5 YEARS FINANCIAL HIGHLIGHTS

Transcription

1 Annual Report 2013

2 5 YEARS FINANCIAL HIGHLIGHTS Revenue (RM Million) Shareholders Equity (RM Million) PBT (RM Million) PAT after NCI (RM Million) EPS (Sen) NTA per share (RM) REVENUE (RM Million) SHAREHOLDERS EQUITY (RM Million) PBT (RM Million) PAT AFTER NCI (RM Million) EPS (Sen) NTA PER SHARE (RM)

3 CONTENTS 2 Corporate Structure 4 Corporate Information 5 Chairman and Managing Director s Statement 8 Corporate Social Responsibility Statement 9 Directors Profile 13 Corporate Governance Statement 19 Audit Committee Report 22 Statement on Risk Management and Internal Control 24 Other Compliance Information 25 Financial Statements 106 List of Properties 109 Analysis of Shareholdings 112 Notice of Annual General Meeting 116 Statement Accompanying Notice of Annual General Meeting Proxy Form

4 2 CORPORATE STRUCTURE 100% SUCCESS ELECTRONICS & TRANSFORMER MANUFACTURER SDN. BHD. (SETM) 65% SEREMBAN ENGINEERING BERHAD* (SEB) 100% SUCCESS TRANSFORMER MARKETING SDN. BHD. (STMKT) 100% SEB RESOURCES SDN. BHD. (SEBR) 100% SUCCESS TRANSFORMER MANUFACTURER SDN. BHD. (STMFR) 100% SEREMBAN MECHANICAL SERVICES SDN. BHD. (SMS) 100% SES PROPERTY SDN. BHD. (SESP) 100% ACE STANDARD INTERNATIONAL LIMITED (ACE) (Incorporated in British Virgin Island) 100% NIKKON INDUSTRIAL LIGHTING SDN. BHD. (NKIL) 60% SEPEN ENGINEERING SDN. BHD. (SEPEN) 100% ARUANMOTA SDN. BHD. (ASB) 50% GROUPAGE SEB SDN. BHD. (GSSB) 100% NIKKON LIGHTING PTY. LTD. (NLPL) (Incorporated in Australia) 40% SELEKTA SPEKTRA SDN. BHD. (SSSB) 80% NIKKON LED SDN. BHD. (NLED) 40% NINE ENERGY SDN. BHD. (NESB) 75% DAIICHI STEEL SDN. BHD. (DS) 65% OMEGA METAL INDUSTRIES SDN. BHD. (OMI) 60% EOS LIGHTING SDN. BHD. (EOS) 51% NIKKON SUCCESS KENYA LIMITED (NSK) (Incorporated in Republic of Kenya) 49% NIKKON LIGHTING (THAILAND) CO. LTD. (NLT) (Incorporated in Thailand)

5 CORPORATE STRUCTURE (CONT D) 3 60% BOXON INDUSTRIES HARDWARE (M) SDN. BHD. (BIHM) 100% 100% BOXON INDUSTRIES HARDWARE (JB) SDN. BHD. (BIHJ) (Formerly known as B-POWER MARKETING (M) SDN. BHD. BOXON INDUSTRIES HARDWARE (S) PTE. LTD. (BIHS) (Incorporated in Singapore) 60% NINGBO SUCCESS ZHENYE LUMINAIRE LIMITED LIABILITIES COMPANY (NSZ) (Incorporated in People s Republic of China) 60% NINGBO SUCCESS ZHENYE CASTING LIMITED LIABILITIES COMPANY (NSC) (Incorporated in People s Republic of China) 100% SUCCESS TRANSFORMER PTE. LTD. (STPL) (Incorporated in Singapore) 55% NIKKON LIGHTING & ELECTRICAL PTE. LTD. (NLE) (Incorporated in Singapore) 80% PT. BOXON NIKKON JAYAINDO (BNJ) (Incorporated in Indonesia) Incorporated In Malaysia Incorporated Outside Malaysia * Listed on the Main Market of Bursa Malaysia Securities Berhad

6 4 CORPORATE INFORMATION BOARD OF DIRECTORS Independent Non-Executive Director, Chairman Liew G Liew Chee Hoe Managing Director Tan Ah Tan Ah Ping Executive Director Pan Kim Foon Woh Way Cheang Independent Non-Executive Director Chiam Tau Meng Non-Independent Non-Executive Director Yeoh Kim Wah Wong Poh Chee Alternate Director to Pan Kim Foon Tan Chung Ling AUDIT COMMITTEE Chairman Chiam Tau Meng Members Yeoh Kim Wah Liew G Liew Chee Hoe NOMINATION COMMITTEE Chairman Liew G Liew Chee Hoe Members Yeoh Kim Wah Chiam Tau Meng REMUNERATION COMMITTEE Chairman Liew G Liew Chee Hoe Members Tan Ah Tan Ah Ping Chiam Tau Meng COMPANY SECRETARY Pang Kah Man (MIA 18831) REGISTERED OFFICE 3-2, 3 rd Mile Square No.151, Jalan Kelang Lama Batu 3½ Kuala Lumpur Tel : (603) Fax : (603) CORPORATE OFFICE No. 3, 5 & 7, Jalan TSB 8 Taman Industri Sungai Buloh Sungai Buloh Selangor Darul ehsan Tel : (603) / 2785 (Hunting Line) Fax : (603) / ses@success.com.my Website : AUDITORS Crowe Horwath (AF 1018) Chartered Accountants Muar Office, 8 (2 nd Floor) Jalan Pesta 1/1 Taman Tun Dr. Ismail Jalan Bakri, Muar Johor, Malaysia SHARE REGISTRAR Symphony Share Registrars Sdn Bhd Level 6, Symphony house Block D13, Pusat Dagangan Dana 1 Jalan PJU 1A/ Petaling Jaya Selangor Darul Ehsan Tel : (603) Fax : (603) PRINCIPAL BANKERS AMBANK (M) BeRhAD CIMB BANK BeRhAD CITIBANK BeRhAD hong LeONG BANK BeRhAD hsbc BANK MALAYSIA BeRhAD STANDARD ChARTeReD BANK MALAYSIA BeRhAD united OVeRSeAS BANK (MALAYSIA) BeRhAD STOCK EXCHANGE LISTING Main Market of BuRSA MALAYSIA SeCuRITIeS BeRhAD

7 CHAIRMAN & MANAGING DIRECTOR S STATEMENT 5 Dear Shareholders, On behalf of the Board of Directors and the Management of Success Transformer Corporation Berhad (STC), we are pleased to present the Annual Report and Audited Financial Statements for the financial year ended 31 December FY2013 FINANCIAL PERFORMANCE STC has successfully recorded an improved turnover of RM322.7 million for the financial year ended The figure represents an increase of RM27.14million or 9.18% over the previous financial year s result of RM295.6 million. The Group has witnessed a corresponding increase in the profit after tax ( PAT ) amounting to RM32.4 million. This is a marked improvement over the RM30.6 million (figure recorded in the year 2012). Earnings per share stood at 25.0 sen. It is an improvement compared to the 23.6 sen recorded last year. Likewise, net tangible assets per share attributable to owners of the parent corporation have reflected this continued upward momentum in growth at an audited figure of RM2.13 per share, up from RM1.89 in the previous year. The Board and Management view these improved results as a reflection of the sound stewardship of the Company s assets and financials as well as the strategic identification to grasp growth opportunities. STC continues its upward momentum by enhancing its effort towards an improved performance in STC believes that the results of the coming years will likewise reflect this positive trend. DIVIDENDS As regards to the financial year ended 31 December 2013, the Board of Directors has paid an interim tax-exempt cash dividend of 6% equivalent to 3 sen per ordinary share, amounting to a total of RM3.5 million. This cash dividend was declared on 22 April 2013 and subsequently paid on 7 June In respect of the financial year ending 31 December 2014, the Board of Directors has declared an interim single-tier dividend of 8% equivalent to 4 sen per ordinary share on 19 March The Board will continue to justify shareholders investments with future dividends with the expected increase in the Group s performance, while ensuring that funds are responsibly managed for the Group s operations and reinvestments.

8 6 CHAIRMAN & MANAGING DIRECTOR S STATEMENT (CONT D) LIGHTING AND TRANSFORMERS S W LED Street Lantern S W LED Floodlight S W LED Highbay K W LED Floodlight The Group, one of the largest low-voltage transformer and lighting manufacturers in Malaysia, has successfully established its long standing commitment for lighting and transformer solutions. The coming financial year is a continuation of our exploration of key growth opportunities through the expansion and exploration of new markets through both local and export markets. The Group s LED lighting products is riding on a new growth path of technological advancement and a growing awareness in eco-friendly LED lighting products and transformers. Research and development (R&D) initiatives are also conducted. The Group is proud of its products, with standards meeting to international requirement. With the added impetus from FY2013, the Group will continue its search for merger and acquisition (M&A) candidates. Future M&A candidates will be in line with the Group s strategy to diversify our business operations to cater for uncertainties resulting from industry and macro-environment downturns. More importantly, candidates are able to support, strengthen and complement existing subsidiaries operations to better synergise business operations in the future. With proper strategies, the Group has established marketing and distribution offices overseas. In addition to its significant local presence in Malaysia, the Group is aggressively venturing into major markets around the world. SETM is currently exporting to over 60 countries including Australia, Singapore, Kenya, the United Arab Emirates (UAE), Japan, Korea and the European countries. With the on-going consolidation of each subsidiary s strengths, the Group continues to invest in the establishment and promotion of its in-house brands which are already on par with global players. The Group s Own Design Manufacturing (ODM) and Own Brand Model (OBM) already include the well-known NIKKON, QPS, SES, LIKO and SUPER-LITE brands all of which have already made their mark among local and export clients.

9 CHAIRMAN & MANAGING DIRECTOR S STATEMENT (CONT D) 7 PROCESS EQUIPMENT It has been over six years since Success Transformer Corporation Berhad ( STC ) diversified into process equipment manufacturing via the acquisition of Seremban Engineering Sdn. Bhd. ( SEB ), which involved the manufacturing and fabrication of process equipment such as unfired pressure vessels, storage tanks, silos, and heat exchangers. During the financial year ended 2013, the SEB Group showed a higher revenue of RM million and lower net profit after taxation (PAT) and after non-controlling interest (NCI) of RM 6.27 million as compared to a revenue of RM million and PAT after NCI of RM 6.96 million previous year. This is mainly due to higher administrative, finance expenses and provision of tax in The oil and gas sector is expected to remain the key growth driver for the Malaysian economy contributing some 20% of the nation s GDP. All these translate into a robust industry outlook and more upstream and downstream opportunities for oil and gas service providers. Moving forward, the global economy remains confronted with challenges and the Malaysian economy is expected to continue on steady growth and to be supported by the continued expansion in domestic demand. We are pleased to report that we are making good progress in the oil and gas industry and this will further sustain our growth. While the outlook in the oil and gas sector in Malaysia is expected to be promising, the market condition in palm oil and other industries remain challenging. Moving forward, we are confident that SEB Group will continue to deliver satisfactory performance in S439 30W Solar Street Lantern Power Transformer Up to 2000KVA CONCLUSIONS The Group, who has strived to record satisfactory financial results in 2013, continues to showcase a meticulous effort to expand business opportunities and operations while being anchored with strong financial guidance and stewardship. Moreover, Success Transformer Corporation Berhad will continually seek further ways of improvement that will serve to benefit its subsidiaries through greater flexibility in our strategic focuses while retaining the Group s strengths in its areas of market leadership. ACKNOWLEDGEMENTS Managing Director, Mr. Tan Ah Tan Ah Ping on behalf of the Board of Directors and the Management, would like to take this opportunity to thank Mr. Liew G Liew Chee Hoe who will be retiring at the end of this Annual General Meeting for his invaluable services rendered. SES Current Transformer STM2420 Automotive Lead Acid Battery Charger In particular, we would like to thank the Group s employees who have worked hard to achieve this year s results. We would also like to express our appreciation to our valued customers, suppliers, business associates and stakeholders, who have given their unwavering support and loyalty. Finally, we want to record our gratitude to the Board of Directors for their contribution towards success of the Company. LIEW G LIEW CHEE HOE Chairman TAN AH TAN AH PING Managing Director

10 8 CORPORATE SOCIAL RESPONSIBILITY STATEMENT In the past several years, Corporate Responsibility (CR) has been an integral part of STC s corporate culture. STC, a socially responsible group, is committed to remain focused to develop and implement its corporate responsibility initiatives. Continuously, the Group uplifts a long-term benefit to its employees and the rest of the community, and hold firm to its belief that CR is the key to its business sustainability and success. STC aims to build a stable, inviting working culture and atmosphere for its employees. The Group focuses on staff education and the provision of a safe, non-hazardous and pleasant environment. In order to foster a better interaction and teamwork amongst its people particularly its employees, the Group further provides trainings, social and sports activities. In dealing with our customers, we strongly advocate honesty and integrity as a prerequisite for strong and lasting relationships. Thus, our aim is to continuously maintain the strong bonds we have cultivated with our customers, suppliers and business associates so that we can satisfy our customers with good quality products at attractive prices with punctual deliveries. As a responsible corporation, we are regularly involved with social and community services with contributions in cash and in kind to charitable and welfare organisations. Looking forward, we will continue to pay great importance to social responsibility while striving for good profitability benefitting the society and environment.

11 DIRECTORS PROFILE 9 LIEW G LIEW CHEE HOE Independent Non-Executive Director and Chairman TAN AH TAN AH PING Managing Director PAN KIM FOON Executive Director Mr Liew G Liew Chee Hoe, aged 78, a Malaysian, is an Independent Non-Executive Director of STC. He was appointed to the Board of the Company on 8 November 2004 and became the Chairman on 7 March He is a member of the Audit Committee and the Chairman of Nomination Committee and Remuneration Committee. He graduated with a degree in electrical engineering from the University of Manchester (U.K.) in Thereafter, he joined Lembaga Lektrik Negara in 1959 as an engineer. In 1972, he joined Tamco Cutler Hammer as an Electrical Engineer and was subsequently promoted to Works Manager. In 1975, he left Tamco Cutler Hammer to form G.H. Liew Engineering Services Sdn Bhd which provides maintenance and testing services in electrical engineering. He was the President of The Electrical & Electronic Association of Malaysia (TEEAM) from 1989 to He was also the President of Asean Federation of Electrical Engineering Contractors from 1987 to Mr. Tan Ah Tan Ah Ping, aged 63, a Malaysian, the founder of STM Group, is the Managing Director of STC. He was appointed to the Board of the Company on 25 October 2004 and he is also a member of the Remuneration Committee. In 1978, Mr. Tan Ah Tan Ah Ping formed Syarikat Success Electronics Trading. In 1990, SETM was incorporated to take over the business activities of Success Electronics Trading. In 1995, STM became the holding company of SETM. In 1998, he established STMKT to focus on the local marketing activities of the STM Group and in 1999, DS was established and OMI was incorporated in In 2007, STC has diversified its business through the acquisition of equity in SEB. Currently, he is responsible for the overall management, strategic business planning and development, decision making and technical advisory of the STC Group. He has been appointed as a member of nomination committee of SEB. He also assumes the role of Managing Director or Director of most subsidiaries of STC. Madam Pan Kim Foon is the wife and Ms Tan Chung Ling is the daughter of Mr. Tan Ah Tan Ah Ping. Madam Pan Kim Foon, aged 59, a Malaysian, is an Executive Director of STC. She was appointed to the Board of the Company on 25 October She advises the STC Group on business strategies and planning, purchasing and management matters. She has more than 35 years of working experience in the Electrical Industrial Equipment Industry. She started her career with Syarikat Success Electronics Trading and established Success Electronics Trading in 1980 to take over the manufacturing and trading of electrical apparatus of Syarikat Success Electronics Trading and was responsible for sales activities. Together with a few shareholders, her husband and her incorporated SETM 1990 to take over the business activities of Success Electronics Trading and she was appointed as Executive Director of SETM. She oversees the management functions, strategic business plannning and development of the STC Group. She is also the Executive Director in subsidiaries of STC, namely STM, STMKT, SESP and NKIL. Mr. Tan Ah Tan Ah Ping is the husband and Ms Tan Chung Ling is the daughter of Madam Pan Kim Foon.

12 10 DIRECTORS PROFILE (CONT D) WOH WAY CHEANG Executive Director YEOH KIM WAH Non-Independent Non-Executive Director CHIAM TAU MENG Independent Non-Executive Director Mr. Woh Way Cheang, aged 52, a Malaysian, is an Executive Director of STC. He was appointed to the Board of the Company on 25 October He has more than 27 years of working experience in the Electrical & Equipment Industry. He graduated from Tunku Abdul Rahman College and obtained Mechanical Engineering Degree from the Institution of Mechanical Engineer, United Kingdom. His career started in 1987 when he joined Matsushita Refrigerator Bedok in Singapore and subsequently joined Sumitomo Electric Sintered Components Sdn Bhd and Akoko Sdn Bhd. In 1995, he joined SETM and he was promoted to General Manager in 2000, a position he holds until now. Currently, he is the Head of Operations overseeing the manufacturing operations, assisting in overall strategic planning and business development of the STC Group. Mr. Yeoh Kim Wah, aged 61, a Malaysian, was appointed to the Board of the Company on 7 March 2008 as a Non-Independent Non-Executive Director. He is also a member of the Audit Committee and Nomination Committee. He is an entrepreneur with more than 39 years of extensive knowledge and experience in the electrical supplies industry. He is one of the founders of Syarikat See Wide Letrik Group of Companies, a well established electrical trading group throughout Malaysia. He is primarily responsible for business development and implementation of marketing strategies of these companies. Presently, he holds numerous directorships and business interests in several other private companies, such as Syarikat See Wide Letrik Sdn Bhd, See Wide Industries Sdn Bhd and NSK. Mr Chiam Tau Meng, aged 61, a Malaysian, is an Independent Non- Executive Director of STC. He was appointed to the Board of the Company on 15 August Currently, he is also the Chairman of the Audit Committee and a member of the Nomination Committee and Remuneration Committee. Mr Chiam Tau Meng graduated with a Bachelor of Commerce Degree majoring in Accountancy from University of Otago, Dunedin, New Zealand in He is an Associate Chartered Accountant of the Institute of Chartered Accountants of New Zealand and Malaysian Institute of Accountant. He started his career in 1976 as Finance Manager of Tolley Industries Ltd (New Zealand) and in 1979, he joined Malaysian Containers (1974) Berhad as Finance Manager cum Company Secretary. In 1984, he joined Menang Corporation (M) Berhad as General Manager of Corporate Services and in 1989 he joined Bee Hin Holdings Sdn. Bhd. as General Manager of Corporate Finance in charge of the reconstruction scheme under Section 176 of the Companies Act 1965 on Kuala Lumpur Industries Berhad. In 1992, he was in the management consultancy practice of an international accounting organisation and in 1994, he set up his own consulting practice namely CTM Consulting. Presently, he is also an Independent Non-Executive Director of Menang Corporation (M) Berhad, KYM Holdings Berhad, Seremban Engineering Berhad and Hovid Berhad.

13 DIRECTORS PROFILE (CONT D) 11 WONG POH CHEE Non-Independent Non-Executive Director TAN CHUNG LING Alternate Director to Pan Kim Foon Ms Wong Poh Chee, aged 46, a Malaysian, was appointed as Non- Independent Non-Executive Director of STC on 4 March Prior to her appointment, she was the Alternative Director to Mr Wong Choon Cheon since 21 August She ceased to be the Alternative Director following the resignation of Mr Wong Choon Chean as a Director of STC on 4 March She obtained her Bachelor of Science majoring in Marketing from California State University, Fresno, United States of America in May She began her career in July 1990 as an Administrative Supervisor with the Investor s Business Daily in Los Angeles, United States where she was responsible for managing and supervising the entire Telemarketing/Marketing Department for the financial newspaper company. In 1991, she returned to Malaysia and joined Seremban Engineering Sdn Bhd ( SESB ) as an Administrative Assistant. She was appointed as a Director of SESB and promoted to the position of Operations and Administrative Manager in She was responsible for overseeing the entire Information Technology, overall operations, administrative, human resources, finance and marketing functions of SESB. SESB was later converted to Seremban Engineering Berhad (SEB) prior to its listing on the Main Market of Bursa Malaysia Securities Berhad in May 2010, a 65%-owned subsidiary of our Company. She is currently an Executive Director of SEB. She holds various positions within Federation of Malaysian Manufacturers ( FMM ) including Seremban Regional Chairman of FMM from 2001 to 2004, Small and Medium Industries Committee Chairman of FMM from 2001 to She was the Chairman and Council Member of FMM from November 2006 until October She is the committee member of FMM Strategic Policies Committee and Finance Committee and the Chairman of the Women in Business Committee of FMM since April She is currently the Vice Chairman of the Negeri Sembilan Branch of the FMM since October 2010 and the committee member of FMM Women In Business. She was also a member of the Steering Committee of the World Congress Chambers, which was held from 3 to 5 June She was awarded the DNS (Darjah Setia) by the Negeri Sembilan Yang Dipertuan Besar in She is the Director of SEPEN, SEBR, ACE, NESB and Wtech Holdings Sdn Bhd ( WTECH ). she is also the substantial shareholder of WTECH, which in turn is a substantial shareholder of our Company. Ms Tan Chung Ling, aged 37, a Malaysian. She was appointed as the Alternate Director of STC to Madam Pan Kim Foon on 17 February In 1999, she obtained her Bachelor of Commerce from Murdoch University, Australia and subsequently in 2001 she obtained her Masters of Electronic Commerce from Curtin University, Australia. Within the same year, she started her career at SETM as International Sales Coordinator. Subsequently in 2003, she was transferred internally to STMKT and was promoted to Business Development Manager of STMKT in Currently, she is responsible for business strategic planning, market planning and developing new markets. Subsequently, she was also appointed as Director of SEBR, BIHM, BIHS, and BNJ. Mr. Tan Ah Tan Ah Ping is the father and Madam Pan Kim Foon is the mother of Ms Tan Chung Ling.

14 12 DIRECTORS PROFILE (CONT D) OTHER INFORMATION Conflict of Interest Save as disclosed in the Circular to shareholders dated 27 May 2014, none of the Directors has any conflict of interest with the business of the company. Convictions None of the Directors has convicted of any offences within the past 10 years other than traffic offences. Attendance of Directors at Board Meetings There were five (5) Board Meetings held during the financial year ended 31 December 2013 and all Directors have attended these meetings.

