NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014 (CONT D)

Transcription

1 66 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report INVESTMENTS IN SUBSIDIARIES (CONT D) (g) The summarised financial information (before intra-group elimination) for each subsidiary, which has non-controlling interests that are material to the, is as follows: (Cont d) NSK At 31 December Non-current assets 195, ,375 Current assets 4,951,520 6,037,300 Non-current liabilities - (9,745) Current liabilities (351,253) (1,092,810) Net assets 4,796,036 5,035,120 Financial year ended 31 December Revenue 1,749,927 1,791,371 (Loss)/Profit and total comprehensive (expenses)/income for the financial year (310,621) 114,366 Total comprehensive (expenses)/income attributable to non-controlling interests (152,204) 56,039 Net cash flows (used in)/from operating activities (444,527) 980,385 Net cash flows (used in)/from investing activities (298) 31, INVESTMENT IN JOINT VENTURE At Carrying Amount 1 January / 31 December - - Details of joint venture are as follows: Country of Name of joint venture incorporation Principal Activities Equity Interest age SEB Sdn. Bhd. Malaysia Dormant 50% 50%

2 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report INVESTMENT IN ASSOCIATES At Carrying Amount At 1 January 8,481,912 8,783,333 Addition 600,000 - Share of post-acquisition (loss) (12,493) (301,421) At 31 December 9,069,419 8,481,912 (a) Details of the investment in associates are as follows: Country of Name of joint associates incorporation Principal Activities Equity Interest Selekta Spektra Sdn. Bhd. ( SSSB ) Malaysia A turnkey contractor providing 40% 40% landfill services, waste pre-treatment and waste excavation services Nine Energy Sdn. Bhd. ( NESB ) Malaysia Fabrication of process equipment and 40% 40% metal structures, piping, auto or manual blasting and painting and the provision of maintenance, repair and shutdown services (b) The summarised financial information for each associate that is material to the is as follows: SSSB As at 31 December Non-current assets 10,283,937 7,569,509 Current assets 1,532,011 1,480,600 Non-current liabilities (1,177,495) (1,339,046) Current liabilities (6,126,696) (4,638,841) Net assets 4,511,757 3,072,222 Financial year ended 31 December Revenue 4,184,950 4,219,657 Loss for the financial year (60,465) (778,318) Total comprehensive expense (60,465) (778,318) s share of loss for the financial year (24,186) (311,327) s share of other comprehensive expense (24,186) (311,327) Reconciliation of net assets to carrying amount s share of net assets above 1,804,703 1,228,888 Goodwill 6,914,100 6,914,100 Carrying amount of the s interests in this associate 8,718,803 8,142,988

3 68 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report PROPERTY, PLANT AND EQUIPMENT Office Factory and equipment, Freehold Leasehold shoplot Plant and Motor furniture Capital workland land buildings machinery vehicles and fittings in-progress Total At Cost At 1 January ,056,452 24,592,832 61,450,593 47,263,425 8,998,199 8,269, , ,465,756 Additions - - 1,056,351 7,586,226 3,207,853 1,237,159 3,745,978 16,833,567 Reclassifications - - (13,500) (32,389) 136,500 (90,611) - - Disposals (254,400) - (606,341) (142,541) (1,034,286) (29,711) - (2,067,279) Write off (7,680,634) (54,064) (2,421,666) - (10,156,364) Exchange differences , ,021 55,534 52, ,693 At 31 December ,802,052 24,592,832 62,019,061 47,451,108 11,309,736 7,016,846 4,580, ,772,373 Less : Accumulated Depreciation At 1 January ,813 3,708,227 26,725,562 4,735,973 5,312,315-41,321,890 Charge for the financial year - 270,998 1,271,968 4,483,154 1,328, ,634-8,295,520 Reclassifications - - (13,500) (62,906) 114,012 (37,606) - - Disposals - - (3) (92,306) (808,394) (27,390) - (928,093) Write off (7,535,512) (54,063) (2,421,131) - (10,010,706) Exchange differences - - 4, ,774 21,876 21, ,125 At 31 December ,110,811 4,970,890 23,663,766 5,338,170 3,788,099-38,871,736 Less: Impairment Loss At 1 January Additions ,371-4,689-48,060 At 31 December ,371-4,689-48,060 Carrying Amount At 31 December ,802,052 23,482,021 57,048,171 23,743,971 5,971,566 3,224,058 4,580, ,852,577

4 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report PROPERTY, PLANT AND EQUIPMENT (CONT D) Office Factory and equipment, Freehold Leasehold shoplot Plant and Motor furniture Capital workland land buildings machinery vehicles and fittings in-progress Total At Cost At 1 January ,586,452 15,306,107 57,228,802 43,868,331 9,233,675 7,042, , ,431,372 Additions - 9,286,725 4,337,781 3,119, ,291 1,167, ,760 19,190,727 Reclassifications 470,000 - (304,763) (11,326) - 11,326 (165,237) - Disposals (155,622) (676,801) (3,038) - (835,461) Write off (88,720) (31,806) (8,608) - (129,134) Exchange differences , ,984 28,840 59, ,252 At 31 December ,056,452 24,592,832 61,450,593 47,263,425 8,998,199 8,269, , ,465,756 Less : Accumulated Depreciation At 1 January ,900 2,503,111 22,583,052 4,133,597 4,480,106-34,307,766 Charge for the financial year - 231,913 1,199,138 4,128,067 1,182, ,675-7,581,154 Reclassifications (179) 31,523 (31,344) - - Disposals (120,153) (616,990) (1,018) - (738,161) Write off (78,615) (30,028) (4,503) - (113,146) Exchange differences - - 5, ,390 35,510 29, ,277 At 31 December ,813 3,708,227 26,725,562 4,735,973 5,312,315-41,321,890 Carrying Amount At 31 December ,056,452 23,753,019 57,742,366 20,537,863 4,262,226 2,957, , ,143,866

