabilities

Group2014 2013

RM RM

Minimum lease payments:Within one year 1,127,071 1,038,637Later than one year and not later than two years 1,014,916 663,400Later than two year and not later than five years 994,525 615,274

3,136,512 2,317,311Less: Future finance charges (273,369) (174,870)Present value of minimum lease payment 2,863,143 2,142,441

Present value of minimum lease payments:Within one year 993,023 939,792Later than one year and not later than two years 937,114 609,926Later than two year and not later than five years 933,006 592,723

2,863,143 2,142,441

The Group leases plant, machinery, equipment and motor vehicles under finance lease (Note 4). At the end of the lease term, the Group has the option to acquire the assets at a nominal price deemed to be a bargain purchase option. There are no restrictive covenants imposed by the lease agreement and no arrangements have been entered into for contingent rental payment.

(c) Irredeemable Convertible Unsecured Loan Stocks (“ICULS”)

On 11 June 2014, the Company issued 470,014,000 or RM35,251,050 nominal value of five (5)-year, 1%, ICULS at 100% of the nominal value of RM0.075 each (“Rights ICULS”) on the basis of four (4) RM0.075 nominal value of Rights ICULS for every one (1) ordinary share of RM0.40 each of the Company held together with free detachable warrants on the basis of one (1) warrant for every eight (8) Rights ICULS subscribed.

The main features of the ICULS are as follows:

(i) The ICULS are convertible into new ordinary shares of RM0.40 each in the Company at any time from the date of issue of the ICULS until the maturity date on 10 June 2019

(ii) The conversion price of the ICULS is RM0.60 for every one (1) new ordinary share of the Company

(iii) The ICULS may be converted in the following manner:

a. by surrendering nominal value of ICULS equivalent to the Conversion Price; or

b. by surrendering such number of ICULS together with cash such that in aggregate it amounts to the Conversion Price.

(iv) Each registered holder of the ICULS shall have the right on any market day from and including the issue date of the ICULS up to and including the maturity date of the ICULS (“Maturity Date”) to convert such amount of ICULS held into fully paid-up shares of the Company at the Conversion Price.

(v) The ICULS will not be redeemable for cash. All outstanding ICULS will be mandatorily converted into new shares of the Company on the Maturity Date.




(c) Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) (Cont'd)

The residual value, after deducting the liability component from the fair value of the instrument as a whole, is attributed to the equity component as follows:

Equity Liability component of component of Total

ICULS (Note 18) ICULS RM RM RM

At the date of issuance of ICULS-nominal value 21,802,809 1,227,237 23,030,046

At the date of issuance 21,802,809 1,227,237 23,030,046Interest expenses - 49,828 49,828Interest paid - (49,828) (49,828)

21,802,809 1,227,237 23,030,046

20. Other payables

Group Company2014 2013 2014 2013

RM RM RM RM

CurrentOther payables 4,488,889 2,444,907 48,301 45,690Accruals 2,630,167 1,413,430 580,525 262,500Refundable deposit received 698,524 - 162,424 162,424Non-refundable deposits received - 2,450,000 - -

7,817,580 6,308,337 791,250 470,614

Non-currentOther payables 504,979 - - -

Non-current other payables

These amounts are non-interest bearing and repayable in 2 to 5 years.

21. Trade payables

Group2014 2013

RM RM

Trade payables 16,825,999 7,252,202

Credit terms of trade payables of the Group ranged from 30 to 90 days (2013: 30 to 90 days) depending on the terms of the contracts.

Included in trade payables are amounts of RM601,835 (2013: RM644,777) due to related parties. These amounts are unsecured.



22. Derivative financial liabilities

Group

2014 2013

RM RM

Derivative held for trading at fair value through profit or loss

-Forward exchange contracts:

-Nominal value - 3,213,600

-Liabilities - 202,225

Forward exchange contracts are used to manage the foreign currency exposure arising from the Group’s receivables and payables denominated in currencies other than the functional currencies of the Group entities. Most of the forward exchange contracts have maturities of less than one year after the end of the reporting period. Where necessary, the forward contracts are rolled over at maturity.

23. Revenue

Group Company

2014 2013 2014 2013

RM RM RM RM

Management fees - - 1,803,500 2,202,000

Sales of goods 107,820,498 115,234,276 - -

Rental income 336,576 - - -

Commission income 977 205,806 - -

108,158,051 115,440,082 1,803,500 2,202,000

24. Finance costs

Group Company

2014 2013 2014 2013

RM RM RM RM

Bank overdrafts 65,526 39,240 - -

Bankers acceptance 921,538 889,188 - -

Finance lease liabilities 148,291 226,519 - -

Term loans 699,069 236,819 - -

Other finance cost 54,056 21,179 49,828 -

1,888,480 1,412,945 49,828 -



25. (Loss)/Profit before tax

(Loss)/Profit before tax is determined after charging/(crediting) amongst other, the following items:

Group Company

2014 2013 2014 2013

RM RM RM RM

Auditors’ remuneration

- statutory audits 106,901 67,013 16,000 15,000

- under/(over) provision in prior year 4,710 (1,000) 3,000 -

- non-audit services 4,000 26,500 4,000 26,500

Bad debt written off 269,440 56,033 - -

Deposit forfeited - 50,000 - -

Depreciation of property, plant and equipment 3,200,887 4,377,405 41,736 34,614

Fair value (gain)/loss of:

-derivative financial instruments (202,225) 202,225 - -

-investment properties - (256,806) - -

Foreign exchange (gain)/ loss

-Realised (227,540) 53,952 (1,410) (25,006)

-Unrealised (80,389) (171,904) - -

(Gain)/Loss on disposal of:

-investment in subsidiary companies - 682,922 - 319,738

-property, plant andequipment (11,270,898) 19,145 (14,999) -

-other investments (128,376) - - -

Impairment loss on:

-inventories 693,607 - - -

-investment in subsidiary companies - - 690,000 -

-goodwill 124,687 - - -

-other investments - 295,000 - 295,000

-trade receivables 5,799,404 - - -

-other receivables 825,000 - - -

Interest income (161,047) (154,272) (52,732) (130,987)

Non-executive directors’ remuneration 142,000 60,000 142,000 60,000

Property, plant and equipment written off 122,332 665 - -

Rental expenses

-premises 2,906,789 3,184,299 27,000 32,400

-motor vehicles 289,500 57,900 120,000 -

-machinery and equipment 23,916 198,731 - -

-warehouse 5,500 10,079 - -

-land 90,000 96,000 - -

Rental income (793,240) (694,562) - -

Staff costs (Note 30) 20,655,663 16,392,345 3,412,228 1,517,590



26. Taxation

Group Company

2014 2013 2014 2013

RM RM RM RM

Tax expenses recognised in profit or loss

Current tax 796,200 597,000 5,600 -

(Over)/Under provision in prior years (26,552) 79,173 29,472 1,801

769,648 676,173 35,072 1,801

Deferred tax

-origination and reversal of temporary

differences (262,294) 204,000 67,569 -

Change in tax rate - (8,000) - -

Under/(Over) provision in prior years 3,000 (446,000) - -

510,354 426,173 102,641 1,801

Malaysian income tax is calculated at the statutory tax rate of 25% (2013: 25%) of the estimate assessable profits for the financial year. Taxation for other jurisdiction is calculated at the rates prevailing in the respective jurisdictions.

A reconciliation of income tax expense applicable to (loss)/profit before tax at the statutory tax rate to income tax expense at the effective income tax rate of the Group and the Company are as follows:

Group Company

2014 2013 2014 2013

RM RM RM RM

Profit/(Loss) before tax (5,891,273) 2,289,199 (4,621,760) (241,004)

At Malaysian statutory tax rate of 25% (2013: 25%) (1,472,818) 572,300 (1,155,440) (60,251)

Expenses not deductible for tax purposes 1,274,094 379,269 612,906 51,755

Income not subject to tax (829,857) (254,565) (353) -

Utilisation of previously unrecognised deferred tax assets - - - -

Utilisation of previous deferred tax assets recognised (93,458) - - -

Net deferred tax movements not recognised 1,072,230 112,148 548,487 8,496

Movement of deferred tax 516,146 (8,152) - -

Changes in tax rate - (8,000)

Others 67,569 - 67,569 -

Under/(Over) provision in prior years (23,552) (366,827) 29,472 1,801

510,354 426,173 102,641 1,801



27. (Loss)/Earnings per share

(a) Basic (loss)/earnings per share

The basic (loss)/earnings per share are calculated based on the consolidated (loss)/profit for the financial year attributable to the owners of the parent and the weighted average number of ordinary shares in issue during the financial year as follows:

Group

2014 2013

RM RM

(Loss)/Profit attributable to ordinary shareholders (6,154,546) 1,022,693

Weighted average number of ordinary shares in issue

Issued ordinary shares at 1 January 45,420,680 44,944,464

Effect of ordinary shares issued during the financial year 76,744,448 476,216

Weighted average number of ordinary shares at 31 December 122,165,128 45,420,680

Basic (loss)/earnings per ordinary shares (in sen) (5.04) 2.25

(b) Diluted (loss)/earnings per share

Diluted (loss)/earnings per share are calculated based on the adjusted consolidated (loss)/ profit for the financial year attributable to the owners of the parent and the weighted average number of ordinary shares in issue during the financial year have been adjusted for the dilutive effects of all potential ordinary shares as follows:

Group

2013

RM

(Loss)/Profit attributable to ordinary shareholders of the Company 1,022,693

Weighted average number of ordinary shares used in the calculation of basic

earnings per share 45,420,680

Effect of share-based payment transactions 246,534

Weighted average number of ordinary shares at 31 December 45,667,214

Diluted earnings per ordinary shares (in sen) 2.24

The Group has no dilution in loss per ordinary share as the potential ordinary shares are antilutive.