15 CORPORATE GOVERNANCE STATEMENT 13 The Board of Directors recognises the importance of establishing and maintaining good corporate governance within the Company and its subsidiaries and associates ( Group or STC Group ). The Board is committed to ensure the adoption of the principles and best practices of the Malaysian Code on Corporate Governance 2012 ( MCCG 2012 ) as a fundamental part of discharging its responsibilities to protect and enhance shareholders value and the financial performance of the Group. This statement sets out the manner in which the Group has applied and observed the principles and recommendations of the MCCG 2012 during the financial year under review. PRINCIPLE 1 ESTABLISH CLEAR ROLES AND RESPONSIBILITIES The Board is responsible for the overall governance and conduct of the Group s strategic plan, including its implementation, and is accountable for the performance of the Company and the Group. The Board assumes the following duties and responsibilities: Reviewing and adopting a strategic plan for the Company, addressing the sustainability of the Company s business; Overseeing the conduct of the Company s business and evaluating whether or not its businesses are being properly managed; Identifying principal risks faced by the Group and ensuring the implementation of appropriate systems to manage and mitigate these risks; Succession planning, including appointing and training, replacing key management; Overseeing the development and implementation of a shareholder communication policy; and Reviewing the adequacy and integrity of the Group s internal control management information system. To assist in the discharge of its duties, the Board has established Board Committees, namely the Audit Committee, Nomination Committee and Remuneration Committee, to examine specific issues within their respective terms of reference as approved by the Board and report to the Board with their recommendations. The ultimate responsibility for decision making, however, lies with the Board. i. Charter of Board In discharging its duties, the Board also guided by its Charter which outlines the authority, delegations, responsibilities of the Board, matters that are specifically reserved for the Board. There is a formal schedule of matters reserved to the Board for its deliberation and decision to ensure the direction and control of the Company are in its hand. In line with Recommendation 1.7 of the MCCG 2012, the Board Charter is available on corporate website at com.my ii. Code of Conduct The Board has formalized a Code of Conduct, setting out the standards of conduct expected from Directors and all employees of the Group. The Code of Conduct provides guidance for Directors regarding ethical and behavioural considerations and/ or actions as they address their duties and obligations during the appointment. The Board should periodically review the Code of Conduct and a summary of the Code of Conduct is available on the company website. iii. Sustainability of Business The Board is mindful of the importance of business sustainability and, in conducting the Group s business, the impact of the Group s business on the environmental, social and governance ( ESG ) is taken into consideration. The Board will incorporate ESG aspect while formalize the company s strategies on promoting its sustainability. The Group activities on corporate social responsibilities during the financial under review are disclosed on page 8 on this Annual Report.

16 14 CORPORATE GOVERNANCE STATEMENT (CONT D) iv. Access to Information and Advice The Board members have full and unrestricted access to all information pertaining to the Group s business and affairs. Directors are supplied with relevant information and reports on financial, operational, corporate, regulatory, business development and audit matters for decisions to be made on an informed basis and effective discharge of the Board s responsibilities. Besides, the Board may also obtain independent professional advice at the Company s expense through an agreed procedure set out in the Board Charter. In additional, the Board is regularly updated and advised by the Company Secretary who is qualified and competent on statutory and regulatory requirements in carrying out its roles and responsibilities. PRINCIPLE 2 STRENGTHEN COMPOSITION OF THE BOARD As at the date of the Annual Report, the Board has seven (7) members comprising one (1) Independent Non-Executive Chairman, one (1) Independent Non-Executive Director, three (3) Executive Directors (including the Managing Director), two (2) Non- Independent Non-Executive Directors and one (1) Alternate Director. This composition complies with Paragraph of the Main Market Listing Requirements ( Listing Requirements ) of Bursa Malaysia Securities Berhad ( Bursa Securities ) whereby the Company must have at least two (2) directors or one-third (1/3) of the Board, whichever is higher who are independent directors. The Board has a healthy mix of both genders. The Profile of each director is presented on page 9 to 12. Appointments to the Board The objective of the Nomination Committee is to ensure that there is a formal and transparent procedure for appointment of new directors and appraisal of directors for recommendation to the Board. However, the Board has the final decision on appointments after considering the recommendations of the Committee. The members are as follows: Chairman: Liew G Liew Chee Hoe (Independent Non-Executive Director) Member: Yeoh Kim Wah (Non-Independent Non-Executive Director) Member: Chiam Tau Meng (Independent Non-Executive Director) The Nomination Committee operates under its terms of reference and had two (2) meetings during the financial year ended 31 December Re-election of Directors In accordance with the Articles of Association of the Company, all directors shall retire from office once in every three (3) years but shall be eligible for re-election and one-third (1/3) of the directors shall retire from office and be eligible for re-election at each Annual General Meeting ( AGM ). Newly appointed directors during the financial year shall hold office until the next following AGM and shall then be eligible for re-election. This requirement has been adhered to by the Board members in AGM. Directors Remuneration The objective of the Remuneration Committee is to recommend the remuneration framework of executive directors to the Board. The remunerations and entitlements of the non-executive directors including the Non-Executive Chairman shall be a matter to be decided by the Board as a whole with the director concerned abstaining from deliberation and voting on his individual remuneration. The Remuneration Committee had one (1) meeting during the financial year ended 31 December This meeting was attended by all members.

17 CORPORATE GOVERNANCE STATEMENT (CONT D) 15 The members of the Remuneration Committee are: Chairman: Liew G Liew Chee Hoe (Independent Non-Executive Director) Member: Tan Ah Tan Ah Ping (Managing Director) Member: Chiam Tau Meng (Independent Non-Executive Director) The Remuneration Committee adopts the principles recommended by the MCCG 2012 in determining the directors remuneration, whereby, the executive remuneration is designed to link rewards to the Group s performance whilst the remuneration of the Non-Executive Directors is determined in accordance with their experience and the level of responsibilities assumed. The Directors fees are subject to the approval of the shareholders of the Company at AGMs. The number of Directors of the Company whose income falls within the following bands are set out as follows: Number of Directors Executive Non-executive RM 50,000 and below - 1 RM 50,001 to RM 100,000-1 RM 100,001 to RM 150, RM 150,001 to RM 200,000-1 RM 200,001 to RM 300, RM 300,001 to RM 350, RM 350,001 to RM 400,000-1 RM 400,001 to RM 650, RM 650,001 to RM 700, RM 700,001 to RM 950, RM 950,001 to RM 1,000, RM 1,000,001 to RM 1,250, RM 1,250,001 to RM 1,300, The aggregate remuneration paid or payable to all Directors are further categorised into the following components: Salaries & other Benefits Fees* emoluments in kind Total RM 000 RM 000 RM 000 RM 000 Executive 135 3, ,261 Non-executive * Subject to the approval of shareholders. The above disclosure includes the remuneration paid to Directors and Alternate Director who had received her remuneration from her capacity as Executive Director or Director and/or manager of the subsidiaries of STC. In respect of the non-disclosure of detailed remuneration of each director, the Board views that the transparency in respect of the Directors remuneration has been appropriately dealt with by the band disclosure presented in this statement.

18 16 CORPORATE GOVERNANCE STATEMENT (CONT D) PRINCIPLE 3 - REINFORCE INDEPENCE OF THE BOARD There is clear division of responsibilities between the Chairman and Managing Director to engender accountability and facilitate the division of responsibility, such that one individual has unfettered powers over decision making. The Chairman is responsible ensuring the adequacy and effectiveness of the Board s governance process and acts as a facilitator at board meeting to ensure that contribution by Directors are forthcoming on matters being deliberated and that no Board member dominates discussion. The Managing Director, supported by the senior management team, implements the Group s strategic plan, policies and decision adopted by the Board and oversees the Operations and business development of the STC Group. The Independent Non-Executive Directors bring to bear objective and independent views, advice and judgment on interest, not only of the Group, but also of shareholder, employee, customers, suppliers and many communities in which the Group conducts its business. Independent Non-Executive Directors are essential for protecting the interest of shareholders and can make significant contributions to the Company s decision making by bringing in the quality of detached impartiality. During the financial year under review, the Board assessed the independence of its Independent Non-Executive Directors according to Recommendation 3.2 of the MCCG 2012 which stipulates that an Independents Director may continue to serve on the Board upon reaching the nine years limit subject to the Independent Directors resignation as a Non-Independent Non- Executive Director. Mr Liew G Liew Chee Hoe who has served as Independent Non-Executive Director for a period of more than nine (9) years, will retire as a non-independent Non-Executive Director as at forthcoming Annual General Meeting due to personal commitment. Hence, the motion on his retention as Independent Non-Executive Director pursuant to MCCG 2012 is not put forward for the approval of shareholders at the forthcoming AGM. PRINCIPLE 4 FOSTER COMMITMENT OF DIRECTORS The Board ordinarily meets at least five (5) times a year, scheduled well in advance before the end of the preceding financial year to facilitate the Directors in planning their meeting schedule for the year and additional meetings are convened as and when necessary. The Board obtains the commitment from Directors to devote sufficient time and efforts to carry out their responsibilities at the time of their appointment. Each Director is expected to commit time as and when required to discharge the relevant duties and responsibilities, besides attending meetings of the Board and Board Committees. It is also the Board s policy for Directors to notify the Chairman before accepting any new directorships notwithstanding that the Listing Requirements allow a Director to sit on the board of 5 listed issuers. Such notification is expected to include an indication of time that will be spent on the new appointment. At the quarterly Board meetings, the Board reviews the business performance of the Group and discusses major operational and financial issues. All pertinent issues discussed at Board meetings in arriving at decisions and conclusions are properly recorded by the Company Secretary by way of minutes of meetings. During the financial year under review, the number of Board of Directors meeting attended by each director is as follows: - Name of Directors No. of meetings attended Liew G Liew Chee Hoe 5/5 Tan Ah Tan Ah Ping 5/5 Pan Kim Foon 5/5 Woh Way Cheang 5/5 Chiam Tau Meng 5/5 Yeoh Kim Wah 5/5 Wong Poh Chee 5/5

19 CORPORATE GOVERNANCE STATEMENT (CONT D) 17 Directors Training All Directors have successfully completed the Mandatory Accreditation Programme prescribed by Bursa Securities. The Directors will continue to attend other relevant training programmes as appropriate, to further enhance their skills and knowledge and fully equip themselves to effectively discharge their duties. The training programmes attended by the Directors are as follows: Training Programme Moving Out of your Comfort Zone The New Landscape for Global Political Risk Management Launch of the Statement on Risk Management and Internal Control Guideline for Directors of Listed Issuers Name of Directors Tan Ah Tan Ah Ping, Pan Kim Foon, Tan Chung Ling, Woh Way Cheang, Liew G Liew Chee Hoe, Yeoh Kim Wah, Chiam Tau Meng and Wong Poh Chee, Chiam Tau Meng Chiam Tau Meng The Company Secretary normally circulates the relevant statutory and regulatory requirement from time to time for the Board s reference and briefs the Board on the updates, where applicable. External Auditors also brief the Board on Malaysian Financial Reporting standards that affect the Group s financial statement for the year under review. The Board will on continuing basis evaluate and determine the training needs of each Director, particularly on relevant new law and regulations and essential practices for effective corporate governance and risk management to enable the Directors to effectively discharge their duties. PRINCIPLE 5 UPHOLD INTEGRITY IN FINANCIAL REPORTING BY THE COMPANY The Board is committed to present a balanced and understandable assessment of the Group s financial position and prospects to the public. These results are contained in the quarterly financial results, audited financial statements and annual reports. The Board is assisted by the Audit Committee in overseeing the Group s financial reporting processes and the accuracy, adequacy and completeness of its financial reports. The audit committee is to ensure that the financial statements of the group and Company have been prepared in conformity with Malaysian Financial Reporting Standards issued by the Malaysian Accounting Standards Board and in accordance with the provisions of the Companies Act, 1965 in Malaysia. The Board, via the Audit Committee, maintains a formal and transparent relationship with the Group s external auditors in seeking valuable professional advice and in ensuring compliance with Malaysian Financial Reporting Standards issued by the Malaysian Accounting Standards Board in Malaysia. The Audit Committee meets up with the external auditors at least twice a year to review audit plans and exchange views on issues requiring attention. The roles of the Audit Committee in relation to the External Auditors are described in the Audit Committee Report set out on pages 19 to 21. In assessing the independence of External Auditors, the Audit Committee required written assurance from the External Auditors conforming that they are, and have been, independent throughout the conduct of the audit engagement with the Company in accordance with the independence criteria set out by the Malaysian Institute of Accountants. PRINCIPLE 6 RECOGNISE AND MANAGE RISK OF THE GROUP With the assistance of the internal audit function, the Board also affirms its responsibility for maintaining a sound system of internal control for the Group. The effectiveness of the systems of key internal control, which are in place, is reviewed by internal auditors, who operated independently from the activities of the Company. The independent internal audit function is currently outsourced to an external consulting company who reports directly to the Audit Committee on the adequacy and effectiveness of the Group s internal controls during the quarterly Audit Committee meetings. The scope of work covered by internal audit function during the financial year under review is provided in the Statement on Risk Management and Internal Control of this Annual Report.

20 18 CORPORATE GOVERNANCE STATEMENT (CONT D) PRINCIPLE 7 ENSURE TIMELY AND HIGH QUALITY DISCLOSURE The Board will formalize internal corporate disclosure policies and procedures not only to comply with the disclosure requirements set out in the Bursa Malaysia Listing Requirements, but also setting out the persons authorized and responsible to approve and disclose material information to regulators, shareholders and stakeholders. Amongst the policies is to upload its announcements to the regulators, the Board Charter, rights of shareholders and Annual Report in the Company s website timely. Various contact details are provided on the Company s website to address queries from customers, shareholders and other Public. PRINCIPLE 8 STRENGTHEN RELATIONSHIP BETWEEN THE COMPANY AND ITS SHAREHOLDERS The Board values dialogue with investors as a means of effective communication that enables the Board and management to convey information about the STC Group s performance, corporate directions and other matters affecting shareholders interests. Such information is disseminated through various disclosures and announcements made to the Bursa Securities covering quarterly financial results, audited financial statements and annual reports. This information is also accessible by the public through the Bursa Securities website at In addition, the Company s website at provides information on the Group s business, corporate development and announcements to Bursa Securities. Other information relevant to shareholders and investors such as annual reports, circulars and quarterly reports are available for download at the Company s website. The Company s AGM continues to be used as a principal forum for dialogue and interaction with shareholders. The Notice of AGM is circulated at least twenty one (21) clear days before the date of the meeting to enable shareholder to go through the Annual Report. Shareholders are encouraged to participate in discussions and to give their views to the Board. Extraordinary General Meetings are held as and when required. At the General Meetings, the Directors will respond to the shareholders queries. Proposed resolutions for special business included in the notice of meeting will be accompanied by an explanatory statement to facilitate shareholders understanding and evaluation of issues involved. Statement of Directors Responsibility for Preparing the Financial Statements The Board is responsible for ensuring that the financial statements are properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the state of affairs of the STC Group as at 31 December 2013 and of the results and the cash flow of the STC Group for the financial year ended on that date. In preparing the financial statements, the Directors have adopted suitable accounting policies and applied them consistently, and made estimates and judgements which are reasonable and prudent. The financial statements have been prepared on a going-concern basis. The statement by Directors pursuant to section 169 of the Companies Act, 1965 is set out on page 28.

21 AUDIT COMMITTEE REPORT COMPOSITION OF AUDIT COMMITTEE Chiam Tau Meng Chairman (Independent Non-Executive Director) Liew G Liew Chee Hoe Member (Independent Non-Executive Director) Yeoh Kim Wah Member (Non-Independent Non-Executive Director) 2. TERMS OF REFERENCE Membership The Committee shall be appointed by the Board of Directors from amongst the Directors excluding Alternate Directors which consists of not less than 3 members. All the members of the Committee must be non-executive directors, with a majority of them being independent directors. All the members of the Committee should be financially literate and at least one member should be a member of an accounting association or body. The Chairman shall be elected by the Committee from among their members who shall be an independent non-executive director. The Chairman should engage on a continuous basis with senior management, the head of internal audit and the external auditors in order to keep informed of matters affecting the Company. Authority The Committee shall: i. Have authority to investigate any matter within its terms of reference; ii. Have the resources which are required to perform its duties; iii. Have full and unrestricted access to any information pertaining to the Company; iv. Have direct communication channels with the external and internal auditors when applicable and to the senior management of the Group; v. Be able to obtain independent professional or other advice; and vi. Be able to convene meetings with the external auditors, the internal auditors or both excluding the attendance of other directors and employees, whenever deemed necessary. Duties and Responsibilities of the Audit Committee The Committee shall: (a) (b) (c) To consider and recommend the appointment of the external auditors, the audit fees and any question of resignation or dismissal; To review the quarterly results and year ended financial statements, prior to the approval by the Board of Directors; To convene meetings with the external auditors, the internal auditors or both excluding the attendance of other directors and employees of the Group, whenever deemed necessary;

22 20 AUDIT COMMITTEE REPORT (CONT D) (d) To do the following in relation to the internal audit function : - to review the adequacy of the scope, function, competency and resources of the internal audit function, and that it has the necessary authority to carry out its works; - to review the internal audit results and where necessary ensure that appropriate action is taken on the recommendations of the internal audit function; - review the appointment or re-appointment of the internal auditors, the audit fee and questions of resignation or dismissal; and - review the annual Internal Control Statement to be published in the Annual Report of the Company; (e) (f) (g) (h) To review the related parties transactions and conflict of interest situations that may arise within the Company or the Group including transaction, procedure or course of conduct that raises a question of management integrity; To review the application of corporate governance principles and the extent of the Group s compliance with the best practices set out under the Code, directions and guidelines established by the relevant regulatory bodies; To identify and direct any special project or investigate and to report on any issue or concern in regard to the Management of the Group; and To consider other topics as defined by the board. Frequency of meetings Meetings shall be conducted not less than four (4) times annually. In order to form quorum for the meeting, the majority of the members present must be Independent Directors. Other meetings may be held as and when required. However, the Committee should meet with the external auditors without the presence of the executive directors, at least twice a year. 3. AUDIT COMMITTEE MEETING ATTENDANCE The Audit Committee had conducted five (5) meetings for the financial year ended 31 December Details of attendance of the Directors at Audit Committee Meetings held during the financial year are as follows: - Name of Directors No. of meetings attended Liew G Liew Chee Hoe 5/5 Yeoh Kim Wah 5/5 Chiam Tau Meng 5/5 4. SUMMARY OF ACTIVITIES During the financial year, the Audit Committee had carried out the following activities:- (a) Reviewed the quarterly financial results and announcements prior to submission to the Board of Directors for consideration and approval; (b) Reviewed the audited financial statements for the financial year ended 31 December 2012;

23 AUDIT COMMITTEE REPORT (CONT D) 21 (c) (d) (e) (f) (g) (h) (i) Reviewed the external auditors comments for the financial year ended 31 December 2012 in relation to audit and accounting issues arising from the audit; Considered the nomination of external auditors for recommendation to the Board for re-appointment; Reviewed the internal audit plan, findings and reports; Reviewed the disclosure statements on Corporate Governance, Audit Committee Report and the Statement of Internal Control and recommend their adoption to the Board; Reviewed the recurrent related party transactions and control procedures for these transactions in the shareholder mandate; and Deliberated the disclosure requirements for corporate social responsibility and noted the management action plan. Reviewed the application of corporate governance principles and the extent of the Group s compliance with the best practices set out under the Code on Corporate Governance. 5. INTERNAL AUDIT FUNCTION The internal audit function is essential to assist the Board in obtaining the assurance of the system of internal control maintained by the management. To achieve this objective, the Company outsourced its internal audit function to an external consulting company, NGL Tricor Governance Sdn Bhd. The audit team members are independent of the activities audited by them. The internal auditors review and assess the Group s system of internal control and report to the Audit Committee. The Audit Committee approves the annual internal audit plan before the commencement of the internal audit reviews for each financial year. During the financial year, the internal auditors conducted reviews on the operations in the subsidiary companies of the Group and presented their reports to the Audit Committee. Areas for improvements identified were communicated to the management for further action.

24 22 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL INTRODUCTION In pursuant to Paragraph (b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Board is pleased to present its Statement on Risk Management and Internal Control which illustrates the nature and scope of risk management and internal control of the Group during the financial year. BOARD RESPONSIBILITY The Board of Directors is committed to maintain a sound system of internal control. In addition, the Board is also responsible for the Group s risk management and to review the adequacy and integrity of these systems to safeguard shareholders investment and Group s assets. The system of risk management and internal control is reviewed by the Board in accordance with the guideline for directors on internal control, the Statement on Risk Management and Internal Control: Guidance for Directors of Listed Issuers. However, it shall be noted that these systems are designed to manage, rather than eliminate risk of failure in achieving the Group s business objectives and to provide reasonable, but not absolute, assurance against material misstatement or loss. THE SYSTEM OF INTERNAL CONTROL The principal elements of the Group s system of internal controls are summarised as follows: 1. A documented hierarchical organization structure defining the line of management responsibility, authority and appropriate reporting structure; 2. Internal policies, procedures and manuals are updated from time to time. These policies, procedures and manual are further strengthened with the implementation of ISO9001:2008 Quality Management System covering major operating subsidiary companies of the Group; 3. Financial statements and management information are provided to the Audit Committee and the Board on a quarterly basis for review. These reviews help the Audit Committee and the Board members to complement its understanding of the risk management in the Group; 4. An annual budgeting process where key performance indicators for each business units are set, and reviewed by the Board and Audit Committee. Performance is monitored regularly and a reporting system highlights significant variances against budgets for investigation and follow-up by management of respective business units; 5. Management and operational meetings are held to monitor and review the operational performance and changes in the business environments. These meetings are led by executive directors and attended by the senior management; 6. Significant corporate matters and its status discussed at the management meetings are brought to the Board meetings for further deliberation and review by the Board members; and 7. Appointment of staff is based on the required level of qualification, experience and competency to fulfill their responsibilities. Trainings and development programs are provided as part of the management succession plan for selected staff to further enhance their skill and capability. Risk MANAGEMENT Framework The Board regards risk management as an integral part of the business operations. The Board acknowledges its responsibility to put in place an ongoing process for identifying, evaluating and managing the significant risks faced by the Group. The management s risk management initiative includes delegating the responsibilities of identifying and managing risk to the respective Head of each business units. Significant risk identified and the corresponding internal controls implemented are discussed during periodic management meetings. In addition, significant risks identified are also brought to the attention of the Board. This is to ascertain risk is properly monitored, managed, and mitigated to an acceptable level.

25 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONT D) 23 The Boards has satisfied with the review on the adequacy and the effectiveness of the risk management and internal control system which has been undertaken during the year and it has received assurance from the executive directors and the senior for this purpose. Internal Audit Function The Group has outsourced its internal audit function to an independent internal audit service provider to review the adequacy and integrity of the internal control systems of the business units. The internal audit adopts a risk-based approach and prepares its audit strategy and plan based on the risk profiles of the business units of the Group. Audits are carried out according to the audit plan approved by the Audit Committee. The resulting reports from the annual audits undertaken are presented to the Audit Committee at its regular meetings for review, discussion, and direct actions on matters pertaining to reports, which among other matter, include findings relating to the adequacy and integrity of the internal control system of the Group. After the Audit Committee had deliberated on the reports, these are then forwarded to the operational management for attention and necessary actions. The operational management is responsible for ensuring recommended corrective actions on reported weaknesses were taken within the required time frame. The cost of internal audit function for the financial year ended 31 December 2013 was RM41,000. Review of Statement by External AUDITOR In accordance with the Paragraph of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the external auditors have reviewed this Statement on Risk Management and Internal Control and reported that nothing has come to their attention that causes them to believe that this statement intended to be included in the annual report is not prepared, in all material respects, in accordance with the disclosures required by paragraphs 41 and 42 of the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers to be set out, nor is factually inaccurate. CONCLUSION The present system of risk management and internal control have been operating effectively in the financial year under review up to the date of approval of this statement for inclusion in the annual report, and there were no reported material losses caused by weaknesses in the Group s system of risk management and internal control. The Board is committed to maintain a sound system of internal control and will strive for continuous improvement where necessary, to further enhance the Group s system of internal control. In consideration of the internal auditors report and management representations, the Board is pleased that internal control deficiencies or weaknesses highlighted are dealt with appropriately.