5 70 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report PROPERTY, PLANT AND EQUIPMENT (CONT D) (a) The following property, plant and equipment of the are charged against loans and borrowings (Note 25): At Carrying Amount Freehold land 20,802,051 21,056,452 Leasehold land 13,989,928 14,337,876 Factory and shoplot buildings 56,061,118 57,153,454 Plant and machinery 757, ,791 91,610,688 93,487,573 (b) The following property, plant and equipment of the are subject to hire purchase agreements (Note 26): At Carrying Amount Motor vehicles 4,017,974 2,154,691 Plant and machinery 1,173, ,245 5,191,230 3,150,936 (c) There is no property, plant and equipment in the Company throughout the current and previous financial years. 10. INVESTMENT PROPERTIES At Cost At 1 January 13,035,502 13,035,502 Addition - - At 31 December 13,035,502 13,035,502 Less: Accumulated Depreciation At 1 January 186, ,937 Charge for the financial year 85,536 85,535 At 31 December 272, ,472 Carrying Amount At 31 December 12,763,494 12,849,030

6 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report INVESTMENT PROPERTIES (CONT D) (a) (b) (c) Investment properties of the with carrying amount of 1,186,179 (2013 : 1,204,652) are charged against loans and borrowings (Note 25). The rental income earned by the from its investment properties, all of which are leased out under operating lease, amounted to 137,000 (2013 : 97,000). Direct operating expenses arising from the rental-earning investment properties amounting to 5,396 (2013 : 5,396). The carrying amount of investment properties held by the as at the end of the reporting period are as follows: Name of property Description Tenure of land Bandar Sunway, 1 unit of 99 years lease from 729, ,776 Petaling Jaya, 1 1/2-storey light 29 December 1998 Selangor industrial terrace factory (83 years remaining) Senawang Light 1 unit of 90 years lease from 90,352 91,992 Industrial Estate, single storey 1 June 1985 Negeri Sembilan terrace factory (61 years remaining) Mukim Ulu Yam Industrial Land Freehold 5,340,513 5,340,513 Bandar Kundang Agriculture Land 99 years lease from 6,236,802 6,303,865 Selangor 4 November 2009 (94 years remaining) Taman Industri, 1 unit of 1 1/2 99 years lease from 366, ,884 Sg. Buloh, storey terrace 24 March 1993 Selangor factory (78 years remaining) 11. GOODWILL ON CONSOLIDATION 12,763,494 12,849,030 At 1 January 7,763,479 7,763,479 Acquisition of subsidiaries - - At 31 December 7,763,479 7,763,479 Impairment testing of goodwill Goodwill arising from business combinations has been allocated to each cash-generating unit ( CGU ) for impairment testing on an annual basis by comparing the carrying amount with the recoverable amount of the CGU based on value-inuse. Value-in-use is determined by discounting the future cash flows to be generated from the continuing use of the CGU based on the following assumptions:

7 72 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report GOODWILL ON CONSOLIDATION (CONT D) Impairment testing of goodwill (Cont d) Cash flows are projected based on the management s five-year business plan. Discount rates used for cash flows discounting purpose are the pre-tax discount rate which reflects specific risks relating to the relevant operating segments. The discount rate applied for cash flow projection is 7.23% (2013 : 7.60%). Growth rate for the CGU is determined based on the management s estimate of the industry trends and past performances of the CGU. The management is not aware of any reasonably possible change in the above key assumptions that would cause the carrying amounts of the CGU to materially exceed their recoverable amounts. 12. DEFERRED TAX ASSETS/(LIABILITIES) Deferred tax assets and liabilities are offset where there is a legally enforceable right to set off current tax assets against current tax liabilities and where the deferred taxes relate to the same tax authority. The following amounts determined after appropriate offsetting, are shown in the statements of financial position. At 1 January (4,707,710) (4,663,924) Recognised in profit or loss - Accelerated capital allowance 1,520,316 (339,390) - Others 227, ,370 - Underprovision in prior years 136, ,222 - Exchange differences 13,066 (27,988) At 31 December (2,809,423) (4,707,710) Presented after appropriate offsetting as follow: Deferred tax assets 433, ,375 Deferred tax liabilities (3,242,686) (5,061,085) At 31 December (2,809,423) (4,707,710) Detailed components of deferred tax assets/(liabilities) as follow: Deferred tax assets (before offsetting) Property, plant and equipment - accelerated capital allowances 133,463 - Allowance for impairment loss on receivables 638,521 10,303 Others 2,314, ,072 3,086, ,375 Offsetting (2,653,125) (539,000) Deferred tax assets (after offsetting) 433, ,375

8 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report DEFERRED TAX ASSETS/(LIABILITIES) (CONT D) Detailed components of deferred tax assets/(liabilities) as follow: (Cont d) Deferred tax liabilities (before offsetting) Property, plant and equipment - accelerated capital allowances (5,642,096) (5,396,613) Others (253,715) (203,472) (5,895,811) (5,600,085) Offsetting 2,653, ,000 Deferred tax liabilities (after offsetting) (3,242,686) (5,061,085) 13. INVENTORIES At Cost Raw materials 57,556,312 47,147,748 Work-in-progress 24,547,119 21,632,015 Finished goods - Trading 13,815,854 15,476,090 - Manufactured 23,627,311 12,265, ,546,596 96,520,985 At Net Realisable Value Raw material 558, ,663 Finished goods 1,310,778 1,136,921 1,868,809 1,584, ,415,405 98,105,569 Recognised in Profit or Loss Inventories recognised as cost of sales 176,528, ,957,570 Amount of write down charged to profit or loss 3,504,509 1,468,365 Reversal of inventories write down in previous years (1,282,321) (210,112) 14. TRADE RECEIVABLES Trade receivables 93,866, ,378,197 Less: Allowance for impairment losses - collective impairment (1,883,077) (1,877,051) - individual impairment (780,245) (700,212) 91,202, ,800,934