28. Employee benefits

Employees Share Option Scheme (“ESOS”)

The salient features of the ESOS scheme are, inter alia, as follows:

(i) The total number of new ordinary shares which are available to be issued under the ESOS shall not exceed ten percent (10%) of the total issued and fully paid-up share capital of the Company at any time.

(ii) The ESOS shall be capable of being exercised from 1 August 2004 to 16 January 2009. On 26 November 2008, the Company has given its approval to extend the existing ESOS expiring on 16 January 2009 for a further period of five years to 16 January 2014 pursuant to By-laws 19.1 of the Scheme. Options not exercised during the said period shall become null and void.

(iii) The new ordinary shares to be issued and allotted upon any exercise of the option will upon allotment and issuance rank pari passu in all respect with the existing issued and fully paid-up ordinary shares of the Company except that the new ordinary shares will not be entitled for any dividends, rights, allotments or other distribution declared, made or paid to shareholders unless the new ordinary shares so allotted have been credited into the relevant securities accounts of the shareholders maintained by Bursa Malaysia Depository Sdn. Bhd. before the entitlement date and will be subject to all provisions of the Articles of Association of the Company relating to transfer, transmission and otherwise.

The fair value of equity-settled share options granted in the previous year was estimated using binomial model, taking into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model used:

Fair value of share options granted on 24 August 2007:

Weighted average share price (RM) 0.88Weighted average exercise price (RM) 1.00Expected volatility (%) 21.82Expected life (years) 6.40Risk free rate (%) 4.04

The expected life of the option was based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other features of the options granted were incorporated into the measurement of fair value.

2014 2013

Weighted Weighted

Number of average Number of average

share exercise share exercise

option price option price

Group RM RM

At 1 January 1,233,500 - 2,470,800 -

Forfeited during the financial year (451,000) - (29,400) -

Exercise during the financial year (782,500) 1.16 (1,207,900) 0.92

At 31 December - 1.16 1,233,500 0.92

During the financial year, 311,500 and 471,000 shares options were exercised at RM1.40 and RM1.00 each respectively. The weighted average share price at the date of exercise for the year was RM0.60 (2013: RM1.44).



29. Dividends


RM RM

Dividends recognised as distribution to ordinary shareholders of the Company:

Final tax dividends paid in respect of the financial year ended 31 Dcember 2012 (tax exempt dividend of RM0.15 per ordinary share) - 684,420

30. Staff costs

Group Company2014 2013 2014 2013

RM RM RM RM

Salaries, wages and other emoluments 19,047,030 15,018,389 2,931,021 1,289,781Social security contributions 116,421 118,463 6,340 5,781Defined contribution plans 1,302,212 1,111,493 388,867 186,028Fee 190,000 144,000 86,000 36,000

20,655,663 16,392,345 3,412,228 1,517,590 Included in staff costs is aggregate amount of remuneration received and receivable by the Executive Directors of

the Company and the subsidiary companies during the financial year as below:

Group Company2014 2013 2014 2013

RM RM RM RM

Executive DirectorsExisting Directors of the CompanySalaries, bonus and other emoluments 2,346,935 712,093 2,346,935 712,093Social contribution plan 2,273 - 2,273 -Fees 86,000 36,000 86,000 36,000Defined contribution plans 319,794 124,962 319,794 124,962Estimated money vale of benefits-in-kind - 14,700 - 14,700

2,755,002 887,755 2,755,002 887,755

Existing Directors of the subsidiary companiesSalaries, bonus and other emoluments 1,157,036 1,132,517 - -Fees 104,000 120,000 - -Defined contribution plans 77,740 95,479 - -Estimated money vale of benefits-in-kind - 6,500 - -

1,338,776 1,354,496 - -

Past Director of the CompanyFees* 11,000 - 11,000 -

Total Executive Directors’ remuneration 4,104,778 2,242,251 2,766,002 887,755

* This represent the remuneration paid to the Director until his resignation in Year 2013.



31. Commitments

Group Company2014 2013 2014 2013

RM RM RM RM

Capital expenditureAuthorised and contracted for:-Acquired in business combination - 23,724,816 - 23,724,816-Property, plant and equipment 5,537,324 7,440,644 - -

5,537,324 31,165,460 - 23,724,816

Authorised but not contracted for-Acquired in business combination - 5,000,000 - -

- 5,000,000 - - Operating lease commitments - as lessee

The future minimum lease payments payable under non-cancellable operating leases are:

Group2014 2013

RM RM

Within one year 1,559,332 652,824Later than one year but not later than two years 1,075,701 240,998Later than two years but not later than five years 1,098,571 -Later than five years 1,037,307 -

4,770,911 893,822

Operating lease commitments represent rentals payables for use of building and equipment. Leases are negotiated for terms ranging from one to five years.

32. Contingencies

Group Company2014 2013 2014 2013

RM RM RM RM

Contingent liabilities

UnsecuredCorporate guarantee extended to banks and financial institutions for credit facilities granted to a former subsidiary -Limit - 11,900,708 - 11,900,708

Corporate guarantee given to suppliers of goods for credit term granted to subsidiary companies - - 1,000,000 1,000,000

LitigationAn oversea customer has commenced

an action against one of the subsidiary company in respect of a civil suit filed by Airdex International Inc. (“Airdex”) alleging infringement by Suzhou Styrotex Plastic Co. Ltd. of Airdex’s patent in respect of its design for Airfreight Pallet. The claim estimated to be RM1,652,437 should the action be successful 1,652,437 - 1,652,437 -



33. Related party disclosures

(a) Identifying related parties

For the purposes of these financial statements, parties are considered to be related to the Group if the Group or the Company has the ability, directly or indirectly, to control or joint 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. Related parties may be individuals or other entities.

Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel include all the Directors of the Group.

(b) Significant related party transactions

Related party transactions have been entered into in the normal course of business under normal trade terms. In addition to the related party balances disclosed in Notes 11, 13 and 21 to the financial statements, the significant related party transactions of the Group and of the Company are as follows:

Group Company2014 2013 2014 2013

RM RM RM RM

(i) Transactions with subsidiary companies

- Management fee income - - 1,803,500 2,052,000- Interest income - - 30,325 -

- Rental of premises - - 27,000 32,400

- Rental of motor vehicles - - 120,000 -

(ii) Transactions with companies which are accustomed to act in accordance with the directions of a director of the Company:

- Sales of goods 5,007,231 - - -

(iii) Transactions with companies in which certain directors of the Company have substantial financial interest:

- Sales of goods - 22,835 - -

- Purchase of goods 2,781,522 2,752,044 - -

(iv) Transactions with companies in which a former director of the Company has substantial financial interest:- Sales of goods - 35,000 - -

- Purchase of goods - 29,474 - -

- Utility charged - 371,697 - -

- Rental of premises - 27,500 - -

(v) Transactions with a former director




33. Related party disclosures (Cont’d)

(b) Significant related party transactions (Cont’d)

Group Company

2014 2013 2014 2013

RM RM RM RM

(vi) Transactions with persons connected to a former director


(ix) Transactions with directors of the Company

- Disposal of motor vehicles 15,000 - 15,000 -

(c) Compensation of key management personnel

The remuneration of key management personnel is same as the Directors’ remuneration as disclosed in Note 30.

34. Segment information

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

Manufacturing Contract manufacturing, conversation of corrugated paper boxes and manufacturing of polymer-based packaging materials and other related products.

Trading Trading of raw materials, computers, finished goods, wooden crates and pallets, provision of testing and calibration services and sale and marketing of agricultural waste related products.

Automation Design, manufacture and systems consultant for all types of industrial machineries and automation systems and other electrical and electronic related manufacturing business.

Investment holding Investment holding and provision of management services. This reportable segment has been formed by aggregating the investment holding segment and the management services segment, which are regarded by management to exhibit similar economic characteristics

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

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the consolidated financial statements.

Transactions between segments are carried out on agreed terms between both parties. The effects of such inter-segment transactions are eliminated on consolidation. The measurement basis and classification are consistent with those adopted in the previous financial year.



34.

Seg

men

t in

form

atio

n (C

ont

’d)

Ad

just

men

ts

Inve

stm

ent

and

Man

ufac

turi

ng

Tra

din

g

Aut

om

atio

n h

old

ing

e

limin

atio

ns

Co

nso

lidat

ed

RM

R

M

RM

R

M

RM

R

M

2014

Rev

enue

Ext

erna

l sal

es 9

6,61

3,28

5 2

,957

,093

6

,597

,319

1

,990

,354

-

108

,158

,051

Inte

r-se

gmen

t sal

es 3

3,76

8,45

6 2

11,5

00

832

,636

8

27,7

22

(35

,640

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) -

Tota

l rev

enue

130

,381

,741

3

,168

,593

7

,429

,955

2

,818

,076

(

35,6

40,3

14)

108

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,051

Res

ults

Loss

from

ope

ratio

n be

fore

inte

rest

inco

me

7,4

37,1

74

(79

1,02

6) (

7,51

4,79

4) (

3,77

5,98

4) 4

80,7

90

(4,

163,

840)

Inte

rest

inco

me

808

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6

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-

52,

246

(70

5,66

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Loss

for

the

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cial

yea

r 8

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(

784,

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(7,

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(3,

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(22

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3)

Inte

rest

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ense

s (

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3,14

7) (

295,

588)

(13

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5) (

319,

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705

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(

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8,48

0)

Loss

bef

ore

tax

6,4

02,0

62

(1,

080,

187)

(7,

650,

459)

(4,

043,

479)

480

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(

5,89

1,27

3)

Taxa

tion

(74

9,00

4) (

27,1

92)

230

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3

5,79

0 -

(51

0,35

4)

Net

loss

for

the

finan

cial

yea

r 5

,653

,058

(

1,10

7,37

9) (

7,42

0,40

7) (

4,00

7,68

9) 4

80,7

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(6,

401,

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Ass

ets

and

liab

ilitie

s

Seg

men

t ass

ets

150

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2

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108

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6

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7,08

6 (

80,6

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Oth

er in

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atio

n

Cap

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Dep

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6

75,0

01

(69

0,00

0) (

3,97

2,10

5)



34.