26 24 OTHER COMPLIANCE INFORMATION 1. SHARE BUY-BACKS Schedule of share bought back during the financial year ended 31 December 2013 is disclosed in Note 17 of the Notes to the Financial Statements on pages 78 to OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES The Company has not granted any options to any parties to take up unissued shares in the Company. The Company has not issued any warrants or convertible securities. As such there is no exercise of any options, warrants or convertible securities during the financial year. 3. AMERICAN DEPOSITORY RECEIPT ( ADR ) OR GLOBAL DEPOSITORY RECEIPT ( GDR ) The Company has not sponsored any ADR or GDR programme during the financial year. 4. IMPOSITION OF SANCTIONS AND/OR PENALTIES No sanctions and/or penalties have been imposed by any regulatory bodies on the Company or its subsidiaries, or on the Directors or management of the Company or its subsidiaries during the financial year. 5. NON-AUDIT FEES An amount of RM6,000 was paid to the external auditors by the Group for non-audit services provided for the financial year ended 31 December MATERIAL CONTRACTS Other than the related party transactions as disclosed in Note 30 to the financial statements, there were no material contracts entered into by the Company and its subsidiaries involving the Directors and major shareholders interests, either still subsisting at the end of the financial year ended 31 December 2013 or entered into since the end of the previous financial year. 7. UTILISATION OF PROCEEDS There were no proceeds raised from any proposal during the financial year. 8. PROFIT FORECAST AND PROFIT GUARANTEE During the financial year, there were no profit guarantees given by the Company. 9. RECURRENT RELATED PARTY TRANSACTIONS OF REVENUE NATURE The details of the related parties transactions undertaken by the Group during the financial year ended 31 December 2013 are stated in Note 30 to the financial statements on page 87 to VARIATION IN RESULTS FOR THE FINANCIAL YEAR There were no material variance between the audited results for the financial year ended 31 December 2013 and the unaudited results previously announced. COMPLIANCE STATEMENT The Company has complied with the best practices as set out in the Code save for the appointment of a Senior Independent Non-Executive Director and the disclosure on the details of the remuneration of each Director as stated above.

27 FINANCIAL STATEMENTS Directors Report 26 Statement by Directors 31 Statutory Declaration 31 Independent Auditors Report 32 Statements of Financial Position 34 Statements of Profit or Loss and Other Comprehensive Income 35 Statements of Changes in Equity 36 Statements of Cash Flows 39 Notes to the Financial Statements 42

28 26 DIRECTORS REPORT The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December PRINCIPAL ACTIVITIES The Company is principally engaged in investment holding and provision of management services, whilst the principal activities of the subsidiaries are disclosed in Note 6(a) to the financial statements. There have been no significant changes in the nature of these principal activities during the financial year. RESULTS Group RM Company RM Profit for the year 32,381,189 6,307,315 Attributable to: Owners of the Company 28,979,315 6,307,315 Non-Controlling Interests 3,401,874-32,381,189 6,307,315 RESERVES AND PROVISIONS There were no material transfers to or from reserves and provisions during the financial year save as disclosed in the financial statements. DIVIDENDS Dividends paid or declared by the Company since the end of the previous financial year were as follows: In respect of the financial year ended 31 December 2013, an interim tax exempt cash dividend of 6% equivalent to RM 0.03 per ordinary share amounting to RM 3,495,667 was declared on 22 April 2013 and subsequently paid on 7 June The payment was made to the shareholders whose names appeared in the Company s Record of Depositors on 22 May In respect of the financial year ending 31 December 2014, an interim single-tier dividend of 8% equivalent to RM 0.04 per ordinary share was declared on 19 March 2014 and will be paid on 13 June 2014 to the shareholders whose names appeared in the Company s Record of Depositors on 21 May This dividend shall be accounted for in equity as an appropriation of retained profits for the financial year ending 31 December The Directors do not recommend any final dividend in respect of the financial year ended 31 December 2013.

29 DIRECTORS REPORT (CONT D) 27 DIRECTORS OF THE COMPANY The Directors who served since the date of the last report are: Liew G Liew Chee Hoe Tan Ah Tan Ah Ping Pan Kim Foon (f) Woh Way Cheang Tan Chung Ling (f) (Alternate to Pan Kim Foon (f)) Wong Poh Chee (f) Chiam Tau Meng Yeoh Kim Wah DIRECTORS INTERESTS According to the register of directors shareholdings, none of the Directors holding office at the end of the financial year had any interest in the shares of the Company and of its related corporations other than as follows: The Company Ordinary shares of RM 0.50 each Balance Balance as at as at Bought Sold Liew G Liew Chee Hoe - Direct 30, ,750 Tan Ah Tan Ah Ping - Direct 100, ,450 - Indirect 54,651, ,000 54,151,864 (1) Pan Kim Foon (f) - Direct 100, ,450 - Indirect 54,651, ,000 54,151,864 (2) Woh Way Cheang - Direct 116, ,235 Tan Chung Ling (f) - Direct 77, ,490 - Indirect 54,674, ,000 54,174,824 (3) Woh Poh Chee (f) - Indirect 18,501, ,000 17,540,250 (4) Yeoh Kim Wah - Direct 30, , ,750

30 28 DIRECTORS REPORT (CONT D) DIRECTORS INTERESTS (CONT D) Holding Company Omega Attraction Sdn. Bhd. ( OASB ) Ordinary shares of RM 1.00 each Balance Balance as at as at Bought Sold Tan Ah Tan Ah Ping - Direct 49, ,466 - Indirect 26, ,106 (5) Pan Kim Foon (f) - Direct 26, ,106 - Indirect 49, ,466 (6) Tan Chung Ling (f) - Indirect 75, ,572 (7) Yeoh Kim Wah - Direct 10, ,261 Notes: (1) Deemed interest by virtue of his wife, Pan Kim Foon and his direct interests in OASB, and his wife and daughter, Tan Chung Ling s direct interests in the Company. (2) Deemed interest by virtue of her husband, Tan Ah Tan Ah Ping and her direct interests in OASB, and her husband and daughter, Tan Chung Ling s direct interests in the Company. (3) Deemed interest by virtue of her parents, Tan Ah Tan Ah Ping and Pan Kim Foon s direct interests in OASB, and her parents direct interest in the Company. (4) Deemed interest by virtue of her direct and indirect interests in Wtech Holdings Sdn. Bhd. (5) Deemed interest by virtue of his wife, Pan Kim Foon s direct interest in OASB. (6) Deemed interest by virtue of her husband, Tan Ah Tan Ah Ping s direct interest in OASB. (7) Deemed interest by virtue of her parents, Tan Ah Tan Ah Ping and Pan Kim Foon s direct interest in OASB. By virtue of their interests in the shares of OASB, Messrs. Pan Kim Foon (f), Tan Ah Tan Ah Ping and Tan Chung Ling (f) are deemed to have an interest in the shares of the Company and its related corporations to the extent that OASB has an interest. DIRECTORS BENEFITS Since the end of the previous financial year, no Directors of the Company has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in Note 25 to the financial statements or the fixed salary of a full time employee of the Company or of related companies) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest, other than certain Directors who have significant financial interests in companies which traded with certain companies in the Group in the ordinary course of business as disclosed in Note 30 to the financial statements. There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

31 DIRECTORS REPORT (CONT D) 29 ISSUE OF SHARES AND DEBENTURES There were no changes in the authorised, issued and paid up capital of the Company during the financial year. There were no debentures issued during the financial year. OPTIONS GRANTED OVER UNISSUED SHARES No options were granted to any person to take up any unissued shares of the Company during the financial year. TREASURY SHARES During the financial year, the Company had repurchased 19,000 of its issued ordinary shares from open market at an average price of approximately RM 1.02 per share. The total consideration paid for the repurchase including transaction costs was RM 19,453. The shares repurchased are held as treasury shares in accordance with Section 67A of the Companies Act, 1965 and are presented as a deduction from total equity. disposed 2,344,400 issued ordinary shares at an average price of approximately RM 1.26 per share. The total consideration for the shares disposal including transaction costs was RM 2,964,023. Out of the total 120,000,000 issued and fully paid ordinary shares of RM 0.50 each as at 31 December 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 116,669,223 ordinary shares of RM 0.50 each. Treasury shares have no rights to voting, dividends and participation in other distribution. Further relevant details are disclosed in Note 17 to the financial statements. HOLDING COMPANY The Company is a subsidiary of Omega Attraction Sdn. Bhd., a company incorporated in Malaysia, which is also the ultimate holding company. OTHER STATUTORY INFORMATION Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that: (i) (ii) proper action had been taken in relation to the writing off of bad debts and the making of allowance for impairment loss on receivables and satisfied themselves that all known bad debts have been written off and adequate allowance have been made for impairment loss of receivables, and any current assets which were unlikely to be realised in the ordinary course of business have been written down to an amount which they might be expected so to realise. At the date of this report, the Directors are not aware of any circumstances: (i) (ii) (iii) (iv) that would render the amount written off for bad debts, or the amount of the allowance for impairment loss of receivables, in the Group and in the Company inadequate to any substantial extent, or that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, or which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate, or not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements of the Group and of the Company misleading.

32 30 DIRECTORS REPORT (CONT D) OTHER STATUTORY INFORMATION (CONT D) At the date of this report, there does not exist: (i) (ii) any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which secures the liabilities of any other person, or any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year. No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due. In the opinion of the Directors, the financial performance of the Group and of the Company for the year ended 31 December 2013 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report. SIGNIFICANT EVENTS DURING THE YEAR Significant events during the financial year are disclosed in Note 35 to the financial statements. AUDITORS The auditors, Messrs. Crowe Horwath, have indicated their willingness to continue in office. Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:... TAN AH TAN AH PING Director... PAN KIM FOON (f) Director Muar, Johor Darul Takzim Date: 21 April 2014

33 STATEMENT BY DIRECTORS PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, In the opinion of the Directors, the financial statements set out on pages 34 to 104 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2013 and of their financial performance and cash flows for the financial year then ended. In the opinion of the Directors, the information set out in Note 37 on page 105 to the financial statements has been compiled 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, 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: TAN AH TAN AH PING PAN KIM FOON (f) Director Director Muar, Johor Darul Takzim Date: 21 April 2014 STATUTORY DECLARATION PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965 I, LO CHIOW LIEH, the Officer primarily responsible for the financial management of Success Transformer Corporation Berhad, do solemnly and sincerely declare that the financial statements and supplementary information set out on pages 34 to 105 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, Subscribed and solemnly declared by the above named in Muar, Johor Darul Takzim on 21 April LO CHIOW LIEH MIA CHARTERED ACCOUNTANT Before me: Commissioner for Oaths

34 32 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF SUCCESS TRANSFORMER CORPORATION BERHAD REPORT ON THE FINANCIAL STATEMENTS We have audited the financial statements of Success Transformer Corporation Berhad, which comprise the statements of financial position as at 31 December 2013 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 34 to 104. 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 audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 December 2013 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. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following: a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries 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 subsidiaries of which we have not acted as auditors, which are indicated in Note 6 to the financial statements. c) We are satisfied that the financial statements of the subsidiaries 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) The auditors reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

35 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF SUCCESS TRANSFORMER CORPORATION BERHAD (CONT D) 33 OTHER REPORTING REQUIREMENTS The supplementary information set out in Note 37 on page 105 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants ( MIA Guidance ) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad. OTHER MATTERS This report is made solely to the members of the Company, as a body, in accordance with Section 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. Crowe Horwath Firm No.: AF 1018 Chartered Accountants Ng Kim Kiat Approval No.: 2074/10/14(J) Chartered Accountant Muar, Johor Darul Takzim Date: 21 April 2014

36 34 STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2013 Group Company Note RM RM RM RM ASSETS Property, plant and equipment 4 131,143, ,123, Investment properties 5 12,849,030 12,934, Investment in subsidiaries ,627, ,523,031 Investment in jointly controlled entity Investment in associates 8 8,481,912 8,783, Goodwill on consolidation 9 7,763,479 7,763, Other receivables ,000-7,444,049 6,697,633 Deferred tax assets , , TOTAL NON-CURRENT ASSETS 161,476, ,294, ,071, ,220,664 Inventories 11 98,105,569 83,898, Amount due from contract customers 12 5,617,345 2,298, Trade and other receivables ,611,058 92,486, , ,357 Prepayment and other assets 14 3,212,272 2,953,588 1,000 1,000 Deposits, cash and bank balances 15 38,253,399 34,877,894 22, ,998 TOTAL CURRENT ASSETS 257,799, ,514, , ,355 TOTAL ASSETS 419,276, ,808, ,293, ,635,019 EQUITY Share capital 16 60,000,000 60,000,000 60,000,000 60,000,000 Treasury shares 17 (3,800,082) (6,455,366) (3,800,082) (6,455,366) Reserves ,347, ,786,501 35,383,187 32,282,253 EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY 220,547, ,331,135 91,583,105 85,826,887 Non-Controlling Interests 6(e) 36,269,711 33,423, TOTAL EQUITY 256,817, ,754,492 91,583,105 85,826,887 LIABILITIES Loans and borrowings 19 36,498,939 43,524, Hire purchase and lease payables 20 1,194,294 1,772, Deferred tax liabilities 10 5,061,085 5,353, TOTAL NON-CURRENT LIABILITIES 42,754,318 50,650, Trade and other payables 21 68,163,665 51,574,694 50,127,038 55,771,274 Loans and borrowings 19 48,152,528 38,919, ,000 - Hire purchase and lease payables , , Tax liabilities 2,478,300-83,573 36,858 TOTAL CURRENT LIABILITIES 119,704,710 91,403,370 50,710,611 55,808,132 TOTAL LIABILITIES 162,459, ,053,888 50,710,611 55,808,132 TOTAL EQUITY AND LIABILITIES 419,276, ,808, ,293, ,635,019 The accompanying notes form an integral part of the financial statements

37 STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER Group Company Note RM RM RM RM Revenue ,749, ,605,469 7,835,025 5,480,000 Cost of sales (227,954,549) (213,634,587) - - GROSS PROFIT 94,795,070 81,970,882 7,835,025 5,480,000 Other income 2,997,223 3,429, ,802 - Selling and distribution expenses (14,939,366) (12,660,865) - - Administrative expenses (30,747,209) (24,207,677) (635,963) (697,661) Other expenses (2,776,740) (4,428,852) - - PROFIT FROM OPERATING ACTIVITIES 49,328,978 44,102,859 7,304,864 4,782,339 Finance costs 23 (4,141,048) (3,669,317) (171,563) (324,167) Share of loss of jointly controlled entity, net of tax Share of loss of associates, net of tax 8 (301,421) (16,667) - - PROFIT BEFORE TAX 24 44,886,509 40,416,875 7,133,301 4,458,172 Tax expense 27 (12,505,320) (9,781,022) (825,986) (199,983) PROFIT FOR THE YEAR 32,381,189 30,635,853 6,307,315 4,258,189 OTHER COMPREHENSIVE INCOME Item that may be reclassified subsequently to profit or loss Foreign currency translation differences for foreign operations 2,053,386 (12,678) - - TOTAL COMPREHENSIVE INCOME FOR THE YEAR 34,434,575 30,623,175 6,307,315 4,258,189 PROFIT ATTRIBUTABLE TO : Owners of the Company 28,979,315 27,042,645 6,307,315 4,258,189 Non-Controlling Interests 3,401,874 3,593, PROFIT FOR THE YEAR 32,381,189 30,635,853 6,307,315 4,258,189 TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO : Owners of the Company 30,867,742 27,029,967 6,307,315 4,258,189 Non-Controlling Interests 3,566,833 3,593, TOTAL COMPREHENSIVE INCOME FOR THE YEAR 34,434,575 30,623,175 6,307,315 4,258,189 BASIC EARNINGS PER ORDINARY SHARE (SEN) The accompanying notes form an integral part of the financial statements

38 36 STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2013 Attributable to Owners of the Company Non-Distributable Distributable Non- Share Treasury Share Translation Retained Controlling Total Note Capital Shares Premium Reserve Profits Total Interes Equity RM RM RM RM RM RM RM RM GROUP At 1 January ,000,000 (5,784,444) 978,517 (92,809) 112,313, ,414,939 28,701, ,116,510 Profit for the year ,042,645 27,042,645 3,593,208 30,635,853 Foreign currency translation differences for foreign operations (12,678) - (12,678) - (12,678) Total comprehensive income for the year (12,678) 27,042,645 27,029,967 3,593,208 30,623,175 Contributions by and distributions to owners of the Company Arising from incorporation of and investment in subsidiaries ,806,314 1,806,314 Purchase of treasury shares 17 - (670,922) (670,922) (208,077) (878,999) Dividends to owners of the Company - by the Company (3,442,849) (3,442,849) - (3,442,849) - by subsidiary to noncontrolling interests (555,574) (555,574) Changes in ownership interest in subsidiary that do not result in a loss of control ,915 85,915 Total transactions with owners of the Company - (670,922) - - (3,442,849) (4,113,771) 1,128,578 (2,985,193) At 31 December ,000,000 (6,455,366) 978,517 (105,487) 135,913, ,331,135 33,423, ,754,492 The accompanying notes form an integral part of the financial statements

39 37 STATEMENTS OF CHANGES IN EQUITY Attributable to Owners of the Company Non-Distributable Distributable Non- Share Treasury Share Translation Capital Retained Controlling Total Note Capital Shares Premium Reserve Reserve Profits Total Interests Equity RM RM RM RM RM RM RM RM RM GROUP At 1 January ,000,000 (6,455,366) 978,517 (105,487) - 135,913, ,331,135 33,423, ,754,492 Profit for the year ,979,315 28,979,315 3,401,874 32,381,189 Foreign currency translation differences for foreign operations ,888, ,888, ,959 2,053,386 Total comprehensive income for the year ,888,427-28,979, ,867,742 3,566,833 34,434,575 Contributions by and distributions to owners of the Company Arising from incorporation of subsidiary , ,630 Arising from bonus shares issue of subsidiary ,544,200 (3,544,200) Purchase of treasury shares 17 - (19,453) (19,453) (17,479) (36,932) Disposal of treasury shares 17-2,674, , ,964,023-2,964,023 Dividends to owners of the Company - by the Company (3,495,667) (3,495,667) - (3,495,667) - by subsidiaries to noncontrolling interests (817,386) (817,386) Changes in ownership interest in subsidiary that do not result in a loss of control (100,214) (100,214) 5,756 (94,458) Total transactions with owners of the Company - 2,655, ,286-3,544,200 (7,140,081) (651,311) (720,479) (1,371,790) At 31 December ,000,000 (3,800,082) 1,267,803 1,782,940 3,544, ,752, ,547,566 36,269, ,817,277 The accompanying notes form an integral part of the financial statements

40 38 STATEMENTS OF CHANGES IN EQUITY Attributable to Owners of the Company Non-Distributable Distributable Share Treasury Share Retained Note Capital Shares Premium Profits Total RM RM RM RM RM COMPANY At 1 January ,000,000 (5,784,444) 978,517 30,488,396 85,682,469 Profit for the year ,258,189 4,258,189 Total comprehensive income for the year ,258,189 4,258,189 Contributions by and distributions to owners of the Company Purchase of treasury shares 17 - (670,922) - - (670,922) Dividends to owners of the Company (3,442,849) (3,442,849) Total transactions with owners of the Company - (670,922) - (3,442,849) (4,113,771) At 31 December 2012/ At 1 January ,000,000 (6,455,366) 978,517 31,303,736 85,826,887 Profit for the year ,307,315 6,307,315 Total comprehensive income for the year ,307,315 6,307,315 Contributions by and distributions to owners of the Company Purchase of treasury shares 17 - (19,453) - - (19,453) Disposal of treasury shares 17-2,674, ,286-2,964,023 Dividends to owners of the Company (3,495,667) (3,495,667) Total transactions with owners of the Company - 2,655, ,286 (3,495,667) (551,097) At 31 December ,000,000 (3,800,082) 1,267,803 34,115,384 91,583,105 The accompanying notes form an integral part of the financial statements

41 STATEMENTS OF CASH FLOWS 39 Group Company RM RM RM RM CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax 44,886,509 40,416,875 7,133,301 4,458,172 Adjustments for: Bad debts written off - 202, Depreciation of property, plant and equipment 7,581,154 6,616, Depreciation of investment properties 85,535 75, Dividend income - - (5,435,025) (4,040,000) Bad debts recovered (81,378) Gain on disposal of property, plant and equipment (228,108) (123,314) - - Allowance for impairment loss of receivables - collective impairment 66, , individual impairment 330,508 2,563, Property, plant and equipment written off 15,988 87, Reversal of allowance for impairment loss of trade receivables (491,298) (846,017) - - Share of loss of jointly controlled entity Share of loss of associates 301,421 16, Unrealised loss/(gain) on foreign exchange 982,704 47,163 (68,378) - Write down of inventories 1,468,365 1,064, Reversal of inventories write down (210,112) Interest expense 3,566,242 3,301,147 54, ,159 Interest income (195,582) (286,872) - - OPERATING PROFIT BEFORE CHANGES IN WORKING CAPITAL 58,078,715 53,470,212 1,684, ,331 Changes in working capital Inventories (15,465,510) (10,811,482) - - Amount due from contract customers (3,319,087) (76,944) - - Trade and other receivables, prepayment and other assets (19,598,947) (8,568,809) (700,335) 3,297,418 Trade and other payables 14,728,961 (12,348,999) (5,644,236) 6,147,510 CASH GENERATED FROM/(USED IN) OPERATIONS 34,424,132 21,663,978 (4,660,049) 10,101,259 Interest paid (3,566,242) (3,301,147) (54,624) (238,159) Interest received 195, , Tax paid (13,099,038) (10,403,342) (779,271) (184,959) Tax refund 2,638,502 64,166-12,077 NET CASH FROM/(USED IN) OPERATING ACTIVITIES/BALANCE CARRIED FORWARD 20,592,936 8,310,527 (5,493,944) 9,690,218 The accompanying notes form an integral part of the financial statements

42 40 STATEMENTS OF CASH FLOWS Group Company Note RM RM RM RM NET CASH FROM/(USED IN) OPERATING ACTIVITIES/BALANCE BROUGHT FORWARD 20,592,936 8,310,527 (5,493,944) 9,690,218 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment (b) (18,852,204) (15,446,812) - - Arising from incorporation of subsidiary 108, Increase of investment in subsidiaries (100,214) (405,582) - - Investment in subsidiaries - - (104,370) (8,913,000) Investment in associates - (8,800,000) - - Net cash outflow from acquisition of subsidiary 6(d)(ii) - (6,915,338) - - Proceeds from disposal of property, plant and equipment 325, , Dividend received - - 5,427,125 4,040,000 NET CASH (USED IN)/FROM INVESTING ACTIVITIES (18,518,380) (31,094,351) 5,322,755 (4,873,000) CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid by the Company (3,495,667) (3,442,849) (3,495,667) (3,442,849) Dividends paid by subsidiaries to non-controlling interests (817,386) (555,574) - - Drawdown from term loans 4,083,589 17,878, Net increase/(decrease) in fixed deposits pledged 1,946,029 (539,083) - - Net movement in trade bills 7,888,929 6,976, Proceeds from issuance of new shares to non-controlling interests in subsidiaries - 369, Repayment of hire purchase and lease payables (915,270) (886,694) - - Drawdown/(Repayment) of revolving credit facility 1,000,000 7,700, ,000 (500,000) Repayment of term loans (9,584,532) (3,179,510) - - Proceeds from disposal of treasury shares 2,964,023-2,964,023 - Purchase of treasury shares (31,176) (793,084) (19,453) (670,922) NET CASH FROM/(USED IN) FINANCING ACTIVITIES 3,038,539 23,528,561 (51,097) (4,613,771) NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 5,113, ,737 (222,286) 203,447 EFFECT OF EXCHANGE RATE CHANGES 1,389,630 2, CASH AND CASH EQUIVALENTS AT 1 JANUARY 29,971,994 29,224, ,998 41,551 CASH AND CASH EQUIVALENTS AT 31 DECEMBER (a) 36,474,719 29,971,994 22, ,998 The accompanying notes form an integral part of the financial statements