9 74 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report TRADE RECEIVABLES (CONT D) Allowance for Impairment Losses: At 1 January 2,577,263 2,674,450 Addition 293, ,111 2,870,679 3,068,561 Less: Reversal (207,357) (491,298) At 31 December 2,663,322 2,577,263 (a) (b) The s trade receivables are non-interest bearing and are generally on credit terms ranging from 7 to 150 days (2013 : 7 to 150 days) from invoice date or the first day of the immediate following month after sales invoice date, whichever applicable. Credit terms for retention sums are generally up to 360 days. Other credit terms are assessed and approved on a case-by-case basis. The impairment losses is made mainly on those trade receivables which have defaulted on payments. 15. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS Company Other receivables Sundry receivables 2,172,867 2,179, ,707 Less: Allowance for impairment losses - individual (485,106) (6,862) - - 1,687,761 2,172, ,707 Deposits to supplier 4,261,732 2,709, ,949,493 4,882, ,707 Deposits 2,912,984 1,380,965 1,000 1,000 Prepayments 1,115, , ,978,464 6,720,332 1, ,707 Allowance for Impairment Losses: At 1 January 6,862 3, Addition 478,244 3, At 31 December 485,106 6, The impairment losses is made mainly on those receivables which have defaulted on payments.

10 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report AMOUNT DUE FROM/(TO) CONTRACT CUSTOMERS Aggregate costs incurred to date 92,692,583 23,749,033 Add: Attributable profits 4,145,012 5,074,515 96,837,595 28,823,548 Less: Progress billings (77,746,854) (23,206,203) 19,090,741 5,617,345 Breakdown into: Amount due from contract customers 29,491,377 5,617,345 Amount due (to) contract customers (10,400,636) - 19,090,741 5,617, AMOUNT DUE FROM/(TO) SUBSIDIARIES Company Amount due from subsidiaries Non-Current Non-trade balances 6,423,388 7,444,049 Current Trade balance 850,000 - Non-trade balances 50,919 64,847 Less: Allowance for impairment losses - individual (9,000) - 891,919 64,847 7,315,307 7,508,896 Allowance for Impairment Losses: At 1 January - - Addition 9,000 - At 31 December 9,000 - Amount due to subsidiaries Current Non-trade balances 3,335,685 49,837,119 (a) (b) The amount due from/due to subsidiaries of the Company are unsecured, interest free and repayable on demand. Amount due from subsidiaries that are individually determined to be impaired relate to subsidiary that have been suffered significant financial losses.

11 76 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report AMOUNT DUE FROM JOINT VENTURE Amount due from joint venture Current Non-trade balances 65,407 65,407 The amount due from joint venture is unsecured, interest free and repayable on demand. 19. AMOUNT DUE FROM/(TO) ASSOCIATES Amount due from associates Non-Current Non-trade balances 765, ,000 Current Trade balance 1,644,772 1,764,772 Less: Allowance for impairment losses - collective (136,171) - 1,508,601 1,764,772 Non-trade balances 190, ,000 1,699,523 1,944,772 2,464,523 2,829,772 Allowance for Impairment Losses: At 1 January - - Addition 136,171 - At 31 December 136,171 - Amount due to an associate Current Trade balances 641, ,132 (a) (b) (c) The trade balances due from associates are non-interest bearing and generally on credit terms ranging from 7 to 150 days (2013 : 7 to 150 days) from invoice date or the first day of the immediate following month after sales invoice date, whichever applicable. The non-trade amount due from an associate is subject to an interest of 5% and is expected to be collected within periods ranging from 25 to 64 months. The amount due to associates are unsecured, interest free and repayable on demand.

12 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report AMOUNT DUE FROM/(TO) RELATED PARTIES Amount due from related parties Current Trade balances 4,612,504 5,039,518 Less: Allowance for impairment losses - individual (2,146,793) (2,122,250) 2,465,711 2,917,268 Allowance for Impairment Losses: At 1 January 2,122,250 2,122,250 Addition 24,543 - At 31 December 2,146,793 2,122,250 Amount due to related parties Current Trade balances 2,266, ,061 Non-trade balances 151,240 21,243 2,418, ,304 (a) (b) (c) (d) The trade amount due from related parties are non-interest bearing and are generally on credit terms ranging from 7 to 150 days (2013 : 7 to 150 days) from invoice date or the first day of the immediate following month after sales invoices date, whichever applicable. The trade amount due to related parties are ranging from 30 to 120 days (2013 : 30 to 120 days) from invoice date or the first day of the immediate following month after purchases invoice date, whichever applicable. The non-trade amount due to related parties are unsecured, interest free and repayable on demand. The impairment losses is made mainly on those receivables which have defaulted on payments. 21. DEPOSITS PLACED WITH LICENSED BANKS Fixed deposits placed with licensed banks 1,172,852 1,330,741 Short term deposits placed with licensed banks 9,384,693 13,126,615 10,557,545 14,457,356 (a) Fixed deposits placed with licensed banks of the amounting to 1,172,852 (2013 : 1,330,741) are pledged against loans and borrowings (Note 25).

13 78 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report DEPOSITS PLACED WITH LICENSED BANKS (CONT D) (b) The effective interest rates (per annum) of deposits placed with licensed banks at the end of the reporting period are as follows: % % Fixed deposits Short term deposits (c) The maturity period at the end of the reporting period are as follows: Days Days Fixed deposits Short term deposits SHARE CAPITAL and Company Number of Shares Number of Shares Authorised: Ordinary shares of 0.50 each 200,000, ,000, ,000, ,000,000 Issued and fully paid up: Ordinary shares of 0.50 each 120,000,000 60,000, ,000,000 60,000,000 The holders of ordinary shares (except treasury shares) are entitled to receive dividends as and when declared by the Company, and are entitled to one (1) vote per share at meetings of the Company. 23. TREASURY SHARES and Company At Cost At 1 January 3,800,082 6,455,366 Buy back 492,851 19,453 Disposal - (2,674,737) At 31 December 4,292,933 3,800,082 The shareholders of the Company, by an ordinary resolution passed in the Annual General Meeting held on 18 June 2014, renewed their approval for the Company s plan to repurchase its own shares up to 10% of the issued and paid-up share capital of the Company ( Share Buy Back ). The directors of the Company are committed in enhancing the value of the Company to its shareholders and believe that the Share Buy Back can be applied in the best interests of the Company and its shareholders.