Seg

men

t in

form

atio

n (C

ont

’d)

Ad

just

men

ts

Ene

rgy

Inve

stm

ent

and

Man

ufac

turi

ng

Tra

din

g

sup

ply

h

old

ing

e

limin

atio

ns

Co

nso

lidat

ed

RM

R

M

RM

R

M

RM

R

M

2013

Rev

enue

Ext

erna

l cus

tom

ers

100

,778

,011

1

4,62

7,07

1 3

5,00

0 -

- 1

15,4

40,0

82

Inte

r-se

gmen

t 3

0,16

9,93

8 1

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1

,945

,000

2

,202

,000

(

34,3

18,4

26)

-

Tota

l rev

enue

130

,947

,949

1

4,62

8,55

9 1

,980

,000

2

,202

,000

(

34,3

18,4

26)

115

,440

,082

Res

ults

Pro

fit fr

om o

pera

tion

befo

re in

tere

st in

com

e 3

,938

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3

2,64

8 3

11,9

94

(73

5,17

5) -

3,5

47,8

72

Inte

rest

inco

me

513

,712

1

0,39

7 -

130

,987

(

500,

824)

154

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Pro

fit fo

r th

e fin

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al y

ear

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311

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(

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(50

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Inte

rest

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ense

s (

1,51

6,03

0) (

367,

137)

(30

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) -

500

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(

1,41

2,94

5)

Pro

fit b

efor

e ta

xatio

n 2

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,087

(

324,

092)

281

,392

(

604,

188)

- 2

,289

,199

Taxa

tion

(39

4,37

2) (

30,0

00)

- (

1,80

1) -

(42

6,17

3)

Net

pro

fit fo

r th

e fin

anci

al y

ear

2,5

41,7

15

(35

4,09

2) 2

81,3

92

(60

5,98

9) -

1,8

63,0

26

Ass

ets

and

liab

ilitie

s

Seg

men

t ass

ets

100

,878

,680

3

,982

,492

-

42,

213,

451

(53

,912

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) 9

3,16

2,00

4

Seg

men

t lia

bilit

ies

66,

980,

259

7,0

80,6

49

- 7

95,4

72

(32

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) 4

2,00

8,34

1

Oth

er in

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atio

n

Cap

ital e

xpen

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re 1

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0 6

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-

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82

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7,54

0

Dep

reci

atio

n of

pro

pert

y, p

lant

and

equ

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ent

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52,4

46

265

,410

3

24,9

35

34,

614

- 4

,377

,405

Oth

er m

ater

ial n

on-c

ash

item

s (

355,

413)

254

,771

-

977

,922

-

877

,280



34. Segment information (Cont’d)

Adjustments and eliminations

Interest income, finance costs, and fair value gains and losses on financial assets are not allocated to individual segments as the underlying instruments are managed on a group basis.

Current taxes, deferred taxes and certain financial assets and liabilities are not allocated to those segments as they are also managed on a group basis.

Capital expenditure consists of additions of property, plant and equipment, intangible assets and investment properties including assets from the acquisition of subsidiary companies.

Inter-segment revenues and balances are eliminated on consolidation.

Other material non-cash items consist of the following items as presented in the respective notes to the financial statements:

2014 2013RM RM

Bad debts written off 269,440 56,033Change in fair value of investment properties - (256,806)Deposit forfeited - 50,000Fair value of derivatives financial instrument (202,225) 202,225Impairment loss on other investments - 295,000(Gain) on disposal other investments (128,376) -(Gain)/Loss on disposal of property, plant and equipment (11,270,898) 19,145Loss on disposal of investment in subsidiary companies - 682,922Property, plant and equipment written off 122,332 665Impairment loss on inventories 693,607 -Impairment loss on trade receivables 5,799,404 -Impairment loss on other receivables 825,000 -Unrealised gain on foreign exchange (80,389) (171,904)

(3,972,105) 877,280

Geographic information

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

Group Revenue Non-current assets2014 2013 2014 2013

RM RM RM RM

Malaysia 99,322,719 115,440,082 76,391,284 25,877,904People’s Republic of China 8,835,332 - 671,283 -

108,158,051 115,440,082 77,062,567 25,877,904

Non-current assets for this purpose consist of property, plant and equipment and investment properties.

Major customers

Revenue from one major customer amount to RM43,426,534 (2013: RM34,561,609), arising from sales in the manufacturing and trading segment.



35. Financial instruments

(a) Classification of financial instruments

Financial assets and financial liabilities are measured on an ongoing basis either at fair value or at amortised cost. The principal accounting policies in Note 3 describe how the classes of financial instruments are measured, and how income and expense, including fair value gains and losses, are recognised.

The following table analyses the financial assets and liabilities in the statements of financial position by the class of financial instruments to which they are assigned, and therefore by the measurement basis:

Group

Financial assetsGroup2014

Fair value through

profit or loss RM

Loans and receivables

RM

Financial liabilities

measured at amortised

cost RM

Available- for-sale

RM Total

RM

Other investments - - - 549,243 549,243

Trade receivables - 32,512,707 - - 32,512,707

Other receivables - 12,488,470 - - 12,488,470

Contigent consideration assset - - - 2,500,000 2,500,000

Fixed deposits with licensed -

banks - 4,424,723 - - 4,424,723

Cash and bank balances - 11,608,956 - - 11,608,956

- 61,034,856 - 3,049,243 64,084,099

2013

Other investments - - - 2,029,023 2,029,023

Trade receivables - 22,795,815 - - 22,795,815

Other receivables - 1,446,161 - - 1,446,161

Fixed deposits with licensed

banks - 4,826,211 - - 4,826,211

Cash and bank balances - 12,477,457 - - 12,477,457

41,545,644 - 2,029,023 43,574,667


2014

Loan and borrowings - - 44,306,058 - 44,306,058

Trade payables - - 16,825,999 - 16,825,999

Other payables - - 8,322,559 - 8,322,559

- - 69,454,616 - 69,454,616

2013

Loan and borrowings - - 27,758,577 - 27,758,577

Trade payables - - 7,252,202 - 7,252,202

Other payables - - 6,308,337 - 6,308,337

Derivative financial liabilities 202,225 - - - 202,225

202,225 - 41,319,116 - 41,521,341



35. Financial instruments (Cont'd)

(a) Classification of financial instruments (Cont'd)

Financial assetsCompany2014

Loan and receivables

RM


measured at amortised

cost RM

Available- for-sale

RM Total

RM

Other investments - - 549,243 549,243

Other receivables 4,706 - - 4,706

Contigent consideration assset - - 2,500,000 2,500,000

Amount due from subsidiary companies 26,035,373 - - 26,035,373

Cash and bank balances 2,042,340 - - 2,042,340

28,082,419 - 3,049,243 31,131,662

2013

Other investments - - 549,243 549,243

Other receivables 16,882 - - 16,882

Amount due from subsidiary companies 11,301,651 - - 11,301,651

Cash and bank balances 4,243,022 - - 4,243,022

15,561,555 - 549,243 16,110,798


2014

Loan and borrowings - 1,227,237 - 1,227,237

Other payables - 791,250 - 791,250

Amount due to subsidiary companies - 743,550 - 743,550

- 2,762,037 - 2,762,037

2013

Other payables - 470,614 - 470,614

Amount due to subsidiary companies - 324,858 - 324,858

- 795,472 - 795,472



35. Financial instruments (Cont’d)

(b) Financial risk management objectives and policies

The Group is exposed to financial risks arising from their operations and the use of financial instruments. Financial risk management policy is established to ensure that adequate resources are available for the development of the Group’s business whilst managing its credit risk, liquidity risk, foreign currency risk and interest rate risk. The Group operates within clearly defined guidelines that are approved by the Board and the Group’s policy is not to engage in speculative transactions.

The following sections provide details regarding the Group’s exposure to the abovementioned financial risks and the objectives, policies and processes for the management of these risks.

(i) Credit risk

Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from its receivables from customers and deposits with banks and financial institutions. The Company’s exposure to credit risk arises principally from loans and advances to subsidiary companies and financial guarantees given to banks for credit facilities granted to subsidiary companies.

The Group has adopted a policy of only dealing with creditworthy counterparties. Management has a credit policy in place to control credit risk by dealing with creditworthy counterparties and deposit with banks and financial institutions with good credit rating. The exposure to credit risk is monitored on an ongoing basis and action will be taken for long outstanding debts.

The Company provides unsecured loans and advances to subsidiary companies. It also provides unsecured financial guarantees to banks for banking facilities granted to certain subsidiary companies. The Company monitors on an ongoing basis the results of the subsidiary companies and repayments made by the subsidiary companies.

The carrying amounts of the financial assets recorded on the statements of financial position at the end of the financial year represents the Group’s and the Company’s maximum exposure to credit risk except for financial guarantees provided to banks for banking facilities granted to certain subsidiary companies. The Company’s maximum exposure in this respect is RM40,215,678 (2013: RM25,616,136), representing the outstanding banking facilities of the subsidiary companies as at the end of the reporting period. There was no indication that any subsidiary company would default on repayment as at the end of the reporting period.

Credit risk concentration

The Group determines concentrations of credit risk by monitoring its trade receivables by reportable segments on an ongoing basis. The credit risk concentration profiles of the Group’s trade receivables at the end of financial year are as follows:

2014 2013Group RM % RM %

Manufacturing 20,624,047 63 15,993,465 70Trading - - 1,228,984 6Automation 647,208 2 - -

21,271,255 65 17,222,449 76

At end of financial year, the highest percentage of concentration of the Group’s net trade receivables was 63% (2013: 70%) in the manufacturing segment. The customer base in this sector comprises a few large customers involved in the industrial goods sector.



35.