43 STATEMENTS OF CASH FLOWS 41 NOTES TO STATEMENTS OF CASH FLOWS (a) Cash and Cash Equivalents Cash and cash equivalents included in the statements of cash flows comprise the following: Group Company Note RM RM RM RM Cash and bank balances 15 23,796,043 30,307,598 22, ,998 Deposits with licensed bank 15 14,457,356 4,570, Bank overdraft 19 (447,939) (1,629,130) ,805,460 33,248,764 22, ,998 Less: Deposits pledged 15 (1,330,741) (3,276,770) ,474,719 29,971,994 22, ,998 (b) Acquisition of Property, Plant and Equipment During the financial year, the Group acquired property, plant and equipment with an aggregate cost of RM 19,190,727 (2012: RM 17,620,629), of which RM 338,523 (2012: RM 2,173,817) were acquired by means of hire purchase. The accompanying notes form an integral part of the financial statements

44 42 FOR THE YEAR ENDED 31 DECEMBER 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 ( Bursa Securities ). The addresses of the principal place of business and registered office of the Company are as follows: Principal place of business No. 3, 5 & 7, Jalan TSB 8, Taman Industri Sungai Buloh, Sungai Buloh, Selangor Darul Ehsan. Registered office 3-2, 3rd Mile Square, No.151, Jalan Kelang Lama, Batu 3 ½, Kuala Lumpur. The consolidated financial statements of the Company as at and for the year ended 31 December 2013 comprise the Company and its subsidiaries (together referred to as the Group ) and the Group s interest in jointly controlled entities and associates. The financial statements of the Company as at and for the financial year ended 31 December 2013 do not include other entities. The Company is principally engaged in investment holding and provision of management services, whilst the principal activities of the subsidiaries are disclosed in Note 6(a). There have been no significant changes in the nature of these principal activities during the financial year. The Company is a subsidiary of Omega Attraction Sdn. Bhd., a company incorporated in Malaysia, which is also the ultimate holding company. These financial statements were authorised for issue by the Board of Directors on 21 April 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 following are accounting standards, amendments and interpretations of the MFRS framework that have been issued by the Malaysian Accounting Standards Board ( MASB ) but have not been adopted by the Group and the Company: MFRSs, IC Interpretations and amendments effective for annual periods beginning on or after 1 January 2014 Amendments to MFRS 10, Consolidated Financial Statements: Investment Entities Amendments to MFRS 12, Disclosure of Interests in Other Entities: Investment Entities Amendments to MFRS 127, Separate Financial Statements (2011): Investment Entities Amendments to MFRS 132, Financial Instruments: Presentation Offsetting Financial Assets and Financial Liabilities Amendments to MFRS 136, Impairment of Assets Recoverable Amount Disclosures for Non-Financial Assets Amendments to MFRS 139, Financial Instruments: Recognition and Measurement Novation of Derivatives and Continuation of Hedge Accounting IC Interpretation 21, Levies

45 43 2. BASIS OF PREPARATION (CONT D) (a) Statement of compliance (Cont d) The Group and the Company plan to apply the abovementioned standards, amendments and interpretations from the annual period beginning on 1 January 2014 MFRSs, IC Interpretations and amendments effective for annual period on or after 1 July 2014 Amendments to MFRS 119, Defined Benefit Plans Employee Contributions Annual Improvements to MFRS cycle Annual Improvements to MFRS cycle MFRSs, IC Interpretations and amendments effective for a date yet to be confirmed MFRS 9, Financial Instruments (2009) MFRS 9, Financial Instruments (2010) MFRS 9, Financial Instruments (Hedge Accounting and Amendments to MFRS 7, MFRS 9 and MFRS 139) Amendments to MFRS 7: Mandatory Effective Date of MFRS 9 and Transition Disclosures The initial application of the abovementioned standards, amendments or interpretations are not expected to have any material impacts to the financial statements of the Group and the Company except as mentioned below: (i) MFRS 9 (2009), MFRS 9 (2010) & Amendments to MFRS 9 and MFRS 7: Mandatory Effective Date of MFRS 9 and Transition Disclosures MFRS 9 (2009) introduces new requirements for the classification and measurement of financial assets. Subsequently, this MFRS 9 was amended in year 2010 to include requirements for the classification and measurement of financial liabilities and for derecognition (known as MFRS 9 (2010)). Generally, MFRS 9 replaces the guidance in MFRS 139, Financial Instruments that relate to the classification and measurement of financial instruments. MFRS 9 divides all financial assets into 2 categories those measured at amortised cost and those measured at fair value, based on the entity s business model for managing its financial assets and the contractual cash flow characteristics of the instruments. For financial liabilities, the standard retains most of the MFRS 139 requirement. An entity choosing to measure a financial liability at fair value will present the portion of the change in its fair value due to changes in the entity s own credit risk in other comprehensive income rather than within profit or loss. There will be no financial impact on the financial statements of the Group upon its initial application but may impact its future disclosures. (ii) Amendments to MFRS 132: Offsetting Financial Assets and Financial Liabilities The amendments to MFRS 132 provide the application guidance for criteria to offset financial assets and financial liabilities. There will be no material impacts on the financial statements of the Group upon its initial application. (iii) Amendments to MFRS 136: Recoverable Amount Disclosures for Non-financial Assets The amendments to MFRS 136 remove the requirement to disclose the recoverable amount when a cashgenerating unit (CGU) contains goodwill or intangible assets with indefinite useful lives but there has been no impairment. Therefore, there will be no financial impact on the financial statements of the Group upon its initial application but may impact its future disclosures.

46 44 2. BASIS OF PREPARATION (CONT D) (a) Statement of compliance (Cont d) (iv) Annual Improvements to MFRSs Cycle The Annual Improvements to MFRSs Cycle contain amendments to MFRS 2, MFRS 3, MFRS 8, MFRS 13, MFRS 16, MFRS 124 and MFRS 138. These amendments are expected to have no material impact on the financial statements of the Group upon their initial application. (v) Annual Improvements to MFRSs Cycle The Annual Improvements to MFRSs Cycle contain amendments to MFRS 1, MFRS 3, MFRS 13, and MFRS 140. These amendments are expected to have no material impact on the financial statements of the Group upon their initial application. (b) Basis of measurement The financial statements have been prepared under the historical cost basis other than as disclosed in the summary of significant accounting policies (Note 3). (c) Functional and presentation currency The individual financial statements of each entity in the Group are presented in the currency of the primary economic environment in which the entity operates, which is the functional currency. These financial statements are presented in Ringgit Malaysia ( RM ), which is the Company s functional currency. All financial information is presented in RM and all values are rounded to the nearest RM, unless otherwise stated. (d) Critical accounting estimates and judgements Estimates and judgements are continually evaluated by the directors and management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and judgements that affect the application of the Group s accounting policies and disclosures, and have a significant risk of causing a material adjustment to the carrying amounts of assets, liabilities, income and expenses are discussed below:- (i) Depreciation of property, plant and equipment The estimates for the residual values, useful lives and related depreciation charges for the property, plant and equipment are based on commercial factors which could change significantly as a result of technical innovations and competitors actions in response to the market conditions. Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. (ii) Income taxes There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimate. The Group recognised tax liabilities based on its understanding of the prevailing tax laws and estimated of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the year in which such determination is made.

47 45 2. BASIS OF PREPARATION (CONT D) (d) Critical accounting estimates and judgements (Cont d) (iii) Impairment of non-financial assets When the recoverable amount of an asset is determined based on the estimate of the value-in-use of the cash-generating unit to which the asset is allocated, the management is required to make an estimate of the expected future cash flows from the cash-generating unit and also to apply a suitable discount rate in order to determine the present value of those cash flows. (iv) Write down of inventories Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories. (v) Classification between investment properties and owner-occupied properties The Group determined whether a property qualifies as an investment property, and has developed a criteria in making that judgement. Investment property is a property held to earn rentals or for capital appreciation or both. Therefore, the Group considers whether a property generates cash flows largely independent of the other assets held by the Group. Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods or services or for administrative purposes. If these portions could be sold separately (or leased out separately under a finance lease), the Group accounts for the portions separately. If the portions could not be sold separately, the property is an investment property only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes. Judgement is made on an individual property basis to determine whether ancillary services are so significant that a property does not qualify as investment property. (vi) Impairment of trade and other receivables An impairment loss is recognised when there is objective evidence that a financial asset is impaired. Management specifically reviews its loan and receivables financial assets and analyses historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in the customer payment terms when making a judgement to evaluate the adequacy of the allowance for impairment loss where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. If the expectation is different from the estimation, such difference will impact the carrying value of receivables. (vii) Impairment of Goodwill Goodwill is tested for impairment annually and at other times when such indicators exist. This requires management to estimate the expected future cash flows of the cash-generating unit to which goodwill is allocated and to apply a suitable discount rate in order to determine the present value of those cash flows. The future cash flows are most sensitive to budgeted gross margins, growth rates estimated and discount rate used. If the expectation is different from the estimation, such difference will impact the carrying value of goodwill.

48 46 2. BASIS OF PREPARATION (CONT D) (d) Critical accounting estimates and judgements (Cont d) (viii) Construction contracts Revenue and expenses that satisfy the characteristic of construction contracts are recognised in the income statement by using the stage of completion method. The stage of completion is determined by the proportion that contract costs incurred for work performed to date compared to the estimated total contract costs. Significant judgement is required in determining the stage of completion, the extent of the contract costs incurred, the estimated total contract revenue and costs, as well as the recoverability of the contracts or development projects. In making the judgement, the management evaluates based on past experience and by relying on the work of specialists. Where the total actual revenue and cost incurred are different from the total estimated revenue and cost incurred, such differences will impact the contract profit or losses recognised. 3. SIGNIFICANT ACCOUNTING POLICIES The accounting policies set out below have been applied consistently to the periods presented in these financial statements and have been applied consistently by the Group entities, unless otherwise stated. (a) Basis of Consolidation (i) Subsidiaries Subsidiaries are entities, including structured entities, controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The Group adopted MFRS 10, Consolidated Financial Statements in the current financial year. This resulted in changes to the following policies:- Control exists when the Group is exposed, 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. In the previous financial years, control exists when the Group has the ability to exercise its power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Potential voting rights are considered when assessing control only when such right are substantive. In the previous financial years, potential voting rights are considered when assessing control when such rights are presently exercisable. The Group considers it has de facto power over investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee s return. In the previous financial years, the Group did not consider de facto power in its assessment of control. The change in accounting policy has been made retrospectively and in accordance with the transitional provision of MFRS 10. The adoption of MFRS 10 has no significant impact to the financial statements of the Group.

49 47 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (a) Basis of Consolidation (Cont d) (ii) Business combination Acquisitions of businesses are accounted for using the acquisition method. Under the acquisition method, the consideration transferred for acquisition of a subsidiary is the fair value of the assets transferred, liabilities incurred and the equity interests issued by the Group at the acquisition date. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs, other than the costs to issue debt or equity securities, are recognised in profit or loss when incurred. In a business combination achieved in stages, previously held equity interests in the acquiree are remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss. Non-controlling interests in the acquiree may be initially measured either at fair value or at the non-controlling interests proportionate share of the fair value of the acquiree s identifiable net assets at the date of acquisition. The choice of measurement basis is made on a transaction-by-transaction basis. (iii) Non-controlling interest Non-controlling interests are presented within equity in the consolidated statements of financial position, separately from the equity attributable to owners of the Company. Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance. At the end of each reporting period, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests share of subsequent changes in equity. (iv) Changes in ownership interest in subsidiaries without change of control All changes in the parent s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of consideration paid or received is recognised directly in equity of the Group. (v) Loss of control Upon the loss of control of a subsidiary, the Group recognise any gain or loss on disposal in profit or loss which is calculated as the difference between:- a) the aggregate of the fair value of the consideration received and the fair value of any retained interest in the former subsidiary; and b) the previous carrying amount of the assets (including goodwill), and liabilities of the former subsidiary and any non-controlling interests. Amounts previously recognised in other comprehensive income in relation to the former subsidiary are accounted for in the same manner as would be required if the relevant assets or liabilities were disposed of (i.e. reclassified to profit or loss or transferred directly to retained profits). The fair value of any investments retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under MFRS 139 or, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

50 48 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (a) Basis of Consolidation (Cont d) (vi) Intangible assets Goodwill Goodwill is measured at cost less accumulated impairment losses, if any. The carrying value of goodwill is reviewed for impairment annually. The impairment value of goodwill is recognised immediately in profit or loss. An impairment loss recognised for goodwill is not reversed in a subsequent period. Under the acquisition method, any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interests recognised and the fair value of the Group s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree s identifiable assets and liabilities at the date of acquisition is recorded as goodwill. Where the latter amount exceeds the former, after reassessment, the excess represents a bargain purchase gain and is recognised as a gain in profit or loss. (vii) Investment in associates An associate is an entity in which the Group have a long-term equity interest and where it exercises significant influence over the financial and operating policies. Investments in associates are stated at cost in the statement of financial position of the Company, and are reviewed for impairment at the end of the reporting period if events or changes in circumstances indicate that the carrying values may not be recoverable. The cost of the investment includes transaction costs. The investment in an associate is accounted for in the consolidated statement of financial position using the equity method, based on the financial statements of the associate made up to 31 December The Group s share of the post acquisition profits and other comprehensive income of the associate is included in the consolidated statement of profit or loss and other comprehensive income, after adjustment if any, to align the accounting policies with those of the Group, from the date that significant influence commences up to the effective date on which significant influence ceases or when the investment is classified as held for sale. The Group s interest in the associate is carried in the consolidated statement of financial position at cost plus the Group s share of the post-acquisition retained profits and reserves. The cost of investment includes transaction costs. When the Group s share of losses exceeds its interest in an associate, the carrying amount of that interest is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation. Unrealised gains on transactions between the Group and the associate are eliminated to the extent of the Group s interest in the associate. Unrealised losses are eliminated unless cost cannot be recovered. When the Group ceases to have significant influence over an associate and the retained interest in the former associate is a financial asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as the initial carrying amount of the financial asset in accordance with MFRS 139. Furthermore, the Group also reclassifies its share of the gain or loss previously recognised in other comprehensive income of that associate to profit or loss when the equity method is discontinued. However, the Group will continue to use the equity method if the dilution does not result in a loss of significant influence or when an investment in a joint venture becomes an investment in an associate. Under such changes in ownership interest, the retained investment is not remeasured to fair value but a proportionate share of the amounts previously recognised in other comprehensive income of the associate will be reclassified to profit or loss where appropriate. All dilution gains or losses arising in investments in associates are recognised in profit or loss.

51 49 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (a) Basis of Consolidation (Cont d) (viii) Joint arrangements Joint arrangements are arrangements of which the Group has joint control, established by contracts requiring unanimous consent for decisions about the activities that significant affect the arrangements returns. Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. The Group has assessed the nature of its joint arrangements and determined them to be joint ventures. A joint venture is a joint arrangement whereby the Group has rights only to the net assets of the arrangement. The investment in a joint venture is accounted for in the consolidated statement of financial position using the equity method, based on the financial statements of the joint venture made up to 31 December The Group s share of the post acquisition profits and other comprehensive income of the joint venture is included in the consolidated statement of profit or loss and other comprehensive income, after adjustment if any, to align the accounting policies with those of the Group, up to the effective date when the investment ceases to be a joint venture or when the investment is classified as held for sale. The Group s interest in the joint venture is carried in the consolidated statement of financial position at cost plus the Group s share of the postacquisition retained profits and reserves. The cost of investment includes transaction costs. When the Group s share of losses exceeds its interest in a joint venture, the carrying amount of that interest is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation. Unrealised gains on transactions between the Group and the joint venture are eliminated to the extent of the Group s interest in the joint venture. Unrealised losses are eliminated unless cost cannot be recovered. The Group discontinues the use of the equity method from the date when the investment ceases to be joint venture or when the investment is classified as held for sales. When the Group retains an interest in the former joint venture and the retained interest is a financial asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as the initial carrying amount of the financial asset in accordance with MFRS 139. Furthermore, the Group also reclassifies its share of the gain or loss previously recognised in other comprehensive income of that joint venture to profit or loss when the equity method is discontinued. However, the Group will continue to use the equity method when an investment in a joint venture becomes an investment in an associate. Under such change in ownership interest, the retained investment is not remeasured to fair value but a proportionate share of the amounts previously recognised in other comprehensive income of the joint venture will be reclassified to profit or loss where appropriate. All dilution gains or losses arising in investments in joint ventures are recognised in profit or loss. (ix) Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group s interest in the investees. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

52 50 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (b) Related Parties A party is related to an entity (referred to as the reporting entity ) if:- (i) A person or a close member of that person s family is related to a reporting entity if that person:- (a) (b) (c) has control or joint control over the reporting entity; has significant influence over the reporting entity; or is a member of the key management personnel of the reporting entity or of a parent of the reporting entity. (ii) An entity is related to a reporting entity if any of the following conditions applies:- (a) (b) (c) (d) (e) (f) (g) The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others). One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member). Both entities are joint ventures of the same third party. One entity is a joint venture of a third entity and the other entity is an associate of the third entity. The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity. The entity is controlled or jointly controlled by a person identified in (i) above. A person identified in (i) (a) above has significant influence over the entity or is a member of the key management personnel of the entity (or of a person of the entity). Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity. (c) Foreign currency (i) Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting period are retranslated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the reporting date except for those that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments or a financial instrument designated as a cash flow hedge of currency risk, which are recognised in other comprehensive income.

53 51 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (c) Foreign currency (Cont d) (ii) Operations denominated in functional currencies other than Ringgit Malaysia The assets and liabilities of operations denominated in functional currencies other than RM are translated to RM at exchange rates at the end of the reporting period. The income and expenses of foreign operations 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, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of, in part or in full, the relevant amount in the FCTR is reclassified to profit or loss as part of the profit or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes 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. In the consolidated financial statements, when settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are presented in the FCTR within equity. (d) Financial instruments (i) Initial recognition and measurement A financial asset or a financial liability is recognised in the statements of financial position when, and only when, the Group or the Company becomes a party to the contractual provisions of the instrument. A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument. (ii) Financial instrument categories and subsequent measurement The Group and the Company categorise financial instruments as follows: Financial assets a) Financial assets at fair value through profit or loss Fair value through profit or loss category comprises financial assets that are held for trading, including derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial assets that are specifically designated into this category upon initial recognition. Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost. Other financial assets categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.

54 52 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (d) Financial instruments (Cont d) (ii) Financial instrument categories and subsequent measurement (cont d) Financial assets (cont d) b) Held-to-maturity investments Held-to-maturity investments category comprises debt instruments that are quoted in an active market and the Group or the Company has the positive intention and ability to hold them to maturity. Financial assets categorised as held-to-maturity investments are subsequently measured at amortised cost using the effective interest method. c) Loans and receivables Loans and receivables category comprises debt instruments that are not quoted in an active market. Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective interest method, less any impairment loss. d) Available-for-sale financial assets Available-for-sale category comprises investment in equity and debt securities instruments that are not held for trading. Investments 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. Other financial assets categorised as available-for-sale are subsequently measured at their fair values with the gain or loss recognised in other comprehensive income, except for impairment losses, foreign exchange gains and losses arising from monetary items and gains and losses of hedged items attributable to hedge risks of fair value hedges which are recognised in profit or loss. On derecognition, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity into profit or loss. Interest calculated for a debt instrument using the effective interest method is recognised in profit or loss. All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment (see Note 3(k)(i)). Financial liabilities All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value through profit or loss. Fair value through profit or loss category comprises financial liabilities that are held for trading, derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial liabilities that are specifically designated into this category upon initial recognition. Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost. Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.

55 53 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (d) Financial instruments (Cont d) (iii) Derecognition A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in profit or loss. A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. (iv) Financial guarantee contracts A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. Financial guarantee contracts are classified as deferred income and are amortised to profit or loss using a straight-line method over the contractual period or, when there is no specified contractual period, recognised in profit or loss upon discharge of the guarantee. When settlement of a financial guarantee contract becomes probable, an estimate of the obligation is made. If the carrying value of the financial guarantee contract is lower than the obligation, the carrying value is adjusted to the obligation amount and accounted for as a provision. (e) Property, plant and equipment (i) Recognition and measurement Items of property, plant and equipment are measured at cost less any accumulated depreciation and any accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. 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. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. 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 estimated amount for which a property could be exchange between knowledgeable willing parties 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 market prices for similar items when available and replacement cost when appropriate. 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. The gains or losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within other income or other expenses respectively in profit or loss.

56 54 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (e) Property, plant and equipment (Cont d) (i) Recognition and measurement (cont d) The carrying amount of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. (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 or the Company, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. (iii) Depreciation Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value. Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Freehold land is not depreciated. Capital work-in-progress is not depreciated as these assets are not ready for their intended use. The estimated useful lives for the current and comparative periods are as follows: Leasehold land Factory buildings Plant and machinery Motor vehicles Office equipment, furniture and fittings 66 to 99 years 10 to 66 years 2 to 20 years 4 to 10 years 2 to 10 years The residual values, useful life and depreciation method are reviewed at each financial year end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment. Fully depreciated property, plant and equipment are retained in the financial statements at nominal value of RM1 each until they are no longer in use and no further charge for depreciation is made in respect of these assets. (f) Leased assets (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 leases. On initial recognition of 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.

57 55 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (f) Leased assets (Cont d) (i) Finance lease (cont d) Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. 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. Leasehold land which in substance is a finance lease is classified as 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 of the Group or the Company. Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. 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. (g) Investment properties Investment properties are properties which are owned or held under a leasehold interest to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment property is initially measured at cost, including transaction costs. Subsequent to initial recognition, investment property is stated at cost less accumulated depreciation and accumulated impairment losses. Depreciation is provided for on a straight line basis over the estimated useful life. Freehold land is not depreciated whilst leasehold land is amortised over its remaining lease period of 50 to 96 years. The principal annual rates used for buildings are 2% per annum. Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labour, any other costs directly attributable to bringing the investment property to a working condition for their intended use and capitalised borrowing costs. An investment property is derecognised on its disposal, or when it is permanently withdrawn from use and no future economic benefits are expected from its disposal. The difference between the net disposal proceeds and the carrying amount is recognised in profit or loss in the period in which the item is derecognised. Transfer is made to or from investment property only when there is a change in use. All transfers do not change the carrying amount of the property reclassified. (h) Inventories Inventories are measured at the lower of cost and net realisable value. The cost of inventories is measured based on weighted average cost and first-in-first-out formula, where appropriate, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of work-in-progress and finished goods, cost includes an appropriate share of production overheads based on normal operating capacity.