14 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report TREASURY SHARES (CONT D) During the financial year, the Company repurchased its treasury shares in its issued ordinary shares from the open market as follows: Buy Back Average purchase Cost Highest Lowest price per share No. of Shares January ,000 7, May ,000 72, August ,000 1, December , , , , The transactions of Share Buy Back were financed by internally generated funds. The shares bought back are held as treasury shares in accordance with Section 67A Subsection 3(A)(b) of the Companies Act, None of the treasury shares held was cancelled during the financial year ended 31 December Out of total 120,000,000 issued and fully paid ordinary shares of 0.50 each at 31 December 2014, 3,636,777 (2013 : 3,330,777) ordinary shares are held as treasury shares by the Company. Therefore, the number of outstanding ordinary shares in issue and fully paid is 116,363,223 (2013 : 116,669,223) ordinary shares of 0.50 each. 24. RESERVES Company Non-Distributable Share premium 1,267,803 1,267,803 1,267,803 1,267,803 Translation reserve 2,432,895 1,782, Capital reserve 3,544,200 3,544, Distributable Retained profits 177,855, ,752,705 44,706,717 34,115, ,100, ,347,648 45,974,520 35,383,187 (a) Share Premium Share premium represents the resultant premium arising from the issue of new shares pursuant to the public issue and surplus arising from resale of treasury shares. (b) Translation reserve The foreign currency translation reserve arose from the translation of the financial statements of foreign subsidiaries and is not distributable by way of dividends. It is also used to record the exchange differences arising from monetary items which form part of the s net investment in foreign subsidiaries, where the monetary item is denominated in either the functional currency of the reporting entity or the foreign subsidiaries.

15 80 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report RESERVES (CONT D) (c) Capital Reserve The capital reserve comprises the equity portion of bonus shares issued by a subsidiary (Note 6(d)). (d) Retained Profits Under the single tier tax system, tax on the Company s profits is a final tax and accordingly, any dividends to the shareholders are not subject to tax. 25. LOANS AND BORROWINGS Company Current Secured - Bank overdraft 1,537, , Revolving credit 27,717,478 12,500, ,000 - Trade bills 44,437,040 30,979, Term loans 3,737,514 4,224, ,429,408 48,152, ,000 Non-Current Secured - Term Loans 23,538,464 36,498, ,967,872 84,651, ,000 (a) (b) Loans and borrowings of the are secured by way of: (i) (ii) Charge over certain property, plant and equipment (Note 9(b)) and certain investment properties (Note 10); Corporate guarantee provided by the Company; (iii) Fixed deposits of the with licensed banks (Note 21(a)); and (iv) Joint and several guarantees by certain directors of a subsidiary. The effective interest rates (per annum) for loans and borrowings at the end of the reporting period were as follows: Company % % % % Bank overdraft Revolving credit Trade bills Term loans

16 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report LOANS AND BORROWINGS (CONT D) (c) The term loans are repayable by 60 to 300 (2013 : 36 to 300) equal monthly installments. At the end of the reporting period, they are repayable as follows: Current Not later than one year 3,737,514 4,224,660 Non-Current Later than one year and not later than two years 3,904,153 3,380,975 Later than two years and not later than five years 9,325,356 11,015,488 Later than five years 10,308,955 22,102,476 23,538,464 36,498,939 27,275,978 40,723, HIRE PURCHASE PAYABLES At the end of the reporting period, the outstanding hire purchase obligations are repayable as follow: Minimum hire purchase payments: Not later than one year 1,307,052 1,011,433 Later than one year and not later than two years 1,218, ,736 Later than two years and not later than five years 1,419, ,957 Later than five years 19,423-3,964,986 2,289,126 Less: Unexpired term charges (416,407) (184,615) Present value of hire purchase payables 3,548,579 2,104,511 Principal amount outstanding: Current 1,139, ,217 Non-current 2,408,719 1,194,294 3,548,579 2,104,511 The effective interest rates of the hire purchase obligations at the end of the reporting period are 2.3% to 12.0% (2013 : 2.5% to 12.0%) per annum. 27. TRADE PAYABLES The normal trade terms granted to the are ranging from 30 to 120 days (2013 : 30 to 120 days) from invoice date or the first day of the immediate following month after purchases invoice date, whichever applicable.

17 82 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report OTHER PAYABLES AND ACCRUALS Company Advance payment from customers 5,266,864 8,838, Accruals 18,798,539 11,043, , ,919 Sundry payables 5,787,702 7,114,058 54,690-29,853,105 26,995, , , REVENUE Company Dividend income - - 4,740,000 5,435,025 Management fee income - - 2,400,000 2,400,000 Invoiced value of goods sold net of discounts and return 248,904, ,951, Invoiced value of process equipment sold 36,587,088 79,157, Invoiced value of maintenance and shutdown services 2,403,553 3,670, Contract revenue 83,519,695 22,969, ,414, ,749,619 7,140,000 7,835, FINANCE COSTS Company Interest on: Bank overdraft 67, , Hire purchase 168, , Term loans 1,408,151 1,852, Trade bills 1,191, , Revolving credit 740, ,889 10,091 54,609 3,576,613 3,566,242 10,108 54,624 Bank charges 248, , ,031 Commitment fee 267, , , ,908 4,092,542 4,141, , ,563