Fina

ncia

l ins

trum

ents

(C

ont

’d)

(b)

Fina

ncia

l ris

k m

anag

emen

t obj

ectiv

es a

nd p

olic

ies

(Con

t’d)

(ii)

Liqu

idity

ris

k

Li

quid

ity ri

sk re

fers

to th

e ris

k th

at th

e G

roup

or t

he C

ompa

ny w

ill e

ncou

nter

diff

icul

ty in

mee

ting

its fi

nanc

ial o

blig

atio

ns a

s th

ey fa

ll. T

he G

roup

’s a

nd th

e C

ompa

ny’s

exp

osur

e to

liqu

idity

ris

k ar

ises

prim

arily

from

mis

mat

ches

of t

he m

atur

ities

of f

inan

cial

ass

ets

and

liabi

litie

s.

Th

e G

roup

’s a

nd t

he C

ompa

ny’s

fund

ing

requ

irem

ents

and

liqu

idity

ris

k ar

e m

anag

ed w

ith t

he o

bjec

tive

of m

eetin

g bu

sine

ss o

blig

atio

ns o

n a

timel

y ba

sis.

The

Gro

up fi

nanc

es it

s liq

uidi

ty th

roug

h in

tern

ally

gen

erat

ed c

ash

flow

s an

d m

inim

ises

liqu

idity

ris

k by

kee

ping

com

mitt

ed c

redi

t lin

es a

vaila

ble.

Th

e fo

llow

ing

tabl

e an

alys

es th

e re

mai

ning

con

trac

tual

mat

urity

for

finan

cial

liab

ilitie

s. T

he ta

bles

hav

e be

en d

raw

n up

bas

ed o

n th

e un

disc

ount

ed c

ash

flow

s of

fina

ncia

l lia

bilit

ies

base

d on

the

earli

est d

ate

on w

hich

the

Gro

up a

nd th

e C

ompa

ny c

an b

e re

quire

d to

pay

.

On

dem

and

T

ota

l T

ota

l o

r w

ithin

c

ont

ract

ual

car

ryin

g

Gro

up 1

yea

r 1

to

2 y

ears

2

to

5 y

ears

A

fter

5 y

ears

c

ash

flo

ws

am

oun

t 20

14 R

M

RM

R

M

RM

R

M

RM

N

on-d

eriv

ativ

e fin

anci

al li

abili

ties

Term

loan

s 1

,619

,933

1

,708

,246

6

,579

,060

5

,420

,121

1

5,32

7,36

0 1

5,32

7,36

0 IC

ULS

3

18,3

56

318

,356

7

69,3

61

- 1

,406

,073

1

,227

,327

Fi

nanc

e le

ase

liabi

litie

s 1

,127

,071

1

,014

,916

9

94,5

25

- 3

,136

,512

2

,863

,143

B

anke

rs a

ccep

tanc

e 2

2,19

8,00

0 -

- -

22,

198,

000

22,

198,

000

Ban

k ov

erdr

afts

2,6

90,3

18

- -

- 2

,690

,318

2

,690

,318

Tr

ade

and

othe

r pa

yabl

es 2

4,64

3,57

9 -

504

,979

-

25,

148,

558

25,

148,

558

52,

597,

257

3,0

41,5

18

8,8

47,9

25

5,4

20,1

21

69,

906,

821

69,

454,

706

2013

Non

-der

ivat

ive

finan

cial

liab

ilitie

sTe

rm lo

ans

855

,484

8

62,6

44

1,8

93,6

13

4,1

06,3

44

7,7

18,0

85

6,6

16,2

05

Fina

nce

leas

e lia

bilit

ies

1,0

38,6

37

663

,400

6

15,2

74

- 2

,317

,311

2

,142

,441

B

anke

rs a

ccep

tanc

e 1

8,76

6,00

0 -

- -

18,

766,

000

18,

766,

000

Ban

k ov

erdr

afts

233

,931

-

- -

233

,931

2

33,9

31

Trad

e an

d ot

her

paya

bles

13,

560,

539

- -

- 1

3,56

0,53

9 1

1,11

0,53

9

Der

ivat

ive

finan

cial

liab

ilitie

sG

ross

- C

urre

ncy

forw

ards

202

,225

-

- -

202

,225

2

02,2

25

34,

656,

816

1,5

26,0

44

2,5

08,8

87

4,1

06,3

44

42,

798,

091

39,

071,

341



35.

Fina

ncia

l ins

trum

ents

(C

ont

’d)

(b)

Fina

ncia

l ris

k m

anag

emen

t obj

ectiv

es a

nd p

olic

ies

(Con

t’d)

(ii)

Liqu

idity

ris

k (C

ont’d

)

Co

mp

any

On

dem

and

o

r w

ithin

1

yea

r R

M

1 t

o 2

yea

rs

RM

2 t

o 5

yea

rs

RM

Aft

er 5

yea

rs

RM

Tota

l co

ntra

ctua

l c

ash

flo

ws

RM

Tota

l c

arry

ing

a

mo

unt

RM

2014

Non

-der

ivat

ive

finan

cial

liab

ilitie

s

ICU

LS31

8,35

631

8,35

676

9,36

1-

1,40

6,07

31,

227,

327

Oth

er p

ayab

les

791,

250

--

-79

1,25

079

1,25

0

Am

ount

due

to s

ubsi

diar

y co

mpa

nies

743,

550

--

-74

3,55

074

3,55

0

1,85

3,15

631

8,35

676

9,36

1-

2,94

0,87

32,

762,

127

2013

Non

-der

ivat

ive

finan

cial

liab

ilitie

s

Oth

er p

ayab

les

470,

614

--

-47

0,61

447

0,61

4

Am

ount

due

to s

ubsi

diar

y co

mpa

nies

324,

858

--

-32

4,85

832

4,85

8

795,

472

--

-79

5,47

279

5,47

2

(iii)

Mar

ket r

isk

(a)

Fore

ign

curr

ency

ris

k

Th

e G

roup

is e

xpos

ed to

fore

ign

curr

ency

ris

k on

tran

sact

ions

that

are

den

omin

ated

in c

urre

ncie

s ot

her

than

the

resp

ectiv

e fu

nctio

nal c

urre

ncie

s of

Gro

up e

ntiti

es. T

he c

urre

ncie

s gi

ving

ris

e to

this

ris

k ar

e pr

imar

ily S

inga

pore

Dol

lar

(SG

D),

Chi

nese

Ren

min

bi (

RM

B)

and

Uni

ted

Sta

tes

Dol

lar

(US

D).

Th

e G

roup

has

not

ent

ered

into

any

der

ivat

ive

inst

rum

ents

for

hedg

ing

or tr

adin

g pu

rpos

es. W

here

pos

sibl

e, th

e G

roup

will

app

ly n

atur

al h

edgi

ng

by s

ellin

g an

d pu

rcha

sing

in th

e sa

me

curr

ency

. How

ever

, the

exp

osur

e to

fore

ign

curr

ency

ris

k is

mon

itore

d fro

m ti

me

to ti

me

by m

anag

emen

t.




(b) Financial risk management objectives and policies (Cont’d)

(iii) Market risk (Cont’d)

(a) Foreign currency risk (Cont’d)

The carrying amounts of the Group’s foreign currency denominated financial assets and financial liabilities at the end of the reporting period are as follows:

Denominated in

GroupUSD RM

SGD RM

RMB RM

Others RM

Total RM

2014

Deposits, cash and bank balances 391,054 343,501 26,437 - 760,992

Trade receivables 2,134,642 1,307,114 - - 3,441,756

Other receivables 88,414 - - - 88,414

Trade payables (1,769,412) (31,186) - (1,379) (1,801,977)

Other payables (230,411) (33,878) - (238,000) (502,289)

614,287 1,585,551 26,437 (239,379) 1,986,896

2013

Deposits, cash and bank balances 1,680,538 208,090 23,684 - 1,912,312

Trade receivables 2,700,666 801,901 - - 3,502,567

Other receivables 177,255 - 235,295 1,803 414,353

Trade payables (205) (6,798) (7,003)

Other payables (254,889) (148,005) - (5,494) (408,388)

Derivative financial liabilities (202,225) - - - (202,225)

4,101,140 855,188 258,979 (3,691) 5,211,616

Company

2014

Bank balances 2,619 - - - 2,619

2013

Bank balances 124,458 - - - 124,458






(a) Foreign currency risk (Cont’d)

Foreign currency sensitivity analysis

Foreign currency risk arises from Group entities which have a RM functional currency. The exposure to currency risk of Group entities which do not have a RM functional currency is not material and hence, sensitivity analysis is not presented.

The following table demonstrates the sensitivity of the Group’s profit/(loss) before tax to a reasonably possible change in the USD, SGD and RMB exchange rates against RM, with all other variables held constant.

2014 2013Group Effect on Effect on

Change in profit profit currency rate before tax before tax

RM RM RM

USD Strengthened 5% (2013: 10%) 30,715 410,114Weakened 5% (2013: 10%) (30,715) (410,114)

SGD Strengthened 5% (2013: 10%) 79,278 85,519Weakened 5% (2013: 10%) (79,278) (85,519)

RMB Strengthened 5% (2013: 10%) 1,322 25,898Weakened 5% (2013: 10%) (1,322) (25,898)

2014 2013Company Effect on Effect on

Change in profit profit currency rate before tax before tax

RM RM RM

USD Strengthened 5% (2013: 10%) 131 12,446Weakened 5% (2013: 10%) (131) (12,446)

(b) Interest rate risk

The Group’s and the Company’s fixed rate deposits placed with licensed banks and borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s and the Company’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates.

The Group manages the interest rate risk of its deposits with licensed financial institutions by placing them at the most competitive interest rates obtainable, which yield better returns than cash at bank and maintaining a prudent mix of short and long term deposits.

The Group manages its interest rate risk exposure from interest bearing borrowings by obtaining financing with the most favourable interest rates in the market. The Group constantly monitors its interest rate risk by reviewing its debts portfolio to ensure favourable rates are obtained. The Group does not utilise interest swap contracts or other derivative instruments for trading or speculative purposes.