58 56 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (h) Inventories (Cont d) In arriving at net realisable value, due allowance is made for all obsolete and slow moving items. 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. (i) Amount due from/(to) contract customers Amount due from/(to) contract customers on fixed price contracts is stated at cost plus attributable profits less progress billings and anticipated losses, if any. Cost includes all direct costs and other related costs. Where progress billings exceed the aggregate amount due from contract customers plus attributable profits less foreseeable losses, the net credit balance on all such contracts is shown in trade payables as amount due to contract customers. (j) Cash and cash equivalents Cash and cash equivalents consist of cash in hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in value. For the purpose of the statements of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits. Cash and cash equivalents (other than bank overdrafts) are categorised and measured as loans and receivables in accordance with policy Note 3(d). (k) Impairment (i) Financial assets All financial assets (except for financial assets categorised as fair value through profit or loss) 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. Losses expected as a result of future events, no matter how likely, are not recognised. For an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment. If any such objective evidence exists, then the impairment loss of the financial assets is estimated. An impairment loss in respect of loans and receivables and held-to-maturity investments is recognised in profit or loss and is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the asset s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured as the difference between the asset s acquisition cost (net of any principal repayment and amortisation) and the asset s current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an available-for-sale financial asset has been recognised in the other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity and recognised to profit or loss. An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Impairment losses recognised in profit or loss for an investment in an equity instrument is not reversed through profit or loss. If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to the extent that the asset s carrying amount 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 the reversal is recognised in profit or loss.

59 57 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (k) Impairment (Cont d) (ii) Non-financial assets The carrying amounts of non-financial assets (except for inventories, amount due from contract customers and deferred tax asset) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset s recoverable amount is estimated. For goodwill that have indefinite useful lives, 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 groups of assets (the cash-generating unit ). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to 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 to sell. 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 its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in profit or loss. 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 units and then to reduce the carrying amount of the other assets in the cash-generating unit (groups of units) on a pro rata basis. 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 if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are recognised. (l) Equity instruments Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently. (i) Issue expenses Costs directly attributable to issue of instruments classified as equity are recognised as a deduction from equity. (ii) Treasury shares When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a deduction from equity. Repurchased shares that are not subsequently cancelled are classified as treasury shares and are presented as a deduction from total equity. Where treasury shares are distributed as share dividends, the cost of the treasury shares is applied in the reduction of the share premium account or distributable reserves, or both. Where treasury shares are reissued by re-sale in the open market, the difference between the sales consideration net of directly attributable costs and the carrying amount of the treasury shares is recognised in equity.

60 58 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (m) Employee benefits (i) Short term employee benefits Short term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. (ii) Defined contribution plan As required by law, companies in Malaysia make contributions to the state pension scheme, the Employees Provident Fund ( EPF ). Such contributions are recognised as an expense in the income statement as incurred. Overseas subsidiaries make contributions to their respective countries statutory pension scheme. Such contributions are recognised as an expense in the income statement as incurred. (n) Provisions A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost. (o) Contingent liabilities Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of 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 liabilities unless the probability of outflow of economic benefits is remote. A contingent liability is not recognised but is disclosed in the notes to the financial statements. When a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision. (p) Revenue and other income recognition (i) Goods sold and service rendered Revenue from the sale of goods is measured at fair value of the consideration received or receivable, net of returns and allowances, traded discount and volume rebates. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, 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. Revenue from services rendered is recognised in profit or loss in proportion to the stage of completion of the transaction at the end of the reporting period. The stage of completion is assessed by reference to services performed to date as a percentage of total services to be performed.

61 59 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (p) Revenue and other income recognition (Cont d) (ii) Construction contracts Revenue from construction contracts is recognised on the percentage of completion method for projects supported by contracts, and/or where specific progress claims can be clearly identified against the stage of completion of contracts or when there is continuous transfer of control and risks and rewards of ownership. When these characteristics cannot be identified, the delivery and acceptance basis shall be adopted. The stage of completion is measured by reference to the proportion that contract costs incurred for contract work performed to date that reflect work performed bear to the total estimated contract costs. When the outcome of a contract cannot be estimated reliably, revenue is recognised only to the extent of contract costs incurred that is probable to be recoverable and the contract costs are recognised as an expense in the period in which they are incurred. An expected loss on a contract is recognised immediately in profit or loss. (iii) Dividend income Dividend income is recognised in profit or loss on the date that the Company s right to receive payment is established, which in the case of quoted securities is the ex-dividend date. (iv) Rental income Rental income from properties is recognised on an accrual basis unless collectability is in doubt, in which case it is recognised on cash receipt basis. (v) Interest income Interest income is recognised as it accrues using the effective interest method in profit or loss. (vi) Management Fee Income Management fee income from subsidiaries is recognised on accrual basis. (q) Borrowing costs Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method. Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets. 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. (r) Income tax Income tax expense comprises current and deferred tax. Income tax expense 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.

62 60 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (r) Income tax (Cont d) Current tax is the expected tax payable on the taxable income for the reporting period, 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, providing for 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 following temporary differences: the initial recognition of goodwill, and the initial recognition of assets or liabilities in a transaction that 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 apply 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. 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. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred income taxes relate to the same taxation authority. A tax incentive that is not a tax base of an asset is recognised as a reduction of tax expense in profit or loss as and when it is granted and claimed. Any unutilised portion of the tax incentive is recognised as a deferred tax asset to the extent that it is probable that future taxable profits will be available against which the unutilised tax incentive can be utilised. (s) Earnings per ordinary share The Group presents basic earnings per share data for its ordinary shares ( EPS ). Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. (t) Operating segments An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group s other components. An operating segment s operating results are reviewed regularly by the chief operating decision maker, which in this case is the Chief Executive Officer of the Group, to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

63 61 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (u) Fair value measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using a valuation technique. The measurement assumes that the transaction takes place either in the principal market or in the absence of a principal market, in the most advantageous market. For non-financial asset, the fair value measurement takes into account a market s participant s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. For financial reporting purposes, the fair value measurements are analysed into level 1 to level 3 as follows:- Level 1: Level 2: Level 3: Input are quoted prices (unadjusted) in active markets for identical assets or liability that the entity can access at the measurement date; Inputs are inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly or indirectly; and Inputs are unobservable inputs for the asset or liability. The transfer of fair value between levels is determined as of the date of the event or change in circumstances that caused the transfer.

64 62 4. PROPERTY, PLANT AND EQUIPMENT Office equipment, Freehold Leasehold Factory Plant and Motor furniture Capital workland land buildings machinery vehicles and fittings in-progress Total RM RM RM RM RM RM RM RM Group At Cost: At 1 January ,077,652 10,093,437 48,284,240 39,007,611 7,252,162 5,748,148 3,170, ,633,854 Acquisition from subsidiary 508, , , , , ,028 1,187,200 3,751,454 Additions - 5,066,670 2,243,464 4,676,740 2,365, ,307 2,277,158 17,620,629 Transfer to investment properties - (190,000) (220,000) (410,000) Reclassification - - 6,469, (6,469,725) - Disposals (60,663) (861,443) - - (922,106) Write off (129,146) (27,410) (15,967) - (172,523) Exchange differences ,873 (101,893) (21,168) (20,748) - (69,936) At 31 December ,586,452 15,306,107 57,228,802 43,868,331 9,233,675 7,042, , ,431,372 Less : Accumulated Depreciation At 1 January ,285 1,442,463 18,690,188 3,557,858 3,634,934-27,825,728 Acquisition from subsidiary , , , , ,715 Charge for the financial year - 122,712 1,039,426 3,775, , ,404-6,616,393 Transfer to investment properties - (15,097) (8,800) (23,897) Disposals (32,225) (539,814) - - (572,039) Write off (71,963) (7,995) (5,363) - (85,321) Exchange differences - - (22) (23,634) (25,960) 2,803 - (46,813) At 31 December ,900 2,503,111 22,583,052 4,133,597 4,480,106-34,307,766 Carrying Amount At 31 December ,586,452 14,698,207 54,725,691 21,285,279 5,100,078 2,562, , ,123,606

65 63 4. PROPERTY, PLANT AND EQUIPMENT (CONT D) Office equipment, Freehold Leasehold Factory Plant and Motor furniture Capital workland land buildings machinery vehicles and fittings in-progress Total RM RM RM RM RM RM RM RM Group 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 Reclassification 470,000 - (304,763) (11,326) - 1 1,326 (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 Reclassification (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

66 64 4. PROPERTY, PLANT AND EQUIPMENT (CONT D) (a) There is no property, plant and equipment in the Company throughout the current and previous financial years. (b) The following property, plant and equipment of the Group are charged against loans and borrowings (Note 19): Group RM RM At Carrying Amount Freehold land 21,056,452 20,586,452 Leasehold land 14,337,876 14,608,638 Factory buildings 57,153,454 54,410,727 Plant and machinery 939,791 1,055,125 Capital work-in-progress - 17,992 93,487,573 90,678,934 (c) The following property, plant and equipment of the Group are subject to hire purchase agreements (Note 20): Group RM RM At Carrying Amount Motor vehicles 2,154,691 3,372,107 Plant and machinery 996, ,875 3,150,936 3,968,982 (d) Included in the cost of the capital work-in-progress is the interest capitalised amounting to RM NIL (2012 : RM 25,343) for the financial year. 5. INVESTMENT PROPERTIES Group RM RM At Cost At 1 January 13,035,502 6,187,513 Acquisition from subsidiary - 6,437,989 Transfer from property, plant and equipment - 410,000 At 31 December 13,035,502 13,035,502 Less : Accumulated Depreciation At 1 January 100,937 1,681 Charge for the financial year 85,535 75,359 Transfer from property, plant and equipment - 23,897 At 31 December 186, ,937 Carrying Amount At 31 December 12,849,030 12,934,565

67 65 5. INVESTMENT PROPERTIES (CONT D) (a) (b) (c) Investment properties of the Group with carrying amount of RM 1,204,652 (2012: RM 1,223,129) are charged against loans and borrowings (Note 19). The rental income earned by the Group from its investment properties, all of which are leased out under operating lease, amounted to RM 97,000 (2012: RM 56,400). Direct operating expenses arising from the rental-earning investment properties amounting to RM 5,396 (2012: RM 5,396). The carrying amount of investment properties held by the Group as at year end are as follows: Group Name of property Description Tenure of land RM RM Bandar Sunway, 1 unit of 99 years lease from 739, ,000 Petaling Jaya, 1 1/2-storey light 29 December 1998 Selangor industrial terrace factory (84 years remaining) Senawang Light 1 unit of 90 years lease from 91,992 93,638 Industrial Estate, single storey 1 June 1985 Negeri Sembilan terrace factory (62 years remaining) Mukim Ulu Yam Industrial Land Freehold 5,340,513 5,340,513 Bandar Kundang Agriculture Land 99 years lease from 6,303,865 6,370,923 Selangor 4 November 2009 (95 years remaining) Taman Industri, 1 unit of 1 1/2 99 years lease from 372, ,491 Sg. Buloh, storey terrace 24 March 1993 Selangor factory (79 years remaining) 6. INVESTMENT IN SUBSIDIARIES 12,849,030 12,934,565 Company RM RM At Cost Unquoted shares At 1 January 102,804,051 93,891,051 Addition 104,370 8,913,000 At 31 December 102,908, ,804,051 Quoted shares At 1 January/At 31 December 31,718,980 31,718, ,627, ,523,031 Market value of quoted shares as at end of the year 31,200,000 23,400,000

68 66 6. INVESTMENT IN SUBSIDIARIES (CONT D) Company RM RM Represented by: Unquoted shares in Malaysia 96,948,738 96,948,738 Unquoted shares outside Malaysia 5,959,683 5,855,313 Quoted shares in Malaysia 31,718,980 31,718, ,627, ,523,031 (a) Details of the subsidiaries are as follows: Country of Effective Name of subsidiaries incorporation Principal Activities Equity Interest Success Electronics & Malaysia Manufacture of electrical 100% 100% Transformer Manufacturer apparatus and industrial Sdn. Bhd. ( SETM ) lighting Success Transformer Malaysia Trading, sales and marketing 100% 100% Marketing Sdn. Bhd. of electrical apparatus and ( STMKT ) industrial lighting Success Transformer Malaysia Investment holding 100% 100% Manufacturer Sdn. Bhd. ( STM ) Nikkon Industrial Lighting Malaysia Dormant 100% 100% Sdn. Bhd. ( NKIL ) SES Property Sdn. Bhd. ( SESP ) Malaysia Property Investment holding 100% 100% Aruanmota Sdn. Bhd. ( ASB ) Malaysia Dormant 100% 100% Nikkon LED Sdn. Bhd. ( NLED ) Malaysia Manufacturing of LED lighting 80% 80% Daiichi Steel Sdn. Bhd. ( DS ) Malaysia Manufacture of metal products 75% 75% focusing on metal stamping parts Omega Metal Industries Sdn. Malaysia Manufacture of metal products 65% 65% Bhd. ( OMI ) focusing on metal casings EOS Lighting Sdn. Bhd. Malaysia Manufacture of metal products 60% 60% ( EOS ) focusing on metal stamping parts Nikkon Lighting Pty. Ltd. Australia Marketing and distributing of 100% 100% ( NLPL ) # electrical apparatus and industrial lighting Success Transformer Pte. Ltd. Singapore Investment holding and to 100% 100% ( STPL ) # carry on business of electricians, mechanical engineers or any other of alike nature

69 67 6. INVESTMENT IN SUBSIDIARIES (CONT D) (a) Details of the subsidiaries are as follows: (Cont d) Country of Effective Name of subsidiaries incorporation Principal Activities Equity Interest Seremban Engineering Berhad Malaysia Fabrication of process 65% 65% ( SEB ) equipment and metal structures and the provision of maintenance, repair and shutdown works Boxon Industries Hardware (M) Malaysia Supplier and dealer in metal 60% 60% Sdn Bhd ( BIH ) enclosure and accessories Ningbo Success Zhenye People s Design, manufacture and 60% 60% Luminaire Limited Liabilities Republic of trading of industrial light Company ( NSZ ) # China fittings and fixtures Nikkon Success Kenya Limited Republic of Marketing and distributing of 51% 51% ( NSK ) # Kenya electrical apparatus and industrial lighting Nikkon Lighting (Thailand) Co., Ltd. Thailand Distribution of lighting and 49%^ - ( NLT ) # electrical products Subsidiaries of SEB SEB Resources Sdn. Bhd. ( SEBR ) Malaysia Fabrication of process equipment 100% 100% and metal structures and the provision of maintenance, repair and shutdown services also to supply both local and foreign labours Ace Standard International British Dormant 100% 100% Limited ( ACE ) * Virgin Island Sepen Engineering Sdn. Bhd. Malaysia Manufacturing and fabrication of 60% 60% ( SEPEN ) process equipment and metal structure Seremban Mechanical Services Malaysia Fabrication of process equipment 100% 100% Sdn. Bhd. ( SMS ) and metal structures and the provision of maintenance, repair and shutdown services Subsidiary of NSZ Ningbo Success Zhenye People s Aluminum die-casting, light 60% 60% Casting Limited Liabilities Republic of fittings assembly and moulds Company ( NSC ) # China Subsidiary of STPL Nikkon Lighting & Electrical Singapore Marketing and distribution of 55% 50% Pte. Ltd. ( NLE ) # electrical apparatus and plus 1 industrial lighting share

70 68 6. INVESTMENT IN SUBSIDIARIES (CONT D) (a) Details of the subsidiaries are as follows: (Cont d) Country of Effective Name of subsidiaries incorporation Principal Activities Equity Interest Subsidiary of BIH Boxon Industries Hardware (JB) Malaysia Trader of accessories and 100% 100% Sdn. Bhd. (BIHJ) panel box (f.k.a. B-Power Marketing (M) Sdn. Bhd. BPWR ) Boxon Industries Hardware Singapore Wholesale of metals and 100% 100% (S) Pte. Ltd. ( BIHS ) # metal ores except general hardware PT. Boxon Nikkon Jayaindo Indonesia Wholesale for lighting, 80% 60% ( BNJ ) # mechanical and electrical products, metal enclosure accessories * Not a legal requirement to be audited and therefore consolidated based on unaudited management accounts # Audited by firms other than Messrs. Crowe Horwath. ^ In accordance with the Memorandum of Articles of Association of NLT, one voting right is attached to every one ordinary share and one voting right is attached to every ten preferred shares. Based on existing total issued and paid-up share capital of NLT of 9,800 ordinary shares of THB 100 each and 10,200 preferred shares of THB 100 each, the total voting rights are 10,820 comprising 9,800 voting rights for ordinary shares and 1,020 voting rights for preferred shares. Success Transformer Corporation Berhad ( STC ) holds 9,800 ordinary shares which carry with them 9,800 voting rights or 90.6% of the total voting rights in NLT. As STC has control over NLT, NLT is consolidated into the Group. (b) (c) During the current financial year, the Directors reviewed the Company s investment in subsidiaries for indication of impairment and concluded that the recoverable amounts of the investment in subsidiaries are in excess of their carrying amounts. During the current financial year, the following transactions occurred: (i) Incorporation of and investment in subsidiaries On 22 July 2013, a subsidiary of the Company, BIH acquired additional 60,000 ordinary shares of USD 1.00 each in BNJ, representing an additional 20% equity interest in the issued and paid-up capital of BNJ for a total cash consideration of USD 60,000 (equivalent to RM 194,640). As a result, BIH holds 80% equity interest in BNJ. The acquisition was completed on 22 July On 2 September 2013, a subsidiary of the Company, STPL acquired additional 15,000 ordinary shares of SGD 1.00 each in NLE, representing an additional 5% equity interest in the issued and paid-up share capital of NLE for a total cash consideration of SGD 18,000 (equivalent to RM 46,818). As a result, STPL holds 55% equity interest in NLE. The acquisition was completed on 2 September On 2 September 2013, a subsidiary of the Company, NSZ completed a bonus issue, which involved increase of paid-up capital by capitalizing an amount of RMB 11 million from the retained earnings account. The bonus issue had been arranged in the proportion with the existing contribution made by all shareholders. As a result, STC remains the equity interest of 60% in NSZ.

71 69 6. INVESTMENT IN SUBSIDIARIES (CONT D) (c) During the current financial year, the following transactions occurred: (Cont d) (i) Incorporation of and investment in subsidiaries (cont d) On 20 November 2012, the Company subscribed to a total of 9,800 ordinary shares of THB each in NLT, representing a 49% of the total issued and paid-up capital of NLT for a total cash consideration of THB 980,000 (equivalent to RM 104,370). The investment in NLT was deemed completed on 4 January The directors have determined that the Company has de facto control as it owns 90.6% of the voting power in NLT. The addition of the above subsidiaries has resulted in a decrease in the Group s net profit for the financial year 2013 by RM 50,799 and increase in net assets by RM 44,751. (d) During the previous financial year, the following transactions occurred: (i) Incorporation of and investment in subsidiaries On 20 September 2011, the Company entered into the Share Sale Agreement with the shareholder of ASB to acquire the entire equity interests, comprising 500,000 ordinary shares of RM 1.00 each in ASB for a total cash consideration of RM 6,438,000. The acquisition was completed on 21 February On 23 March 2012, the Company entered into a sale and purchase agreement with the shareholders of BIH, to acquire 35.29% equity interests comprising 900,000 ordinary shares of RM1.00 each in BIH for a total cash consideration of RM 900,000 and to subscribe for an additional 1,575,000 ordinary shares of RM1.00 each in BIH at par for cash. The acquisition was completed on 2 April Consequently, BIH became a 60% owned subsidiary of the Company. Subsequently, BIH, had on 22 May 2012 subscribed to a total of 180,000 ordinary shares of USD 1.00 each in BNJ, representing a 60% equity interest in the issued and paid-up share capital of BNJ for a total cash consideration of USD 180,000 (equivalent to RM 554,688) upon incorporation. As a result, BNJ became a 60% owned subsidiary of BIH. On 12 November 2012, the Group via its subsidiary, SEB entered into a sale of shares agreement to acquire the remaining 40% equity interest in SMS from Ng Kit Seong comprising 400,000 shares of RM 1.00 each for a total cash consideration of RM 405,582. Consequently, SMS became a wholly-owned subsidiary of SEB. The addition of the above subsidiaries has resulted in a decrease in the Group s net profit for the financial year 2012 by RM 132,345 and increase in net assets by RM 9,220,445.

72 70 6. INVESTMENT IN SUBSIDIARIES (CONT D) (d) During the previous financial year, the following transactions occurred: (Cont d) (ii) The following summarises the major classes of consideration transferred, and the recognised amounts of assets acquired and liabilities assumed at the acquisition date: ASB BIH Total RM RM RM Fair value of consideration transferred Cash and cash equivalents 6,438,000 2,475,000 8,913,000 Identifiable assets acquired and liabilities assumed Property, plant and equipment 6,437,989 3,157,739 9,595,728 Inventories - 1,590,692 1,590,692 Trade and other receivables - 2,199,639 2,199,639 Cash and bank balances 11 1,997,651 1,997,662 Trade and other payables - (2,241,786) (2,241,786) Bank Borrowings - (2,820,836) (2,820,836) Deferred tax liabilities - (3,500) (3,500) Total identifiable net assets 6,438,000 3,879,599 10,317,599 Net cash outflow arising on acquisition of subsidiaries Purchase consideration settled in cash and cash equivalents 6,438,000 2,475,000 8,913,000 Cash and cash equivalents of subsidiaries acquired (11) (1,997,651) (1,997,662) Net cash outflow arising on acquisition 6,437, ,349 6,915,338 Goodwill Total consideration transferred 6,438,000 2,475,000 8,913,000 Fair value of identifiable net assets (6,438,000) (3,879,599) (10,317,599) Non-controlling interest, based on their propotionate interest in the recognised amounts of the assets and liabilities of the acquiree - 1,551,840 1,551,840 Goodwill - 147, ,241 (e) The non-controlling interests at the end of the reporting period comprise the following:- Group RM RM SEB 24,234,597 22,505,769 NSZ 5,861,146 4,803,112 NSK 2,467,208 2,256,514 Other individually immaterial subsidiaries 3,706,760 3,857,962 36,269,711 33,423,357

73 71 6. INVESTMENT IN SUBSIDIARIES (CONT D) (f) The summarised financial information (before intra-group elimination) for each subsidiary which has non-controlling interests that are material to the Group is as follows:- At 31 December SEB RM RM Non-current assets 52,295,323 50,461,909 Current assets 73,378,663 68,822,750 Non-current liabilities (8,382,380) (9,666,087) Current liabilities (48,049,901) (45,316,375) Net assets 69,241,705 64,302,197 Financial year ended 31 December Revenue 94,936,995 96,892,332 Profit and total comprehensive income for the financial year 6,545,267 7,457,211 Total comprehensive income attributable to non-controlling interests 2,290,843 2,610,024 Dividends paid to non-controlling interests 554, ,574 Net cash flows from operating activities (169,332) (5,745,080) Net cash flows from investing activities (2,646,017) (17,575,516) Net cash flows from financing activities 316,577 13,324,956 At 31 December NSZ RM RM Non-current assets 3,510,558 3,102,138 Current assets 29,506,133 19,763,655 Current liabilities (18,363,826) (10,858,012) Net assets 14,652,865 12,007,781 Financial year ended 31 December Revenue 64,617,113 51,963,246 Profit and total comprehensive income for the financial year 2,071,951 2,012,177 Total comprehensive income attributable to non-controlling interests 828, ,871 Dividends paid to non-controlling interests 263,350 - Net cash flows from operating activities 1,361,942 3,845,554 Net cash flows from investing activities (1,008,218) (1,008,094) Net cash flows from financing activities (633,679) -