18 31. PROFIT BEFORE TAX SUCCESS TRANSFOER CORPORATION BERHAD Annual Report Company This is arrived at after charging: Allowance for impairment loss of receivables: - collective impairment 142,406 66, individual impairment 789, ,508 9,000 - Auditors remuneration: - statutory audit 326, ,136 40,000 36,300 - under provision in prior year (10,789) 22,761 3,700 6,300 - other services 4,516 3,000 4,000 3,000 Bad debts written off 99, Depreciation of investment properties 85,536 85, Depreciation of property, plant and equipment 8,295,520 7,581, Foreseeable loss from contract customers 4,662, Impairment loss of investment in subsidiaries ,523 - Impairment loss of property, plant and equipment 48, Property, plant and equipment written off 145,658 15, Rental expenses: - office 844, , hostel 329, , factory 1,409,874 1,065, crane 4,348, , gas cylinder 8,541 6, forklift 247, , machine 1,185, , motor vehicle 87,053 6, equipment 481,321 7, skylift Research and development expenses 4,330,916 2,612, Unrealised loss on foreign exchange 980, , Write down of inventories 3,504,509 1,468, And Crediting: Bad debts recovered - (81,378) - - Export allowance/incentives (246,372) (129,094) - - Gain from waiver of debts - - (9,411,230) - Gain on disposal of property, plant and equipment (368,318) (228,108) - - Gain on foreign exchange - realised (772,313) (548,533) (11,480) (37,424) - unrealised - - (8,654) (68,378) Insurance compensation (43,455) Fixed deposits interest income (363,410) (195,582) - - Rental income (378,290) (453,774) - - Reversal of allowance for impairment loss of trade receivables (207,357) (491,298) - - Reversal of inventories write down (1,282,321) (210,112) - - Sundry income - (668,164) - -

19 84 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report DIRECTORS REMUNERATIONS Company Directors of the Company: Executive Directors: Fees 135, ,000 90,000 90,000 Salaries and other emoluments 1,530,040 1,362, Defined contribution plan ( EPF ) 224, , Bonus and incentive 1,429,800 1,512, ,319,120 3,213,347 90,000 90,000 Benefits-in-kind 36,496 47, ,355,616 3,261,197 90,000 90,000 * Non-Executive Directors: Fees 260, , , ,000 Salaries and other emoluments 271, , EPF 32,544 33, Bonus and incentive 180, , , , , ,000 Benefits-in-kind 19,231 20, , , , ,000 4,120,011 3,923, , ,000 Directors of the subsidiaries Fees 272, , Salaries and other emoluments 2,537,016 2,332, EPF 250, , Bonus and incentive 439, , ,499,337 3,384, Benefits-in-kind 68,256 63, ,567,593 3,447, Total Directors Remunerations 7,687,604 7,371, , ,000 * Included in the non-executive directors remunerations are remuneration paid to certain directors who are executive directors of subsidiaries amounting to 365,164 (2013 : 341,626).

20 33. EMPLOYEE BENEFITS SUCCESS TRANSFOER CORPORATION BERHAD Annual Report Company Executive Directors Remuneration (excluding benefits-in-kind) (Note 32) 6,818,457 6,597,655 90,000 90,000 Other staff costs Wages, salaries and bonuses 44,223,101 38,480, , ,000 EPF 3,711,812 3,038, Other benefits 6,399,362 4,748,204 4,530-54,334,275 46,267, , ,000 Total Staff Costs 61,152,732 52,865, , , TAX EXPENSE Company (a) (b) Component of tax expense Current tax expense: - Malaysia income tax 10,336,523 11,024, , ,861 - Foreign income tax 1,615, , Deferred tax (income)/expense relating to (reversal)/origination of temporary differences (1,748,251) 234, Withholding tax - 387, ,125 Real property gain tax 22, (Over)/Underprovision in prior years: - current tax (53,682) 116,707 (9,357) - - deferred tax (136,970) (218,222) ,034,708 12,505, , ,986 Reconciliation of income tax expense Profit before tax 35,811,612 44,886,509 15,694,454 7,133,301 Tax at statutory income tax rate of 25% (2013 : 25%) 8,952,953 11,221,627 3,923,614 1,783,325 Tax effect of: - different tax rates in other countries (113,356) (57,951) non-deductible income 1,327, ,741 65,136 14,292 - expenses available for double deduction (196,654) (220,294) non-taxable income (31,130) (208,025) (3,542,841) (1,358,756) Tax saving from utilisation of tax incentives (110,840) (231,810) - - Carried Forward 9,828,415 11,280, , ,861

21 86 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report TAX EXPENSE (CONT D) Company (b) Reconciliation of income tax expense (Cont d) Brought Forward 9,828,415 11,280, , ,861 Deferred tax assets not recognised 434, , Difference of tax rate on capital gain (38,000) Witholding tax - 387, ,125 Under/(Over)provision in prior years: - current tax (53,682) 116,707 (9,357) - - deferred tax (136,970) (218,222) ,034,708 12,505, , ,986 The Malaysian statutory tax rate will be reduced to 24% from the rate of 25% for current financial year effective from year of assessment (c) Subject to the agreement of the Inland Revenue Board, at 31 December, the has deferred tax assets not recognised in the financial statements for the following items under the liability method: Unutilised reinvestment allowances 1,257,000 1,161,000 Unutilised tax losses 7,271,940 5,982,644 Unabsorbed capital allowances 2,138, ,257 10,667,877 7,952, EARNINGS PER ORDINARY SHARE (a) Basic Earnings Per Ordinary Share Basic earnings per ordinary share is calculated by dividing the profit after tax attributable to owners of the Company by the weighted average number of ordinary shares in issue during the financial year, excluding treasury shares held by the Company. Profit after tax attributable to owners of the Company 24,667,638 28,979,315 Units Units Weighted average number of ordinary shares in issue 116,624, ,744,942 Basic earnings per ordinary share (sen) (b) Diluted Earnings Per Ordinary Share The diluted earnings per share of the were not presented as there were no dilutive potential ordinary shares during the financial year.