(b) Interest rate risk (Cont’d)

The interest rate profile of the Group’s and the Company’s significant interest-bearing financial instruments, based on carrying amounts as at the end of the reporting period was:

2014 2013Group RM RMFixed rate instrumentsFinancial assets 4,424,723 4,826,211Financial liabilities (2,863,143) (2,142,441)

1,561,580 2,683,770

Floating rate instrumentsFinancial assets 3,685,650 5,285,650Financial liabilities (41,442,915) (25,616,136)

(37,757,265) (20,330,486)

Company Fixed rate instrumentsFinancial liabilities 1,227,237 -

Floating rate instrumentsFinancial assets 382,647 3,682,647

Interest rate risk sensitivity analysis

Fair value sensitivity analysis for fixed rate instruments

The Group and the Company do not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss.

Cash flow sensitivity analysis for floating rate instruments

A change in 25 basic point interest rate at the end of the reporting period would have decreased the Group’s and the Company’s profit before tax by RM96,177 (2013: RM67,511) respectively, arising mainly as a result of lower/higher interest expense on floating rate loans and borrowings. This analysis assumes that all other variables remain constant. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.

(c) Fair value of financial instruments

The carrying amounts of receivables and payables, cash and cash equivalents and loans and borrowings approximate their fair value due to the relatively short term nature of these financial instruments and/or insignificant impact of discounting.

It was not practicable to estimate the fair value of investment in unquoted equity due to the lack of comparable quoted prices in an active market and the fair value cannot be reliably measured.

The table below analyses financial instruments carried at fair value and those not carried at fair value for which fair value is disclosed, together with their fair values and carrying amounts shown in the statements of financial position.



35.

Fina

ncia

l ins

trum

ents

(C

ont

’d)

(c)

Fair

valu

e of

fina

ncia

l ins

trum

ents

(C

ont’d

)

Fai

r va

lue

finan

cial

inst

rum

ents

car

ried

F

air

valu

e fin

anci

al in

stru

men

ts n

ot

at

fair

val

ue

car

ried

at

fair

val

ue

To

tal f

air

Car

ryin

g

2014

Lev

el 1

L

evel

2

Lev

el 3

T

ota

l L

evel

1

Lev

el 2

L

evel

3

To

tal

val

ue

am

oun

t

Gro

up R

M

RM

R

M

RM

R

M

RM

R

M

RM

R

M

RM

Fina

ncia

l ass

ets

Con

tinge

nt

con

side

ratio

n as

set

- -

2,5

00,0

00

2,5

00,0

00

- -

- -

2,5

00,0

00

2,5

00,0

00

2014

Co

mp

any

Fina

ncia

l ass

ets

Con

tinge

nt

con

side

ratio

n as

set

- -

2,5

00,0

00

2,5

00,0

00

- -

- -

2,5

00,0

00

2,5

00,0

00

2013

Gro

up

Fina

ncia

l lia

bili

ties

Der

ivat

ives

- 2

02,2

25

- 2

02,2

25

- -

- -

202

,225

2

02,2

25

(i)

Leve

l 1 fa

ir va

lue

Le

vel 1

fair

valu

e is

der

ived

from

quo

ted

pric

es (

unad

just

ed)

in a

ctiv

e m

arke

ts fo

r id

entic

al a

sset

s or

liab

ilitie

s.

(ii)

Leve

l 2 fa

ir va

lue

Le

vel 2

fair

valu

e is

est

imat

ed u

sing

inpu

ts o

ther

than

quo

ted

pric

es in

clud

ed w

ithin

Lev

el 1

that

are

obs

erva

ble

for t

he a

sset

or l

iabi

lity,

eith

er d

irect

ly (i

.e.

as p

rices

) or

indi

rect

ly (

i.e. d

eriv

ed fr

om p

rices

).

D

eriv

ativ

es

Th

e fa

ir va

lue

of fo

rwar

d ex

chan

ge c

ontr

acts

is e

stim

ated

by

disc

ount

ing

the

diffe

renc

e be

twee

n th

e co

ntra

ctua

l for

war

d pr

ice

and

the

curr

ent f

orw

ard

pric

e fo

r th

e re

sidu

al m

atur

ity o

f the

con

trac

t usi

ng a

ris

k-fre

e in

tere

st r

ate

(bas

ed o

n go

vern

men

t bon

d).




(c) Fair value of financial instruments (Cont’d)

(iii) Level 3 fair value

Level 3 fair values for the financial assets and liabilities are estimated using unobservable inputs.

Reconciliation of fair value measurement of Level 3 financial instruments

The only financial assets subsequently measured at fair value on Level 3 fair value measurement represents contingent consideration asset relating to acquisition of ZASB and ZTSB (see Note 7). No gain or loss for the financial year relating to this contingent consideration asset has been recognised in profit or loss.

The following table shows the valuation techniques used in the determination of fair values within Level 3, as well as key unobservable inputs used.

Financial instruments carried at fair value

TypeValuation technique and key inputs

Significant unobservable inputs

Relationship of significant unobservable inputs to fair value

Contingent consideration asset in business combination (Note 7)

Discounted cash flow method was used to capture the present value of the expected future economic benefits that will flow to the Group arising from the contingent consideration

Discount rate of 16% determined based on the weighted average cost of capital of the Group plus a reasonable risk premium

A slight increase in the discount rate used in isolation would result in a significant decrease in the fair value

36. Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.



36. Capital management (Cont’d)

The Group monitors capital using a gearing ratio. The Group’s policy is to maintain a prudent level of gearing ratio that complies with debt covenants. The gearing ratios at end of the reporting period are as follows:

Group Company

2014 2013 2014 2013

RM RM RM RM

Trade payables 16,825,999 7,252,202 - -

Other payables 8,322,559 6,308,337 791,250 470,614

Amount due to subsidiary companies - - 743,550 324,858

Total loan and borrowings (Note 19) 44,306,058 27,758,577 1,227,237 -

69,454,616 41,319,116 2,762,037 795,472

Less: Deposits, cash and bank

balances (Note 14 and 15) (13,085,879) (14,694,551) (2,042,340) (4,243,022)

Net debt 56,368,737 26,624,565 791,697 (3,447,550)

Total equity 83,382,772 51,153,663 75,388,301 41,417,979

Net debts and equity 139,751,509 77,778,228 76,107,998 37,970,429

Gearing ratio 0.40 0.34 0.01 - *

* The gearing ratio is not applicable as the Company have sufficient deposits, cash and bank balances to settle the liabilities as at year end.

There were no changes in the Group’s approach to capital management during the financial year.

The Group is not subject to any externally imposed capital requirements.

37. Significant events during the financial year

(i) The Company has on 8 January 2014 announced to Bursa Malaysia to undertake the following proposals:

(a) Proposed share split, which involve the subdivision of every one existing ordinary share of RM1.00 each in the Company into two and a half ordinary shares of RM0.40 each;

(b) Proposed increase in its authorised share capital from RM50,000,000 comprising 50,000,000 existing shares to RM500,000,000 comprising 1,250,000,000 shares subsequent to proposed share split.

(c) Proposed private placement of up to 11,870,000 new shares, representing up to approximately 10% of the issued and paid-up share capital of the company after the proposed share split.

(d) Proposed rights issue of up to RM39,172,350 nominal value of five year, 1% irredeemable convertible unsecured loan stocks (“ICULS”) at 100% of the nominal value of RM0.075 each (“Rights ICULS”) on the basis of RM0.30 nominal value of the Rights ICULS for every one ordinary share held by the entitled shareholders of the Company after the proposed share split, on an entitlement date to be determined later together with up to 65,287,250 free detachable warrants on the basis of one Warrant for every RM0.60 nominal value of the Rights ICULS subscribed for.

(ii) On 14 April 2014, the company announced that the share split involving the subdivision of every one (1) existing ordinary share of RM1.00 each in the company into two and a half (2.5) ordinary shares of RM0.40 each has been completed.



37. Significant events during the financial year (Cont’d)

(iii) On 3 June 2014, a wholly-owned subsidiary of the Company, Zoomic Automation (M) Sdn. Bhd. (“ZASB”) entered into an agreement with Future Rank Sdn. Bhd. (“FRSB”), for the purchase of machinery amounted to RM16,500,000. Payment of RM11,500,000 has been made to FRSB during the financial period. Subsequent to the financial year end, the agreement was terminated due to unsatisfied performance obligation of the supplier.

On 5 February 2015, the Group has entered into an agreement with Sanjung AMS Sdn. Bhd. (“AMS”) to revamp and upgrade the existing machines amounting to RM15,986,900. In conjunction with this, on 6 February 2015, the Group has entered into a tripartite agreement to assign the debt of RM10,675,000 owing from FRSB to AMS. The debt of RM10,675,000 is derived from RM11,500,000 less a cancellation penalty of RM825,000.

(iv) On 6 June 2014, the Company entered into an agreement with Midstream Resources Sdn. Bhd. (“MRSB”) for for the implementation of a Lean Manufacturing Program amounted to RM2,000,000 which would improve the production efficiency of the Group. No specified timeline for delivery of the project deliverables was stated in the agreement.

RM1,500,000 advance payment has been made during the financial year. Of the RM1,500,000 paid to MRSB, RM500,000 was expensed off to statements of profit or loss and other comprehensive income on the basis that a preliminary report was received from MRSB and RM1,000,000 remains as prepayment in other receivables.

To complete the performance obligations under the agreement, MRSB will conduct training program for the Group. However, as at the date of this report, MRSB has yet to complete its performance obligations under the agreement.

38. Subsequent events

(i) On 10 February 2015, the Board of Directors of ITCB wishes to announce that Ire-Tex (Johor) Sdn Bhd (“ITJSB” or the “Purchaser” or the “Employer”), a subsidiary company of ITCB had on 10 February 2015 entered into the following agreements:

(a) A sale and purchase agreement (“SPA 1”) with Modern Unit Sdn Bhd (Company No. 833277-P) (“MUSB” or the “Vendor”) for the proposed acquisition of a piece of land known as HS(D) 541178, PTD 180984, Mukim Tebrau, Daerah Johor Bahru, Negeri Johor measuring approximately 0.1263 Hectare (13,594 Square Feet) or thereabouts bearing assessment address PTD 180984, Jalan Kempas Lama, Kempas Lama, 81300 Skudai, Johor (“Land 1”) for a total cash consideration of RM611,730.