74 72 6. INVESTMENT IN SUBSIDIARIES (CONT D) (f) The summarised financial information (before intra-group elimination) for each subsidiary which has non-controlling interests that are material to the Group is as follows:- (Cont d) At 31 December NSK RM RM Non-current assets 100, ,739 Current assets 6,037,300 5,384,642 Non-current liabilities (9,745) (10,709) Current liabilities (1,092,810) (908,542) Net assets 5,035,120 4,605,130 Financial year ended 31 December Revenue 1,791,371 2,979,617 Profit and total comprehensive income for the financial year 114, ,037 Total comprehensive income attributable to non-controlling interests 56,039 98,018 Net cash flows from operating activities 980,385 (513,094) Net cash flows from investing activities 31,114 (11,152) 7. INVESTMENT IN JOINTLY CONTROLLED ENTITY Group RM RM At Carrying Amount At 1 January - - Addition - - At 31 December - - (a) The details of the jointly controlled entity are as follows: Name of jointly controlled entity Principal activity Effective equity interest Groupage SEB Sdn. Bhd. Dormant 50% 50% (Incorporated in Malaysia) (b) The summarised financial information of jointly controlled entity, that is immaterial to the Group, is as follows: Group RM RM Current assets 9,433 9,433 Net loss (2,416) (3,162)

75 73 8. INVESTMENT IN ASSOCIATES At Carrying Amount Group RM RM At 1 January 8,783,333 - Addition - 8,800,000 Share of post-acquisition (loss) (301,421) (16,667) At 31 December 8,481,912 8,783,333 (a) The details of the associates are as follows: Name of associates Principal activities Effective equity interest Selekta Spektra Sdn. Bhd. ( SSSB ) A turnkey contractor providing landfill 40% 40% (Incorporated in Malaysia) services, waste pretreatment and waste excavation services Nine Energy Sdn. Bhd. ( NESB ) Fabrication of process equipment and 40% 40% (Incorporated in Malaysia) 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 associates that is material to the Group is as follows: SSSB RM RM As at 31 December Non-current assets 7,569,509 7,268,174 Current assets 1,480,600 1,148,926 Non-current liabilities (1,339,046) (932,620) Current liabilities (4,638,841) (3,683,924) Net assets 3,072,222 3,800, month period ended 31 December Revenue 4,219,657 2,620,173 Profit for the financial year (778,318) (282,147) Total comprehensive income (778,318) (282,147) Group s share of profit for the financial year (311,327) (40,401) Group s share of other comprehensive income (311,327) (40,401) Reconciliation of net assets to carrying amount Group s share of net assets above 1,228,888 1,538,222 Goodwill 6,914,100 6,916,093 Carrying amount of the Group s interests in this associate 8,142,988 8,454,315

76 74 9. GOODWILL ON CONSOLIDATION Group RM RM At 1 January 7,763,479 7,616,238 Acquisition of subsidiaries - 147,241 At 31 December 7,763,479 7,763,479 The goodwill on consolidation brought forward from previous financial year arises from the piecemeal acquisition of Seremban Engineering Berhad and acquisition of Boxon Industries Hardware (M) Sdn Bhd. The key factors contributing to the goodwill on this business are the strength of the company acquired, among others; include the technical know-how of the employees, established management control systems and expectation to generate profitability for the Group. Impairment testing The recoverable amount of the goodwill is higher than its carrying amount and was based on its value in use. Value in use was determined by discounting the future cash flows generated from the continuing operation of the subsidiaries and was based on the following key assumptions : Cash flows were projected based on actual operating results and financial budgets approved by management covering a 5 years business plan. The units will continue their operations indefinitely. A discount rate of 7.6% (2012 : 8.4%) was applied. Growth rate is determined based on the management s estimate of the industry trends and past performances. The key assumptions represent management assessment of future trends in their respective process equipment, hardware, accessories and lighting related business and are based on both external sources and internal sources (historical data). 10. 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: Group RM RM At 1 January (4,663,924) (5,023,231) Recognised in profit or loss - Accelerated capital allowance (339,390) (501,244) - Acquisition of subsidiary (Note 6(d)) - (3,500) - Others 105, ,452 - Under/(over) provision in prior years 218,222 (84,972) - Exchange differences (27,988) 37,571 At 31 December (4,707,710) (4,663,924) Presented after appropriate offsetting as follow: Deferred tax assets 353, ,340 Deferred tax liabilities (5,061,085) (5,353,264) (4,707,710) (4,663,924)

77 DEFERRED TAX ASSETS/(LIABILITIES) (CONT D) Detailed components of deferred tax assets/(liabilities) as follow: Group RM RM Deferred tax assets (before offsetting): Property, plant and equipment - accelerated capital allowances Allowance for impairment loss on receivables 10, ,531 Others 343, , ,375 1,075,461 Offsetting - (386,121) Deferred tax assets (after offsetting) 353, ,340 Deferred tax liabilities (before offsetting): Property, plant and equipment - accelerated capital allowances (4,857,613) (5,208,112) Others (203,472) (531,273) (5,061,085) (5,739,385) Offsetting - 386,121 Deferred tax liabilities (after offsetting) (5,061,085) (5,353,264) 11. INVENTORIES Group RM RM At Cost Raw materials 47,147,748 37,019,108 Work-in-progress 21,632,015 21,886,571 Finished goods - Trading 15,476,090 10,607,431 - Manufactured 12,265,132 13,482,445 96,520,985 82,995,555 At Net Realisable Value Raw materials 447, ,224 Finished goods 1,136, ,533 1,584, ,757 98,105,569 83,898,312 Recognised in profit or loss: Inventories recognised as cost of sales 204,957, ,094,969 Write down of inventories to net realisable value 1,468,365 1,064,886 Reversal of inventories write down in previous years (210,112) -

78 AMOUNT DUE FROM CONTRACT CUSTOMERS Group RM RM Aggregate costs incurred to date 23,749,033 30,059,223 Add: Attributable profits 5,074,515 1,741,124 28,823,548 31,800,347 Less: Progress billings (23,206,203) (29,502,089) 13. TRADE AND OTHER RECEIVABLES 5,617,345 2,298,258 Group Company RM RM RM RM Non-Current Non-trade Amount due from subsidiaries - - 7,444,049 6,697,633 Amount due from associates 885, ,000-7,444,049 6,697,633 Current Trade Amount due from subsidiaries ,623 Amount due from associates 1,764, Amount due from related parties (Note 30(a)) 5,039,518 3,336, Other trade receivables 105,378,197 89,484, ,182,487 92,821,806-16,623 Less: Allowance for impairment losses - collective impairment (1,877,051) (1,881,276) individual impairment (2,822,462) (2,915,424) ,482,974 88,025,106-16,623 Non-trade Amount due from subsidiaries ,847 18,028 Amount due from jointly controlled entity 65,407 58, Amount due from associates 180, Deposits to supplier 2,709,932 3,250, Sundry receivables 2,179,607 1,155, , ,706 Less: Allowance for impairment losses (6,862) (3,698) - - 5,128,084 4,460, , , ,611,058 92,486, , , ,496,058 92,486,005 7,642,603 6,865,990

79 TRADE AND OTHER RECEIVABLES (CONT D) Group Company RM RM RM RM Allowance for impairment losses As at 1 January 4,800,398 2,747, Charge for the year 397,275 2,898, ,197,673 5,646, Less : Bad debt written off - (200,000) - - : Reversal (491,298) (646,017) - - 4,706,375 4,800, (a) (b) (c) The Group s trade receivables including related parties are non-interest bearing and are generally on credit terms ranging from 7 to 150 days (2012: 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 180 days (2012: 180 days). Other credit terms are assessed and approved on a case-by-case basis. The amounts due from subsidiaries of the Company are unsecured, interest free and repayable on demand. The impairment losses is made mainly on those trade receivables which have defaulted on payments. 14. PREPAYMENT AND OTHER ASSETS Group Company RM RM RM RM Current Non-trade Deposits 1,380,965 1,266,391 1,000 1,000 Prepayments 456, , Tax recoverable 1,374, , ,212,272 2,953,588 1,000 1, DEPOSITS, CASH AND BANK BALANCES Group Company RM RM RM RM Cash and bank balances 23,796,043 30,307,598 22, ,998 Fixed deposits placed with licensed banks 1,330,741 3,276, Short term deposits placed with licensed banks 13,126,615 1,293, ,253,399 34,877,894 22, ,998 (a) Fixed deposits placed with licensed banks of the Group amounting to RM 1,330,741 (2012: RM 3,276,770) are pledged against loans and borrowings (Note 19).

80 DEPOSITS, CASH AND BANK BALANCES (CONT D) (b) The effective interest rates (per annum) of deposits placed with licensed banks as at the end of financial year are as follows: Group % % Fixed deposits Short term deposits (c) The maturity periods as at the end of financial year are as follow: Group Days Days Fixed deposits Short term deposits SHARE CAPITAL Group and Company RM No. of Shares RM No. of Shares Authorised: Ordinary shares of RM 0.50 each 100,000, ,000, ,000, ,000,000 Issued and fully paid up : Ordinary shares of RM 0.50 each 60,000, ,000,000 60,000, ,000,000 The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Company. 17. TREASURY SHARES Group and Company RM RM At Cost At 1 January 6,455,366 5,784,444 Buy back 19, ,922 Disposal (2,674,737) - At 31 December 3,800,082 6,455,366 The shareholders of the Company, by an ordinary resolution passed in the Annual General Meeting held on 12 June 2013, 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.

81 TREASURY SHARES (CONT D) During the financial year, the Company repurchased and disposed its issued ordinary shares of RM 0.50 each from the open market as follows: Average purchase price Buy back Cost Highest Lowest per share No. of Shares RM RM RM RM January ,100 7, February ,900 8, July ,000 3, ,000 19,453 Total Average consideration re-sell price Disposal received Surplus Cost Highest Lowest per share RM RM No. of Shares RM RM RM RM May ,777, ,728 2,194,400 2,503, October ,693 15, , , ,964, ,286 2,344,400 2,674,737 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, The surplus arising from resale of treasury shares during the financial year has been credited to share premium account (Note 18(a)). None of the treasury shares held was cancelled during the financial year ended 31 December Out of the total 120,000,000 issued and fully paid ordinary shares of RM 0.50 each as at 31 December 2013, 3,330,777 (2012: 5,656,177) ordinary shares are held as treasury shares by the Company. Therefore, the number of outstanding ordinary shares in issue and fully paid is 116,669,223 (2012: 114,343,823) ordinary shares of RM 0.50 each. 18. RESERVES Group Company RM RM RM RM Non-Distributable Share premium 1,267, ,517 1,267, ,517 Translation reserve 1,782,940 (105,487) - - Capital reserve 3,544, Distributable Retained profits 157,752, ,913,471 34,115,384 31,303, ,347, ,786,501 35,383,187 32,282,253

82 RESERVES (CONT D) (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 is used to record foreign currency exchange differences arising from the translation of the financial statements of foreign subsidiaries whose functional currencies are different from that of the Group s presentation currency. It is also used to record the exchange differences arising from monetary items which form part of the Group 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. (c) Capital reserve The capital reserve comprises the equity portion of bonus shares issued by a subsidiary (Note 6 (c)). (d) Retained Profits Under the single tier tax system, tax on the Company s profits is a final tax. Accordingly, any dividends to the shareholders are not subject to tax. 19. LOANS AND BORROWINGS Group Company RM RM RM RM Current Secured - Bank overdraft 447,939 1,629, Revolving credit 12,500,000 11,500, , Trade bills 30,979,929 23,091, Term loans 4,224,660 2,699, ,152,528 38,919, ,000 - Non-current Secured - Term loans 36,498,939 42,569, Term loan partially released - 955, ,498,939 43,524, ,651,467 82,444, ,000 - (a) Loans and borrowings of the Group are secured by way of: (i) Charge over certain property, plant and equipment (Note 4(b)); and certain investment properties (Note 5); (ii) Corporate guarantee provided by the Company; (iii) Fixed deposits of the Group with licensed banks (Note 15(a)); and (iv) Joint and several guarantees by certain directors of a subsidiary.

83 LOANS AND BORROWINGS (CONT D) (b) The effective interest rates (per annum) for loans and borrowings during the financial year were as follow: Group Company % % % % Bank overdraft Revolving credit Trade bills Term loans (c) The term loans are repayable by 36 to 300 (2012: 60 to 300) equal monthly instalments. As at the end of financial year, they are repayable as follows: Group RM RM Current Not later than one year 4,224,660 2,699,608 Non-current Later than one year and not later than two years 3,380,975 2,816,447 Later than two years and not later than five years 11,015,488 10,780,104 Later than five years 22,102,476 28,973, HIRE PURCHASE AND LEASE PAYABLES 36,498,939 42,569,879 40,723,599 45,269,487 As at the end of financial year, the outstanding hire purchase and lease obligations are repayable as follow: Group RM RM Minimum hire purchase payments: Not later than one year 1,011,433 1,025,823 Later than one year and not later than two years 636, ,887 Later than two years and not later than five years 640, ,007 More than five years - 15,950 2,289,126 2,944,667 Less: Unexpired term charges (184,615) (263,409) 2,104,511 2,681,258 Principal amount outstanding: Current portion 910, ,938 Non-current portion 1,194,294 1,772,320 2,104,511 2,681,258 The effective interest rates of the hire purchase obligations are ranging from 2.5% to 12.0% (2012: 2.5% to 9.3%) per annum.

84 TRADE AND OTHER PAYABLES Group Company RM RM RM RM Trade Amount due to associates 351, , Amount due to related parties 300,061 1,484, Other trade payables 40,495,234 27,947, ,146,427 29,540, Non-trade Amount due to a subsidiary ,837,119 55,457,768 Amount due to a related party 21,243 24, Advance payment from customers 8,838,079 6,589, Accruals 11,043,858 11,482, , ,506 Sundry payables 7,114,058 3,938, ,017,238 22,034,329 50,127,038 55,771,274 68,163,665 51,574,694 50,127,038 55,771,274 (a) (b) The normal credit terms granted to the Group by trade payables including related parties are ranging from 30 to 120 days (2012: 30 to 120 days) from invoice date or the first day of the immediate following month after purchases invoice date, whichever applicable. The amount due to a subsidiary of the Company and a related party are unsecured, interest free and repayable on demand. The related party is a company in which directors of a subsidiary company have substantial financial interest. 22. REVENUE Group Company RM RM RM RM Dividend income - - 5,435,025 4,040,000 Management fee income - - 2,400,000 1,440,000 Invoiced value of goods sold net of discounts and return 216,951, ,917, Invoiced value of process equipment sold 79,157,797 88,099, Invoiced value of maintenance and shutdown services 3,670,845 4,653, Contract revenue 22,969,496 8,934, ,749, ,605,469 7,835,025 5,480,000

85 FINANCE COSTS Group Company RM RM RM RM Interest on: - Bank overdraft 111,764 50, Hire purchase and leasing 127,254 97, Term loans 1,852,770 1,548, Trade bills 832,565 1,006, Revolving credit 641, ,963 54, ,064 3,566,242 3,301,147 54, ,159 Bank charges 335, ,783 2, Commitment fee 239, , ,908 85, PROFIT BEFORE TAX 4,141,048 3,669, , ,167 Profit before tax is arrived at: Group Company RM RM RM RM After charging: Allowance for impairment loss of receivables: - collective impairment 66, , individual impairment 330,508 2,563, Auditors remuneration: - statutory audit 259, ,270 36,300 30,000 - under provision in prior year 22,761 12,520 6,300 5,000 - other services 3,000 2,500 3,000 2,500 Bad debts written off - 202, Depreciation of property, plant and equipment 7,581,154 6,616, Depreciation of investment properties 85,535 75, Loss on theft - 273, Property, plant and equipment written off 15,988 87, Unrealised loss on foreign exchange 982,704 47, Rental expenses: - office 708, , hostel 185, , factory 233, , crane 297, , gas cylinder 6,994 58, forklift 238, , machine 261, , motor vehicle 6,628 72, equipment 7,853 29, skylift 790 1, shophouse - 3, Research and development expenses 1,298, , Write down of inventories 1,468,365 1,064,

86 PROFIT BEFORE TAX (CONT D) Profit before tax is arrived at: (Cont d) Group Company RM RM RM RM And crediting: Bad debts recovered (81,378) Export allowance / Incentives (129,094) (29,670) - - Gain on disposal of property, plant and equipment (228,108) (123,314) - - Gain on foreign exchange - Realised (548,533) (351,969) (37,424) - - unrealised - - (68,378) - Insurance compensation - (156,489) - - Fixed deposits interest income (195,582) (286,872) - - Rental income (453,774) (434,282) - - Reversal of allowance for impairment loss of trade receivables (491,298) (846,017) - - Reversal of inventories write down (210,112) Sundry income (668,164) (604,340) DIRECTORS REMUNERATIONS Directors of the Company: Group Company RM RM RM RM Executive Directors: - Fees 135, ,000 90,000 90,000 - Salaries and other emoluments 1,362,040 1,218, Defined contribution plan ( EPF ) 203, , Bonus and incentive 1,512,899 1,132, ,213,347 2,668,160 90,000 90,000 - Benefits-in-kind 47,850 45, ,261,197 2,713,735 90,000 90,000 Directors of the Company: Non-Executive Directors:* - Fees 180, , , ,000 - Salaries and other emoluments 247, , EPF 33,366 30, Bonus and incentive 180, , , , , ,000 - Benefits-in-kind 20,383 21, , , , ,000 3,923,206 3,366, , ,000

87 DIRECTORS REMUNERATIONS (CONT D) Directors of subsidiary companies: Group Company RM RM RM RM - Fees 236, , Salaries and other emoluments 2,332,457 1,986, EPF 255, , Bonus and incentive 560, , ,384,308 2,743, Benefits-in-kind 63,538 66, ,447,846 2,809, ,221,052 6,176, , ,000 * Included in the Non-Executive Directors remunerations are remuneration paid to certain Directors who are executive directors of subsidiaries amounting to RM 341,626 (2012: RM 353,095). 26. EMPLOYEE BENEFITS Group Company RM RM RM RM (a) (b) Executive directors remunerations (Note 25) (excluding benefits-in-kind) 6,597,655 5,411,266 90,000 90,000 Other staff costs - Wages, salaries and bonuses 38,480,552 29,904, , ,000 - Defined contribution plan ( EPF ) 3,038,661 2,497, Other benefits 4,748,204 4,789, ,267,417 37,191, , ,000 52,865,072 42,602, , , TAX EXPENSE Group Company RM RM RM RM (a) Component of the tax expense: Current tax expense - Malaysia tax 11,024,171 8,985, , ,483 - Foreign tax 961, , Deferred tax expenses/(income) relating to origination of temporary differences 234,020 (310,966) - - Withholding tax 387, ,125 - (Over)/Under provision in prior year - current tax 116, ,906 - (500) - deferred tax (218,222) 84, Total tax expense 12,505,320 9,781, , ,983

88 TAX EXPENSE (CONT D) Group Company RM RM RM RM (b) Reconciliation of tax expense with statutory income tax rate Profit before tax 44,886,509 40,416,875 7,133,301 4,458,172 Tax at statutory income tax rate at 25% (2012: 25%) 11,221,627 10,104,219 1,783,325 1,114,543 Tax effects of: - different tax rates in other countries (57,951) (71,302) non-deductible expenses 776, ,885 14,292 95,940 - expenses available for double deduction (220,294) (277,807) non-taxable income (208,025) (190,352) (1,358,756) (1,010,000) Tax saving arising from utilisation of tax incentives (231,810) (941,178) - - Deferred tax assets not recognised 939, , Withholding tax 387, ,125 - (Over)/Under provision in prior year - current tax 116, ,906 - (500) - deferred tax (218,222) 84, Total tax expense 12,505,320 9,781, , ,983 The statutory tax rate will be reduced to 24% from the current financial year s rate of 25%, effective year of assessment As at the end of financial year, the Group has an estimated unutilised reinvestment allowances, unutilised tax losses and unabsorbed capital allowances of approximately RM 1,161,000 (2012: RM 1,125,000), RM 5,982,644 (2012: RM 3,974,502) and RM 809,257 (2012: RM 1,186,000) respectively available for setting off against future taxable profits, subject to agreement by the Inland Revenue Board. 28. EARNINGS PER ORDINARY SHARE (a) The earnings per share is calculated by dividing the net profit for the financial year attributable to ordinary owners by the weighted average number of ordinary shares in issue during the financial year: Group Profit attributable to ordinary owners of the Company (RM) 28,979,315 27,042,645 Weighted average number of ordinary shares in issue 115,744, ,651,015 Basic Earnings per share (sen) (b) The diluted earnings per share of the Group were not presented as there were no dilutive potential ordinary shares during the financial year.

89 DIVIDENDS (a) Dividend recognised in the current year by the Company is: Sen per Total Date of Share Amount Payment RM 2013 Interim tax exempt dividend per 116,522,223 ordinary shares of RM0.50 each 3.0 3,495,667 7 June Interim tax exempt dividend per 114,761,623 ordinary shares of RM0.50 each 3.0 3,442,849 8 June 2012 (b) In respect of the financial year ending 31 December 2014, an interim single-tier dividend of 8% equivalent to RM 0.04 per ordinary share was declared on 19 March 2014 and will be paid on 13 June 2014 to the shareholders whose names appeared in the Company s Record of Depositors on 21 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) Related Party Relationship Party are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other parties. Related parties of the Company include: (i) Direct and indirect subsidiaries as disclosed in Note 6; and (ii) Key management personnel which comprises persons (including the Directors of the Company) having authority and responsibility for planning, directing and controlling the activities of the Group directly or indirectly. (b) Related Party Transactions The following are aggregate value of significant transactions with related parties that took place during the financial year: Company RM RM (i) Subsidiaries - Rendering of services (2,400,000) (1,440,000) - Dividend income (5,435,025) (4,040,000) Group RM RM (ii) Associates - Sales of goods (1,809,772) - - Supply of labour service 1,050, ,865

90 RELATED PARTY DISCLOSURES (CONT D) (b) Related Party Transactions (Cont d) The following are aggregate value of significant transactions with related parties that took place during the financial year: (cont d) Group RM RM (iii) Other Directors Interest - Sales of goods (5,729,080) (4,766,712) - Purchase of goods 6,909,154 6,908,142 - Sub contractor fees - (5,000) - Supply of labour and materials - (2,200) - Supply of labour services 97, ,006 - Rental of factory 714, ,523 - Rental of hostel 6,000 6,000 - Rental of machinery 618, ,357 (c) Compensation Of Key Management Personnel Group RM RM Short term employee benefits 7,901,775 6,662,795 Defined contribution plans ( EPF ) 612, ,841 8,514,649 7,219,636 Comprise amounts paid to: - Directors of the Group and of the Company 7,239,281 6,042,841 - Other key management personnel 1,275,368 1,176,795 8,514,649 7,219,636 The remuneration of key management personnel are determined by the remuneration committee having regard to the performance of individuals and market trends. 31. COMMITMENT (a) Capital Commitment As at financial year end, the capital expenditure contracted for but not provided for in the financial statements are as follows: Group Company RM RM RM RM Approved and contracted for: Purchase of property, plant and equipment 394, , Investment in subsidiary - 104, , , , ,370

91 COMMITMENT (CONT D) (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:- Group RM RM Not later than one year 162, ,000 Later than one year and not later than five years 648, ,000 Later than five years 405, ,000 1,215,000 1,377, CONTINGENT LIABILITIES Group Company RM RM RM RM Secured Bank guarantees issued to third party 4,927,052 2,204, Unsecured Corporate guarantee to financial institution for banking facilities granted to subsidiaries 59,424,924 79,145,611 54,024,858 74,339,741 As at the end of financial year, the subsidiaries have banking facilities from licensed banks which are guaranteed by the Company and jointly with certain subsidiaries of the Company. Accordingly, the Group and the Company is contingently liable to the extent of the outstanding banking facilities of the said subsidiaries. 33. OPERATING SEGMENTS Operating segments are prepared in a manner consistent with the internal reporting provided to the Group Executive Committee as its chief operating decision maker in order to allocate resources to segments and to assess their performance. For management purposes, the Group is organised into business units based on their products provided. The Group comprises the following business segments as follow: 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.