22 36. DIVIDENDS SUCCESS TRANSFOER CORPORATION BERHAD Annual Report In respect of the financial year ended 31 December 2013 Interim tax-exempt dividend of 6% equivalent to 3 sen per ordinary share on 116,522,223 ordinary shares of 0.50 each - 3,495,667 In respect of the financial year ended 31 December 2014 Interim single-tier dividend of 8% equivalent to 4 sen per ordinary share on116,664,223 ordinary shares of 0.50 each 4,666,569-4,666,569 3,495,667 The directors declared an interim tax-exempt single-tier dividend of 8% equivalent to 0.04 per ordinary share at the Board of Directors Meeting on 24 April 2015 in respect of the financial year ending 31 December This dividend is payable on 15 June 2015 to shareholders whose name appeared in the Company s Record of Depositors on 18 May This dividend shall be accounted for in equity as an appropriation of retained profits for the financial year ending 31 December RELATED PARTY DISCLOSURES (a) (b) Identities of related parties In addition to the information detailed elsewhere in the financial statements, the has related party relationships with its directors, key management personnel and entities within the same group of companies. Other than those disclosed elsewhere in the financial statements, the and the Company also carried out the following significant transactions with the related parties during the financial year: Company Subsidiaries - Rendering of services - - (2,400,000) (2,400,000) - Dividend income - - (4,740,000) (5,435,025) Associates - Sale of goods - (1,809,772) Supply of labour service 1,662,488 1,050, Other directors interest - Sale of goods (2,980,815) (5,729,080) Purchase of goods 1,058,422 6,909, Supply of labour services 99,445 97, Rental of factory 274, , Rental of hostel 516,326 6, Rental of machinery 156, ,

23 88 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report RELATED PARTY DISCLOSURES (CONT D) (c) Compensation Of Key Management Personnel Key management personnel (include the and the Company s executive and non-executive directors) are defined as those persons having authority and responsibility for planning directly and controlling the activities of the Company whether directly or indirectly. The remuneration of directors and other members of key management personnel during the financial year was as follows: Short-term employee benefits 8,861,775 7,901,775 EPF 697, ,874 9,558,924 8,514,649 Included in the total key management personnel compensation are: - Directors of the and of the Company 7,563,621 7,239,281 - Other key management personnel 1,995,303 1,275,368 9,558,924 8,514,649 The remuneration of key management personnel are determined by the remuneration committee having regard to the performance of individuals and market trends. 38. OPERATING SEGMENTS Operating segments are prepared in a manner consistent with the internal reporting provided to the Executive Committee as its chief operating decision maker in order to allocate resources to segments and to assess their performance. For management purposes, the is organised into business units based on their products provided: The comprises the following business segments as follows: Business segments Transformer, lighting and related products Process equipment Business activities Manufacturing and marketing of electrical apparatus industrial lighting and metal products focusing on metal casing and stamping parts. Fabrication of process equipment and metal structures and the provision of maintenance, repair and shutdown works. The Executive Committee assesses the performance of the operating segments based on operating profit or loss which is measured differently from those disclosed in the consolidated financial statements. financing (including finance costs) and income taxes are managed on a group basis and are not allocated to operating segments. Assets, liabilities and expenses which are common and cannot be meaningfully allocated to the operating segments are presented under unallocated items. Unallocated items comprise mainly deferred tax assets and liabilities, tax recoverable, tax liabilities and corporate assets (primarily the Company s headquarters) and head office expenses.

24 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report OPERATING SEGMENTS (CONT D) (a) Business Segments Transformer, lighting and Process related products equipment Eliminations Consolidated At 31 December 2014 Revenue - external sales 248,904, ,510, ,414,578 - inter-segment sales 30,931 - (30,931) - Total revenue 248,935, ,510,336 (30,931) 371,414,578 Segment results 46,296,846 (6,082,618) - 40,214,228 Share of loss of associates - (12,493) - (12,493) 46,296,846 (6,095,111) - 40,201,735 Unallocated corporate expenses (660,991) Finance costs (4,092,542) Interest income 363,410 Profit before tax 35,811,612 Tax expense (10,034,708) Profit for the financial year 25,776,904 Attributable to: Owners of the Company 24,667,638 Non controlling interests 1,109,266 25,776,904 Other Information: Segment assets 297,896, ,560, ,456,243 Unallocated assets 3,321,456 Consolidated total assets 472,777,699 Segment liabilities 96,789, ,982, ,771,944 Unallocated liabilities (5,170,892) Consolidated total liabilities 194,601,052 Other information: Capital expenditure 9,208,734 7,624,833-16,833,567 Depreciation of property, plant and equipment 5,789,084 2,506,436-8,295,520 Depreciation of investment properties 83,896 1,640-85,536 Non-cash expenses (other than amortisation and depreciation) (3,415,140) (5,111,944) - (8,527,084)

25 90 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report OPERATING SEGMENTS (CONT D) (a) Business Segments (Cont d) Transformer, lighting and Process related products equipment Eliminations Consolidated At 31 December 2013 Revenue - external sales 217,083, ,666, ,749,619 - inter-segment sales 7, ,000 (139,177) - Total revenue 217,090, ,798,136 (139,177) 322,749,619 Segment results 43,952,158 10,597,057 (4,779,854) 49,769,361 Share of loss of associates - (301,421) - (301,421) 43,952,158 10,295,636 (4,779,854) 49,467,940 Unallocated corporate expenses (635,965) Finance costs (4,141,048) Interest income 195,582 Profit before tax 44,886,509 Tax expense (12,505,320) Profit for the financial year 32,381,189 Attributable to: Owners of the Company 28,979,315 Non controlling interests 3,401,874 32,381,189 Other Information: Segment assets 272,302, ,246, ,548,313 Unallocated assets 1,727,992 Consolidated total assets 419,276,305 Segment liabilities 89,783,315 65,136, ,919,643 Unallocated liabilities 7,539,385 Consolidated total liabilities 162,459,028 Other information: Capital expenditure 15,526,912 3,663,815-19,190,727 Depreciation of property, plant and equipment 5,305,501 2,275,653-7,581,154 Depreciation of investment properties 83,896 1,639-85,535 Non-cash expenses (other than amortisation and depreciation) 2,437,610 (282,753) - 2,154,857