(b) A sale and purchase agreement (“SPA 2”) with MUSB for the proposed acquisition of a piece of land known as HS(D) 541179, PTD 180985, Mukim Tebrau, Daerah Johor Bahru, Negeri Johor measuring approximately 0.1263 Hectare (13,594 Square Feet) or thereabouts bearing assessment address PTD 180985, Jalan Kempas Lama, Kempas Lama, 81300 Skudai, Johor (“Land 2”) for a total cash consideration of RM611,730.

(c) A building agreement (“BA 1”) with Blessplus Sdn. Bhd. (Company No. 333162-U) (“BSB” or the “Contractor”) to build a 1 storey with 2 Mezzanine Floors Semi-Detached Factory with a total built-up area of 9,055 square feet or thereabouts to be erected on the Land 1 for a total contract sum of RM2,173,200.

(d) A building agreement (“BA 2”) with BSB to build a 1 storey with 2 Mezzanine Floors Semi-Detached Factory with a total built-up area of 9,055 square feet or thereabouts to be erected on the Land 2 for a total contract sum of RM2,173,200.

(ii) On 17 February 2015, the Company announced that the approval granted by Bursa Malaysia Securities Berhad on 18 February 2014 and 25 July 2014, for the implementation of the Private Placement, had lapsed on 17 February 2015.

(iii) The Company has on 18 March 2015 announced to Bursa Malaysia to subscribe 50,000 ordinary shares of USD1.00 each, representing 100% equity interest in Aribar Investment Ltd (“Aribar”). Consequent thereto, Aribar became a wholly-owned subsidiary of ITCB.



39. Material litigation

On 13 February 2015, the company announced to Bursa Malaysia that it has been informed by Suzhou Styrotex Plastic Co. Ltd. (“SSPC”), a wholly owned subsidiary company of the Company incorporated in the People’s Republic of China and operating in Suzhou, had received a summon in respect of a civil suit filed by Airdex International Inc. (“Airdex”) alleging infringement by SSPC of Airdex’s patent in respect of its design for Airfreight Pallet. The suit seeks enforcement and damages against SSPC for the following:

1. Demand for SSPC to stop production on Airfreight Pallet

2. Demand for SSPC’s molds in respect of Airfreight Pallet to be destroyed

3. Damages amounting to RMB3 million (Renminbi Three Million)

4. Court fees to be borne by SSPC

Hearing for the suit has been fixed on 2 March 2015.

Further to the Company’s announcement on 13 February 2015, the Company announced to Bursa Malaysia on 17 February 2015 wishes to provide the following additional information relating to the material litigation:

(a) There is no relationship between SSPC and Airdex, except that both companies were engaged in the same business of production and selling of a Lightweight Polyfoam Pallet. Thus, Airdex was a competitor to SSPC.

(b) SSPC is not a major subsidiary of the Company. (c) In the event the Company lose the civil suit, the financial impact to the Group are as follows:

(i) compensation damages claimed by plaintiff up to RMB3 million;

(ii) mold in respect of Airfreight Pallet to be destroyed. However, net book value of the said asset had been fully depreciated and thus does not have any financial impact; and

(iii) There is no impact on the operation because SSAP has stopped the production and selling of Lightweight Polyfoam pallet.

40. Comparative figures

The financial statements of the Group and the Company for the financial year ended 31 December 2013 were audited by another auditor who expressed an unqualified opinion on those financial statements on 25 April 2014.

41. Date of authorisation for issue

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 30 April 2015.



SUPPLEMENTARY INFORMATION

42. Supplementary information on the disclosure of realised and unrealised profits or losses

The following analysis of realised and unrealised retained earnings/(accumulated losses) of the Group and the Company as at the reporting date is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad and prepared in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Group Company

2014 2013 2014 2013

RM RM RM RM

Total (accumulated losses)/retained earnings of the Company and its subsidiary companies

- realised (3,527,049) 3,295,588 (14,447,087) (10,024,609)

- unrealised 374,926 24,485 - -

(3,152,123) 3,320,073 (14,447,087) (10,024,609)

Less: Consolidation adjustments (3,317,432) (3,640,260) - -

Total accumulated losses (6,469,555) (320,187) (14,447,087) (10,024,609)

The disclosure of realised and unrealised profits or losses above is solely for complying with the disclosure requirements stipulated in the directive of Bursa Malaysia Securities Berhad and should not be applied for any other purposes.


LIST OF PROPERTIES

Registered Owner / Location Description

Date of Acquisition/

*Valuation

Land/Build

Up Area(sq ft)

Tenure (Expiry

Date)

Approximate Age of

Building (Years)

Net Book Value as at 31/12/2014

(RM)

Ire-Tex Packaging Sdn Bhd(Formerly known as Ire-Tex Paper Packaging Sdn Bhd)Plot 49 & 63, Lorong Perusahaan 2B, Kulim Industrial Estate, 09000 Kulim Kedah.

1 Storey Factory with

1 Storey Office

Building

2/10/2012 510,959/ 313,895

Leasehold 60 years

(24/04/2042)

2 31,964,901

Ire-Tex (Johor) Sdn BhdPlot 733 Jalan Keluli 9 Zone 12Kawasan Perindustrian Pasir Gudang81700 Pasir GudangJohor Darul Takzim

1 Storey Factory with

3 Storey Office

Building

14/03/2006 108,900/ 67,598

Leasehold 60 years

(13/03/2066)

8 5,317,830

Ire-Tex (Johor) Sdn BhdPTD 180984 Jalan Kempas Lama,Kempas Lama, 81300 Skudai, Johor Darul Takzim

1 storey with 2 mezzanine floors semi-

detached factory

10.02.2015 27,188/18,110

Freehold 1 2,784,930

Ire-Tex (Johor) Sdn BhdPTD 180985 Jalan Kempas Lama,Kempas Lama, 81300 Skudai, Johor Darul Takzim

1 storey with 2 mezzanine floors semi-

detached factory

10.02.2015 27,188/18,110

Freehold 1 2,784,930

Zoomic Technology (M) Sdn BhdPlot 12 & 13, Phase IV Free Industrial Zone,Hilir Sungai Keluang 3, Bayan Lepas 11900 Penang

Double storey

detached factory-cum-office block

6.12.2013 90,040/78,024

Leasehold 60 years

(09/09/2051)

4 22,000,000


ANALYSIS OF SHAREHOLDINGS

Analysis of Shareholdings As At 30 April 2015

Authorised Capital : RM 500,000,000Issued and Fully Paid Capital : RM 52,722,975.20Class of Equity Securities : Ordinary shares of RM0.40 eachVoting Rights : 1 vote per shareTotal Shareholders : 1,475

Distribution Schedule of Shareholders As At 30 April 2015

Holdings No. of Holders Total Holdings %

Less than 100 9 275 ^100 – 1,000 87 35,138 0.031,001 – 10,000 639 3,883,325 2.9510,001 – 100,000 631 22,035,001 16.72100,001 – 6,590,370* 107 58,817,812 44.626,590,371 and above** 2 47,035,887 35.68

Total 1,475 131,807,438 100.00

^ Negligible* Less than 5% of issued shares** 5% and more of issued shares

Substantial Shareholders As At 30 April 2015

Direct Indirect

Name No. Of Shares % No. Of Shares %

Tey Por Yee 32,517,500 24.67 - -Ooi Kock Aun 9,435,912 7.16 - -Dato’ Dr Yap Tatt Keat 14,535,887 11.03 - -Teh Eng Huat 5,860,500 4.45 875,000(1) 0.66

(1) Interest held by spouse treated as interest of director in accordance with Section 134(12)(c) of the Companies Act, 1965.

Interests of Directors As At 30 April 2015

a) Interest in shares of the Company

Direct Indirect

Name No. Of Shares % No. Of Shares %

Abdul Rahim Bin Abdul Hamid - - - -Dato’ Dr. Yap Tatt Keat 14,535,887 11.03 - -Dr. Lai Chee Chuen - - - -Na Chiang Seng 4,214,712 3.20 - -Soo Tee Wei - - - -Collin Goonting A/L O.S.Goonting - - - -

b) Interest in shares of related corporations

By virtue of his interest of not less than 15% in the shares of the Company as at 30 April 2015, Tey Por Yee is deemed to have interest in the shares of all the subsidiary companies to the extent that the company has an interest as at that date.

None of the Directors have any interest in the shares of related corporations as at 30 April 2015.