92 OPERATING SEGMENTS (CONT D) (a) Business Segments Financial Year Ended 31 December 2013 Transformer, lighting and Process related products equipment Eliminations Consolidated RM RM RM RM 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 RESULTS 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 Income 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 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

93 OPERATING SEGMENTS (CONT D) (a) Business Segments (Cont d) Financial Year Ended 31 December 2012 Transformer, lighting and Process related products equipment Eliminations Consolidated RM RM RM RM REVENUE - external sales 193,917, ,687, ,605,469 - inter-segment sales 219,171 - (219,171) - Total revenue 194,136, ,687,671 (219,171) 295,605,469 RESULTS Segment results 40,520,978 9,595,599 (5,602,929) 44,513,648 Share of loss of associates - (16,667) - (16,667) 40,520,978 9,578,932 (5,602,929) 44,496,981 Unallocated corporate expenses (697,661) Finance costs (3,669,317) Interest income 286,872 Profit before tax 40,416,875 Income tax expense (9,781,022) Profit for the financial year 30,635,853 Attributable to: Owners of the Company 27,042,645 Non controlling interest 3,593,208 30,635,853 OTHER INFORMATION Segment assets 232,754, ,432, ,187,477 Unallocated assets 1,620,903 Consolidated total assets 365,808,380 Segment liabilities 78,912,250 57,788, ,700,624 Unallocated liabilities 5,353,264 Consolidated total liabilities 142,053,888 Capital expenditure 7,730,547 9,890,082-17,620,629 Depreciation of property, plant and equipment 4,665,537 1,920,771 30,085 6,616,393 Depreciation of investment properties 83,692 1,688 (10,021) 75,359 Non-cash expenses (other than amortisation and depreciation) 1,172,997 2,148,476-3,321,473

94 OPERATING SEGMENTS (CONT D) (b) Geographical Information (Cont d) Revenue Total Assets Total Capital Expenditure RM RM RM RM RM RM Malaysia 270,556, ,798, ,059, ,553,719 14,671,577 15,784,416 People s Republic of China 65,680,499 53,258,096 34,758,576 24,349,372 1,140,833 1,177,388 Other countries 21,769,633 16,350,090 31,259,659 21,595,117 3,378, ,825 Eliminations (35,256,755) (18,801,072) (59,801,090) (49,689,828) - - Consolidated 322,749, ,605, ,276, ,808,380 19,190,727 17,620,629 (c) Major customers There is 1 (2012: 1) customer with revenue equal to or more than 10% of Group s revenue amounting to RM 45,518,072 (2012: RM 43,247,423) arising from sales by the process equipment segment. 34. FINANCIAL INSTRUMENTS (a) Categories of financial instruments The table below provides an analysis of financial instruments categorised as follows: (i) (ii) Loans and receivables (L&R); Other financial liabilities measured at amortised cost (OL) Carrying Carrying Amount L&R Amount L&R RM RM RM RM Financial assets Group Trade and other receivables 112,611, ,611,058 92,486,005 92,486,005 Deposits, cash and bank balances 38,253,399 38,253,399 34,877,894 34,877, ,864, ,864, ,363, ,363,899 Company Trade and other receivables 198, , , ,357 Deposits, cash and bank balances 22,712 22, , , , , , ,355

95 FINANCIAL INSTRUMENTS (CONT D) (a) Categories of financial instruments (Cont d) Financial liabilities Carrying Carrying Amount OL Amount OL RM RM RM RM Group Trade and other payables 68,163,665 68,163,665 51,574,694 51,574,694 Loans and borrowings 84,651,467 84,651,467 82,444,672 82,444,672 Hire purchase and lease payables 2,104,511 2,104,511 2,681,258 2,681, ,919, ,919, ,700, ,700,624 Company Trade and other payables 50,127,038 50,127,038 55,771,274 55,771,274 Loans and borrowings 500, , ,627,038 50,627,038 55,771,274 55,771,274 (b) Financial Risk Management The operations of the Group are subject to various financial risks, including foreign currency risk, interest rate risk, credit risk and liquidity and cash flow risk, in connection with its use or holding of financial instruments. The Group has adopted a financial risk management framework with the principal objective of effectively managing these risks and minimising any potential adverse effects on its financial performance. (i) Foreign Currency Risk The Group operates principally in Malaysia but is exposed to various currencies, mainly United States Dollar, Singapore Dollar and Chinese Renminbi (Yuan) arising from its imports and exports. Foreign currency denominated assets and liabilities together with expected cash flows from highly probably purchases and sales give rise to foreign exchange exposures. The Group has a natural hedge to the extent that payments for foreign currency payables will be matched against receivables denominated in the same foreign currency or whenever possible, by intra group arrangements and settlements. As at year end, the Group does not have any derivative financial instruments used to hedge foreign currency risk. The Group s exposure to foreign currency risk, based on the carrying amounts at the reporting date is as follows: As at 31 December 2013 Trade and Deposits, other cash and bank receivables balances Total RM RM RM Financial Assets Ringgit Malaysia 82,244,126 27,443, ,687,183 Chinese Renminbi (Yuan) 7,222,354 3,810,781 11,033,135 Singapore Dollar 7,352,971 2,789,490 10,142,461 United States Dollar 11,919, ,351 12,713,008 Others 3,871,950 3,416,720 7,288, ,611,058 38,253, ,864,457

96 FINANCIAL INSTRUMENTS (CONT D) (b) Financial Risk Management (Cont d) (i) Foreign Currency Risk (Cont d) As at 31 December 2013 Financial Liabilities Hire purchase Trade and Loans and and lease other payables borrowings payables Total RM RM RM RM Ringgit Malaysia 46,770,229 69,809,825 1,710, ,291,049 Chinese Renminbi (Yuan) 16,910, ,910,436 Singapore Dollar 1,482,441 4,161, ,079 5,939,093 United States Dollar 2,002,618 10,680,069-12,682,687 Others 997,941-98,437 1,096,378 68,163,665 84,651,467 2,104, ,919,643 Net financial assets denominated in the Net financial assets/ respective entities Currency (liabilities) functional currency exposure RM RM RM Ringgit Malaysia (8,603,866) 8,603,866 - Chinese Renminbi (Yuan) (5,877,301) 5,881,085 3,784 Singapore Dollar 4,203, ,126 4,718,494 United States Dollar 30,321-30,321 Others 6,192,292 (5,585,536) 606,756 (4,055,186) 9,414,541 5,359,355 As at 31 December 2012 Trade and Deposits, other cash and bank receivables balances Total RM RM RM Financial Assets Ringgit Malaysia 69,649,134 24,786,992 94,436,126 Chinese Renminbi (Yuan) 5,971,324 4,335,086 10,306,410 Singapore Dollar 4,705,178 2,594,567 7,299,745 United States Dollar 7,762,179 2,199,848 9,962,027 Others 4,398, ,401 5,359,591 92,486,005 34,877, ,363,899

97 FINANCIAL INSTRUMENTS (CONT D) (b) Financial Risk Management (Cont d) (i) Foreign Currency Risk (Cont d) As at 31 December 2012 Financial Liabilities Hire purchase Trade and Loans and and lease other payables borrowings payables Total RM RM RM RM Ringgit Malaysia 37,416,099 80,505,932 2,128, ,050,969 Chinese Renminbi (Yuan) 10,369, ,369,794 Singapore Dollar 721,838 1,938, ,745 3,086,323 United States Dollar 1,515, ,515,369 Others 1,551, ,575 1,678,169 51,574,694 82,444,672 2,681, ,700,624 Net financial assets denominated in the Net financial assets/ respective entities Currency (liabilities) functional currency exposure RM RM RM Ringgit Malaysia (25,614,843) 25,614,843 - Chinese Renminbi (Yuan) (63,384) 63,384 - Singapore Dollar 4,213,422 (231,861) 3,981,561 United States Dollar 8,446,658-8,446,658 Others 3,681,422 (3,450,018) 231,404 (9,336,725) 21,996,348 12,659,623 The Company s exposure to foreign currency risk, based on the carrying amounts at the reporting date is as follows: As at 31 December 2013 Trade and Deposits, other cash and bank receivables balances Total RM RM RM Financial Assets Ringgit Malaysia 152,328 22, ,040 Chinese Renminbi (Yuan) 7,901-7,901 United States Dollar 12,192-12,192 Others 26,133-26, ,554 22, ,266

98 FINANCIAL INSTRUMENTS (CONT D) (b) Financial Risk Management (Cont d) (i) Foreign Currency Risk (Cont d) As at 31 December 2013 Financial Liabilities Trade and other Loan and payables borrowings Total RM RM RM Ringgit Malaysia 50,127, ,000 50,627,038 Net financial assets denominated Net financial assets/ in the Company s Currency (liabilities) functional currency exposure RM RM RM Ringgit Malaysia (50,451,998) 50,451,998 - Chinese Renminbi (Yuan) 7,901-7,901 United States Dollar 12,192-12,192 Others 26,133-26,133 As at 31 December 2012 Financial Assets (50,405,772) 50,451,998 46,226 Trade and Deposits, other cash and bank receivables balances Total RM RM RM Ringgit Malaysia 156, , ,852 United States Dollar 11,503-11, , , ,355 Financial Liabilities Trade and other payables RM Ringgit Malaysia 55,771,274 55,771,274

99 FINANCIAL INSTRUMENTS (CONT D) (b) Financial Risk Management (Cont d) (i) Foreign Currency Risk (Cont d) As at 31 December 2012 Net financial assets denominated Net financial assets/ in the Company s Currency (liabilities) functional currency exposure RM RM RM Ringgit Malaysia (55,369,422) 55,369,422 - United States Dollar 11,503-11,503 Currency risk sensitivity analysis (55,357,919) 55,369,422 11,503 The Group s exposure to foreign currency risk mainly relates to United States Dollar and Singapore Dollar. A strengthening of Ringgit Malaysia, as indicated below, against the United States Dollar and Singapore Dollar as at 31 December would have increased and decreased profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, remain constant. Group Company Increase / Increase / (Decrease) (Decrease) RM RM 31 December % strengthening of RM against Singapore Dollar (35,389) - 1% strengthening of RM against United States Dollar (227) (91) (35,616) (91) 31 December % strengthening of RM against Singapore Dollar (29,862) - 1% strengthening of RM against United States Dollar (63,350) (86) (93,212) (86) Conversely, a weakening of the Ringgit Malaysia, against the above currencies at 31 December would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant. (ii) Interest Rate Risk The Group s primary interest rate risk relates to interest-bearing debts obtained from the financial institutions in Malaysia and overseas. It has no substantial long term interest-bearing assets as at 31 December The investments in financial assets, i.e. deposits placed with licensed banks, are short term in nature and are not held for speculative purposes. The Group does not hedge interest rate risk but ensures that it obtains borrowings at competitive interest rates under the most favourable term and conditions.

100 FINANCIAL INSTRUMENTS (CONT D) (b) Financial Risk Management (Cont d) (ii) Interest Rate Risk (Cont d) Information relating to the Group s exposure to the interest rate risk of the financial liabilities is disclosed in Note 34(b)(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 as at the end of the reporting period, with all other variables held constant: Group Company Increase / Increase / Increase / Increase / (Decrease) (Decrease) (Decrease) (Decrease) RM RM RM RM Effects on profit after taxation Increase of 50 basis points (bp) (210,862) (179,376) (4,240) - Decrease of 50 basis points (bp) 210, ,376 4,240 - (iii) Credit Risk The credit risk with respect to trade and other receivables are managed through the application of credit approvals, credit limits and monitoring procedures. Credit is extended to the customers based upon careful evaluation of the customer s financial condition and credit history. The Group s normal credit term ranges from 7 to 150 days (2012: 7 to 150 days) except for related companies, which are not subject to credit terms, whilst credit terms for retention sums are generally up to 180 days (2012: 180 days). Any other credit terms are assessed and approved on a case-by-case basis depending on the length of trading relationship, the volume of trade and other management considerations. Notwithstanding the credit terms granted to customers, it is the norm for local electrical industry to begin counting the credit period from the first day of the immediate following month after sales transactions occurred, i.e. invoicing date. At the end of the reporting period, only one (1) largest customer account for 10% (2012: one (1) largest customer account for 14%) of total trade receivables of the Group. Except for the above, there were no significant concentrations of credit risk. Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented by the carrying amounts in the statements of financial position. Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are measured at their realisable values. A significant portion of these receivables are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the receivables. Any receivables having significant balances past due more than 120 days, which are deemed to have higher credit risk, are monitored individually.

101 FINANCIAL INSTRUMENTS (CONT D) (b) Financial Risk Management (Cont d) (iii) Credit Risk (Cont d) Exposure to credit risk, credit quality and collateral (cont d) The exposure of credit risk for receivables as at the end of the reporting period by geographical region was: Group Company RM RM RM RM Malaysia 69,498,562 54,230,157-16,623 Singapore 18,368,902 19,199, Others 19,615,510 14,595, The ageing of receivables as at the end of the reporting period was: 107,482,974 88,025,106-16,623 Gross Collective Individual Carrying amount impairment impairment amount RM RM RM RM Group 2013 Not past due 80,330, ,330,889 Past due: days 6,293, ,293, days 13,516,598 (115,080) - 13,401,518 - more than 120 days 12,041,138 (1,761,971) (2,822,462) 7,456, ,182,487 (1,877,051) (2,822,462) 107,482, Not past due 64,575, ,575,566 Past due: days 10,871,845 (477,845) - 10,394, days 10,152,303 (631,717) (22,650) 9,497,936 - more than 120 days 7,222,092 (771,714) (2,892,774) 3,557,604 92,821,806 (1,881,276) (2,915,424) 88,025,106 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 past due but not impaired The Group believes that no impairment allowance is necessary in respect of these trade receivables. They are substantially companies with good collection track record and no recent history of default.

102 FINANCIAL INSTRUMENTS (CONT D) (b) Financial Risk Management (Cont d) (iii) Credit Risk (Cont d) Exposure to credit risk, credit quality and collateral (cont d) 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 Group. The Group uses ageing analysis to monitor the credit quality of the trade receivables. Any receivables having significant balances past due, which are deemed to have higher credit risk, are monitored individually. Financial guarantees Risk management objectives, policies and processes for managing the risk The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to certain subsidiaries. The Company monitors on an on-going basis the results of the subsidiaries and repayments made by the subsidiaries. Exposure to credit risk, credit quality and collateral The maximum exposure to credit risk amounts to RM 59,424,924 (2012: RM 79,145,611) representing the outstanding banking facilities of the subsidiaries as at the end of the reporting period. As at the end of the reporting period, there was no indication that any subsidiary would default on repayment. The financial guarantees have not been recognised since the fair value on initial recognition was not material. Inter company balances Risk management objectives, policies and processes for managing the risk The Company provides unsecured loans and advances to subsidiaries. The Company monitors the results of the subsidiaries regularly. Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts in the statements of financial position. Impairment losses As at the end of the reporting period, there was no indication that the loans and advances to the subsidiaries are not recoverable. The Company does not specifically monitor the ageing of the advances to the subsidiaries. Non-current loans to subsidiaries are not overdue. (iv) Liquidity Risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group s exposure to liquidity risk arises principally from its various payables, loans and borrowings. The Group maintains a level of cash and cash equivalents and bank facilities deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due.

103 FINANCIAL INSTRUMENTS (CONT D) (b) Financial Risk Management (Cont d) (iv) Liquidity Risk (Cont d) Maturity analysis The table below summarises the maturity profile of the Group s and the Company s financial liabilities as at the end of the reporting period based on undiscounted contractual payments: Contractual Contracted interest Carrying undiscounted Under 1-5 More than rate amount cash flow 1 year years 5 years RM RM RM RM RM RM Group 2013 Non-derivative financial liabilities Trade and other payables - 68,163,665 68,163,665 68,163, Loans and borrowings 1.4% - 7.9% 84,651,467 89,293,818 49,131,970 15,645,318 24,516,530 Hire purchase payables 2.5% -12.0% 2,104,511 2,289,126 1,011,432 1,277, ,919, ,746, ,307,067 16,923,012 24,516, Non-derivative financial liabilities Trade and other payables - 51,574,694 51,574,694 51,574, Loans and borrowings 1.6% - 7.9% 82,444,672 99,736,417 40,861,890 19,240,533 39,633,994 Hire purchase payables 2.5% - 9.3% 2,681,258 2,944,667 1,025,823 1,902,894 15, ,700, ,255,778 93,462,407 21,143,427 39,649,944 Company 2013 Non-derivative financial liabilities Loans and borrowings 4.7% - 4.8% 500, , , Trade and other payables - 50,127,038 50,127,038 50,127, ,627,038 50,627,038 50,627, Non-derivative financial liabilities Trade and other payables - 55,771,274 55,771,274 55,771,

104 FINANCIAL INSTRUMENTS (CONT D) (c) Fair Values Information Other than those disclosed below, the fair values of the financial assets and financial liabilities maturing within the next 12 months approximated their carrying amounts due to the relatively short-term maturity of the financial instruments. The fair values are included in level 2 of the fair value hierarchy. Fair Value Of Financial Instruments Not Carried At Fair Value Total Carrying Level 1 Level 2 Level 3 Fair Value Amount RM RM RM RM RM Group 2013 Financial liabilities Hire purchase payables - 2,095,212-2,095,212 2,104,511 Term loans - 40,723,599-40,723,599 40,723,599 Level * RM RM RM 2012 Financial Liabilities Hire purchase payables 2,672,840 2,672,840 2,681,258 Term loans 46,224,542 46,224,542 46,224,542 * Comparative fair value information is not presented by levels, by virtue of the exemption given in MFRS 13. The fair value of level 2 above have been determined using the following basis:- (i) The fair value of hire purchase are determined by discounting the relevant cash flows using interest rate for similar instruments at the end of the reporting period. The interest rates used to discount the estimated cash flows are as follows: % % Hire Purchase payables (ii) The carrying amount of the term loans approximated their fair values as these instrument bear interest at variable rates.

105 SIGNIFICANT EVENTS DURING THE YEAR There were no significant events of the Group and of the Company during the financial year that will affect materially the contents of this report other than as follows: (cont d) (a) (b) (c) On 19 March 2013, the Group via its wholly-owned subsidiary, Success Transformer Markerting Sdn. Bhd. entered into a conditional sale and purchase agreement with Moremas Sdn. Bhd. to acquire 3 pieces of industrial leasehold land, held under Title no. HSD PT 689, HSD PT 690 and HSD PT 691 in Pekan Subang, Daerah Petaling Negeri Selangor with land area measuring approximately 4,045 square meters, 4,046 square meters and 2,697 square meters respectively for a total cash consideration of RM9,000,000. The acquisition was completed on 12 July On 8 April 2013, a subsidiary of Success Transformer Corporation Berhad ( STC ), Success Transformer Pte Ltd ( STPL ) acquired a leasehold property in Singapore at the address No. 3, Kaki Bukit Road 1, #03-05 Eunos Technolink Singapore , measuring 259 square meters for a total consideration of SGD 1,198,840 (equivalent to RM 3,141,947) (excluded Goods and Service Tax). The purchase was completed on 28 June On 22 July 2013, a subsidiary of the Company, Boxon Industries Hardware (M) Sdn Bhd ( BIH ) acquired additional 60,000 ordinary shares of USD 1.00 each in PT. Boxon Nikkon Jayaindo ( BNJ ), representing an additional 20% equity interest in the issued and paid-up capital of BNJ for a total cash consideration of USD 60,000 (equivalent to RM 194,640). As a result, BIH holds 80% equity interest in BNJ. The acquisition was completed on 22 July (d) On 2 September 2013, a subsidiary of the Company STPL, acquired additional 15,000 ordinary shares of SGD 1.00 each in Nikkon Lighting & Electrical Pte Ltd ( NLE ), representing an additional 5% equity interest in the issued and paid-up share capital of NLE for a total cash consideration of SGD 18,000 (equivalent to RM 46,818). As a result, STPL holds 55% equity interest in NLE. The acquisition was completed on 2 September (e) (f) On 2 September 2013, a subsidiary of the Company, Ningbo Success Zhenye Luminaire Limited Liabilities ( NSZ ) completed a bonus issue, which involved increase of paid-up capital by capitalizing an amount of RMB 11 million from the retained earnings account. The bonus issue had been arranged in the proportion with the existing contribution made by all shareholders. As a result, STC remains the equity interest of 60% in NSZ. On 20 November 2012, the Company subscribed to a total of 9,800 ordinary shares of THB each in Nikkon Lighting (Thailand) Co., Ltd ( NLT ), representing a 49% of the total issued and paid-up capital of NLT for a total cash consideration of THB 980,000 (equivalent to RM 104,370). The investment in NLT was deemed completed on 4 January The directors have determined that the Company has de facto control as it owns 90.6% of the voting power in NLT.

106 CAPITAL MANAGEMENT The Group s policy is to keep gearing within manageable levels. The debt-to-equity ratio of the Group as at the end of the reporting year was as follows: Group RM RM Hire purchase and lease payables 2,104,511 2,681,258 Loans and borrowings 84,651,467 82,444,672 86,755,978 85,125,930 Less: Deposits, cash and bank balances (38,253,399) (34,877,894) Net debt 48,502,579 50,248,036 Total equity 220,547, ,331,135 Debt-to-equity ratio (times) There were no changes in the Group s approach to capital management during the year. The debt to equity ratio is calculated as net debt divided by total equity. Net debt is calculated as total borrowings from financial institutions less deposits, cash and bank balances. Under the requirement of Bursa Malaysia Practice Note No. 17/2005, the Company is required to maintain a consolidated shareholders equity equal to or not less than 25% of the issued and paid-up capital (excluding treasury shares) and such shareholders equity is not less RM 40 million. The Company has complied with this requirement.