26 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report OPERATING SEGMENTS (CONT D) (b) Geographical Information Revenue Total Assets Total Capital Expenditure Malaysia 307,600, ,556, ,327, ,059,160 12,059,673 14,671,577 People s Republic of China 80,156,390 65,680,499 41,527,719 34,758,576 3,775,057 1,140,833 Other countries 30,574,021 21,769,633 36,790,246 31,259, ,837 3,378,317 Eliminations (46,915,894) (35,256,755) (67,867,510) (59,801,090) - - Consolidated 371,414, ,749, ,777, ,276,305 16,833,567 19,190,727 (c) Major customers Revenue from one major customer, with revenue equal to or more than 10% of the s revenue, amount to 50,760,063 (2013 : 45,518,072) arising from sales by the process equipment segment. 39. COMMITMENTS (a) Capital commitment At the end of the reporting period, the capital expenditure contracted but not provided for in the financial statements are as follows: Approved and contracted for: Purchase of property, plant and equipment 3,232, ,153 (b) Operating lease commitment At 31 December, the lease commitment contracted to a related company but not provided for in the financial statements are as follows: Not later than one year 162, ,000 Later than one year and not later than five years 648, ,000 Later than five years 243, ,000 1,053,000 1,215,000

27 92 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report CONTINGENT LIABILITIES Company Secured Bank guarantees issued to third party 6,281,960 4,927, Unsecured Corporate guarantee to financial institution for banking facilities granted to subsidiaries ,826,000 54,024,858 At the end of the reporting period, certain subsidiaries have banking facilities from licensed banks which are guaranteed by the Company. Accordingly, the Company is contingently liable to the extent of the outstanding banking facilities of the said subsidiaries. 41. FINANCIAL INSTRUMENTS The s activities are exposed to variety of market risks (including foreign currency risk, interest rate risk), credit risk and liquidity risk. The s overall financial risk management policy focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the s financial performance. (a) Financial Risk Management Policies The following sections provide details on the s and the Company s exposure to the abovementioned financial risks and the objectives, policies and processes for the management of these risks. (i) Foreign currency risk The is exposed to foreign currency risk on transactions and balances that are denominated in currencies other than functional currency. The currencies giving rise to this risk are primarily United States Dollar ( USD ), Singapore Dollar ( SGD ) and Chinese Renminbi ( B ). Foreign currency risk is monitored closely on an ongoing basis to ensure that the net exposure is at an acceptable level. On occasion, the enters into forward foreign currency contracts to hedge against its foreign currency risk.

28 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report FINANCIAL INSTRUMENTS (CONT D) (a) Financial Risk Management Policies (Cont d) (i) Foreign currency risk (Cont d) The s and the Company s exposure to foreign currency is as follows: USD SGD B Others Total At 31 December 2014 Financial Assets Trade receivables 8,358,368 6,101,773 6,232,019 4,756,633 65,754,049 91,202,842 Other receivables 597,493 37,460 1,358, ,023 3,689,761 5,949,493 Amount due from joint venture ,407 65,407 Amount due from associates ,699,523 1,699,523 Amount due from related parties ,251 1,482, ,385 2,465,711 Deposit placed with licensed banks ,686,000 8,871,545 10,557,545 Cash and bank balances 1,980,820 4,325,987 7,618,953 2,485,448 16,954,792 33,366,000 10,936,681 10,465,220 15,441,979 10,676,179 97,786, ,306,521 Financial Liabilities Loans and borrowings (13,036,265) (3,849,530) - - (84,082,077) (100,967,872) Hire purchase payables - (472,633) - (146,617) (2,929,329) (3,548,579) Trade payables (757,922) (1,129,431) (12,548,238) (113,583) (27,051,564) (41,600,738) Other payables and accruals (662,776) (424,323) (3,125,819) (268,546) (25,371,641) (29,853,105) Amount due to an associate (641,075) (641,075) Amount due to related parties - - (2,069,773) - (348,382) (2,418,155) (14,456,963) (5,875,917) (17,743,830) (528,746) (140,424,068) (179,029,524) Net financial assets/ (liabilities) (3,520,282) 4,589,303 (2,301,851) 10,147,433 (42,637,606) (33,723,003) Less: Net financial (assets)/liabilities denominated in the respective entities functional currency - (346,787) 2,324,059 (9,360,311) 42,637,606 35,254,567 Currency exposure (3,520,282) 4,242,516 22, ,122-1,531,564

29 94 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report FINANCIAL INSTRUMENTS (CONT D) (a) Financial Risk Management Policies (Cont d) (i) Foreign currency risk (Cont d) USD SGD B Others Total At 31 December 2013 Financial Assets Trade receivables 9,816,636 7,347,532 6,037,743 1,627,853 77,971, ,800,934 Other receivables 2,103,021 5,439 1,184, ,150 1,472,456 4,882,677 Amount due from joint venture ,407 65,407 Amount due from associates ,944,772 1,944,772 Amount due from related parties ,126, ,321 2,917,268 Deposit placed with licensed banks ,500 14,322,856 14,457,356 Cash and bank balances 793,351 2,789,490 3,810,781 3,282,220 13,120,201 23,796,043 12,713,008 10,142,461 11,033,135 7,288, ,687, ,864,457 Financial Liabilities Loans and borrowings (10,680,069) (4,161,573) - - (69,809,825) (84,651,467) Hire purchase payables - (295,079) - (98,437) (1,710,995) (2,104,511) Trade payables (1,298,520) (1,244,411) (14,334,114) (767,880) (22,850,309) (40,495,234) Other payables and accruals (704,098) (238,030) (2,555,079) (230,061) (23,268,727) (26,995,995) Amount due to an associate (351,132) (351,132) Amount due to related parties - - (21,243) - (300,061) (321,304) (12,682,687) (5,939,093) (16,910,436) (1,096,378) (118,291,049) (154,919,643) Net financial assets/ (liabilities) 30,321 4,203,368 (5,877,301) 6,192,292 (8,603,866) (4,055,186) Less: Net financial (assets)/liabilities denominated in the respective entities functional currency - 515,126 5,881,085 (5,585,536) 8,603,866 9,414,541 Currency exposure 30,321 4,718,494 3, ,756-5,359,355