ANALYSIS OF SHAREHOLDINGS (CONT'D)

Thirty Largest Shareholders

According to the Record of Depositors, the 30 largest shareholders of the Company as at 30 April 2015 are as follows :

Name No. of Shares %

1 JF APEX NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR TEY POR YEE

32,500,000 24.66

2 YAP TATT KEAT 13,763,387 10.44

3 JF APEX NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR OOI KOCK AUN

5,557,100 4.22

4 NA CHIANG SENG 4,214,712 3.20

5 JF APEX NOMINEES (ASING) SDN BHDPLEDGED SECURITIES ACCOUNT FOR FAST GLOBAL INVESTMENTS LIMITED

3,706,400 2.81

6 PUBLIC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR TEH ENG HUAT

2,757,500 2.09

7 KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR TOH PIK CHAI

2,499,900 1.90

8 TAN AH LEE 2,151,200 1.63

9 AFFIN HWANG NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR TOH PIK CHAI

2,150,000 1.63

10 SYARIKAT PERKAPALAN SOO HUP SENG SDN BHD 2,104,350 1.60

11 AFFIN HWANG NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR TEH ENG HUAT

1,820,250 1.38

12 TELECITY INVESTMENTS LIMITED 1,705,400 1.29

13 MAYBANK NOMINEES (TEMPATAN) SDN BHD FAIZATUL IKMI BINTI ABD RAZAK 1,699,600 1.29

14 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR KUAK JUAN CHEE

1,000,000 0.76

15 CIMSEC NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR CHAN CHEE WAI

993,250 0.75

16 NG KOK YONG 900,000 0.68

17 LIM LIEW HONG 875,000 0.66

18 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR TING HUA SEE

800,000 0.61

19 PUBLIC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR LIM LIAN HOCK

784,600 0.60

20 YAP TATT KEAT 772,500 0.59

21 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR TEH ENG HUAT

744,750 0.57

22 AMSEC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR LIM KOCK PENG

715,000 0.54

23 KHOO HUN SNIAH 687,500 0.52

24 PUBLIC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR TAN LIM SOON

600,000 0.46

25 MAYBANK NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR CHAI MIN FOH

585,000 0.44

26 AFFIN HWANG NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR LO GA LUNG

550,000 0.42

27 DB (MALAYSIA) NOMINEE (TEMPATAN) SENDIRIAN BERHAD EXEMPT AN FOR BANK OF SINGAPORE LIMITED

500,000 0.38

28 HLIB NOMINEES (TEMPATAN) SDN BHD HONG LEONG BANK BHD FOR TOH SIU NIENG

500,000 0.38

29 AFFIN HWANG NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR HWANG AI MOR

485,500 0.37

30 THAM SWEE WAH 467,800 0.35


Analysis of 5-year, 1%, Irredeemable Convertible Unsecured Loan Stocks (ICULS) As At 30 April 2015

No. of ICULS of nominal value of : 424,475,012RM0.075 each in issue Voting Rights : Each ICULS Holder present in person or by proxy at any meeting of ICULS Holders shall be entitled on a show of hands to one vote, and on a poll each ICULS Holder who is present in person or by proxy shall have one vote for every RM0.075 nominal amount of ICULS held. Total number of ICULS holders : 1,366

Distribution Schedule of ICULS Holders As At 30 April 2015


Less than 100 0 0 0100 – 1,000 23 15,912 ^1,001 – 10,000 60 493,900 0.1210,001 – 100,000 701 42,974,600 10.12100,001 – 21,223,749* 582 380,990,600 89.7621,223,750 and above** 0 0 0

Total 1,366 424,475,012 100.00

^ Negligible* Less than 5% of issued ICULS** 5% and more of issued ICULS


Interest in ICULS of the Company

Direct Indirect

Name No. of ICULS % No. of ICULS %

Abdul Rahim Bin Abdul Hamid - - - -Dato’ Dr. Yap Tatt Keat - - - -Dr. Lai Chee Chuen - - - -Na Chiang Seng - - - -

Soo Tee Wei - - - -Collin Goonting A/L O.S.Goonting - - - -



Thirty Largest ICULS Holders

According to the Record of Depositors, the 30 largest ICULS holders of the Company as at 30 April 2015 are as follows :

Name No. of ICULS %

1 TAN YU YEH 19,895,600 4.69

2 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR SHER KHAN BIN KHAN MOHAMAD

9,250,000 2.18

3 TEO AH SENG 8,886,800 2.09

4 TING SEU NGUONG 8,624,800 2.03

5 MAYBANK NOMINEES (TEMPATAN) SDN BHDFAIZATUL IKMI BINTI ABD RAZAK

8,424,500 1.98

6 TAN KIA MENG 8,000,000 1.88

7 MAYBANK NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR YEAP BAN AIK

7,283,000 1.72

8 OOI CHIN KIANG 6,000,000 1.41

9 PHEN SAY BAH 5,100,000 1.20

10 OOI CHEE MIN 5,047,900 1.19

11 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR WONG KAI HING

5,000,000 1.18

12 CHUA KIEN HUA 5,000,000 1.18

13 DAN YOKE PYNG 4,650,000 1.10

14 CIMSEC NOMINEES (TEMPATAN) SDN BHD CIMB FOR TEO AH SENG

4,000,800 0.94

15 CHANG SEONG HENG @ CHEN SEONG HIN 4,000,000 0.94

16 MAYBANK NOMINEES (TEMPATAN) SDN BHD TEO BENG HOE

3,600,000 0.85

17 ONG KENG SENG 3,600,000 0.85

18 TAN HEE TIT 3,600,000 0.85

19 MAYBANK NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR KEK LIAN LYE

3,500,000 0.82

20 MAYBANK NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR TAN CHIN SEOH

3,500,000 0.82

21 KEE HING @ KOO YAP TIAN 3,000,000 0.71

22 LAM YEN LING 3,000,000 0.71

23 PUBLIC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR TAN LIM SOON

3,000,000 0.71

24 PUBLIC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR SONG SIEW KHENG

3,000,000 0.71

25 TAN KWEE HONG 3,000,000 0.71

26 LEE CHIOU YUEH 2,963,000 0.70

27 LOK WEI SEONG 2,915,000 0.69

28 YEOH BENG CHONG 2,900,000 0.68

29 LOKE PEK YOKE 2,834,000 0.67

30 CH’NG CHEE SENG 2,800,000 0.66



Analysis of Warrants Holdings As At 30 April 2015

No. of Warrants in issue : 58,751,722Voting Rights : Each Warrants Holder present in person or by proxy at any meeting of Warrant Holders shall be entitled on a show of hands to one vote, and on a poll every Warrant Holder who is present in person or by proxy shall have one vote for each Warrant held. Total number of Warrant Holders : 687

Distribution Schedule of Warrant Holders As At 30 April 2015


Less than 100 44 1,931 ^100 – 1,000 19 7,111 0.011,001 – 10,000 135 711,659 1.2110,001 – 100,000 369 17,373,147 29.57100,001 – 2,937,585* 120 40,657,874 69.212,937,586 and above** 0 0 0

Total 687 58,751,722 100.00

^ Negligible* Less than 5% of issued warrants** 5% and more of issued warrants


Interest in Warrants of the Company

Direct Indirect

Name No. of Warrants % No. of Warrants %

Abdul Rahim Bin Abdul Hamid - - - -Dato’ Dr. Yap Tatt Keat - - - -Dr. Lai Chee Chuen - - - -Na Chiang Seng - - - -

Soo Tee Wei - - - -Collin Goonting A/L O.S.Goonting - - - -



Thirty Largest Warrants Holders

According to the Record of Depositors, the 30 largest Warrants holders of the Company as at 30 April 2015 are as follows :

Name No. of Warrants %

1 TEO AH SENG 1,911,787 3.25

2 SOO AI WAH 1,450,000 2.47

3 CIMSEC NOMINEES (TEMPATAN) SDN BHDCIMB FOR TEO AH SENG

1,259,100 2.14

4 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHDHIEW SYN CHOI

1,164,000 1.98

5 SABARIAH BINTI ZAKARIA 1,100,000 1.87

6 TAN HEE TIT 1,086,500 1.85

7 MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR MOHD ZAFFREY BIN ZAINAL

1,043,100 1.78

8 MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR ZAMLIS BIN ZAINAL

1,024,600 1.74

9 MAYBANK NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR ANG AI LEE

900,000 1.53

10 KENANGA NOMINEES (TEMPATAN) SDN BHDMICHAEL HENG CHUN HONG

748,300 1.27

11 MOHAMAD RAFIE BIN BAHARUDIN 713,500 1.21

12 FOONG AI KUAN 650,000 1.11

13 KOK AH KUM @ OH BOON SECK 650,000 1.11

14 TAN SWEE KWANG @ TAN CHOK BOONG 620,000 1.06

15 TAN EU HON 600,000 1.02

16 CHONG KAH AN 578,300 0.98

17 CHEONG WENG KEAT 500,000 0.85

18 KEAN THONG ENTERPRISE SDN. BHD. 451,000 0.77

19 TEE BOCK CHUAN 450,000 0.77

20 LEE KE VINN 430,000 0.73

21 ANG BENG HENG 410,000 0.70

22 CIMSEC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR SIOW KONG CHEONG @ SEOW KUAN CHONG

400,000 0.68

23 CIMSEC NOMINEES (TEMPATAN) SDN BHD CIMB BANK FOR JEREMY MICHAEL GREENALL

400,000 0.68

24 LEE BOON SIONG 400,000 0.68

25 LEE HOCK 400,000 0.68

26 LIM SIN PEN 400,000 0.68

27 OOI KEAN TEONG 400,000 0.68

28 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHDPOON WAI HONG

396,000 0.67

29 CIMSEC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR FONG YEW KONG

390,000 0.66

30 AFFIN HWANG INVESTMENT BANK BERHAD IVT

384,100 0.65



NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the Thirteenth Annual General Meeting of Ire-Tex Corporation Berhad will be held at Kelawai Room, Lobby Level, Evergreen Laurel Hotel, 53, Persiaran Gurney, 10250 Penang on Monday, 29 June 2015 at 10.30 a.m. for the following purposes :-

AS ORDINARY BUSINESSES

1. To receive the Audited Financial Statements for the financial year ended 31 December 2014 together with the Reports of the Directors and Auditors thereon;

2. To approve the payment of Directors’ fees of RM214,000.00 for the financial year ended 31 December 2014;

Ordinary Resolution 1

3. To consider and, if thought fit, to pass with or without modifications the following resolutions as Ordinary Resolutions :-

(a) “THAT Abdul Rahim Bin Abdul Hamid, who retires pursuant to Article 102 of the Company’s Articles of Association, be and is hereby re-elected as a Director of the Company.”


(b) “THAT Dr. Lai Chee Chuen, who retires pursuant to Article 102 of the Company’s Articles of Association, be and is hereby re-elected as a Director of the Company.”


(c) “THAT Collin Goonting A/L O.S.Goonting, who retires pursuant to Article 102 of the Company’s Articles of Association, be and is hereby re-elected as a Director of the Company.”