107 SUPPLEMENTARY INFORMATION ON THE DISCLOSURE OF REALISED AND UNREALISED PROFITS OR LOSSES The breakdown of the retained profits/(accumulated losses) of the Group and of the Company as at the end of the reporting period into realised and unrealised profits/(losses) are presented in accordance with the directive issued by Bursa Malaysia Securities Berhad and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants, as follows:- Group Company RM RM RM RM Total retained profits of the Company and its subsidiary: - realised 256,184, ,990,174 34,047,006 31,303,736 - unrealised (4,015,608) (5,366,452) 68, ,168, ,623,722 34,115,384 31,303,736 Total share of accumulated losses from associates and jointly controlled entity - realised (301,421) (16,667) ,867, ,607,055 34,115,384 31,303,736 Less: Consolidation adjustments (94,114,501) (92,693,584) - - Total retained profits 157,752, ,913,471 34,115,384 31,303,736

108 106 LIST OF PROPERTIES The summary of the information on the landed properties of the STC Group is as follows: Carrying Land Area / Age of Amount as at Date of Description / Built Up Tenure Buildings Revaluation / Location/ Postal Address Existing Use Area (years) (years) RM Acquisition 1 Title no. Geran Lot Industrial 24,490 Freehold 15 9,421,027 7 September 19042, Seksyen 20, Bandar premises square (Land) 2011 Rawang comprising a meters / 1-storey factory / 16,444 10,153,385 Address warehouse/ square (Building) Lot. 102, Jalan Industri ¾, office building meters Taman Industri Integrasi annexed with a Rawang, Rawang, guardhouse Selangor Darul Ehsan 2 Title No. PM 1272 (Formerly Industrial 4,213 square Leasehold 11 1,194, December HSM 7615), Lot No premises metres / interest for (Land) 2009 (Formerly Lot P.T. No. comprising 11, years 20047), Locality of Bt 16 a 4-storey square expiring on 8,849,262 Jalan Subang, Mukim of detached factory/ metres 24 March (Building) Sungai Buloh, District of warehouse/ 2091, leaving Petaling, State of Selangor office building an unexpired with one term of about Address basement 78 years No. 7, Jalan TSB 8, Taman level and a Industri Sungai Buloh, guardhouse Sungai Buloh, Selangor Darul Ehsan 3 Title No. H.S.(D) , Industrial 16,664 square Freehold 3 3,621, February (Lot No.32554,GRN114865), premises metres / (Land) 2011 Pekan Senawang District of with an attached 6271 square Seremban, State of Negeri single storey metres 4,804,251 Sembilan open-sided (Building) factory (Fasa 1) Address annexed together 75 & 76 Persiaran Bunga with a guardhouse Tanjung 2, Senawang Industrial Park, Seremban, Negeri Sembilan 4 Title No. H.S.(D) Industrial premises 14,144 square Freehold 18 2,260, July & , P.T. No comprising a metres / (Land) 2009 & 1286 (Lot No ), 3-storey office 7,273 square Pekan Senawang District with an attached metres 5,402,407 of Seremban, State of single storey (Building) Negeri Sembilan open-sided factory annexed together Address with a guardhouse Lot 1A & 1B, Lorong Bunga Tanjung 1/3, Senawang Industrial Park, Seremban, Negeri Sembilan

109 LIST OF PROPERTIES (CONT D) 107 Carrying Land Area / Age of Amount as at Date of Description / Built Up Tenure Buildings Revaluation / Location/ Postal Address Existing Use Area (years) (years) RM Acquisition 5 No. PT 2086, Jalan Batu Arang, Agreculture Land 44,300 square Leasehold N/A 6,303, February Bandar Kundang, Daerah metres interest for 99 (Land) 2012 Gombak, State of Selangor years expiring on 3 November 2108, leaving an unexpired term of about 95 years 6 Title No. PM 1304 (Formerly Industrial premises 4,435 square Leasehold 14 4,145, September HSM 7554) Lot comprising two metres / interest for (Land) 2010 (Formerly Lot P.T. No ), 1 ½ storey factory / 2,376 square 99 years Locality of Bt 16 Jalan Subang, warehouse / office metres expiring on 24 2,883,818 Mukim of Sungai Buloh, annexed with March 2091, (Building) District of Petaling, a guardhouse leaving an State of Selangor unexpired term of about Address 78 years No. 9, Jalan TSB 9, Taman Industri Sungai Buloh, Sungai Buloh, Selangor Darul Ehsan 7 Title No. H.S.(D) , P.T. Industrial 8,786 square Freehold 7 1,490, July 1285 (Lot No ), Pekan premises metres / (Land) 2009 Senawang District of comprising 2 5,031 square Seremban, State of Negeri single storey store metres 4,368,491 Sembilan and office with (Building) an attached Address single storey Lot 1C, Lorong Bunga open-sided factory Tanjung 1/3, Senawang Industrial Park, Seremban, Negeri Sembilan 8 Title No. GM5407 Lot 1578 Industrial Land 12,773, Freehold N/A 5,340, February Mukim Ulu Yam, Title No. 15,555, (Land) 2011 GM5687 Lot 1475 Mukim 13,279, and Ulu Yam, Title No. GM ,946 square Lot 1476 Mukim Ulu Yam, metres and Title No. GM6226 Lot 1474 Mukim Ulu Yam

110 108 LIST OF PROPERTIES (CONT D) Carrying Land Area / Age of Amount as at Date of Description / Built Up Tenure Buildings Revaluation / Location/ Postal Address Existing Use Area (years) (years) RM Acquisition 9 Title No. H.S.(D) 64702, Industrial premises 10,565 square Freehold 6 1,610, July (Lot No. 1666, GRN ), with an attached metres / (Land) 2009 Pekan Senawang District of single storey 2,446 square Seremban, State of Negeri open-sided metres 3,478,102 Sembilan factory annexed (Building) together with Address a guardhouse Lot 6A, Lorong Bunga Tanjung 1/2, Senawang Industrial Park, Seremban, Negeri Sembilan 10 PN Lot Leasehold 28,430 square Leasehold N/A 5,012, December Mukim Lumut Daerah Industrial land metres interest for (Land) 2012 Manjung Negeri Perak 99 years expiring on 09 July 2105, leaving an unexpired term of about 92 years The above list of properties are only disclosed the top 10 properties in terms of highest net book value as at the end of financial year.

111 ANALYSIS OF SHAREHOLDINGS AS AT 30 APRIL Authorised share capital Issued and fully paid-up capital Class of shares No. of shareholders : 2,770 Voting Rights : One vote per ordinary share A) DISTRIBUTION OF SHAREHOLDINGS : RM 100,000,000 ordinary shares of RM 0.50 each : RM 60,000,000 divided into 120,000,000 shares of RM0.50 each (excluding 3,335,777 treasury shares) : Ordinary shares of RM 0.50 each No. of % of Total No. of Shares % of Issued Size of Shareholding Shareholders Shareholders Held Capital Less than , to , ,001 to 10,000 1, ,283, ,001 to 100, ,737, ,001 to less than 5% of issued shares ,096, % and above of issued shares ,436, TOTAL: 2, ,664, B) LIST OF SUBSTANTIAL SHAREHOLDERS Direct Deemed interest in shares No. Name of Shareholders No. of shares % No. of shares % 1 Omega Attraction Sdn. Bhd. ( OASB ) 53,973, Wtech Holdings Sdn. Bhd. 17,059, Tan Ah Tan Ah Ping 100, ,151,864 (1) Pan Kim Foon 100, ,151,864 (2) Tan Chung Ling 77, ,174,824 (3) Wong Choon Cheon ,059,000 (4) Wong Poh Chee ,059,000 (5) Notes: (1) Deemed interest by virtue of his substantial interest in OASB, and his wife and daughter, Tan Chung Ling s direct interests in the Company. (2) Deemed interest by virtue of her substantial interest in OASB, and her husband and daughter, Tan Chung Ling s direct interests in the Company. (3) Deemed interest by virtue of her father, Tan Ah Tan Ah Ping s and her mother, Pan Kim Foon s direct interests in STC, and her father and mother s direct interests in OASB. (4) Deemed interest by virtue of her substantial interest in WTECH, and her mother s direct interest in the Company.

112 110 ANALYSIS OF SHAREHOLDINGS AS AT 30 APRIL 2014 (CONT D) C) LIST OF DIRECTORS SHAREHOLDINGS The Company Direct Deemed interest in shares No. Name of Shareholders No. of shares % No. of shares % 1. Tan Ah Tan Ah Ping 100, ,151,864 (1) Pan Kim Foon 100, ,151,864 (2) Woh Way Cheang 116, Liew G Liew Chee Hoe 30, Tan Chung Ling (Alternate Director to Pan Kim Foon) 77, ,174,824 (3) Yeoh Kim Wah 530, Chiam Tau Meng Wong Poh Chee ,059,000 (4) Notes : (1) Deemed interest by virtue of his substantial interests in OASB, and his wife and daughter, Tan Chung Ling s direct interests in the Company. (2) Deemed interest by virtue of her substantial interests in OASB, and her husband and daughter, Tan Chung Ling s direct interests in the Company. (3) Deemed interest by virtue of her father, Tan Ah Tan Ah Ping s and her mother, Pan Kim Foon s direct interests in the company, and her father and mother s direct interests in OASB. (4) Deemed interest by virtue of her substantial interest in WTECH, and her mother s direct interest in the Company. Holding Company - OASB Direct Deemed interest in shares No. Name of Shareholders No. of shares % No. of shares % 1. Tan Ah Tan Ah Ping 49, ,367 (1) Pan Kim Foon 36, ,466 (2) Tan Chung Ling (Alternate Director to Pan Kim Foon) ,833 (3) Notes : (1) By virtue of his wife, Pan Kim Foon s direct interest in OASB. (2) By virtue of her husband, Tan Ah Tan Ah Ping s direct interest in OASB. (3) By virtue of her father, Tan Ah Tan Ah Ping and her mother, Pan Kim Foon s direct interests in OASB. By virtue of their interests in the shares of OASB, Messrs. Tan Ah Tan Ah Ping, Pan Kim Foon, and Tan Chung Ling are deemed to have an interest in the shares of the Company and its related corporations to the extent that OASB has an interest.

113 ANALYSIS OF SHAREHOLDINGS AS AT 30 APRIL 2014 (CONT D) 111 D) TOP THIRTY (30) LARGEST SHAREHOLDERS Percentage (%) No. of of Issued No. Name of Shareholders Shares Held Share Capital 1. Omega Attraction Sdn Bhd 53,377, Wtech Holdings Sdn Bhd 17,059, Cartaban Nominees (Asing) Sdn Bhd 3,000, SSBT Fund F9EX for Fidelity Northstar Fund 4. Fong Ting Wong 1,588, Public Invest Nominees (Tempatan) Sdn Bhd 1,161, Pledged Securities Account for Yoong Fui Kien 6. TA Nominees (Tempatan) Sdn Bhd 1,146, Pledged Securities Account for Koon Yew Yin 7. Tee Ah Swee 1,142, TA Nominees (Tempatan) Sdn Bhd 1,000, Pledged Securities Account for Tan Kit Pheng 9. Tham Kin Foong (John) 612, Omega Attraction Sdn Bhd 596, TA Nominees (Tempatan) Sdn Bhd 586, Pledged Securities Account for Koon Yew Yin (M) 12. HLIB Nominees (Tempatan) Sdn Bhd 534, Pledged Securities Account for Tan Kit Pheng (M) 13. Teratak Aeden (JK) Development Sdn Bhd 512, Yeo Kim Wah 500, Cimsec Nominees (Tempatan) Sdn Bhd 499, Pledged Securities Account for Koon Yew Yin (MY0951) 16. Lock Kai Sang 492, Malacca Equity Nominees (Tempatan) Sdn Bhd 491, Exempt AN for Phillip Capital Management Sdn Bhd 18. Kenanga Nominees (Tempatan) Sdn Bhd 454, Pledged Securities Account for Koon Yew Yin (002) 19. Maybank Nominees (Tempatan) Sdn Bhd 341, Pledged Securities Account for Lian Jiann Fwu 20. Public Nominees (Tempatan) Sdn Bhd 289, Pledged Securities Account for Ng Seng Giap (E-KDA) 21. Maybank Nominees (Asing) Sdn Bhd 240, DBS Bank for Kriya PAM Macro Master Fund (211373) 22. Cimsec Nominees (Tempatan) Sdn Bhd 230, CIMB Bank for Ng Gheok Kian (MY0286) 23. Foo You Chai 206, Khoo Boon Chong 200, Koh Yong Hwee 200, Yoo Kee Mo 199, Ang Ching Keong 194, Leau Kim Liau Kim Pun 194, Chan Bee Chuan 190, Tan Ming Kian 180,

114 112 NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN that the Tenth Annual General Meeting of the Company will be held at Langkawi Room, Bukit Jalil Golf and Country Resort, Jalan 3/155B, Bukit Jalil, Kuala Lumpur on Wednesday, 18 June 2014 at 2.00 p.m. for the following purposes: AS ORDINARY BUSINESS 1. To receive the Audited Financial Statements for the financial year ended 31 December 2013 together with the Reports of Directors and Auditors thereon (Please refer to Note A). 2. To approve the payment of Directors fees for the financial year ended 31 December To re-elect the following Directors retiring in accordance with the Article 96 of the Company s Articles of Association:- (1) Mr Yeoh Kim Wah (2) Ms Wong Poh Chee 4. To approve the re-appointment of retiring Auditors, Messrs Crowe Horwath as Auditors of the Company and to authorise the Directors to fix their remuneration. (Ordinary Resolution 1) (Ordinary Resolution 2) (Ordinary Resolution 3) (Ordinary Resolution 4) AS SPECIAL BUSINESS To consider and if thought fit, to pass the following resolutions with or without any modifications as resolutions:- 5. Authority to Directors to allot and issue shares pursuant to Section 132D of the Companies Act, 1965 THAT subject always to the Companies Act, 1965 ( Act ), the Articles of Association of the Company and the approvals of Bursa Malaysia Securities Berhad and other relevant governmental or regulatory bodies, where such approvals are necessary, the Directors be and are hereby empowered, pursuant to Section 132D of the Act, to issue shares in the Company from time to time and upon such terms and conditions and for such purposes as the Directors may deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten percent (10%) of the issued share capital of the Company for the time being and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company. 6. Proposed renewal of existing shareholders mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature THAT pursuant to paragraph of the Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ), approval be and is hereby given for the renewal of the shareholders mandate for the Company and its subsidiaries ( STC Group ) to enter into and to give effect to specified RRPT and with specified class of the related parties as stated in Section 2.3 of the Circular to Shareholders dated 27 May 2014, which are necessary for its dayto-day operations, to be entered into by the STC Group on the basis that these transactions are entered into on terms which are not more favourable to the Related Parties involved than generally available to the public and are not detrimental to the minority shareholders of the Company (hereinafter referred to as the Proposed Renewal of Shareholders Mandate ); (Ordinary Resolution 5) THAT the Proposed Renewal of Shareholders Mandate is subject to annual renewal. In this respect, any authority conferred by the Proposed Renewal of Shareholders Mandate shall only continue to be in force until:- (a) the conclusion of the next Annual General Meeting of the Company following the general meeting at which time the Proposed Renewal of Shareholders Mandate has been passed, at which time they will lapse, unless by a resolution passed at the meeting, the authority is renewed;

115 NOTICE OF ANNUAL GENERAL MEETING (CONT D) 113 (b) (c) the expiration of the period within which the next Annual General Meeting after the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 ( Act ) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or revoked or varied by resolution passed by the shareholders in general meeting, whichever is the earlier; AND THAT the Directors of the Company and/or any of them be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) to give effect to the Proposed Renewal of Shareholders Mandate. (Ordinary Resolution 6) 7. Proposed renewal of authority to the Company to purchase its own ordinary shares up to ten percent (10%) of its issued and paid-up capital THAT, subject always to the Companies Act, 1965, the Memorandum and Articles of Association of the Company, the Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ) and all other applicable laws, regulations and guidelines, the Directors of the Company be and are hereby given full authority, to seek shareholders approval for the renewal of authority for the Company to allocate an amount not exceeding the total available retained profits and share premium of the Company for the purpose of and to purchase such amount of ordinary shares of RM0.50 each on the Company ( Proposed Renewal of Share Buy-back Authority ) as may be determined by the Directors of the Company from time to time through Bursa Securities as the Directors may deem fit and in the best interest of the Company provided that the aggregate number of shares to be purchased and/or held pursuant to this resolution does not exceed ten percent (10%) of the issued and paid-up share capital of the Company at any point in time; AND THAT, upon the purchase by the Company of its own shares, the Directors are authorised to retain such shares so purchased as treasury shares or cancel the shares so purchased or retain part of the shares so purchased as treasury shares and cancel the remainder. The Directors are further authorised to distribute the treasury shares as dividends to the shareholders of the Company and/or resell the shares on Bursa Securities in accordance with the relevant rules of Bursa Securities or subsequently cancel the treasury shares or any combination thereof; AND THAT such approval and authorisation shall only continue to be in force until:- (i) (ii) (iii) the conclusion of the next Annual General Meeting of the Company, at which time it will lapse, unless renewed by ordinary resolution passed at that meeting, either unconditionally or subject to conditions; the expiration of the period within which the next Annual General Meeting after that date is required by law to be held; or revoked or varied by ordinary resolution passed by the shareholders in general meeting; whichever occurs first; AND FURTHER THAT the Directors of the Company be authorised to do all such acts and things (including, without limitation executing all such documents as may be required) as they may consider expedient or necessary to give full effect to the Proposed Renewal of Share Buy-back Authority. (Ordinary Resolution 7) 8. To transact any other ordinary business of which due notice shall have been given.

116 114 NOTICE OF ANNUAL GENERAL MEETING (CONT D) By order of the Board PANG KAH MAN (MIA 18831) Company Secretary Kuala Lumpur 27 May 2014 Notes: (A) This Agenda item is meant for discussion only as the provision of Section 169(1) of the Companies Act, 1965 does not require a formal approval of the shareholders and hence, is not put forward for voting. 1. Only depositors whose names appear in the Record of Depositors as at 11 June 2014 shall be regarded as members and be entitled to attend, speak and vote at the Meeting. 2. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy or proxies to attend and vote on a show of hands or on a poll in his stead. There shall be no restriction as to the qualification of the proxy and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. 3. Where a member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account ( Omnibus Account ), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each Omnibus Account it holds. 4. To be valid, the proxy form duly completed must be deposited at the Registered Office of the Company at 3-2, 3rd Mile Square, No. 151 Jalan Kelang Lama, Batu 3½, Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting provided that in the event the member(s) duly executes the proxy form but does not name any proxy, such member(s) shall be deemed to have appointed the Chairman of the meeting as his/their proxy, provided always that the rest of the proxy, other than the particulars of the proxy have been duly completed by the member(s). 5. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting provided that the provisions of Section 149(1)(c) of the Companies Act, 1965 are not complied with. 6. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportion of his holdings to be represented by each proxy. 7. If the appointor is a corporation, the proxy form must be executed under its common seal or under the hand of an officer or attorney duly authorised.

117 NOTICE OF ANNUAL GENERAL MEETING (CONT D) 115 Explanatory Notes on Special Business: 8. Ordinary Resolution no. 5 Authority to Allot and Issue Shares pursuant to Section 132D of the Companies Act, 1965 (a) (b) (c) (d) The proposed Ordinary Resolution no. 5, if passed, will empower the Directors of the Company, from the date of the forthcoming Annual General Meeting to allot and issue shares in the Company up to an amount not exceeding ten percent (10%) of the issued capital of the Company for the time being for such purposes as they may deem fit and in the interest of the Company. This authority, unless revoked or varied at a general meeting will expire at the conclusion of the next Annual General Meeting of the Company. The mandate now sought is a renewal from the previous mandate obtained at the last Annual General Meeting held on 12 June 2013 which will expire at the conclusion of the forthcoming Annual General Meeting The Company did not issue any new shares based on the previous mandate obtained at the last Annual General Meeting. The authority will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares, for purpose of funding future investment project(s), working capital and/or acquisitions. 9. Ordinary Resolution no. 6 Proposed Renewal of Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature ( RRPT ) The proposed Ordinary Resolution no. 6, if passed, will authorise the Company and/or its subsidiary companies ( STC Group ) to enter into RRPT which are necessary for the STC Group s day-to-day operations with the respective specified class of the related parties, subject to the transactions are entered into on terms which are not more favorable to the related parties involved than generally available to the public and are not detrimental to the minority shareholders of the Company. Further details on the proposed renewal of existing shareholders mandate for RRPT are provided in the Circular to Shareholders dated 27 May 2014 on the same. 10. Ordinary Resolution no. 7 Proposed Renewal of Authority for Purchase of Own Shares by the Company The proposed Ordinary Resolution no. 7, if passed, will authorise the Company to allocate an amount not exceeding the total available retained profits and share premium of the Company for the purpose of and to purchase such amount of ordinary shares of RM0.50 each on the Company ( Proposed Renewal of Share Buy-back Authority ) as may be determined by the Directors of the Company from time to time through Bursa Malaysia Securities Berhad as the Directors may deem fit and in the best interest of the Company provided that the aggregate number of shares to be purchased and/or held pursuant to this resolution does not exceed ten percent (10%) of the issued and paid-up share capital of the Company at any point in time. Further details on the Proposed Renewal of Share Buy-back Authority are provided in the Circular to Shareholders dated 27 May 2014 on the same.

118 116 STATEMENT ACCOMPANYING NOTICE OF ANNUAL ANNUAL GENERAL MEETING (Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad) DETAILS OF INDIVIDUALS WHO ARE STANDING FOR ELECTION AS DIRECTORS No individual is seeking election as a Director at the Tenth Annual General Meeting of the Company.

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121 I/We PROXY FORM of (Full Address) being (a) Member(s) of Success Transformer Corporation Berhad hereby appoint(s) of or failing him / her, of as my / our proxy to vote for me / us and on my / our behalf at the Tenth Annual General Meeting of the Company to be held at Langkawi Room, Bukit Jalil Golf and Country Resort, Jalan 3/155B, Bukit Jalil, Kuala Lumpur, on Wednesday, 18 June 2014 at 2.00 p.m. and at any adjournment thereof. No. Ordinary Resolutions For Against 1 Approval of Directors Fees for the financial year ended 31 December Re-election of Mr Yeoh Kim Wah as Director 3 Re-election of Ms Wong Poh Chee as Director 4 Re-appointment of Messrs Crowe Horwath as Auditors and to authorise the Directors to fix their remuneration 5 Renewal of Authority for Directors to issue shares pursuant to Section 132D of the Companies Act, Proposed Renewal of Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature 7 Proposed Renewal of Authority for the Company to purchase its own shares 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. For appointment of two proxies, percentage of shareholdings to be represented by the proxies: No. of Shares Percentage Proxy 1 Proxy 2 Total 100% Number of Shares Held Signature of Shareholder(s) or Common Seal Signed this day of 2014 Notes: 1. Only depositors whose names appear in the Record of Depositors as at 11 June 2014 shall be regarded as members and be entitled to attend, speak and vote at the Meeting. 2. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy or proxies to attend and vote on a show of hands or on a poll in his stead. There shall be no restriction as to the qualification of the proxy and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. 3. Where a member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account ( Omnibus Account ), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each OmnibusAccount it holds. 4. To be valid, the proxy form duly completed must be deposited at the registered office of the Company situated at 3-2, 3rd Mile Square, No. 151 Jalan Kelang Lama, Batu 3½, Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting provided that in the event the member(s) duly executes the proxy form but does not name any proxy, such member(s) shall be deemed to have appointed the Chairman of the meeting as his/their proxy, provided always that the rest of the proxy form, other than the particulars of the proxy have been duly completed by the member(s). 5. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting provided that the provisions of Section 149(1)(c) of the Companies Act, 1965 are complied with. 6. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. 7. If the appointor is a corporation, the proxy form must be executed under its common seal or under the hand of an officer or attorney duly authorised.

122 fold here STAMP The Company Secretary SUCCESS TRANSFORMER CORPORATION BERHAD ( W) 3-2, 3rd Mile Square No. 151, Jalan Kelang Lama Batu 3½ Kuala Lumpur fold here

123 accreditations & certifications International ISO 9001:2008 Quality Management System Standards certified by Bureau Veritas Certification (BVC) for design, development and manufacture of HID ballast, ignitor, industrial lightings and LED lightings, low voltage transformer and current transformer since Certificate of Type Test by ASTA Certificate Services (2002) CE Marking on products for street lantern, ballast, ignitor, isolating transformer and current transformers (2005) Domestic ISO 9001:2008 Quality Management System since 1998 SIRIM Product Type Test Certification for ballast, ignitor, street lighting and floodlights (1998) JKR approval of products for ballast and ignitor (2005), street lighting (2006) TNB approval on products for ballast and ignitor (2006) Superbrands status (2006) ISO9001 : 2008 BV CE marking for ballast CE marking for street lantern CE marking for Ignitor ISO9001 : 2008 Standard Malaysia TNB Approval SIRIM Certificate JKR Approval