30 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report FINANCIAL INSTRUMENTS (CONT D) (a) Financial Risk Management Policies (Cont d) (i) Foreign currency risk (Cont d) USD B Others Total Company At 31 December 2014 Financial Assets Amount due from subsidiaries , , ,919 Cash and bank balances , , ,371 1,096,185 1,121,556 Financial Liabilities Other payables and accruals (388,714) (388,714) Amount due to subsidiaries (3,335,685) (3,335,685) (3,724,399) (3,724,399) Net financial assets/ (liabilities) ,371 (2,628,214) (2,602,843) Less: Net financial liabilities denominated in the entities functional currency ,628,214 2,628,214 Currency exposure ,371-25,371 At 31 December 2013 Financial Assets Other receivables , ,707 Amount due from subsidiaries 12,192 7,901 26,133 18,621 64,847 Cash and bank balances ,712 22,712 12,192 7,901 26, , ,266 Financial Liabilities Loans and borrowings (500,000) (500,000) Other payables and accruals (289,919) (289,919) Amount due to subsidiaries (49,837,119) (49,837,119) (50,627,038) (50,627,038) Net financial assets/ (liabilities) 12,192 7,901 26,133 (50,451,998) (50,405,772) Less: Net financial liabilities denominated in the entities functional currency ,451,998 50,451,998 Currency exposure 12,192 7,901 26,133-46,226

31 96 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report FINANCIAL INSTRUMENTS (CONT D) (a) Financial Risk Management Policies (Cont d) (i) Foreign currency risk (Cont d) Foreign currency risk sensitivity analysis The following table details the sensitivity analysis to a reasonably possible change in the foreign currencies at the end of the reporting period, with all other variables held constant: Company Increase/(Decrease) Increase/(Decrease) Effects on profit after tax USD / - strengthened by 1% (26,402) SGD / - strengthened by 1% 31,819 35, A weakening of the above currencies against Ringgit Malaysia at the reporting date would have had the equal but opposite effect on the above currencies to the amounts shown above, with all other variables held constant. (ii) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The s exposure to interest rate risk arises mainly from interest-bearing financial assets and liabilities. The s policy is to obtain the most favourable interest rates available. Any surplus funds of the will be placed with licensed financial institutions to generate interest income. Information relating to the s exposure to the interest rate risk of the financial liabilities is disclosed in Note 41(a)(iv) to the financial statements. Interest rate risk sensitivity analysis The following table details the sensitivity analysis to a reasonably possible change in the interest rates at the end of the reporting period, with all other variables held constant: Company Effects on profit after tax Increase of 50 basis points (bp) (113,794) (210,862) - (4,240) Decrease of 50 basis points (bp) 113, ,862-4,240

32 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report FINANCIAL INSTRUMENTS (CONT D) (a) Financial Risk Management Policies (Cont d) (iii) Credit risk The s exposure to credit risk, or the risk of counterparties defaulting, arises mainly from trade and other receivables. The manages its exposure to credit risk by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis. For other financial assets (including cash and bank balances), the minimises credit risk by dealing exclusively with high credit rating counterparties. The establishes an allowance for impairment that represents its estimate of incurred losses in respect of the trade and other receivables as appropriate. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. Impairment is estimated by management based on prior experience and the current economic environment. Credit risk concentration profile The s major concentration of credit risk relates to the amounts owing by NIL (2013 : 1) customers which constituted approximately NIL (2013 : 10%) of its trade receivables at the end of the reporting period. Exposure to credit risk As the does not hold any collateral, the maximum exposure to credit risk is represented by the carrying amount of the financial assets at the end of the reporting period and those disclosed in Note 40 to the financial statements. The exposure of credit risk for trade receivables (including amount due from related parties) by geographical region is as follows: By country: Malaysia 62,485,863 69,498,562 Singapore 11,587,264 18,368,902 Other countries 21,104,027 19,615,510 95,177, ,482,974

33 98 SUCCESS TRANSFOER CORPORATION BERHAD Annual Report FINANCIAL INSTRUMENTS (CONT D) (a) Financial Risk Management Policies (Cont d) (iii) Credit risk (Cont d) Ageing analysis The ageing analysis of the s trade receivables (including amount due from related parties) at the end of the reporting period is as follows: As 31 December 2014 Individual Collective Carrying Gross amount impairment impairment Value Neither past due nor impaired 76,305,297 (3,643) - 76,301,654 Past due but not impaired: - 1 to 30 days 4,706,274 - (1,337) 4,704, to 120 days 6,242,200 - (4,375) 6,237,825 - more than 120 days 12,869,669 (2,923,395) (2,013,536) 7,932, ,123,440 (2,927,038) (2,019,248) 95,177,154 At 31 December 2013 Neither past due nor impaired 80,330, ,330,889 Past due but not impaired: - 1 to 30 days 6,293, ,293, to 120 days 13,516,598 - (115,080) 13,401,518 - more than 120 days 12,041,138 (2,822,462) (1,761,971) 7,456, ,182,487 (2,822,462) (1,877,051) 107,482,974 At the end of the reporting period, trade receivables that are individually impaired were those have defaulted on payments. These receivables are not secured by any collateral or credit enhancement. The collective impairment allowance is determined based on estimated irrecoverable amounts from the sale of goods, determined by reference to past default experience. Trade receivables that are neither past due nor impaired A significant portion of trade receivables that are neither past due nor impaired are regular customers that have been transacting with the. The uses ageing analysis to monitor the credit quality of the trade receivables. Any receivables have significant balances past due, which are deemed to have higher credit risk, are monitored individually. Trade receivables that are past due but not impaired The believes that no impairment allowance is necessary of these trade receivables. They are substantially companies with good collection track record and no recent history of default.