4. To re-appoint Messrs. UHY as auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration.


AS SPECIAL BUSINESSES

5. To consider and, if thought fit, to pass with or without modifications the following resolutions as Ordinary Resolutions :-

Authority To Issue Shares Pursuant to Section 132D of the Companies Act, 1965

(a) “THAT pursuant to Section 132D of the Companies Act, 1965, and subject to the approvals of the relevant Governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue shares in the Company from time to time upon such terms and conditions and for such purposes and to such person or persons as the Directors may deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the total issued share capital of the Company for the time being and that the Directors be and are also empowered to obtain the approval from Bursa Malaysia Securities Berhad for the listing of and quotation for the additional shares so issued and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company or the expiration of the period within which the next Annual General Meeting is required by law to be held or revoked/varied by resolution passed by the shareholders in general meeting whichever is earlier.”



NOTICE OF ANNUAL GENERAL MEETING (CONT'D)

Proposed Shareholders’ Ratification of Recurrent Related Party Transactions of a Revenue or Trading Nature

(b) “THAT pursuant to Paragraph 10.09 Part E of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, all the recurrent related party transactions of a revenue or trading nature, entered or to be entered into by the Company’s subsidiary company, Zoomic Automation (M) Sdn. Bhd. (“ZASB”), from 24 April 2014, the date on which ZASB became a wholly owned subsidiary of the Company, until the date of the Company’s Thirteenth Annual General Meeting, with the related parties as set out in Section 2.2 (b) of the Circular to Shareholders in relation to Proposed Shareholder Ratification For Recurrent Related Party Transactions Of A Revenue Or Trading Nature and Proposed Renewal Of Shareholders’ Mandate For Recurrent Related Party Transactions Of A Revenue Or Trading Nature (“Said Circular”) which were transactions carried out in the normal course of business based on normal commercial terms consistent with ZASB’s usual business practices and policies, be and are hereby approved and ratified.

AND THAT all actions taken and the execution of all necessary documents by the Directors of the Company as they had considered expedient or deemed fit in the best interests of the Company in connection with such transactions, be and are hereby approved and ratified.”


Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

(c) “THAT subject always to the Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given to the Company’s subsidiaries to enter into all arrangements and/or transactions as detailed in Section 2.2(c) of the Said Circular involving the interests of Directors, major shareholders or persons connected with such Directors or major shareholders of the Company (“Related Parties”) as detailed in Section 2.2(c) of the Said Circular provided that such arrangements and/or transactions are:-

(i) recurrent transactions of a revenue or trading nature;(ii) necessary for the day-to-day operations; and(iii) carried out in the ordinary course of business and are made on an arm’s

length basis on normal commercial terms which are not more favourable to the Related Parties than those generally available to the public and not to the detriment of the minority shareholders of the Company.

(the “Proposed Shareholders’ Mandate”)

THAT the Proposed Shareholders’ Mandate is subject to annual renewal and shall continue to be in force until:-

(i) the conclusion of the next annual general meeting (“AGM”) of the Company at which such Proposed Shareholders’ Mandate was passed, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed;

(ii) the expiration of the period within which the next AGM after that date is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or

(iii) revoked or varied by resolution passed by the shareholders in general meeting,

whichever is the earlier.

AND THAT the Directors of the Company be and are hereby authorised to complete and do all such acts and things as they may consider expedient or necessary to give effect to the Proposed Shareholders’ Mandate.”




6. To consider any other business for which due notice shall have been given in accordance with the Companies Act, 1965.

By order of the Board

Lim Kim Teck (MAICSA 7010844)Kong Sown Kaey (MAICSA 7047655)Secretaries

Penang Date : 29 May 2015

Explanatory Notes on Special Businesses Ordinary Resolution 6 - Authority To Issue Shares Pursuant to Section 132D of the Companies Act, 1965

The proposed ordinary resolution 6, if passed will empower the Directors of the Company to issue and allot shares up to 10% of the issued and paid-up share capital of the Company from time to time. This authority will, unless revoked or varied by the Company in general meeting, expire at the conclusion of the next Annual General Meeting of the Company or the period within which the next Annual General Meeting of the Company is required by law to be held whichever is the earlier.

As at the date of this notice no share has been issued pursuant to the mandate granted to the Directors at the last Annual General Meeting held on 26 June 2014 and which will lapse at the conclusion of the Thirteenth Annual General Meeting.

The Directors seek a renewal of the mandate to provide flexibility to the Company for possible raising of funds, including but not limited to further placing of shares, for purpose of additional working capital, funding of investments and/or acquisitions.

Ordinary Resolution 7 - Proposed Shareholders’ Ratification of Recurrent Related Party Transactions of a Revenue or Trading Nature

The proposed ordinary resolution 7, if passed will ratify all Recurrent Related Party Transactions of a revenue or trading nature entered by Zoomic Automation (M) Sdn. Bhd. (“ZASB”) with the Related Parties from 24 April 2014, the date on which ZASB became a wholly owned subsidiary of the Company, until the date of the Company’s Thirteenth Annual General Meeting as set out in Section 2.2 (b) of the Circular.

Ordinary Resolution 8 - Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

The proposed ordinary resolution 8 in relation to the Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature which is to be reviewed annually will eliminate the requirement for the Company to make regular announcements and convene separate general meetings from time to time in respect of the aforesaid Related Party Transactions.


Notes:

1. Only a Depositor whose name appear in the Record of Depositors as at 19 June 2015 shall be regarded as a member entitled to attend, speak and vote or to appoint a proxy or proxies to attend, speak and vote at the Thirteenth Annual General Meeting.

2. Subject to Paragraph (4) below, a member entitled to attend and vote is entitled to appoint not more than two (2) proxies to attend and vote instead of him. Where a member appoints more than one (1) proxy to attend and vote at the same meeting, the appointment shall be invalid unless the member specifies the proportion of his holdings to be represented by each proxy.

3. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without restriction as to the qualification of the proxy and the provisions of Section 149(1)(a) and (b) of the Companies Act, 1965 shall not apply to the Company.

4. Where a member of the Company is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

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

6. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 35, 1st Floor, Jalan Kelisa Emas 1, Taman Kelisa Emas, 13700 Seberang Jaya, Penang not less than forty eight (48) hours before the time appointed for holding the meeting or any adjournment thereof.



PROXY FORMFor the 13th Annual General Meeting

IRE-TEX CORPORATION BERHAD (576121-A) (Incorporated in Malaysia)

No. of shares held

I/We_______________________________________________________________________________________________________ (Full Name in Block Letters)

of_________________________________________________________________________________________________________(Address)

being a member/members of the abovenamed Company, hereby appoint___________________________________________(Full Name in Block Letters)

of_________________________________________________________________________________________________________(Address)

or failing him _______________________________________________________________________________________________(Full Name in Block Letters)

of_________________________________________________________________________________________________________(Address)

as my/our Proxy to vote for me/us on my/our behalf at the Thirteenth Annual General Meeting of the Company to be held at Kelawai Room, Lobby Level, Evergreen Laurel Hotel, 53, Persiaran Gurney, 10250 Penang on Monday, 29 June 2015 at 10.30 a.m. and at any adjournment thereof in the manner indicated below :-

Resolution For AgainstTo approve the payment of Directors’ fees of RM214,000.00 for the financial year ended 31 December 2014; Ordinary Resolution 1

To re-elect Abdul Rahim Bin Abdul Hamid, who retires pursuant to Article 102 of the Company’s Articles of Association as a Director of the Company.


To re-elect Dr. Lai Chee Chuen, who retires pursuant to Article 102 of the Company’s Articles of Association as a Director of the Company. Ordinary Resolution 3

To re-elect Collin Goonting A/L O.S.Goonting, who retires pursuant to Article 102 of the Company’s Articles of Association as a Director of the Company.


To re-appoint Messrs. UHY as auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration. Ordinary Resolution 5

To empower the Directors to issue up to 10% of the issued share capital of the Company. Ordinary Resolution 6To approve the Proposed Shareholders’ Ratification of Recurrent Related Party Transactions of a Revenue or Trading Nature. Ordinary Resolution 7

To approve the Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature. Ordinary Resolution 8

(Please indicate with an “X” in the appropriate box against each resolution how you wish your proxy to vote. If no instruction is given this form will be taken to authorise the proxy to vote at his/her discretion.)

Dated this ____________day of ________________________ 2015.

_________________________________________Signature of Shareholder(s) or Common Seal

Notes:

1. Only a Depositor whose name appear in the Record of Depositors as at 19 June 2015 shall be regarded as a member entitled to attend, speak and vote or to appoint a proxy or proxies to attend, speak and vote at the Thirteenth Annual General Meeting.

2. Subject to Paragraph (4) below, a member entitled to attend and vote is entitled to appoint not more than two (2) proxies to attend and vote instead of him. Where a member appoints more than one (1) proxy to attend and vote at the same meeting, the appointment shall be invalid unless the member specifies the proportion of his holdings to be represented by each proxy.

3. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without restriction as to the qualification of the proxy and the provisions of Section 149(1)(a) and (b) of the Companies Act, 1965 shall not apply to the Company.

4. Where a member of the Company is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

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

6. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 35, 1st Floor, Jalan Kelisa Emas 1, Taman Kelisa Emas, 13700 Seberang Jaya, Penang not less than forty eight (48) hours before the time appointed for holding the meeting or any adjournment thereof.

The Company Secretary

IRE-TEX CORPORATION BERHAD (576121-A)35, 1st Floor, Jalan Kelisa Emas 1,Taman Kelisa Emas,13700 Seberang Jaya, Penang, Malaysia.

AFFIX

STAMP

Please fold across the line and close

Please fold across the line and close

IRE-TEX CORPORATION BERHAD (576121-A)

Plot 49 & 63, Lorong Perusahaan 2B,Kulim Industrial Estate,09000 Kulim, Kedah.Tel : 604-492 4422Fax : 604-492 4433

Documents

Ire-Tex-Annual Report 2014.pdf